©2023 Seyfarth Shaw LLP www.seyfarth.com 2023 Cal-Peculiarities | 123 PAGA settlements resolve PAGA claims of other aggrieved employees. The Court of Appeal so held in a case where a truck driver who was bringing a PAGA action against his employer for denying rest and meal breaks learned that another employee bringing a PAGA action and a class action on those claims was settling those claims. Although the truck driver opted out of the proposed class settlement, he could not opt out of the PAGA action and so the PAGA settlement and resulting judgment in the other employee’s case finally resolved all PAGA claims, including the truck driver’s. Although the truck driver sought to continue his own PAGA action beyond the period covered by the PAGA settlement, he lacked standing to do so because, by the time that period ended, he had not been employed by the employer for well more than a year.466 In 2022 the Ninth Circuit similarly held that an aggrieved employee, who was not a party to the PAGA lawsuit, could not appeal a PAGA settlement. The Ninth Circuit noted: “There is no individual component to a PAGA action because every PAGA action is a representative action on behalf of the state [and] [p]laintiffs may bring a PAGA claim only as the state’s designated proxy[.]”467 The Ninth Circuit further rejected the argument that an aggrieved employee could appeal a PAGA settlement on the grounds that he was entitled to some portion of the PAGA award: an aggrieved employee “does not receive a portion of the PAGA settlement because of any injury, but instead because the California legislature made a policy choice that the bounty that normally serves as the incentive for the plaintiff to bring the suit should instead be shared with all aggrieved employees.”468 The manner in which PAGA actions are settled confirms their peculiar nature. This chart compares a PAGA settlement with a class action settlement involving the same underlying alleged Labor Code violations (in which a class is conditionally certified for purposes of settlement). PAGA Settlements Class Settlements One-step approval process Preliminary and final approval steps required Individuals cannot opt out All class members have a chance to opt out Only the LWDA can object Any class member can object PAGA judgments preclude duplicative PAGA claims Class members can bring PAGA claims No effect on individual Labor Code claims Class members are bound by the settlement 75% of net fund goes to LWDA, 25% to individuals All of net fund goes to class members 100% of settled civil penalties Settlement proceeds can be both wages and penalties Prior immunity to arbitration agreements. The California Supreme Court enhanced PAGA’s power in 2014, in Iskanian v. CLS Transportation Los Angeles,469 which found a PAGA exception from the general rule that classaction waivers in arbitration agreements are enforceable. Iskanian reasoned that a PAGA claim differs from a class action in that PAGA plaintiffs act as private attorneys general, on behalf of the State of California—an entity that never agreed to arbitrate with the employee.470 While federal district courts both before and after Iskanian reached the opposite conclusion,471 the Ninth Circuit in 2015 sided with Iskanian.472 And later U.S. Supreme Court authority, though reaffirming the broad scope of the FAA in striking down state laws hostile to arbitration, left intact the PAGA claim’s special immunity from enforceable arbitration agreements. (See § 5.2.4.) However, on June 15, 2022, the U.S. Supreme Court partially preempted the Iskanian decision in Viking River Cruises, Inc. v. Moriana by ruling that employers can enforce arbitration agreements under the FAA insofar as the agreements mandate arbitration of an employee’s individual PAGA claims. 473 Specifically, the Court held that
RkJQdWJsaXNoZXIy OTkwMTQ4