Prior PAGA Settlement Released Claims of Subsequent Plaintiff, California Appellate Court Holds

A prior settlement in a related Private Attorneys General Act (PAGA) action released the claims of an employee in a subsequent lawsuit, a California appellate panel recently ruled.

After working at a Dave & Buster’s (Buster’s) restaurant for a few years, Laura Brown filed a representative action under PAGA in June 2019, alleging it failed to provide meal periods, rest periods, vacation pay and wage statements, and that the restaurant routinely required its employees to work off-the-clock.

Two months later, Buster’s filed a demurrer to abate or stay on the grounds that Brown’s action was between the same parties on the same cause of action as at least two previously filed actions.

Finding Brown’s case to be substantially identical to one of the other cases, the trial court sustained Buster’s demurrer and stayed the case in October 2019.

In February 2020, Buster’s filed a status conference statement providing information about the earlier-filed PAGA actions, documenting when each case was filed, when the other plaintiffs submitted their requisite notices to the Labor and Workforce Development Agency and which claims overlapped with Brown’s case.

According to Buster’s, Brown’s was the fifth PAGA action pending against it, including a case filed in San Diego County Superior Court, Andrade v. Dave & Buster’s Management Corporation, Inc.

In June 2021, the parties stated that Buster’s was working on a global settlement in the Andrade action, which would include Brown’s action. In April 2023, the parties noted the Andrade action had settled. Brown said she was evaluating if any of her claims remained, as she was not sure there was a complete overlap with Andrade.

Buster’s moved for judgment on the pleadings in June 2023, arguing that the Andrade settlement released all of Brown’s claims against it and that claim preclusion entirely barred Brown’s lawsuit.

Andrade entered into a long-form settlement agreement with all of Buster’s entities on April 1, 2022, and the court granted approval on Nov. 4, 2022.

Brown objected to dismissal of her action, pointing to the timeline of Andrade’s action. Andrade sent her first pre-filing notice to the Agency on May 13, 2019 and filed a complaint on Nov. 14, 2019. That complaint only named Dave & Buster’s Management Corporation and did not specifically list a vacation pay violation under section 227.3.

Andrade then sent an amended notice letter to the Agency on Feb. 3, 2022 and filed an amended complaint on March 10, 2022, adding a Section 227.3 vacation pay claim and the other Buster’s entities as defendants.

Brown argued that Andrade waited only 35 days between sending her amended pre-filing notice and filing her amended complaint in court. She, therefore, failed to exhaust her claims before the Agency and was not deputized to pursue and settle the Labor Code violations she alleged in her amended complaint.

The trial court disagreed and granted Buster’s motion. Brown appealed.

Buster’s argued that Andrade’s initial notice letter, initial complaint, amended notice letter and amended complaint expressly included all of Brown’s alleged Labor Code violations such that they encompassed Brown’s entire PAGA claim.

Further, the employer told the court that Andrade’s failure to abide by the 65-day waiting period for her amended complaint was a technicality that was not dispositive as to the issue of administrative exhaustion under PAGA, citing several federal district court cases that declined to require strict adherence to the 65-day waiting period.

The federal cases cited by Buster’s are consistent with the longstanding doctrine of substantial compliance that arose in the context of the Tort Claims Act, the court explained. Under this doctrine, a court may excuse small deficiencies in a plaintiff’s pre-filing notice if the notice nonetheless “substantially complies with all of the statutory requirements for [a] valid claim.”

Both PAGA and the Tort Claims Act include a pre-filing notice requirement, the purpose of which is to notify the relevant government agency of alleged legal violations before a plaintiff files a civil action.

“The statute itself and case law are silent as to whether the pre-filing notice requirements apply to Andrade’s amended notice,” the court wrote. “Regardless, Andrade substantially fulfilled the purpose of the PAGA pre-filing notice requirement in her amended notice. Andrade’s failure to wait 65 days was a harmless defect. The Agency accepted Andrade’s global settlement with Buster’s after it had an opportunity to object.”

To find otherwise would invalidate the San Diego Superior Court’s approval of the settlement as to the three Buster’s entities and all of Andrade’s claims, the court said, noting that the California Supreme Court has “firmly rejected” the efforts of PAGA plaintiffs to file objections to the settlement reached by another aggrieved employee representing the same state interest and also acting on the state’s behalf.

“Andrade’s settlement fully encompassed and released Brown’s claims as to all Buster’s entities, thus satisfying all elements of claim preclusion,” the court concluded.

To read the opinion in Brown v. Dave & Buster’s of California, Inc., click .

Why it matters: The court specifically highlighted that the California Supreme Court has “firmly rejected” the efforts of PAGA plaintiffs to object to settlements in overlapping PAGA claims, refusing to invalidate the Andrade settlement, which released the plaintiff’s claims and saved the employer from relitigating the same allegations of Labor Code violations.