Galarsa v. Dolgen Cal., LLC

• Docket Number: F082404
• Decision Date: 19 November 2021
• Parties: TRICIA GALARSA, Plaintiff and Respondent, v. DOLGEN CALIFORNIA, LLC, Defendant and Appellant.
• Court: California Court of Appeals Court of Appeals

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TRICIA GALARSA, Plaintiff and Respondent, v. DOLGEN CALIFORNIA, LLC, Defendant and Appellant.

F082404

California Court of Appeals, Fifth District

November 19, 2021

NOT TO BE PUBLISHED

APPEAL from an order of the Superior Court of Kern County No BCV-19-102504. Thomas S. Clark, Judge.

McGuire Woods, Mathew C. Kane, Amy E. Beverlin, Sabrina A Beldner and Travis Gunn for Defendant and Appellant.

Robins Kaplan, Glenn A. Danas; The Bainer Law Firm, and Matthew R Bainer for Plaintiff and Respondent.

OPINION

THE COURT^[*]

Plaintiff Tricia Galarsa sued her former employer to recover civil penalties under the Private Attorneys General Act of 2004 (PAGA; Lab. Code, § 2698 et seq.)^[1] for various Labor Code violations. The employer filed a motion to compel arbitration pursuant to an agreement signed by plaintiff when she began her employment. The superior court denied the motion, concluding plaintiff could not be compelled to arbitrate any portion of her PAGA representative claim.

We again conclude that (1) a former employee who is authorized to pursue PAGA representative claims cannot be compelled to arbitrate those claims pursuant to a predispute arbitration agreement and (2) this rule of state law is not preempted by federal law. (Herrera v. Doctors Medical Center of Modesto, Inc. (2021) 67 Cal.App.5th 538, 549-550 (Herrera).) Also, employer has not demonstrated the superior court was compelled as a matter of law to find that (1) the state assumed the obligation to arbitrate, (2) the state is bound by principles of agency to the arbitration agreement made before plaintiff became the state's authorized agent, or (3) plaintiff, as the state's agent, is equitably estopped from denying the arbitrability of the PAGA claim.

We therefore affirm the order denying the petition to compel arbitration.

FACTS

In March 2016, plaintiff applied for employment with Dolgen California, LLC (Dollar General).^[2] As part of the application and hiring process, plaintiff accessed Dollar General's Express Hiring system, which allows persons to receive, review, and acknowledge documents related to their hiring and employment. It is undisputed that on March 30, 2016, plaintiff electronically signed Dollar General's arbitration agreement.

The arbitration agreement stated Dollar General "has a process for resolving employment related legal disputes with employees that involves binding arbitration." It also stated:

"You agree that, with the exception of certain excluded claims described below, any legal claims or disputes that you may have against Dollar General … arising out of your employment with Dollar General or termination of employment with Dollar General ("Covered Claim" or "Covered Claims") will be addressed in the manner described in this Agreement. You also understand that any Covered Claims that Dollar General may have against you related to your employment will be addressed in the manner described in this Agreement.

"Class and Collective Action Waiver: You and Dollar General may not assert any class action, collective action, or representative action claims in any arbitration pursuant to the Agreement or in any other forum. You and Dollar General may bring individual claims or multi-plaintiff claims joining together not more than three plaintiffs, provided that the claims are not asserted as a class, collective or representative action. Non-representative, multi-plaintiff arbitrations (up to the three-plaintiff limit) may only be filed if each of the plaintiff's claims: (1) arises out of the same transaction, occurrence, or series of transactions or occurrences; (2) arises out of the same work location; and (3) presents a common question of law or fact. A challenge to a multi-plaintiff action can be initiated by any party by filing a motion to dismiss or sever one or more parties. The arbitrator shall rule upon the motion to dismiss or sever based upon the standards set forth in this Paragraph. NOTE: This waiver does not apply to claims under the National Labor Relations Act."

The arbitration agreement also stated its procedures "will be the exclusive means of resolving Covered Claims relating to or arising out of your employment or termination of employment with Dollar General." The covered claims included alleged violations of wage and hour laws and alleged violations of any other state or federal laws. Plaintiff marked the box on the arbitration agreement stating she agreed to its terms and understood that by checking the box, both Dollar General and she would be bound by the agreement's terms. The agreement also contained an opt-out provision. Plaintiff did not opt out.

In April 2016, plaintiff began working for Dollar General as an hourly-paid assistant manager. Her employment ended in January 2017.

