ZB, N.A. v. Superior Court, 448 P.3d 239

Lawson, an hourly employee of CB&T (now ZB, N.A.), signed an employee handbook arbitration agreement containing a mandatory individual arbitration clause and class-action waiver.
Lawson sued under the Private Attorneys General Act (PAGA) alleging various Labor Code violations and sought civil penalties under Labor Code §558, including the “amount sufficient to recover underpaid wages.”
ZB moved to compel individual arbitration of the unpaid-wages component, arguing that unpaid wages are victim-specific and arbitrable despite Iskanian’s rule invalidating predispute waivers of representative PAGA claims.
The trial court bifurcated and sent the unpaid-wages issue to arbitration; the Court of Appeal reversed, holding §558’s unpaid wages are part of the civil penalty recoverable under PAGA and thus not arbitrable under Iskanian.
The Supreme Court granted review and held that the “amount sufficient to recover underpaid wages” in §558 is compensatory (unpaid wages), not a civil penalty recoverable in a PAGA action; therefore Lawson could not recover that amount via PAGA and the trial court should have denied ZB’s motion (because it sought arbitration only of relief not cognizable in PAGA).

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether §558’s “amount sufficient to recover underpaid wages” is a civil penalty recoverable under PAGA	Lawson: It is part of §558’s civil penalty and thus recoverable in PAGA as a representative penalty	ZB: It is victim‑specific compensatory unpaid wages (not a civil penalty) and not within PAGA	Court: It is compensatory unpaid wages, not a PAGA civil penalty; not recoverable via PAGA
Whether Iskanian’s prohibition on enforcing predispute waivers of PAGA claims prevents arbitration of §558 unpaid-wages relief	Lawson: Because §558 lacked a private right before PAGA, unpaid wages are PAGA penalties so Iskanian prevents arbitration	ZB: Iskanian does not apply to victim‑specific unpaid wages; those remain arbitrable individually	Court: Iskanian inapplicable because unpaid wages are not PAGA civil penalties; the arbitration waiver rule does not shield this relief
Proper procedural outcome when complaint seeks unpaid wages under §558	Lawson: She may seek unpaid wages via her single PAGA cause of action	ZB: Arbitration may be compelled as to that victim‑specific relief	Court: Complaint seeks relief not cognizable under PAGA (unpaid wages under §558); because ZB moved to compel arbitration only for that impermissible relief, the trial court should have denied ZB’s motion; remand for appropriate pleadings relief (strike or amendment)

Iskanian v. CLS Transp. Los Angeles, LLC, 59 Cal.4th 348 (Cal. 2014) (predispute waivers of representative PAGA claims are unenforceable)
Arias v. Superior Court, 46 Cal.4th 969 (Cal. 2009) (PAGA empowers employees as proxy of the state to recover civil penalties)
Murphy v. Kenneth Cole Prods., Inc., 40 Cal.4th 1094 (Cal. 2007) (distinguishing civil penalties from compensatory statutory damages)
United Riggers & Erectors, Inc. v. Coast Iron & Steel Co., 4 Cal.5th 1082 (Cal. 2018) (statutory interpretation reviewed de novo; harmonize related provisions)
Thurman v. Bayshore Transit Mgmt., 203 Cal.App.4th 1112 (Cal. Ct. App. 2012) (Court of Appeal decision treating §558 unpaid wages as part of civil penalty) (disapproved to the extent inconsistent with this opinion)
Reynolds v. Bement, 36 Cal.4th 1075 (Cal. 2005) (addressed PAGA issues in different context)
AT&T Mobility LLC v. Concepcion, 563 U.S. 333 (U.S. 2011) (FAA preemption and enforceability of class‑action waivers in arbitration agreements)