Private Attorneys General Act Review – 2025

defendant moved to compel arbitration of the claims pursuant to an arbitration agreement the plaintiff signed at the commencement of his employment. The agreement required arbitration for disputes but included a “Class, Collective, and Representative Action Waiver.” Id. at *1-2. The trial court denied the defendant’s motion, agreeing with the plaintiff that the waiver in the agreement was unenforceable for his representative PAGA claim. The trial court also found that the waiver contained a “poison pill” provision, which rendered the entire arbitration agreement unenforceable. Id. at *2. The defendant appealed, arguing that only the representative PAGA claim should be excluded from arbitration, and the remainder of the claims should still be arbitrated. The California Court of Appeal affirmed in part and reversed in part the trial court’s ruling. The Court of Appeal disagreed with the trial court’s broad interpretation of the “poison pill” provision. Id. at *14. It ruled that the waiver should only be unenforceable for the representative PAGA claim, and that the remaining individual claims could still be arbitrated. The court also noted that it was premature to decide on the plaintiff’s arguments that the agreement was unconscionable, as the trial court had not yet addressed them. Therefore, the Court of Appeal remanded the action to the trial court to consider the plaintiff’s argument regarding the agreement’s unconscionability, and affirmed the decision denying the motion to arbitrate the PAGA claim. The California Court of Appeal’s decision in DeMarinis, et al. v. Heritage Bank Of Commerce , 98 Cal.App.5th 776 (Cal. App. 1st Dist. 2024), is indicative of judicial hostility to arbitration. The plaintiff in DeMarinis filed a putative class and PAGA action against her former employer alleging various violations of the California Labor Code. The defendant moved to compel arbitration. The arbitration agreement in question contained a waiver clause providing that claims could be brought only in an “individual capacity” and “not as a plaintiff or class member in any purported class or representative proceeding” and that there was no right “for any dispute to be brought, heard, or arbitrated on a class, collective or representative basis.” Id. at 780. The arbitration agreement also contained a “poison pill” clause providing that, if the foregoing waiver provision was deemed unenforceable in part, then the entirety of the agreement was vo Id. Id. Because the agreement impermissibly waived the right to bring any PAGA claims in any forum, arbitral or judicial, the trial court applied the poison pill clause to void the agreement and denied the defendant’s motion to compel arbitration. On appeal, the California Court of Appeal affirmed. The Court of Appeal noted that an employer is free to draft a severability clause like the one in Viking River to permit arbitration of just an individual PAGA claim. However, that is not what the defendant had done in this case. Rather, the defendant had drafted an arbitration agreement with a poison pill clause. The Court of Appeal further rejected the defendant’s argument that the waiver clause did not apply to the plaintiff’s individual PAGA claim, interpreting the clause to waive the right to bring any type of PAGA claim in any forum in an impermissible manner. The Court of Appeal noted that, even if the defendant was correct in its position that the waiver clause did not apply to the individual PAGA claim, that it was nonetheless unenforceable because it waived the right to bring non-individual PAGA claims in any forum, and application of the poison pill clause then voided the arbitration agreement. Further, because the agreement allowed claims to be brought only in an “individual capacity,” that language, in the Court of Appeal’s view, impermissibly precluded a plaintiff from maintaining an individual PAGA claim, which is not asserted in an individual capacity but instead asserted as a proxy of the State of California. Id. at 790. The Court of Appeal also reasoned that the arbitration agreement’s use of first-person words such as “I” and “me” supported the conclusion that an individual PAGA claim was not covered by the agreement. Id. By contrast, the California Court of Appeal reversed orders denying the employers’ motions to compel arbitration in Daniel, et al. v. Blue Bridge Hospitality Management, LLC, 2024 Cal. App. Unpub. LEXIS 3150 (Cal. App. 4th Dist. May 22, 2024), and Aguilar, et al. v. Santa Catalina Healthcare, 2024 Cal. App. Unpub. LEXIS 3631 (Cal. App. 4th Dist. June 13, 2024). At issue in Daniel was the meaning of the arbitration agreement’s waiver clause, which waived the right to bring a “representative action,” but which then carved out an exception from waiver for “a private attorney general act claim.” Id. at *16. The Court of Appeal found this clause clear – a PAGA claim was not waived and, even if there were an ambiguity, it would need to be resolved in favor of arbitration and not against the employer as the drafter of the agreement. Because the plaintiff’s individual PAGA claim was covered by the agreement, the Court of Appeal determined that it was properly compelled to arbitration so long as the agreement was actually signed and not unconscionable, issues that needed to be remanded to the trial court to resolve in the first instance. The arbitration agreement in Aguilar similarly waived the right for the plaintiff to pursue a “representative action,” but carved out from that waiver the right to pursue a PAGA claim. Id. at *2. The agreement then indicated that arbitration had to occur on an individual basis and that arbitration could not occur “on a class basis, or as a

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