92 Cal.App.5th 59
Cal. Ct. App.2023Background
- Duran worked for EmployBridge/Select Staffing (Apr 2018–Aug 2019) and electronically signed a broad arbitration agreement as part of hiring.
- The agreement (governed by the FAA) required arbitration of employment disputes, included a class/representative-action waiver, but contained an express carve-out: “claims under PAGA … are not arbitrable under this Agreement.”
- The agreement also said the class/collective/representative waiver did not apply to NLRA claims and contained a severability clause.
- Duran served the statutory PAGA notice (§ 2699.3) and sued only to recover PAGA civil penalties on behalf of the State (a PAGA-only, representative action).
- Select Staffing moved to compel arbitration (seeking arbitration of any individual PAGA-related claims and enforcement of the representative-action waiver); the trial court denied the motion, concluding the carve-out unambiguously excluded PAGA claims from arbitration.
- The court of appeal affirmed, holding the carve-out unambiguously excludes all PAGA claims and that the Iskanian anti-waiver rule invalidates any contractual waiver of representative PAGA actions.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the agreement’s carve-out (“claims under PAGA … are not arbitrable”) excludes all PAGA claims from arbitration | Duran: clause is plain and excludes all PAGA claims (both Type A and Type O) from arbitration | Select Staffing: clause should be read to except only those PAGA claims that are non-arbitrable as a matter of law (i.e., carve out only nonarbitrable claims); arbitration of individual (Type A) claims should be compelled | Held: The language is unambiguous; it excludes all PAGA claims from arbitration and cannot be rewritten to insert a modifier. |
| Whether the representative-action waiver is enforceable or should be severed | Duran: representative-action waiver is invalid under Iskanian and therefore cannot bar PAGA claims | Select Staffing: waiver should be severed or limited so individual claims proceed in arbitration | Held: Iskanian invalidates waivers of representative PAGA claims; here the agreement’s own qualifier (“Except as prohibited under applicable law”) places PAGA claims outside the waiver, so no severance of an invalid provision is necessary. |
| Whether ambiguity should be resolved in favor of arbitration | Duran: the text is clear and ordinary meaning controls; arbitration policy does not create ambiguity | Select Staffing: any doubts should be resolved in favor of arbitration; clause intended as a truism | Held: Arbitration policy does not override clear contract language; court will not rewrite the contract under Code Civ. Proc. § 1858—no ambiguity exists. |
Key Cases Cited
- Iskanian v. CLS Transp. Los Angeles, LLC, 59 Cal.4th 348 (Cal. 2014) (contracts cannot require employees to waive the right to bring representative PAGA actions)
- Viking River Cruises, Inc. v. Moriana, 142 S. Ct. 1906 (U.S. 2022) (addressed interplay between FAA and Iskanian; upheld Iskanian’s rule insofar as it invalidates wholesale waivers of PAGA representative claims)
- Arias v. Superior Court, 46 Cal.4th 969 (Cal. 2009) (PAGA actions are prosecuted by the employee as the State’s representative and seek civil penalties)
- Galarsa v. Dolgen California, LLC, 88 Cal.App.5th 639 (Cal. Ct. App. 2023) (distinguishes Type A/Type O PAGA claims and discusses arbitrability issues)
- Gravillis v. Coldwell Banker Residential Brokerage Co., 143 Cal.App.4th 761 (Cal. Ct. App. 2006) (principle that arbitration is a matter of consent and exclusions should be narrowly construed)