Employee’s Individual, Nonrepresentative PAGA Claims Not Arbitrable Because The Parties’ Arbitration Agreement Specifically Excluded PAGA Claims From Arbitration
Duran v. EmployBridge Holding Company, 2023 WL 3717207 (2023)
Griselda Duran was employed defendant EmployBridge, LLC. As part of her employment application, plaintiff electronically signed an arbitration agreement. The arbitration agreement (1) states it is governed by the Federal Arbitration Act; and (2) contains a broad agreement to arbitrate claims:
In the event there is any dispute between [Duran] and the Company relating to or arising out of the employment or the termination of [Duran], which [Duran] and the Company are unable to resolve informally through direct discussion, regardless of the kind or type of dispute, [Duran] and the Company agree to submit all such claims or disputes to be resolved by final and binding arbitration, instead of going to court, in accordance with the procedural rules of the Federal Arbitration Act.
Except as prohibited under applicable law, [Duran] and the Company expressly intend and agree that: (1) class action, collective action, and representative action procedures shall not be asserted nor will they apply, in any arbitration proceeding pursuant to this Agreement; (2) neither [Duran] nor the Company will assert any class action, collective action, or representative action claims against each other in arbitration, in any court, or otherwise; and (3) [Duran] and the Company shall only submit their own respective, individual claims in arbitration and will not seek to represent the interests of any other person.
Should any term or provision, or portion of this Agreement, be declared void or unenforceable or deemed in contravention of law, it shall be severed and/or modified by the court, and the remainder of this Agreement shall be fully enforceable.
Duran sued EmployBridge to recover civil penalties under PAGA for Labor Code violations suffered by her and other employees. EmployBridge moved to compel arbitration of Duran’s claims on an individual, nonrepresentative basis. The trial court denied the motion because the arbitration agreement specifically excluded PAGA claims from arbitration.
EmployBridge appealed arguing that the arbitration agreement’s exclusion of PAGA claims from arbitration did not actually mean that all PAGA claims were excluded from arbitration; rather, EmployBridge argued that individual PAGA claims had to be arbitrated. The Court of Appeal affirmed the denial of the motion to compel arbitration:
This appeal challenges the denial of a motion to compel arbitration of claims to recover civil penalties under the Labor Code Private Attorneys General Act of 2004. The denial of the motion was based on the trial court’s determination that the agreement to arbitrate specifically excluded PAGA claims. We conclude the trial court correctly interpreted the agreement’s carve-out provision stating that “claims under PAGA … are not arbitrable under this Agreement.” This provision is not ambiguous. It is not objectively reasonable to interpret the phrase “claims under PAGA” to include some PAGA claims while excluding others. Thus, the carve-out provision excludes all the PAGA claims from the agreement to arbitrate.