Cunningham v. Leslie’s Poolmart: Representative PAGA Actions Unaffected by Concepcion, Federal Court Finds

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In ruling on a motion to compel arbitration, U.S. District Judge Christina A. Snyder has held that an arbitration clause cannot prevent a plaintiff from pursuing intrinsically representative actions under PAGA, California’s Labor Code Private Attorneys General Statute, in arbitration. Cunningham v. Leslie’s Poolmart, Inc., No. 13-2122 (C.D. Cal. June 25, 2013) (order on defendant’s motion to compel arbitration, available here). Although the decision otherwise substantially sided with the defendant’s arguments that the U.S. Supreme Court’s AT&T Mobility v. Concepcion ruling preempted the plaintiff’s cited authority, Judge Snyder extensively distinguished representative PAGA actions from the class actions that fall within the ambit of Concepcion.

The plaintiff contended that PAGA claims were within the scope of the at-issue arbitration agreement, while the defendant argued that by not expressly authorizing the arbitration of representative PAGA claims, the arbitration agreement prohibited such claims altogether. See order at 7. From these divergent positions, Judge Snyder set forth a detailed survey of PAGA’s inception and provisions, and concluded that PAGA actions “are not a sub-species of class actions” but rather a type of qui tam action. Order at 11. Critically, therefore, because “a plaintiff’s right under PAGA to pursue a bounty through a representative action is closely analogous to a qui tam relator’s right to pursue a bounty, an aggrieved employee’s rights under PAGA should also be characterized as substantive.” Order at 12.

Based on that core holding, the Cunningham decision weighed in on multiple important, and often nuanced, PAGA issues, including reconciling the dissonant holdings in Franco v. Athens Disposal Co. and Quevedo v. Macy’s, Inc. The court found Quevedo to be premised on the erroneous assumption that there is such a thing as an “individual PAGA claim” and found that Franco is not preempted by Concepcion. See order at 13-14.

Moreover, Cunningham distinguishes PAGA actions from the class actions at the center of Gentry and Discover Bank, two California cases that have been in jeopardy during the post-Concepcion era: “The fact that PAGA accomplishes state policy goals through granting substantive rights rather than access to procedures distinguishes the Franco rule from the rules in Gentry and Discover Bank,” and “although the FAA preempts state law imposing the presence of certain procedures in the arbitration, the FAA does not preempt state laws ensuring that a plaintiff may assert substantive rights in arbitration.” Order at 15-16.

Finally, Cunningham distinguishes the U.S. Supreme Court’s Stolt-Nielsen S.A. v. AnimalFeeds holding. See order at 17. Although an agreement to arbitrate cannot necessarily be inferred to tacitly comprise class claims, “[t]his reasoning does not, however, apply when considering whether an agreement to arbitrate encompasses representative PAGA claims” because “PAGA claims do not bind absent employees, and hence do not require the complex proceedings that must be used when binding absent class members.” Order at 17.