December 15, 2022

Lewis v. Simplified Labor Staffing Solutions, Inc.

At the time of her hiring, plaintiff signed an arbitration agreement and class action waiver that required arbitration of all claims arising out of plaintiff’s employment relationship with the defendant employer. Plaintiff sued defendant under the Private Attorneys General Act (PAGA), alleging failure to pay wages and provide meal and rest periods. The trial court denied defendant’s motion to compel arbitration on grounds that, under California Supreme Court precedent, this predispute agreement to arbitrate PAGA claims was unenforceable because, as the real plaintiff in interest in a PAGA action, the State of California would need to consent to arbitration, which can occur only after a dispute has arisen. The trial court also indicated this precedent rendered the FAA inapplicable to PAGA claims. Defendant appealed. While the appeal was pending, the Supreme Court decided Viking River Cruises, Inc. v. Moriana (2022) ___U.S.___ [142 S.Ct. 1906], which held that PAGA claims are not exempt from the Federal Arbitration Act.

The Court of Appeal reversed the trial court’s denial of the motion to compel arbitration. The court held that Courts of Appeal, not California Supreme Court precedent, imposed the state-must-consent rule, and concluded that the Federal Arbitration Act preempts this rule because Viking River vitiates the rule’s foundation. The court explained that allowing consent to PAGA arbitration only after an employment dispute has arisen prevents enforcement of predispute arbitration agreements, and therefore conflicts with the purpose of the Federal Arbitration Act.