Judge Bruce G. Iwasaki, Case Number: 22STCV34627, Date: 2023-05-22 Tentative Ruling

Moving Party: Defendants Clean Harbors Environmental Services, Inc. and HPC Industrial Services, LLC

Tentative Ruling: Motion to compel arbitration is granted as to individual PAGA claims; denied and stayed as to representative PAGA claims.

This is an employment action. Plaintiff Erick Plaza Villamar (“Plaintiff”) sues Defendants Clean Harbors Environmental Services, Inc. (“Clean Harbors”) and HPC Industrial Services, LLC (“HPC”) (collectively, “Defendants”) under the Private Attorneys General Act for failure to provide prompt payment of wages, failure to provide accurate itemized wage statements, failure to provide meal and rest periods, failure to pay overtime wages, failure to pay minimum wages, failure to provide itemized wage statements, failure to pay all wages twice during each calendar month on days designated in advance by the employer as the regular paydays, and failure to maintain records.

On April 26, 2023, Defendants filed the instant petition to compel arbitration of Plaintiff’s individual PAGA claims and dismiss the non-individual PAGA claims. On May 8, 2023, Plaintiff opposed the petition. On May 15, 2023, Defendants replied.

Defendants seek to compel arbitration based on an arbitration agreement Plaintiff signed when hired by HPC on February 24, 2021 (the “Arbitration Agreement”). Defendants contend the Arbitration Agreement covers all disputes arising out of Plaintiff’s Employment with HPC. Paragraph 2 of the Arbitration Agreement provides that:

“Employer and I mutually contract and agree to the resolution by arbitration of all disputes, claims or controversies, past, present or future, arising out of or related to my application for employment, employment, or the termination of my employment with Employer…”

Defendants also contend that this Arbitration Agreement is governed by the Federal Arbitration Act (“FAA”), that Plaintiff conceded in separate federal lawsuits against Defendants in the Central District of California that he signed the Arbitration Agreement, and that he also conceded the Arbitration Agreement is not unconscionable. The judge in that case entered an order compelling arbitration of all claims against Defendants. Defendants further contend that Plaintiff’s non-individual PAGA claims should be dismissed or stayed in light of the United States Supreme Court’s recent decision in Viking River Cruises, Inc. v. Moriana (2022) 142 S. Ct. 1906, 1925.

Plaintiff’s only argument submitted in opposition to the petition to compel arbitration is that Plaintiff’s non-individual PAGA claims should continue to be litigated in this Court. Plaintiff cites to Kim v. Reins International California, Inc. (2020) 9 Cal.5th 73 to argue that a plaintiff’s non-individual PAGA claims should still be able to proceed without the individual PAGA claims because the court in Kim held that a plaintiff could settle and dismiss all of his or her individual claims and still have standing to bring a PAGA claim in court. Plaintiff further requests the Court stay this issue pending the California Supreme Court’s decision in Adolph v. Uber Technologies, Inc. (April 11, 2022, Case No. G059860), which will directly address the issue left open by Viking River Cruises, i.e., whether Plaintiff’s non-individual PAGA claims can continue separate from his individual PAGA claims.

In reply, Defendants reiterate their contention that Viking River Cruises requires dismissal of Plaintiff’s non-individual PAGA claims. Defendants contend that Plaintiff’s argument regarding Kim is unsupported since the United States Supreme Court considered that case in reaching its decision in Viking River Cruises. Defendants then argue that if the matter is not dismissed, it should be stayed pending the California Supreme Court’s decision in Adolph.

The Court finds that there is a valid arbitration agreement and grants the motion as to Plaintiff’s individual PAGA claims. The Court declines to dismiss the non-individual PAGA claims and instead stays the case under Code of Civil Procedure section 1281.4 and 9 U.S.C. section 3.

The Court GRANTS Defendants’ requests for judicial notice. (Evid. Code § 452(d).)

The party moving to compel arbitration has the initial burden to (1) affirmatively admit and allege the existence of a written arbitration agreement, and (2) prove the existence of that agreement by a preponderance of the evidence. (Rosenthal v. Great Western Fin. Securities Corp (1996) 14 Cal. 4th 394, 413.) Once this is met, the burden shifts to the responding party to prove that the agreement is unenforceable by a preponderance of the evidence. (Ibid.)

“If any suit or proceeding be brought in any of the courts of the United States upon any issue referable to arbitration under an agreement in writing for such arbitration, the court in which such suit is pending, upon being satisfied that the issue involved in such suit or proceeding is referable to arbitration under such an agreement, shall on application of one of the parties stay the trial of the action until such arbitration has been had in accordance with the terms of the agreement, providing the applicant for the stay is not in default in proceeding with such arbitration.” (9 U.S.C. § 3.)

In establishing the existence of an agreement to arbitrate, it is sufficient for the defendant to provide a copy of the arbitration agreement or state the paragraph verbatim. (Baker v. Italian Maple Holdings, LLC, 13 Cal.App.5th 1152, 1160 (2017); Cal. Rules of Court, rule 3.1330.) Defendants have attached a copy of the Arbitration Agreement to their moving papers and it provides that disputes arising out of Plaintiff’s employment with HPC, and Clean Harbors by extension, are to be submitted to arbitration. (McClain Decl., Ex. 1.) The Court notes that there is no dispute regarding the existence or enforceability of the Arbitration Agreement with respect to Plaintiff’s claims. Instead, the issue is what happens to Plaintiff’s PAGA claims.

