California Supreme Court Ruling on Right to Statewide Discovery in PAGA Actions Is Not as Bad for Employers as It Looks
In a blow to the defense bar—and, in particular, retail employers—the California Supreme Court, in Williams v. Superior Court (Marshalls of CA, LLC), S227228 (July 13, 2017), held that there is nothing unique about claims filed under the California Labor Code Private Attorneys General Act of 2004 (PAGA) that would justify restricting the scope of discovery under California law. The Supreme Court reversed a decision of the California Court of Appeal that would have precluded PAGA plaintiffs from obtaining the contact information of other potentially aggrieved employees beyond the discrete location at which they work(ed) without first making a threshold evidentiary showing that (a) they were aggrieved employees and (b) they had knowledge of systemic statewide Labor Code violations. Rather, to justify disclosure of the contact information of all employees in California, the Supreme Court found that it is sufficient for a named plaintiff to allege that the at-issue violations occurred, that plaintiff himself or herself was aggrieved, and that the defendant employer had a systemic, statewide policy that caused injury to other employees across California.
While the decision deprives employers of the ability to limit the scope of discovery to some extent, the holding in Williams is actually quite narrow and should not be read as a carte blanche invitation to propound unlimited statewide discovery without any preliminary showing of good cause. The Supreme Court emphasized that its decision was limited to the particular facts before it—i.e., interrogatories seeking the contact information of similarly situated (allegedly aggrieved) nonexempt employees throughout the State of California. It specifically noted that its decision did not apply to other discovery devices—including requests for production, where, the Court noted, a statutory good-cause requirement exists.
Separately, the Supreme Court found that privacy objections typically will not merit altogether withholding contact information. In reaching this conclusion, the Court expressly endorsed the reasoning of Belaire-West Landscape, Inc. v. Superior Court, 149 Cal. App. 4th 554 (2007), noting that, in general, any concerns about keeping contact information private are adequately addressed through the issuance of a Belaire-West-style notice of the claims to employees, and permitting them an opportunity to opt out from disclosure of their contact information.
The takeaway? Absent unusual circumstances, be prepared to turn over contact information for all potentially aggrieved employees, but continue to push back with respect to any overbroad discovery requests that seek statewide information prematurely.
1. Procedural History and Background
Plaintiff Michael Williams (“Williams” or “Plaintiff”) was a retail worker for defendant Marshalls of CA, LLC (“Marshalls”). In 2013, Williams sued Marshalls under PAGA, alleging that Marshalls failed to provide Williams and other similarly situated (i.e., aggrieved) employees meal and rest periods under Labor Code sections 226.7 and 512. Slip op. at 2.
At an early stage of discovery, Williams propounded on Marshalls two special interrogatories seeking the name, address, telephone number, and company employment history of each nonexempt California employee during the alleged statutory period. Id. at 3. Marshalls responded that there were 16,500 employees, but it refused to provide their contact information on the grounds that the request (a) exceeded the scope of permissible discovery because it sought information beyond Williams’ particular store and job title; (b) was unduly burdensome because Williams sought private information without first showing that he himself was an aggrieved employee or that any other similarly situated employees were aggrieved as alleged in the complaint; and (c) invaded the privacy of third parties under California Constitution, article I, section 1. Id. at 3.
Williams moved to compel disclosure of the contact information of Marshalls’ nonexempt employees statewide. The trial court granted Williams’ motion in part and denied it in part. Id. at 3. It ordered Marshalls to provide the contact information of other employees, but only at the Costa Mesa location at which Williams worked, subject to an opt-out notice under Belaire-West. As to the remaining 130 store locations, the court denied Williams’ request for contact information but left open the door for a renewed motion after Williams sat for at least six hours of deposition and established that there was some evidentiary basis for his allegations of a statewide, unlawful practice of violating the Labor Code. Id. at 4.
