Contreras v. Super. Ct.

Filed 3/1/21
CERTIFIED FOR PUBLICATION
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION FIVE
ROBINA CONTRERAS et al., B307025
Petitioners, (Los Angeles County
Super. Ct. No. 19STCV43062)
v.
THE SUPERIOR COURT OF LOS
ANGELES COUNTY,
Respondent;
ZUM SERVICES, INC.,
Real Party in Interest.
ORIGINAL PROCEEDINGS in mandate. Dennis J. Landin,
Judge. Petition granted.
Lichten & Liss-Riordan, Shannon Liss-Riordan and Anne
Kramer for Petitioners.
No appearance for Respondent.
Littler Mendelson, K. Kayvan Iradjpanah and Ashley J.
Brick for Real Party in Interest.
____________________
INTRODUCTION
Petitioners Robina Contreras and Gabriel Ets-Hokin filed
suit against Zum Services, Inc. (Zum) under the Private
1
Attorneys General Act (PAGA). (Lab. Code, § 2699 et seq.)
Petitioners alleged Zum misclassified them and others as
independent contractors, thereby violating multiple provisions of
the California Labor Code. Zum moved to compel arbitration
based on agreements petitioners had signed at the beginning of
their employment. The trial court granted the motion, ordering
into arbitration “the issue of arbitrability” of petitioners’ suit –
whether they are “aggrieved employees” entitled to raise PAGA
claims. Petitioners now challenge the trial court’s order, arguing
that the delegation of that question to an arbitrator frustrates
the purpose of PAGA and is therefore prohibited under California
law. We agree and reverse the order compelling arbitration.
FACTUAL AND PROCEDURAL BACKGROUND
1. Zum’s Terms of Service Agreement
Zum is a transportation service, designed to allow
customers to schedule rides for children using the Zum website or
phone application. Upon logging in the first time, new Zum
drivers are expected to sign the Zum Terms of Service Agreement
(Agreement).
The Agreement contains what appears to be a mutual
dispute resolution provision that requires drivers to resolve
disputes through final and binding arbitration: “[Y]ou and Zum
waive your rights to a jury trial and to have any dispute arising
out of or related to these Terms or our Service resolved in court.
1
Undesignated statutory references that follow are to the
Labor Code.
2
Instead, all disputes arising out of or relating to these Terms or
our Service will be resolved through confidential binding
arbitration held in San Mateo County, California in accordance
with the Streamlined Arbitration Rules and Procedures (‘Rules’)
of the Judicial Arbitration and Mediation Services (‘JAMS’),
which are available on the JAMS website and hereby
2
incorporated by reference.” The Agreement also requires drivers
to waive their right to bring a class action: “You and Zum agree
that any dispute arising out of or related to these Terms or our
Service is personal to you and Zum and that any dispute will be
resolved solely through individual arbitration and will not be
brought as a class arbitration, class action or any other type of
representative proceeding.”
The Agreement gives the arbitrator “exclusive authority to
make all procedural and substantive decisions regarding any
dispute and to grant any remedy that would otherwise be
available in court; provided, however, that the arbitrator does not
have the authority to conduct a class arbitration or a
representative action, which is prohibited by these Terms.” The
JAMS Streamlined Arbitration Rules and Procedures,
incorporated by reference, state in relevant part: “Jurisdictional
and arbitrability disputes, including disputes over the formation,
existence, validity, interpretation or scope of the agreement
under which Arbitration is sought, and who are proper Parties to
the Arbitration, shall be submitted to and ruled on by the
Arbitrator.” (Italics added.)
2
Certain claims are exempted from arbitration, but those
claims are not relevant to this appeal.
3
Contreras began driving for Zum in October 2018; Ets-
Hokin started in June 2019. Both assented to the terms of the
Agreement.
