Betancourt v. Prudential Overall Supply
9 Cal. App. 5th 439
| Cal. Ct. App. | 2017Background
- Roberto Betancourt sued Prudential Overall Supply under the Private Attorneys General Act (PAGA), alleging several wage-and-hour violations on behalf of the state (overtime, missed breaks, wage statements, recordkeeping, expense reimbursement, etc.).
- Betancourt sought civil penalties under PAGA and listed additional relief (unpaid wages, expenses, attorneys’ fees) in the prayer.
- Prudential moved to compel arbitration based on a 2006 Agreement to Arbitrate Betancourt had signed, which required using an internal FTP and final, binding arbitration and barred representative/class claims.
- Betancourt opposed: challenged existence/adequacy of the arbitration proof, argued PAGA representative claims cannot be waived, and asserted unconscionability and other defenses.
- The trial court denied the motion to compel arbitration (without prejudice) relying on Iskanian’s rule that PAGA representative claims cannot be waived and advising Prudential to challenge non-PAGA pleadings by motion to strike or demurrer.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Prudential can compel arbitration of this PAGA action using a predispute arbitration agreement | Betancourt: PAGA claim is a representative action on behalf of the state; the state is not bound by his predispute arbitration waiver | Prudential: The arbitration agreement covers employment-related disputes, including Betancourt’s claims, so arbitration should be compelled | Court: Predispute private arbitration agreements cannot bind the state in a PAGA action; motion to compel denied |
| Whether the complaint actually asserts non-PAGA private claims that could be arbitrated | Betancourt: Complaint pleads only a PAGA representative action; prayer language does not convert it into private claims | Prudential: Prayer seeks private remedies (wages, expenses, fees), showing non-PAGA claims that must be arbitrated | Court: If Prudential thinks complaint pleads private claims, it must challenge the pleading (demurrer/motion to strike); motion to compel arbitration is not the proper vehicle |
| Whether the arbitration agreement’s waiver of representative/class claims is severable or enforceable as to individual claims | Betancourt: Waiver of PAGA representative claims is unenforceable and not severable to bind the state | Prudential: The representative-claims waiver can be severed and remaining arbitration provisions can be enforced | Court: Severing private-waiver language in a predispute agreement does not bind the state in a PAGA action; reliance on a private predispute agreement is ineffective |
| Whether Iskanian precludes arbitration of PAGA claims or is preempted by the Federal Arbitration Act (FAA) | Betancourt: Iskanian bars enforcing predispute waivers of PAGA representative claims against the state and is consistent with FAA | Prudential: Iskanian does not categorically prohibit arbitration of PAGA claims and state law might be preempted by the FAA; federal decisions (e.g., Sakkab) allow arbitration | Court: Decision is limited — a defendant cannot rely on a private predispute arbitration agreement to compel arbitration of a PAGA action because the state (real party in interest) is not bound; no broad ruling on preemption or post-filing consent to arbitrate |
Key Cases Cited
- Iskanian v. CLS Transp. Los Angeles, LLC, 59 Cal.4th 348 (California Supreme Court) (an employee cannot waive the right to bring representative PAGA claims; PAGA actions are prosecuted on behalf of the state)
- Sakkab v. Luxottica Retail N. Am., Inc., 803 F.3d 425 (9th Cir. 2015) (interpreting Iskanian to permit arbitration of some individual PAGA claims while recognizing representative waivers are unenforceable)
- County of Solano v. Lionsgate Corp., 126 Cal.App.4th 741 (California Court of Appeal) (defendant cannot rely on employee’s predispute waiver to compel arbitration of PAGA representative claims)
- Broughton v. Cigna Healthplans of Cal., 21 Cal.4th 1066 (California Supreme Court) (when an action contains arbitrable and inarbitrable claims, sever and send arbitrable claims to arbitration)
- Carlson v. Home Team Pest Defense, Inc., 239 Cal.App.4th 619 (California Court of Appeal) (de novo review applies where denial of motion to compel arbitration rests on legal questions)