LaCour v. Marshalls of California

Facts

PAGA authorizes an aggrieved employee to recover civil penalties as a proxy for the state — but only after exhausting a presuit notice procedure. “As a condition of suit, an aggrieved employee acting on behalf of the state and other current or former employees must provide notice to the employer and the responsible state agency ‘of the specific provisions of [the Labor Code] alleged to have been violated, including the facts and theories to support the alleged violation.’” (LaCour v. Marshalls of California, LLC (2023) 94 Cal.App.5th 1172, 1193, quoting Williams v. Superior Court (2017) 3 Cal.5th 531, 545; see Lab. Code, § 2699.3, subd. (a)(1)(A).) That notice gives the Labor and Workforce Development Agency (LWDA) the information it needs to decide whether to take enforcement into its own hands. (LaCour, at p. 1193.)

Robert LaCour, a former Loss Prevention Specialist at a Marshalls store whose employment ended in May 2019, filed this standalone PAGA action on January 4, 2021. His presuit LWDA notice, filed November 4, 2020, addressed Marshalls’ alleged “failure to reimburse uniform maintenance and other expenses, such as the costs of using personal phones and vehicles for work purposes, in addition to other kinds of claimed Labor Code violations.” (LaCour, supra, 94 Cal.App.5th at p. 1182.)

Marshalls, however, had already bought PAGA peace once. In Rodriguez v. Marshalls of CA, LLC — two consolidated federal cases, a wage-and-hour class action by Alicia Rodriguez and a parallel PAGA action by Joan Paulino — the Central District of California approved a class settlement in 2020, entered judgment by consent, and dismissed with prejudice. (LaCour, supra, 94 Cal.App.5th at pp. 1181–1182 & fn. 1.) Paulino’s LWDA notice “covered only Labor Code violations for off-the-clock work during time employees spent undergoing an antitheft bag check procedure at the end of their shifts” — although a footnote in the letter listed a menu of Labor Code sections, including section 2802, without any supporting facts. (Id. at pp. 1182, 1193, fn. 8.) The Rodriguez release, by contrast, covered claims from December 27, 2017 through November 17, 2020. (Id. at p. 1183.)

Procedural history

Marshalls demurred on timeliness grounds: LaCour’s employment ended in May 2019, so his one year plus 65 days (Code Civ. Proc., § 340, subd. (a); Lab. Code, § 2699.3, subds. (a), (d)) ran out in August 2020, months before he acted. The trial court overruled the demurrer, holding that Emergency Rule 9 — the Judicial Council’s COVID-19 rule tolling civil limitations periods exceeding 180 days from April 6 through October 1, 2020 — validly extended LaCour’s deadlines. (LaCour, supra, 94 Cal.App.5th at pp. 1182, 1184–1185.)

Marshalls simultaneously moved to strike all allegations predating November 17, 2020 as released in Rodriguez. The trial court granted the motion in part. Reasoning that Paulino’s footnote list of statutes gave her authority to settle as the LWDA’s proxy, it held “the res judicata effect of the judgment in Paulino’s case was co-extensive with the scope of the Rodriguez settlement release,” and confined LaCour to violations occurring after November 17, 2020. (LaCour, supra, 94 Cal.App.5th at pp. 1182–1183.) That ruling proved fatal: because LaCour had not worked at Marshalls after November 17, 2019, Marshalls obtained judgment on the pleadings on the ground that he was not an “aggrieved employee” with standing under Robinson v. Southern Counties Oil Co. (2020) 53 Cal.App.5th 476. LaCour appealed; Marshalls cross-appealed the timeliness ruling. (Id. at p. 1183.) Rejecting Marshalls’ argument that the notice of appeal reached only the judgment-on-the-pleadings order, the court read the notice liberally and held all intermediate orders reviewable under Code of Civil Procedure section 906. (Id. at pp. 1183–1184.)