2. Petitioners’ Lawsuit Against Zum and the Motion to
Compel Arbitration
On March 23, 2020, petitioners filed the operative first
amended complaint against Zum, raising a single cause of action
3
pursuant to PAGA. The complaint alleged that Zum had
misclassified them as independent contractors and, as a result,
Zum violated multiple provisions of the California Labor Code
and other statutes and regulations protecting California
employees. Specifically, petitioners claimed Zum willfully
misclassified drivers as independent contractors in violation of
section 226.84; failed to reimburse drivers for expenses incurred
while working in violation of section 2802 and Wage Order No. 9;
failed to ensure that drivers receive minimum wage for all hours
worked in violation of sections 1194 and 1197 ; failed to pay
drivers the appropriate overtime premium for all overtime hours
worked in violation of sections 510, 554, 1194, and 1198; and
required drivers to sign illegal contracts in violation of section
432.5.
3
The original complaint was filed on November 27, 2019.
The first amended complaint added Ets-Hokin as a
representative plaintiff.
4
Section 226.8 provides in part:
“(a) It is unlawful for any person or employer to engage in
any of the following activities:
“(1) Willful misclassification of an individual as an
independent contractor.”
4
On April 21, 2020, Zum filed its motion to compel
arbitration, citing the Agreement’s provisions waiving class
actions and agreeing to submit claims to binding arbitration.
Petitioners opposed the motion, arguing that PAGA claims
cannot be compelled into individual arbitration. In reply, Zum
again emphasized the terms of the Agreement and also raised the
argument that the “threshold issue” of whether petitioners were
employees and thus eligible to raise PAGA claims should be
decided in arbitration.
3. Ruling on the Motion to Compel Arbitration
On July 22, 2020, the trial court granted Zum’s motion. In
its ruling, the court relied on California public policy that favors
resolving conflicts through arbitration, and Code of Civil
Procedure section 1281.2, which directs courts to order the
parties to arbitrate a controversy if an agreement to arbitrate the
controversy exists. The court relied on cases that support the
general rule that arbitrators should decide the issue of
arbitrability if there is an enforceable delegation clause in an
agreement. (Rent-A-Center, W., Inc. v. Jackson (2010) 561 U.S.
63, 68-69; Pinela v. Neiman Marcus Group, Inc. (2015)
238 Cal.App.4th 227, 239.) The court found that the delegation
clause here was enforceable, with “clear and unmistakable”
terms.
Although the court acknowledged that Correia v. NB Baker
Electric, Inc. (2019) 32 Cal.App.5th 602 (Correia) held PAGA
claims are not arbitrable unless the state consents (Correia, at
pp. 624-625), it found Correia inapplicable. According to the
court, “the PAGA statute and the case law expressly require the
claims to be brought by aggrieved ‘employees,’ . . . [and u]nlike
cases cited [by petitioners where] claims were undisputedly
5
brought by employees, the present case is on the very issue of
whether [petitioners] should be classified as independent
contractors or employees.’ ” The court added that “[t]here is no
California law yet regarding whether PAGA claims on [the]
misclassification issue cannot be delegated,” and found that the
issue was properly delegated to an arbitrator.
4. Writ Proceedings
Petitioners filed a petition for writ of mandate in this court,
challenging the trial court’s order granting the motion to compel
arbitration. Zum filed a preliminary opposition. On August 25,
2020, we issued an order to show cause before this court why the
relief sought in the petition should not be granted. Zum filed a
return and petitioners a reply.
DISCUSSION
1. Overview of the Parties’ Contentions
Petitioners’ writ petition is founded on a fairly
straightforward argument: Our Supreme Court in Iskanian v.
CLS Transportation Los Angeles, LLC (2014) 59 Cal.4th 348(Iskanian) and several Courts of Appeal are uniform in holding
that PAGA claims are not waivable and are not arbitrable.
Under that case law and in light of the very nature of a PAGA
claim, a court – not an arbitrator – must decide all aspects of the
claim. The only exception is when the state, as real party in
interest, has consented to arbitration. The state did not consent
here.
