D081483
Cal. Ct. App.Oct 26, 2023Background
- Plaintiff Gloria Baltazar worked for Ace Parking (2013–2020) and signed a 2019 "Team Member Acknowledgement and Agreement" containing a broad FAA‑governed arbitration clause covering "all disputes that may arise out of or be related in any way to [my] employment."
- The agreement also contained: (a) a paragraph forbidding class/collective actions and stating claims must be brought in the plaintiff’s individual capacity; (b) a PAGA “savings” provision stating that if a representative PAGA claim is unwaivable and pursued in court, "any such PAGA claim will be severed and stayed pending resolution of claims that are arbitrable"; and (c) an exception for "other claims that are not subject to arbitration under current law."
- Baltazar filed a single‑count PAGA suit seeking civil penalties on behalf of herself and other employees (representative PAGA action).
- Ace Parking moved to compel arbitration of Baltazar’s individual PAGA claims and to dismiss non‑individual PAGA claims (relying on Viking River). Trial court denied the motion, viewing the agreement as excluding representative PAGA claims from arbitration and invoking the PAGA savings clause.
- The Court of Appeal independently construed the arbitration agreement, found the broad arbitration clause covers Baltazar’s individual PAGA claims, resolved ambiguous carveouts in favor of arbitration under federal law, and reversed the trial court: individual PAGA claims must be arbitrated; non‑individual PAGA claims remain in court (Adolph controls refusal to dismiss).
Issues
| Issue | Plaintiff's Argument (Baltazar) | Defendant's Argument (Ace Parking) | Held |
|---|---|---|---|
| 1. Are Baltazar’s individual PAGA claims covered by the agreement’s broad "arising out of or related to" arbitration clause? | The agreement is ambiguous overall and carveouts (esp. "current law") exclude PAGA claims. | The broad "arising out of or related to" language plainly covers individual PAGA claims. | Held: Individual PAGA claims fall within the broad arbitration clause. |
| 2. Does the paragraph‑2 carveout for "claims not subject to arbitration under current law" exclude individual PAGA claims (because Iskanian was then "current law")? | "Current law" meant law at signing (Iskanian), so PAGA claims are excepted. | "Current law" is ambiguous; even if ambiguous, FAA presumption favors arbitration. | Held: The phrase is ambiguous and, under FAA precedent, must be construed in favor of arbitration; it does not clearly exempt individual PAGA claims. |
| 3. Does paragraph 3’s waiver and its PAGA ‘‘savings’’ clause permit the entire PAGA action (including individual claims) to proceed in court? | The savings clause requires severing/staying only if a representative PAGA claim is unwaivable, and here that means the whole PAGA action stays in court. | The waiver is severable; severing the unlawful PAGA waiver leaves the savings clause to operate to keep only non‑individual PAGA claims in court while individual PAGA claims are arbitrable. | Held: The waiver is severed; the savings clause reasonably reads to preserve non‑individual claims in court while individual PAGA claims are sent to arbitration (any remaining ambiguity resolved for arbitration). |
| 4. Does paragraph 5’s bar on arbitration "on a class, collective, representative or other similar basis" bar arbitration of individual PAGA claims? | The word "representative" means all PAGA claims, so arbitration is barred. | "Representative" in that list aligns with "class/collective" and thus refers to non‑individual (other‑employee) claims; it does not bar arbitration of individual PAGA claims. | Held: "Representative" is ambiguous but, read with the surrounding list, reasonably means only non‑individual PAGA claims; it does not preclude arbitration of individual PAGA claims. |
Key Cases Cited
- Iskanian v. CLS Transp. Los Angeles, LLC, 59 Cal.4th 348 (Cal. 2014) (California Supreme Court: pre‑dispute waivers of PAGA actions are invalid and anti‑splitting rule articulated)
- Viking River Cruises, Inc. v. Moriana, 142 S. Ct. 1906 (U.S. 2022) (U.S. Supreme Court: FAA does not permit wholesale waiver of PAGA but preempts Iskanian’s anti‑splitting rule; individual PAGA claims may be sent to arbitration)
- Adolph v. Uber Techs., Inc., 14 Cal.5th 1104 (Cal. 2023) (California Supreme Court: plaintiff compelled to arbitrate individual PAGA claims retains standing to litigate non‑individual PAGA claims in court; court may stay non‑individual claims)
- Lamps Plus, Inc. v. Varela, 139 S. Ct. 1407 (U.S. 2019) (U.S. Supreme Court: California’s contra proferentem rule cannot be used to infer consent to class arbitration under the FAA)
- Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp., 460 U.S. 1 (U.S. 1983) (federal law presumes ambiguities about arbitrability are resolved in favor of arbitration)
- Granite Rock Co. v. Int’l Bhd. of Teamsters, 561 U.S. 287 (U.S. 2010) (courts must first decide whether parties clearly agreed to arbitrate a dispute; presumption of arbitrability applies only where agreement is valid and ambiguous)