Issue

The appeal and cross-appeal presented three questions, in the court’s framing: whether LaCour’s notice of appeal supported review of the preliminary orders; whether “the trial court err[ed] in rejecting Marshalls’ argument that LaCour’s PAGA complaint was untimely” — which turned on the validity and constitutionality of Emergency Rule 9; and whether “the trial court err[ed] in partially granting Marshalls’ motion to strike on grounds of claim preclusion” — which turned on whether a federal consent judgment implementing a PAGA settlement release broader than the settling plaintiff’s LWDA notice precludes a later PAGA plaintiff’s unlisted claims. (LaCour, supra, 94 Cal.App.5th at p. 1181.)

Holding

Reasoning

Timeliness: Emergency Rule 9 was authorized and constitutional. Marshalls’ cross-appeal attacked the pandemic tolling rule root and branch. The court traced the chain of authority — the Governor’s March 2020 emergency proclamation under the California Emergency Services Act, Executive Order N-38-20 giving the Judicial Council “maximum flexibility” to adopt rules responding to the pandemic, and the Council’s adoption of Emergency Rule 9 tolling civil limitations periods over 180 days from April 6 to October 1, 2020. (LaCour, supra, 94 Cal.App.5th at pp. 1185–1186.) Marshalls’ textual argument — that Government Code section 8571 lets the Governor suspend only statutes governing “state agenc[ies],” which the Judicial Council is not — “rests on a false premise”: the statute separately reaches “statute[s] prescribing the procedure for conduct of state business,” and “since the business of courts is necessarily state business, the Governor’s emergency power to suspend statutes extends to rules of court procedure.” (Id. at pp. 1187–1188.) On the separation-of-powers challenge, the court followed Newsom v. Superior Court (2021) 63 Cal.App.5th 1099 as “soundly reasoned,” and found nothing arbitrary in a months-long extension adopted when “no one could predict how long the COVID-19 crisis would last.” (Id. at pp. 1188–1189.) LaCour’s filings were therefore timely.

The preclusion framework: a federal diversity judgment, measured by California primary rights. Because the Rodriguez judgment issued from a federal court sitting in diversity, Semtek directs California courts to apply “the law of the state where the judgment-issuing federal court sat” — California’s claim preclusion law, with its distinctive primary rights doctrine. (LaCour, supra, 94 Cal.App.5th at pp. 1190–1191.) A dismissal with prejudice following settlement — a retraxit — is a judgment on the merits, and under Boeken, “the determinative factor is the harm suffered.” (Id. at p. 1191.) Two questions therefore controlled: identity of claims (did Paulino plead, or could she have pleaded, what LaCour now pursues?) and privity (did Paulino represent LaCour when she settled?). “We conclude that the answer to both questions is no.” (Id. at p. 1192.)

Identity of claims: “could have pleaded” means authorized to plead. The only injury framed by Paulino’s complaint — and, critically, by her LWDA notice — was uncompensated off-the-clock time in end-of-shift bag checks. To hold that Paulino “could have” alleged LaCour’s reimbursement and other claims, “we would need proof that Paulino was deputized by the LWDA to file suit on the broader set of PAGA claims that LaCour subsequently brought. Nothing in the record shows that Paulino had that authority.” (LaCour, supra, 94 Cal.App.5th at p. 1192.) The presuit exhaustion requirement “is not particularly stringent, but it is not an empty formality either”: the statute demands “facts and theories” supporting each alleged violation, and “[m]ere code section references with prose excerpting or rephrasing the statutory language” are insufficient. (Id. at p. 1193, quoting Uribe v. Crown Building Maintenance Co. (2021) 70 Cal.App.5th 986, 1004.) Paulino’s footnote — listing nine of the ten statutes LaCour would later invoke, with no factual predicate beyond bag checks — could not carry the weight: “it is impossible to say she ‘could have’ sued for other violations. Whether she could have obtained broader authorization is pure speculation.” (Ibid. & fn. 8.)