Zum argues PAGA is subject to the Federal Arbitration Act
(FAA) and Iskanian is no longer good law. But its more tailored
assertion is: The trial court did not order the PAGA claim to
arbitration. It only compelled a single antecedent fact or
“gateway issue” to be arbitrated: whether petitioners are
6
employees, which they must be to have standing under PAGA, or
independent contractors, and thus ineligible to bring a PAGA
claim. Zum contends that, by virtue of the delegation clause of
the Agreement and its incorporation of JAMS rules,
“jurisdictional and arbitrability disputes, including disputes over
the formation, existence, validity, interpretation or scope of the
agreement . . . and who are proper Parties to the Arbitration,
shall be submitted to and ruled on by the Arbitrator.” Iskanian
and most other appellate opinions are beside the point.
We discuss first the standard of review. Next, we
summarize how PAGA operates. Then we consider whether
PAGA claims are subject to the FAA, whether they may be
waived, and whether they may be arbitrated without the state’s
consent. We then apply these principles to Zum’s argument that
the gateway issue of whether petitioners are employees or
independent contractors is subject to arbitration.
2. Standard of Review
Standards of review of orders on a motion to compel
arbitration are not uniform. (Avila v. Southern California
Specialty Care, Inc. (2018) 20 Cal.App.5th 835, 839-840.)
Generally, if the trial court’s order rests on a factual
determination, the appellate court adopts a substantial evidence
standard. If the court’s decision rests solely on an interpretation
of law, then we employ the de novo standard of review. (Ibid.)
Because the arbitrability of a portion of a PAGA claim
presents a legal question that lies at the intersection of California
labor and arbitration law, our review is de novo. (See Provost v.
YourMechanic, Inc. (2020) 55 Cal.App.5th 982, review den.
Jan. 20, 2020, D076569 (Provost) [“Here, we apply a de novo
standard of review because the denial of arbitration of the
7
‘individual’ claim—whether Provost is an independent contractor
or an ‘aggrieved employee,’ with standing under section 2699,
subdivisions (a) and (c)—rests on a determination of the law”].)
3. PAGA Claims
a. PAGA overview
“In September 2003, the Legislature enacted the Labor
Code Private Attorneys General Act of 2004 [citations]. The
Legislature declared that adequate financing of labor law
enforcement was necessary to achieve maximum compliance with
state labor laws, that staffing levels for labor law enforcement
agencies had declined and were unlikely to keep pace with the
future growth of the labor market, and that it was therefore in
the public interest to allow aggrieved employees, acting as
private attorneys general, to recover civil penalties for Labor
Code violations, with the understanding that labor law
enforcement agencies were to retain primacy over private
enforcement efforts. (Stats. 2003, ch. 906, § 1.)” (Arias v.
Superior Court (2009) 46 Cal.4th 969, 980-981 (Arias).) Under
PAGA, an “aggrieved employee” may bring a civil action
personally and on behalf of other current or former employees for
Labor Code violations. (§ 2699, subd. (a).) An “aggrieved
employee” is defined as “any person who was employed by the
alleged violator and against whom one or more of the alleged
violations was committed.” (§ 2699, subd. (c).)
Every PAGA claim is “ ‘a dispute between an employer and
the state.’ ” (Iskanian, supra, 59 Cal.4th at p. 386.) “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.’ (Arias, supra, 46 Cal.4th at
8
p. 986, italics added).” (Kim v. Reins International California,
Inc. (2020) 9 Cal.5th 73, 81.) “The ‘government entity on whose
behalf the plaintiff files suit is always the real party in interest.’ ”
(Ibid.)
Of the civil penalties recovered under a PAGA lawsuit, 75
percent goes to the Labor and Workforce Development Agency,
leaving the remaining 25 percent for the “aggrieved employees.”
(§ 2699, subd. (i).) The state’s paramount interest means that
relief under PAGA is designed foremost to benefit the general
public, not individual parties bringing the action. (Arias, supra,46 Cal.4th at p. 986.)
