101 Cal.App.5th 592
Cal. Ct. App.2024Background
- Angel Mondragon was required by Sunrun Inc. to sign an arbitration agreement as a condition of employment.
- The arbitration agreement broadly covered most employment disputes, but expressly excluded claims brought under the California Private Attorney General Act (PAGA).
- After his employment ended, Mondragon sued Sunrun for Labor Code violations solely under PAGA, alleging wage and hour violations.
- Sunrun moved to compel arbitration of Mondragon's individual PAGA claims, arguing the agreement excluded only claims for violations involving other employees, not him.
- The trial court denied Sunrun's motion, holding that no delegation of arbitrability occurred and all PAGA claims (including individual) were excluded from arbitration; Sunrun appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Who decides arbitrability: court or arbitrator? | The court should decide as there was no clear delegation to the arbitrator. | The contract incorporates AAA rules, so arbitrator decides. | The court decides because there was no clear and unmistakable delegation. |
| Scope of PAGA carve-out: Does it exclude all or only representative claims? | PAGA carve-out excludes all PAGA claims, individual and representative. | Carve-out only excludes representative claims for violations involving other employees. | The PAGA carve-out unambiguously applies to all PAGA claims. |
| Effect of incorporating AAA arbitration rules | Reference to AAA rules doesn't delegate arbitrability to arbitrator for unsophisticated parties. | Incorporating AAA rules is clear delegation to arbitrator per federal cases. | Mere reference to AAA rules, plus carve-out and severability, is not clear enough for delegation here. |
| Applicability of Viking River Cruises decision | Not relevant; agreement here has a carve-out for PAGA claims unlike Viking River. | Viking River requires arbitration of individual PAGA claims even with a PAGA carve-out. | Viking River is inapplicable where agreement expressly excludes all PAGA claims. |
Key Cases Cited
- Iskanian v. CLS Transp. Los Angeles, LLC, 59 Cal.4th 348 (Cal. 2014) (all PAGA actions are representative of the state)
- Kim v. Reins Int'l California, Inc., 9 Cal.5th 73 (Cal. 2020) (no individual component to a PAGA action)
- Adolph v. Uber Techs., Inc., 14 Cal.5th 1104 (Cal. 2023) (standing to litigate PAGA claims after compelling individual arbitration)
- Pinnacle Museum Tower Assn. v. Pinnacle Market Dev. (US), LLC, 55 Cal.4th 223 (Cal. 2012) (de novo review of arbitration denial)
- Boghos v. Certain Underwriters at Lloyd's of London, 36 Cal.4th 495 (Cal. 2005) (contract interpretation principles for arbitration agreements)