California Judges Staying Non-Individual Claims When Compelling Individual PAGA Actions to Arbitration

California Judges Staying Non-Individual Claims When Compelling Individual PAGA Actions to Arbitration

In Adolph v. Uber Technologies, Inc., (2023), the Supreme Court of California held that a Private Attorneys General Act (“PAGA”) plaintiff’s “non-individual” claims survive in court despite the fact that the “individual” claims are compelled to arbitration. As such, the Court intimated that the non-individual claims should be stayed until the arbitration is finished.

A stay is an action taken by a court to place a legal proceeding on hold and jeep it from continuing. A stay is usually temporary in nature. In this instance, a stay preserves the bargained-for benefits of arbitration. Arbitration is an out-of-court resolution of a dispute between parties. It’s decided by an impartial third-party and is faster and more cost effective than litigation.

As far as PAGA suits, if the plaintiff loses in arbitration, he or she is not an aggrieved employee. As a result, they lack standing to pursue the court action and any efforts spent litigating the action in court will have been wasted.

California Court of Appeals’ Decisions Applying Adolph

In the months since Adolph was decided, California courts have primarily accepted the California Supreme Court’s proposition and have stayed non-individual claims pending the completion of individual arbitration resolutions. The various districts of the California Courts of Appeal have applied this notion in the same manner.

To that end, a number of decisions of the Court of Appeals have affirmatively ordered trial courts to issue stays in this circumstance. Most recently, the Second Appellate District ordered the trial court to stay litigation of a plaintiff's nonindividual PAGA claim until after arbitration of her individual claim was completed. In Wing v. Chico Healthcare & Wellness Ctr., LP, No. (Dec. 18, 2023), a plaintiff brought claims under the Private Attorneys General Act against her former employer. She asserted PAGA claims on her own behalf and on behalf of similarly situated employees. The employer appealed from an order denying its motion to compel arbitration of her individual and non-individual PAGA claims.

In Moreno v. Unisource Sols., Inc. (Cal. App. 2023), the Second District reversed the part of the trial court’s order dismissing plaintiff's non-individual PAGA claims and ordered that it issue a new and different order denying the motion to dismiss the non-individual claims and staying proceedings on the non-individual claims pending the arbitration of the individual claims. The plaintiff's appeal from that part of the order compelling arbitration of her individual PAGA claims was dismissed. Also, in the Second District, in Stiger v. Providence St. Joseph Health (Cal. App. 2023), the defendants moved to compel arbitration of plaintiff's individual claims and to dismiss her nonindividual claims, relying on the U.S. Supreme Court’s holding in Viking River Cruises, Inc. v. Moriana(2022). The trial court granted defendants' motion, and plaintiff appealed. Again, the portion of the trial court order dismissing plaintiff's nonindividual PAGA claims was reversed. The trial court was ordered to issue a new and different order denying the motion to dismiss the nonindividual claims and staying proceedings on the nonindividual claims pending the arbitration of the individual claims. The plaintiff's appeal from that part of the order compelling arbitration of her individual PAGA claims was also dismissed.

In Baltazar v. Ace Parking Mgmt., Inc. (Cal. App. 2023), the Fourth District reversed the trial court's order denying the employer's motion to compel arbitration and the dismissal of the plaintiff’s non-individual PAGA claims. Justice Truc T. Do wrote that “a trial court ‘may exercise its discretion to stay the non-individual claims pending the outcome of the arbitration pursuant to section 1281.4 of the Code of Civil Procedure.” In that case, Justice Do found that there was no legitimate dispute that Baltazar's PAGA action against Ace Parking was "representative" because:

  1. Baltazar was maintaining it as an agent acting on behalf of the state (in other words, in that it has been brought under PAGA); and
  2. It sought, in part, to redress the rights of employees other than Baltazar.

