California Mediation and Arbitration

Arbitration, PAGA: 4th Dist. Div. 2 Holds That Losing Non-PAGA Claims In Arbitration Does Not Preclude Litigation Of PAGA Claims

Modified Opinion Addresses Viking River Cruises v. Moriana.

        In a partially published and modified opinion, the Court of Appeal holds that an employee's loss of Labor Code violation claims in arbitration does not preclude her from bringing a PAGA claim that the trial court had stayed. The basis for this ruling is that the plaintiff was acting in different capacities, bringing Labor Code claims on her own behalf in arbitration, and acting in a different and representative capacity in the PAGA action. The PAGA action, which seeks civil penalties as a remedy, "is fundamentally a law enforcement action designed to protect the public and not to benefit private parties." Eleni Gavriiloglou v. Prime Healthcare Management, Inc., No. E076832 (4/2  9/20/22) (Ramirez, Slough, Fields).

        COMMENT: The original opinion did not address Viking River Cruises v. Moriana, the subject of our 6/19/22 post. The modified opinion seems to suggest that in Viking River, SCOTUS didn't really understand California law: "It . . .  held that the Federal Arbitration Act preempts a state-law rule that precludes the arbitration of an individual PAGA claim separately from a representative PAGA claim. .... In Prime’s view, Viking River 'explicitly recognizes an individual claim under PAGA . . . .' This is mere wordplay. What the Supreme Court called, as shorthand, an 'individual PAGA claim' is not actually a PAGA claim at all. It would exist even if PAGA had never been enacted. It is what we are calling, more accurately, an individual Labor Code claim."

        We note one difference between Gavriiloglou case and Viking River. In Gavriiloglou, the issue in the published part of the opinion is whether the arbitrator's award denying non-PAGA claims precluded the PAGA claims, and the court held that it did not. In Viking River, the issue was different. SCOTUS held that the employee could be compelled to arbitrate PAGA individual claims (which Justice Ramirez now says are really better described as Labor Code claims).

         Look forward to ongoing confusion about standing to bring representative PAGA claims in California in cases where there are mandatory arbitration provisions. 

 

Arbitration, PAGA, Collective Bargaining: A PAGA Lawsuit Is Barred By A Collective Bargaining Agreement In The Construction Industry

A Statutory Route In California Avoids A Private Attorney General Act Of 2004  (PAGA) Lawsuit In The Construction Industry: Labor Code § 2699.6.

        The issue presented in Jerome Oswald v. Murray Plumbing and Heating Corporation, B312736 (2/2  9/2/22) (Lui, Chavez, Hoffstadt), is whether an arbitration clause in a construction industry collective bargaining agreement bars  a PAGA lawsuit. While the recent SCOTUS opinion in Viking River Cruises, Inc. v. Moriana (see our 6.19/22 post) limits the ability of employees to avoid arbitrating PAGA claims wherever federal preemption under the Federal Arbitration Act is involved, California has created its own statutory exception to bringing a PAGA lawsuit: Labor Code § 2699.6. 

        Section 2699.6 generally provides that the right to bring a civil action under PAGA shall not apply to an employee in the construction industry with respect to work performed under a valid collective bargaining agreement providing for wage and hour issues and conditions of work. The states legislative intention behind this legislation is to commit PAGA claims in the building and construction trades to the grievance and arbitration machinery in the building trades to CBAs that provide expressly for key coverage of issues. This was intended to allay "significant legal abuse" by limiting "class action type lawsuits over minor employment issues."

        In Oswald, the Court of Appeal concluded that the CBA met the requirements of § 2699.6. There, it reversed the trial court's order that had denied a motion to compel arbitration under the CBA.

        COMMENT: Perhaps application of the Supreme Court's Viking Cruises decision would have led to the same result. But the Court of Appeal did not discuss Viking Cruises, because California law provided an answer that would not have been incompatible with Viking Cruises.