Cal. Court Says Employer’s Arbitration Win Precludes Representative PAGA Claim

Quick Hits

• The California Court of Appeal held that an arbitrator’s finding of no Labor Code violations has issue-preclusive effect on an employee’s PAGA standing.
• The decision barred an employee from pursuing representative PAGA claims in court after losing on individual claims in arbitration.
• The ruling confirms a powerful strategy for employers: compel individual claims to arbitration, secure a favorable ruling, and then move to dismiss the representative PAGA action.

On March 3, 2026, in Sorokunov v. NetApp, Inc., the California Court of Appeal, First Appellate District held that, absent any Labor Code violations, which were dismissed in arbitration, the employee is no longer an “aggrieved employee,” and the employee’s representative PAGA claim cannot survive.

Background

Former NetApp employee Alexander Sorokunov sued the company, alleging various Labor Code violations related to his compensation and sought civil penalties under PAGA on behalf of himself and other affected employees.

The trial court granted NetApp’s motion to compel arbitration of Sorokunov’s individual (non-PAGA) claims but refused to stay the PAGA claim during the arbitration proceedings. The trial court confirmed the arbitration award and then granted NetApp’s motion for judgment on the pleadings on the PAGA claim, concluding that the arbitration award conclusively established that Sorokunov was not an “aggrieved employee” and thus lacked standing to pursue the PAGA cause of action.

On appeal, the First Appellate District upheld the trial court and rejected Sorokunov’s arguments that the trial court had erred by compelling arbitration, denying summary adjudication on his PAGA claim, confirming the award, and applying issue preclusion to bar PAGA standing.

Issue Preclusion Barred the PAGA Claim

The most significant portion of the ruling addressed whether the arbitration award barred the employee’s PAGA claim through issue preclusion—a doctrine that prevents relitigating issues between parties in privity that are identical to issues that have been “actually litigated” on the merits in a prior proceeding.

Issue Preclusion Applies

Sorokunov argued that issue preclusion cannot be applied because the parties were not the same or in privity, because a PAGA claim is an action prosecuted on behalf of the state. The court rejected this, holding that while preclusion barred Sorokunov personally from prosecuting a PAGA action, it had no effect on the California Labor and Workforce Development Agency’s (LWDA), i.e., the state’s, ability to investigate and prosecute the same violations, nor would it prevent other NetApp employees from asserting their own claims.

Sorokunov also argued the issues were not identical, characterizing the PAGA case as involving broader employer “practices.” The court was not persuaded, explaining that “to the extent [Sorokunov’s] PAGA standing is dependent on having suffered the same Labor Code violations that have been adjudicated in arbitration, his standing and the underlying violations are considered identical issues.” Once a confirmed award establishes that an employee did not experience the alleged violations, he is no longer an “aggrieved employee” with PAGA standing.

Arbitration Award Had Preclusive Effect

The appellate court further held that an arbitrator’s findings that no Labor Code violations occurred were preclusive on the question of the employee’s PAGA standing. The court stated: “[t]he arbitrator determined both as a matter of fact and law that [the employee] had not suffered any of the alleged Labor Code violations and,  … we agree with that conclusion. The trial court did not err in finding that the arbitrator’s findings were subject to issue preclusion. Nor did the trial court err by relying on those conclusive findings to determine that [the employee] was not an aggrieved employee” or find that he lacked standing.

Policy Arguments Rejected

Finally, the appellate court rejected policy arguments against applying issue preclusion, including the concern that doing so would eliminate the state’s enforcement interest because PAGA claims may be time-barred before a replacement plaintiff or the LWDA can act. The court noted that the LWDA receives notice of every PAGA claim at the outset, retains the ability to investigate on its own timeline, and is not bound by the arbitration award.  

Key Takeaways

Sorokunov confirms a powerful strategic sequence for California employers: compel individual claims to arbitration, win on the merits, and use that result to end the companion representative PAGA action. For companies facing PAGA claims, the individual arbitration is not merely a procedural formality—it is the main event. Key takeaways include:

• Arbitration agreements remain a powerful tool for managing PAGA exposure. When an employee’s individual Labor Code claims are resolved in the employer’s favor through arbitration, the employee may lose standing to pursue representative PAGA claims based on those same alleged violations. This makes well-drafted arbitration agreements an increasingly critical component of employer litigation strategy in California.
• Individual arbitration can be a PAGA defense. After Sorokunov, employers may want to consider approaching the individual arbitration with an understanding that the findings may serve as the basis for a dispositive motion on the PAGA claim.
• Preclusion likely only applies to substantive arbitration ruling, not procedural ruling. Issue preclusion requires that the violations were “actually litigated” and “necessarily decided.” Thus, an arbitrator who dismisses on procedural grounds may not generate the preclusive finding needed to defeat a representative PAGA claim.

Ogletree Deakins’ California Class Action and PAGA Practice Group will continue to monitor developments and will provide updates on the Arbitration and Alternative Dispute Resolution, California, and Class Action blogs as additional information becomes available.

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