A PAGA claim does not need to satisfy requirements for
class actions and “is binding not only on the named employee
plaintiff, but also on government agencies and any aggrieved
employee not a party to the proceeding.” (Arias, supra,46 Cal.4th at pp. 975, 985.)
b. PAGA claims are not subject to the FAA
Zum argues in its response that “The Federal Arbitration
Act Governs This Matter and Creates a Presumption in Favor of
Arbitration.” It points to part of the FAA that provides “a
contract evidencing a transaction involving commerce to settle by
arbitration a controversy thereafter arising out of such contract
or transaction, or the refusal to perform the whole or any part
thereof, or an agreement in writing to submit to arbitration an
existing controversy arising out of such a contract, transaction, or
refusal, shall be valid, irrevocable, and enforceable, save upon
such grounds as exist at law or in equity for the revocation of any
contract.” (9 U.S.C. § 2.)
Our Supreme Court has expressly rejected this argument.
A “PAGA claim ‘lies’ completely ‘outside the FAA’s coverage
9
because it is not a dispute between an employer and an employee
arising out of their contractual relationship.’ [Citation.] It is . . .
a dispute between an employer and the state, which alleges
directly or through its agents—either the Labor and Workforce
Development Agency or aggrieved employees—that the employer
has violated the Labor Code.” (Iskanian, supra, 59 Cal.4th at
pp. 395-396.) “Representative actions under the PAGA, unlike
class action suits for damages, do not displace the bilateral
arbitration of private disputes between employers and employees
over their respective rights and obligations toward each other.
Instead, they directly enforce the state’s interest in penalizing
and deterring employers who violate California’s labor laws.” (Id.
at p. 387.)
Undeterred, Zum tells us we should ignore our Supreme
Court’s decision in Iskanian: “The United States Supreme
Court’s recent arbitration jurisprudence confirms that the
California Supreme Court’s ruling in Iskanian cannot stand.”
Zum misunderstands our authority. “On federal questions,
intermediate appellate courts in California must follow the
decisions of the California Supreme Court, unless the United
States Supreme Court has decided the same question differently.”
(Olson v. Lyft, Inc. (2020) 56 Cal.App.5th 862, 870, original
italics; Auto Equity Sales, Inc. v. Superior Court (1962) 57 Cal.2d
450, 455.)
“The United States Supreme Court’s recent arbitration
jurisprudence” to which Zum refers is found in AT&T Mobility,
LLC v. Concepcion (2011) 563 U.S. 333 (Concepcion) and Epic
Sys. Corp. v. Lewis (2018) __ U.S. __ [138 S.Ct. 1612] (Epic
Systems). Both cases are cited repeatedly in Zum’s return to the
writ petition.
10
We are not persuaded that either opinion undermines
Iskanian’s validity. The Iskanian opinion was filed some three
years after Concepcion. Not only was our Supreme Court aware
of Concepcion, it considered and relied on Concepcion for the first
part of its holding. There, the court addressed the waivability of
two different types of claims: (1) consumer class actions and
(2) PAGA claims. As to the former, the court concluded that the
FAA preempted the non-waivability of consumer class actions.
The court concluded that “our holding to the contrary in Gentry v.
Superior Court (2007) 42 Cal.4th 443 (Gentry) has been abrogated
by recent United States Supreme Court precedent.” (Iskanian,
supra, 59 Cal.4th at pp. 359–360.) In the second part of its
opinion, the court held that neither Concepcion nor the FAA
applied to PAGA claims. Immediately after citing Concepcion’s
general rule of FAA preemption, the court stated: “We conclude
that the rule against PAGA waivers does not frustrate the FAA’s
objectives because, as explained below, 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
Agency.” (Iskanian, at p. 384.) We are not at liberty to disregard
a California Supreme Court opinion that expressly rejects the
applicability of a United States Supreme Court opinion. (See
Olson v. Lyft, Inc., supra, 56 Cal.App.5th at p. 870.)
