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Sixth District Holds Arbitration Agreement Unenforceable as Applied to PAGA Claims

In Arbitration, Class Waiver, PAGA on June 5, 2013 at 5:23 pm
you are the only exception

you are the only exception (Photo credit: heatherknitz)

In a preview of a question currently before the California Supreme Court in Iskanian v. CLS Transportation of Los Angeles, the Sixth District held that “When applied to the PAGA, a private agreement purporting to waive the right to take representative action is unenforceable because it wholly precludes the exercise of this unwaivable statutory right.”  Brown v. Superior Court (Morgan Tire & Auto, LLC), No. H037271, __ Cal. App. 4th __ (6th Dist. June 4, 2013).

The question presented in this case is whether the Federal Arbitration Act (9 U.S.C. §§ 1-16) (FAA) permits arbitration agreements to override the statutory right to bring representative claims under the Labor Code Private Attorneys General Act of 2004 (PAGA). (Lab. Code, § 2698 et seq.) We conclude that the FAA does not demand enforcement of such an agreement. A plaintiff suing for PAGA civil penalties is suing as a proxy for the State. A PAGA claim is necessarily a representative action intended to advance a predominately public purpose. When applied to the PAGA, a private agreement purporting to waive the right to take representative action is unenforceable because it wholly precludes the exercise of this unwaivable statutory right. AT&T Mobility LLC v. Concepcion (2011) 131 S.Ct. 1740 (Concepcion) does not require otherwise.

Slip Op. at 1-2.

Judges & Attorneys

Associate Justice Eugene M. Premo delivered the opinion for the court, with Presiding Justice Conrad L. Rushing and Associate Justice Franklin D. Elia concurring.

Appeal from Santa Clara County Superior Court, Judge Peter H. Kirwan.

Counsel for Petitioners, Milton Brown and Lee Moncada: Initiative Legal Group, Melissa Grant, Glenn A. Danas, Katherine W. Kehr.

Counsel for Real Parties in Interest, Morgan Tire & Auto: Klatte, Budensiek & Young-Agriesti, E.W. Klatte, III, Summer Young Agriesti;  Heikaus Weaver,  Christopher Michael HeikausWeaver

By CHARLES H. JUNG

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  1. […] the Sixth District held that an arbitration agreement cannot be enforced against PAGA claims.   Brown v. Superior Court (Morgan Tire & Auto, LLC), No. H037271, __ Cal. App. 4th __ (6th Dist. June 4, […]

  2. […] District yesterday reversed an order compelling arbitration of an employee’s PAGA claims. Brown v. Superior Court (Morgan Tire & Auto, LLC), No. H037271, __ Cal. App. 4th __ (6th Dist. June 4, 2013).  This is a  preview of a question […]

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