Keith Cunningham v. Leslies Poolmart Inc et al

Filing 16

MINUTES (IN CHAMBERS) by Judge Christina A. Snyder: Defendant's Motion to Compel Arbitration 6 is hereby granted in part and denied in part. Defendant's motion is denied insofar as it seeks an order preventing plaintiff from pursuing a re presentative PAGA claim in arbitration. Otherwise, defendant's motion is granted, and plaintiff's claims must proceed in arbitration. These proceedings are hereby STAYED pending the completion of arbitration. The parties are ORDERED to file a joint status report regarding the posture of the arbitration every one hundred and eighty days from the date of this order, and within 20 days of the resolution of the arbitration. Court Reporter: Not Present. (gk)

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL

JS-6

Case No.

CV 13-2122 CAS (CWx)

Title

KEITH CUNNINGHAM V. LESLIE’S POOLMART, INC. ET AL.

Present: The Honorable

Date

June 25, 2013

CHRISTINA A. SNYDER

Catherine Jeang
Deputy Clerk

Not Present
Court Reporter / Recorder

N/A
Tape No.

Attorneys Present for Plaintiffs:

Attorneys Present for Defendants

Not Present

Not Present

Proceedings:

I.

(IN CHAMBERS): DEFENDANT’S MOTION TO COMPEL
ARBITRATION (Docket #6, filed April 1, 2013)

INTRODUCTION

Plaintiff filed this putative class action in Los Angeles County Superior Court on
February 13, 2013. Defendant Leslie’s Poolmart, Inc. (“Leslie’s) removed the case to
this Court on March 25, 2013. Plaintiff’s complaint asserts claims under California and
federal employment laws, and claims under California’s Unfair Competition Law
(“UCL”), California Business and Professions Code § 17200, et seq.
On April 1, 2013, defendant filed a motion to compel arbitration of plaintiff’s
claims. Plaintiff filed an opposition on April 22, 2013, and defendant filed a reply on
April 29, 2013. After considering the parties’ arguments, the Court finds and concludes
as follows.
II.

BACKGROUND

This case arises out of plaintiff’s employment with Leslie’s. Plaintiff worked at
Leslie’s as a retail employee from September 2011 through September 2012, and was
compensated through an hourly wage and a monthly non-discretionary performance
bonus. In his complaint, plaintiff alleges that Leslie’s compensation policy is unlawful
because it calculates overtime payments only using an employee’s hourly rate, and
disregards the employee’s performance bonus.
Plaintiff alleges that although it is clear as both a matter of fact and law that
defendant’s compensation practice is unlawful, defendant has been able to avoid liability
CV-13-2122 CAS (CWx) (06/13)

CIVIL MINUTES - GENERAL

Page 1 of 19

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Date

JS-6

Case No.

CV 13-2122 CAS (CWx)

June 25, 2013

Title

KEITH CUNNINGHAM V. LESLIE’S POOLMART, INC. ET AL.

for its unlawful policy because its employment contracts contain a mandatory arbitration
clause that thwarts effective enforcement. This clause provides that:
The Company and I mutually consent to the resolution by arbitration of all
claims or controversies (“claims”), past, present or future, whether or not
arising out of my employment (or its termination), that the Company may
have against me or that I may have against any of the following (1) the
Company, (2) its officers, directors, employees or agents in their capacity as
such or otherwise, (3) the Company’s parent, subsidiary and affiliated
entities, (4) the Company’s benefit plans or the plans’ sponsors, fiduciaries,
administrators, affiliates and agents, and/or (5) all successors and assigns of
any of them.
The only claims that are arbitrable are those that, in the absence of this
Agreement, would have been justiciable under applicable state or federal
law. The claims covered by this Agreement include, but are not limited to:
claims for wages or other compensation due; claims for breach of any
contract or covenant (express or implied); tort claims; claims for
discrimination (including, but not limited to, race, sex, sexual orientation,
religion, national origin, age, marital status, physical or mental disability or
handicap, or medical condition); claims for benefits (except claims under an
employee benefit or pension plan that either (1) specifies that its claims
procedure shall culminate in an arbitration procedure different from this one,
or (2) is underwritten by a commercial insurer which decides claims); and
claims for violation of any federal, state, or other governmental law, statue,
regulation or ordinance, except claims excluded in the section of this
Agreement entitled “Claims Not Covered By The Agreement.”
Except as otherwise provided in this Agreement, both the Company and I
agree that neither of us shall initiate or prosecute any lawsuit or
administrative action (other than an administrative charge of discrimination
to the Equal Employment Opportunity Commission, California Department
of Fair Employment and Housing or similar fair employment practices
agency, or an administrative charge within the jurisdiction of the National
Labor Relations Board), in any way related to any claim covered by this
Agreement.
CV-13-2122 CAS (CWx) (06/13)

CIVIL MINUTES - GENERAL

Page 2 of 19

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Date

JS-6

Case No.

