Duane Morris Private Attorneys General Act Review – 2024

Although Middleton, et al. v. Halliburton Energy Services, Inc ., 2023 U.S. Dist. LEXIS 10655 (E.D. Cal. Jan. 19, 2023), is not a waiver case, its outcome was effectively that the right to arbitration was waived. The plaintiff filed a putative wage and hour class and PAGA action. In 2020, well before the Viking River decision, the parties stipulated that the plaintiff’s individual Labor Code claims would be arbitrated and that the PAGA claims would be stayed in court pending arbitration. After Viking River was decided, the defendant sought to then compel the plaintiff’s individual PAGA claims to arbitration too. The court held that the stipulation operated to amend the arbitration agreement and to carve out from arbitration all the PAGA claims pending before the court. As a result, it denied the motion to compel arbitration on that basis. In Colores, et al. v. Ray Moles Farms, Inc., 2023 U.S. Dist. LEXIS 56599 (E.D. Cal. Mar. 30, 2023), the plaintiff filed two lawsuits against his former employer, both a PAGA action and a putative wage and hour class action, which were then removed to federal court and consolidated. The employer filed an answer, counterclaims challenging the PAGA’s constitutionality, and a motion for judgment on the pleadings. The parties then participated in mediation. Shortly before mediation, the employer filed a motion to compel arbitration. The plaintiff argued the employer waived its right to arbitration by engaging in almost 12 months of litigation, and the employer countered that it raised arbitration as a defense in both its answers. The court concluded there was no waiver of the right to arbitration because the employer’s conduct did not evince an intent to actively litigate and to forego the right to arbitration. In Dhaliwal, et al. v. Ace Hardware Corp ., 2023 U.S. Dist. LEXIS 45492 (E.D. Cal. Mar. 16 2023), the plaintiff filed a putative wage and hour class and PAGA action against the defendant, his former employer. The defendant answered the complaint and then removed the case, and also opposed the plaintiff’s motion to remand. When the employer moved to compel arbitration, the plaintiff argued the company had waived its right to do so. The court concluded that the plaintiff had not met his burden to establish waiver. In doing so, the court acknowledged that the test for waiver changed in 2022 , with the elimination of the requirement that prejudice be shown. Thus, to establish waiver, a party must show only knowledge of an existing right to compel arbitration and acts that were inconsistent with that right. Id . at *7. The court concluded that the employer’s conduct was not inconsistent with its right to arbitration because the employer pled arbitration as a defense in its answer, and also objected to discovery on the same grounds. Although the employer had argued in its removal papers that an individual defendant was a sham defendant, that position did not seek a ruling on the merits of the claims. Id . at *8. The plaintiff also argued that the arbitration agreement was not valid because he did not recall signing it. Id . at *13. The court rejected this argument, and granted the motion to compel arbitration of the plaintiff’s individual claims. In Alvitre, et al. v. Colonial Life & Accident Insurance Co ., 2023 U.S. Dist. LEXIS 35355 (C.D. Cal. Mar. 2, 2023), the plaintiff filed two lawsuits against her former employer, including a PAGA action and a putative wage and hour class action. In connection with her employment, the plaintiff signed an independent contractor agreement that included an arbitration clause. The court found the agreement was procedurally unconscionable to a degree because, although it was offered to the plaintiff on a take-it-or-leave-it basis, the arbitration clause was clear and not a surprise. As to substantively unconscionability provisions, the plaintiff argued there were many, but the court in large part disagreed. Although the agreement impermissibly provided that each party would bear their own attorneys fees’ and costs and impermissibly required that an award be confidential, another clause in the agreement preserved the parties’ rights under the law, thereby ameliorating these concerns. Additionally, the court concluded that a clause that permitted the employer to seek an injunction in court “necessary to protect its business” with respect to certain non- complete provisions did not make the agreement non-mutual. Id . at *15. There were, however, two provisions of the agreement of concern — a clause requiring the plaintiff to pay half the arbitrator’s fees and a clause requiring the plaintiff to pay the costs of litigating the motion to compel arbitration. The court, however, found that these terms were readily severed from the agreement. The court thus granted the motion to compel arbitration and dismissed the class claims. The plaintiffs in Merhi, et al. v. Lowe’s Home Improvement Center, LLC , 2023 U.S. Dist. LEXIS 184725 (S.D. Cal. Oct. 13, 2023), filed a putative wage and hour class action under the California Labor Code, and

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