A California Court of Appeal has handed employers two welcome rulings under the Private Attorneys General Act (PAGA). In Taduran v. Glidewell, the court confirmed that trial courts have broad discretion to reduce a maximum PAGA penalty using any reasonable method, and equally broad discretion to apply a negative multiplier that lowers a prevailing plaintiff’s attorneys’ fee award. For employers facing large PAGA exposure, the decision is an important signal of how much room trial courts have to bring eye-popping penalty demands and fee requests down to size. You can read the full decision here.
What Happened in Taduran v. Glidewell?
Plaintiff Abraham Taduran sued his former employer, dental-products maker Glidewell, under PAGA, alleging a series of California Labor Code violations. By the time of trial, the parties had stipulated to liability and undisputed facts on four issues — defective wage statements, rest-period pay calculated on rounded fractional hours, underpaid overtime because non-productive time pay was left out of the regular-rate calculation, and underpaid overtime because of bonus pay was left out of the regular-rate calculation. The single question for the court was the amount of civil penalties.
The numbers show why the case matters. Taduran argued the maximum aggregate PAGA penalty came to roughly $56 million. The trial court awarded $515,965 — a fraction of one percent of that figure. On fees, Taduran sought just over $1.57 million (a $1.047 million lodestar — the hours-times-rate baseline fee — enhanced by a 1.5 multiplier). The court accepted the lodestar but applied a 0.70 multiplier, awarding $733,440. After Taduran appealed both rulings, the Court of Appeal affirmed the trial court’s rulings across the board.
How Can a Court Reduce the Maximum PAGA Penalty?
PAGA penalties are calculated per employee, per pay period — a structure that produces enormous theoretical maximums when many workers are affected over many pay periods. Labor Code section 2699(e)(2) lets a court award a lesser amount when the maximum would be unjust, arbitrary and oppressive, or confiscatory. The fight in Taduran was not whether the court could reduce the penalty, but how.
Taduran argued the reduction had to be applied on a per-pay-period basis — the same metric used to calculate maximum PAGA penalties — rather than the per-employee basis the trial court used for three of the four violations. The Court of Appeal disagreed. It held that section 2699(e)(2) supplies no formula for reducing the maximum; once the court calculates the maximum on a per-pay-period basis, it may bring that figure down by any reasonable method, whether a flat percentage, a per-pay-period figure, or a per-employee figure. In short, the Labor Code does not mandate any particular method for reducing a maximum PAGA penalty, and the trial court did not abuse its discretion by landing well below the statutory ceiling.
When Can a Court Apply a Negative Fee Multiplier?
The fee ruling may be the more practically significant part of the opinion. A negative multiplier is a reduction applied across the board to the lodestar — here, the court multiplied the baseline fee by 0.70. Taduran argued that this kind of cut must satisfy heightened scrutiny, meaning the trial court had to explain in detail its reasoning for selecting a 0.70 multiplier rather than some other multiplier.
The Court of Appeal noted that California appellate courts are split on whether heightened scrutiny applies to across-the-board fee cuts, an issue currently pending before the California Supreme Court in Cash v. County of Los Angeles. The court did not have to resolve the split: because the trial court gave specific, articulated reasons for the 0.70 multiplier, the reduction held up under either standard.
The trial court justified its .70 multiplier by considering:
- Past, lower billing rates. The lodestar used counsel’s current billing rates for work performed years earlier, when their rates were materially lower. The Court of Appeal held that a trial court may consider those lower past rates when applying a negative multiplier, so long as it does not count the same factor twice — once in the lodestar and again in the multiplier.
- Reasonable and expected skill in prosecuting the claims. The claims in this case were relatively straightforward and records-based. The trial court found that the skill of the attorneys was a neutral factor as to the multiplier.
- Limited success. Because the penalty award came in below one percent of what Taduran sought, the court weighed that limited degree of success against the fee. The Court of Appeal confirmed that in representative actions like PAGA, the percentage of recovery can properly support a negative multiplier.
- The contingency risk. The trial court held that the contingency risk weighed in favor of an upward multiplier given the case lasted seven years, involved 1,500 attorney hours and nearly $100,000 in out-of-pocket litigation costs, but only slightly given that liability of certain claims was established over four years prior to the attorneys’ fees motion.
What Should California Employers Take Away?
- Courts have real flexibility to reduce PAGA penalties. Taduran confirms that a trial court may use any reasonable method to bring a maximum PAGA penalty down to a fair figure, and that even a very deep reduction from the statutory maximum can survive appeal when it is grounded in the facts.
- Sound pay practices matter. The reduction here rested on concrete findings — no lost wages on the wage-statement claim, good-faith calculation methods, prompt correction, and minimal actual underpayment. Employers who maintain accurate payroll practices and fix problems quickly are in a stronger position if a PAGA penalty is ever calculated.
- A large fee demand is not guaranteed. A high attorneys’ fee request paired with a small recovery can support a reduced fee award in PAGA and other representative actions — regardless of how the California Supreme Court ultimately resolves the heightened-scrutiny question in Cash.