CV 13-2122 CAS (CWx)

June 25, 2013

Title

KEITH CUNNINGHAM V. LESLIE’S POOLMART, INC. ET AL.

Dkt. # 6, Ex. A (“arbitration agreement”). Plaintiff does not dispute whether he signed
the arbitration agreement, but denies that he understood its significance. He claims that
no one at Leslie’s explained that he was giving up his right bring claims against Leslie’s
in court.
III.

LEGAL STANDARD

The Federal Arbitration Act (“FAA”) provides that “a contract evidencing a
transaction involving commerce to settle by arbitration a controversy thereafter arising . .
. shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in
equity for the revocation of any contract.” 9 U.S.C. § 2. The FAA reflects a “liberal
federal policy favoring arbitration agreements.” Gilmer v. Interstate/Johnson Lane Corp.,
500 U.S. 20, 25 (1991) (quoting Moses H. Cone Mem. Hosp. v. Mecury Constr. Corp.,
460 U.S. 1, 24 (1983)).
The “first task of a court asked to compel arbitration of a dispute is to determine
whether the parties agreed to arbitrate the dispute.” Mitsubishi Motors Corp. v. Soler
Chrysler-Plymouth, Inc., 473 U.S. 614, 626 (1985). The court must determine
(1) whether there exists a valid agreement to arbitrate; and (2) if there is a valid
agreement, whether the dispute falls within its terms. Chiron Corp. v. Ortho Diagnostic
Sys., 207 F.3d 1126, 1130 (9th Cir. 2000). When determining whether a valid and
enforceable contract to arbitrate has been established for the purposes of the FAA, federal
courts should apply “ordinary state-law principles that govern the formation of contracts
to decide whether the parties agreed to arbitrate a certain matter.” First Options of
Chicago, Inc. v. Kaplan, 514 U.S. 938, 944 (1995); Circuit City Stores v. Adams, 279
F.3d 889, 892 (2002). “[A]greements to arbitrate [may] be invalidated by generally
applicable contract defenses, such as fraud, duress, or unconscionability, but not by
defenses that apply only to arbitration or that derive their meaning from the fact that an
agreement to arbitrate is at issue.” AT&T Mobility LLC v. Concepcion, 563 U.S. ----,
131 S. Ct. 1740, 1746 (2011).
IV.

ANALYSIS

Defendant argues that because plaintiff’s claims concern “claims for wages or
other compensation due,” they are squarely within the scope of the parties’ arbitration
CV-13-2122 CAS (CWx) (06/13)

CIVIL MINUTES - GENERAL

Page 3 of 19

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Date

JS-6

Case No.

CV 13-2122 CAS (CWx)

June 25, 2013

Title

KEITH CUNNINGHAM V. LESLIE’S POOLMART, INC. ET AL.

agreement. Additionally, defendant contends that because the agreement only
encompasses claims that “the Company may have against me or that I may have against
[the Company],” it only allows plaintiff to pursue individual claims in arbitration, not
class claims or representative claims pursuant to California’s Private Attorney General
Act (“PAGA”), California Labor Code § 2698 et seq. In response, plaintiff does not
contest whether the arbitration agreement, as written, encompasses his claims. Instead,
plaintiff argues that, to the extent the arbitration agreement requires plaintiff to give up
his right to pursue a class claim or a representative PAGA claim, the agreement is
unenforceable. Additionally, plaintiff argues that under the California Supreme Court’s
decision in Broughton v. Cigna Healthplans of Cal., 21 Cal. 4th 1066 (1999), and Cruz v.
PacifiCare Health Systems, Inc., 30 Cal. 4th 303 (2003), plaintiff’s claims for injunctive
relief are not arbitrable. The Court considers each of plaintiff’s arguments in turn.
A.

Labor and Employment Class Actions Claims

Plaintiff first argues that to the extent the arbitration agreement requires him to
arbitrate his claims under state and federal employment law on an individual basis, and
not a class basis, the agreement is unenforceable under Gentry v. Superior Court, 42 Cal.
4th 443, 453 (2007). In Gentry, the California Supreme Court held that a class action
waiver in an employer-employee arbitration agreement is unenforceable as a matter of
public policy if a court finds that “a class arbitration is likely to be a significantly more
effective practical means of vindicating the rights of the affected employees than
individual litigation or arbitration, and finds that the disallowance of the class action will
likely lead to a less comprehensive enforcement of overtime laws for the employees
alleged to be affected by the employer’s violations.” Id. at 463. The California Supreme
Court explained that when determining whether to void a class action waiver under this
standard, courts should consider several factors, including “the modest size of the
potential individual recovery, the potential for retaliation against members of the class,
the fact that absent members of the class may be ill informed about their rights, and other
real world obstacles to the vindication of class members’ right to overtime pay through
individual arbitration.” Id. Plaintiff asserts that each of these factors weigh in his favor,
leading to the conclusion that the arbitration agreement cannot be enforced.
In opposition, defendant argues that Gentry is no longer good law in light of the
Supreme Court’s decision in AT&T Mobility v. Concepcion, 131 S. Ct. 1740 (2011). In
Concepcion, the Court considered whether the FAA preempted a rule of California law
CV-13-2122 CAS (CWx) (06/13)

CIVIL MINUTES - GENERAL

Page 4 of 19

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Date

JS-6

Case No.

