Nickson v. Shemran, Inc.

CourtCalifornia Court of Appeal
DecidedApril 7, 2023
DocketD080914
StatusPublished

This text of Nickson v. Shemran, Inc. (Nickson v. Shemran, Inc.) is published on Counsel Stack Legal Research, covering California Court of Appeal primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Nickson v. Shemran, Inc., (Cal. Ct. App. 2023).

Opinion

Filed 4/7/23

CERTIFIED FOR PUBLICATION

COURT OF APPEAL, FOURTH APPELLATE DISTRICT

DIVISION ONE

STATE OF CALIFORNIA

BLAINE NICKSON, D080914

Plaintiff and Respondent,

v. (Super. Ct. No. CVSW2107735)

SHEMRAN, INC.,

Defendant and Appellant.

APPEAL from an order of the Superior Court of Riverside County, Angel M. Bermudez, Judge. Reversed with directions. Law Offices of Eli Mayer Kantor, Eli Mayer Kantor and Jonathan D. Kantor for Defendant and Appellant. Lawyers for Justice, Edwin Aiwazian, Tara Zabehi and Travis Joseph Maher for Plaintiff and Respondent. Shemran, Inc. (Shemran) appeals the denial of its motion to compel arbitration of a Labor Code Private Attorneys General Act of 2004 (PAGA) (Lab. Code, § 2698 et seq.) action brought by a former employee, Blaine

Nickson.1 The motion was based on Nickson’s agreement to arbitrate all individual claims arising from his employment (the Agreement). At the time of the trial court’s ruling, a predispute agreement to arbitrate PAGA claims was unenforceable under Iskanian v. CLS Transportation Los Angeles, LLC (2014) 59 Cal.4th 348 (Iskanian). But during the pendency of this appeal, the United States Supreme Court decided Viking River Cruises, Inc. v. Moriana (2022) 142 S.Ct. 1906 (Viking River), holding that the Federal Arbitration Act (FAA) (9 U.S.C., § 1 et seq.) preempts Iskanian in part. The issue now is whether the trial court’s ruling survives Viking River. We hold it does not. Nickson’s individual PAGA claims are arbitrable. Viking River aside, Nickson further contends the Agreement is unenforceable because it is unconscionable. But as we explain, the Agreement delegates to the arbitrator the exclusive authority to decide that point. The final issue is what to do with Nickson’s nonindividual PAGA claims, since only his individual ones are arbitrable. In Viking River, purporting to apply California law, the United States Supreme Court stated that a plaintiff lacks standing to prosecute nonindividual PAGA claims when their individual ones are ordered to arbitration. (Viking River, supra, 142 S.Ct. at p. 1925.) Shemran contends we should, therefore, dismiss Nickson’s nonindividual PAGA claims. California courts, however, are the final word on the meaning and application of this state’s statutes. (See Beal v. Missouri

1 Undesignated statutory references are to the Labor Code. 2 P.R. Corp. (1941) 312 U.S. 45, 50 (Beal).)2 In Kim v. Reins (2020) 9 Cal.5th 73, 80, the California Supreme Court held that employees do not lose PAGA standing even after settling and dismissing individual claims. Indeed, relying on Kim, we recently held that an employee whose individual PAGA claims are time-barred still has standing to pursue nonindividual claims. (Johnson v. Maxim Healthcare Services, Inc. (2021) 66 Cal.App.5th 924, 929

(Johnson).) Pending further guidance from the California Supreme Court,3 we are compelled to follow Kim and hold that Nickson’s nonindividual PAGA claims should not be dismissed.

FACTUAL AND PROCEDURAL BACKGROUND

In 2021, Nickson filed a single-count PAGA complaint against Shemran and “Barons Market,” a fictitious business name under which it operates grocery stores. Nickson alleged that he was “an hourly-paid, non-exempt employee” and defendants violated certain wage-and-hour provisions of the Labor Code. He sought civil penalties on behalf of himself and other aggrieved employees.