The trial court measured the wrong thing: the release is not the claim. The trial court had reasoned that once a claim settles, preclusion analysis “changes from a claim preclusion analysis of the ‘harm suffered’ to a contract analysis of the scope of the release.” That, the Court of Appeal held, “assumes the answer to the legal question at hand. Rather than assess what was or could have been properly pleaded in Rodriguez, which was required in order to analyze the primary rights issue, the trial court focused on what was released. The two inquiries are not the same.” (LaCour, supra, 94 Cal.App.5th at p. 1193.) In ordinary two-party litigation a plaintiff may release more than she pleaded, and the judgment will hold. “But in the PAGA context, where the interests of nonparties are implicated, we must proceed cautiously”: a PAGA plaintiff who “purports to settle PAGA claims that are not the subject of an adequate LWDA notice letter … exceeds her authority to act on behalf of the LWDA and to that extent cannot bind the LWDA to a judgment, at least not one that will have claim preclusive effect against a PAGA claimant authorized to litigate a broader set of PAGA claims.” (Id. at p. 1194.)

Moniz reconciled, not repudiated. Marshalls leaned on Moniz v. Adecco USA, Inc. (2021) 72 Cal.App.5th 56 — this same division’s holding that PAGA settlements may release claims “not specifically listed in the PAGA notice where those claims involve the same primary right litigated.” The court explained the limit built into that sentence: if a notice makes a factual showing but omits a statute that fits those facts, the unlisted section is “nothing more than an alternative legal theory to justify recovery for the same injury,” and a release reaching it is fine. “But that is not the case we have here.” (LaCour, supra, 94 Cal.App.5th at p. 1194.) Nor does judicial approval of a settlement settle the matter: the burden of proving preclusion rests on the party asserting it, and “the imprimatur of judicial approval will not always be conclusive on the issue of res judicata. Where, as here, the record affirmatively shows that a settlement release extends beyond the plaintiff’s authority to act on behalf of the LWDA, such a settlement will certainly bind the settling PAGA plaintiff by its literal terms, but any judgment entered pursuant to the settlement will have limited preclusive effect in binding nonparties.” (Id. at pp. 1195–1196.)

Privity: an unauthorized proxy represents no one. Privity — compelled by due process — requires an identity or community of interest, adequate representation, and circumstances such that the nonparty “‘should reasonably have expected to be bound.’” (LaCour, supra, 94 Cal.App.5th at p. 1196, quoting DKN Holdings LLC v. Faerber (2015) 61 Cal.4th 813, 826.) The same defect that broke identity of claims broke privity: “An LWDA statutory proxy acting without authority cannot be said to be in privity with her principal.” (Ibid.) The notice requirement is itself the due-process mechanism — it “puts subsequent PAGA claimants on notice—precisely—of the circumstances in which they should expect to be bound by another party’s litigation efforts.” (Id. at p. 1197.) By taking a release broader than Paulino’s authorization, “the Rodriguez settling parties ran the risk the judgment entered pursuant to their settlement would be found not to bind later claimants—such as LaCour—pursuing PAGA claims under different or broader LWDA authorization.” (Ibid.)

A deliberate caveat: issue preclusion and double recovery. The court closed by limiting its own holding. LaCour’s pleaded claims appear to encompass Paulino’s, and LaCour took a share of the Rodriguez settlement proceeds; he “is not eligible for double payment on the same Labor Code violations Paulino pursued and resolved in Rodriguez within the scope of her LWDA authority.” Because Marshalls’ motion rested solely on claim preclusion, the court “express[ed] no view of the issue preclusive effect of the Rodriguez judgment.” (LaCour, supra, 94 Cal.App.5th at p. 1197.)