CV 13-2122 CAS (CWx)

June 25, 2013

Title

KEITH CUNNINGHAM V. LESLIE’S POOLMART, INC. ET AL.

announced in Discover Bank v. Superior Court, 36 Cal. 4th 148, 162 – 163 (2005). The
Discover Bank rule applied in the context of litigation over consumer contracts, and
provided that a class action waiver contained in a contract of adhesion is not enforceable
where any individual recovery is small and the plaintiff alleges that the defendant has
“carried out a scheme to deliberately cheat large numbers of consumers out of
individually small sums of money.” Id. at 163. If those conditions are satisfied, the
California Supreme Court held that the class action waiver is unconscionable because
“the waiver becomes in practice the exemption of the party from responsibility for its
own fraud, or willful injury to the person or property of another.” Id. (citing Cal. Civ.
Code § 1668).
The United States Supreme Court held that the Discover Bank rule is preempted by
the FAA. The Court began its analysis by reviewing 9 U.S.C. § 2, which only allows
state law to invalidate an arbitration agreement “upon such grounds as exist at law or in
equity for the revocation of any contract.” Concepcion, 131 S.Ct. at 1746. The Court
explained that this provision of the FAA not only preempts state rules that explicitly
prohibit arbitration, but also prevents generally applicable doctrines such as
unconscionability from being applied in a way that disfavors arbitration. Id. at 1747.
The Court held that the Discover Bank rule fell into the latter category, as an instance of a
state applying unconscionability in a way that disfavors arbitration. Specifically, the
Court reasoned that because class arbitration is more complex, costly, and lengthy than
individual arbitration, it “is not arbitration as envisioned by the FAA, lacks its benefits,
and therefore may not be required by state law.” Id. at 1753. In other words, because
class arbitration is not truly “arbitration as envisioned by the FAA,” state rules that
mandate the availability of classwide proceedings disfavor arbitration and are therefore
preempted by the FAA.
In dissent, Justice Breyer observed that the Discover Bank rule was motivated by
the practical reality that if class proceedings are not available in consumer fraud cases,
many claims will not be litigated. Id. at 1761. The Court noted this concern, but
explained that it was not relevant to the analysis because “States cannot require a
procedure that is inconsistent with the FAA, even if it is desirable for unrelated reasons.”
Id. at 1753.
Several courts have concluded that the rule in Gentry is analogous to the Discover
Bank rule, and therefore is preempted under Concepcion. See, e.g., Lewis v. UBS
CV-13-2122 CAS (CWx) (06/13)

CIVIL MINUTES - GENERAL

Page 5 of 19

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Date

JS-6

Case No.

CV 13-2122 CAS (CWx)

June 25, 2013

Title

KEITH CUNNINGHAM V. LESLIE’S POOLMART, INC. ET AL.

Financial Services, 818 F. Supp. 2d 1161, 1167 (N.D. Cal. 2011); Sanders v. Swift
Transp. Co. of Arizona, LLC, 843 F. Supp. 2d 1033, 1037 (N.D. Cal. 2012). The Court
agrees. Like the Discover Bank rule, Gentry mandates the availability of class
proceedings due to a California public policy favoring class actions for claims which
would not otherwise be adjudicated due to social and economic obstacles that discourage
individual claims. As other decisions have recognized, Concepcion is clear that such
rules are preempted because they disfavor arbitration by mandating the use of class action
procedures inconsistent with the nature of arbitration “envisioned by the FAA.”
Foreclosing access to class proceedings may be contrary to California public policy, but
state public policy cannot be invoked as a justification for mandating the use of
procedures inconsistent with the FAA. Concepcion, 131 S. Ct. at 1753.
Plaintiff resists this conclusion on two grounds, both of which are legally
unavailing. First, plaintiff argues that the rule in Gentry is distinct from the Discover
Bank rule because it requires courts to make factual findings prior to invalidating a class
action waiver, whereas the Discover Bank rule only required a plaintiff to make certain
allegations. Nelsen v. Legacy Partners Residential, Inc., 207 Cal. App. 4th 1115, 1132
(2012) (declining to apply Gentry to invalidate a class action waiver because the plaintiff
did not submit evidence that the relevant factors were satisfied); Discover Bank, 36 Cal.
4th at 163. This difference is not significant. At best, plaintiff’s argument shows that
Gentry mandates the availability of class proceedings in a narrower class of cases than
Discover Bank. While it is true that one aspect of the Discover Bank rule that the Court
found improper was its broad scope, Concepcion, 131 S. Ct. at 1750, the holding in
Concepcion does not ultimately turn on the breadth of state law rules mandating the
availability of class action procedures. Accordingly, the Court finds that Concepcion is
applicable to the rule in Gentry even though it is narrower in scope than the Discover
Bank rule.
Second, plaintiff argues that Gentry remains good law because its holding rests on
the California Supreme Court’s conclusion that, due to fear of retaliation, employment
class actions are necessary to vindicate employees’ statutory rights under California labor
and employment law. Gentry, 42 Cal. 4th at 459 – 461. Plaintiff further argues that
arbitration clauses are void if they operate as a waiver of a party’s right to pursue
statutory remedies. Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S.
614, 628, 637 n. 19 (1985); Cole v. Burns Intern. Sec. Services, 105 F.3d 1465, 1482
(D.C. Cir. 1997) (“At a minimum, statutory rights include both a substantive protection
CV-13-2122 CAS (CWx) (06/13)

