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Diaz v. Macys West, 101 F. 4th 697
Huff v, Interior Specialists, Inc., 107 Cal.App. 5th 970
Johnson v. Lowe’s Home Centers, 93 F. 4th 459
Leeper v. Shipt, Inc., 107 Cal. App. 5th 1001
Mondragon v. Sunrun, Inc., 101 Cal. App. 5th 592
Rodriguez v. Lawrence Equipment Inc.,106 Cal. App. 5th 645
Diaz v. Macys West, 101 F. 4th 697
Diaz filed suit against Macy’s asserting both an individual and a non-individual claim under the Private Attorneys General Act (PAGA). Macy’s moved to compel arbitration of the individual claim and dismissal of the non-individual claim, the latter argument based on Viking River Cruises v. Moriana, 596 U.S. 639 (2022). The district court granted the motion to arbitrate the individual claim and denied the motion to dismiss and, instead, ordered the non-individual claim to arbitration and “closed” the case. Macy’s appealed from the denial of the motion.
Initially, Diaz moved to dismiss the appeal because it was not a final order. The Ninth Circuit disagreed. A judicial decision on an arbitration dispute is "final" for purposes of 9 U.S.C. § 16(a)(3) when it ends the litigation on the merits and leaves nothing more for the court to do but execute the judgment. An order compelling arbitration may be appealed if the district court dismisses all the underlying claims but may not be appealed if the court stays the action pending arbitration. Here, the district court compelled arbitration without explicitly dismissing the underlying claims. The court compelled arbitration "in accordance with the [parties'] arbitration agreement." The Macy's-Diaz agreement specified that "If a party files a lawsuit in court to resolve claims subject to arbitration, both agree that the court shall dismiss the lawsuit and require the claim to be resolved through [arbitration]." The agreement further provided that in the event the suit involved arbitrable and non-arbitrable claims, the parties would ask the court to stay the non-arbitrable claims pending resolution of the arbitrable claims. The district court concluded that all of Diaz's claims were arbitrable and denied Diaz's request for a stay because it was moot. The district court closed the case because there were no remaining claims before it. Although the district court did not expressly state whether the underlying claims were dismissed or stayed, the denial of Diaz's requested stay, combined with the language of closure, overcame any presumption that the action was stayed pending the arbitration.
The Court then affirmed the district court’s denial of the motion to dismiss. But it went further and put Macy’s in a worse position than it would have been had it not appealed. It held that not only was the denial of the motion to dismiss correct, but that the court erred sending the non-individual claim to arbitration. The non-individual claim was not arbitrable for two reasons.
First, the parties consented only to arbitration of claims relating to Diaz's own employment. The agreement was replete with references to the employee herself and disputes "relating to [her] employment." Diaz was told that the arbitral process is available for "your dispute[s]" based on "your situation." The agreement also discussed disputes as "asserted by the Associate against the Company." These were but a couple of examples of the bilateral relationship between employer and individual employee that the arbitration agreement presumed would frame all arbitrable claims. Considered as a whole, the agreement's language strongly indicated an intent to exclude any amalgamation of employees' claims—including non-individual PAGA claims—from arbitration.Second, in Adolph v. Uber Technologies, Inc., 14 Cal. 5th 1104 (Cal. 2023), the California Supreme Court held that a worker becomes an aggrieved employee with standing to litigate claims on behalf of fellow employees upon sustaining a Labor Code violation committed by his or her employer. Accordingly, standing under PAGA is not affected by enforcement of an agreement to adjudicate a plaintiff's individual claim in another forum. But, under Viking River Cruises, Inc. v, Moriana, 596 U.S. 639 (2022), Diaz's non-individual PAGA claims could not be referred to arbitration. The combination of Viking River and Adolph opened the way for Diaz to bring those claims in a separate court proceeding that Macy's surely did not desire.
Huff v, Interior Specialists, Inc., 107 Cal.App. 5th 970
Huff filed a class action and individual PAGA claim against defendant. The trial court followed the decision in Viking River, supra, granting defendant’s motion to compel arbitration and dismissing the class action on the ground that Huff no longer had standing because her case was referred to arbitration. Subsequently, in Adolph, supra, the California Supreme Court ruled that the United States Supreme Court misinterpreted California law when it ruled that the employee did not have standing. Consequently, Huff appealed from the ruling dismissing the class action.
The Court of Appeal reversed. It held that the trial court, relying solely on Viking River, determined that upon ordering Huff's individual PAGA claims to arbitration, Huff no longer had standing to pursue her non-individual claims, and therefore dismissed them without prejudice. In light of Adolph and other appellate court decisions, it was now clear that trial court was mistaken on this point
.Johnson v. Lowe’s Home Centers, 93 F. 4th 459
Johnson filed an individual and non-individual PAGA claim against Lowe’s, her former employer. Lowe’s motion to compel arbitration of the individual claim and to dismiss the non-individual claim because Johnson no longer would have standing if the individual claim was sent to arbitration, was granted. Johnson appealed.
While the appeal was pending, the California Supreme Court decided Adolph, supra, wherein it held that arbitration of the individual claim did not deprive a plaintiff of standing to pursue a non-individual claim. Lowe’s argued that the Adolph ruling conflicted with federal law and that the district court’s dismissal of the on-individual claim should be affirmed.
The Ninth Circuit disagreed and reversed. There was nothing in Adolph that was inconsistent with the federal law articulated in Viking River. As required by the FAA and Viking River, supra, the California Supreme Court in Adolph compelled the plaintiff to arbitrate his individual PAGA claims. Further, as permitted by the FAA and Viking River, the Court held in Adolph that PAGA prevented the plaintiff from waiving his right to pursue his non-individual PAGA claims in court. Finally, as may or may not have been required but was certainly consistent with the FAA and Viking River, the Court held that if the plaintiff lost on the merits of his individual PAGA claims in arbitration, he no longer had standing to pursue his non-individual PAGA claims in court.
