UPDATE, August 19, 2015 – Mr. Williams is challenging the Court of Appeal’s ruling, described below, and the California Supreme Court has agreed to review the case. This means, among other things, that litigants and courts can no longer cite or rely on the Court of Appeal’s decision. We’ll continue updating readers on this case, which will significantly shape the course of future PAGA litigation.

May 15, 2015 – In Williams v. Superior Court, the Second Appellate District rejected – or at least delayed – plaintiff’s attempt to obtain through discovery the names and contact information of all of the defendant’s employees throughout California.

Plaintiff Michael Williams worked at a Marshalls retail store in Costa Mesa, California. In March 2013 he brought a representative action under California’s Labor Code Private Attorneys General Act (“PAGA”), seeking penalties arising out of Marshalls’ alleged failure to provide its employees with meal and rest breaks, to reimburse employees for expenses, to pay all earned wages and to provide accurate wage statements.

Williams served discovery requests for the names and contact information of all nonexempt Marshalls employees who had worked at each of Marshalls’ 129 California stores. Marshalls objected on numerous grounds, including that the request sought irrelevant information, was overbroad and unduly burdensome, and sought to invade the privacy rights of Marshalls’ employees.

After Marshalls refused to provide any of the requested information, Williams asked the court to intervene and to order Marshalls to comply. He argued that contact information of other employees is “routinely discoverable in representative employee actions and vital to the prosecution of his PAGA claims.”

The trial court granted the plaintiff’s motion in part, compelling Marshalls to provide the names and contact information of employees at its Costa Mesa store only. The court denied the motion as to the names and contact information of workers at Marshalls’ other California stores, but ruled that Williams could renew his motion as to those employees “after he had been deposed for at least six productive hours.” The court also stated that Marshalls could oppose that motion by presenting evidence that plaintiff’s claims lacked merit. Williams then asked the Court of Appeal to vacate the trial court’s order and require Marshall’s to turn over all of the requested information.

In rejecting Williams’ request, the court first rejected his argument that “immediate discovery of the contact information of Marshalls’ employees statewide [was] clearly germane to and necessary for progress in his PAGA action.” The court noted that

At this nascent stage of plaintiff’s PAGA action there has as yet been no discovery – plaintiff has not even sat for his own deposition. The litigation therefore consists solely of the allegations in his complaint. But plaintiff alleges therein only that at the Costa Mesa store, he and perhaps other employees at that store were subjected to violations of the Labor Code. Nowhere does he evince any knowledge of the practices of Marshalls at other stores, nor any fact that would lead a reasonable person to believe he knows whether Marshalls has a uniform statewide policy. That being the case, it was eminently reasonable for the trial judge to proceed with discovery in an incremental fashion, first requiring that plaintiff provide some support for his own, local claims and then perhaps later broadening the inquiry to discover whether some reason exists to suspect Marshalls’ local practices extend statewide.

…

Plaintiff’s proposed procedure, which contemplates jumping into extensive statewide discovery based only on the bare allegations of one local individual having no knowledge of the defendant’s statewide practices would be a classic use of discovery tools to wage litigation rather than facilitate it.

The court further held that the plaintiff’s speculative need for the information did not warrant the invasion of other employees’ privacy. A “party seeking discovery must demonstrate a compelling need for discovery, and that compelling need must be so strong as to outweigh the privacy right when these two competing interests are carefully balanced.” The court declined to intrude on the employees’ “right to be free from unwanted attention and perhaps fear of retaliation from an employer” unless and until Williams overcame two evidentiary hurdles:

[Plaintiff’s] first task will be to establish he was himself subjected to violations of the Labor Code. As he has not yet sat for deposition, this task remains unfulfilled. The trial court could reasonably conclude that the second task will be to establish Marshalls’ employment practices are uniform throughout the company, which might be accomplished by reference to a policy manual or perhaps deposition of a corporate officer. The trial court could reasonably conclude that only then will plaintiff be able to set forth facts justifying statewide discovery. … The courts will not lightly bestow statewide discovery power to a litigant who has only a parochial claim.

Before employers celebrate, or become overly confident in their ability to use the Williams decision to block wide-ranging PAGA discovery (thereby potentially blocking such claims entirely), keep in mind that the court ordered Marshall’s to provide names and contact information for all of the employees who worked at the same location as Williams during the relevant time period. This was not a complete victory for the employer.

Moreover, the court’s decision raises as many questions as it answers. First, it’s not entirely clear what the court expected plaintiff’s deposition to “prove,” what standard of proof would be required to justify broader discovery, or how much evidence from the defendant would be needed to rebut plaintiff’s evidence. For example, would deposition testimony by Williams that on one occasion he was denied a meal break satisfy the court that he had been subjected to Labor Code violations? What if defendant countered with testimony of two witnesses who contradicted Williams’ testimony?

Also, there appears to be little logic in the court’s decision to allow discovery of contact information of other employees at the Costa Mesa store without first requiring some proof that Williams had suffered a violation. To recover PAGA penalties, a plaintiff must always prove that he personally was subjected to at least one of the Labor Code violations alleged in his complaint — that is, the plaintiff must prove that he is an “aggrieved employee” as defined by the statute. This is true whether the plaintiff seeks penalties arising out of violations committed only at the location where he worked, or arising out of violations committed at all of his employer’s facilities. Thus, it seems that – if proof of a violation committed against the plaintiff is to be a prerequisite for PAGA discovery – that prerequisite should apply to all PAGA discovery, not just discovery aimed beyond the plaintiff’s specific worksite.

PAGA remains an area fraught with risk and uncertainty. Employers are advised to seek knowledgeable counsel.