Kim v. Reins International California, Inc.
An employee who settles and dismisses his individual Labor Code claims remains an “aggrieved employee” with standing to pursue a representative PAGA action, because PAGA standing turns on whether a violation was committed — not on whether the employee retains an unredressed individual injury.
Kim v. Reins International California, Inc. (2020) 9 Cal.5th 73
PAGA
Standing
Aggrieved Employee
Representative Actions
Reversed
Published
In brief. After an employee settled and dismissed his individual Labor Code claims, the lower courts held he had lost standing to pursue his remaining representative claim under the Private Attorneys General Act (PAGA) because he was no longer “aggrieved.” The Supreme Court reversed, holding that PAGA standing depends on having been subject to a Labor Code violation while employed by the defendant — “violations, not injury” — so that settling the individual damages claim does not strip an employee of “aggrieved employee” status. (Kim v. Reins International California, Inc. (2020) 9 Cal.5th 73, 83–87.)
Facts
Justin Kim, employed by Reins as a training manager, brought a putative class action and a representative PAGA claim alleging he and other employees had been misclassified as exempt and denied overtime and other wages. (9 Cal.5th at pp. 77–78.) Pursuant to an arbitration agreement, Kim’s individual claims were ordered to arbitration and his class claims were dismissed. (Ibid.) Reins then served a statutory settlement offer (Code Civ. Proc., § 998) on the individual claims, which Kim accepted; his individual claims were dismissed, leaving only the PAGA claim pending in court. (Id. at pp. 82–83.) Reins moved for summary adjudication, arguing that because Kim had settled and dismissed his own claims, he was no longer an “aggrieved employee” and had lost standing to prosecute the PAGA action. (Ibid.)
Procedural history
The trial court agreed with Reins and ruled that Kim lacked PAGA standing once he dismissed his individual claims. The Court of Appeal affirmed, reasoning that settlement of the individual claims left Kim without the injury required to be “aggrieved.” The Supreme Court granted review and reversed. (9 Cal.5th at pp. 73, 78, 87.)
Issue
Does an employee lose standing to maintain a representative PAGA action when he settles and dismisses his individual Labor Code claims against the same employer? Put differently, does “aggrieved employee” status under PAGA require a continuing, unredressed individual injury? (9 Cal.5th at pp. 83–84.)
Holding
No. PAGA confers standing on any “aggrieved employee,” defined by two requirements: the plaintiff must be “someone who was employed by the alleged violator and against whom one or more of the alleged violations was committed.” (9 Cal.5th at p. 83; Lab. Code, § 2699, subd. (c).) That status depends on “violations, not injury.” (9 Cal.5th at p. 83.) Settling and dismissing an individual damages claim does not undo the fact that a violation was committed against the employee, and therefore does not strip the employee of standing to pursue civil penalties on the state’s behalf. The Court of Appeal’s judgment is reversed. (Id. at pp. 76–77, 87.)
Reasoning
1. PAGA standing is defined by statute, in terms of violations. The Court began with the statutory text. To have standing, a plaintiff must satisfy “two requirements”: he must be “someone who was employed by the alleged violator and against whom one or more of the alleged violations was committed.” (9 Cal.5th at p. 83.) Nothing in that definition requires an ongoing or unsatisfied injury; the touchstone is having been subject to a violation. The remedy for a Labor Code violation, whether through settlement or otherwise, is distinct from the fact of the violation itself, and a person “become[s] an aggrieved employee” by virtue of the violation, not by virtue of retaining an unredressed claim. (Id. at p. 83.)
2. “Aggrieved” does not mean “unredressed.” Reins urged that an employee whose individual claims have been settled is no longer “aggrieved” in any meaningful sense. The Court rejected the equation of “aggrieved” with “injured and uncompensated.” (9 Cal.5th at pp. 78–84.) Had the Legislature meant to condition PAGA standing on an unsatisfied injury, it could have said so; instead, it tied standing to the existence of a violation. (Id. at pp. 80–83.) The Court also observed that adopting Reins’s rule would let employers defeat representative enforcement by “picking off” named plaintiffs with individual settlements — a result at odds with PAGA’s law-enforcement purpose. (Id. at pp. 84–86.)
3. The PAGA claim and the individual claim are distinct. A PAGA action seeks civil penalties on behalf of the state, most of which are paid to the state, and is conceptually separate from the employee’s own damages claim. (9 Cal.5th at pp. 80–81, 86.) Because the two claims are distinct, the disposition of the individual claim — whether by settlement, dismissal, or judgment — does not extinguish the representative claim or the employee’s authority to prosecute it as the state’s proxy. (Id. at pp. 86–87.)
Significance
Kim is the Supreme Court’s definitive statement that PAGA standing rests on violations rather than unredressed injury, and it became the linchpin of the post-Iskanian arbitration battles. When the United States Supreme Court in Viking River Cruises, Inc. v. Moriana (2022) 596 U.S. 639 predicted that a plaintiff compelled to arbitrate his “individual” PAGA claim would lose standing to maintain the “representative” claim in court, it was construing California standing law — and Justice Sotomayor’s concurrence expressly noted that California courts would have the last word. The California Supreme Court supplied that word in Adolph v. Uber Technologies, Inc. (2023) 14 Cal.5th 1104, applying Kim to hold that arbitration of the individual claim does not strip a plaintiff of PAGA standing. Kim thus underwrites the survival of representative PAGA actions even where individual claims are sent to arbitration. It builds on Arias v. Superior Court (2009) 46 Cal.4th 969 and Iskanian v. CLS Transportation Los Angeles, LLC (2014) 59 Cal.4th 348. See the Review’s practice guide on wage-and-hour class actions and PAGA.
Key quotes
“The plaintiff must be ‘someone who was employed by the alleged violator and against whom one or more of the alleged violations was committed.’” (Kim, supra, 9 Cal.5th at p. 83.)
PAGA standing depends on “violations, not injury.” (Id. at p. 83.)
Practice pointer
Settling a named plaintiff’s individual claims — or having them compelled to arbitration — does not end the PAGA case. Preserve the representative PAGA claim explicitly: when negotiating a § 998 offer or any individual settlement, do not release the PAGA claim unless that is the intended bargain, and make any carve-out express. On the plaintiff’s side, Kim (with Adolph) defeats any defense argument that arbitration or settlement of the individual claim destroys standing. On the defense side, recognize that “picking off” the named plaintiff will not extinguish the state’s penalty claim; resolution must address the PAGA claim directly, typically through a court-approved PAGA settlement. Plead the PAGA claim as a free-standing representative count from the outset.
Open questions
Kim resolved standing but not the mechanics that Viking River and Adolph later raised: how a court should manage the representative PAGA claim while the individual claim is arbitrated (stay, sequencing, and the preclusive effect of arbitral findings), and how sprawling representative actions are to be tried manageably after Estrada v. Royalty Carpet Mills, Inc. (2024) 15 Cal.5th 263. The durability of Kim’s violations-based standing rule against future statutory amendment to PAGA is a further open question.
See also: Turrieta v. Lyft · Amalgamated Transit Union Local 1756 v. Superior Court