California Employees Cannot be Compelled to Arbitrate PAGA Claim Without the Government’s Consent

California

From The National Law Review, Emilia A. Arutunian discusses a recent case in which the court said that a party could not be compelled to arbitrate California’s Private Attorney General Act (PAGA) claims without the government’s consent. Emilia writes:

The trial court granted the arbitration petition on all causes of action except for the PAGA claim, following two prior California decisions. (Iskanian v. CLS Transportation Los Angeles, LLC (2014 59 Cal. App. 4th 48) (holding unenforceable agreements to waive the right to bring PAGA representative actions in any forum) and Tanguilig v. Bloomingdales, Inc. (2016) 4 Cal. App. 5th 665 (holding a PAGA claim cannot be compelled to arbitration without the state’s consent)).

NB Baker appealed, arguing the United States Supreme Court decision Epic Systems Corp v. Lewis (2018), which reaffirmed the broad preemptive scope of the Federal Arbitration Act, preempted Iskanian and Tanguilig.

The Court of Appeal affirmed the trial court’s finding, holding California courts remain bound by Iskanian.  The Court acknowledged the Epic court’s findings, but concluded they were not applicable because Epiq did not specifically address the issues of claims for civil penalties brought on behalf of the government, and the enforceability of an agreement barring a PAGA representative action in any forum.  The Court concluded that a waiver of PAGA representative claims in any forum is unenforceable.

In applying Iskanian, the Court also found that the State is the real party in interest in a PAGA claim.  Therefore, the State must consent to an agreement to effectively waive the right to bring a PAGA claim into court.

The Court acknowledged the seeming inconsistency of its findings with the federal courts, but characterized the federal decisions as “unpersuasive” due to the fact those courts did not fully consider the implications of the “qui tam” nature of a PAGA claim on the enforceability of an employer-employee arbitration agreement.

Read the full story at Gov Consent Required to Compel Arbitration in PAGA Claim

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