24 Cal. App. 5th 1197
Cal. Ct. App. 5th2018Background
- Employee Carlos Juarez worked as an hourly, nonexempt car-wash employee for Wash Depot and filed a wage-and-hour lawsuit including a representative PAGA claim.
- Wash Depot’s employee handbook (English and Spanish) contained a mandatory arbitration/dispute-resolution provision and a clause waiving the right to bring representative PAGA actions.
- The English handbook stated the PAGA waiver was severable if found unenforceable; the Spanish handbook stated the PAGA waiver was not severable. The handbook also said English controls in event of ambiguity.\
- Juarez signed acknowledgements (English and Spanish) that he received the handbook, but he disputed receiving the handbook copies and said he was unaware of the arbitration policy.\
- The trial court denied Wash Depot’s motion to compel arbitration, concluding the PAGA waiver is unenforceable and the conflicting severability clauses created an ambiguity to be construed against the drafter. Wash Depot appealed.
Issues
| Issue | Plaintiff's Argument (Juarez) | Defendant's Argument (Wash Depot) | Held |
|---|---|---|---|
| Enforceability of PAGA waiver | PAGA waiver is void as contrary to public policy; cannot be enforced | Waiver should be enforced as written | Court: PAGA waiver unenforceable under Iskanian (contrary to public policy) |
| Whether severability saves arbitration agreement | Severability conflict (English vs Spanish) creates ambiguity; construed against drafter so cannot be salvaged | English-version clause controls; severability can be applied to preserve arbitration | Court: ambiguity must be construed against employer; decline to sever PAGA waiver and enforce remaining arbitration |
| Consideration of untimely opposition filing | Late filing should be considered; merits disposition favors considering opposition | Motion judge erred by considering two-day-late opposition | Court: trial court did not abuse discretion – two days late, no prejudice, merits preference |
| Standard of review for denying motion to compel arbitration | N/A (procedural posture) | N/A | Court: reviewed legal enforceability de novo with deference to factual findings; affirmed denial of arbitration |
Key Cases Cited
- Iskanian v. CLS Transportation Los Angeles, LLC, 59 Cal.4th 348 (2014) (PAGA representative claims cannot be waived as contrary to public policy)
- Securitas Security Servs. USA, Inc. v. Superior Court, 234 Cal.App.4th 1109 (2015) (refused to sever PAGA waiver and enforce remaining arbitration where employee lacked adequate notice/understanding)
- Sandquist v. Lebo Automotive, Inc., 1 Cal.5th 233 (2016) (ambiguities in employer-drafted arbitration agreements construed against drafter, particularly in adhesion contracts)
- Pearson Dental Supplies, Inc. v. Superior Court, 48 Cal.4th 665 (2010) (contract interpretation favors preserving arbitration when consistent with parties' intent)