CIVIL MINUTES - GENERAL

Page 6 of 19

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Date

JS-6

Case No.

CV 13-2122 CAS (CWx)

June 25, 2013

Title

KEITH CUNNINGHAM V. LESLIE’S POOLMART, INC. ET AL.

and access to a neutral forum in which to enforce those protections.”). Plaintiff
concludes that because California policy recognizes that class actions are necessary for
enforcing rights under California’s labor and employment statutes, Gentry remains good
law under the vindication of statutory rights doctrine.
The Court cannot accept this argument given the current state of the law. Under
the FAA, a state cannot ensure the vindication of statutory rights by making class
procedures available in certain categories of cases. Concepcion, 131 S.Ct. at 1753;
American Exp. Co. v. Italian Colors Restaurant, — S.Ct. —, 2013 WL 3064410, at *5 – 6
(2013). States may retain some power to adopt rules regarding the adequacy of the
arbitral forum, but states may not seek to have private plaintiffs vindicate public policies
by mandating the availability of class proceedings. Italian Colors Restaurant, 2013 WL
3064410 at *4.
Therefore, the Court concludes that the rule announced in Gentry is preempted
under the FAA, and accordingly does not provide grounds for invalidating the arbitration
agreement.
B.

Claims under PAGA

In addition to pursuing class claims, plaintiff has asserted a representative claim
under PAGA. Plaintiff argues that his representative PAGA claim is within the scope of
the arbitration agreement, and therefore that this claim can proceed in arbitration.
Alternatively, in response to defendant’s contention that the arbitration agreement does
not permit representative PAGA claims, plaintiff argues that if the arbitration agreement
does not allow him to pursue representative PAGA claims, it is unenforceable.
Prior to considering the parties’ arguments, the Court sets out background legal
principles describing the unique form of representative actions created by the California
Legislature through PAGA.
1.

Representative Actions under California’s PAGA

California faced a budget shortfall in 2004 that led to understaffing in the Labor
and Workforce Development Agency and insufficient resources to enforce the Labor
Code. Ben Nicholson, Businesses Beware: Chapter 906 Deputizes 17 Million Private
CV-13-2122 CAS (CWx) (06/13)

CIVIL MINUTES - GENERAL

Page 7 of 19

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Date

JS-6

Case No.

CV 13-2122 CAS (CWx)

June 25, 2013

Title

KEITH CUNNINGHAM V. LESLIE’S POOLMART, INC. ET AL.

Attorneys General to Enforce the Labor Code, 35 McGeorge L. Rev. 581, 584 (2004).
To address these problems and ensure more vigorous enforcement of the labor and
employment laws, the California Legislature passed PAGA. Id. PAGA allows an
“aggrieved employee” to bring a lawsuit seeking civil penalties arising out of violations
of the California Labor Code that could otherwise only be assessed and collected by
California’s Labor and Workforce Development Agency. Cal. Lab. Code § 2699(a). The
California Legislature’s purpose in creating this new claim was to create “an alternative
private attorney general system for labor law enforcement.” Dunlap v. Superior Court,
142 Cal. App. 4th 330, 337 (2006). In essence, PAGA “deputizes” employees by
allowing them to pursue the same civil monetary penalties that, absent PAGA, would
only be available to state law enforcement agents. Franco v. Athens Disposal Co., Inc.,
171 Cal. App. 4th 1277, 1300 (2009). By deputizing aggrieved employees, the California
Legislature intended to create incentives for non-governmental actors to enforce the law
in a growing labor market that could not be effectively controlled by public agents.
Dunlap, 142 Cal. App. 4th at 337.
A plaintiff proceeding under PAGA brings the action “on behalf of himself or
herself and other current or former employees.” Cal. Lab. Code § 2699. As this
provision makes clear, PAGA allows an employee to seek penalties arising out of classwide violations of labor rights. Because a PAGA plaintiff brings the action on behalf of
herself and other employees, courts routinely refer to PAGA claims as “representative”
claims. See, e.g., Reyes v. Macy’s, Inc., 202 Cal. App. 4th 1119, 1123 (2011). Allowing
a PAGA plaintiff to bring a representative action touching upon the rights of a group of
employees promotes PAGA’s legislative purpose of bringing about meaningful, vigorous
private enforcement of the California Labor Code. Id.; Brown v. Ralph’s Grocery Co.,
197 Cal. App. 4th 489, 501 – 502 (2011).
Since a representative action under PAGA allows an individual employee to seek
monetary relief arising out of unlawful conduct directed at a group of employees, PAGA
actions bear a superficial resemblance to a type of class action. There are, however,
several factors distinguishing representative PAGA actions and class actions. First, a
unique feature of a representative action under PAGA is that it is “fundamentally a law
enforcement action designed to protect the public and penalize the employer for past
illegal conduct.” Franco, 171 Cal. App. 4th at 1300. The purpose is not to collect
damages on behalf of other employees or provide restitution to victims of Labor Code
violations. Id. Consistent with this purpose, seventy-five percent of the civil penalties
CV-13-2122 CAS (CWx) (06/13)

