Private Attorneys General Act Lawsuits Not Precluded by Arbitration Clauses

Audet & Partners, LLP reports that a new opinion issued by a California appellate court has revived employment claims brought by a workers under the California Private Attorneys General Act (“PAGA”) despite the fact that the worker had signed a mandatory arbitration agreement in connection with her employment.  Reyna Marie Ybarra v. Apartment and Investment Management Co., case number B245901, in the Court of Appeal of the State of California, Second Appellate District.

Ms. Ybarra had brought a lawsuit in California in 2012 alleging that her employer had violated California employment laws related to overtime and minimum wage compensation.  During her employment, Ms. Ybarra had signed an agreement to take any employment-related dispute to arbitration.  Her employer, Aimco, ultimately moved to compel arbitration of these claims, including claims brought under the California Private Attorneys General Act.

Initially, the trial court ruled in favor of Ms. Ybarra as to the PAGA claims holding that to not allow a plaintiff to pursue PAGA claims in the courts in a representative capacity was contrary to public policy as this would effectively destroy the intent of the Private Attorneys General Act in serving as a type of “proxy” to assist the California Attorney General’s office in prosecuting employment-related offenses by employers.

On appeal, however, the California Appellate Court reversed the trial court and held that recent case law that has upheld the enforceability of mandatory arbitration clauses effectively defeated Ms. Ybarra’s claims in court and that these claims must be heard in arbitration.

Now, the Appellate Court has reversed its prior opinion and held that in light of a more recent California court opinion (Iskanian) that carved out an exception from mandatory arbitration clauses for PAGA actions.

The U.S. Supreme Court has been asked to review the Iskanian decision, but for now the California law holds that Private Attorneys General Act lawsuits are not subject to mandatory arbitration agreements in the employment context.

Audet & Partners, LLP has extensive experience in representing individuals in collective actions to address employment law related violations by employers.  If you believe that your employer may be violating California law with regard to compensation or working conditions, you are urged to contact a PAGA attorney at Audet & Partners, LLP for a free, confidential consultation either by calling (800) 965-1461 or by completing and submitting our online inquiry form on the right side of this page.