Link to Takeaways Takeaways
- This decision strengthens the enforceability of arbitration agreements in PAGA cases.
- Employers can now compel arbitration even when plaintiffs attempt to bring only “non-individual” PAGA claims.
- The ruling helps prevent plaintiffs from bypassing arbitration through creative pleading tactics.
Some employers with California operations may have missed a very significant California Court of Appeal decision issued on December 31, 2024.
In Leeper v. Shipt., Inc. (B339670, December 31, 2024), the California Court of Appeal rejected the plaintiff’s argument that her action under the Private Attorneys General Act (“PAGA”) could not be compelled to arbitration because it did not allege an individual PAGA claim. The Court held that “every PAGA action necessarily includes an individual PAGA claim.”
Christina Leeper worked as an independent contractor for Shipt. Leeper and Shipt entered into an arbitration agreement that required both parties to resolve all claims and disputes through arbitration.
Leeper sued, alleging that Shipt misclassified her and other workers as independent contractors. Leeper styled her complaint as a “representative complaint” for relief under PAGA and alleged a single count for “non-individual” PAGA penalties in an effort to avoid the parties’ arbitration agreement.
Shipt filed a motion to compel arbitration of the individual component of Leeper’s PAGA action, but the trial court denied the motion.
The Court of Appeal reversed the trial court. The Court concluded that “every PAGA action necessarily includes an individual PAGA claim.” This is an important win for employers in California who utilize arbitration agreements. Now, plaintiffs’ attorneys cannot creatively avoid those agreements by pleading a “headless” PAGA claim.
For more information on how to take advantage of this new ruling, please contact your Dykema Labor and Employment Attorney.