CIVIL MINUTES - GENERAL

Page 8 of 19

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Date

JS-6

Case No.

CV 13-2122 CAS (CWx)

June 25, 2013

Title

KEITH CUNNINGHAM V. LESLIE’S POOLMART, INC. ET AL.

recovered in a representative PAGA action are paid to the California Labor and
Workforce Development Agency. Cal. Lab. Code § 2699(i). The remaining twenty-five
percent of the penalties recovered are distributed to the aggrieved employees who
initiated the claim under PAGA, not to the group of aggrieved employees on whose
behalf the claim was prosecuted.1
Second, unlike a class action, a judgment or dismissal with prejudice in a
representative PAGA action is not binding on non-party employees. Arias v. Superior
Court, 46 Cal.4th 969, 975 (2009). This is because in a lawsuit brought under PAGA,
“the employee plaintiff represents the same legal right and interest as state labor law
enforcement agencies—namely, recovery of civil penalties that otherwise would have
been assessed and collected by the Labor Workforce Development Agency.” Id. at 986.
Consequently, the only parties bound by a PAGA lawsuit are the defendant, the private
plaintiff, and the California Labor Workforce Development Agency. Id.2 This holding is
1

While the Court has not been presented with any case law or other authority
directly addressing how penalties recovered by an employee are to be distributed, the best
interpretation of PAGA is that the penalties not distributed to the Labor Workforce
Development Agency are distributed to the individual employee who brought the action.
The strongest consideration in favor of this interpretation is that the statute contains no
provisions for distributing any portion of the recovery to non-party employees, even
though PAGA contains detailed procedures setting out how a representative action is
litigated. See Cal. Lab. Code § 2699.3. Moreover, the California Supreme Court has
held that, under California law, non-party employees need not be given notice of
representative actions under PAGA. See Arias, 46 Cal. 4th at 986 – 987. The lack of
mandatory notice means that non-parties are never notified about their right to a portion
of the recovery in a PAGA action, which implies that no such right exists. Furthermore,
some courts seem to assume that the twenty-five percent recovery goes to the individual
plaintiff. Adoma v. University of Phoenix, Inc., — F. Supp. 2d — , 2012 WL 6651141,
at *10 n.5; Amaral v. Cintas Corp. No. 2, 163 Cal. App. 4th 1157, 1195 (2008). Finally,
since the purpose of PAGA is to create incentives for private litigants to bring actions
enforcing the Labor Code, not to provide restitution to aggrieved employees, rewarding
prevailing litigants with a substantial recovery promotes PAGA’s purpose. See Franco,
171 Cal. App. 4th at 1300.
2
While absent parties seeking to enforce their individual rights under California’s
Labor Code are not bound by the judgment in a representative PAGA action, they are
CV-13-2122 CAS (CWx) (06/13)

CIVIL MINUTES - GENERAL

Page 9 of 19

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Date

JS-6

Case No.

CV 13-2122 CAS (CWx)

June 25, 2013

Title

KEITH CUNNINGHAM V. LESLIE’S POOLMART, INC. ET AL.

consistent with the theory underlying PAGA: the state – and not absent parties – is bound
in PAGA litigation because a private plaintiff bringing a PAGA suit is acting as a private
attorney general on behalf of the State of California, not as a representative of other
employees.
Because a PAGA plaintiff is litigating the state’s legal interest in collecting civil
penalties, PAGA requires plaintiffs to notify the California Labor and Workforce
Development Agency prior to bringing suit. Cal. Lab. Code § 2699.3. The Labor and
Workforce Development agency then has an opportunity to investigate the alleged
misconduct that the potential plaintiff has identified and issue a citation. Id. §
2699.3(b)(1) – (2). If an investigation takes place, the plaintiff is barred from bringing
suit. Id. § 2699.3(b)(2)(A)(i).3 If no investigation takes place, the potential employee
must notify the employer about the alleged misconduct and give the employer an
opportunity to cure any problems. Id. § 2699.3(c)(1) – (2).4 If the employer does not
adequately cure the violation, then the aggrieved employee may file a civil suit. Id. §
2699.3(c)(3). Under these provisions, the Labor and Workforce Development Agency
retains substantial authority over investigations of labor violations, and the ‘deputy’
PAGA plaintiffs can only step in to enforce the law when public officials fail to act.