The Court of Appeal affirmed the ruling. See Williams v. Superior Court, 187 Cal. Rptr. 3d 321 (2015). Relying on statutory language that requires that requests for production be justified by “good cause” (Cal. Civ. Proc. Code § 2031.310(b)(1)), the Court of Appeal reasoned that Williams’ request for statewide contact information was premature. Id. at 325. Specifically, it found that Williams had failed to “evince any knowledge of the practices of Marshalls at other stores [or] any fact that would lead a reasonable person to believe he knows whether Marshalls has a uniform statewide policy.” Id. (emphasis added). Absent such a threshold showing, the Court of Appeal held Williams was not entitled to the contact information of employees beyond his store location. Alternatively, the Court of Appeal held that because his request for contact information implicated third-party privacy interests, Williams “must demonstrate a compelling need for discovery” by showing “the discovery sought is directly relevant and essential to the fair resolution of the underlying lawsuit.” Id. at 327.
2. Reversal by the Supreme Court
a. The Trial Court Abused Its Discretion by Limiting Discovery to Plaintiff’s Store Location
The California Supreme Court reversed the Court of Appeal’s decision, holding that the trial court had abused its discretion by requiring Williams to demonstrate good cause for the production of contact information. In sweeping terms, the Court noted, “The disclosure of the names and addresses of potential witnesses is a routine and essential part of pretrial discovery. Indeed our discovery system is founded on the understanding that parties use discovery to obtain names and contact information for possible witnesses as the starting point for further investigations . . . .” Slip op. at 10 (quoting Puerto v. Super. Ct., 158 Cal. App. 4th 1242, 1249-50 (2008)) (internal citations and quotation marks omitted). While recognizing that “in a particular case there may be special reason to limit or postpone a representative plaintiff’s access to contact information for those he or she seeks to represent[,] . . . the default position is that such information is within the proper scope of discovery, an essential first step to prosecution of any representative action.” Slip op. at 11.
That the action was a PAGA action and not a putative class action did not change the outcome. According to the Court, nothing in the text of PAGA requires a particular threshold of evidentiary weightiness “beyond the requirements of nonfrivolousness generally applicable to any civil filing.” Id. at 12; see also Cal. Civ. Proc. Code § 128.7. Moreover, although restricting access to confidential information could help curb abuses by plaintiffs or plaintiffs’ counsel, such protection is unnecessary. Class certification requirements exist to protect the due process rights of absent litigants because class actions result in the final adjudication of the private, personally held claims of absent plaintiffs. PAGA actions, by contrast, are public rights of action brought on behalf of the state. No such private due process concerns are at issue and, in any event, Court approval is necessary in order for any final settlement to be binding.
More relevant to the Supreme Court was the fact that the statutory scheme “imposes no obligation” on parties propounding interrogatories to establish good cause or show an evidentiary basis for their claims. Slip op. at 19. Although Code of Civil Procedure section 2031.310(b)(1) requires that demands for inspection, copying, or sampling be supported by good cause, no such requirement exists for interrogatories.
The Court rejected Marshalls’ argument that not requiring good cause would lead to unwarranted “fishing expeditions.” It noted that the California Legislature was aware of such a risk when it granted a broad right to discovery and that it “granted such a right anyway, comfortable with the conclusion that ‘[m]utual knowledge of all the relevant facts gathered by both parties is essential to proper litigation.’” Id. at 20.
According to the Court, that the eventual proper scope of Williams’ representative action was uncertain did not render his statewide request for contact information premature. “[A] party may proceed with interrogatories . . . precisely in order to ascertain that scope.” Id. at 20 (citing Union Mut. Life Ins. Co. v. Super. Ct., 80 Cal. App. 3d 1, 9-12 (1978)).
