Julian v. Glenair, Inc., B277064M

Background

Malissa and Machele Julian were Glenair hourly employees who received a proposed mandatory arbitration program in July 2014 that would bind employees who did not opt out within 30 days and purported to cover wage-and-hours and representative claims “to the extent permitted by law.”
The Rojas putative class/PAGA action against Glenair was pending when the program was circulated; a proposed amended complaint described a PAGA claim similar to the one the Julians later pursued.
The Julians did not opt out; they were later terminated and in October 2015 filed their own PAGA action seeking civil penalties on behalf of themselves and other current and former nonexempt employees.
Glenair petitioned to compel arbitration under the agreement; the trial court denied the petition, concluding the arbitration agreement could not be enforced to compel arbitration of the PAGA claim.
On appeal, Glenair argued the agreement was an enforceable postdispute waiver (thus permitting arbitration of the PAGA claim); the court held the agreement was an unenforceable predispute waiver as to PAGA claims and affirmed the denial of the petition to compel.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether an arbitration agreement executed before an employee is authorized to bring a PAGA action can compel arbitration of that PAGA claim	Julians: agreement was unenforceable as a predispute waiver of PAGA because they lacked awareness/authorization when it was circulated	Glenair: the agreement was effectively postdispute (Rojas action put employees on notice), so it lawfully required arbitration of the Julians’ PAGA claim	Held: unenforceable as a predispute waiver; an agreement executed before the employee satisfies PAGA’s statutory prerequisites cannot compel arbitration of that employee’s PAGA claim
Whether an employee can waive PAGA representative claims in any forum via predispute agreements	Julians: such waivers harm public interest and are invalid	Glenair: Iskanian permits postdispute waivers and the FAA governs arbitration agreements	Held: Predispute waivers of representative PAGA claims are unenforceable under state law (Iskanian control); postdispute waiver issues depend on whether employee is authorized and informed
Whether notice to other employees from an existing PAGA suit (Rojas) converts a predispute waiver into a postdispute waiver for all employees	Julians: each employee’s status is determined individually; mere notice of another plaintiff’s PAGA claim does not make other employees the state’s agents	Glenair: Rojas put employees on notice, so the agreement became postdispute for similar claims	Held: Rejected; the predispute/postdispute boundary is crossed only when an individual employee satisfies PAGA’s statutory requirements and becomes an agent of the state
Effect of FAA preemption on state law invalidation of PAGA waivers	Julians: FAA does not preempt state rule because PAGA actions are actions on behalf of the state, not private contract disputes	Glenair: FAA requires enforcement of arbitration provisions	Held: FAA does not preempt state law invalidating predispute PAGA waivers because PAGA claims are fundamentally public actions brought for the state (Iskanian)

Key Cases Cited

Iskanian v. CLS Transp. Los Angeles, 59 Cal.4th 348 (2014) (predispute waivers of representative PAGA claims are unenforceable; PAGA actions are prosecutions on behalf of the state)
Arias v. Superior Court, 46 Cal.4th 969 (2009) (PAGA permits aggrieved employees to recover civil penalties on behalf of the state; LWDA initial enforcement role)
Armendariz v. Foundation Health Psychcare Servs., 24 Cal.4th 83 (2000) (arbitration agreements waiving statutory protections are disfavored; postdispute voluntary waivers may be evaluated differently)
Betancourt v. Prudential Overall Supply, 9 Cal.App.5th 439 (2017) (predispute arbitration agreements ineffective to compel arbitration of PAGA claims)
Tanguilig v. Bloomingdale’s, Inc., 5 Cal.App.5th 665 (2016) (PAGA claim cannot be forced into arbitration under predispute agreement without state consent)