Duane Morris Private Attorneys General Act Review – 2024

As Westmoreland and Gentry make clear, it is important for employers to review and update any problematic savings or severability clause language. In turn, employers should take the time and effort to review their arbitration agreements to ensure that individual PAGA claims can be compelled to arbitration and non-individual PAGA claims stayed post- Viking River and Adolph . One of the more key decisions to address arbitration in this context is the case of Galarsa, et al. v. Dolgen California, LLC, 88 Cal.App.5th 639 (Cal. App. Feb. 24, 2023) . The plaintiff filed a representative action against her former employer, Dolgen California, LLC (Dollar General) to recover civil penalties under the PAGA for Labor Code violations on behalf of herself and other employees. Id. at 643-44. Dollar General moved to compel the matter to arbitration, and maintained that plaintiff must individually arbitrate her wage and hour claims, either as a PAGA action or otherwise. Id. at 646. The trial court denied the motion. Id. at 646. It reasoned that an employee could not waive their right to bring a representative PAGA claim, and that a PAGA claim could not be split into arbitrable individual claims and non-arbitrable representative claims. Id. Dollar General appealed, but the Court of Appeal affirmed the trial court’s order. Id. Dollar General thereafter petitioned the California Supreme Court for review, but the petition was denied. Id. The Court of Appeal ruling was subsequently vacated by the U.S. Supreme Court when it granted Dollar General's petition for writ of certiorari and remanded the case for further consideration in light of its decision in Viking River Cruises, Inc. v. Moriana, et al., 142 S.Ct. 1906 (2022). Id. On remand, the Court of Appeal reversed in part and affirmed in part its order denying Dollar General’s motion to compel arbitration. The Court of Appeal held that PAGA claims could be divided into two types – claims seeking to recover civil penalties due to a Labor Code violation suffered by the plaintiff (Type A claims) and claims seeking to recover civil penalties for Labor Code violations suffered by employees other than the plaintiff (Type B claims). Id. at 648-49. Consistent with the California Supreme Court’s ruling in Iskanian, et al. v. CLS Transportation Los Angeles, LLC 59 Cal.4th 348 (2014), the Court of Appeal concluded that the waiver of the right to bring a representative action (Type B claims) under the PAGA was invalid, thereby requiring severance from the arbitration agreement. Id. at 649-50. However, in keeping with the decision in Viking River , the Court of Appeal concluded that the plaintiff’s individual PAGA claims (Type A) could be compelled to arbitration under the enforceable language of the agreement requiring arbitration of disputes arising out of the employee’s own employment. Id. at 651. With respect to the PAGA representative claim, the plaintiff argued she had the right to continue to pursue that action in court, while Dollar General maintained that the claim should be dismissed. Id. at 652. The Court of Appeal agreed with the plaintiff. It found that a plaintiff does not lose their standing to pursue PAGA representative claim (Type B) in court, after their individual PAGA claim (Type A) is compelled to arbitration. Id. at 653. The Court of Appeal also briefly touched on California’s rule against splitting a cause of action, predicting that the California Supreme Court would agree that California law does not prohibit an aggrieved employee from pursuing Type B claims in court once the Type A claims are ordered to arbitration, stating “[t]he reason for this prediction is simple – it is the interpretation of PAGA that best effectuates the statute’s purpose, which is ‘to ensure effective code enforcement.’” Id. at 654. For these reasons, the Court of Appeal affirmed its order denying arbitration of the representative PAGA claim, and reversed as to the plaintiff’s individual PAGA claim. Id. at 655. In Nickson, et al. v. Shemran, Inc ., 90 Cal.App.5th 121 (Cal. App. 2023), the Court of Appeal applied Viking River to reverse an order denying an employer’s motion to compel arbitration. The arbitration agreement at issue provided for individual arbitration of employment disputes, but waived the plaintiff’s right to “make any claims . . . in a private attorney general capacity.” Id . at 127. The Court of Appeal concluded this language impermissibly waived only non-individual PAGA claims. Id . at 130. Fortunately, the agreement included a severability clause such that if any provision of the agreement was found unenforceable, the remainder of the agreement would not be affected. The Court of Appeal thus severed the unenforceable non-individual PAGA claim waiver and affirmed the trial court’s order that compelled the plaintiff’s individual PAGA claims to arbitration. As to the plaintiff’s non-individual PAGA claims, the Court of Appeal left it to the trial court’s discretion on remand to decide whether they should be stayed or contemporaneously litigated.

Made with FlippingBook - professional solution for displaying marketing and sales documents online