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Tuesday, January 31, 2012

Reyes v. Macy’s: Defendant Cannot Appeal Order Compelling Arbitration of Individual Claims, but Not Compelling Arbitration of Class or PAGA Claims

In Reyes v. Macy’s, Inc. (12/21/11, pub. 1/19/12) --- Cal.App.4th ----, 2011 WL 6416432, the plaintiffs filed an action alleging individual discrimination, harassment, and retaliation claims, class wage and hour class claims, and representative claims under PAGA. The employer moved to compel individual arbitration, dismiss the class allegations, and stay the court action. The trial court (San Francisco Superior, Judge Charlotte Walter Woolard) severed the individual claims and ordered them into arbitration. The court declined to dismiss the class and representative claims, but stayed them pending arbitration. The employer appealed, and the employee moved to dismiss the appeal.

The Court of Appeal granted the motion to dismiss. The Court held that that portion of the trial court's order granting the motion to compel arbitration of the individual claims is not appealable, and the remainder of the order denying the motion to dismiss representative claims is not a final judgment and, therefore, also is not appealable at this time. Slip op. at 1. The Court reasoned that the employer had not sought to compel arbitration of the class and representative claims, so the order denying the motion to dismiss them was not appealable. Cal. Code Civ. Proc. 904.1. Slip op. at 3.

Rejecting the employer's argument that the employee's PAGA claims also were individual claims, the Court held:

[P]laintiff may not and does not bring the PAGA claim as an individual claim, but “as the proxy or agent of the state’s labor law enforcement agencies.” (Arias v. Superior Court (2009) 46 Cal.4th 969, 986.) “The purpose of the PAGA is not to recover damages or restitution, but to create a means of ‘deputizing’ citizens as private attorneys general to enforce the Labor Code. [Citation.] [T]he relief is in large part ‘for the benefit of the general public rather than the party bringing the action.’ ” (Brown v. Ralphs Grocery Co. (2011) 197 Cal.App.4th 489, 501.)
A plaintiff asserting a PAGA claim may not bring the claim simply on his or her own behalf but must bring it as a representative action and include “other current or former employees.” (Machado v. M.A.T. & Sons Landscape, Inc. (E.D.Cal., July 23, 2009, No. 2:09-cv-00459 JAM JFM) 2009 U.S.Dist. Lexis 63414, *6.) In Machado, the district court, using the “common acceptation” of the word “and,” held that the claim must be brought on behalf of other employees. (Ibid.) “The PAGA statute does not enable a single aggrieved employee to litigate his or her claims, but requires an aggrieved employee “on behalf of herself or himself and other current or former employees to enforce violations of the Labor Code by their employers.” (Urbino v. Orkin Services of California Inc. (C.D.Cal Oct. 5, 2011, No. 2:11-cv-06456-CJC(PJWx)) 2011U.S. Dist. Lexis 114746, *22; see also Plows v. Rockwell Collins, Inc. (C.D.Cal. Aug. 9, 2011, No. SACV 10-01936 DOC (MANx)) 2011 U.S.Dist. Lexis 88781, *14; Brown v. Ralphs Grocery Co., supra, 197 Cal.App.4th 489.) Because the PAGA claim is not an individual claim, it was not within the scope of Macy’s request that individual claims be submitted to arbitration and the court’s order may not be construed as a denial of any such request.
Slip op. at 3-5.  

This is one of the few published California appellate decisions discussing PAGA, and as far as I know it is the only one holding that a plaintiff may not bring a PAGA claim only on his or her own behalf, but must include other current or former employees.  Someone feel free to correct me if I'm wrong about that.  Also, it's interesting that the Court relied on unpublished district court opinions on this point.  

The opinion is available here.

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