Viking River Cruises applies and requires arbitration of Plaintiff’s individual PAGA claims.

In Viking River Cruises, the United States Supreme Court decided the issue of whether the Federal Arbitration Agreement preempted Iskanian v. CLS Transportation Los Angeles, LLC (2014) 59 Cal.4th 348 (Iskanian), which invalidated contractual waivers of the right to allege representative claims under PAGA. (Viking River Cruises, supra, 142 S.Ct. at p. 1913.) In Viking River Cruises, plaintiff Moriana signed an arbitration agreement that contained a class action waiver and a severability clause that if any “portion” of the waiver remained valid, it would be “enforced in arbitration.” (Id. at p. 1916.) Moriana then filed a PAGA complaint against her employer, Viking River Cruises, which moved to compel arbitration of her “individual” claims. (Ibid.)

The United States Supreme Court distinguished PAGA actions as being representative in “two distinct ways” – first, these claims are representative because the employees act as “agents or proxies” of the state and thus, “ ‘ “every PAGA action is . . . representative.” ’ ” Second, PAGA claims are representative “when they are predicated on code violations sustained by other employees.” With respect to the second sense of “representative,” the High Court further distinguished “ ‘individual’ PAGA claims, which are premised on Labor Code violations actually sustained by the plaintiff, from ‘representative’ (or perhaps quasi-representative) PAGA claims arising out of events involving other employees.” (Viking River Cruises, supra, 142 S.Ct. at p. 1916.) The Viking decision upheld Iskanian’s “principal rule” prohibiting general waivers of PAGA actions in the first sense. However, it held that federal law preempted the “secondary rule that invalidates agreements to separately arbitrate or litigate ‘individual PAGA claims for Labor Code violations that an employee suffered.’ ” (Id. at pp. 1916-1917.)

The Court reasoned that Iskanian’s prohibition on the division of PAGA claims “unduly circumscribes the freedom of parties to determine ‘the issues subject to arbitration.’” (Id. at p. 1923.) Because PAGA’s unique mechanism permitted employees to “unite a massive number of claims,” and Iskanian allowed employees to abrogate an agreement to arbitrate individual claims, this created the effect of coercing parties into withholding PAGA claims from arbitration. (Id. at p. 1924.) This result, the Supreme Court explained, was inconsistent with the basic principle that arbitration is a matter of consent and was “incompatible with the FAA.” (Ibid.)

In applying its holding to the facts of the case, the United States Supreme Court found that Viking River Cruises was entitled to compel arbitration of the plaintiff’s individual PAGA claim. While the agreement’s class action waiver was invalid as a matter of law, the severability clause allowed the valid portion of the waiver to be “ ‘enforced in arbitration.’ ” (Viking River Cruises, supra, 142 S.Ct. at p. 1925.) In addition, the Court found that once compelled to arbitrate her individual claim, Moriana would then lack standing to pursue the nonindividual PAGA claim because she was no longer an aggrieved employee under Labor Code section 2699, subdivisions (a) and (c). (Ibid.)

Here, there is no dispute that Plaintiff’s individual PAGA claims are subject to arbitration. The only question here is whether Plaintiff’s non-individual PAGA claims should be dismissed, stayed, or allowed to proceed.

The non-individual PAGA claims must be stayed and whether Plaintiff still has standing to assert them is an issue of state law.

While the Court orders arbitration of the individual PAGA claims, the Court will not dismiss the non-individual PAGA claim and instead stays the claim pending the outcome of the arbitration.

Defendants argue that Plaintiff’s non-individual PAGA claims must be dismissed based on non-binding dictum in the Viking River Cruises decision. The majority opinion of the United States Supreme Court assumed that “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.” (Viking River Cruises, supra, 142 S.Ct. at p. 1925.) This dictum turns on state law, and involves, among other things, the difference between federal Article III standing, and who is an “aggrieved employee” under PAGA.

Our Supreme Court has held that non-individual PAGA claims may be pursued even when the individual claims have settled. In Kim, supra, 9 Cal.5th 73 at p. 83, the High Court noted that statutory standing in California “rests on the [statute’s] language, its underlying purpose, and the legislative intent.” For PAGA standing, Labor Code section 2699, subdivision (c) only imposed two requirements to be an “aggrieved employee”: the plaintiff must be someone who was “ ‘employed by the alleged violator’ and ‘against whom one or more of the alleged violations was committed.’” (Kim, supra, 9 Cal.5th at pp. 83-84.) Even if the plaintiff was no longer “injured” because his claims were settled, the statute defined standing “in terms of violations, not injury.” (Id. at p. 84.) Therefore, the “remedy for a Labor Code violation, through settlement or other means, is distinct from the fact of the violation itself.” (Ibid.) [italics in original].

