Kim Reigns

Piplack v. In-N-Out Burgers, No. G061098 (D4d3 Mar. 7, 2023)

Galarsa v. Dolgen California, LLC, No. F082404A (D5 Feb. 24, 2023)

So, like I was saying in my post on Viking River, in nuking the Iskanian rule that an individual PAGA claim can’t be sent to arbitration, the U.S. Supreme Court kind of assumed that the remaining representative claims would get dismissed for a lack of standing. But California doesn’t have Article III-type standing, and the idea that the plaintiff would lose statutory standing when her claim was hived off was essentially foreclosed by the California Supreme Court’s decision in Kim v. Reins Int’l California, Inc., 9 Cal. 5th 73, 84 (2020).

The standing issue is pending before the California Supreme Court in Adolph v. Uber Technologies, Inc., which hasn’t been argued yet. But in the last couple of weeks, both the 4/3 and the 5 have come to the same conclusion I did—the big Supremes got California law wrong in Viking River because they misread Kim. And since the California Supreme Court is the ultimate arbiter of California law, Kim reigns.

Update (3/27): The Second District just reached the same conclusion. 

(4/7) And again, this time the 4/1. 

The Cops Don't Arbitrate

People v. Maplebear, Inc., No. D079209 (D4d1 Jul. 28, 2022)

The San Diego City Attorney sued Instacart under the UCL for misclassifying its Shoppers as independent contractors. Almost all of the Shoppers are parties to a form a agreement that contains an arbitration clause. Instacart claims it can enforce that obligation against the People. That does not make any sense. The People never agreed to arbitrate with Instacart. The fact that the People’s UCL claim is premised on violations of the Shoppers’ rights under state employment law does not make the People the Shoppers’ agent or bind them to the Shoppers’ obligations to arbitrate. Indeed, Iskanian and all of the other PAGA cases make this pretty clear.

Affirmed.

The Last Gasps of Iskanian?

Wing v. Chico Healthcare & Wellness Cntr., No. B310232 (D2d5 Apr. 28, 2022)

Leshane v. Tracy VW, Inc., No. C093881 (D3 Apr. 29, 2022)

In two cases over two days, the Court of Appeal affirms denials of motions to compel arbitration of claims based in the rule in Iskanian, finding, as other court of appeal decisions have held, that the Iskanian rule survives the U.S. Supreme Court’s intervening rulings in Epic Systems Corp. v. Lewis, 138 S. Ct. 1612 (2018) and Kindred Nursing Centers Ltd. Partnership v. Clark, 137 S. Ct. 1421 (2017).

What the Court in these cases doesn’t say is that that the Supreme Court recently heard a direct attack on Iskanian in Viking River Cruises v. Moriana. From the sound of the argument, it’s not long for the world.

Affirmed.

The NRLA Doesn't Make PAGA Claims Arbitrable

Olson v. Lyft, No. A156322 (D1d2 Oct. 29, 2020)

In Iskanian v. CLS Transp. L.A., LLC, 59 Cal.4th 348 (2014), the California Supreme Court held that PAGA claims are not arbitrable. Employer here acknowledges that rule, but argues that Iskanian was implicitly overruled by the U.S. Supreme Court in Epic Sys. Corp.v. Lewis, 138 S. Ct. 1612 (2018). Epic held that § 7 of the National Labor Relations Act—which guarantees certain employee rights to collective action—was not in conflict with the FAA and thus that employment claims are generally arbitrable. But that doesn’t undermine Iskanian. Iskanian is not premised on labor law, but on the fact that the State, which never agreed to arbitrate, is technically the plaintiff in a PAGA case. The Court of Appeal already made that point in Correia v. NB Baker Elec., Inc., 32 Cal. App. 5th 602 (2019), and the Court here sees no good reason to decide otherwise.

Affirmed.

Iskanian Survives Epic

Correia v. NB Baker Elec., Inc., No. D073798 (D4d1 Feb. 25, 2019)

The Court of Appeal here affirms a decision severing out a PAGA representative claim as not amenable to arbitration while compelling arbitration of the rest of the case. In getting to that result, the Court makes three basic decisions:

First, The fact that Plaintiff mistakenly filed an opposition to the petition to compel nine court days before the hearing (which is the rule for regular motions under Code of Civil Procedure § 1005(b) instead of ten days after service of the petition (the rule for arbitration oppositions under § 1290.6) did not prevent the court from reaching the merits. The deadline in § 1290.6 is not jurisdictional, so the court could give relief for good cause.