precluded from re-litigating PAGA claims for civil penalties. Arias, 46 Cal. 4th at 987.
Additionally, if the plaintiff in a representative PAGA action is successful, other
employees can benefit from the victory under the doctrine of collateral estoppel. Id.
(“[I]f an employee plaintiff prevails in an action under the act for civil penalties by
proving that the employer has committed a Labor Code violation, the defendant employer
will be bound by the resulting judgment. Nonparty employees may then, by invoking
collateral estoppel, use the judgment against the employer to obtain remedies other than
civil penalties for the same Labor Code violations.”).
3
If an investigation occurs but no citation is issued, the potential plaintiff can
challenge that decision in superior court. Cal. Lab. Code § 2699.3(b)(2)(A)(ii). The
statute provides that the plaintiff may not bring a PAGA action if the court orders the
Labor and Workforce Development Agency to issue a citation, but the statute does not
specify whether the plaintiff can bring her own case if the court finds that no citation
should have been issued.
4
An employer may only take advantage of the cure provisions three times during a
twelve month period for the same violations. Cal. Lab. Code § 2699.3(c)(2)(B).
CV-13-2122 CAS (CWx) (06/13)

CIVIL MINUTES - GENERAL

Page 10 of 19

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Date

JS-6

Case No.

CV 13-2122 CAS (CWx)

June 25, 2013

Title

KEITH CUNNINGHAM V. LESLIE’S POOLMART, INC. ET AL.

Representative PAGA actions therefore are not a sub-species of class actions.
Instead, representative PAGA actions are better characterized as a type “qui tam” action.
See Rockwell Intern. Corp. v. United States, 549 U.S. 457, 462 n.2 (2007). In a qui tam
action, a private party – often referred to as a relator – pursues a statutory claim on behalf
of the government. If the relator prevails, the relator shares in the proceeds of the lawsuit
with the government. Note, The History and Development of Qui Tam, 1972 Wash. U.
L.Q. 81, 84 – 85 (1972). Although qui tam is a “creature of antiquity,” qui tam actions
are commonly used today to allow private plaintiffs to prosecute claims alleging fraud on
the federal government under the False Claims Act (“FCA”). 31 U.S.C. § 3730 (qui tam
provisions of the False Claims Act); Charles Doyle, Congressional Research Service, QUI
TAM: THE FALSE CLAIMS ACT AND RELATED FEDERAL STATUTES 17 (2009), available at
http://www.fas.org/sgp/crs/misc/R40785.pdf; David Freeman Engstrom, Harnassing the
Private Attorney General: Evidence from Qui Tam Litigation, 112 Colum. L. Rev. 1244
(2012); see also Cal. Govt. Code § 12652 (California analogue to federal FCA qui tam
provisions).5 The policy underlying the qui tam provisions in the FCA is “the theory,
based on experience as old as modern civilization, that one of the least expensive and
most effective means of preventing frauds on the treasury is to make the perpetrators of
them liable to actions by private persons acting, if you please, under the strong stimulus
of personal ill will or the hope of gain.” Hughes Aircraft Co. v. United States ex re.
Schumer, 520 U.S. 939, 949 (1997) (quoting United States ex rel. Marcus v. Hess, 317
U.S. 537, 541 n.5 (1943)).
Two considerations show that representative actions under PAGA are, in essence, a
form of qui tam action. The first is the remedy recovered in a PAGA action. Just as a qui
tam relator seeks to recover funds on behalf of the government and then receive a portion
of those funds as a bounty, a PAGA plaintiff pursues civil penalties on behalf of the
government and receives a twenty-five percent portion of the recovered penalty as a
5

While qui tam provisions are most commonly used in the context of actions
brought based on alleged fraud on the government, California was not the first
jurisdiction to use qui tam provisions to enforce labor laws. In Seventh Century England,
King Wihtred of Kent issued a decree outlawing labor on the Sabbath, and this decree
included qui tam provisions granting anyone uncovering a violation of this rule half of
the fine imposed and any profits from the labor. Linda J. Stengle, Rewarding Integrity:
The Struggle to Protect Decentralized Fraud Enforcement Through the Public Disclosure
Bar of the False Claims Act, 33 Del. J. Corp. L. 471, 476 (2008).
CV-13-2122 CAS (CWx) (06/13)

CIVIL MINUTES - GENERAL

Page 11 of 19

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Date

JS-6

Case No.

