Zakaryan v. Men's Wearhouse, Inc.
245 Cal. Rptr. 3d 333
Cal. Ct. App. 5th2019Background
- Plaintiff Arthur Zakaryan, a former Men's Wearhouse store manager, sued under the Labor Code Private Attorneys General Act (PAGA) alleging managers were misclassified as exempt and seeking unpaid wages, penalties (including waiting-time and meal/rest penalties) and other relief on behalf of aggrieved employees.
- Zakaryan had signed arbitration agreements with the employer (2006 and 2015); the 2015 agreement attempted to waive representative actions but expressly excluded PAGA claims.
- Employer moved to compel arbitration only for the portion of the PAGA claim seeking underpaid wages (after answering the complaint and after the Esparza decision); the trial court denied the motion.
- The core legal question: whether a solitary PAGA claim may be split so that the plaintiff must arbitrate his individual underpaid-wages component while the remaining PAGA penalties remain in court.
- The court reviewed California labor and arbitration law (including Iskanian) and held that courts may not split a solitary PAGA claim between arbitration and court; it affirmed denial of the motion to compel arbitration.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| May a solitary PAGA claim be split so the underpaid-wages component goes to arbitration while statutory penalties remain in court? | Zakaryan argued the PAGA claim is indivisible and representative, so it cannot be split; arbitration would undermine PAGA's enforcement scheme. | Men's Wearhouse argued the underpaid-wages portion is "private"/victim-specific and thus arbitrable; section 558 allocates underpaid wages to affected employees. | No. A solitary PAGA claim cannot be split; sending the wages portion to arbitration would impermissibly divide the single primary right PAGA vindicates and conflict with PAGA's structure and Iskanian. |
| Does section 558’s allocation of underpaid wages to affected employees permit splitting a PAGA action? | Zakaryan argued PAGA governs allocation in employee-prosecuted actions and precludes splitting; PAGA’s 75/25 allocation applies to the single civil penalty. | Men's Wearhouse contended section 558 separately allocates underpaid wages to employees and thus supports splitting. | Held that PAGA’s allocation and procedural framework govern employee prosecutions; section 558 does not authorize splitting a PAGA claim. |
| Does splitting a PAGA claim conflict with the primary-rights doctrine? | Zakaryan argued the PAGA plaintiff vindicates a single public enforcement right, so splitting would impermissibly divide one primary right. | Men's Wearhouse argued individual wage relief is distinct and therefore separable. | Court held primary-rights doctrine bars dividing the PAGA claim into separate proceedings for essentially the same injury. |
| Would ordering arbitration of the wages component undermine Iskanian and arbitration/public-policy principles? | Zakaryan argued arbitration would eviscerate Iskanian’s rule that PAGA claims cannot be waived/arbitrated because it would effectively bind the state agency and send the core liability issue to arbitration. | Men's Wearhouse argued FAA and precedents permit arbitration of individual damages even where representative remedies remain in court. | Court held arbitration of the wages component would undercut Iskanian and is inconsistent with PAGA’s representative enforcement scheme; thus splitting is impermissible. |
Key Cases Cited
- Iskanian v. CLS Transp. Los Angeles, LLC, 59 Cal.4th 348 (2014) (employees cannot contractually waive PAGA claims; individual damages may be arbitrable but PAGA representative claims are not)
- Arias v. Superior Court, 46 Cal.4th 969 (2009) (PAGA creates a qui tam–style representative enforcement mechanism; plaintiff acts as state proxy)
- Broughton v. Cigna Healthplans, 21 Cal.4th 1066 (1999) (permitted splitting CLRA claims between arbitration and court where distinct primary rights existed)
- Cruz v. PacifiCare Health Sys., 30 Cal.4th 303 (2003) (permitted splitting UCL claims between arbitration and court for restitution vs. injunctive relief where distinct public vs. private rights existed)
- Boeken v. Philip Morris USA, 48 Cal.4th 788 (2010) (explains primary-rights doctrine: one injury, one claim)
- Williams v. Superior Court, 3 Cal.5th 531 (2017) (explains PAGA procedures and timing for agency notice and confirms limits on arbitration of PAGA claims)