Julian v. Glenair, Inc.
17 Cal. App. 5th 853
Cal. Ct. App. 5th2017Background
- Glenair distributed a mandatory arbitration "Glenair Dispute Resolution Program" to hourly employees in July 2014; employees could opt out within 30 days and otherwise arbitration (including wage and Labor Code claims) was mandatory. The agreement referenced ongoing litigation (the Rojas action) and described PAGA claims.
- Respondents Malissa and Machele Julian received the proposed agreement while employed (did not opt out); their employment ended January 2015.
- Respondents filed a representative PAGA action in October 2015 asserting Labor Code violations on behalf of themselves and other nonexempt employees.
- Glenair petitioned to compel arbitration under the distributed agreement; respondents opposed, arguing the agreement was an unenforceable predispute waiver of PAGA rights and procedurally/substantively unconscionable.
- The trial court denied Glenair’s petition; the court and the parties disputed whether the agreement was predispute or postdispute, but the record shows the agreement was provided before respondents met PAGA's statutory requirements to sue as agents of the state.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether an arbitration agreement signed before an employee is authorized to file a PAGA action can compel arbitration of that PAGA claim | Julians: Agreement unenforceable because they lacked awareness/authorization to bring PAGA claims when they failed to opt out | Glenair: Agreement described the Rojas PAGA allegations and thus functioned as a postdispute waiver covering respondents | Court: Waiver executed before employee is authorized to bring PAGA claim is an unenforceable predispute waiver; denial of petition affirmed |
| Whether Iskanian’s prohibition on predispute PAGA waivers is preempted by the FAA | Julians: Iskanian controls; FAA does not preempt | Glenair: FAA/contract principles allow arbitration; Iskanian’s limit should not bar postdispute waivers | Court: Iskanian stands; FAA does not preempt state rule invalidating predispute PAGA waivers because PAGA claims are actions on behalf of the state |
| Whether an arbitration agreement distributed to other employees after a PAGA plaintiff filed suit converts the agreement for non‑party employees into a postdispute waiver | Julians: Each employee must individually meet PAGA notice/agency requirements; distribution alone does not change status | Glenair: Distribution and description of Rojas action put employees on notice; thus agreements became postdispute for similar claims | Court: Rejected Glenair; each employee's status depends on when that employee becomes the state's agent under PAGA, so distribution alone does not make it postdispute |
Key Cases Cited
- Iskanian v. CLS Transportation Los Angeles, LLC, 59 Cal.4th 348 (California Supreme Court) (predispute waivers of PAGA representative claims are unenforceable; FAA does not preempt that rule)
- Armendariz v. Foundation Health Psychcare Services, Inc., 24 Cal.4th 83 (California Supreme Court) (postdispute arbitration agreements entered knowingly and voluntarily may be enforceable; employees can trade procedural protections for arbitral efficiency)
- Arias v. Superior Court, 46 Cal.4th 969 (California Supreme Court) (PAGA actions are representative actions brought as a proxy for the state; LWDA has initial enforcement authority)
- Betancourt v. Prudential Overall Supply, 9 Cal.App.5th 439 (California Court of Appeal) (predispute arbitration agreement ineffective to compel arbitration of PAGA claim)
- Tanguilig v. Bloomingdale's, Inc., 5 Cal.App.5th 665 (California Court of Appeal) (PAGA claims cannot be compelled to arbitration under predispute employer agreements without state consent)