Judge Lisa K. Sepe-Wiesenfeld, Case Number: 24SMCV01432, Date: 2024-10-29 Tentative Ruling

Judge: Lisa K. Sepe-Wiesenfeld, Case: 24SMCV01432, Date: 2024-10-29 Tentative Ruling

Case Number: 24SMCV01432 Hearing Date: October 29, 2024 Dept: N

TENTATIVE ORDER

Defendant Tata Consultancy Services, Ltd.’s Motion to Compel Arbitration of Plaintiff’s Individual PAGA Claims and Stay Representative PAGA Claims is DENIED.

Defendant Tata Consultancy Services, Ltd. to give notice.

REASONING

Defendant Tata Consultancy Services, Ltd. (“Defendant”) moves to compel Plaintiff Jessamyn Williams (“Plaintiff”) to submit her individual claims under the Labor Code Private Attorneys General Act of 2004 (“PAGA”) alleged in her complaint to binding arbitration in accordance with the Mutual Agreement to Arbitrate Disputes that Plaintiff and Defendant entered into on January 17, 2019, and staying the proceedings regarding Plaintiff’s representative PAGA claim until the arbitration of the individual PAGA claim concludes. Plaintiff opposes the motion on the grounds there is no procedural avenue to compel arbitration of an individual claim where Plaintiff did not bring an individual claim, individual PAGA claims do not fall within the scope of the arbitration agreement, and Plaintiff may bring a representative claim without an individual claim.

“[I]n considering a . . . petition to compel arbitration, a trial court must make the preliminary determinations whether there is an agreement to arbitrate and whether the petitioner is a party to that agreement (or can otherwise enforce the agreement).” (M & M Foods, Inc. v. Pac. Am. Fish Co. (2011) 196 Cal.App.4th 554, 559; see also Giuliano v. Inland Empire Personnel, Inc. (2007) 149 Cal.App.4th 1276, 1284 [“petitioner bears the burden of proving the existence of a valid arbitration agreement by the preponderance of the evidence”].) In deciding a petition to compel arbitration, trial courts must first decide whether an enforceable arbitration agreement exists between the parties, and then determine whether plaintiff’s claims are covered by the agreement. (Omar v. Ralphs Grocery Co. (2004) 118 Cal.App.4th 955, 961.) The burden then shifts to the opposing party to prove, by a preponderance of evidence, a defense to enforcement of the agreement. (Rosenthal v. Great Western Financial Securities Corp. (1996) 14 Cal.4th 394, 413.)

Code of Civil Procedure section 1281 states, “A written agreement to submit to arbitration an existing controversy or a controversy thereafter arising is valid, enforceable and irrevocable, save upon such grounds as exist for the revocation of any contract.” Code of Civil Procedure section 1281.2 provides, in relevant part:

On petition of a party to an arbitration agreement alleging the existence of a written agreement to arbitrate a controversy and that a party thereto refuses to arbitrate such controversy, the court shall order the petitioner and the respondent to arbitrate the controversy if it determines that an agreement to arbitrate the controversy exists, unless it determines that:

(a) The right to compel arbitration has been waived by the petitioner; or

(b) Grounds exist for the revocation of the agreement.

(c) A party to the arbitration is also a party to a pending court action or special proceeding with a third party . . . .

“The right to arbitration depends upon contract; a petition to compel arbitration is simply a suit in equity seeking specific performance of that contract.” (Engineers & Architects Association v. Community Development Department (1994) 30 Cal.App.4th 644, 653.) General principles of contract law determine whether the parties have entered a binding agreement to arbitrate. (Chan v. Drexel Burnham Lambert, Inc. (1986) 178 Cal.App.3d 632, 640-641 [“The existence of a valid agreement to arbitrate involves general contract principles”].)

Here, Plaintiff entered into a Mutual Agreement to Arbitrate Disputes, which provides, in part, as follows:

[B]oth [TCS] and you voluntarily agree that any claim, dispute, or controversy arising out of or relating to your employment with [TCS] . . . shall be submitted to final and binding arbitration in accordance with the terms of this Mutual Agreement to Arbitrate Disputes.

Examples of claims, disputes or controversies that must be resolved through the process set forth in this agreement rather than in court, include, but are not limited to, . . . wage and benefit claims; . . . discrimination and harassment claims, including, without limitation, those brought under . . . the California Labor Code, . . . and any other employment-related claims of any type unless otherwise specifically excluded below. This agreement applies to all claims that [TCS] may have against you, as well as all claims that you may have against [TCS], including any of [TCS]’s parents, subsidiaries, affiliates, successors, assigns, owners, directors, officers, shareholders, employees, managers, members, and agents.

