Opinion ID: 6221085
Heading Depth: 3
Heading Rank: 1

Heading: Right to Appeal a PAGA Settlement

Text: The PAGA claim before us was brought by two private plaintiffs, Saucillo and Rudsell. Although Peck brought his own PAGA claim in a different case, he is not a party to the PAGA action here. “The rule that only parties to a lawsuit, or those that properly become parties, may appeal an adverse judgment, is well settled,” and so Peck has failed to show that he has any right to appeal the district court’s approval of the PAGA settlement here. United States ex rel. Alexander Volkhoff, LLC v. Janssen Pharmaceutica N.V., 945 F.3d 1237, 1241 (9th Cir. 2020) (quoting Marino v. Ortiz, 484 U.S. 301, 304 (1988) (per curiam)); see also Fed. R. App. P. 3(c)(1)(A) (notice of appeal must “specify the party or parties taking the appeal” (emphasis added)). Peck raises several arguments as to why he may appeal the PAGA settlement anyway. None of them has merit. First, he argues that because he is a class member of the class action, he may also object to the PAGA action. However, as indicated above, a PAGA action is distinct from a class action. A class member may appeal from approval of a class-action settlement, because he “has an interest in the settlement” and the “legal rights he seeks to raise are his own.” Devlin v. Scardelletti, 536 U.S. 1, 6–7 (2002). “But a representative action under PAGA is not a class action. There is no individual component to a PAGA action because every PAGA action is a representative action on behalf of the state. Plaintiffs may bring a PAGA claim only as the state’s designated proxy . . . .” Kim v. Reins Int’l Cal., Inc., 459 P.3d 1123, 1130–31 (Cal. 2020) (cleaned up); see also Canela v. Costco Wholesale Corp., 971 F.3d 845, 851, 856 (9th Cir. 2020) (stating that “PAGA causes of action [are] 16 PECK V. SWIFT TRANSPORTATION nothing like Rule 23 class actions,” and holding that in a PAGA suit, “an aggrieved employee[] has no individual claim of her own and is not seeking individual relief”). To put a finer point on it: Nonnamed class members are parties to [class action] proceedings in the sense of being bound by the settlement. It is this feature of class action litigation that requires that class members be allowed to appeal the approval of a settlement when they have objected at the fairness hearing. To hold otherwise would deprive nonnamed class members of the power to preserve their own interests in a settlement that will ultimately bind them, despite their expressed objections before the trial court. Devlin, 536 U.S. at 10 (emphasis added). Conversely, while “a judgment from a PAGA suit binds all those, including nonparty aggrieved employees, who would be bound by a judgment in an action brought by the government . . . without an opportunity to opt out,” that preclusive effect extends only to an employee’s ability to seek “civil penalties” under PAGA. Canela, 971 F.3d at 851 (citations and internal quotation marks omitted). “[U]nlike class action judgments that preclude all claims the class could have brought under traditional res judicata principles, employees [precluded from bringing a PAGA claim] retain all rights to pursue or recover other remedies available under state or federal law.” Id. (citations and internal quotation marks omitted). That is consistent with PAGA’s “remedial scheme,” which is “different” than a class action: while class actions typically seek compensation for individual wrongs, PECK V. SWIFT TRANSPORTATION 17 PAGA is a delegation of California’s power to enforce its labor laws to private parties. Id. at 852; accord Iskanian v. CLS Transportation Los Angeles, LLC, 327 P.3d 129, 147 (Cal. 2014) (citing Arias v. Superior Court, 209 P.3d 923, 933 (Cal. 2009)); Robinson v. S. Ctys. Oil Co., 267 Cal. Rptr. 3d 633, 637–38 (Cal. Ct. App. 2020). Because they have no comparable individual stake, objectors to a PAGA settlement are not “parties” to a PAGA suit in the same sense that absent class members are “parties” to a class action. Relatedly, Peck