128 | 2025 Cal-Peculiarities ©2025 Seyfarth Shaw LLP www.seyfarth.com Prior immunity to arbitration agreements. The California Supreme Court enhanced PAGA’s power in 2014, in Iskanian v. CLS Transportation Los Angeles,473 which found a PAGA exception from the general rule that classaction waivers in arbitration agreements are enforceable. Iskanian reasoned that a PAGA claim differs from a class action in that PAGA plaintiffs act as private attorneys general, on behalf of the State of California—an entity that never agreed to arbitrate with the employee.474 While federal district courts both before and after Iskanian reached the opposite conclusion,475 the Ninth Circuit in 2015 sided with Iskanian.476 And later U.S. Supreme Court authority, though reaffirming the broad scope of the FAA in striking down state laws hostile to arbitration, left intact the PAGA claim’s special immunity from enforceable arbitration agreements. (See § 5.2.4.) However, on June 15, 2022, the U.S. Supreme Court partially preempted the Iskanian decision in Viking River Cruises, Inc. v. Moriana by ruling that employers can enforce arbitration agreements under the FAA insofar as the agreements mandate arbitration of an employee’s individual PAGA claims. 477 Specifically, the Court held that PAGA claims can be divided into individual and non-individual, “representative” PAGA claims and that individual PAGA claims can be compelled to arbitration under the FAA. In such instances, where plaintiff’s individual PAGA claims are enforced in arbitration, it follows that the plaintiff no longer has statutory standing to maintain representative PAGA claims in court because “[u]nder PAGA’s standing requirement, a plaintiff can maintain nonindividual PAGA claims in an action only by virtue of also maintaining an individual claim in that action.”478 The U.S. Supreme Court clarified that a “wholesale waiver” of PAGA claims in an arbitration agreement is still invalid under Iskanian and is not preempted by the FAA.479 In a series of post-Viking River decisions, California Courts of Appeal dealt significant blows to employers’ attempts to avoid representative PAGA actions by holding that an employer can compel arbitration of the plaintiff’s individual PAGA claims, but cannot compel arbitration of the plaintiff’s representative PAGA claims.480 In other words, notwithstanding compelled arbitration of the plaintiff’s individual PAGA claim, the plaintiff retains standing to pursue representative claims on behalf of other employees in state court or another forum. In a 2023 ruling, the California Supreme Court cemented PAGA plaintiffs’ standing to pursue representative claims on behalf of other employees in state court or another forum.481 But in a somewhat surprising twist, the California Supreme Court’s decision supports the stay of representative PAGA claims pending arbitration, rather than employers having to defend two concurrent actions, and further noted the binding effect the arbitrator’s ruling on the individual PAGA claim has on the plaintiff’s standing to pursue representative PAGA claims.482 Practically speaking, this means that if an employer prevails on individual PAGA claims in arbitration, a representative action by the unsuccessful plaintiff is extinguished – and vice versa. That is, if the individual plaintiff prevails in arbitration, she has standing to pursue a representative action in court. The plaintiffs’ bar adapts to post-Viking River reality. In order to avoid arbitrating the plaintiff’s individual PAGA claim and staying the representative PAGA claim at the trial court, the plaintiffs’ bar has employed “headless PAGA claims” wherein the plaintiffs expressly forgo their individual PAGA claims and allege solely a representative PAGA claim in court. The Court of Appeal endorsed these types of claims in March of 2024, by holding in Balderas v. Fresh Start Harvesting, Inc. that an employee does not need to allege an individual PAGA claim, in order to pursue a representative PAGA claim.483 There, the trial court dismissed a PAGA lawsuit because it alleged representative claims only and no individual claims. The Court of Appeal reversed and revived the lawsuit, holding that plaintiffs can pursue representative PAGA claims without alleging an individual PAGA claim. Citing Adolph v. Uber Techs., Inc., , the Court of Appeal reasoned that there are only two requirements for PAGA standing: “The plaintiff must allege that he or she is (1) someone who was employed by the alleged violator and (2) someone against whom one or more of the alleged violations was committed.”484 Balderas was significant because some in the plaintiffs’ bar began to assert that they could file “headless” PAGA actions – i.e., representative claims with no individual claims – and thereby avoid arbitration. The life of headless PAGA claims was short-lived, however, as the Court of Appeal handed down a decision before the end of 2024
RkJQdWJsaXNoZXIy OTkwMTQ4