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TABLE OF CONTENTS

Page

Introduction ..................................................................................................................................... 4

Argument ........................................................................................................................................ 4

I. Plaintiff Lacks Standing to Challenge PAGA As-Applied and Identifies No

II.

III.

IV.

Justiciable Controversy As-Applied . ...................................................................... 4

The Excessive Fines Claims Fail as a Matter of Law . ............................................ 7

The Separation of Powers Claim Fails as a Matter of Law ..................................... 8

A. Plaintiff Identifies No Basis to Avoid Iskanian . ......................................... 8

B. The Complaint Pleads No Separation-of-Powers Violation . .................... 11

The Due Process Claims Fail as a Matter of Law . ................................................ 13

V. The Equal Protection Claims Fail as a Matter of Law . ......................................... 13

Conclusion .................................................................................................................................... 14

2

Defendant's Reply in Support of Demurrer to the Complaint (30-2018-01035180-CU-JR-CXC)

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TABLE OF AUTHORITIES

CASES

Alaska Fish & Wildlife Fed'n & Outdoor Council v. Dunkle

(9th Cir. 1987) 829 F.2d 933. (Opp. 6.) ................ : ............................................. : ................... 6, 7

Atempa v. Pedrazzani

(2018) 27 Cal.App.5th 809 ....................................................................................................... 11

Blank v. Kirwan

(1985) 39 Cal.3d 311 ................................................................................................................ 14

Browning-Ferris Indus. v. Kelco Disposal

(1989) 492 U.S. 257 .................................................................................................................... 9

Cal. Family Bioethics Council v. Cal. Inst. for Regenerative Med. (2007) 14 7 Cal.App.4th 1319 ............................................................................................... 6, 10

Carmel Valley Fire Prat. Dist. v. State (2001) 25 Cal.4th 287 ......................................................................................................... 12, 13

Coffman Specialties v. Dep 't of Transp. (2009) 176 Cal.App.4th 1135 ..................................................................................................... 6

Hatch v. Sup. Ct. (2000) 79 Cal.App.4th 663 ................................................................................... .-..................... 6

Home Depot US.A., Inc. v. Superior Court (2010) 191 Cal.App.4th 210 ....................................................................................................... 8

Huff v. Securitas Sec. Servs. USA (2018) 23 Cal.App.5th 745 ....................................................................................................... 11

Int 'l Union, United Auto., Aerospace Workers v. Brock (1986) 477 U.S. 274. (Opp. 6-7.) ............................................................................................ 7, 8

Iskanian v. CLS Transp. LA (2014) 59 Cal.4th 348 .. . .................................................................................................... passim

Lockyer v. City & Cty. of San Francisco (2004) 33 Cal.4th 1055 .......................................................................................................... 9, 13

NY State Nat. Org. for Women v. Pataki (2d Cir. 2001) 261 F.3d 156 ........................................................................................................ 7

0 'Shea v. Littleton (1974) 414 U.S. 488 .................................................................................................................... 6

3

Defendant's Reply in Support of Demurrer to the Complaint (30-2018-01035180-CU-JR-CXC)

1 INTRODUCTION

2 In the demurrer, the Attorney General demonstrated that Plaintiff lacks standing to

3 challenge the constitutionality of PAGA as applied to California employers, and Plaintiffs claims

4 are barred by settled legal authority. Plaintiff fails to establish otherwise. Plaintiff relies entirely

5 on the Supreme Court's recent decision Timbs v. Indiana to support its excessive fines claims, but

6 that decision has no bearing on the issues raised in this demurrer. It held only that the federal

7 excessive fines clause applies to the states, a point that is not in dispute here. Plaintiff states no

8 valid excessive-fines claim under the applicable standards for determining whether a given fine is

9 constitutionally excessive, which Plaintiff ignores entirely. Plaintiffs separation-of-powers claim

1 o merely seeks to re-litigate the precise theories that the California Supreme Court rejected in

11 Iskanian v. CLS Transportation, and Plaintiff identifies no reasoned basis to distinguish Jskanian.

12 Rather, Plaintiff simply contends that Iskanian was wrongly decided. This Court, however, is

13 bound by it. Finally, Plaintiff essentially abandons its due process claims, and fails to support its

14 equal protection claims with relevant authority or argument. Therefore, as explained further

15 below, the Attorney General requests that the demurrer be sustained.

16 ARGUMENT

17 I. PLAINTIFF LACKS STANDING TO CHALLENGE PAGA As-APPLIED AND IDENTIFIES

No JUSTICIABLE CONTROVERSY As-APPLIED.

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As explained, Plaintiff lacks standing to challenge PAGA as-applied to California

employers, and the Complaint pleads no justiciable controversy regarding PAGA's application to

California employers. (Mtn. 10-13.) Plaintiff fails to carry its burden to establish otherwise.

