By Leonard H. Sansanowicz
Leonard H. Sansanowicz is Senior Counsel at Feldman Browne Olivares, APC and represents employees in all aspects of employment law. He has been a Southern California Rising Star each year since 2013 and has for the past three years been named to the Up-and-Coming 100 list. He can be contacted at: leonard@ leefeldmanlaw.com.
Porter v. Nabors Drilling USA, L.P., 854 F.3d 1057 (9th Cir. 2017)
When a litigant files for Chapter 11 bankruptcy, it triggers an automatic stay on the litigation.1 There is an exception to the rule, sometimes known as the governmental unit or governmental regulatory exception,2 that can exempt certain claims from the stay to allow a governmental unit to enforce its police or regulatory power. Plaintiff argued that claims brought under the Private Attorneys General Act of 2004 (PAGA)3 should fall under this exception. The Ninth Circuit disagreed, holding that although plaintiff was a qui tam private citizen bringing the action on behalf of the State of California, he himself was not a governmental unit, and finding that he was would require rewriting the statutory definition of a governmental unit. Plaintiff's argument that he should qualify for the exception as an agent of a governmental unit was not persuasive when the Labor and Workforce Development Agency (LWDA) itself had not intervened and the action remained under plaintiff's control.
Hernandez v. Ross Stores, Inc., 7 Cal. App. 5th 171 (2017)
Plaintiff brought a PAGA-only representative claim for civil penalties for various Labor Code violations in the face of an arbitration agreement. The agreement, which was governed by the Federal Arbitration Act (FAA) and the California Arbitration Act (CAA), provided that "all such disputes [arising out of or relating to the employment relationship are] to be resolved only by an Arbitrator . . ." Defendant move to compel, arguing that the term "disputes" differed from the word "claims" and therefore plaintiff had agreed to arbitrate her own Labor Code violations, such that plaintiff needed to resolve whether she had standing (as an "aggrieved party") to bring a PAGA representative action before the action could proceed in court. Plaintiff argued that under Iskanian v. CLS Transp. Los Angeles, LLC4, an arbitration agreement that forced an employee to forego her right to bring a PAGA claim was unenforceable, and that a PAGA claim was fundamentally different than any individual dispute since PAGA claims are disputes between the state and the employer, rather than the employee and the employer. The trial court agreed with plaintiff, denying defendant's motion and finding that PAGA claims do not include individual claims, and therefore there were no individual disputes between Plaintiff and defendant to compel to arbitration. Defendant appealed, arguing the FAA gives employers and employees a preemptive right to arbitrate individual disputes that may underlie a PAGA claim.
The court of appeal rejected Defendant's argument and upheld the trial court's denial, finding that the PAGA waiver ("there will be no right or authority for any dispute to be brought, heard or arbitrated as a class action, private attorney general, or in a representative capacity on behalf of any person") violated Iskanian, and further finding that PAGA claims lie outside FAA coverage. The appellate court also cited to Williams v. Superior Court5, for the proposition that "a single representative PAGA claim cannot be split into an arbitrable individual claim and a nonarbitrable representative claim" and that an employee "cannot be compelled to submit any portion of his representative PAGA claim to arbitration, including whether he was an 'aggrieved employee.'"6
Defendant argued Williams was distinguishable in that: (a) it was not binding precedent, (b) the language of defendant's arbitration agreement differed in that it referred to "disputes" rather than "claims," and (c) defendant was not trying to compel the entire PAGA action to arbitration. The court of appeal rejected each of those arguments, finding that plaintiff had not alleged any individual claims or disputes.
Vasserman v. Henry Mayo Newhall Mem. Hosp., 8 Cal. App. 5th 236 (2017)
Plaintiff, a registered nurse, worked at the defendant hospital. The applicable collective bargaining agreement (CBA) mandated...