CV 13-2122 CAS (CWx)

June 25, 2013

Title

KEITH CUNNINGHAM V. LESLIE’S POOLMART, INC. ET AL.

bounty. The second is that PAGA, like a set of qui tam provisions, does not create new
substantive duties or new provisions under which liability can be found, but merely
changes how existing rules are enforced. See Hughes Aircraft Co., 520 U.S. at 948
(“[T]he monetary liability faced by an FCA defendant is the same whether the action is
brought by the Government or by a qui tam relator. . .”). Taking these considerations
together, both PAGA actions and qui tam actions reward individuals for enforcing
existing duties by creating monetary bounties. See Note, The History and Development
of Qui Tam, 1972 Wash. U. L.Q. 81, 84 – 85 (1972) (describing qui tam plaintiffs as “a
class of bounty hunters.”).
The similarities between PAGA actions and qui tam actions show that an
employee’s rights under PAGA are substantive in nature, not procedural. The right of a
relator to pursue a bounty under the qui tam provisions of the FCA has been
characterized as a substantive right to pursue a claim for relief. Hughes Aircraft Co. 520
U.S. at 949 – 951; United States ex rel. Robinson v. Northrop Corp., 824 F. Supp. 830,
837 (N.D. Ill. 1993) (“The False Claims Act grants substantive rights to particular private
citizens . . . . the plaintiffs bring this suit for themselves, as well as for the government *
* * and seek to vindicate rights that Congress gave specifically to them . . .). Since a
plaintiff’s right under PAGA to pursue a bounty through a representative action is closely
analogous to a qui tam relator’s right to pursue a bounty, an aggrieved employee’s rights
under PAGA should also be characterized as substantive. By pursuing a claim arising out
of the alleged Labor Code violations suffered by a class of employees, a PAGA plaintiff
– operating “under the strong stimulus of personal ill will or the hope of gain” – seeks to
vindicate her own right to a substantial portion of an award of civil penalties, not the
rights of other employees. See Hughes Aircraft Co., 520 U.S. at 949.6
6

Although the right to pursue a representative action under PAGA is a substantive
right, the related question of whether or not a plaintiff pursuing such an action in federal
court must satisfy the requirements of Rule 23 is a procedural question. See Fields v.
QSP, Inc., 2012 WL 2049528 at * 4 – 5 (C.D. Cal. 2012). Additionally, the Court
acknowledges that the California Supreme Court has stated, in a wholly distinct context,
that PAGA 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.” Amalgamated Transit Union, Local 1756, AFL-CIO v.
Superior Court, 46 Cal. 4th 993, 1003 (2009) (emphasis added). This case is not in
conflict with the Court’s characterization of PAGA. The feature of PAGA highlighted by
CV-13-2122 CAS (CWx) (06/13)

CIVIL MINUTES - GENERAL

Page 12 of 19

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Date

JS-6

Case No.

CV 13-2122 CAS (CWx)

June 25, 2013

Title

KEITH CUNNINGHAM V. LESLIE’S POOLMART, INC. ET AL.

Through PAGA, then, California has adopted qui tam provisions that allow an
employee to litigate claims for violation of the Labor Code in order to ensure more
vigorous enforcement of its law and public policy. The question presented by this motion
is whether an employee can waive his or her right to pursue such a claim by entering into
an arbitration agreement, and whether such a claim can be pursued in arbitration.
2.

Whether Plaintiff can Pursue a Representative PAGA Claim

Defendant argues that the arbitration agreement, by its terms, does not permit
plaintiff to pursue a representative claim under PAGA. Since the arbitration agreement
only extends to claims “that the Company may have against [plaintiff] or that [plaintiff]
may have against [the Company],” defendant argues that the agreement only covers
claims involving plaintiff and defendant, not claims involving employees other than
plaintiff. Consequently, defendant concludes that plaintiff cannot bring a representative
PAGA claim in arbitration. Instead, defendant states that plaintiff may assert an
“individual PAGA claim,” through which plaintiff recovers civil penalties arising out of
violations of his rights under the Labor Code.
Defendant acknowledges that its position is inconsistent with the rule California
law – announced in Franco v. Athens Disposal Co. – providing that a contract containing
a waiver of the right to pursue a representative action under PAGA is unenforceable as
contrary to public policy (“the Franco rule”). Franco, 117 Cal. App. 4th at 1303.7
Defendant argues, however, that to the extent California law requires that a plaintiff be
able to pursue a representative PAGA action rather than an individual PAGA action, it is
preempted under Concepcion. According to defendant, under Concepcion, the FAA does
not permit a state to mandate the availability of complex dispute resolution procedures
Amalgamated is that the statute creates no new legal duties for employers under the
Labor Code. Instead, PAGA only creates a new mechanism for enforcing existing legal
duties. Since this mechanism gives employees the affirmative right to recover penalties,
however, it is nonetheless accurate to conclude that PAGA confers substantive rights to
relief upon employees, even if it does not create any new duties for employers.
7
The Franco court reasoned that because the purpose of a representative action
under PAGA is ensuring robust enforcement of California law, a waiver of the right to
pursue a representative action improperly impedes California policy. Franco, 117 Cal.
App. 4th at 1303.
CV-13-2122 CAS (CWx) (06/13)

CIVIL MINUTES - GENERAL

Page 13 of 19

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Date

JS-6

Case No.

