Defendants Merchants Building Maintenance, LLC and Merchants Building Maintenance Company (the MBM defendants) appeal from an order of the trial court denying their joint motion to compel arbitration. The MBM defendants moved to compel arbitration of a portion of plaintiff Loren Mejia's cause of action brought against them for various violations of the Labor Code under the Private Attorneys General Act of 2004 (PAGA) (Lab. Code, § 2698 et seq.).
Pursuant to PAGA, "an 'aggrieved employee' may bring a civil action personally and on behalf of other current or former employees to recover civil penalties for Labor Code violations. (Lab. Code, § 2699, subd. (a).)" (Arias v. Superior Court (2009) 46 Cal.4th 969, 980 (Arias).) A PAGA claim "is not a dispute between an employer and an employee arising out of their contractual relationship. It is a dispute between an employer and the state, which alleges directly or through its agents—either the [Labor and Workforce Development] Agency or aggrieved employees—that the employer has violated the Labor Code." (Iskanian v. CLS Transportation Los Angeles, LLC (2014) 59 Cal.4th 348, 386–387 (Iskanian).) In Iskanian, the Supreme Court held that individual employees cannot contractually agree to arbitrate or waive any predispute PAGA claims, but they may agree to arbitrate their "individual damages claims." (Iskanian, supra, at p. 387.)
The MDM defendants moved to compel arbitration of that portion of Mejia's
PAGA claim in which she seeks "an amount sufficient to recover underpaid wages" pursuant to section 558. Section 558 provides in relevant part:
"(a) Any employer or other person acting on behalf of an employer who violates, or causes to be violated, a section of this chapter or any provision regulating hours and days of work in any order of the Industrial Welfare Commission shall be subject to a civil penalty as follows:
"(1) For any initial violation, fifty dollars ($50) for each underpaid employee for each pay period for which the employee was underpaid in addition to an amount sufficient to recover underpaid wages.
"(2) For each subsequent violation, one hundred dollars ($100) for each underpaid employee for each pay period for which the employee was underpaid in addition to an amount sufficient to recover underpaid wages.
"(3) Wages recovered pursuant to this section shall be paid to the affected employee.
"[¶] . . . [¶]
"(d) The civil penalties provided for in this section are in addition to any other civil or criminal penalty provided by law." (§558, subds. (a), (d).)
The MBM defendants contend that Mejia's claim to recover the portion of the penalty under section 558 that represents underpaid wages amounts to a claim for individual damages because it seeks "victim-specific relief," given that section 558 provides that any amount recovered representing the amount of underpaid wages are to be directed to "the affected employee." The MBM defendants further contend that because Mejia agreed to arbitrate any individual claim that she may have to her unpaid wages, any claim that she asserts seeking the amount that is sufficient to recover underpaid wages under section 558 must be separated from the remainder of the PAGA claim and sent to arbitration. The MBM defendants maintain that only that portion of Mejia's claim brought pursuant to section 558 in which she seeks to recover the $50 or $100 per violation per employee civil penalty on behalf of herself and other aggrieved employees may be brought by an individual plaintiff as a representative PAGA claim that is not subject to arbitration.
The question presented in this case has been framed by other courts as a question as to whether a single PAGA claim seeking recovery of the civil penalty provided for in section 558 may be "split" in the way that the MBM defendants suggest. In other words, may a court split a single PAGA claim so as to require a representative employee to arbitrate that aspect of the claim in which the plaintiff seeks to recover the portion of the penalty that represents the amount sufficient to recover underpaid wages where the representative employee has agreed to arbitrate her individual wage claims, while at the same time retain in the judicial forum that aspect of the employee's claim in which the plaintiff seeks to recover the additional $50 or $100 penalties provided for in section 558 for each violation of the wage requirements? Appellate courts are divided on this question. (Compare Esparza v. KS Industries, L.P. (2017) 13 Cal.App.5th 1228 [concluding that claim for unpaid or underpaid wages under section 558 involves "victim-specific relief" and is subject to arbitration where employee has agreed to arbitrate private claims] with Lawson v. ZB, N.A. (2017) 18 Cal.App.5th 705, 724 (Lawson) [concluding that court may not split a PAGA claim seeking recovery of civil penalties under section 558 in order to send the portion seeking section 558 unpaid or underpaid wages penalties to arbitration because section 558 provides "no private right of action and by its terms is only enforceable by the LWDA"] and Zakaryan v. The Men's Wearhouse, Inc. (2019) 33 Cal.App.5th 659, 672 (Zakaryan) [concluding that court may not split a PAGA claim seeking recovery of civil penalties under section 558 in order to send the portion seeking section 558 underpaid wages penalties to arbitration because "an individual PAGA plaintiff is at all times acting on behalf of the [Labor and Workforce Development Agency (the Agency)] when seeking underpaid wages as well as the $50/$100 penalty," such that "his pursuit of both remedies 'involv[es] the same parties seek[ing] compensation for the same harm' and thus involves 'the same primary right' "].) The issue is pending before the Supreme Court in Lawson, supra, review granted Mar. 21, 2018, S246711.
We agree with the conclusion of the Lawson and Zakaryan courts on this question, and conclude that a single PAGA claim seeking to recover section 558 civil penalties may not be "split" between that portion of the claim seeking an "amount sufficient to recover underpaid wages" and that portion of the claim seeking the $50 or $100 per-violation, per-pay-period assessment imposed for each wage violation. The result is that an employee bringing a PAGA claim to recover the civil penalties identified in section 558 may not be compelled to arbitrate that portion of her PAGA claim that seeks an amount sufficient to recover underpaid wages pursuant to that statute, while the rest of the claim that seeks the $50 or $100 per-pay-period per violation portion of the penalty remains in a judicial forum. We therefore affirm the trial court's order denying the MDM defendants' motion to compel arbitration in this case.
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