Zum asks us also to ignore Iskanian in favor of a second
high court case, Epic Systems, supra, 138 S.Ct. 1612, a case
decided after Iskanian. The United States Supreme Court
addressed whether the FAA governed arbitration agreements
between employers and employees when the employee brought
claims under the Federal Labor Standards Act and a state class
action. Relying significantly on Concepcion, the court held the
11
agreements to arbitrate the claims were enforceable. Neither
Concepcion nor Epic Systems mentions PAGA or comparable laws
in other states. Two of our sibling courts have already held that
the issues decided in Concepcion and Epic Systems were not the
“same” as those in Iskanian. (Olson v. Lyft, Inc., supra,
56 Cal.App.5th 862; Correia, supra, 32 Cal.App.5th 602 .) Both
Courts of Appeal concluded that, even after Epic Systems, PAGA
claims, which seek to vindicate state interests, not private party
agreements, are not covered by the FAA. As Justice Haller wrote
in Correia, “Epic did not address the specific issues before the
Iskanian court involving a claim for civil penalties brought on
behalf of the government and the enforceability of an agreement
barring a PAGA representative action in any forum.” (Correia, at
p. 609; see also Tanguilig v. Bloomingdale’s, Inc. (2016)
5 Cal.App.5th 665, 673 [“We first reject Bloomingdale’s
suggestion that we depart from Iskanian either as wrongly
decided or as superseded by intervening United States Supreme
Court precedent”].)5 We join those Courts of Appeal.
5
We also observe that recently our Supreme Court cited
Iskanian approvingly in an opinion that postdates Epic Systems
by more than a year. (ZB, N.A. v. Superior Court (2019)
8 Cal.5th 175.) “In Iskanian, we declared unenforceable as a
matter of state law an employee’s predispute agreement waiving
the right to bring these representative PAGA claims. Requiring
employees to forgo PAGA claims in this way contravenes public
policy by ‘serv[ing] to disable,’ through private agreement, one of
the state’s ‘primary mechanisms’ for enforcing the Labor Code.
[Citation.] We then concluded the FAA did not preempt this rule
or otherwise require enforcement of such a waiver in an
arbitration agreement.” (Id. at p. 185.)
12
c. PAGA claims cannot be arbitrated without state
consent
Iskanian held that the PAGA claim itself may not be
waived by an employment agreement. It did not directly address
whether an employer may contractually require a PAGA claim to
be arbitrated. (Iskanian, supra, 59 Cal.4th at p. 384; see also
Julian v. Glenair, Inc. (2017) 17 Cal.App.5th 853, 867.)
After Iskanian, several appellate courts have held that an
individual PAGA plaintiff may not be required to arbitrate his or
her PAGA claim. “[A]n employer cannot rely on an employee’s
predispute arbitration agreement to compel arbitration of a
PAGA claim. [Citation.]” (Collie v. The Icee Co. (2020)
52 Cal.App.5th 477, 481, review den. Nov. 10, 2020, S264524; see
also Correia, supra, 32 Cal.App.5th at pp. 621-622; Provost.,
supra, 55 Cal.App.5th at pp. 997-998; Betancourt v. Prudential
Overall Supply (2017) 9 Cal.App.5th 439, 447-448; Julian v.
Glenair, Inc., supra, 17 Cal.App.5th at p. 872; Tanguilig v.
Bloomingdale’s, Inc., supra, 5 Cal.App.5th at p. 678.)
The rationale for this rule is stated plainly in Correia:
“Without the state’s consent, a predispute agreement
between an employee and an employer cannot be the basis for
compelling arbitration of a representative PAGA claim because
the state is the owner of the claim and the real party in interest,
and the state was not a party to the arbitration agreement.
Under state and federal law, an arbitration agreement applies
only to the parties who agreed to its terms and a party cannot be
compelled to arbitrate a dispute that it has not elected to submit
to arbitration.” (Correia, supra, 32 Cal.App.5th at p. 622, italics
added.)
13
Nothing in the record suggests that the state has consented
to the arbitration of petitioners’ PAGA claim.
4. The “Preliminary” Question of Whether Petitioners
Are “Aggrieved Employees” Under PAGA May Not Be
Decided in Private Party Arbitration
Zum argues that, even if PAGA claims are not subject to
the FAA, even if Iskanian is still good law, and even if an
employee by predispute agreement may not be forced to arbitrate
a PAGA claim, the trial court’s order was nevertheless correct.