This was not to say that Marshalls could not have delayed or modified the scope of discovery had it adduced evidence of the administrative burden of producing this information, or made a proper, timely motion to modify the timing and sequence of discovery. Crucially, the Court noted that the burden was on Marshalls to support its “undue burden” objection with evidence of the amount of work that would be required to respond. Id. at 18. The Court found that Marshalls had failed to produce any evidence showing that the production of contact information on a statewide basis would be burdensome and instead chose to rely solely on legal arguments as to the scope of discovery. The Supreme Court also noted that Marshalls failed to file a motion pursuant to Code of Civil Procedure section 2019.020, to modify/set a special sequence or timing for discovery, and that it therefore had no occasion to determine whether the production of statewide contact information might have been properly delayed on that basis. Id. at 19-20.
b. A Belaire-West-Style Opt-Out Notice Is Sufficient to Protect the Privacy Interests of Non-Party Employees
The Supreme Court also reversed the alternative basis for the Court of Appeal’s ruling—i.e., Marshalls’ objection that the disclosure of contact information would invade the privacy rights of the third-party employees under Article I, section 1 of the California Constitution. In weighing the privacy rights of employees, the Court found that the appropriate balancing test to employ is that under Hill v. National Collegiate Athletic Ass’n, 7 Cal. 4th 1, 35 (1994) and Pioneer Electronics (USA), Inc. v. Super. Ct., 40 Cal. 4th 360, 370-74 (2007). Under the test established by those cases, the party asserting a privacy right must establish (a) a legally protected privacy interest, (b) an objectively reasonable expectation of privacy in the given circumstances, and (c) a threatened intrusion of that interest that is serious. Id. at 22. Assuming these threshold requirements are met, the party seeking the information must establish countervailing interests served by disclosure sufficient to overcome the proffered privacy interest. The court must then balance the competing considerations.
In the context of the contact information of other potentially aggrieved employees in a wage-and-hour representative action, the Court found that the employees had a legally cognizable privacy interest, but that the final two factors—i.e., a reasonable expectation of privacy and a serious intrusion—were not satisfied. The Court expressly endorsed the Belaire-West reasoning, holding that the balancing of interests falls in favor of disclosure of the contact information of putative class members in wage-and-hour class and representative actions. The issuance of a Belaire-West-style notice, which provided notice of the nature of the claims at issue and an opportunity for employees to opt out of the disclosure of their contact information, was sufficient to protect the privacy interest in the employees’ contact information. Id. at 27-32.
Prior to Williams, the restriction of the scope of pre-certification discovery to the specific location at which the named plaintiff worked was a key device in limiting discovery costs and burdens at the early stages of a class action. The Supreme Court’s reasoning in Williams will make it significantly more difficult for employers to avoid disclosure of the names and contact information of all putative class members/potentially aggrieved employees in wage-and-hour class actions/representative PAGA actions.
That said, it is critical to view the decision as limited to the record that was before the Court. The decision applied only to interrogatories seeking contact information and did not foreclose the possibility, based on appropriate facts, of postponing the disclosure of contact information. It acknowledged, moreover, that requests for production, which were not at issue in Williams, must be supported by good cause. It stands to reason, therefore, that at an early stage of discovery, legitimate bases exist for limiting the scope of pre-certification document productions to the location at which a plaintiff works.
In addition, it bears noting that in opposing Williams’ motion to compel, Marshalls failed to provide specific evidence supporting the administrative burden and cost it would be under to produce statewide contact information for 16,500 employees. Likewise, the Court specifically noted that Marshalls had failed to bring a motion under Code of Civil Procedure section 2019.020 for the Court to set a specific sequence and timing for discovery.
Accordingly, while Williams creates a less hospitable discovery framework for employers at the early stages of discovery, it is not a fundamental re-ordering of discovery procedures as we know them. Employers can still avail themselves of a full array of tools to oppose overbroad requests and manage the timing and scope of pre-certification discovery.
 The Supreme Court found that the Court of Appeals erred in requiring Williams to show a “compelling interest” sufficient to justify disclosure of contact information. It noted that a compelling interest is necessary where the interest at issue is one fundamental to personal autonomy; otherwise, where a lesser interest is at stake, the Hill and Pioneer Electronics framework applies, “with the strength of the countervailing interest sufficient to warrant disclosure of private information varying according to the strength of the privacy interest itself, the seriousness of the invasion, and the availability of alternatives and protective measures.” Slip op. at 28.