September 20, 2021

Volume XI, Number 263

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September 20, 2021

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September 17, 2021

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California Court of Appeal Confirms that PAGA Claims Cannot be Compelled to Arbitration

Even after the Supreme Court’s favorable decision in Epic Systems Corp. v. Lewis (“Epic”), California courts will not compel a PAGA claim to arbitration.

In Collie v. The Icee Co., a former employee of The Icee Company, Tauran Collie, alleged a single cause of action under California’s Private Attorney General Act (“PAGA”) against her former employer. The Icee Company attempted to compel Collie’s claim to arbitration based on a broadly worded pre-dispute arbitration agreement that Collie signed when he began his employment.

The Icee Company argued that two decisions which held that PAGA claims could not be compelled to arbitration, Betancourt and Iskanian, were no longer good law after the United States Supreme Court’s decision in Epic, which held that class action waivers in arbitration agreements must be enforced and individual arbitration must be compelled if the agreement contains such a provision.

The Court of Appeal was not persuaded that Epic should change the court’s analysis of PAGA claims. It held that “Epic does not address ‘the unique nature of a PAGA claim’—that is, the ‘PAGA litigant’s status as ‘the proxy or agent’ of the state’ and his or her ‘substantive role in enforcing our labor laws on behalf of state law enforcement agencies.’”  Thus, Epic does not undermine Iskanian’s or Betancourt’s characterization of PAGA claims as law enforcement actions in which plaintiffs step into the shoes of the state.” And because Collie had yet to step into those shoes, he could not have agreed to arbitrate on behalf of the state when he signed the arbitration agreement. The Court simply held that because the state did not agree to arbitrate its PAGA claim, “Icee cannot enforce a contractual provision to bind a nonparty [the state].”

PAGA’s unique nature has, at least for the time being, immunized PAGA claims for arbitration, and it appears that will be the case for the foreseeable future, much to the chagrin of California employers.

© 2021 Proskauer Rose LLP. National Law Review, Volume X, Number 205
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About this Author

Kate Gold Labor and Employment Lawyer Proskauer
Partner

Kate Gold is a partner in the Labor & Employment Law Department in the Los Angeles office.

Kate has over 25 years of experience representing clients in a range of industries, across all areas of employment law.  An experienced litigator, she has represented clients in all types of employment-related suits, including class and collective actions, discrimination, retaliation and harassment, non-compete and wage/hour matters.  In addition to litigating, she conducts high-level workplace investigations and routinely counsels clients on matters involving the full range of state and...

+1.310.284.5623
Phillipe Lebel labor & Employment Attorney Los Angeles Proskauer Law Firm
Associate

Philippe (Phil) A. Lebel represents employers in all aspects of employment litigation, including wage and hour, wrongful termination, discrimination, harassment, retaliation, whistleblower, trade secrets, and breach of contract litigation, in both the single-plaintiff and class-action context, at both the trial and appellate level, and before administrative agencies. Phil also represents employers in connection with labor law matters, such as labor arbitrations and proceedings before the National Labor Relations Board. Additionally, Phil counsels clients to ensure compliance with federal...

+1.310.284.4558
Cole Lewis Employment Attorney
Associate

Cole Lewis is an associate in the Labor & Employment Department.

Cole graduated from UCLA School of Law, where he worked as a law clerk for Public Counsel of Los Angeles and advocated for benefit recipients in the Department of Public Social Services. He has also previously worked as a summer associate in Proskauer’s Labor & Employment Department.

Prior to law school, Cole received his Bachelor’s degree in Journalism at Indiana University, where he graduated cum laude.

310-284-5668
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