Seyfarth Synopsis: The Second District again held that issue preclusion barred plaintiff’s PAGA claim because he failed to establish any violation of the Labor Code and arbitral findings have a preclusive effect on a plaintiff’s standing in a stayed PAGA claim.
The Second District again grappled with the issue of whether an arbitrator’s previous adjudication of Labor Code violations preclude a plaintiff from asserting a PAGA claim based on those same Labor Code violations. The Court of Appeal held that issue preclusion applies—that is, when an arbitrator concludes that a PAGA plaintiff failed to establish that they suffered any individual violations under the California Labor Code, issue preclusion bars that PAGA plaintiff from relitigating those same violations for the purpose of standing under PAGA. The Court reached the same conclusion as its colleagues in Division One of the Second District in Rocha v. U-Haul Co. of California.
The Second District found that the defendant established the four elements of issue preclusion: (1) there was a final adjudication, (2) of an identical issue, (3) that was actually litigated and necessarily decided in the first suit, and (4) asserted against one who was a party in the first suit or one in privity with that party. The Court of Appeal explained that for purposes of there being an “identical issue,” it is sufficient that a single, dispositive element is identical and shared between different claims. Given that both individual Labor Code claims and PAGA claims require a preliminary showing that a violation of the Labor Code occurred, and the arbitrator conclusively established there was no Labor Code violation, plaintiff did not have standing as a PAGA plaintiff since he did not personally suffer a Labor Code violation. The Court also noted that its analysis and result was also endorsed by the California Supreme Court in Adolph v. Uber Technologies, Inc.