Second, the California Supreme Court’s decision in Iskanian v. CLS Transportation—which held that waivers of PAGA representative claims are unenforceable—remains good law following the U.S. Supreme Court’s decision in Epic Systems Corp. v. Lewis, 138 S. Ct. 1612 (2018)—which held that the National Labor Relations Act did not preclude class action waivers in employment agreements. Epic said that FAA preemption is broad, but it is not crosswise with Iskanian’s central point—that PAGA claims are essentially qui tam claims that belong to the government and thus can’t be waived by an agreement between private parties.

Third, although some federal courts suggest otherwise, PAGA claims—whether representative or individual—can’t be compelled to arbitration at all. Iskanian didn’t reach that issue, but it’s logic compels it. Because PAGA claims belong to the state, the statutory right to bring them in court can’t be waived in pre-dispute arbitration because the state has not consented. agreement without the state’s consent. A PAGA plaintiff does becomes semi-agent of the state when he brings his or her claims. In that capacity, the plaintiff could arguably consent to arbitration post-lawsuit on the state’s behalf. But at the time an employee signs a pre-dispute arbitration agreement, no such agency exists.

Affirmed.

Can't Waive the PAGA Till You're a PAG

Julian v. Glenair, Inc., No. B277064 (D2d4 Dec. 13, 2017)

By now, it’s well-settled that an employee’s claims under the Labor Code Private Attorney General Act, or PAGA, aren’t arbitrable, even if the employee’s contract says they are. But the Supreme Court decision that set that rule—Iskanian—had some dicta suggesting that its rationale did not apply to post-dispute agreements to arbitrate. The theory is, basically, that a PAGA claim belongs to the state, so the employee can’t agree to arbitrate it in an employment agreement. But once the employee is litigating on the state’s behalf she’s free to make any tactical decisions related to the litigation she deems advantageous, which includes the right, post dispute, to agree to send a case to arbitration.

Iskanian Applies Only to the Man's Bread

Esparza v. KS Indus., LP, No. F072597 (D5 Aug. 2, 2017)

In the Iskanian case, the California Supreme Court held that claims brought under the Labor Code Private Attorney General Act are not arbitrable because, although they are litigated by private parties, the relief sought in them—civil penalties—belongs to the state, which never agreed to arbitrate. That includes PAGA “representative actions,” where an employee can seek penalties arising from her employer’s violations involving other employees. Given the US Supreme Court’s upholding of arbitration clause class action waivers in the Concepcion case, Iskanian has had the effect of pushing a lot of formerly class action employment litigation into the PAGA realm. 

Broughton-Cruz Lives to Fight Another Day

McGill v. Citibank, N.A., No. S224086 (Cal. Apr. 6, 2107)

The Supreme Court granted review of this case to address whether claims brought under statutes like the CLRA and UCL, which permit a private plaintiff to seek injunctive relief on behalf of the public, can be subjected to mandatory arbitration wherein that relief is completely waived. The Court of Appeal said yes. The Supreme Court says no.

The main issue in the case is whether a California rule that claims seeking public injunctive relief are not arbitrable is preempted under § 2 of the Federal Arbitration Act, which makes all contracts to arbitrate enforceable except to the extent that state law would generally invalidate the contract. The California Supreme Court had previously upheld such a rule (known as the “Broughton-Cruz” rule), but there’s a question as to whether it survives the U.S. Supreme Court’s ruling in AT&T v. Concepcion, which held that class-action waivers were enforceable and any rule otherwise was preempted by § 2. Plaintiff analogizes Broughton-Cruz to Iskanian v. Superior Court, in which the California Supreme Court held that Private Attorney General Act claims, in which private plaintiffs seek relief on behalf of the state, cannot be compelled to arbitration because the state is not a party to the arbitration agreement.