You and [TCS] agree that this agreement to arbitrate and any arbitration under this agreement shall be governed by the Federal Arbitration Act (“FAA”) and California Code of Civil Procedure sections 1280, et seq. (including without limitation section 1283.05 and its mandatory and permissive rights to discovery). The arbitration process shall be administered by JAMS pursuant to its Employment Arbitration Rules & Procedures in effect at the time the dispute is submitted.

(Mot., Sharma Decl. ¶ 26, Ex. 5.) Plaintiff does not dispute that she signed this agreement. Instead, Plaintiff argues that her claims are not subject to arbitration under the agreement.

In the First Amended Complaint (“FAC”), Plaintiff specifically states that she “is not suing in her individual capacity; she is proceeding solely under PAGA, on behalf of the State of California for all aggrieved employees.” (FAC ¶ 5.) However, Defendant argues that the arbitration agreement covers the purported violations of the Labor Code that were personally committed against Plaintiff, and because she alleges that she is a former employee who suffered at least one violation alleged in the FAC, i.e., she had personal experience with the alleged Labor Code violations, Plaintiff has alleged individual claims under PAGA.

“An employee plaintiff suing, as here, under the Labor Code Private Attorneys General Act of 2004, does so as the proxy or agent of the state’s labor law enforcement agencies. . . . In a lawsuit brought under the act, the employee plaintiff represents the same legal right and interest as state labor law enforcement agencies—namely, recovery of civil penalties that otherwise would have been assessed and collected by the Labor Workforce Development Agency.” (Arias v. Superior Court (2009) 46 Cal.4th 969, 985.) Every PAGA action is “a dispute between an employer and the state.” (LaFace v. Ralphs Grocery Co. (2022) 75 Cal.App.5th 388, 397, italics omitted.) “[A]n action to recover civil penalties is fundamentally a law enforcement action designed to protect the public and not to benefit private parties.” (Ibid.) When a private plaintiff brings a case under PAGA, the plaintiff is representing the “Labor and Workforce Development Agency or any of its departments, divisions, commissions, boards, agencies, or employees.” (Lab. Code, § 2699, subd. (a).)

In Viking River Cruises, Inc. v. Moriana (2022) 596 U.S. 639, the United States Supreme Court acknowledged that under California law “there is no individual component to a PAGA action.” (Id. at p. 649, brackets omitted.) The Supreme Court also stated, though, that “‘individual’ PAGA claims, which are premised on Labor Code violations actually sustained by the plaintiff,” can be distinguished “from ‘representative’ (or perhaps quasi-representative) PAGA claims arising out of events involving other employees.” (Id. at pp. 648-649.) In Gavriiloglou v. Prime Healthcare Management, Inc. (2022) 83 Cal.App.5th 595, the Fourth District Court of Appeal rejected the concept of “individual PAGA claims,” stating that “an ‘individual PAGA claim’ is not actually a PAGA claim at all,” i.e., “[i]t would exist even if PAGA had never been enacted,” and “[i]t is what we are calling, more accurately, an individual Labor Code claim.” (Id. at p. 605.) In Adolph v. Uber Technologies (2023) 14 Cal.5th 1104, the California Supreme Court again stated that “[a] PAGA claim for civil penalties is fundamentally a law enforcement action,” and “[t]he government entity on whose behalf the plaintiff files suit is the real party in interest.” (Id. at p. 1117, quotation marks and ellipses omitted.)

The Court opts to follow the consistent authority providing that an action under PAGA is a law enforcement action, and under PAGA, an employee acts merely as a proxy and agent for the Labor Workforce Development Agency. (Barrera v. Apple American Group LLC (2023) 95 Cal.App.5th 63, 79.) The Court “is not bound by the United States Supreme Court’s interpretation of PAGA” (id. at p. 90), particularly when there is California appellate case law to the contrary. Defendant argues that Plaintiff admits she is pursuing individual claims under PAGA. This is based on Plaintiff’s argument that she is entitled to recover a portion of the PAGA penalties if she prevails in this action. Defendant asks this Court to essentially conclude that all PAGA claims can be subject to arbitration because they all have an individual component, and any plaintiff who may receive a portion of the recovery has brought an individual claim, but the Court is not prepared to adopt such a drastic position. Put simply, the Court finds that is no “individual PAGA claim” because, again, a plaintiff who asserts a claim under PAGA asserts the claim as proxy and agent of the Labor Workforce Development Agency, not in an individual capacity. Because there are no individual PAGA claims in this action, Defendant Tata Consultancy Services, Ltd.’s Motion to Compel Arbitration of Plaintiff’s Individual PAGA Claims and Stay Representative PAGA Claims is DENIED.