Wing v. Chico Healthcare Wellness Centre CA2/5 ( 2023 )

Filed 12/18/23 Wing v. Chico Healthcare Wellness Centre CA2/5
Opinion following transfer from Supreme Court
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions
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IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION FIVE
JILL WING, B310232
Plaintiff and Respondent, (Los Angeles County
Super. Ct. No. BC719077)
v.
CHICO HEALTHCARE &
WELLNESS CENTRE, LP,
Defendant and Appellant.
APPEAL from an order of the Superior Court of Los
Angeles County, Elihu M. Berle, Judge. Reversed and remanded.
Fisher & Phillips, Grace Y. Horoupian, Shaun J. Voight,
Rebecca S. King and Raymond W. Duer; Zarmi Law and David
Zarmi for Defendant and Appellant.
Mara Law Firm, David Mara and Matthew Crawford for
Plaintiff and Respondent.
__________________________
Jill Wing brought claims under the Private Attorneys
General Act of 2004 (PAGA) against her former employer, Chico
Healthcare & Wellness Centre, LP. PAGA allows an aggrieved
employee to sue for civil penalties under the Labor Code as a
representative of the State. (Lab. Code, § 2699 et seq.)1 Wing
asserted PAGA claims on her own behalf (individual claim) and
on behalf of similarly situated employees (non-individual claim).
Chico appealed from an order denying its motion to compel
arbitration of Wing’s individual and non-individual PAGA claims.
In a previous opinion, we affirmed the trial court’s order
denying the motion to compel based on then-controlling case law,
Iskanian v. CLS Transportation Los Angeles, LLC (2014)
59 Cal.4th 348 (Iskanian). Chico petitioned for review in the
California Supreme Court, which granted the petition and
deferred further action pending its consideration of and
disposition in Adolph v. Uber Technologies, Inc. (2023) 14 Cal.5th
1104 (Adolph). The high court has now directed us to vacate our
previous decision and reconsider the cause in light of Adolph.
In Adolph, supra, 14 Cal.5th at page 1114, the California
Supreme Court considered the United States Supreme Court’s
examination of PAGA in Viking River Cruises, Inc. v. Moriana
(2022) 596 U.S. ––––, [142 S.Ct. 1906, 1919, fn. 4] (Viking River).
Viking River rejected that portion of Iskanian that prohibited an
employer from compelling arbitration of an employee’s individual
PAGA claim. (Ibid.) Under Viking River, Wing may be ordered
to arbitrate her individual PAGA claim. We thus reverse that
1 All further undesignated statutory references are to the
Labor Code.
2
portion of the trial court’s order denying arbitration of her
individual PAGA claim.
Remaining is the question of her non-individual PAGA
cause of action. Adolph provides the answer. It holds, “Where a
plaintiff has brought a PAGA action comprising individual and
non-individual claims, an order compelling arbitration of the
individual claims does not strip the plaintiff of standing as an
aggrieved employee to litigate claims on behalf of other
employees under PAGA.” (Adolph, supra, 14 Cal.5th at p. 1114.)
Applying Adolph, we conclude the trial court properly denied the
motion to compel arbitration of Wing’s non-individual PAGA
claim. Trial of the non-individual claim may proceed after
arbitration of the individual claim is concluded.
We therefore reverse in part, affirm in part, and remand
with directions to the trial court to stay litigation of Wing’s non-
individual PAGA claim until after arbitration of her individual
claim is completed.
PROCEDURAL BACKGROUND
On October 17, 2017, Wing was hired to work for Chico as a
receptionist at a skilled nursing facility. As a condition of her
employment, Wing agreed to be bound by Chico’s Alternative
Dispute Resolution Policy (ADR Policy), which provided that
“final and binding arbitration” would be the exclusive means for
resolving “covered disputes” between the employee and employer.
The ADR Policy defined “covered disputes” as including
“any dispute arising out of or related to my employment, the
terms and conditions of my employment and/or the termination of
your employment [sic], including, but not limited to, the
following: [¶] Alleged violations of federal, state and/or local
constitutions, statutes or regulations; [¶] . . . [¶] Claims alleging
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failure to compensate for all hours worked, failure to pay
overtime, failure to pay minimum wage, failure to reimburse
expenses, failure to pay wages upon termination, failure to
provide accurate, itemized wage statements, failure to provide
meal and/or rest breaks, entitlement to waiting time penalties
and/or other claims involving employee wages, including, but not
limited to, claims brought under the Fair Labor Standards Act
and any other statutory scheme related to wages or working
hours . . . .”
