Friday, January 20, 2012

First District Dismisses Appeal Challenging Trial Court’s Refusal to Compel Arbitration of “Individual” PAGA Claims: Reyes v. Macy’s, Inc.

On January 19, 2012, the First District (Division 3) published its opinion in Reyes v. Macy’s, Inc., __ Cal.App.4th __ (2012), which dismissed Macy’s appeal “from an order granting Macy’s motion to compel arbitration of plaintiff’s individual claims but denying the request to dismiss class allegations and plaintiff’s claim under the Labor Code Private Attorneys General Act of 2004 (PAGA)….” See Slip Opinion, at 1. As reasoned by the Court, the trial court's ruling on Macy's motion to dismiss the class allegations and the PAGA claim was a non-appealable interlocutory order, and could not be construed as a denial of the motion to compel arbitration insofar as Macy’s did not seek to compel arbitration of the class allegations and the PAGA claim. See Slip Opinion, at 2-3.

In reaching its holding, the Court expressly rejected Macy’s argument that the trial court’s failure to order arbitration of plaintiff’s individual PAGA claim affected a denial, in part, of the motion to compel arbitration. Relying on the analysis of Brown v. Ralphs Grocery Co., 197 Cal.App.4th 489 (2011) – previously discussed here and here – and Arias v. Superior Court, 46 Cal.4th 969 (2009), the Court reasoned that a “plaintiff may not and does not bring the PAGA claim as an individual claim, but ‘as the proxy or agent of the state’s labor law enforcement agencies.” See Slip Opinion, at 3. As further explained by the Court, a PAGA action can only be pursued as a representative claim. See id., at 4 (“The PAGA statute does not enable a single aggrieved employee to litigate his or her claims, but requires an aggrieved employee ‘on behalf of herself or himself and other current or former employees to enforce violations of the Labor Code by their employers.’”) (emphasis in original). Based thereon, the Court expressly rejected the conclusions of three Federal District Court opinions finding that PAGA claims were “personal” claims which an individual employee could agree were arbitrable in the first instance:
Macy’s argues that Machado was incorrectly decided, relying on three district court cases for the proposition that PAGA permits plaintiffs to maintain individual claims. (See Grabowski v. Robinson (S.D.Cal. Sept. 19, 2011, No. 10cv1658-WQH-MDD) 2011 U.S.Dist. Lexis 105680; Valle v. Lowe’s HIW, Inc. (N.D.Cal. Aug. 22, 2011[]) 2011 U.S.Dist. Lexis 93639; Quevedo v. Macy’s, Inc. (C.D.Cal., June 16, 2011[]) 2011 U.S.Dist. Lexis 83046.) None of these cases, however, addresses PAGA’s statutory language and purpose. They rely on AT&T Mobility LLC v. Concepcion (2011) 563 U.S. __ [179 L.Ed.2d 742, 131 S.Ct. 1740], which does not address the question of whether a PAGA claim may be asserted individually. The court in Brown v. Ralphs Grocery Co., supra, 197 Cal.App.4th 489 pointed out that Quevedo v. Macy’s, Inc. failed to mention Machado, although Machado explicitly concluded that a PAGA claim cannot be brought on an individual basis. (197 Cal.App.4th at p. 503, fn. 8.)
See Slip Opinion, at 4 n. 3

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