Zum’s position is that the order did not compel arbitration
of a PAGA claim. What the trial court did was to carve out part
of the PAGA claim – whether or not petitioners are really
aggrieved employees – and then order that “antecedent” fact to be
arbitrated. The argument continues, if petitioners are not
employees but independent contractors, this is really not a PAGA
claim at all, the law regarding PAGA claims does not apply, and
the parties agreed to arbitrate.
Zum begins its legal discussion with the familiar rule that
parties to an agreement can agree that the arbitrator may decide
the question of arbitrability. (Rent-A-Center, W., Inc. v. Jackson,
supra, 561 U.S. at pp. 68-69.) Zum asserts, “Here, the parties
unmistakably agreed that only the arbitrator would decide
gateway questions of arbitrability.” The high court has cautioned
that merely naming part of a dispute as a “gateway question”
does not resolve necessarily “arbitrability.” “Linguistically
speaking, one might call any potentially dispositive gateway
question a ‘question of arbitrability,’ for its answer will determine
whether the underlying controversy will proceed to arbitration on
the merits.” (Howsam v. Dean Witter Reynolds, Inc. (2002)
537 U.S. 79, 83.)
14
With the high court’s observation in mind, we turn to Zum’s
argument. That argument begins with what Zum characterizes
as the Agreement’s delegation clause. Although there is no
provision in the Term of Service captioned “Delegation Clause,”
the trial court agreed with Zum that the Agreement delegated to
the arbitrator the issue of whether petitioners were “aggrieved
employees.” The court relied on two provisions: “Here, [real
party] asserts that the parties have ‘clearly and unmistakably’
agreed to delegate questions of arbitrability to an arbitrator
because the dispute resolution provision provides that ‘all
disputes arising out of [or] relating to these Terms or our Service
will be resolved through confidential binding arbitration.’ Mtn.,
Garg Decl., Ex. B. Further, [Zum] asserts that the agreement
expressly requires that arbitration be governed by the JAMS
Streamlined Arbitration Rules and Procedures, which provide at
Rule 8(b) that ‘Jurisdictional and arbitrability disputes, including
disputes over the formation, existence, validity, interpretation or
scope of the agreement under which Arbitration is sought, and
who are proper Parties to the Arbitration, shall be submitted to
and ruled on by the Arbitrator.’ Mtn., Brick Decl., ¶¶ 3-4, Ex. D;
Garg Decl., Ex. B.”
Zum portrays the arbitrability question as “a private issue
subject to a private agreement, not a public issue in which the
State has an interest,” as there will be no determinations on the
merits of the claim. The state will not have an interest in the
suit unless and until the arbitrator determines petitioners are
employees and, if it does, the PAGA claim may be litigated in
court. This is fallacious wordsmithing. If an arbitrator rules that
petitioners are not “aggrieved employees,” there will be no
remaining PAGA claim anywhere. By virtue of an arbitration to
15
which it did not consent, the state will have lost one of its
weapons in the enforcement of California’s labor laws. This
result would be at odds with the several appellate opinions we
previously have cited, e.g., Correia: “Without the state’s consent,
a predispute agreement between an employee and an employer
cannot be the basis for compelling arbitration of a representative
PAGA claim because the state is the owner of the claim and the
real party in interest, and the state was not a party to the
arbitration agreement.” (Correia, supra, 32 Cal.App.5th at
p. 622.)
Characterizing the process as resolving only an
“arbitrability,” “delegatable” or “gateway” issue, or the
adjudication of an “antecedent” fact, does not extinguish the risk
to the state that it is an arbitrator, not a court, who nullifies the
state’s PAGA claim.
This “splitting of the PAGA claim” argument is not new.