But the Court sidesteps the brewing Concepcion/Iskanian debate—which will sooner or later make it to the U.S. Supreme Court—to decide the case on narrower grounds. The agreement here effectively precluded plaintiff from seeking public injunctive relief in any forum, arbitral or otherwise. But unlike Concepcion—where the class action waiver was a procedure inconsistent with arbitration— the contract here waived a substantive remedy that is un-waivable as a matter of statute. Which means that the waiver is unenforceable, Concepcion notwithstanding. 

Court of Appeal reversed.

Nothing New, Move Along

Betancourt v. Prudential Overall Supply, No. E064326 (D4d2 Mar. 7, 2017) 

Not really sure why this one was published. Straight up holds that PAGA claims can’t be compelled to arbitration because Plaintiff is technically standing in the shoes of the state, qui tam-style. That’s essentially the Supreme Court’s holding in Iskanian, so this doesn’t add much to the mix.

Affirmed.

Iskanian Applies to Threshold PAGA Issues Too.

Hernandez v. Ross Stores, Inc., No. E064026 (D4d2 Jan. 3, 2017)

Along the same lines as the recent Tanguilig case, this appeal addresses a motion to compel arbitration over an individual’s PAGA claim. As we’ve discussed many times, in the Iskanian case the Supreme Court held that because PAGA claims essentially belong to the state, they aren’t subject to arbitaration agreements between employer and employee. As the court explains here, that covers the whole claim, including whether plaintiff is an “aggrieved person” under PAGA and thus has standing to sue. There’s no basis to compel that determination to arbitration, even if it is technically predicate to the application of PAGA.

Affirmed.

Iskanian Applies to Individual PAGA Claims, Too

Tanguilig v. Bloomingdale’s Inc., No. A145283 (D2d5 Nov. 16, 2016)

In Iskanian v. CLS Trans. L.A., 59 Cal. 4th 348 (2014), the Supreme Court held that Labor Code Private Attorney General Act claims cannot be sent to arbitration under an arb agreement that includes a class action waiver. The gist is that PAGA claims more or less belong to the government in a qui tam-like capacity. That being the case, the matter can’t go to arbitration unless the government consents. That logic holds true for non-class PAGA claims, as much as it does for representative actions. Which resolves this appeal, in which Defendant unsuccessfully moved to send Plaintiff’s individual PAGA claim to arbitration.

Affirmed.

The Death Knell Still Rings Naught!

Nguyen v. Applied Med. Res. Corp., No. G052207 (D4d3 Oct. 14, 2016)

Denials of class cert motions and grants of motions to compel arbitration of claims subject to class action waivers are usually appealable under the “death knell” doctrine. The gist is that what’s left of the case is usually not economically viable to try or arbitrate, so refusing the permit the plaintiff on proceed on a class basis is the “death knell” for the litigation more generally, and thus provides a justification for an interlocutory appeal. 

Nice Try...

Perez v. U-Haul of Cal., No. B262029 (D2d7 Sept. 16, 2016)

The California Supreme Court held that PAGA claims aren’t arbitrable in the oft-cited Iskanian case. Defendant here raised a clever argument that, while a whole PAGA claim might not be, whether plaintiff is an “aggrieved employee”—a threshold issue that goes to whether PAGA even applies—can be the subject of an agreement to arbitrate. No dice. According to the court, nothing in Iskanian can be read to permit the hiving off of threshold issues and sending them to arbitration.

Affirmed.

Death Knell Permits Appeal of Denial of PAGA Representaive Status

Miranda v. Anderson Enters., No. A140328 (D1d5 Oct. 15, 2015)

Since the Supreme Court’s Iskanian decision permitted claims under the Labor Code Private Attorney General Act to skirt the class action waiver arbitration clauses that are otherwise decimating employment class action practice, PAGA has been at the forefront of employment litigation in California. In this case, the trial court, in a pre-Iskanian order, held that Plaintiff’s representative PAGA claims were subject to a class action waiver in her employment contract. There’s little question that the order won’t hold up under Iskanian. But can it be raised in an immediate interlocutory appeal?

