When a class action litigant seeks to discover contact information for a third party—often with respect to potential class members—privacy considerations come into play.
By: Craig A. Roeb, Esq. and Lauren S. Kadish, Esq.
September 14, 2017
Wage and hour class action litigation frequently involves lengthy and expensive battles over the proper scope of pre-class certification discovery. The extent of unnamed potential class members’ right to privacy is a constant debate between litigants. Early in the case, a plaintiff will propound discovery requesting contact information, timesheets, payroll history, for every putative class member company-wide or state-wide, even though the named plaintiff has no evidence or knowledge of unlawful practices beyond the particular location where he or she works. In an effort to protect its employees’ right to privacy, defendants will often object to these requests on the grounds that such discovery is burdensome and invades privacy rights of non-party employees.
Historically, California state courts have ruled that contact “information concerning the identity of potential class members is generally discoverable, so that the lead plaintiff may learn the names of other persons who might assist in prosecuting the case.” See Pioneer Electronics (USA), Inc. v. Superior Court, 40 Cal.4th 360, 373 (2007). The California Supreme Court recently affirmed that these rules concerning privacy rights in wage and hour class actions also extend and apply to representative actions filed under California’s Labor Code Private Attorneys General Act of 2004 (“PAGA,” Cal. Labor Code §§ 2698, et seq.).
PAGA creates a private right of action, allowing an aggrieved employee to collect civil penalties “on behalf of himself or herself and other current or former employees.” Cal. Lab. Code §2699(g)(1). While plaintiffs generally seek PAGA penalties as a tag-along claim in an otherwise exclusively wage and hour class action case, stand-alone PAGA claims have become increasingly more common, particularly for plaintiffs who have signed arbitration agreements that include a class action waiver, or who may be unable to meet class certification requirements such as typicality, adequacy, or the predominance of common issues of law and fact. A PAGA action does not need to satisfy class action requirements. Arias v. Superior Court, 46 Cal.4th 969 (2009).
ALONG COMES WILLIAMS
In Williams v. Superior Court, 2017 WL 2980258, ____ Cal.5th _____ (“Williams”) the California Supreme Court decided a matter of first impression concerning the appropriate scope of discovery in a PAGA action, clarifying the need to reconcile asserted privacy rights with competing claims for access to third party contact information.
In Williams, an employer-defendant attempted to limit the scope of discovery in a stand-alone PAGA action by arguing that the plaintiff should be required to establish substantial proof of class-wide violations in order to obtain class-wide discovery. However, the Supreme Court rejected that approach and affirmed that the scope of discovery in PAGA actions is the same as discovery in wage and hour class actions.
In short, absent unusual circumstances, an employer sued in a wage and hour class lawsuit or a PAGA action should be prepared to turn over contact information for all potentially aggrieved current and former employees.
The Williams case involved a representative action under PAGA. Plaintiff Michael Williams alleged that defendant Marshalls of CA (“Marshalls”) failed to provide him, and other similarly situated employees, meal and rest periods required by law. See Cal. Labor Code §§ 226.7 and 512. Mr. Williams worked for the retail chain in its Costa Mesa store, beginning in January 2012. In 2013, he sued Marshalls, alleging that the company failed to provide him and other aggrieved employees with meal and rest periods, or compensation in lieu of the required breaks. Mr. Williams’ complaint also alleged that Marshalls maintained companywide practices of understaffing stores, requiring employees to work during meal periods without compensation, directing managers to erase meal period violations from time records, failing to pay premiums for missed breaks, and requiring employees to carry out company business without reimbursement.
PROCEDURAL CONTEXT OF THE PRIVACY ISSUE
Mr. Williams filed his lawsuit as a representative action under PAGA, rather than as a class action wage and hour lawsuit. Early in discovery, plaintiff’s counsel served interrogatories on Marshalls seeking the names and contact information for all nonexempt employees in California for the period of March 2012 through February 2014. Marshalls objected to the production of such information on the grounds of relevance, overbreadth, undue burden, and employee privacy.
The trial court granted the plaintiff’s motion to compel in part, ordering Marshalls to produce information for the employees at the Costa Mesa store, but not the employees at Marshalls’ other 130 stores statewide. The disclosure was to follow a “Belaire-West notice,” which is a communication sent to employees giving them an opportunity to object to the disclosure of their contact information within 30 days. See Belaire-West Landscape, Inc. v. Superior Court, 149 Cal.App.4th 554 (2007). The trial court ordered that plaintiff could renew his motion to compel information from the other Marshall’s stores after he had been deposed for at least six hours to provide evidence of a statewide issue sufficient to support a broadened disclosure.
INTERMEDIATE APPELLATE RULING
The court of appeal upheld this approach to limited discovery of employee contact information in PAGA claims. Because the allegations in plaintiff’s complaint concerned only the Costa Mesa store, he had not yet made any showing concerning practices at other stores or put forth evidence of a uniform statewide policy. Considering that the privacy interests of the nonparty employees—whose information plaintiff’s counsel was seeking—the court of appeal concluded that Mr. Williams had failed to demonstrate a “compelling need” for the discovery, and the nonparty employees’ right to privacy outweighed plaintiff’s need to discover their identity. Thus, the court of appeal affirmed the trial court’s decision finding that it was reasonable to conclude that a plaintiff in a PAGA claim is required to establish that the employer’s employment practices are uniform throughout the company, before statewide discovery is justified.
SUPREME COURT REVERSAL
The California Supreme Court reversed and held that plaintiffs do not need to demonstrate a companywide policy to discover contact information of other potential employees in a PAGA action. The state high court held that the right to privacy does not bar a plaintiff’s right to discover the contact information pertaining to other employees, and the process expressly disapproved a string of intermediate appellate decisions holding that a party seeking to discover employee contact information must establish a compelling need for such information.
