PAGA Claims Not Subject to Arbitration, Says Sixth District

KMODE_EXCEPTION_NOT_HANDLED

KMODE_EXCEPTION_NOT_HANDLED (Photo credit: avlxyz)

The Sixth District yesterday reversed an order compelling arbitration of an employee’s PAGA claims. Brown v. Superior Court (Morgan Tire & Auto, LLC), No. H037271, __ Cal. App. 4th __ (6th Dist. June 4, 2013).  This is a  preview of a question currently pending before the California Supreme Court in the case Iskanian v. CLS Transportation of Los Angeles.  The court in Brown held that “When applied to the PAGA, a private agreement purporting to waive the right to take representative action is unenforceable because it wholly precludes the exercise of this unwaivable statutory right.”

The question presented in this case is whether the Federal Arbitration Act (9 U.S.C. §§ 1-16) (FAA) permits arbitration agreements to override the statutory right to bring representative claims under the Labor Code Private Attorneys General Act of 2004 (PAGA). (Lab. Code, § 2698 et seq.) We conclude that the FAA does not demand enforcement of such an agreement. A plaintiff suing for PAGA civil penalties is suing as a proxy for the State. A PAGA claim is necessarily a representative action intended to advance a predominately public purpose. When applied to the PAGA, a private agreement purporting to waive the right to take representative action is unenforceable because it wholly precludes the exercise of this unwaivable statutory right. AT&T Mobility LLC v. Concepcion (2011) 131 S.Ct. 1740 (Concepcion) does not require otherwise.

Slip Op. at 1-2.

By CHARLES H. JUNG

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