Enjoining Arbitrations

Brooks v. Amerihome Mortgage Co., No. B298132 (D2d6 Apr. 8, 2020)

As is required by the Labor Code Private Attorney General Act, Plaintiff here gave notice to the Labor and Workforce Development Agency that he intended to bring a PAGA claim against his Employer if the LWDA declined to. During the waiting period for LWDA to act, Employer served an arbitration demand. Once the period ran, Plaintiff sued. Employer moved to stay the case and Plaintiff sought a preliminary injunction preventing the arbitration. The trial court denied the stay and granted the injunction.

On the merits, this one is pretty clear. PAGA claims—which are brought in a semi-qui tam posture on behalf of the state—aren’t arbitrable. Plaintiff here brought only a claim under PAGA. Therefore, his claim couldn’t be sent to an arbitration. Employer argued that the complaint also sought individual remedies under Labor Code for lost wages, and that such claims are arbitrable. But that’s not what the complaint said.

So Plaintiff showed a likelihood of success. And being forced to arbitrate a non-arbitrable claim is the kind of irreparable injury that would permit an injunction.

Affirmed.

This all seems pretty cut and dry. But what if Plaintiff had lost in the trial court? Pretend, for the moment that these aren’t PAGA claims. The trial court’s grant of a stay pending arbitration is not an appealable order. But Plaintiff sought an injunction, and the denial of an injunction generally is. Code Civ. Proc. § 904.1(a)(6). 

So could Plaintiff have appealed that loss? Probably not. Notwithstanding § 904.1(a)(6), California courts have held that “an order refusing to enjoin arbitration is tantamount to an order compelling arbitration,” and thus not appealable under § 1294, the statue that limits appealability to denials of motions to compel arbitration. See Melchor Inv. Co. v. Rolm Sys., 3 Cal. App. 4th 587, 592 (1992).