In Brown v. Ralphs, Plaintiff Terri Brown brought a class action and representative action under the Private Attorney General Act of 2004 (“PAGA”) against her employers, defendants and appellants Ralphs and Kroger for violations of the California Labor Code. Defendants appealed from the trial court’s order denying their petition to compel plaintiff to submit her individual causes of action to arbitration as required under her employment agreement.
The CA Second Apellate Dist, Div 5 (LA) held that the trial court erred in ruling that under Gentry v. Superior Court (2007) 42 Cal.4th 443 (“Gentry”), the class action waiver provision in plaintiff’s employment agreement was unenforceable because that ruling was not supported by substantial evidence. The Court of Appeal also held that the recent decision of the United States Supreme Court in AT&T Mobility LLC v. Concepcion et ux. (2011) 131 S.Ct. 1740, holding that California decisional law invalidating class action waivers in consumer arbitration agreements is preempted by the Federal Arbitration Act (9 U.S.C. § 1 et seq. (“FAA”)), does not apply to representative actions under the PAGA, and thus the trial court correctly ruled that the waiver of plaintiff’s right to pursue a representative action under the PAGA was not enforceable under California law. The Court of Appeal remanded the case for the trial court to determine whether to sever the unenforceable provision in the arbitration agreement waiving plaintiff’s right to pursue a PAGA representative action or whether to refuse to enforce the entire arbitration agreement or parts of it.