Tesla’s Bid to Dismiss PAGA Lawsuit Gets Anti-SLAPPed Down

Oakland, CA On August 8, the California Court of Appeal denied Tesla’s motion to dismiss a Private Attorneys General Act (PAGA) lawsuit brought by former Tesla employees. At its simplest, Sharonda Taylor v. Tesla, Inc. is about the workers’ struggle to access their own wage and hour records.

Nothing about this California labor lawsuit is straightforward, however.

Taylor grows out of a long-running class action lawsuit, Vaughn v. Tesla, that accuses the electric car maker of  racial discrimination and harassment prohibited by California’s Fair Employment and Housing Act. In an improbable plot twist, Tesla based its bid to have Taylor dismissed on California’s Anti-SLAPP statute, a law designed to protect free speech rights.

Neither the Alameda County Superior Court, where the Taylor trial was held, nor the Court of Appeal bought Tesla’s free speech argument. The next stop is likely the California Supreme Court. Tesla presumably has an interest and the litigation budget to tie up Taylor and Vaughan for a long time – which brings us to SLAPP and anti-SLAPP laws.

SLAPP, anti-SLAPP, SLAPP back—What is this?

SLAPP is an acronym that stands for “strategic lawsuits against public participation.” It is not a law, but a litigation strategy. SLAPPs have been criticized as “an all-too-common tool for intimidating and silencing criticism through expensive, baseless legal proceedings.” Several states, including California, have enacted statutes to discourage SLAPPs.

California’s Anti-SLAPP law

California has a strong pro-free speech, anti-SLAPP law. To challenge a SLAPP lawsuit in California, defendants must show that they are being sued for “any act . . . in furtherance of the person’s right of petition or free speech under the United States Constitution or the California Constitution in connection with a public issue.” Under the statute, the rights of free speech include statements made:

• before a legislative, executive or judicial proceeding;
• in connection with an issue under consideration by a governmental body;
• in a place open to the public or a public forum in connection with an issue of public interest; and
• any other conduct in furtherance of the exercise of free speech or petition rights in connection with “a public issue or an issue of public interest.”

To succeed, a defendant must show that the statement or conduct could affect large numbers of people beyond the direct participants, and whether the statement contributed to debate on a topic of widespread public interest.

In its motion to dismiss, Tesla argued that, because Vaughan deals with issues of racial discrimination, to which the records requested in Taylor might be relevant, it should be protected by California’s anti-SLAPP law. The Tesla workers, who were the plaintiffs in Taylor, argued that their lawsuit was strictly a matter of private interest and so would not fall under the law’s protection.

Keeping it simple

The Court of Appeal was not entirely convinced of the workers’ “private interest only” argument. Nonetheless, it denied Tesla’s motion to dismiss because it could not identify anything in the PAGA lawsuit that implicated "speech or petitioning activity undertaken in connection with a public issue." Tesla’s refusal to give over individual wage and hour records was not a matter of public interest "simply because of the pendency of hotly contested litigation on a public issue in a related case."

What the denial of a motion to dismiss means

Courts are generally very reluctant to grant a motion to dismiss a lawsuit before trial. It happens only when the plaintiff has failed to describe facts or cite law to make a lawsuit even plausible, which is a very low bar. Absent the California Supreme Court’s intervention, the Taylor PAGA lawsuit will continue, despite the Court of Appeal’s skepticism, at least until the case can be further developed.

But nothing is straightforward in this lawsuit.

Taylor, it must be understood, takes place in the context of widespread employer efforts to limit or be rid entirely of PAGA as a tool to enforce the worker protections of the California labor code. Who knows but whether Elon Musk, the electric car maker’s CEO, saw this as a chance to flip the free speech script in favor of the business community.

PAGA as a collective action deterrent

In 2004, the California Legislature enacted PAGA, amending the California labor code to address serious and widespread violations of California labor law and to address the problem of significant under-enforcement of those laws. PAGA authorizes employees, acting on behalf of the state, to recover civil penalties for labor code violations. Where the employee prevails, 75 percent of all penalties recovered goes to the Labor and Workforce Development Agency (LWDA) for enforcement.

Aggrieved workers may recover relatively little money in a PAGA lawsuit, which seems unfortunate. The biggest benefit they receive, however, may be the deterrent effect of the law on employers, which is something they might only be able to achieve collectively.
The penalties can be quite stiff, especially because they are assessed on a per worker, per paycheck basis. Employer groups, like the Chamber of Commerce have consistently campaigned for the limitation or repeal of PAGA.

On November 5, 2024, Californians will face a ballot question about whether to replace PAGA with the California Fair Pay and Employer Accountability Act (CFPEA). The CFPEA could gut the LWDA’s enforcement budget and deprive workers of much of the deterrent effect of the existing law.