Courts of Appeal have rejected Zum’s position, although on a
slightly different ground than lack of state consent. The most
recent is Provost, supra, 55 Cal.App.5th 982. There, the Fourth
District framed the issue as if it had the present case in mind:
“YourMechanic sought to compel plaintiff Jonathan Provost to
arbitrate whether he was an ‘aggrieved employee’ within the
meaning of the Labor Code before he could proceed under the
Labor Code Private Attorneys General Act of 2004 (PAGA)
(§ 2698 et seq.) with his single-count representative action
16
alleging various Labor Code violations against the company.”
6
(Provost, supra, 55 Cal.App.5th at p. 987, fn. omitted.)
The court first reviewed the principles of waiver and
arbitrability of PAGA claims as set out in Iskanian. The Provost
court reminded that a PAGA claim is “a representative or qui
tam-type action and that the state is the real party in interest in
the suit.” (Provost, supra, 55 Cal.App.5th at p. 987.)
The court held that the employer’s motion to compel
arbitration of the “aggrieved employee” issue was an effort to
split a single representative PAGA action into (a) individual
arbitratable and (b) representative nonarbitrable components.
This, the Court of Appeal concluded, the employer cannot do.
Other Courts of Appeal before Provost have addressed
PAGA “splitting.” The earliest of these is Williams v. Superior
Court (2015) 237 Cal.App.4th 642 (Williams). The trial court in
Williams was apparently presented with the converse of what we
have here. Zum seeks to arbitrate the “antecedent” fact of
whether petitioners are aggrieved employees. The defendant
employer in Williams sought to arbitrate the sequent fact of
whether there was a wage and hour violation. The Williams
defendant argued that plaintiff must first arbitrate his
“individual claim” because “he is required to prove the underlying
rest period violation in order to prevail, and the [arbitration
agreement] mandates that rest period claims be arbitrated.”
(Williams, at p. 645.) The trial court denied defendant’s motion
6
The complaint in the present case is also a “single-count
representative action alleging various Labor Code violations.”
(Provost, supra, 55 Cal.App.5th at p. 987.)
17
to enforce waiver of the plaintiff’s PAGA claim, but ordered the
“individual claim” to arbitration. (Williams, at p. 645.)
Division Four of this court issued a peremptory writ
directing the trial court to deny the employer’s motion in its
entirety. The court pointed out there was no “individual claim” in
petitioner’s complaint. “The trial court cited no legal authority
for its determination that a single representative action may be
split in such a manner; [the employer] has identified no case so
holding, and we have located none. Indeed, case law suggests
that a single representative PAGA claim cannot be split into an
arbitrable individual claim and a nonarbitrable representative
claim.” (Williams, supra, 237 Cal.App.4th at p. 649.)7
Williams was followed by Perez v. U-Haul Co. of California
(2016) 3 Cal.App.5th 408 (Perez). There, Division Seven of this
court described the employer’s motion to compel arbitration this
way: “[Employer] contends, however, that plaintiffs may
nonetheless be compelled to individually arbitrate the ‘predicate
issue of whether’ they are ‘aggrieved employee[s] within the
7
The defendant in Williams had argued in the trial court the
arbitrator should decide the underlying Labor Code violation.
The Court of Appeal described the actual ruling as Williams
“must submit the ‘underlying controversy’ to arbitration for a
determination whether he is an ‘aggrieved employee’ under the
Labor Code with standing to bring a representative PAGA claim.”
(Williams, supra, 237 Cal.App.4th at p. 649.) Regardless of
which part of the PAGA claim was to be arbitrated and which
was to be adjudicated in court, Williams’s holding was clear:
“[P]etitioner cannot be compelled to submit any portion of his
representative PAGA claim to arbitration, including whether he
was an ‘aggrieved employee.’ ” (Williams, at p. 649.)
18
meaning of PAGA, and thus have standing to bring . . .
representative claim[s].’ According to [employer], if the
arbitrator determines it did ‘commit[ ] Labor Code violations
against [plaintiffs]’ (thereby establishing standing), plaintiffs
may then pursue their ‘representative PAGA claim [in court],
e.g., . . . the number, scope and identities of other “aggrieved
employees” that [plaintiffs] will represent, and the amount of
representative penalties.’ Stated more simply, [employer] argues
that although ‘neither [party] agreed to arbitrate representative
issues, and neither may be compelled to participate in a
representative arbitration,’ plaintiffs may be compelled to
individually arbitrate whether they have standing to bring such a
representative claim.” (Id. at p. 409.)