Plaintiff states that the Attorney General is "correct" that Plaintiff cannot challenge any

"judgments, settlements, and/or fee awards." (Opp. 7.) It argues that it has standing because it

seeks only "prospective" relief. (Opp. 7.) Plaintiff identifies no particular application of PAGA

that it seeks to enjoin, and its opposition brief, in substance, describes facial challenges, as

explained in the following sections. (Infra, pp. 7-14.) 1 Plaintiff nevertheless purports to assert

"as-applied" claims. (Opp. 8, 13 .) To mount an "as-applied" challenge, Plaintiff must show that

1 Insofar as the claims assert facial challenges to PAGA, the demurrer did not challenge them on standing and justiciability grounds. (Mtn. 10 & fn. 3.)

Defendant's Reply in Support of Demurrer to the Complaint (30-2018-01035180-CU-JR-CXC)

1 Plaintiff relies entirely on Walgreen Co. v. City & Cty. of SF (2010) 185 Cal.App.4th 424.

2 (Opp. 17-19.) In particular, Plaintiff appears to rely on its statement that "[w]e must accept [the

3 plaintiffs] allegation as true" for purposes of demurrer. (Id. at p. 437.) Plaintiff reads far too

4 much into that statement. In the next sentence, the decision explained that "[m]ore importantly,"

5 those factual allegations "appear to be beyond dispute, with the [defendant] conceding" them.

6 The crux of the holding, the decision clarified, was that the asserted rationale was not even

7 "plausible," and the defendant had identified "no reasonably conceivable factual basis" to support

8 the challenged measure. (Id. at p. 439, italics added; id. at p. 444 fn. 13.) Therefore, Walgreen

9 did not rule that a plaintiff can survive demurrer simply by alleging that there is no valid basis for

10 the measure. In fact, Wal green reaffirmed that the factual basis for the statutory distinction is not

11 "subject to courtroom factfinding" and may rest on "rational speculation." (Id. at p. 441.)

12 Here, Plaintiff does not even discuss the "reasonably conceivable" justifications for section

13 2699.6 that the Attorney General identified. (See Mtn. 19-20.) This alone is fatal to Plaintiffs

14 claim. As Walgreen reaffirmed, "[t]hose attacking the rationality of the legislative classification

15 have the burden 'to negative every conceivable basis which might support it." (Id. at p. 435,

16 italics added.) Plaintiff has not even attempted to do that. Plaintiff simply ignores the rationales

17 that the Attorney General identified, and therefore certainly has not carried its burden to negate

18 every conceivable rationale for the law. (Ibid.) Furthermore, Plaintiff attempts to limit the

19 inquiry to the Legislature's "stated purpose[s]" (Opp . .19), but it is "irrelevant" whether the

20 proferred justifications "actually motivated the Legislature." (Id. at p. 436; Mtn. 19-20.)

21 Therefore, Plaintiff fails to state a claim that section 2699 .6 violates equal protection.9

22 CONCLUSION

23 For the foregoing reasons, Attorney General Becerra respectfully requests that the Court

24 sustain this demurrer to the Complaint.

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9 Furthermore, Plaintiff fails to show that the remedy it seeks would be available even if the claims had merit. (See Mtn. 20:16-20.) Contrary to Plaintiffs argument (Opp. 19 fn. 20), Walgreen referenced the same inquiry discussed in the demurrer. (See Walgreen, 185 Cal.App.4th at p. 444, citing People v. Hofsheier.) Plaintiff points to nothing in the legislative history remotely suggesting that the Legislature would have elected to eliminate PAGA altogether had it known that it could not enact section 2699.6, rather than simply not enacting that section.

15

Defendant's Reply in Support of Demurrer to the Complaint (30-2018-01035180-CU-JR-CXC)

DECLARATION OF ELECTRONIC SERVICE AND SERVICE BY U.S. MAIL

Case Name: Case No.:

California Business & Industrial Alliance v. Xavier Becerra

30-2018-01035180-CU-JR-CX C

I declare:

I am employed in the Office of the Attorney General, which is the office of a member of the California State Bar, at which member's direction this service is made. I am 18 years of age or older and not a party to this matter. I am familiar with the business practice at the Office of the Attorney General for collecting and processing electronic and physical correspondence. In accordance with that practice, correspondence placed in the internal mail collection system at the Office of the Attorney General is deposited with the United States Postal Service with postage thereon fully prepaid that same day in the ordinary course of business. Correspondence that is submitted electronically is transmitted using the OneLegal electronic filing system. Participants who are registered with Onelegal will be served electronically. Participants will also receive hard copies of said correspondence through the mail via the United States Postal Service.

On March 21, 2019, I electronically served the attached

DEFENDANT'S REPLY IN SUPPORT OF DEMURRER TO THE COMPLAINT

by transmitting a true copy via the One Legal system. On March 21, 2019, I placed a true copy thereof enclosed in a sealed envelope in the internal mail collection system at the Office of the Attorney General at 455 Golden Gate Avenue, Suite 11000, San Francisco, CA 94102-7004, addressed as follows:

Richard J. Frey Epstein, Becker & Green, P.C. Robert H. Pepple David M. Prager 1925 Century Park East, Suite 500 Los Angeles, CA 90067

I declare under penalty of perjury under the laws of the State of California the foregoing is true and correct and that this declaration was executed on March 21, 2019, at San Francisco, California.

SA2018103544

21391343.docx

M. Xiang

Declarant Signature