PAGA cases stalled by arbitration: of mice and elephants
Website design By BotEap.comTHE CASE PAYS AND ARBITRATION: BACKGROUND.
Website design By BotEap.comWhether it is more noble to bear the stones and arrows of outrageous fortune and thereby represent the public good, or to submit to the accusation of a leech that feeds on others, the lifeblood of the California economy, that is the question. . And it will be decided by an appellate court one day, but until then, we have defense attorneys, and not a few judges, who would transmute a pure “Private Attorney General Act” into some class action hybrid, with all its attendant hurdles. and traps for Claimants.
Website design By BotEap.com“PAID” in a nutshell is a set of California Labor Codes that throws the ball at private attorneys to do what the California legislature felt the state wage-control agency couldn’t or wouldn’t: hold employers accountable. for violations of the Labor Code. The statute has a built-in incentive for private attorneys to act as “attorneys general” to bring such lawsuits and recover attorneys’ fees for their efforts if they win. As part of the “deal”, the employees and the State shared the proceeds of the recovery.
Website design By BotEap.comThe procedural battle is now in the dark valley between a clear statutory action based on PAY for a penalty that would normally be recovered by the State of California, and specific individual Labor Code claims that allow a direct cause of action without sharing the reward with the state. . The reasoning of the prior courts is that an arbitration claim signed by an employee does not extend to a Labor Code penalty case recoverable only by the State of California prior to PAGA. California and the employee(s) are effectively 75% and 25% equity partners respectively in the case, and the employer cannot force the State of California into arbitration. But as for that overtime claim, or break violation, for example, the employee has a separate and direct right to recover those amounts as “wages” instead of penalties. Those claims may be subject to an arbitration agreement signed by the employee.
Website design By BotEap.comCALIFORNIA PAY CLAIMS ARE NOT SUBJECT TO THE “CLASS ACTION” WAIVER OR ARBITRATION.
Website design By BotEap.comCurrent California law states that a pre-dispute waiver of PAGA cannot be enforced even if there was an intent to waive. The waiver is simply unenforceable because it is contrary to the fundamental policy of PAGA’s statutes to rectify and remedy employer labor violations through sanctions statutes through State enforcement action. Securitas Security Services USA, Inc. v. Superior Court (Edwards) 2015 Cal.Application. LEXIS 190 (Cal. App. 4th Dist. Feb. 27, 2015). Because the waiver agreement with arbitration had a clause that prevented the illegal termination of PAGA’s waiver, the entire agreement was invalid because it was contrary to public policy.
Website design By BotEap.comThe situation arises when a Plaintiff’s attorney includes multiple causes of action in a first document filed in court called the “Complaint.” The Lawsuit alleges some violations that are unique because, in the past, those causes of action are for civil penalties that were recoverable only by the State of California, through the Department of Industrial Relations.
Website design By BotEap.comHowever, if the Plaintiff-Employee meets certain conditions by notifying the Department, and the Department consents, the Plaintiff may proceed to collect legal penalties from the Defendant-Employer. But suppose the Plaintiff has filed other causes of action that employees have always been able to sue without Department approval, such as overtime or rest break violations, or perhaps actions for discrimination, whistleblower retaliation, or defamation.
Website design By BotEap.comAssume that Plaintiff has included such causes of action in his Complaint, along with the causes of action based on the penalty, and further assume that when Plaintiff started work, before any disputes arose, he or she signed a Release Agreement. arbitration that resolves all disputes. between employer and employee would be resolved by binding private arbitration. That is, there will be no jury, judge or court of appeal. Instead, the parties hire a private company, known as an arbitration service, to resolve the dispute. The contract signed by the employee includes an onerous and ill-tempered resignation: no class action lawsuits allowed.
Website design By BotEap.comFor the final link in the chain of assumptions: suppose the Respondent persuades the Court that the Arbitration Agreement is enforceable and the Court orders the case to Arbitration, with one exception. Claims for legal sanction, by case precedent, are not subject to arbitration, and those that the Court separates from the Agreement, remitting the remaining causes of action to Arbitration. These non-arbitrable causes of action by penalty are called “PAGA” claims. These claims typically involve many employees suing as a class, but for technical reasons, the class is not considered a “class” requiring a court order approving the class by “class certification.” This is important because PAGA claims can produce significant verdicts in the millions of dollars.
