In the case of Jessica Piran v. Yamaha Motor Corporation, U.S.A. et al., decided on February 8, 2024, the Court of Appeal of the State of California, Fourth Appellate District, Division Three, addressed the enforceability of an arbitration agreement in the context of Private Attorneys General Act (PAGA) claims.

The central issue before the court was whether Piran’s individual PAGA claim should be compelled to arbitration and her non-individual PAGA claims dismissed for lack of standing. This case required the court to navigate the complex interplay between recent United States Supreme Court decisions and California state law regarding PAGA claims and arbitration agreements.

The court applied several legal rules in reaching its decision. Primarily, it relied on the U.S. Supreme Court’s ruling in Viking River Cruises, Inc. v. Mariana, which held that the Federal Arbitration Act (FAA) preempts the California rule prohibiting the division of PAGA actions into individual and non-individual claims through arbitration agreements. Additionally, the court considered the California Supreme Court’s decision in Adolph v. Uber Technologies, Inc., which clarified that a plaintiff maintains standing to pursue non-individual PAGA claims in court even when their individual PAGA claim is compelled to arbitration.

Applying these rules to the facts of the case, the court first examined the arbitration agreement between Piran and her employer. It determined that Piran’s individual PAGA claim fell within the scope of the agreement and, following Viking River, must be compelled to arbitration. The court then analyzed the agreement’s class and collective action waiver, concluding that it did not constitute an invalid wholesale waiver of PAGA claims but rather only prohibited the arbitrator from hearing representative actions.

Regarding the issue of standing, the court followed the Adolph decision, holding that Piran maintains standing to pursue her non-individual PAGA claims in court, even though her individual claim is subject to arbitration. The court rejected Yamaha’s argument that compelling the individual PAGA claim to arbitration should result in dismissal of the non-individual claims for lack of standing.

In its conclusion, the court affirmed in part and reversed in part the trial court’s decision. It reversed the trial court’s order denying arbitration of Piran’s individual PAGA claim, directing the lower court to enter an order compelling this claim to arbitration. However, it affirmed the trial court’s decision to stay the non-individual PAGA claims pending the completion of arbitration. The court declined to address Yamaha’s arguments concerning the stay of class claims, noting that Yamaha failed to demonstrate how any alleged error in this regard was prejudicial.

This decision highlights the evolving landscape of PAGA litigation in California, particularly in the context of arbitration agreements. It underscores the courts’ efforts to balance the enforcement of arbitration agreements under the FAA with the preservation of employees’ rights to pursue representative actions under PAGA.