2 Subject, of course, to review by the United States Supreme Court, but only if that interpretation is challenged on federal constitutional grounds. (Beal, supra, 312 U.S. at p. 50.) 3 The California Supreme Court has granted review in the unpublished opinion of Adolph v. Uber Technologies (Apr. 11, 2022, G059860, G060198), on July 20, 2022, S274671, to address “[w]hether an aggrieved employee who has been compelled to arbitrate claims under the Private Attorneys General Act (PAGA) that are ‘premised on Labor Code violations actually sustained by’ the aggrieved employee [citations] maintains statutory standing to pursue “PAGA claims arising out of events involving other employees.” 3 Shemran promptly moved to compel arbitration, supported by an authenticated copy of the Agreement. It provides for the “resolution by binding arbitration” of Nickson’s individual claims:

“Barons Market and I mutually consent to the resolution by binding arbitration of all claims or controversies . . . that Barons Market may have against me or that I may have against Barons Market . . . .” [¶] . . . [¶]

“All claims that are covered by this Agreement can only be brought . . . on an individual basis. . . . I agree to waive any right to join or consolidate claims with others, or to make any claims as representative of a class, a member of a class, or in a private attorney general capacity.”

After conducting an unreported hearing, the trial court denied the motion, citing Iskanian, supra, 59 Cal.4th 348 as “controlling law.”

DISCUSSION

A. PAGA

Before 2004, the California Labor and Workforce Development Agency (LWDA) was responsible for collecting civil penalties for labor law violations. The Legislature found, however, that the LWDA lacked sufficient resources to keep pace with the sheer number and gravity of offenses. As a solution, PAGA was enacted to empower aggrieved employees to act as private attorneys general to prosecute and collect civil penalties on the State’s behalf. (See Arias v. Superior Court (2009) 46 Cal.4th 969, 980 (Arias).) PAGA does not create substantive rights. It “ ‘ “is simply a procedural statute allowing an aggrieved employee to recover civil penalties—for Labor Code violations—that otherwise would be sought by state labor law enforcement agencies.” ’ ” (Bautista v. Fantasy Activewear, Inc. (2020) 52 Cal.App.5th 650, 657.) Seventy-five percent of the penalties recovered go to the LWDA; the remainder is disbursed to the aggrieved employees. (§ 2699, 4 subd. (i).) A prevailing plaintiff is also entitled to reasonable attorney’s fees and costs. (Id., subd. (g)(1).) Only an “ ‘aggrieved employee’ ” has standing to prosecute a PAGA action, which the statute defines as “any person who was employed by the alleged violator and against whom one or more of the alleged violations was committed.” (§ 2699, subd. (c).) In PAGA parlance, Labor Code violations suffered by the plaintiff are “individual claims.” (See Viking River, supra, 142 S.Ct. at p. 1916.) The statute, however, allows an aggrieved employee to join claims for offenses committed against fellow employees. These are called “non-individual” claims. (Ibid.)

B. Iskanian

In Iskanian, the California Supreme Court considered whether an employer could limit its PAGA exposure by contract. The answer was no. An employee’s right to bring a PAGA action “is unwaivable.” (Iskanian, supra, 59 Cal.4th at p. 383.) This is because an employee’s agreement to waive their right to bring a PAGA action would “disable one of the primary mechanisms for enforcing the Labor Code,” and as such was against public

policy. (Iskanian, at p. 383.)4 The Iskanian court also considered whether the FAA preempted its rule against PAGA waivers. It found no preemption because “the FAA aims to ensure an efficient forum for the resolution of private disputes, whereas a PAGA action is a dispute between an employer and the state.” (Iskanian, supra, 59 Cal.4th at p. 384.) In a PAGA action, “the state is the real party in interest” and “[t]here is no indication that the FAA was intended to govern

4 “All contracts which have for their object, directly or indirectly, to exempt anyone from responsibility for his own . . .

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Related

Beal v. Missouri Pacific R. Corp.
312 U.S. 45 (Supreme Court, 1941)
Arias v. Superior Court
209 P.3d 923 (California Supreme Court, 2009)
Malone v. Superior Court
226 Cal. App. 4th 1551 (California Court of Appeal, 2014)
Iskanian v. CLS Transportation Los Angeles, LLC
327 P.3d 129 (California Supreme Court, 2014)
Baeza v. Superior Court
201 Cal. App. 4th 1214 (California Court of Appeal, 2011)
Rent-A-Center, West, Inc. v. Jackson
177 L. Ed. 2d 403 (Supreme Court, 2010)

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Nickson v. Shemran, Inc., Counsel Stack Legal Research, https://law.counselstack.com/opinion/nickson-v-shemran-inc-calctapp-2023.