The Private Attorneys General Act (“PAGA”) has long given trial court judges the discretion to reduce the civil penalties for which an employee may be held liable when the standard penalties would be “unjust, arbitrary, oppressive, or confiscatory.” Recently, in Taduran v. James R. Glidewell Dental Ceramics, Inc., the California Court of Appeal, Fourth Appellate District held that this discretionary is not bound by a mandated formula and therefore, courts may use “any reasonable method” to reduce penalties. Specifically, the Taduran court rejected the employee’s argument that PAGA required the reduction to be on a per-pay-period basis and approved a reduction on a per-employee basis.
This is overall a positive ruling for employers, as it confirms that trial courts have broad discretion to reduce PAGA imposed penalties using whatever method the facts of the case support.
In the underlying case, plaintiff sued his former employer alleging the usual laundry list of Labor Code violations. By the time of trial, through motion practice and stipulations, the primary issues had been narrowed to whether overtime was paid correctly and whether wage statements included required piece-pay information. As to the wage statements, the employer argued it substantially complied by providing the required information on a separate document. The court rejected this argument at the violation phase, but state that it would consider substantial compliance when “determining appropriate civil penalties under Labor Code [section] 2699(e)(2).”
After trial through briefing, Plaintiff prevailed and = argued that the PAGA civil penalties totaled $55,985,350 and that the Court should not reduce them much, if at all. Plaintiff did not provide a proposed reduction method or amount. The employer argued that significant reduction was warranted by the narrow, “hyper-technical” violations and proposed specific reductions calculated on a per-pay-period or per-employee basis for each violation type. The trial court ultimately awarded a total of $515,955 in civil penalties (less than 1% of the requested maximum penalties), providing extensive reasoning for its reduction from the statutory maximum penalty. The court made clear that some of its calculations were on a per-employee basis.
The plaintiff also sought over $1.5 million in attorneys’ fees and nearly $100,000 in costs. The trial court awarded most of the costs, but significantly reduced the amount of fees awarded to $733,440. The court reached the reduced amount primarily by adjusting the fee “multiplier,” rather than the underlying time and rates. Plaintiff appealed, challenging the methods used to reach the reduced amounts. The Court of Appeal affirmed the reduction of both penalties and fees.
The appellate court held that although the initial step of calculating the maximum civil penalty is set forth in the PAGA statute, it neither references a reduction of the penalty, nor provides a mandatory formula for such reduction. The appellate court explained, “a trial court may apply a reduction on a per pay period basis, but that discretionary choice does not preclude other trial courts from applying a reduction on a per employee basis.” The court further found that the plaintiff’s challenge largely relied on the reduction being too dramatic in the aggregate, without engaging with the specific factors that led to the trial court’s ultimate decision. Accordingly, the court held that the trial court did not abuse its discretion.
The Court of Appeal applied the same deferential reasoning to the attorney fee dispute. Because the trial court gave an explicit, factor-by-factor analysis supporting its the negative multiplier, and because there is “[n]o established criteria [to] calibrate the precise size and direction of the multiplier,” the appellate court concluded that trial courts retain considerable authority in setting attorney fee awards. The court accordingly held that the trial court did not abuse its discretion in applying a negative multiplier to reduce the attorney fee award.
Taduran underscores just how much latitude trial courts retain in scaling PAGA civil penalties down from the statutory maximum, confirming judges are free to reduce awards on a per-pay period, per-employee, or percentage basis so long as the reduction is tied to the specific facts before them. The same deference extends to attorney fee awards, where the court affirmed that trial judges need only articulate their reasoning to justify their multiplier to survive appellate review. Together, these holdings signal that appellate courts will be reluctant to second-guess a well explained discretionary reduction, even a significant one, making trial-level advocacy and a well-documented record more decisive than ever. Employers should watch this trend closely. While broad judicial discretion can work in their favor when penalties are reduced, it also means outcomes are less predictable and more dependent on how persuasively the facts and equities are presented at trial.
Kyle D. Kring is the Firm’s Managing Partner. He specializes in employment and construction litigation, including defending contractors and other employers in PAGA and similar actions. He can be reached at 844-496-1071 or [email protected]. Eden Broussard is a law clerk at the Firm.