Significance

LaCour supplies the missing enforcement architecture for overlapping PAGA actions: the LWDA notice, not the settlement release, defines the res that a PAGA judgment adjudicates. That principle disciplines both sides of every PAGA settlement. For defendants, a release drafted wider than the plaintiff’s notice buys less peace than it appears to — later plaintiffs with different or broader LWDA authorization can litigate straight through it. For settling plaintiffs, the decision converts the once-perfunctory notice letter into the charter of settlement authority. And for the later-filing plaintiff, LaCour is a shield against the reverse-auction dynamic — a defendant settling cheaply with the plaintiff holding the narrowest claims, then asserting preclusion against everyone else — a concern Justice Liu’s dissent in Turrieta would later press in the overlapping-settlement context. The decision works in tandem with Moniz’s requirement that trial courts review PAGA settlements for fairness in light of PAGA’s purposes, adding a back-end check for what slips through: “it may be that, in a later case, a subsequent PAGA claimant will identify limitations on a prior settling PAGA claimant’s authority that no one had any incentive to bring to the court’s attention in the prior case.” (LaCour, supra, 94 Cal.App.5th at p. 1195.)

The decision predates — and complements — Turrieta v. Lyft, Inc. (2024) 16 Cal.5th 664, which holds that a PAGA plaintiff has no right to intervene in, object to, or seek vacatur of another PAGA plaintiff’s overlapping settlement. Read together, the cases channel the policing of PAGA settlements into two lanes: the approving court’s fairness review (with LWDA input) before judgment, and LaCour’s authority-bounded preclusion doctrine after judgment. A worker shut out of another plaintiff’s settlement proceeding is not shut out of court — if the earlier notice did not authorize the claims, the earlier judgment does not bar them. The timeliness holding has independent significance: LaCour squarely upholds Emergency Rule 9’s validity and the constitutionality of the executive-order framework behind it, authority that matters in any case where pandemic-era tolling still determines a limitations defense. (LaCour, supra, 94 Cal.App.5th at pp. 1185–1189.) Note that LaCour construes the pre-2024 PAGA; the 2024 reform legislation rewrote standing and penalty provisions for notices filed on or after June 19, 2024, but the notice-defines-authority logic operates on section 2699.3’s exhaustion structure, which the reform retained.

Key quotes

“Rather than assess what was or could have been properly pleaded in Rodriguez, which was required in order to analyze the primary rights issue, the trial court focused on what was released. The two inquiries are not the same.” (LaCour, supra, 94 Cal.App.5th at p. 1193.)

“[W]e hold that the prior judgment does not extinguish unlisted PAGA claims in litigation brought by other authorized PAGA plaintiffs because such claims do not arise from violations of the same primary rights Paulino was authorized to pursue.” (Id. at p. 1195.)

“An LWDA statutory proxy acting without authority cannot be said to be in privity with her principal.” (Id. at p. 1196.)

Read the full opinion (Justia) →

Practice pointer

Open questions

The court expressly left open “the issue preclusive effect of the Rodriguez judgment” — so even where claim preclusion fails, defendants may argue that particular issues actually litigated (or resolved by consent) bind later PAGA plaintiffs, an argument LaCour neither blesses nor forecloses. (LaCour, supra, 94 Cal.App.5th at p. 1197.) How much factual detail a notice must contain to “authorize” a claim remains a question of degree: LaCour holds that a statute list without facts is too little and Moniz holds that facts without every statute can be enough, leaving the middle ground — thin facts gesturing at multiple theories — for future cases. (Id. at pp. 1193–1194.) The court did not decide whether the Judicial Council held independent authority for Emergency Rule 9 under Government Code section 68115, resting instead on Executive Order N-38-20. (Id. at p. 1186.) It never reached the standing question that had ended the case below — whether a plaintiff whose employment predates the surviving claims window is an “aggrieved employee” under Robinson — because vacating the preclusion ruling mooted it. (Id. at p. 1189.) And because LaCour construes the pre-reform statute, courts have yet to say how its authority analysis maps onto the 2024 amendments’ revised standing and penalty structure for notices filed on or after June 19, 2024. Finally, Turrieta has since confirmed that objectors cannot police overlapping settlements from inside the settling case — making LaCour’s after-the-fact preclusion limit the principal check, and raising the practical question whether approving courts will now scrutinize notice-release mismatches themselves at the fairness stage.