Court of Appeal rejects cost recovery against LWDA in non-participating PAGA suits: Rose v. Hobby Lobby Stores

In Rose v. Hobby Lobby Stores,          Cal.App.5th           (May 16, 2025), the Court of Appeal First Appellate District, Division Two) held that the Labor and Workforce Development Agency (LWDA) is not liable for costs in a PAGA action unless it actively participates in the litigation.

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Plaintiff sued under PAGA, alleging violations of the “suitable seating” provisions of IWC Wage Order No. 7-2001. After a bench trial, the trial court found for Defendant. Defendant filed a memorandum of costs, arguing it was entitled to recover costs against both the representative Plaintiff and the LWDA. The LWDA successfully moved to intervene, but the trial court awarded Defendant approximately $125,000 in costs against the LWDA, with none against the representative Plaintiff.

On appeal, the Court of Appeal reversed the cost order. It held that costs cannot be recovered from the LWDA when the agency did not participate in the litigation. The court acknowledged Defendant’s argument that Labor Code § 2699(k)(1) contains no express exception to Code of Civil Procedure § 1032(b), which under Murillo v. Fleetwood Enterprises, Inc. (1998) 17 Cal.4th 985, could arguably permit cost recovery. However, the court declined to address whether PAGA displaces Code Civ. Proc. § 1032(b). Instead, it based its decision on the LWDA’s non-participation in the action. It rejected Defendant’s argument that a PAGA Plaintiff acts as an agent of the LWDA, finding that PAGA plaintiffs lack fiduciary obligations to the agency and the LWDA lacks control over the litigation. The court noted that Defendant failed to cite any qui tam case in which costs were awarded against a government real party in interest who did not participate.

While the Court noted that the PAGA statute explicitly provides for fees and costs to a prevailing employee (Lab. Code § 2699, subd. (k)(1)), it noted that the statute says nothing about an award to prevailing defendants. Nevertheless, the Court explicitly reserved the question regarding whether a defendant is entitled to recover costs under Code Civ. Proc. § 1032(b) in a PAGA action for another day. 

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