Defendants contend that Kim is not persuasive because the United States Supreme Court was aware of Kim and even relied on it when reaching its decision in Viking River Cruises. However, the United States Supreme Court briefly referenced Kim only four times in Viking River Cruises and did not discuss it substantively for its statutory analysis. In fact, one of the cited quotes from Kim in Viking River Cruises referenced that PAGA standing, “was meant to be a departure from the ‘general public’ [citation] standing”; however, the very next sentence in Kim stated that, “[n]othing in the legislative history suggests the Legislature intended to make PAGA standing dependent on the existence of an unredressed injury, or the maintenance of a separate, unresolved claim.” (Kim, supra, 9 Cal.5th at pp. 90-91, italics added.) Given the lack of discussion on statutory standing in Viking River Cruises, this Court does not rely upon that case for its dictum on PAGA standing, which is a matter of California law. (Beal v. Missouri P.R. Corp. (1940) 312 U.S. 45, 50 [“state courts are the final arbiters of [statutory] meaning and appropriate application”].) Defendants’ argument that Viking River Cruises requires this Court to dismiss Plaintiff’s non-individual PAGA claims misconceives that decision and this Court’s duty. This Court is bound to follow the United States Supreme Court on whether state law conflicts with federal law. This Court, subject to state appellate review, and not the United States Supreme Court, establishes the meaning of state law.

Additionally, the Court is not considering Kim for the proposition that Plaintiff can simultaneously pursue individual and non-individual PAGA claims in two separate actions. Rather, the Court relies on Kim for its analysis on standing generally such that PAGA authorizes employees to pursue civil penalties, even if they suffer no individual injury or if their individual injuries were remedied by other means. (Kim, supra, 9 Cal.5th at pp. 90-91.)

Furthermore, the issue of PAGA standing was recently discussed by the Court of Appeal in Gavriiloglou v. Prime Healthcare Management, Inc. (2022) 83 Cal.App.5th 595 (Gavriiloglou).) In that case, the trial court ordered Plaintiff’s non-PAGA claims to arbitration and the arbitrator found that the alleged Labor Code violations did not occur. The defendant then moved for judgment on the pleadings because it argued plaintiff no longer had standing under PAGA. The trial court agreed and entered judgment. The Court of Appeal reversed, reiterating that the plaintiff acted in two different capacities for purposes of the PAGA claim: “ ‘ “[i]dentity of parties means not only that they must be identical in person, but that the capacity in which they appear must be the same. A judgment for or against a party in one right or capacity cannot affect him when acting in another right or capacity.” ’ ” (Id. at p. 603; see also Howitson v. Evans Hotels, LLC (2022) 81 Cal.App.5th 475, 488.)

The defendant in Gavriiloglou also argued that Viking River Cruises “ ‘explicitly recognizes an individual claim under PAGA … .’” (Gavriiloglou, supra, 83 Cal.App.5th at p. 605.) The Court of Appeal disagreed, stating that the Supreme Court’s distinction between individual and non-individual claims was “mere wordplay.” An individual PAGA claim, explained the Gavriiloglou court, “is merely an individual Labor Code claim.” (Ibid.)

Recent appellate decisions reiterate that the separation of a plaintiff’s individual PAGA claims does not necessarily preclude a plaintiff’s standing to pursue representative PAGA claims. (Piplack v. In-n-Out Burgers (2023) 88 Cal.App.5th 1281, 1291 [“paring away the plaintiff’s individual claims does not deprive the plaintiff of standing to pursue representative claims under PAGA, so long as the plaintiff was employed by the defendant and suffered one or more of the alleged violations”]; Galarsa v. Dolgen California, LLC (2023) 88 Cal.App.5^th 639, 653 [plaintiff’s standing to recover a civil penalty imposed because of a Labor Code violation suffered by an employee other than the plaintiff “does not evaporate when an employer chooses to enforce an arbitration agreement”].)

Lastly, the Court does not agree that Viking River Cruises is dispositive of the standing issue as to representative PAGA claims. The Court finds that PAGA standing under California law is not necessarily connected to injury or redressability and the Court declines to dismiss the non-individual PAGA claims. (See Shams v. Revature LLC (N.D.Cal., Aug. 17, 2022, No. 22-cv-01745-NC) 2022 U.S.Dist.LEXIS 149682, *10 [“because the California Supreme Court is the final arbiter of California law, this Court applies Kim’s interpretation of PAGA standing to this case”].)[1]

The Court grants the motion to compel arbitration of Plaintiff’s individual claims and denies the motion as to the representative PAGA claims and stays them. All deadlines and time limits are tolled until further order. When the arbitration of the individual claims is completed, the parties must promptly notify the Court.

[1] Defendant also cites to Johnson v. Lowe’s Home Centers, LLC (E.D.Cal. Sep. 21, 2022, No. 2:21-cv-00087-TLN-JDP) 2022 U.S.Dist.Lexis 171626, which compelled arbitration of the individual PAGA claim and dismissed the non-individual PAGA claim. That court declined to analyze the issue further “[a]bsent intervening California authority,” though it recognized that other district courts, like Shams, ruled the other way. In any event, this Court is not bound by decisions in federal district courts.

Department 58