Death Knell Permits Appeal of Denial of PAGA Representaive Status

Miranda v. Anderson Enters., No. A140328 (D1d5 Oct. 15, 2015)

Since the Supreme Court’s Iskanian decision permitted claims under the Labor Code Private Attorney General Act to skirt the class action waiver arbitration clauses that are otherwise decimating employment class action practice, PAGA has been at the forefront of employment litigation in California. In this case, the trial court, in a pre-Iskanian order, held that Plaintiff’s representative PAGA claims were subject to a class action waiver in her employment contract. There’s little question that the order won’t hold up under Iskanian. But can it be raised in an immediate interlocutory appeal?

Under the “death knell” doctrine, some orders denying class treatment of claims are immediately appealable, notwithstanding the fact that plaintiff could still pursue her own claims on an individual basis. In many cases, denying class treatment transforms the incentive structure for a case in ways that make it highly unlikely if not impossible to pursue individual claims to judgment. If that happens, a denial of class cert would effectively be shielded from review. Thus, since denying cert will practically terminate the whole case, courts often permit a direct appeal of that decision, notwithstanding the absence of a final judgment.

It’s an open question as to whether the death knell doctrine applies denial of representative treatment for PAGA claims. But the court here holds it does. There are various procedural differences between PAGA representative actions and class actions. Indeed, some of those distinctions—in particular, that the plaintiff is acting in a quasi qui tam capacity on the State’s behalf—are the basis of Iskanian. But there are also similarities. And when it comes to the death knell doctrine, the similarities matter more than the differences. In particular, the denial of representative status for PAGA claims alters the incentives to pursue small cases in more or less same way as denial of class cert does. So just like a decision denying cert or sending a case to non-class arbitration, a denial of the right to proceed with PAGA claims on a representative basis effectively rings the death knell on those claims too.

Reversed.