The case of Parra Rodriguez v. Packers Sanitation Services LTD., LLC typifies the reason employers and employment counsel must stay on top of arbitration case developments.
The Second District Court of Appeals in California in Leeper v. Shipt, Inc. recently decided that all Private Attorney General Act (“PAGA”) actions necessarily have “individual” and “representative” components, regardless of whether individual claims are pleaded. This holding was significant because employers could then compel arbitration of the otherwise absent individual PAGA claims, and request that the trial court stay the pending representative action.
Within the few weeks of that decision, the Fourth District Court of Appeals in Parra Rodriguez concluded that the previous decision had been decided incorrectly. Like the facts in Leeper, the employee in Parra Rodriguez filed a complaint that specifically disclaimed that he was seeking redress for any individual PAGA claims, but instead only sought to act in a representative capacity for similarly situated aggrieved employees. The employer moved to compel arbitration of his individual PAGA claims and sought a stay of the representative action.
The trial court denied the motion and the Fourth District Court of Appeal affirmed the decision, pointedly examining and disagreeing with the Second District’s opinion in Leeper. According to the Parra Rodriguez court, the Leeper court erred by appearing to insert into the plaintiff’s complaint a missing claim; namely an individual PAGA claim. “But in our legal system, it is the plaintiff, not the court, who is responsible for prosecuting a civil action […] The Leeper court overlooked these principles by construing [the PAGA statute] as requiring an individual PAGA claim, and not only declaring that the complaint “necessarily” included such a claim but also requiring the plaintiff to arbitrate a claim she had never chosen to assert.”
Although the court in Parra Rodriguez found in favor of the employee in this instance, it strongly hinted at how an employer could properly challenge an employee’s action that depends upon creative writing to avoid arbitration obligations. According to the court, “the plaintiff's failure to assert an individual PAGA claim may mean the complaint fails to comply with section 2699, subdivision (a). This is a potential pleading deficiency the defendant may raise in an appropriate pleading challenge. If the defendant files a motion raising such a challenge and the court grants it with leave to amend, the plaintiff will then have the opportunity to decide for himself or herself whether to cure the asserted deficiency by adding an individual PAGA claim.”
As there is a split in appellate authority between Leeper (2nd Appellate District) and Parra Rodriguez (4th Appellate District), the trial courts under the jurisdiction of the applicable appellate court will follow their respective rulings until such time as the California Supreme Court weighs in to resolve the split.
Until the split in authority is resolved, employers should come away from this decision with an imperative to closely review PAGA complaints filed against them and strategize with their counsel the appropriate method for challenging the pleading. Rushing in with a motion to compel arbitration might not always be the best path forward.
