PRIVATE ATTORNEYS GENERAL ACT

Rodriguez v. Packers Sanitation Services LTD, LLC., 109 Cal. App. 5th 69

Ford v. The Silver F, Inc., 110 Cal. App. 5th 553

CRST Expedited, Inc. v. Superior Court, 112 Cal. App. 5th 872


Rodriguez v. Packers Sanitation Services LTD, LLC., 109 Cal. App. 5th 69
Plaintiff filed a PAGA claim (section 2699(a) of the Labor Code) against his employer in which he asserted a non-individual claim only. The employer’s motion to compel arbitration of plaintiff’s individual claim was denied. The employer appealed, citing Leeper v. Shipt, Inc., 107 Cal. App. 5th 1001 (2024), wherein another panel of the Court of Appeal held that an individual claim must be part of a PAGA action and is arbitrable.

This panel of the Court of Appeal affirmed. The Leeper court interpreted section 2699(a) to mean that an action under PAGA is one that “has both an individual claim component (plaintiff's action on behalf of the plaintiff himself or herself) and a representative component (plaintiff's action on behalf of other aggrieved employees).” It held as a matter of statutory construction that “any PAGA action” therefore “necessarily includes … an individual PAGA claim.” Based on this reasoning, and without analyzing the plaintiff's complaint, the Leeper court concluded the plaintiff's complaint included an individual PAGA claim. It reversed the trial court's order with directions to issue a new order “compelling the parties to arbitrate [the plaintiff's] individual PAGA claim and staying litigation of the representative [i.e., nonindividual] PAGA claim.”

In essence, Leeper decided that (1) under Labor Code section 2699(a), an individual PAGA claim is a necessary component of a PAGA action; therefore, (2) all PAGA actions, including the complaint under consideration, included an individual PAGA claim. But the second conclusion does not follow from the first. In other words, even if one were to agree with Leeper's interpretation of Labor Code section 2699(a), just because a PAGA action must include an individual PAGA claim does not mean any particular complaint brought under the auspices of PAGA does contain one. It means that a PAGA complaint should contain an individual PAGA claim, not that it does. Plaintiffs commonly file complaints that do not conform to statutory requirements. For that reason, , Code Civ. Proc., § 436(b) authorizes trial court to strike out all or any part of any pleading not drawn or filed in conformity with the laws.

Further, Leeper ruled that the plaintiff's complaint “necessarily” included an individual PAGA claim and reached this conclusion without considering the allegations of the complaint itself. By ruling in this fashion, the Leeper court appeared to insert into the plaintiff's complaint a missing claim. It is the plaintiff, not the court, who is responsible for prosecuting a civil action. And the complaint in a civil action serves to frame and limit the issues. The Leeper court overlooked these principles by construing Labor Code section 2699(a) as requiring an individual PAGA claim, and not only declaring that the complaint “necessarily” included such a claim but also requiring the plaintiff to arbitrate a claim she had never chosen to assert. Instead, where the defendant brings a motion to compel arbitration and the parties dispute whether the complaint includes arbitrable individual PAGA claims, the court should resolve the dispute by examining the complaint. A motion to compel arbitration is simply a suit in equity seeking specific performance of a contract. On a motion to compel arbitration, the court is required to determine whether the plaintiff has asserted claims that fall within the parties' arbitration agreement. No dispute may be ordered to arbitration unless it is within the scope of the arbitration agreement. If the plaintiff's complaint does not assert an individual PAGA claim, there is no existing dispute over his or her right to obtain an individual PAGA remedy, the plaintiff cannot be ordered to arbitrate such a claim, and the court should decline to compel any such claim to arbitration.

However, the plaintiff's failure to assert an individual PAGA claim may mean the complaint failed to comply with section 2699(a). This was a potential pleading deficiency the defendant may raise in an appropriate pleading challenge. If the defendant files a motion raising such a challenge and the court grants it with leave to amend, the plaintiff will then have the opportunity to decide for himself or herself whether to cure the asserted deficiency by adding an individual PAGA claim.

This is an appeal from an order resolving a motion to compel arbitration, not a motion challenging the sufficiency of the complaint. The relevant question is whether the complaint does assert an individual PAGA claim, not whether it should include such a claim. As a result, the parties' dispute over the propriety of bringing a PAGA action that asserts only nonindividual PAGA claims is not ripe for consideration.

Ford v. The Silver F, Inc., 110 Cal. App. 5th 553
Ford filed a PAGA claim on behalf of himself and other employees of Silver F, doing business as Parkwest Casino, for Labor Code violations. Parkwest moved to compel arbitration. The arbitration agreement was signed prior to the ruling in Viking River Cruises, Inc. v. Moriana , 596 U.S. 1639 (2022) and excluded “representative claims under [PAGA]”. The agreement also waived “the right to commence arbitration or to file a complaint in court in the form of a class, collective, or representative action on behalf of others”. The trial court held that the agreement excluded all PAGA claims and denied the motion.

Parkwest appealed, arguing that, under Viking River, PAGA claims are "representative" in two ways: First, all PAGA claims are "representative" in the sense that a plaintiff brings a PAGA claim as an agent or proxy for the state. Second, some PAGA claims are "representative" in the sense that they are predicated on code violations suffered by employees other than the plaintiff. Because the term "representative" has two possible meanings, the exclusion for "representative claims under [PAGA]" was, at best, ambiguous about whether it was intended to exclude all PAGA claims or only those non-individual claims that the plaintiff might assert on behalf of other employees. Thus, the FAA's presumption of arbitrability must be applied to construe the agreement to permit arbitration of Ford's individual PAGA claims.

