By: Phillip J. Ebsworth and Michael Afar
Seyfarth Synopsis: The first reported PAGA case of 2024 serves as a reminder of the importance of precise language for an enforceable PAGA waiver and the risks of including a “poison pill” provision in a class/representative/PAGA action waiver in arbitration agreements.
In DeMarinis, the First District affirmed the trial court’s denial of the employer’s motion to compel arbitration finding that the agreement contained a wholesale PAGA waiver in violation of Iskanian and a “poison pill” provision. As representative PAGA claims cannot be compelled to arbitration under Iskanian and Viking River, the Court concluded that the “poison pill” language prevented a grant of the employer’s motion. In fact, the Court noted that in the absence of the poison pill provision, the employer could have compelled the plaintiff’s individual Labor Code claims and individual PAGA claims to arbitration, and compelled waiver of the class claims. Instead, the employer is facing class and representative PAGA claims in state court.
The First District has provided employers another reminder to review their arbitration agreements. With the ever-evolving landscape of PAGA case law, time and attention should be given to the language of arbitration agreements and class and representative action waivers. In 2024, employers should resolve to schedule a new year’s check up of their arbitration agreement.