Lawson v. ZB, N.A.
D071279
| Cal. Ct. App. | Dec 19, 2017Background
- Plaintiff Kalethia Lawson, an hourly employee of California Bank & Trust (a ZB subsidiary), sued CBT and ZB alleging multiple Labor Code violations and pursued civil penalties under the Private Attorneys General Act (PAGA) on behalf of the state and other employees.
- Lawson's complaint sought penalties under Labor Code § 558, which the court (following Thurman) treats as a civil-penalty remedy that includes both the $50/$100 assessments and recovery of underpaid wages.
- ZB moved to compel arbitration based on Lawson’s employment agreement and class/representative-action waiver, seeking arbitration of Lawson’s underpaid wage claims (but not the specific $50/$100 assessments).
- The trial court bifurcated Lawson’s § 558 claim and compelled arbitration of the underpaid wages portion as a representative PAGA claim.
- ZB filed a notice of appeal and a petition for writ of mandate; the Court of Appeal concluded an order compelling arbitration is not appealable but granted writ review and consolidated proceedings.
- The Court of Appeal concluded the trial court erred: § 558 claims are indivisible PAGA civil-penalty claims and the court must vacate the bifurcation and deny ZB’s motion to compel arbitration.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether an order compelling arbitration is appealable | Lawson: order compels arbitration (no appeal) implicitly | ZB: appealed trial court’s arbitration order | Court: Appeal dismissed — order compelling arbitration is generally not appealable; writ proper |
| Whether § 558 underpaid wages are severable from § 558 assessments for PAGA purposes | Lawson: § 558’s underpaid wages are part of the civil penalty and not severable; therefore part of PAGA claim | ZB: underpaid wages are individual wage claims subject to arbitration and separable from PAGA civil-penalty assessments | Court: Held § 558’s assessments and underpaid wages constitute a single civil-penalty remedy under PAGA and are not severable |
| Whether a PAGA representative claim can be compelled to arbitration despite an employee’s arbitration/class-waiver agreement | Lawson: PAGA is a qui tam–style public enforcement action; employee acts as proxy for state; state has not agreed to arbitrate | ZB: FAA/Concepcion and arbitration agreement require arbitration of overlapping wage claims; underpaid wages may be private claims | Court: Held PAGA representative claims (including § 558 civil penalties) lie outside employee’s arbitration waiver per Iskanian; arbitration of the representative claim is improper |
| Whether FAA preemption bars treating § 558 recovery as non-arbitrable civil penalties | Lawson: § 558 was enforceable only by LWDA pre-PAGA and thus fits civil-penalty category Iskanian protects from FAA preemption | ZB: Conception/FAA may preempt non-arbitration of wage portions that are private in nature | Court: Held Iskanian principles and § 558’s history support rejecting FAA preemption on this record (but allowed ZB to pursue preemption on fuller factual record) |
Key Cases Cited
- Iskanian v. CLS Transp. Los Angeles, LLC, 59 Cal.4th 348 (Cal. 2014) (PAGA claims are representative/qui tam in nature; employee’s arbitration waiver cannot block PAGA enforcement on state’s behalf)
- Arias v. Superior Court, 46 Cal.4th 969 (Cal. 2009) (PAGA creates representative enforcement by aggrieved employees; judgments bind state and nonparty aggrieved employees)
- Concepcion v. AT&T Mobility LLC, 563 U.S. 333 (U.S. 2011) (class-action procedures are often incompatible with arbitration; FAA preempts state rules that effectively prohibit class waivers)
- Thurman v. Bayshore Transit Mgmt., 203 Cal.App.4th 1112 (Cal. Ct. App. 2012) (held § 558’s $50/$100 assessments and underpaid wages comprise the civil penalty recoverable under PAGA)
- Williams v. Superior Court (Pinkerton), 237 Cal.App.4th 642 (Cal. Ct. App. 2015) (a PAGA claim cannot be split into an arbitrable individual claim and a nonarbitrable representative claim)
- Reynolds v. Bement, 36 Cal.4th 1075 (Cal. 2005) (discussed § 558 as a civil-penalty vehicle including underpaid wages)
- Reyes v. Macy’s, Inc., 202 Cal.App.4th 1119 (Cal. Ct. App. 2011) (PAGA plaintiff acts as proxy for state; representative nature of PAGA claims)