The Court of Appeal rejected this argument and affirmed. It was guided by the principle of statutory construction known as noscitur a sociis, which means that a word takes meaning from the company it keeps. Under this principle, the meaning of a word may be enlarged or restrained by reference to the object of the whole clause in which it is used. Here, in addition to "representative claims under [PAGA]," the arbitration agreement excluded claims for workers compensation or unemployment compensation, ERISA claims, and administrative complaints submitted to a governmental agency. These were all employment-related claims that an employee was likely to bring against an employer, and they were not claims ordinarily pursued on a class, collective, or representative basis. Therefore, the doctrine of noscitura sociis supported the conclusion that the parties intended the PAGA carve out to be construed broadly, similar to the other types of claims excluded from the scope of arbitration.

The court also took account of the circumstances under which the contract was executed. At the time the parties entered into the arbitration agreement, California law was settled that every PAGA action was a "representative" action and that PAGA claims could not be split into "individual" and "representative" components through an agreement to arbitrate. Parties to a contract are presumed to have had the existing law in mind when they execute an agreement. Because the parties' contract was formed prior to Viking River, at a time when the law established that PAGA claims could not be split into arbitrable "individual" claims and nonarbitrable "representative" claims, the only reasonable interpretation of the exclusion of "representative claims under [PAGA]" was that it was intended to exclude all PAGA claims. Although Viking River may have changed the law about whether PAGA claims are divided into individual and nonindividual components, it did not change the principle that a party cannot be compelled to arbitrate a dispute that he or she did not agree to resolve by arbitration.

In addition, the exclusionary clause and representative claims waiver used different language. It is a general rule of interpretation that where different words or phrases are used in one section than in other sections of an agreement, it is presumed a different meaning was intended. Here, both the waiver and the exclusionary clause used the term "representative," but only the waiver added the qualifying phrase "on behalf of others." This supported the interpretation that the parties intended the phrase "representative claims under [PAGA]" to refer broadly to all PAGA claims, not just those brought on behalf of other employees.

CRST Expedited, Inc. v. Superior Court, 112 Cal. App. 5th 872
The issue in this case was whether employees could file a “headless” PAGA claim. Plaintiff
Sanchez filed a PAGA claim against his former employer alleging violations of the Labor Code, asserting both an individual claim and a non-individual claim. At that time, neither claim was arbitrable. Subsequently, the United States Supreme Court decided Viking River Cruises, Inc. v. Moriana, supra, wherein it held that the individual claim was arbitrable and that the non-individual claim, even though it remained non-arbitrable, could not be pursued, because once the individual claim was referred to arbitration, the plaintiff no longer had standing to prosecute it. The employer then moved to compel arbitration of the individual claim and dismiss the non-individual claim. The court granted the motion. Sanchez appealed and while the appeal was pending, the California Supreme Court held in Adolph v. Uber Technologies, Inc., 14 Cal. 5th 1104 (2023) that employees whose individual claims were compelled to arbitration had standing to pursue a non-individual claim, although the non-individual claim could be stayed pending result of the arbitration. Sanchez then dismissed the individual claim and amended the non-individual claim by asserting the PAGA claim on behalf of his fellow employees, not himself. i.e., a “headless” PAGA claim. Sanchez also asked the trial court to reinstate the non-individual claim. It did so. The employer filed a writ, arguing that the word “and” in PAGA required a plaintiff to both arbitrate an individual claim and litigate a non-individual claim.

The Court of Appeal affirmed. It concluded that the statutory text was at least reasonably susceptible to more than the employer’s strictly conjunctive interpretation. The strictly conjunctive interpretation that requires the plaintiff to pursue both individual PAGA claims and nonindividual PAGA claims greatly increased the time and effort required of the plaintiff to resolve the lawsuit. In certain cases, the disincentive created by the extra effort might deter a plaintiff from pursuing any PAGA penalties whatsoever on the State’s behalf. This reduction in PAGA actions would undercut the vigorous assessment and collection of civil penalties as provided in the Labor Code. Thus, it was reasonable to interpret “may” and “and” broadly and not limit a plaintiff’s choices to either pursuing no PAGA claims or pursuing all PAGA claims.

The court could have stopped at that point, but it decided to “resolve the ambiguity” by determining whether a requirement that an aggrieved employee pursue the State’s individual PAGA claims in arbitration before pursuing the State’s nonindividual PAGA claims in court enhanced or diminished effective enforcement of California’s labor laws. The court then concluded that arbitration impeded the State’s intent. It cited two law review articles critical of arbitration that asserted (1) employers enjoyed a higher percentage of favorable rulings when compared to court actions; (2) awards were, on average, lower than those obtained in court; and (3) procedural restraints, such as limitations on discovery, favored the employer. It also disputed the argument that arbitration is speedy, citing Rodriguez v. Lawrence Equipment, Inc. (2024) 106 Cal.App.5th 645 and Rocha v. U-Haul Co. of California (2023) 88 Cal.App.5th 65, where the arbitration in each case took roughly two years from filing to award without stating the time it generally takes a litigated matter to proceed from filing to decision. Finally, citing one of the aforementioned law review articles, it concluded that empirical studies of arbitration outcomes suggest the employee is less likely to be found to be an aggrieved employee by an arbitrator than by a court.