Securitas Security Services USA, Inc. v. Superior Court of San Diego County
234 Cal. App. 4th 1109
| Cal. Ct. App. | 2015Background
- Denise Edwards, a Securitas employee, signed (and did not timely opt out of) Securitas’s predispute dispute resolution agreement providing for individual arbitration and containing a class/collective/representative-action waiver and a PAGA waiver.
- Paragraph 4 of the agreement: (1) bars class/collective/representative actions; (2) states that the class-action waiver is not severable when the dispute "is brought as a class, collective or representative action"; and (3) reserves any determination of the waiver’s enforceability for a court. Paragraph 10 contains a general severability clause.
- Edwards sued in state court asserting class claims (meal/rest and wage-statement violations), UCL and a representative PAGA claim.
- Securitas moved to compel arbitration of individual claims and to dismiss/sever or stay class and PAGA claims. The trial court found the arbitration agreement valid, held the PAGA waiver unenforceable under Iskanian, applied the severability clause, and ordered Edwards’s entire complaint (including class and PAGA claims) to arbitration.
- Securitas petitioned for a writ; the Court of Appeal stayed arbitration and reviewed whether the trial court correctly (a) applied Iskanian to the PAGA waiver and (b) severed the unenforceable PAGA waiver while enforcing the remainder of the arbitration agreement.
Issues
| Issue | Plaintiff's Argument (Edwards) | Defendant's Argument (Securitas) | Held |
|---|---|---|---|
| Enforceability of PAGA waiver | PAGA waiver is unwaivable as a matter of public policy; Iskanian controls regardless of opt-out mechanics | Opt-out made the agreement voluntary; Iskanian addressed only mandatory precondition-of-employment waivers, so Edwards voluntarily waived PAGA rights | Court: Iskanian controls; predispute PAGA waivers unenforceable even where employee had an opt-out opportunity — Edwards did not knowingly waive PAGA rights here |
| Enforceability of class-action waiver | Will not contest class-waiver enforceability absent PAGA issue; class waiver may be enforceable | Class-action waiver is enforceable under Concepcion/Iskanian and FAA preemption of state rules invalidating class waivers | Court: Class-action waiver is valid under federal preemption (Iskanian/Concepcion) |
| Severability when PAGA waiver is invalid | Nonseverability clause prevents severing the PAGA/class-waiver provision; invalid PAGA waiver renders entire arbitration agreement unenforceable | Contract allows severing or, at minimum, holding PAGA claim for court while arbitrating individual claims; nonseverability applies only to whether parties agreed to arbitrate PAGA, not to the rest of the agreement | Court of Appeal: Paragraph 4’s nonseverability language unambiguously prevents severing the class/representative waiver when disputes are brought as class/representative actions — invalid PAGA waiver makes the entire arbitration agreement unenforceable; trial court erred by severing and compelling arbitration of entire complaint |
| Remedy/order on remand | (implicitly) Order should leave class/PAGA claims in court if agreement unenforceable | (Securitas sought) remand to enforce class waiver or alternatively sever/stay representative/PAGA claims and compel arbitration of individual claims | Court of Appeal: Grants writ in part — vacates order compelling arbitration of entire complaint and directs trial court to deny Securitas’s motion to compel arbitration; otherwise petition denied |
Key Cases Cited
- Iskanian v. CLS Transp. Los Angeles, 59 Cal.4th 348 (Cal. 2014) (predispute representative PAGA waivers are contrary to public policy and unenforceable)
- AT&T Mobility LLC v. Concepcion, 131 S.Ct. 1740 (U.S. 2011) (FAA preempts state rules that invalidate class-action waivers where they interfered with arbitration’s fundamental attributes)
- Gentry v. Superior Court, 42 Cal.4th 443 (Cal. 2007) (pre-Concepcion framework assessing when to invalidate class waivers to vindicate statutory rights)
- Armendariz v. Foundation Health Psychcare Servs., 24 Cal.4th 83 (Cal. 2000) (standards for validity of employment arbitration agreements and noting post-dispute waivers may be valid)
- Discover Bank v. Superior Court, 36 Cal.4th 148 (Cal. 2005) (consumer-contract class-waiver unconscionability doctrine later limited by Concepcion)
- Johnmohammadi v. Bloomingdale's, 755 F.3d 1072 (9th Cir. 2014) (holding an opt-out arbitration enrollment can render a class-waiver enforceable under federal law)