Piplack v. Burgers

Docket NumberG061098
Decision Date07 March 2023
Citation88 Cal.App.5th 1281,305 Cal.Rptr.3d 405
Parties Tom PIPLACK, et al., Plaintiffs and Respondents, v. IN-N-OUT BURGERS, Defendant and Appellant.
CourtCalifornia Court of Appeals Court of Appeals

Littler Mendelson, Fermin H. Llaguno, and Michael L. Kibbe, Irvine, for Defendant and Appellant.

Aiman-Smith & Marcy, Randall B. Aiman-Smith, Reed W. L. Marcy, Hallie Von Rock, and Brent A. Robinson, Oakland, for Plaintiffs and Respondents.

OPINION

SANCHEZ, J.

* * * Defendant In-N-Out Burgers appeals from the trial court's denial of its motion to compel arbitration of the claims of plaintiffs Tom Piplack and Donovan Sherrod for penalties under the Labor Code Private Attorneys General Act of 2004 ( Lab. Code, § 2698 et seq. ; PAGA). Defendant argues the recent decision of the United States Supreme Court in Viking River Cruises, Inc. v. Moriana (2022) ––– U.S. ––––, , 213 L.Ed.2d 179 ( Viking ), rendered while defendant's appeal was pending before this court, requires plaintiffs’ individual PAGA claims to be arbitrated and all remaining representative claims dismissed for lack of standing.1 Plaintiffs contend the agreement does not require arbitration of individual PAGA claims, defendant waived its right to arbitration by participating in trial proceedings, plaintiff Sherrod is not bound by the arbitration agreement because he entered it before reaching the age of majority and disaffirmed it after reaching that age, and that plaintiffs have standing to pursue representative PAGA claims in court even if their individual claims are sent to arbitration.

We conclude the arbitration agreements require individual PAGA claims to be arbitrated and defendant did not waive its right to compel arbitration. Accordingly, as to plaintiff Piplack, we reverse—his individual PAGA claim must be arbitrated. As to plaintiff Sherrod, we remand for the trial court to consider his arguments regarding disaffirmance in the first instance, as those arguments were not properly briefed or decided in the trial court because they were irrelevant under pre- Viking law.2

The standing question associated with the representative PAGA claims presents us with a dilemma. On the one hand, the California Supreme Court, in the case Kim v. Reins International California, Inc. (2020) 9 Cal.5th 73, 259 Cal.Rptr.3d 769, 459 P.3d 1123 ( Kim ), provided us with a recent, definitive, and (most importantly) binding interpretation of the relevant portions of PAGA controlling standing. We read Kim as recognizing two (and only two) requirements for standing under PAGA,3 neither of which is affected in any way by moving the individual component of a PAGA claim to arbitration. On the other hand, in Viking , the United States Supreme Court, citing the very same Kim case, concluded a plaintiff whose individual PAGA claim is compelled to arbitration loses standing to pursue representative PAGA claims. ( Viking, supra , ––– U.S. ––––, .)

Despite the deep deference we afford the United States Supreme Court, even on purely state law questions where the United States Supreme Court's opinions are only persuasive, not binding, we conclude we must follow Kim and hold that plaintiffs retain standing to pursue representative PAGA claims in court even if their individual PAGA claims are compelled to arbitration. We simply cannot reconcile the Viking decision's standing analysis with the Kim decision.

FACTS AND PROCEDURAL HISTORY

Defendant is a restaurant chain, operating in California and elsewhere. Plaintiffs are former employees of defendant. During their employment, both plaintiffs signed arbitration agreements with defendant. Those agreements required plaintiffs to pursue any claims arising out of their employment with defendant through arbitration under the Federal Arbitration Act ( 9 U.S.C. § 1, et seq. ; FAA). The agreements also contained a private attorney general waiver, which provided, "There will be no right or authority for any dispute to be brought, heard or arbitrated as a private attorney general action (‘Private Attorney General Waiver’)." This waiver was severable under two different clauses. The first provided the waiver was severable "in any case in which (1) the dispute is filed as a private attorney general action and (2) a civil court of competent jurisdiction finds the Private Attorney General Waiver is unenforceable. In such instances, any private attorney general claim must be litigated in a civil court of competent jurisdiction." The second stated, "The ... Private Attorney General Waiver ... shall be severable in any case in which the dispute is filed as an individual action and severance is necessary to ensure that the individual action proceeds in arbitration."

In late 2019, plaintiffs sued defendant for penalties under PAGA based on defendant's alleged practices of requiring employees to purchase and wear certain articles of clothing without reimbursing them and requiring employees to purchase and utilize special cleaning products to maintain these clothes, again without reimbursement. As is typical for a PAGA action, plaintiffs’ suit was brought on their own behalf and on behalf of other similarly aggrieved employees.

Initially, the case proceeded in relatively ordinary fashion, with the filing of answers, demurrers, amended complaints, and a discovery motion. However, in February 2022, defendant filed a motion to compel arbitration. Defendant explained the delayed timing of its motion by referring to a pending United States Supreme Court case, Viking , in which defendant indicated it expected the United States Supreme Court to overturn or materially alter the California Supreme Court's so-called Iskanian rule,4 which barred arbitration of PAGA claims. Just a few days after the filing of the motion, before plaintiffs could file opposition to the motion, the trial court summarily denied it under Iskanian. Defendant timely appealed.

