Yesterday, the California Court of Appeal in Leeper v. Shipt, Inc., held that because every PAGA action necessarily includes an “individual PAGA claim” a PAGA plaintiff cannot avoid arbitration by asserting purely representative PAGA claim on behalf of other allegedly aggrieved employees (i.e., a “headless” PAGA action). Accordingly, the Court of Appeal concluded that the trial court must order Leeper’s “individual PAGA claim to arbitration” and must stay the litigation in accordance with California Code of Civil Procedure section 1281.4. We previously posted about California Employers’ Fight Against “Headless” PAGA Actions like the one at issue in Leeper. The Leeper decision should put an end to it.
The underlying lawsuit involved a single PAGA cause of action, which Leeper purported to bring “on a representative, non-individual basis” and through which she sought to recover “non-individual civil penalties.” In her complaint, Leeper addressed her arbitration agreement by asserting, “Because [Leeper] alleges only non-individual PAGA claims on a representative basis, Shipt cannot compel them to arbitrat[ion].” Like many (if not all) other plaintiffs seeking to litigate a “headless” PAGA action, Leeper relied on the Court of Appeal’s decision in Balderas v. Fresh Start to support her argument PAGA plaintiffs may disclaim their “individual PAGA claim,” avoid arbitration, and proceed with litigating a purely “representative PAGA claim” in court.
In Leeper, the Court of Appeal explained that the unambiguous text of the PAGA statute authorizes only claims for civil penalties brought by the employee plaintiff “and other current or former employees.” Further, the court explained that Balderas does not support the position that a plaintiff may properly maintain a purely representative PAGA claim because Balderas “did not have occasion to discuss, did not discuss, and its holding does not address, whether a plaintiff may carve out an individual PAGA claim from a PAGA action.”
The distinction between Leeper and Balderas is critical, as both decisions were published by the California Court of Appeal, Second Appellate District. Undoubtedly, PAGA plaintiffs will argue Leeper is not binding because it creates a “split of authority” with Balderas. But trial courts will not likely take the bait.
Leeper specifically addresses and rejects the argument that PAGA plaintiffs may properly disclaim the arbitrable, individual components of their PAGA action to avoid arbitration. Balderas held that trial courts may not dismiss a PAGA lawsuit brought by an allegedly “aggrieved employee” who does not specifically assert an individual claim. Both decisions can and do coexist within the post-Viking River framework of PAGA jurisprudence. Generally, an “aggrieved employee” has standing to maintain a PAGA action even if it does not specifically assert an individual claim (Balderas), but that PAGA action nonetheless includes an “individual PAGA claim” that may be subject to an arbitration agreement (Leeper). Because there is no actual split of authority on the issue, the Leeper decision should bind all California trial courts.