In October 2017, plaintiff's attorney mailed a written notice to the Labor and Workforce Development Agency and defendant pursuant to section 2699.3. Over 65 days passed without the agency responding to plaintiff's notice.

PROCEEDINGS

In February 2018, plaintiff filed a complaint seeking civil penalties under PAGA for violations of the Labor Code. In May 2018, plaintiff filed a first amended complaint for civil penalties under PAGA based on alleged violations of Labor Code sections 201, 202, 203, 204, 226, subdivision (a), 226.7, 510, 512, 1174, subdivision (d), 1194, 1197, 1197.1, and 1198. In June 2019, the parties stipulated to the transfer of the action from Contra Costa County Superior Court to Kern County Superior Court.

In July 2020, Dollar General filed a motion to compel arbitration and stay the proceeding pending completion of arbitration. The motion was supported by two declarations. Dollar General argued that plaintiff must individually arbitrate the alleged wage and hour violations that involved her, whether cast as a PAGA claim or otherwise.

In September 2020, the superior court held a hearing, announced a tentative ruling to deny the motion, and heard argument from counsel for Dollar General. Counsel argued that allowing plaintiff to pursue a PAGA only action enabled her to void her agreement to arbitrate all employment related disputes. The court stated that, in its view, the statutory scheme allowed an employee to avoid arbitration.

After the hearing, the superior court filed a minute order denying the motion to compel arbitration. The order concluded (1) an employee's right to bring a PAGA representative claim could not be waived, (2) the rule against waivers was not preempted by federal law, and (3) a PAGA claim could not be split into arbitrable individual claims and nonarbitrable representative claims. Dollar General appealed.

DISCUSSION

I. WAIVER OF REPRESENTATIVE CLAIMS WAS INVALID

Dollar General contends plaintiff waived her right to bring representative claims when she signed the arbitration agreement, and that waiver is enforceable under the Federal Arbitration Act (FAA; 9 U.S.C. § 1 et seq.). We disagree.

The California Supreme Court has adopted the rule that "an arbitration agreement requiring an employee as a condition of employment to give up the right to bring representative PAGA actions in any forum is contrary to public policy." (Iskanian v. CLS Transportation Los Angeles, LLC (2014) 59 Cal.4th 348, 360 (Iskanian).) If this rule is good law, the waiver contained in Dollar General's arbitration agreement is not enforceable.

Iskanian's anti-waiver rule remains good law because it is not preempted by federal law. Our Supreme Court stated "that the FAA's goal of promoting arbitration as a means of private dispute resolution does not preclude our Legislature from deputizing employees to prosecute Labor Code violations on the state's behalf. Therefore, the FAA does not preempt a state law that prohibits waiver of PAGA representative actions in an employment contract." (Iskanian, supra, 59 Cal.4th at p. 360.) The court explained that "a PAGA claim lies outside the FAA's coverage because it is not a dispute between an employer and an employee arising out of their contractual relationship. It is a dispute between an employer and the state, which alleges directly or through its agents-either the [Labor and Workforce Development] Agency or aggrieved employees-that the employer has violated the Labor Code." (Id. at pp. 386-387.)

Dollar General argues Iskanian's approach to federal preemption is no longer correct because more recent opinions of the United States Supreme Court are controlling. Dollar General contends this court can properly conclude that Epic Systems Corp. v. Lewis (2018) ___U.S. ___[138 S.Ct. 1612, 200 L.Ed.2d 889] (Epic Systems) and Lamps Plus, Inc. v. Varela (2019) ___U.S. ___[139 S.Ct. 1407, 203 L.Ed.2d 636] (Lamps Plus) impliedly abrogate the Iskanian rule banning contractual waivers of PAGA representative claims. Dollar General acknowledges that several decisions by the Court of Appeal have concluded that Iskanian remains good law and argues "those court are incorrect and this Court is not bound to follow them or Iskanian at this juncture."

After Dollar General filed is opening brief, this court issued an opinion following those Court of Appeal decisions and concluding "our Supreme Court's analysis of preemption under the FAA remains good law." (Herrera, supra, 67 Cal.App.5th at p. 550.) We cited Provost v. YourMechanic, Inc. (2020) 55 Cal.App.5th 982 (Provost) as authority for the conclusion that Epic Systems did not implicitly overrule Iskanian. (See Provost, at p. 998; Winns v. Postmates, Inc. (2021) 66 Cal.App.5th 803 813, 814 ["several other cases that have reached the same conclusion that Epic Systems did not overrule Iskanian"; the contention that "Lamps Plus overruled Iskanian is equally unavailing"]; see also, Williams v. RGIS, LLC (2021) 70...