The ADR Policy qualified that it did not intend to “require
arbitration of any claim or dispute which the courts of this
jurisdiction have expressly held are not subject to mandatory
arbitration.” The ADR Policy further specified that if any party
filed a lawsuit involving some claims that were subject to
arbitration and some that were not, “the court will stay, or place
on hold, any litigation of the claims in the case that are not
subject to arbitration” and require litigation of the non-arbitrated
claims to proceed after arbitration is complete.
The ADR Policy included a waiver of class or representative
actions: “I understand and agree this ADR Program prohibits me
from joining or participating in a class action or representative
action, acting as a private attorney general or representative of
others, or otherwise consolidating a covered claim with the claim
of others.” It also included a severability clause, allowing any
illegal, invalid or unenforceable terms to be enforced to the extent
permissible and all remaining terms and provisions to continue
“in full force and effect.”
On June 11, 2018, Wing provided statutorily required
notice to the Labor and Workforce Development Agency of alleged
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Labor Code violations by her employer.2 (§ 2699.3.) The agency
did not respond to her notice within the time provided by statute,
allowing Wing to file PAGA claims for wage, overtime, meal
break, and other Labor Code violations.3 She filed her complaint
on August 22, 2018, alleging the afore-mentioned PAGA claims
as well as individual and class action claims. Relying on the ADR
Policy, Chico requested Wing stipulate to arbitrate her individual
claims, strike her class claims, and stay her PAGA claims
pending the outcome of arbitration. Wing refused; she instead
amended her complaint to drop the non-PAGA claims. After an
unsuccessful mediation, Chico moved to compel arbitration of
Wing’s PAGA claims.
The trial court denied the motion. In its statement of
decision, the court found it was bound to follow “the Supreme
Court precedent of Iskanian and the subsequent overwhelming
authority reaffirming its holding.” Chico timely appealed. We
affirmed the judgment, and Chico petitioned for and was granted
review by the California Supreme Court. The high court
transferred the case to this court with directions to vacate our
2 Wing initially believed her employer was Rockport
Administrative Services, LLC. She amended the notice to the
agency and her subsequent complaint when she learned Chico
Healthcare was her employer.
3 PAGA requires that an employee give written notice both to
the agency and the employer of an alleged Labor Code violation.
(§ 2699.3, subd. (a)(1); Kim v. Reins International California, Inc.
(2020) 9 Cal.5th 73, 81 (Kim).) If the agency does not investigate,
does not issue a citation, or fails to respond within a specified
time, the employee may assert PAGA claims as a representative
of the state. (§ 2699.3, subd. (a)(2); LaFace v. Ralphs Grocery Co.
(2022) 75 Cal.App.5th 388, 394.)
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prior opinion and reconsider it in light of Adolph. Neither Wing
nor Chico filed supplemental briefs discussing Adolph. (Cal.
Rules of Court, rule 8.200(b).)
DISCUSSION
Where, as here, the trial court’s order denying a motion to
compel arbitration “rests solely on a decision of law,” we review
that decision de novo. (Robertson v. Health Net of California, Inc.
(2005) 132 Cal.App.4th 1419, 1425.)
PAGA authorizes an “aggrieved” employee to bring an
action for civil penalties on behalf of the state against her
employer for Labor Code violations committed against the
employee and fellow employees, with most of the proceeds of that
litigation going to the state. (Kim, supra, 9 Cal.5th at p. 81.)
Before PAGA was enacted, only the state could sue employers for
civil penalties under the Labor Code. (Id. at p. 80.) “A PAGA
claim is legally and conceptually different from an employee’s
own suit for damages and statutory penalties. An employee
suing under PAGA ‘does so as the proxy or agent of the state’s
labor law enforcement agencies.’ Every PAGA claim is ‘a dispute
between an employer and the state.’ Moreover, the civil penalties
a PAGA plaintiff may recover on the state’s behalf are distinct
from the statutory damages or penalties that may be available to
employees suing for individual violations. Relief under PAGA is
designed primarily to benefit the general public, not the party
bringing the action. ‘A PAGA representative action is therefore a
type of qui tam action,’ conforming to all ‘traditional criteria,
except that a portion of the penalty goes not only to the citizen
bringing the suit but to all employees affected by the Labor Code
violation.’ The ‘government entity on whose behalf the plaintiff
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files suit is always the real party in interest.’ ” (Ibid., internal
citations omitted.)
In Iskanian, our Supreme Court examined an arbitration
agreement that, like Chico’s ADR Policy, contained a waiver of all
representative actions, including PAGA claims. (Iskanian, supra,
59 Cal.4th at p. 377.) Iskanian held “an employee’s right to bring
a PAGA action is unwaivable” and that such a rule was not
preempted by the FAA to the extent the rule barred “predispute
waiver[s] of an employee’s right to bring an action that can only
be brought by the state or its representatives.” (Id. at pp. 383,
388.) The court reasoned, “the rule against PAGA waivers does
not frustrate the FAA’s objectives because . . . the FAA aims to
ensure an efficient forum for the resolution of private disputes,
whereas a PAGA action is a dispute between an employer and the
state [Labor and Workforce Development] Agency.” (Id. at
p. 384.) Under Iskanian, employers could not “require employees
to ‘split’ PAGA actions in a manner that puts individual and non-
individual components of a PAGA claim into bifurcated
proceedings.” (Adolph, supra, 14 Cal.5th at p. 1118 [citing
cases].) This was no longer the rule after Viking River.
