This Fight Doesn't Seem Over

Franco v. Arakellian Enters., No. B232583 (D2d1, as modified Mar. 11, 2015)

This is an employee class action where the plaintiff asserts claims under both the Labor Code Private Attorney General Act as well as other statutes. This is the Second District’s third shot in this case, which has been ping-ponging through the courts as the law regarding the arbitrability of certain claims kept changing.  This time, the court gets the case on transfer from the California Supreme Court to reconsider in light of Iskanian v. CLS Transportation Los Angeles, LLC, 59 Cal. 4th 348 (2014), which held that PAGA claims are not arbitrable under arbitration clauses in an employment agreement because the claims actually belong to the state government, even if they are prosecuted by an employee on a quasi-qui tam basis.

Given cumulative effects of the U.S. Supreme Court’s decision in AT&T Mobility v. Concepcion, 563 U.S. ---, 131 S.Ct. 1740 (2011) and the state supreme court’s Iskanian ruling, the results are pretty clear: Plaintiff’s non-PAGA claims are arbitrable and subject to a class valid action waiver. Plaintiff’s PAGA claims are not arbitrable and the waiver of his right to bring representative PAGA actions is unenforceable, but severable from the otherwise valid arbitration provision. On remand, the trial court should stay the PAGA claims under Code of Civil Procedure 1281.4, pending resolution of the non-PAGA claims by arbitration.

Remanded with orders.