Under the “death knell” doctrine, some orders denying class treatment of claims are immediately appealable, notwithstanding the fact that plaintiff could still pursue her own claims on an individual basis. In many cases, denying class treatment transforms the incentive structure for a case in ways that make it highly unlikely if not impossible to pursue individual claims to judgment. If that happens, a denial of class cert would effectively be shielded from review. Thus, since denying cert will practically terminate the whole case, courts often permit a direct appeal of that decision, notwithstanding the absence of a final judgment.

It’s an open question as to whether the death knell doctrine applies denial of representative treatment for PAGA claims. But the court here holds it does. There are various procedural differences between PAGA representative actions and class actions. Indeed, some of those distinctions—in particular, that the plaintiff is acting in a quasi qui tam capacity on the State’s behalf—are the basis of Iskanian. But there are also similarities. And when it comes to the death knell doctrine, the similarities matter more than the differences. In particular, the denial of representative status for PAGA claims alters the incentives to pursue small cases in more or less same way as denial of class cert does. So just like a decision denying cert or sending a case to non-class arbitration, a denial of the right to proceed with PAGA claims on a representative basis effectively rings the death knell on those claims too.

Reversed.

Why Not Wait?

Khalatian v. Prime Time Shuttle Inc., No. B255945 (D2d8 Jun. 9, 2015)

In an appeal of the denial of a motion to compel arbitration in a wage-and-hour misclassification case, the court of appeal uncontroversially finds that plaintiff’s job as an airport shuttle driver involved interstate commerce and thus that the FAA preempted the anti-arbitration provisions in Labor Code § 299.

PAGA Takes Down Another Arbitration Clause

Williams v. Superior Court, No. B261007 (D2d4 Jun. 9, 2015)

Plaintiff in this case filed a single count action over the Labor Code Private Attorney General Act, seeking damages for Labor Code violations in both an individual and representative capacity. Defendant moved to compel arbitration, arguing that plaintiff had contractually waived the right to bring PAGA claims, and that, in any event the Labor Code violations that were the factual predicates to his PAGA claims we subject to an arbitration clause in his employment agreement. The trial court held the claims were unwaivable, but agreed that the underlying violations, when applied to the plaintiff individually, could be severed out and sent to arbitration, with the rest of the case stayed until that gets resolved.

This Fight Doesn't Seem Over

Franco v. Arakellian Enters., No. B232583 (D2d1, as modified Mar. 11, 2015)

This is an employee class action where the plaintiff asserts claims under both the Labor Code Private Attorney General Act as well as other statutes. This is the Second District’s third shot in this case, which has been ping-ponging through the courts as the law regarding the arbitrability of certain claims kept changing.  This time, the court gets the case on transfer from the California Supreme Court to reconsider in light of Iskanian v. CLS Transportation Los Angeles, LLC, 59 Cal. 4th 348 (2014), which held that PAGA claims are not arbitrable under arbitration clauses in an employment agreement because the claims actually belong to the state government, even if they are prosecuted by an employee on a quasi-qui tam basis.

Given cumulative effects of the U.S. Supreme Court’s decision in AT&T Mobility v. Concepcion, 563 U.S. ---, 131 S.Ct. 1740 (2011) and the state supreme court’s Iskanian ruling, the results are pretty clear: Plaintiff’s non-PAGA claims are arbitrable and subject to a class valid action waiver. Plaintiff’s PAGA claims are not arbitrable and the waiver of his right to bring representative PAGA actions is unenforceable, but severable from the otherwise valid arbitration provision. On remand, the trial court should stay the PAGA claims under Code of Civil Procedure 1281.4, pending resolution of the non-PAGA claims by arbitration.

Remanded with orders.

Gentry Falls, But PAGA Waivers Are Still Void

Iskanian v. CLS Transp., No. S204032 (Cal., as modified, June 26, 2014)

This is yet another arbitration preemption decision in the wake of AT&T v. Concepcion, 563 U.S. 321 (2011). The California Supreme Court holds that its prior opinion in Gentry v. Superior Court, 42 Cal. 4th 443 (2007)—which says class action waivers in employment agreements are generally unenforceable—is preempted under the FAA. But the court goes on to decide that the FAA does not preempt state law that prohibits waiver of representative actions under the Labor Code Private Attorney General Act.