Skip to main content

Nickson v. Shemran, Inc. (CA4/1 D080914 4/7/23) PAGA | Arbitration 

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. 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 P.R. Corp. (1941) 312 U.S. 45, 50 (Beal).) 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, we are compelled to follow Kim and hold that Nickson’s nonindividual PAGA claims should not be dismissed.