The more difficult question, Do said, was whether (and to what extent) the plaintiff's individual PAGA claims fell within the scope of the disputes the agreement required to be arbitrated. The Court found that the arbitration provision clearly encompassed her individual PAGA claims.

Decisions of the Superior Court of California

Superior courts has also followed suit and have examined whether arbitration provisions clearly include the plaintiff’s her individual PAGA claims. They also have looked at whether arbitration agreements were unconscionable.

The Superior Court for Los Angeles County recently dismissed a PAGA class claim and stayed the remaining claims pending completion of arbitration. Pool v. Cast Parts (Cal. Super. (LA) 2023). Also, a motion to lift the stay was granted in part with respect to the non-individual PAGA claims in Ellis v. B&V Enters., Inc. (Cal. Super. (LA) 2023). However, in Carrillo v. Southwind Foods, LLC (Cal. Super. (LA) 2023), the motion to compel arbitration of the individual PAGA claim and stay remaining litigation was denied by the LA Superior Court where the court found that the language of the arbitration agreement excluding PAGA claims from binding arbitration was unambiguous. Similarly, in Wooldridge v. Agva, LLC (Cal. Super. (LA) 2023), the plaintiff was required to arbitrate her individual claims with the defendant pursuant to the arbitration agreement. Her class claims were stricken, and the balance of the action was stayed. Williams v. Cornerstone Ondemand, Inc. (Cal. Super. (LA)) was determined in the same manner.

In Orange Couty Superior Court, a PAGA action was stayed pending completion of the arbitration in Parada v. Gpi Ca-Tii, Inc. (Cal. Super. (Orange) 2023). The same result was found in other cases in Orange County: Aguilera v. Amvets Dep't of Cal. Serv. Found. (Cal. Super. (Orange) 2023) and Alonso v. Arthur J. Gallagher Serv. Co. (Cal. Super. (Orange) 2023).

In San Bernadino Superior Court, the defendant’s Motion to Compel Arbitration and To Stay Action Pending Arbitration was denied on the grounds: (a) the PAGA claims did not "arise from" the Agreement, and thus fell outside the scope of the arbitration provision; and (b) the Agreement was unconscionable. As a result, the plaintiff's individual and representative PAGA claims were ordered to be adjudicated in that civil action. Ramos v. E Mortg. Cap., Inc. (Cal. Super. (San Bernadino) 2023).

The Superior Court in Riverside stayed the nonindividual PAGA pending the outcome of the arbitration in Selby v. KPC Glob. Med. Ctrs., Inc. (Cal. Super. (Riverside) 2023), and the Superior Court in San Diego has granted motions seeking to stay the action. Gonzalez v. Taco Bell Corp. (Cal. Super. (San Diego) 2023). But that court has also held that even assuming a stipulated agreement between the parties is an "order" triggering section 1281.4, there was no evidence that a formal agreement existed. As a result, the Motion to Stay was denied on this basis, and the Court didn’t address the substantive propriety of whether the PAGA claim must be stayed pending completion of arbitration. Mills v. MGM Contr. Inc. (Cal. Super. (San Diego) 2023). But pursuant to Adolph, a defendant’s motion to compel arbitration was denied in Haluska v. Costar Realty Info. Inc. (Cal. Super. (San Diego) 2023) (“[I]n light of the drafting decisions made to the arbitration agreement and its waiver provision, the agreement is unenforceable and so defendants must litigate all of Haluska's claims in court.”).

Takeaway

Research shows that many appellate and trial courts hearing PAGA cases are staying court proceedings until the conclusion of individual arbitrations. Some that are not have erroneously required the parties litigate the case and arbitration simultaneously. Adolph provides that a plaintiff still has standing to bring claims. “[T]he court may stay the trial of the action until such arbitration has been had in accordance with the terms of the agreement,” the Supreme Court said.

Hence, California employers seeking to enforce arbitration agreements should be aware that a judicial stay of a non-individual PAGA claim is an option until individual arbitration is complete.

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