Private Attorneys General Act Review – 2025

collective action, or as a representative action.” Id. at *3. The trial court denied the employer’s motion to compel arbitration. It reasoned that because the parties agreed not to arbitrate a “representative action,” that an individual PAGA claim, as a representative claim, could not be arbitrated. Id. at *1. The California Court of Appeal reversed. It explained that the waiver clause made no mention of the forum in which PAGA claims could be resolved. The Court of Appeal’s decision did not address the further language in the agreement that arbitration could not occur “as a representative action.” In addition to decisions on motions to compel arbitration in PAGA cases, there have been several decisions of significance on related issues in State Of California ex rel. Lizbeth Balderas v. Fresh Start Harvesting, Inc. , 101 Cal.App.5th 533 (Cal. App. 2d Dist. 2024), and Johnson, et al. v. Lowe’s Home Centers, 93 F.4th 459 (9th Cir. 2024). The plaintiff in Balderas filed PAGA claims against her former employer based on alleged failures to provide meal and rest breaks, and other derivative claims. The plaintiff specifically alleged that she was “not suing in an individual capacity” but instead on behalf of the State of California under the PAGA. Id. at 536. After the employer moved to compel arbitration, the trial court on its own motion gave notice of its intent to strike the complaint. The trial court reasoned that, because the plaintiff had not filed an individual PAGA claim seeking relief for herself, she lacked standing to pursue non-individual PAGA claims. The Court of Appeal reversed. It reasoned that the plaintiff had standing to bring non-individual PAGA claims because she alleged that she was an aggrieved employee who had suffered violations. The plaintiff’s bar has begun citing Balderas for the proposition that a plaintiff can disclaim an individual PAGA claim to avoid arbitration entirely. It remains to be seen if this pleading tactic will be condoned by the courts as this decision is cited in future motions in 2025. The plaintiff in Johnson alleged PAGA claims against her former employer based on the employer’s alleged violations of the California Labor Code. Applying all aspects of the U.S. Supreme Court’s decision in Viking River Cruises, Inc. v. Moriana, et al. , the district court compelled Johnson’s individual PAGA claims to arbitration and dismissed her non-individual PAGA claims for lack of statutory standing. While the case was on appeal, the California Supreme Court issued its decision in Adolph, et al. v. Uber Technologies, Inc. , 14 Cal.5th 1104 (2023), which held that a PAGA plaintiff retains standing to maintain non-individual PAGA claims even after their individual PAGA claims are compelled to arbitration. Of a further appeal, the Ninth Circuit in Johnson held that federal courts must follow the statutory standing analysis of the California Supreme Court in Adolph , and not the U.S. Supreme Court’s different interpretation in Viking River . It thus vacated the ruling dismissing the non- individual PAGA claims and remanded the case to the district court to apply Adolph . The Johnson decision is of further interest because of the concurring opinion of Judge Kenneth Lee. In his concurrence, Judge Lee addressed the next big question in PAGA cases, i.e ., the extent to which issues decided by the arbitrator in resolving individual PAGA claims will be binding in court in the litigation of the non- individual PAGA claims. Judge Lee noted that individual arbitration is often “low-stakes” for companies, who sometimes even send non-lawyers, such as paralegals, to arbitration proceedings because the amount at issue is not worth a lawyer’s high hourly rates. Id. at 466. However, as Judge Lee noted, if legal conclusions or factual findings in individual arbitration are binding, then companies would have little choice but to bring in the “legal cavalry” and devote substantial resources in individual arbitration, which would undermine the efficiency of those proceedings, which is the whole “point” of enforcing arbitration agreements according to their terms. Id. Judge Lee opined that there is a “lurking tension” between the FAA and the suggestion in Adolph that issue preclusion can apply to the outcome of arbitration of an individual PAGA action. Id. at 478. Judge Lee expressed his view that application of issue preclusion in this context would contravene the FAA. Hence, the concurring opinion in Johnson provides employers facing adverse rulings in individual arbitration with good arguments against the application of issue preclusion in the non-individual PAGA claim proceedings. With the test for waiver easier to meet under both federal and California law, defendants are seeing more waiver arguments advanced by plaintiffs, and more findings of waiver from the courts. With prejudice no longer at issue, it is all the more critical for a defendant to assert its right to arbitration at the earliest possible juncture in a case, as the following decisions confirm.

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