Judge: William D. Claster, Case: 22-01247402, Date: 2022-10-21 Tentative Ruling

1. Defendant Activcare Living, Inc.'s Notice of Motion and Motion to Compel Arbitration of Plaintiff's Individual PAGA Claim, Dismiss the Non-Individual PAGA Claims, and Dismiss or Stay Litigation Pending Arbitration ROA 37

2. Status Conference
  

Defendants ActivCare Living, Inc. and ActivCare Living of California, Inc. move for an order (1) compelling arbitration of Plaintiff Jackqueline Mitchell’s PAGA claim on an individual basis, and (2) dismissing the representative portion of her PAGA claim.  For the reasons set forth below, the motion to compel arbitration is GRANTED, and this case is STAYED pending the completion of arbitration.  The request to dismiss the representative portion of Plaintiff’s claim is DENIED WITHOUT PREJUDICE to reconsideration upon completion of arbitration.

The Court has not considered the unpublished decisions of California Superior Courts cited by Plaintiff.  “Even assuming for the sake of argument that [these cases] involve[] the same issue as the case before [the Court] . . . a written trial court ruling has no precedential value.”  (Santa Ana Hospital Medical Center v. Belshe (1997) 56 Cal.App.4th 819, 831.)

An arbitration review conference will be held on July 31, 2023 at 8:30 a.m. in Department CX-104.

I.            Existence and Enforceability of Agreement to Arbitrate

Plaintiff does not contest the existence of an agreement to arbitrate that covers claims arising under the Labor Code.  She does not argue the agreement is unconscionable under Armendariz v. Foundation Health Psychare Services, Inc. (2000) 24 Cal.4th 83, nor does she challenge Defendants’ argument that the Federal Arbitration Act applies to the agreement.  The Court therefore treats these points as conceded.

Plaintiff’s opposition centers on two paragraphs of the agreement, which provide in relevant part:

Notwithstanding the foregoing, these arbitration procedures do not apply to Workers’ Compensation claims, to any claims or charges which may be filed under the National Labor Relations Act, Employment Development Department claims, or as otherwise required by state or federal law . . . .

[. . .]

Except as otherwise required under applicable law, (1) Employee and Company expressly intend and agree that class action and representative action procedures shall not be asserted, nor will they apply, in any arbitration pursuant to this provision; (2) Employee and Company agree that each will not assert class action or representative action claims against the other in arbitration or otherwise; and (3) Employee and Company shall only submit their own, individual claims in arbitration and will not seek to represent the interests of any other person or entity.  (Shetter Decl., Ex. 1, at p. 3.)

Plaintiff makes two arguments.  First, she contends that because PAGA waivers remain unenforceable under California law, PAGA claims are excluded from the scope of the agreement insofar as “arbitration procedures do not apply . . . as otherwise required by state or federal law.”  Plaintiff is correct that even under Viking River Cruises, California’s rule against wholesale waiver of PAGA claims remains good law.  (See Viking River Cruises, Inc. v. Moriana (2022) 142 S.Ct. 1906, 1924-1925 [citing Iskanian v. CLS Transportation Los Angeles, LLC (2014) 59 Cal.4th 348].)  But under Viking River Cruises, FAA preemption requires a PAGA claim to be split into “individual” and “representative” components, and the former component is arbitrable regardless of what Iskanian says. 

Second, Plaintiff contends the agreement is ambiguous and must be interpreted against Defendants.  The Court disagrees that the agreement is ambiguous.  To the extent there is any ambiguity, it arises not from the agreement, but from the use of “representative” in PAGA jurisprudence.  As the Supreme Court explained in Viking River Cruises:

An unfortunate feature of this lexicon is that it tends to use the word “representative” in two distinct ways, and each of those uses of the term “representative” is connected with one of Iskanian’s rules governing contractual waiver of PAGA claims.

In the first sense, PAGA actions are “representative” in that they are brought by employees acting as representatives—that is, as agents or proxies—of the State. But PAGA claims are also called “representative” when they are predicated on code violations sustained by other employees. In the first sense, “‘every PAGA action is ... representative’” and “[t]here is no individual component to a PAGA action” [citations], because every PAGA claim is asserted in a representative capacity. But when the word “representative” is used in the second way, it makes sense to distinguish “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.  (142 S.Ct. at p. 1916.)

The representative action waiver here provides that representative actions cannot be pursued in arbitration except to the extent required by law.  Under the FAA as interpreted by Viking River Cruises, the parties are required by law to permit arbitration of the individual component of a PAGA claim, even though “individual” PAGA claims are still “representative” in the first sense identified by the Supreme Court.  Construed as required by Viking River Cruises, the agreement is clear.  Plaintiff is ordered to arbitrate the individual portion of her PAGA claim.

II.          Further Proceedings

Pursuant to CCP § 1281.4, this case is stayed pending the outcome of Plaintiff’s arbitration.

The remaining question is what to do with the representative portion of Plaintiff’s PAGA claim.  Defendants ask the Court to dismiss it.  This request follows the conclusion of Viking River Cruises.  There, the Supreme Court majority explained that under its view of California law, plaintiffs ordered to arbitrate their individual PAGA claims lose standing to prosecute representative PAGA claims: “But as we see it, 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.  Under PAGA’s standing requirement, a plaintiff can maintain non-individual PAGA claims in an action only by virtue of also maintaining an individual claim in that action.”  (Id., at p. 1925.)

But “construction of a state statute by a federal court does not preclude a state court from later rejecting the federal court’s conclusion.”  (16 Cal.Jur.3d (2022) Courts, § 324.)  As two concurrences in Viking River Cruises pointed out, the majority may well be incorrect about PAGA standing.  Justice Sotomayor wrote, “Of course, if this Court’s understanding of state law is wrong, California courts, in an appropriate case, will have the last word.”  (Viking River Cruises, supra, 142 S.Ct. at p. 1926 [conc. opn. of Sotomayor, J.].)  And three justices noted the majority’s conclusion “addresses disputed state-law questions” and “is unnecessary to the result.”  (Ibid. [conc. opn. of Barrett, J.].)

In fact, the California Supreme Court recently granted review in Adolph v. Uber Technologies, S274671, to answer this exact question.  Per an order dated August 1, 2022, “The issue to be briefed and argued is limited to the following: Whether an aggrieved employee who has been compelled to arbitrate claims under the Private Attorneys General Act (PAGA) that are ‘premised on Labor Code violations actually sustained by’ the aggrieved employee [citation] maintains statutory standing to pursue ‘PAGA claims arising out of events involving other employees’ [citation] in court or in any other forum the parties agree is suitable.”

Were the Court to dismiss the representative PAGA claims only for Adolph to reach a different conclusion than Viking River Cruises, both judicial economy and the parties’ resources would be taxed by attempts to unwind the dismissal.  Furthermore, the arbitrator may decide that Plaintiff hasn’t suffered any of the Labor Code violations complained of, meaning Plaintiff may lack PAGA standing regardless of what happens in Adolph.  For these reasons, the Court will deny the request to dismiss the representative portion of the PAGA claim without prejudice to Defendants raising the issue again when the arbitration concludes.