California Court of Appeal Holds That Every PAGA Action Necessarily Includes an Individual PAGA Claim – and Plaintiffs With Arbitration Agreements Must Arbitrate Their Individual Claims First

Following the United States Supreme Court’s decision in Viking River Cruises, Inc. v. Moriana (2022) U.S. 639 and the California Supreme Court’s decision in Adolph v. Uber Technologies, Inc. (2023) 14 Cal. 5^th 1104, when faced with employee arbitration agreements, California trial courts have regularly compelled plaintiffs to arbitrate their individual Private Attorneys General Act (“PAGA”) claims first, while staying their representative, non-individual PAGA claims.

In an attempt to avoid arbitrating the named plaintiffs’ individual PAGA claims – and knowing that the representative, non-individual claims would be dismissed if the employers prevailed in an individual arbitration – more than a few plaintiff’s counsel have tried to circumvent Adolph by asserting that their clients were not bringing individual claims at all, but were only bringing claims on behalf of others. 

In response, employers have argued that, based on the clear statutory language, every PAGA action necessarily includes an individual PAGA action such that those individual claims have to be arbitrated first.

In Leeper v. Shipt, Inc., the California Court of Appeal has apparently put an end to the gameplaying, agreeing with employers that every PAGA action necessarily includes an individual PAGA action such that plaintiffs with arbitration agreements must arbitrate their individual claims.  The Court relied upon PAGA’s unambiguous language and the statute’s legislative history, noting that the statute uses the conjunctive “and” rather than the disjunctive “or” in providing that suits may be brought “on behalf of the employee and other current or former employees.”

Of course, only time will tell whether the plaintiff seeks review of this decision by the California Supreme Court, whether the Supreme Court grants review, and, if so, what it ultimately holds.  In the meantime, employers should take some comfort in knowing that employees generally should not be allowed to avoid arbitration of individual PAGA claims just by claiming they are only seeking to bring PAGA claims on behalf of others.