Leeper v. Shipt, Inc., 107 Cal. App. 5th 1001
Plaintiff Leeper sued Shipt and its parent, Target, asserting Labor Code violations arising from her misclassification as an independent contractor. She filed a non-individual PAGA claim but did not assert an individual claim. Defendants asserted that an individual claim is inherent in a PAGA cause of action and moved to compel arbitration of that individual claim and stay litigation of the representative claim. The trial court held that there was no individual claim and denied the motion because non-individual claims cannot be arbitrated. The defendants appealed.
The Court of Appeal reversed. In pertinent part, Labor Code section 2699(a) describes a PAGA claim as “a civil action brought by an aggrieved employee on behalf of the employee and other current or former employees.” The unambiguous and ordinary meaning of the word “and” is conjunctive, not disjunctive. Thus, the clause “on behalf of the employee and other current or former employees” in § 2699(a) means that the action described has both an individual claim component (plaintiff's action on behalf of the plaintiff himself or herself) and a non-individual component (plaintiff's action on behalf of other aggrieved employees).
The court recognized that the existence of an individual PAGA claim in every PAGA action meant that separately compelling the individual claim to arbitration where the FAA applied might trigger a stay of the litigation of the non-individual PAGA claim, and even potentially affect the outcome of that litigation via issue preclusion. But Leeper's contention that this result contravened public policy was not a ground for ignoring the unambiguous language of the PAGA statute.
Leeper also cited language in Kim v. Reins International, Inc. 9 Cal. 5th 73, 88-91 (2020) stating that the statute “expressly authorizes PAGA suits brought ‘separately’ from individual claims for relief”, and that the Legislature did not “intend]to make PAGA standing dependent on … the maintenance of a separate, unresolved claim”. But this language referred to individual non-PAGA claims—not individual PAGA claims. The plaintiff in Kim had settled his own Labor Code claims against the defendant seeking statutory penalties not recoverable under PAGA, and the question presented to the high court was whether that settlement of individual non-PAGA claims deprived him of standing to bring a PAGA action seeking civil penalties. The court concluded it did not. Thus, the language in Kim that PAGA “expressly authorizes PAGA suits brought ‘separately’ from individual claims for relief” and that “the Legislature did not intend to make PAGA standing dependent on the maintenance of a separate, unresolved claim” was referring to individual nonPAGA claims. It did not address individual PAGA claims and therefore did not guide the court’s analysis.
Mondragon v. Sunrun, Inc., 101 Cal. App. 5th 592
The plaintiff filed a PAGA claim against his former employer. The defendant moved to compel arbitration. The plaintiff opposed the motion, noting that the arbitration agreement carved out PAGA claims. The defendant responded that the issue of arbitrability should be decided by the arbitrator, arguing that the agreement stated that the AAA rules applied and these rules provided that the arbitrator had the power to decide arbitrability. The motion was denied, and the defendant appealed.
The Court of Appeal affirmed. The carveout barred arbitration of PAGA claims. Sunrun argued that the decision in Viking River, supra, prohibited enforcement of the carveout. Viking River required enforcement of agreements to arbitrate a PAGA plaintiff's individual claims where an agreement was covered by the FAA. But it had nothing to say about whether there was an agreement to arbitrate individual PAGA claims. The United States Supreme Court held that an employer could compel an employee to arbitrate individualPAGA claims if the terms of the agreement so provided. But nothing in Viking River suggested a party must arbitrate individual PAGA claims where, as here, the arbitration agreement specifically carved out PAGA claims and did not distinguish between individual and non-individual claims.
Rodriguez v. Lawrence Equipment Inc.,106 Cal. App. 5th 645
Rodriguez sued Lawrence, his former employer, alleging seven causes of action for various
Labor Code violations plus an eighth clause asserting a PAGA violation. After Lawrence filed a motion to compel arbitration, the court ordered the seven Labor Code causes of action to arbitration and stayed the PAGA claim. The arbitrator found that Rodriguez failed to prove any of his Labor Code violations and ruled in favor of Lawrence. Lawrence moved to dismiss the PAGA claim on the ground that the arbitrator’s ruling precluded Rodriguez from asserting that he was an “aggrieved employee”. Rodriguez countered that since the arbitrator never considered or made findings about his allegations that Lawrence failed to furnish accurate and complete wage statements in violation of section 226(a) or did not pay final wages in violation of section 201, those issues were not litigated or decided. The court granted Lawrence’s motion and Rodriguez appealed. The Court of Appeal affirmed.
In finding that Rodriguez “shall take nothing by way of his complaint,” the arbitrator necessarily decided all the wage and hour claims, including the sections 226(a) and 201 claims. The arbitrator did not need to make an express finding of fact regarding each wageand-hour claim because arbitrators are not obliged to find facts or give reasons for their award. A simple statement regarding the recovery amount the claimant was entitled to from the opposing party was sufficient to resolve all matters embraced by the arbitration.
The court also noted that Rodriguez presented no evidence at arbitration to support his sections 226(a), and 201 contentions. The arbitration award observed: “The evidence presented at the arbitration hearing dealt solely with the issues of alleged non-payment for all hours worked and the allegation of legally non-compliant meal and rest breaks.” In other words, Rodriguez chose not to present evidence on these claims at arbitration and now sought to justify litigation of these claims based on that choice. This is precisely the type of gamesmanship that issue preclusion aims to prevent. Thus, all of Rodriguez's wage and hour violations, including those related to sections 226(a), and 201, were litigated and necessarily decided in the arbitration proceedings.