In Johnson v. Lowe’s Home Centers LLC, the Ninth Circuit Court of Appeals affirmed a district court order granting defendant Lowe’s motion to compel arbitration of plaintiff Maria Johnson’s individual claims brought under California’s Private Attorneys General Act (PAGA) and remanded the district court’s dismissal of her non-individual claims for further consideration.
In connection with her employment with Lowe’s Home Centers, Johnson signed a contract that included a mandatory arbitration agreement in which she agreed that any controversy arising from her employment would be settled by arbitration. The contract also included a provision known as a “representative action waiver,” which barred the arbitration of disputes brought as a representative action or an action brought as a private attorney general action under PAGA. As the court explained, an “individual” PAGA claim asserts violations of California labor laws that impact the claimant personally, while a “representative” or “non-individual” PAGA claim is based on violations that impact other employees.
In November 2020, Johnson filed an action in California state court alleging individual and non-individual PAGA claims. Lowe’s removed the case to federal court and moved to compel arbitration of Johnson’s individual claim and to dismiss her non-individual PAGA claim. The district court granted Lowe’s motion in its entirety. The Ninth Circuit noted the district court’s dismissal of Johnson’s non-individual PAGA claims was consistent with California law as then interpreted by the U.S. Supreme Court in 2022 in Viking River Cruises Inc. v. Moriana, which interpreted a prior California Supreme Court decision as holding that pre-dispute waivers of both individual and non-individual PAGA claims were forbidden under California law and that “PAGA requires joinder of individual and non-individual claims, such that both claims must be tried in the same forum.” While Johnson’s appeal of the district court’s order granting Lowe’s motion was pending, the California Supreme Court issued its opinion in 2023 in Adolph v. Uber Technologies Inc. The Ninth Circuit noted that in Adolph, the California Supreme Court “corrected Viking River’s misunderstanding of PAGA,” holding that “[o]nly if there has been a final determination that the plaintiff’s arbitrated individual PAGA claim is without merit does the plaintiff lose statutory standing under PAGA to pursue his or her non-individual PAGA claims in court.”
With that backdrop, the Ninth Circuit then addressed whether the district court’s order compelling Johnson to arbitrate her individual PAGA claims was proper, and the impact of the Adolph decision on Johnson’s non-individual PAGA claims. The court concluded that the arbitration agreement between the parties, which included a severability clause, was valid and encompassed the claims at issue in the case. The court affirmed the district court’s order granting Lowe’s motion to compel Johnson to arbitrate her individual PAGA claims. In addressing the dismissal of the non-individual claims, the court vacated the order and remanded the non-individual claims to the district court to apply the California Supreme Court’s recent holding in Adolph, noting that Adolph held that “a plaintiff in a bifurcated representative PAGA claim still has statutory standing” … and that “[s]tanding under PAGA is not affected by enforcement of an agreement to adjudicate a plaintiff’s individual claim in another forum.”
Johnson v. Lowe’s Home Centers, LLC, No. 22-16486 (9th Cir. Feb. 12, 2024).