HOLDINGS: [1]-Former employee’s pleading of her Private Attorneys General Act of 2004 (PAGA), Cal. Lab. Code § 2698 et seq., claim in her class action complaint alleging wage and hour violations, and her reply brief representations, were sufficient to conclude that her PAGA claim was brought as a representative claim, not a class action claim, thus barring consideration of the employer’s estimates of PAGA penalties in the potential recovery value of the Class Action Fairness Act (CAFA)’s amount-in-controversy requirement; [2]-Because the exclusion of PAGA penalties reduced the amount in controversy below the $5,000,000 jurisdictional minimum under CAFA, the court remanded the action to state court. Parties’ litigation lawyer California appeal.

Outcome

Employee’s motion to remand was granted.

Procedural Posture

Plaintiff pharmacy sued defendant drug claims processors, alleging that defendants failed to comply with the reporting requirements of Civ. Code, § 2527. The Los Angeles County Superior Court, California, granted defendants’ motion for judgment on the pleadings, finding that the statute’s reporting requirements violated the free speech clause of Cal. Const., art. I, § 2. The trial court awarded attorney fees to defendants. The pharmacy appealed.

Overview

The pharmacy asserted that defendants had repeatedly violated Civ. Code, § 2527, subd. (c), by failing to provide to their clients drug processing cost reports. The court held that the reporting requirement in § 2527 violated the drug claims processors’ free speech rights under the California Constitution. Civ. Code, § 2527, was “true” compelled speech. The speech compelled by the statute was a report by processors to third party insurers on the average fees pharmacies charged for dispensing pharmaceutical drugs to private customers. The report neither proposed a transaction nor promoted the processors’ business. While the report may have related to the economic interests of pharmacies by highlighting the dispensing fees charged to uninsured individuals, it did not affect the processors’ economic interests. Thus, the speech compelled by the statute was not commercial speech. The statute was not narrowly tailored to accomplish a compelling state interest, nor did it have the least restrictive impact on the processors’ right to free speech. Therefore, the statute did not satisfy the strict scrutiny required for the regulation of speech.

Outcome

The judgment and order awarding attorney fees to defendants were affirmed.