Takeaway: California employers could face additional liability since a court has decided that employees can file PAGA claims after settling individual claims for the same violations.

An employee who settled individual claims against her employer for alleged labor code violations was not subsequently barred from bringing a Private Attorneys General Act (PAGA) enforcement action against the employer for the same labor code violations, even though—prior to settlement—the employee could have added the PAGA claims to the existing action, a California appeals court ruled.

Because the two actions involve different claims for different harms and because the state was not a party to the first action, the doctrine known as "claim preclusion" did not mandate dismissal of the PAGA claims, the court said.

Claim preclusion is based on the reasoning that a party should not be allowed to litigate the same issue a second time, the court said. Further, if the matter the party is seeking to litigate could have been raised in the first action, the party may not raise it in a second lawsuit even if it was not actually litigated in the first action.

Three requirements must be met for claim preclusion to apply, the court explained. First, the second lawsuit must involve the same cause of action as the first lawsuit. Second, there must have been a final judgment on the merits in the prior litigation. Third, the parties in the second lawsuit must be the same as the parties to the first lawsuit.

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