THE RIGHT BALANCE
The California Supreme Court rejected the use of the “compelling interest” or “compelling need” test to evaluate potential invasions of privacy. In White v. Davis, 13 Cal.3d 757 (1975) the court held that the state constitutional privacy right (see Cal. Const., Art. I, § 1) does not prohibit invasion into individual privacy, but rather requires that such intervention be justified by a “compelling interest.” The state supreme court narrowed this standard and ruled that not every assertion of a privacy interest under the state constitution must be overcome by a compelling interest, particularly where a lesser interest is at stake.
In Williams, the court found that the seriousness of the prospective invasion is important, and only obvious invasions of interests fundamental to personal autonomy must be supported by a compelling interest. Williams, 2017 WL 2980258 at *14. Where more than just contact information is sought, more extensive protection of such information is appropriate, and the court should utilize the compelling interest test, which places a higher burden on plaintiff to establish a “compelling need” for production. However, while absent employees have a bona fide interest in the confidentiality of their contact information, the California Supreme Court held in Williams that such information is less sensitive than medical history or financial data. Thus, the appropriate balancing test to employ in weighing the privacy rights of employees’ contact information is the balancing test set forth in Hill v. National Collegiate Athletic Ass’n, 7 Cal.4th 1, 35 (1994) (“Hill”) and Pioneer Electronics (USA), Inc. v. Super. Ct., 40 Cal.4th 360, 370-74 (2007) (“Pioneer”). See Williams, 2017 WL 2980258 at *11-14.
Under the standard established in Hill and Pioneer, the party asserting the privacy right (i.e. the defendant/employer) must establish: (1) a legally protected privacy interest; (2) an objectively reasonable expectation of privacy; and (3) a threatened intrusion of that interest that is serious. See Williams, 2017 WL 2980258 at *11.
The first factor is always an issue of law. As it relates to discovery of employee contact information, the state supreme court held such information is a protected privacy interest because “absent employees have a bona fide interest in the confidentiality of their contact information.” Id., at *12.
However, regarding the second factor, the court held that there is no reasonable expectation of privacy in an employees’ contact information because absent employees would not expect their information to be withheld from a plaintiff who is seeking to recover civil penalties on their behalf. Id. Moreover, there is also no serious invasion of privacy because a Belaire-West notice may be sent to employees affording them an opportunity to opt out of having their information shared. This notice would protect the employees’ privacy interests by conditioning disclosure on the issuance of such notice giving them an opportunity to opt out. Thus, because two of the three factors were not present, the Supreme Court held the employer’s privacy objection does not support the denial of statewide discovery of employee contact information.
UNDUE BURDEN MAY STILL BE AN ISSUE
While the ruling in Williams appears to grant a broad scope of discovery in favor of plaintiffs, a plaintiff is not necessarily afforded free rein. The employer still has defenses based on undue burden to limit and/or prevent such discovery.
Where the employer seeks to assert an objection based upon unduly burden, the employer must make a concrete showing of the difficulty required in order to comply and provide the requested contact information. See Williams, 2017 WL 2980258 at *9. While each business is different, employee contact information is often maintained in a central database that is easily accessible to the employer. In these circumstances, it may be difficult to make the showing necessary to claim the production of statewide contact information is unduly burdensome. There may be a stronger case for the burdensome objection where the discovery goes beyond statewide contact information and seeks timekeeping or payroll records, which is much more voluminous and time consuming to compile. Thus, it is important to review the discovery requests in detail as a valid objection may be made where the plaintiff seeks information beyond basic contact information of the employee.
EMPLOYEES MAY “OPT OUT”
The state supreme court held that trial courts do not have the right to completely preclude discovery of employee contact information or require that employees affirmatively consent to disclosure before allowing such discovery. Instead, the court confirmed that it is sufficient to allow a Belaire-West privacy notice and provide the employees with an opportunity to affirmatively opt out—with a failure to do so resulting in the default disclosure of that employee’s contact information. Thus, while it is unlikely courts will completely bar disclosure of contact information, insisting on a Belaire-West notice provides the affected employees with the opportunity to object and thus reasonably preserves their privacy interests.
IMPACT OF THE WILLIAMS DECISION
The California Supreme Court’s ruling in Williams essentially confirms the status quo of discovery in wage and hour class action cases. However, the court did expressly reverse a large number of published decisions that had held that wherever a privacy right of any sort is implicated, the party seeking the discovery must show a compelling need. See Williams, 2017 WL 2980258 at *14 & n 8. Not all of the cases cited by the court are wage an hour cases, so this decision may ultimately impact other areas of law where privacy and disclosure of third party contact information is at issue. For example: requests for information concerning other employees/former employees in a wrongful termination case; investigations of complaints and reports of elder abuse; communications between a party and his/her psychiatrist; or identities of undisclosed clients and attorneys current cases in a legal malpractice action.
The court’s ruling signals that lower courts will continue to allow plaintiffs broad discovery rights and to conduct “fishing expeditions” in discovery in order to obtain evidence to support statewide claims. The fact that a plaintiff does not have specific knowledge of any statewide practice or policy at the time the request is made will not by itself justify an objection to discovery on the grounds that the request is overly burdensome or invades privacy rights. Therefore, in opposing discovery requests for third party contact information, a party should be prepared to set forth specific facts demonstrating the undue burden and expense of compiling such information, and review the three-prong test set forth in Hill and Pioneer—confirmed in Williams—in order to strike the correct balance between privacy interests and the need to properly litigate the case at hand.
Craig A. Roeb is a partner and Lauren S. Kadish is an associate in the Los Angeles office of Chapman, Glucksman, Dean, Roeb & Barger, where they focus on employment, professional liability, business, and products liability law.