California Courts Have Repeatedly Held That PAGA Claims Are Between Employee Acting On Behalf of State, And Employer, And Therefore Arbitration Cannot Be Compelled By Employer.
Iskanian v. CLS Transportation Los Angeles LLC, 59 Cal.4th 348 (2014) held, “[A] PAGA claim lies outside the FAA’s coverage because it is not a dispute between an employer and an employee . . . It is a dispute between the employer and the state . . . “
Nevertheless, California employers continue to seek ways to avoid the ruling in Iskanian. In Bonillas v. DMSI Staffing, LLC, E064503 (4/2 10/19/16), an unpublished opinion authored by Justice Codrington, the employer sought to escape the clutches of PAGA by arguing that “underlying” Labor Code violations, upon which PAGA violations necessarily depend, must be arbitrated first, while PAGA claims are stayed.
Nope, said the Court. “Based on the cases of Iskanian and Williams [237 Cal.App.4th 642 (2015)], we hold the PAGA claim is not subject to arbitration in whole or part because the PAGA claim is not a discrete dispute between the employer and the employee. Instead, the PAGA claim is a dispute between DMSI and Bonillas – acting on behalf of the state, the real party in interest – about probably Labor Code violations.”
COMMENT: See also my article in California Litigation, Vol. 28, No. 2 (2015): “Can Private Attorney General Actions Be Forced Into Arbitration?”
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