In Viking River, the United States Supreme Court held the
FAA applied to preempt Iskanian’s prohibition against claim
splitting under PAGA. (Viking River, supra, 142 S.Ct. at
p. 1916.) Viking River concluded, “the FAA preempts the rule of
Iskanian insofar as it precludes division of PAGA actions into
individual and non-individual claims through an agreement to
arbitrate.” (Id. at p. 1924.) Viking River reasoned that portion of
Iskanian improperly “ ‘circumscribes the freedom of parties to
determine “the issues subject to arbitration” and “the rules by
which they will arbitrate” ’ ” by imposing on them an all-or-
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nothing choice: arbitrate both individual and non-individual
claims or forego arbitration entirely. (Id. at pp. 1923-1925.)
The court left intact Iskanian’s other holdings. In
particular, Viking River held the FAA did not preempt Iskanian
to the extent it held that a predispute categorical waiver of the
right to bring a PAGA action was unenforceable as against
California public policy. (Viking River, supra, 142 S.Ct. at
p. 1919.) It also affirmed that part of Iskanian holding
unenforceable an agreement that, while providing for arbitration
of individual claims, compelled waiver of non-individual claims.
(Id. at p. 1925.)
Viking River thus permitted an employer to compel
arbitration of an employee’s individual PAGA claims, even
though the arbitration agreement was invalid under Iskanian as
to waiver of the non-individual claims. (Viking River, supra,
142 S.Ct. at p. 1925.) Notwithstanding its affirmance of Iskanian
on the grounds described above, the Viking River court concluded
“the correct course” was dismissal of the non-individual claim
once an employee’s individual claim was sent to arbitration.
(Ibid.) It explained, “PAGA provides no mechanism to enable a
court to adjudicate non-individual PAGA claims once an
individual claim has been committed to a separate proceeding.”
A plaintiff whose individual claims were “pared away from a
PAGA action” would be “no different from a member of the
general public” with respect to any non-individual PAGA claims.
Thus, he or she would lack statutory standing to pursue any
remaining non-individual PAGA claims in court. (Id. at p. 1925.)
Justice Sotomayor, in a concurring opinion, noted that, “in an
appropriate case,” California courts would “have the last word”
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on the state law question of standing under PAGA. (Ibid. (conc.
opn. of Sotomayor, J.).)
Adolph, supra, 14 Cal.5th at page 1119 presented the
California Supreme Court with Justice Sotomayor’s “appropriate
case” to address standing under PAGA. Adolph held, “Standing
under PAGA is not affected by enforcement of an agreement to
adjudicate a plaintiff’s individual claim in another forum.” (Id. at
p. 1121.) As a result, a plaintiff retains standing as an aggrieved
employee to litigate claims on behalf of other employees under
PAGA. (Id. at p. 1114.)
Here, Wing agreed to an ADR Policy that, as in Viking
River, required binding arbitration of “any dispute arising out of
or related to” her employment with Chico. The ADR Policy also
contained a waiver of all representative and non-individual
PAGA claims along with a severability clause. The ADR Policy
further specified a procedure to stay litigation of claims not
subject to arbitration pending completion of arbitration of the
covered claims.
Applying Viking River, Wing’s individual PAGA claims are
“covered claims” that are subject to mandatory arbitration under
Chico’s ADR Policy because they are severable from her non-
individual claims. Applying Adolph, and the still-valid portions
of Iskanian, the waiver of her right to bring non-individual PAGA
claims under the ADR Policy is unenforceable and Wing retains
standing to litigate her non-individual claims after arbitration of
her individual PAGA claims. We thus reverse the trial court’s
order denying Chico’s motion to compel arbitration of Wing’s
individual PAGA claim. We affirm the trial court’s order denying
the motion to compel arbitration of the non-individual PAGA
claim.
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DISPOSITION
The order denying the motion to compel arbitration of
Wing’s individual PAGA claims is reversed. The matter is
remanded for the trial court to issue a new order granting the
motion to compel arbitration of her individual PAGA claim and
stay the litigation of her non-individual PAGA claim until the
arbitration is completed. The parties to bear their own costs on
appeal.
RUBIN, P. J.
WE CONCUR:
BAKER, J.
KIM, J.
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