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Quick Hits
- A California appellate court recently ruled a company could not compel individual PAGA claims to arbitration because the plaintiff disclaimed all individual relief and bought the action on a representative basis only.
- There is a split of authority on this issue at the California appellate court level.
- The company could appeal this decision to the California Supreme Court.
On February 26, 2025, the California Court of Appeal, Fourth Appellate District, upheld a lower court decision denying a sanitation company’s motion to compel arbitration of individual PAGA claims.
In February 2022, an employee sued Packers Sanitation Services, which was recently renamed Fortrex, in a representative capacity under PAGA, alleging violations of California’s overtime and meal and rest break requirements. In March 2022, the company moved to compel arbitration based on an arbitration agreement the employee had signed.
The plaintiff argued he did not allege the individual component of a PAGA claim, so there was no individual claim that the trial court could compel to arbitration. Instead, he argued that he was acting only in a representative capacity. The Imperial County Superior Court agreed.
The Fourth District agreed with the trial court and concluded that the plaintiff alleged violations only in a representative capacity, and the trial court was correct in denying the company’s motion to compel arbitration. It noted that a complaint could fail to include an individual PAGA claim, even if it should include an individual PAGA claim.
Notably, the California Court of Appeal, Second Appellate District recently came to the opposite conclusion as the Fourth District. In that decision, the Second District held that a PAGA plaintiff cannot disclaim the individual component of a PAGA action and bring such an action in only a representative capacity.
In 2022, the Supreme Court of the United States held in Viking River Cruises v. Moriana that individual PAGA claims can be compelled to arbitration, and any non-individual claims would be dismissed at that point. However, in 2023, the California Supreme Court ruled that plaintiffs may still be able to pursue representative PAGA claims in court, even after their individual claims are sent to arbitration.
Next Steps
The employer in this case could appeal the Fourth District’s decision to the California Supreme Court, especially in light of the current split in authority in the state.
In the meantime, California employers may wish to review their arbitration agreements when confronting a potential PAGA lawsuit.
Ogletree Deakins’ California Class Action and PAGA Practice Group will continue to monitor developments and will provide updates on the California, Class Action, and Wage and Hour blogs as new information becomes available.
Tim L. Johnson is a shareholder in Ogletree Deakins’ San Diego office.
This article was co-authored by Leah J. Shepherd, who is a writer in Ogletree Deakins’ Washington, D.C., office.
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