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.

California Supreme Court Remands "Virtual Representation" Case

I missed this while I was out with my broken leg last fall.

On September 9, 2009, the Cal. Supreme Court remanded Deleon v. Verizon Wireless to the Second District Court of Appeal for reconsideration in light of the Court's decision in Arias v. Superior Court (Angelo Dairy). In Deleon, the Court of Appeal originally held that where the plaintiff in a class action pleads the same set of operative facts violating the same primary rights as were raised in a prior class action against the same defendant -- that employer made unlawful chargebacks against employees’ commissions -- even though parties sought different forms of relief, the primary right invaded was identical, and the latter class action was barred by res judicata to the extent that the plaintiff sought relief on behalf of class members who had settled the prior class action. The Court also held that the trial court abused its discretion in denying the plaintiff leave to amend his complaint to state claims that accrued after the settlement date of the prior action.

Our post on Deleon is here, and our post on the Supremes' decision in Arias is here.

Supreme Court Says Representative PAGA Actions Need Not Be Certified - As We Predicted

It's good to know that my powers of prediction are not failing me, at least not completely. In March, I predicted here that the Supreme Court would hold that Prop. 64 requires class certification in Unfair Competition Law ("UCL") actions, but not in actions seeking civil penalties on a representative basis under the 2004 Labor Code Private Attorneys General Act ("PAGA"). Cal. Labor Code section 2698, et seq. This morning, the Supremes issued their decisions in Arias v. Superior Court (Angelo Dairy) and Amalgamated Transit Union v. Superior Court (First Transit, Inc.) addressing these and other issues. In Arias, a unanimous Court held:

We hold that an employee who, on behalf of himself and other employees, sues an employer under the unfair competition law (Bus. & Prof. Code, § 17200 et seq.) for Labor Code violations must satisfy class action requirements, but that those requirements need not be met when an employee‘s representative action against an employer is seeking civil penalties under the Labor Code Private Attorneys General Act of 2004 (Lab. Code, § 2698 et seq.).

I didn't do as good a job predicting the outcome in Amalgamated. The Court held:

This case presents two issues. First, may a plaintiff labor union that has not suffered actual injury under the unfair competition law, and that is not an "aggrieved employee" under the Labor Code Private Attorney General Act of 2004, nevertheless bring a representative action under those laws (1) as the assignee of employees who have suffered an actual injury and who are aggrieved employees, or (2) as an association whose members have suffered actual injury and are aggrieved employees? The answer is "no." Second, must a representative action under the unfair competition law be brought as a class action? The answer is "yes," for the reasons stated in the companion case of Arias v. Superior Court (June 29, 2009, S155965) ___ Cal.4th ___.

I had predicted that the Court would answer both questions in the affirmative, so I missed on that one. Although I have to say that the Court framed the issue a little differently in its decision than it did in granting review, when it framed issue #1 thus:

Does a worker's assignment to the worker's union of a cause of action for meal and rest period violations carry with it the worker's right to sue in a representative capacity under the Labor Code Private Attorneys General Act of 2004 (Lab. Code, sec. 2698 et seq.) or the Unfair Competition Law (Bus. & Prof. Code, sec. 17200 et seq.)?

That was the question I thought the Court would answer in the affirmative. In any case, you can read the full text of Arias here and Amalgamated here.

Supreme Court to Issue Decision on 17200 and PAGA

The Cal. Supreme Court just announced that its decision in Arias v. Superior Court is forthcoming. I blogged about Arias here. The issues presented are:

(1) Must an employee who is suing an employer for labor law violations on behalf of himself and others under the Unfair Competition Law (Bus. & Prof. Code, section 17203) bring his representative claims as a class action? (2) Must an employee who is pursuing such claims under the Private Attorneys General Act (Lab. Code, section 2699) bring them as a class action?

I predicted that "the Court is likely to answer: (1) Yes; (2) No." I can't wait to see how good my crystal ball is.

Cal. Supreme Court Sets Hearings in Wage and Hour Cases

The California Supreme Court has set hearings in two cases that we're watching. On March 8, the Court will hear arguments in Arias v. Superior Court (Angelo Dairy) and Amalgamated Transit Union v. Superior Court (First Transit, Inc.).

In Arias, the Court will consider the following issues:

(1) Must an employee who is suing an employer for labor law violations on behalf of himself and others under the Unfair Competition Law (Bus. & Prof. Code, section 17203) bring his representative claims as a class action? (2) Must an employee who is pursuing such claims under the Private Attorneys General Act (Lab. Code, section 2699) bring them as a class action?

It seems to me that the Court is likely to answer: (1) Yes; (2) No. But I'm not on the Court.

In Amalgamated, the Court will consider the following:

(1) Does a worker's assignment to the worker's union of a cause of action for meal and rest period violations carry with it the worker's right to sue in a representative capacity under the Labor Code Private Attorneys General Act of 2004 (Lab. Code, sec. 2698 et seq.) or the Unfair Competition Law (Bus. & Prof. Code, sec. 17200 et seq.)? (2) Does Business and Professions Code section 17203, as amended by Proposition 64, which provides that representative claims may be brought only if the injured claimant "complies with Section 382 of the Code of Civil Procedure," require that private representative claims meet the procedural requirements applicable to class action lawsuits?

I think the Court is likely to answer: (1) Yes; (2) Yes. Let's see how my predictions do.