DISCUSSION
The Recent History of Group Employment Litigation in California and Arbitration

California's Labor Code "contains a complex scheme for timely compensation of workers, deterrence of abusive employer practices, and enforcement of wage judgments." ( Voris v. Lampert (2019) 7 Cal.5th 1141, 1157, 250 Cal.Rptr.3d 779, 446 P.3d 284.) The Labor Code imposes civil penalties and a right for employees to recover attorney fees for violations of many of its rules. (See, e.g., Lab. Code, §§ 203, 218.5, 226.)

By at least the mid-2000s, it had become clear that "class actions play[ed] an important function in enforcing [the Labor Code] by permitting employees who are subject to the same unlawful payment practices a relatively inexpensive way to resolve their disputes." ( Gentry v. Superior Court (2007) 42 Cal.4th 443, 459, 64 Cal.Rptr.3d 773, 165 P.3d 556 ( Gentry ), disapproved by Iskanian, supra , 59 Cal.4th at 443, 173 Cal.Rptr.3d 289, 327 P.3d 129.) In short, employees of large employers with standardized practices allegedly violating the Labor Code could band together, making it economically viable to pursue claims that might have been too small for each of them to pursue individually.

To avoid such class actions, some employers began including arbitration agreements containing class action waivers in their employment contracts. In Gentry , the California Supreme Court held these provisions were, at least in some instances, unenforceable as contrary to California public policy. ( Gentry, supra , 42 Cal.4th at p. 457, 64 Cal.Rptr.3d 773, 165 P.3d 556.) However, in AT&T Mobility LLC v. Concepcion (2011) 563 U.S. 333, 131 S.Ct. 1740, 179 L.Ed.2d 742 ( Concepcion ), the United States Supreme Court held this rule was preempted by the FAA.

After Concepcion , class actions were now effectively unavailable against employers utilizing mandatory arbitration agreements containing class action waivers. In lieu of class actions, some employee-plaintiffs turned to PAGA, which permitted them to bring an action for certain civil penalties (and attorney fees) on behalf of both themselves and other similarly situated employees. In Iskanian , the California Supreme Court held an employee cannot waive his or her right to file a PAGA claim, or to file the representative portion of a PAGA action on behalf of other similarly situated employees. ( Iskanian, supra , 59 Cal.4th at pp. 382-384, 173 Cal.Rptr.3d 289, 327 P.3d 129.) The court also concluded PAGA actions could not be split into "individual" and "representative" components (the individual component corresponding to the alleged violations experienced by the plaintiff, and the representative component corresponding to the alleged violations experienced by the other employees) in order to compel arbitration of the individual component. ( Id. at pp. 383-384, 173 Cal.Rptr.3d 289, 327 P.3d 129.) The California Supreme Court also considered whether these rules were preempted by the FAA but concluded they were not. ( Iskanian, supra , at pp. 384-389, 173 Cal.Rptr.3d 289, 327 P.3d 129.)

After Iskanian , it was settled law in California that PAGA claims could not be compelled to arbitration, in whole or in part. However, that rule would last only a few years. In Viking , the United States Supreme Court considered a challenge to the Iskanian rule based on the same FAA preemption theory the California Supreme Court had rejected. ( Viking, supra , ––– U.S. ––––, .) The majority reached a mixed result, concluding the FAA preempted only the portion of Iskanian forbidding splitting PAGA actions into individual and representative components, but not the portion prohibiting waiver of the right to pursue representative PAGA actions. ( Viking, supra , ––– U.S. ––––, .) Consequently, the FAA required severance and separate arbitration of the individual component of the plaintiff's PAGA claim. ( Viking, supra , ––– U.S. ––––, .)

The majority also concluded that, now that the plaintiff's individual PAGA claim was to be compelled to arbitration, the plaintiff lacked standing to pursue a representative...

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3 cases
  • Barrera v. Apple Am. Grp.
    • United States
    • California Court of Appeals Court of Appeals
    • August 31, 2023
    ...motion to compel arbitration. We disagree. Piplack v. In-N-Out Burgers (2023) 88 Cal.App.5th 1281, review granted June 14, 2023, S279546 (Piplack), a defendants cite in their reply brief, is on point. And we agree with its analysis. In Piplack, the plaintiffs sued the defendant under PAGA. ......
  • Accurso v. In-N-Out Burgers
    • United States
    • California Court of Appeals Court of Appeals
    • August 29, 2023
    ...County (Carrera). Accurso was the fifth of the six to be filed, followed by Andrews in Los Angeles County. The operative complaint in Piplack alleges a single claim arising from In-N-Out's policy of requiring its restaurant employees to report to work each shift wearing white pants and fail......
  • Garcia v. Omni Hotels Mgmt. Corp.
    • United States
    • California Court of Appeals Court of Appeals
    • December 21, 2023
    ...1281, (Piplack) involved an employee claim against a fast-food restaurant company. In late 2019, employees filed their PAGA lawsuit. (Id. at p. 1285.) The proceeded normally in court "with the filing of answers, demurrers, amended complaints, and a discovery motion." (Id. at p. 1286.) In Fe......
3 firm's commentaries
1 books & journal articles
  • Wage and Hour Case Notes
    • United States
    • California Lawyers Association California Labor & Employment Law Review (CLA) No. 37-4, July 2023
    • Invalid date
    ...being compelled to bring the individual component of their PAGA claims in arbitration. Those cases are: Piplack v. In-N-Out Burgers, 88 Cal. App. 5th 1281 (2023); Gregg v. Uber Technologies, Inc., 89 Cal. App. 5th 786 (2023); Nickson v. Shemran, Inc., 2023 WL 2820860 (Cal. App. 4th Dist. Ap......

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