argues that he may appeal because he may be entitled to some part of the PAGA award as an aggrieved employee. This argument also fails. The fact that Peck may ultimately receive a portion of the PAGA settlement does not make him a party to the lawsuit. Analogously, in class action settlements, “Federal district courts often dispose of . . . unclaimed [funds] by making what are known as cy pres distributions,” Klier v. Elf Atochem N. Am., Inc., 658 F.3d 468, 473 (5th Cir. 2011), which generally go to charitable organizations. See, e.g., In re Google Inc. St. View Elec. Commc’ns Litig., — F.4th —, 2021 WL 6111383, at  (9th Cir. 2021); Lane v. Facebook, Inc., 696 F.3d 811, 822 (9th Cir. 2012). In such cases, proceeds from the settlement go “to a third party,” Klier, 658 F.3d at 475, not to the named plaintiffs or absent class members who are parties to the underlying litigation. Moreover, a PAGA action has “no individual component.” Kim, 459 P.3d at 1131; see also Canela, 971 F.3d at 852 (describing civil penalties allocated to aggrieved employees as an incentive to bring an enforcement suit, and not as restitution for harm suffered). The aggrieved employees’ 25% portion of the PAGA proceeds “is not restitution for wrongs done to members of the class” but is instead “an incentive to perform a service to the state.” 18 PECK V. SWIFT TRANSPORTATION Canela, 971 F.3d at 852 (citation and internal quotation marks omitted); see also Magadia, 999 F.3d at 675 (noting that “a PAGA plaintiff must give the ‘lion’s share’ (75%) of the civil penalties recovered to the LWDA” (citing Cal. Lab. Code § 2699(i))). In other words, Peck does not receive a portion of the PAGA settlement because of any injury, but instead because the California legislature made a policy choice that the bounty that normally serves as the incentive for the plaintiff to bring the suit should instead be shared with all aggrieved employees. We do not view this reasoning as inconsistent with statements in Magadia suggesting that “PAGA . . . creates an interest in penalties, not only for California and the plaintiff employee, but for nonparty employees as well,” and disagreeing with “the notion that the aggrieved employee is solely stepping into the shoes of the State rather than also vindicating the interests of other aggrieved employees.” 999 F.3d at 676–77. Magadia addressed the narrow question of whether PAGA “hew[ed] closely to the traditional scope of a qui tam action . . . under Article III,” thereby allowing an “uninjured plaintiff to maintain suit” in federal court. Id. at 675. More precisely, Magadia was concerned with whether “PAGA’s features diverge from” a specific “assignment theory of qui tam injury” articulated by the Supreme Court in Vermont Agency of Nat. Res. v. U.S. ex rel. Stevens, 529 U.S. 765, 773 (2000). 999 F.3d at 678. That is an altogether different inquiry than whether Peck’s right to share in settlement proceeds makes him an actual party to the underlying PAGA suit. Cf. Johnson v. Maxim Healthcare Servs., Inc., 281 Cal.Rptr.3d 478, 484 & n.4 (Cal. Ct. App. 2021) (holding that Magadia was “not instructive” on PAGA standing question because it addressed only “standing under Article III of the United States Constitution and does not address Kim whatsoever”). PECK V. SWIFT TRANSPORTATION 19 Indeed, Magadia expressly distinguished itself from other Ninth Circuit cases on these grounds. See 999 F.3d at 678 n.6. In any event, as discussed above, the fact that Peck might have some interest in the outcome of Saucillo’s and Rudsell’s PAGA lawsuit does not make him a “party” to that suit. Finally, Peck argues that his separately filed PAGA action gives him standing to object and to appeal in Saucillo’s and Rudsell’s case. But maintaining a parallel action does not change the fact that Peck is not a party to the PAGA lawsuit brought by Saucillo and Rudsell. See Kim, 459 P.3d at 1130 (“[A] PAGA claim is an enforcement action between the LWDA and the employer, with the PAGA plaintiff acting on behalf of the government.”).