The Perez court rebuffed the argument. “We agree with
Williams’s conclusion that California law prohibits the
enforcement of an employment agreement provision that requires
an employee to individually arbitrate whether he or she qualifies
as an ‘aggrieved employee’ under the PAGA, and then (if
successful) to litigate the remainder of the ‘representative action
in the superior court.’ In Iskanian, the Supreme Court explained
that ‘every PAGA action, whether seeking penalties for Labor
Code violations as to only one aggrieved employee—the plaintiff
bringing the action—or as to other employees as well, is a
representative action on behalf of the state.’ (Iskanian, supra,
59 Cal.4th at p. 387.) The court also held that requiring an
employee to bring a PAGA claim in his or her ‘individual’
capacity, rather than in a ‘representative’ capacity, would
undermine the purposes of the statute. ([Id.] at pp. 383–384.)
Given these conclusions, we do not believe an employer may force
an employee to split a PAGA claim into ‘individual’ and
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‘representative’ components, with each being litigated in a
different forum.” (Perez, supra, 3 Cal.App.5th at p. 421.)
Other courts have agreed with Williams and Perez. (See
Brooks v. AmeriHome Mortgage Co., LLC (2020) 47 Cal.App.5th
624, 629 [because the plaintiff brought a PAGA representative
claim, “he cannot be compelled to separately arbitrate whether he
was an aggrieved employee”]; Hernandez v. Ross Stores, Inc.
(2016) 7 Cal.App.5th 171, 178 [“determination of whether the
party bringing the PAGA action is an aggrieved party . . . should
not be decided separately by arbitration”]; see also Jarboe v.
Hanlees Auto Group (2020) 53 Cal.App.5th 539, 557 [“Because a
PAGA claim is representative and does not belong to an employee
individually, an employer should not be able [to] dictate how and
where the representative action proceeds.”].)
Williams, Perez, Provost, and the other cited cases all have
reached the same conclusion. We agree with the chorus that in
California, a PAGA plaintiff may not be compelled to arbitrate
whether he or she is an aggrieved employee.8
8
Zum argues that a “number of courts have examined
whether a misclassification controversy must be resolved
pursuant to the parties’ arbitration agreement before the
substantive portions of their claim could proceed. These courts
have required the claimants first to arbitrate the
misclassification gateway issue in accordance with the parties’
contractual agreement.” Zum cites a number of federal cases for
this proposition. (See Johnston v. Uber Technologies, Inc. (N.D.
Cal. 2019) 2019 WL 4417682, at *5; Lamour v. Uber Technologies,
Inc. (S.D.Fla. 2017) 2017 WL 878712, at *12-13; Ali v. Vehi-Ship,
LLC (N.D.Ill. 2017) 2017 WL 5890876, at *5; Sakyi v. Estee
Lauder Cos. (D.D.C. 2018) 308 F.Supp.3d 366; Olivares v. Uber
Technologies, Inc. (N.D.Ill. 2017) 2017 WL 3008278, at *3.)
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DISPOSITION
Let a peremptory writ of mandate issue directing the
respondent court to vacate its July 22, 2020 order granting the
motion to compel arbitration, and to issue a new order denying
the motion. Petitioners shall recover their costs in this
proceeding.
RUBIN, P. J.
WE CONCUR:
BAKER, J.
MOOR, J.
None of these cases involve PAGA claims; of interest the
arbitration provisions in two of the cases expressly excluded
PAGA claims from arbitration. (See Johnston v. Uber
Technologies, Inc., supra, 2019 WL 4417682, at *5; Olivares v.
Uber Technologies, Inc., supra, 2017 WL 3008278, at *3.) We find
these cases irrelevant to this appeal.
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