52 Cal.App.5th 477
Cal. Ct. App.2020Background
- Collie worked for The ICEE Company from November 2014 to August 2015 and signed a predispute arbitration agreement governed by the FAA covering "all claims."
- In July 2016 Collie filed a PAGA action alleging Labor Code violations on behalf of himself and other aggrieved employees.
- ICEE moved to compel arbitration (Aug. 2018), arguing the arbitration agreement required Collie to pursue any claims individually in arbitration and barred representative PAGA litigation.
- The trial court denied the motion, relying on Iskanian; ICEE appealed to the Court of Appeal, Fourth Appellate District, Division Two.
- The Court of Appeal affirmed: predispute arbitration agreements cannot be used to compel arbitration of PAGA claims because the state is the real party in interest, and Epic does not undermine that principle.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether a predispute arbitration agreement can compel arbitration of a PAGA claim | Collie: PAGA is a representative/enforcement action; his agreement as an individual cannot bind the state, so PAGA suit is not subject to arbitration | ICEE: The arbitration agreement requires Collie to arbitrate any individual claim and bars representative PAGA litigation; he must arbitrate individually | Denied: Predispute arbitration cannot compel arbitration of PAGA claims because the state — the real party in interest — is not bound by the employee's agreement |
| Whether Epic Systems v. Lewis nullifies Iskanian/Betancourt | Collie: Epic addresses FAA vs. NLRA and does not change PAGA's unique law‑enforcement nature | ICEE: Epic’s broad enforcement of arbitration agreements under the FAA undermines Iskanian/Betancourt | Denied: Epic does not address PAGA’s representative/state‑enforcement character and does not undermine those decisions |
| Whether a PAGA claim seeking unpaid wages under Lab. Code § 558 must be arbitrated | Collie: Section 558 penalties are part of PAGA relief but unpaid wages under § 558 are not recoverable via PAGA | ICEE: Claims labeled as individual wage claims should be subject to arbitration under the agreement | Denied: PAGA does not authorize recovery of § 558 unpaid wages; such relief is impermissible in PAGA and cannot be compelled to arbitration |
Key Cases Cited
- Iskanian v. CLS Transp. Los Angeles, LLC, 59 Cal.4th 348 (Cal. 2014) (PAGA actions are representative law‑enforcement suits; employee cannot waive state’s interest)
- Betancourt v. Prudential Overall Supply, 9 Cal.App.5th 439 (Cal. Ct. App. 2017) (predispute arbitration agreements cannot compel arbitration of PAGA claims)
- Epic Sys. Corp. v. Lewis, 138 S. Ct. 1612 (U.S. 2018) (FAA requires enforcement of class/collective waivers; does not address PAGA’s state‑enforcement nature)
- Correia v. NB Baker Electric, Inc., 32 Cal.App.5th 602 (Cal. Ct. App. 2019) (Epic does not undermine Iskanian/Betancourt as applied to PAGA)
- ZB, N.A. v. Superior Court, 8 Cal.5th 175 (Cal. 2019) (reiterated that PAGA plaintiffs act as the state’s proxy; limited availability of unpaid wages under § 558)