©2023 Seyfarth Shaw LLP www.seyfarth.com 2023 Cal-Peculiarities | 93 rights to concerted activity under the NLRA.113 But in 2019 the Court of Appeal reaffirmed that PAGA representative-action waivers remain unenforceable under California law and that PAGA representative actions may not be compelled to arbitration without the state’s consent.114 A 2020 case upheld an employee’s right to seek injunctive relief against arbitration of a PAGA claim. The employee had brought a PAGA suit for violation of wage and hour laws. When the employer moved to stay proceedings pending arbitration under the parties’ employment contract, the employee sought a preliminary injunction against the arbitration. The trial court issued the injunction and denied the employer’s stay request. The Court of Appeal affirmed, holding that the trial court properly considered (1) the party’s likelihood of prevailing on the merits and (2) the relative interim harm the parties would suffer from the issuance or nonissuance of an injunction. Both factors seemed to favor the injunction: because the PAGA claim was representative, not individual, the plaintiff could not be compelled to submit any portion of it to arbitration, including whether he was an “aggrieved employee,” and so arbitration of a nonarbitrable claim would be futile. And the employee’s harm from suffering arbitration would outweigh the employer’s harm from an injunction against arbitration.115 Another 2020 case similarly held that predispute waivers of PAGA claims are unenforceable. The Court of Appeal held that the plaintiffs’ arbitration agreements were unenforceable as to their PAGA claims, which they brought on behalf of the LWDA—the real party in interest despite it not being named as such. Here, although the plaintiffs were acting as agents of the LWDA when they sued, they were not acting as LWDA agents when they signed their arbitration agreements. Consequently, the agreements were not entered into on behalf of the LWDA and thus could not be enforced against the LWDA. Because there was no arbitration agreement between the employer and the LWDA, the trial court properly denied the employer’s motion to compel arbitration.116 Two 2020 Court of Appeal decisions rejected employer arguments that the California Supreme Court’s 2014 Iskanian decision—holding that employee can’t be compelled to arbitrate PAGA claims on the basis of predispute arbitration agreements—did not survive the U.S. Supreme Court’s 2018 decision in Epic Systems Corp. v. Lewis upholding an arbitration agreement. In the first case, the Court of Appeal noted that Epic does not address the PAGA plaintiff’s unique status as “the proxy or agent” of the state in enforcing state labor laws on behalf of state law enforcement agencies. Epic thus does not undermine Iskanian’s characterization of PAGA claims as law enforcement actions in which plaintiffs step into the shoes of the state. Moreover, while Epic reconfirmed the FAA’s breadth, the FAA allows courts to refuse to enforce arbitration agreements on grounds applicable to any contract, and refusing to enforce a PAGA waiver in an arbitration agreement would be for a reason that would apply to any contract: the LWDA is not a party to the agreement, and thus can’t be bound by the employee’s predispute agreement to arbitrate.117 In a similar 2020 decision, the Court of Appeal likewise held that post-Epic challenges to Iskanian lack merit. The Court of Appeal reasoned that Epic—which addressed whether the NLRA renders unenforceable arbitration agreements containing class action waivers that interfere with workers’ right to engage in “concerted activities”— did not address the same issue raised in Iskanian, which addressed a private attorneys general law.118 And in yet another 2020 repudiation of employer efforts to direct PAGA claims to arbitration, the Court of Appeal held that a PAGA action is not subject to arbitration even for the limited purpose of determining whether the plaintiff has standing to sue. The employer, noting that the plaintiff alleged he was misclassified as an independent contractor, moved to compel arbitration under an arbitration agreement, arguing that since only “aggrieved employees” can bring PAGA claims, an arbitrator must decide whether the plaintiff was an employee, instead of an independent contractor, before a PAGA action could proceed. The trial court rejected this argument, as did the Court of Appeal, which held that requiring the plaintiff to arbitrate whether he is an “aggrieved employee” would require splitting his single action into two components: an arbitrable “individual” claim and a nonarbitrable representative claim. Such case-splitting would run contrary to the law holding that a PAGA action is
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