When the court compels individual PAGA claim arbitration, what happens to the non-individual PAGA claims?

The Case: Johnson v. Lowe’s Home Centers, LLC

The Court: U.S. District Court for the Eastern District of California

The Case No.: 2:2021cv00087

The Plaintiff: Johnson v. Lowe’s Home Centers, LLC

Maria Johnson’s individual PAGA claim alleged Lowe’s failure to provide paid sick leave and accurate wage statements to employees. The plaintiff, Maria Johnson, argued that the waiver was unenforceable in her situation because it was a wholesale waiver of PAGA claims. However, the court disagreed based on findings in Viking River. In Viking River (Viking River Cruises, Inc. v. Moriana), the court found that PAGA actions are representative either because they are brought by employees acting as representatives (proxies of the state) or because they are predicated on code violations sustained by other employees. According to the court, Johnson’s severability provision was similar to the condition considered in Viking River and therefore warranted identical results. As in Viking River, the court enforced the agreement to send individual PAGA claims to arbitration, compelling Johnson’s individual PAGA claim to arbitration. Also, based on Viking River, the court found that once the individual PAGA claims were compelled to arbitration, her non-individual PAGA claims should be dismissed due to lack of standing.

What is a PAGA Claim:

PAGA (enacted in 2004) enables employees to bring actions against employers violating the California Labor Code to recover civil penalties. PAGA claims can be filed on behalf of the individual employee and on behalf of other allegedly victimized employees working for the same employer. Until recently, the court held that categorical waivers of PAGA standing could not be enforced, and claims could not be separated into arbitrable and nonarbitrable claims.

The Defendant: Johnson v. Lowe’s Home Centers, LLC

In the Johnson case, U.S. District Judge Troy Nunley granted Lowe’s Home Centers, LLC’s motion to compel arbitration of Johnson’s individual PAGA claim for the alleged failure to provide paid sick leave or accurate wage statements.

Relevant Provisions in the Arbitration Agreement: Johnson v. Lowe’s Home Centers, LLC

The most relevant provisions of the arbitration agreement being considered in this case included the following:

Controversies “arising out of [the plaintiff’s] employment … shall be settled by binding arbitration.”
Employees may bring claims “solely on an individual basis,”…not on a representative basis under PAGA.
“[I]f a court of competent jurisdiction finds the … Representative Action Waiver unenforceable for any reason, then the unenforceable waiver provision shall be severable from [the] Agreement, and any claims covered by any deemed unenforceable waiver provision may only be litigated in a court of competent jurisdiction, but the remainder of the agreement shall be binding and enforceable.”

The Case: Johnson v. Lowe’s Home Centers, LLC

On September 21, 2022, a federal judge in the U.S. District Court for the Eastern District of California issued an order compelling arbitration of a plaintiff’s individual claims under the Private Attorneys General Act (PAGA) and dismissing the remaining representative PAGA claims. The court’s actions can be considered a straightforward application of the Supreme Court of the United States’ June 2022 decision in Viking River Cruises, Inc. v. Moriana (Viking River). However, the California Supreme Court has since granted review in a case that might complicate California courts’ application of Viking River.

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