Kim v. Reins International California, Inc., B278642

Justin Kim sued employer Reins for individual wage-and-hour claims, class claims, and PAGA civil penalties; operative complaint alleged Labor Code and UCL violations and a PAGA cause of action.
Kim had signed an arbitration agreement; the trial court compelled arbitration of his individual claims, stayed class issues and the PAGA cause of action.
While arbitration was pending, Reins served a CCP § 998 offer; Kim accepted and dismissed his individual claims with prejudice and class claims without prejudice, leaving only the PAGA claim.
The trial court lifted the stay on the PAGA claim; Reins moved for summary adjudication arguing Kim lacked PAGA standing because he was no longer an “aggrieved employee.”
The court granted summary adjudication and dismissed the PAGA claim; Kim appealed.
The Court of Appeal held that by settling and dismissing his individual Labor Code claims with prejudice, Kim ceased to be an “aggrieved employee” under PAGA and therefore lacked standing to pursue the PAGA claim.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether a plaintiff who settles and dismisses his individual Labor Code claims with prejudice remains an “aggrieved employee” under PAGA	Kim: settlement of individual claims does not deprive the State’s PAGA claims from proceeding; dismissal does not eliminate PAGA standing	Reins: dismissal with prejudice eliminates plaintiff’s personal injury/harm, so he is no longer an "aggrieved employee" and lacks PAGA standing	Held: dismissal with prejudice of the individual claims removes plaintiff from PAGA’s definition of “aggrieved employee,” so he lacks standing to continue the PAGA action
Whether affirming dismissal creates an impermissible "backdoor" waiver of PAGA via arbitration	Kim: staying PAGA during compelled arbitration and then dismissing individual claims effectively waives PAGA rights contrary to Iskanian	Reins: standing loss stems from plaintiff’s voluntary dismissal, not the arbitration order	Held: No backdoor waiver; lack of standing is due to voluntary dismissal with prejudice, unrelated to arbitration

Smith v. Superior Court, 39 Cal.4th 77 (statutory interpretation and de novo review of questions of law)
Arias v. Superior Court, 46 Cal.4th 969 (PAGA as private enforcement of labor law; purpose and penalty allocation)
Iskanian v. CLS Transp. Los Angeles, LLC, 59 Cal.4th 348 (PAGA claims are unwaivable; real party in interest is the state)
Williams v. Superior Court, 3 Cal.5th 531 (PAGA’s standing requirement — plaintiff must have suffered harm)
Coalition of Concerned Communities, Inc. v. City of Los Angeles, 34 Cal.4th 733 (statutory interpretation principles)
Lazarin v. Superior Court, 188 Cal.App.4th 1560 (standards for reviewing statutory application to facts)