Website design By BotEap.comPAY CASES STALLED BY ARBITRATION, ALTHOUGH THEY ARE NOT SUBJECT TO ARBITRATION.
Website design By BotEap.comThe stage is set: do the courts order individual wage claims to arbitration while they stay the PAGA case and thus “wait and see” if the employee has viable PAGA claims? Perhaps the PAGA representative will simply walk away if he or she obtains a full recovery in arbitration or by settlement.
Website design By BotEap.comThe Court may stay the PAGA case because it does not want parallel proceedings that produce inconsistent results, and which may produce some collateral impediment as to facts/issues in the PAGA case. The trial court may take the position that it does not have jurisdiction over the Agreement to Arbitrate and the time at which that Arbitration should proceed because it is a matter of separate private agreement between the employer and the employee. The trial court may also expect the PAGA case to be resolved in the course of arbitration, even if that case is still within the Court’s jurisdiction.
Website design By BotEap.comThe defense bar’s main argument: appealing to the self-interest of overburdened courts dealing with the intricacies of multi-party litigation and the self-interest of the PAGA representative. The first loophole in the defense argument: trial courts, until relieved by appellate courts, should not sacrifice PAGA’s purpose and direction for the sake of administrative efficiency.
Website design By BotEap.com“Handing over” the case bit by bit, especially to a non-judicial official, is a solution, but also a judicial error. It’s a common military tactical offensive and now defense driven: divide and conquer, and attrition increases the cost of war, but of course, in the name of efficiency.
Website design By BotEap.comBut “little by little” is one thing, and case management is another. It is reasonable to expect a court to control its own procedures to ensure due process and contain the cost and complexity of litigation. It is not yet clear how much restriction and control there may be on PAGA cases, or what law or jurisprudence will support “case management”, even to the potential point of denying the PAGA case moving forward. The classic Post-Brinker v. The Restaurant Group situation is if break violations are so variable from employee to employee that class certification is not indicated. Could and should the same be said of a PAY for sanctions case?
Website design By BotEap.comCOURT RESPONSES TO COMBINED PAY AND NON-PAY CLAIMS
Website design By BotEap.comMore trial courts will decide “what comes first”: arbitration of non-PAGA wage claims or the PAGA case for civil suit? That question makes very practical sense. If the arbitration is first, the issues are explored by discovery that may well affect the trial court case. It would be the classic “tail wagging the dog”. Logic would indicate that you put time and energy into the most important issues, and that the small case of individual overtime will be included in an eventual settlement. Or have individual overtime claims dismissed to allow for a pure PAY case. Of course, the simple solution, subject to the consent of the client, is to bring only the “pure PAGA” case and, when possible, choose only a “clean” PAGA case. That is, do not include individual minor or high-stakes wage and discrimination claims. In addition, the Private Attorneys General, that is, the lawyers for the Plaintiffs, should focus on those cases that have a high degree of overlap based on a company-wide infringement. Such was, for example, the case of bright v. 99 cent only stores 189 Cal.App4th 1472 (2010) where the failure to provide stools to sit at checkout stations for retail employees was the result of company policy that stools were impractical.
Website design By BotEap.comSTOP PAY CLAIMS ENGINES RESTART
Website design By BotEap.comCourts will design their own case management rules that will be less than strict class action certification procedures, but more than full freedom to litigate the matter as a one-party case. Seasoned jurists already handle these types of “complex” cases, and are likely to use complex multi-party litigation guidelines to control costs and scope of discovery, and to come up with quick and efficient ways to resolve interim logjams in litigation. . But I also predict that the California Supreme Court will decide the finality of these disputes as “in the public good” and as presented by the elected State Attorney General. The result will be unsatisfactory to the plaintiff or the defense bar, but will allow PAGA cases to be heard and concluded quickly without the impediment of arbitration or any variation of class action certification procedures.
Website design By BotEap.comCONCLUSION
Website design By BotEap.comGreed, in the paraphrased words of Adam Smith, is what makes the world go round. The defense bar appears to denigrate both the intelligence and foresight of the California legislature by asserting that this is not a “private attorney general” case, but a “Get Rich Act” by Plaintiffs’ attorneys. Well, fine, but that’s surely incidental to the actual incentive of the PAGA statutes: an incentive for employers to change their operations to comply with the law with every press release of another verdict for employees. If employers want to close PAGA cases, let them comply with the law.