Another Court of Appeal holds that PAGA claims cannot be split and sent partially to arbitration

Right now, Lawson v. ZB, N.A., review granted Mar. 21, 2018, S246711, is making its way through the California Supreme Court. The case asks whether a representative action under the Private Attorneys General Act of 2004 (Lab. Code, § 2698 et seq.) (‘PAGA”) seeking recovery of individualized lost wages as civil penalties under Labor Code § 558 fall within the preemptive scope of the Federal Arbitration Act (9 U.S.C. § 1 et seq.). Lawson was argued on June 5, 2019. Supplemental briefing was requested and received, and the matter was deemed submitted on June 27, 2019. That means a decision is imminent.

Today, in Mejia v. Merchants Building Maintenance, LLC (August 13, 2019), the Court of Appeal (Fourth Appellate District, Division One) another Court of Appeal came down on the side of the Courts of Appeal that have concluded that PAGA claims cannot be split so as to direct a portion to arbitration:

We agree with the conclusion of the Lawson and Zakaryan courts on this question, and conclude that a single PAGA claim seeking to recover section 558 civil penalties may not be "split" between that portion of the claim seeking an "amount sufficient to recover underpaid wages" and that portion of the claim seeking the $50 or $100 per-violation, per-pay-period assessment imposed for each wage violation. The result is that an employee bringing a PAGA claim to recover the civil penalties identified in section 558 may not be compelled to arbitrate that portion of her PAGA claim that seeks an amount sufficient to recover underpaid wages pursuant to that statute, while the rest of the claim that seeks the $50 or $100 per-pay-period per violation portion of the penalty remains in a judicial forum. We therefore affirm the trial court's order denying the MDM defendants' motion to compel arbitration in this case

Slip op., at 6.

As for reading tea leaves, the Lawson matter (perhaps to be known as the ZB matter due to a change in the name of the case), as noted above, requested supplemental briefing on this question:

If this court concludes Labor Code section 558's "amount sufficient to recover underpaid wages" is not a "civil penalty" recoverable under the Private Attorneys General Act (Lab. Code, § 2698 et seq.), should the trial court be ordered to deny ZB's motion to compel arbitration?

Lawson docket. That question suggests that at least someone on the Supreme Court is thinking about whether an aggrieved employee can recover unpaid wages at all through Labor Code § 558. There’s a curve for you.