CV 13-2122 CAS (CWx)

June 25, 2013

Title

KEITH CUNNINGHAM V. LESLIE’S POOLMART, INC. ET AL.

inconsistent with arbitration, regardless of the state’s public policy. Quevedo v. Macy’s,
Inc., 798 F. Supp. 2d, 1122, 1141 – 42 (C.D. Cal. 2011); Grabowski v. Robinson, 817 F.
Supp. 2d 1159, 1180 – 81 (S.D. Cal. 2011). The fact that California policy demands that
plaintiff be able to act as a private attorney general is, according to defendant, beside the
point because “States cannot require a procedure that is inconsistent with the FAA, even
if it is desirable for unrelated reasons.” Concepcion, 131 S.Ct. at 1753.
Defendant’s request, that the Court compel plaintiff to arbitrate an “individual
PAGA claim,” rests on a misconception of PAGA. While defendant appears to assume
that PAGA claims can be brought in either an individual or representative capacity,
PAGA does not recognize the existence of an individual claim. Urbino v. Orkin Services
of California, Inc., 882 F. Supp. 2d 1152, 1167 (C.D. Cal. 2011) (“[T]here are no separate
individual claims in a PAGA action; rather, the individual must bring a PAGA claim as a
representative action on behalf of himself and other aggrieved employees.”); Reyes v.
Macy’s, Inc., 202 Cal. App. 4th 1119, 1123 (2011) (“A plaintiff asserting a PAGA claim
may not bring the claim simply on his or her own behalf but must bring it as a
representative action and include other current or former employees.”). The only claim
PAGA permits a plaintiff to pursue is a claim for statutory penalties arising out of
violations of the Labor Code allegedly suffered by a group of employees. Arias, 46
Cal.4th at 986. This is a straightforward consequence of PAGA’s purpose of promoting
the enforcement of California’s labor laws, because an action asserting the rights of only
one individual under the Labor Code will not have PAGA’s intended punitive and
deterrent effects. See Brown v. Ralphs Grocery Co., 197 Cal. App. 4th 489, 502 (2011).
The Court is not free to rewrite California law by compelling plaintiff to arbitrate a claim
for civil penalties only arising out of violations of his rights under the Labor Code.
More fundamentally, the Court rejects defendant’s argument because the Franco
rule is not preempted by the FAA. The Franco rule protects a plaintiff’s right to pursue a
representative PAGA action, either in court or in arbitration. Therefore, to the extent it
invalidates an arbitration provision barring representative PAGA claims, it does so “upon
such grounds as exist at law or in equity for the revocation of any contract.” 9 U.S.C. §
2. In fact, since the Franco rule exists to ensure that employees can pursue their
substantive rights under PAGA, it promotes fundamental policies underlying the FAA.
“By agreeing to arbitrate a statutory claim, a party does not forgo the substantive rights
afforded by the statute; it only submits to their resolution in an arbitral, rather than a
judicial, forum. It trades the procedures and opportunity for review of the courtroom for
CV-13-2122 CAS (CWx) (06/13)

CIVIL MINUTES - GENERAL

Page 14 of 19

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Date

JS-6

Case No.

CV 13-2122 CAS (CWx)

June 25, 2013

Title

KEITH CUNNINGHAM V. LESLIE’S POOLMART, INC. ET AL.

the simplicity, informality, and expedition of arbitration.” Mitsubishi Motors Corp., 473
U.S. at 628. By ensuring that an employee-plaintiff can assert a right to recover a bounty
through a representative PAGA action in arbitration, the Franco rule ensures that an
employee can assert the same right to recovery in the judicial and arbitral forums. If
plaintiff is barred from pursuing a representative action under PAGA, he is wholly
forbidden from asserting his right to pursue a twenty-five percent portion of the civil
penalties recoverable by the government for labor code violations allegedly committed by
defendant. Both the FAA and California law are inconsistent with this result. American
Exp. Co. v. Italian Colors Restaurant, — S.Ct. —, 2013 WL 3064410, at *5 (2013)
(arbitration provision need not be enforced to the extent that it “forbid[s] the assertion of
certain statutory rights.”).
The conclusion that the Franco rule is not preempted by the FAA is fully consistent
with the Supreme Court’s holding in Concepcion. Under Concepcion, the FAA prohibits
states from enforcing their public policy through procedural mechanisms that are
inconsistent with the nature of arbitration. Class action procedures impose a level of cost,
formality, and complexity upon dispute resolution that the Concepcion Court found to be
incompatible with arbitration under the FAA. This conclusion led the Court to hold that
states could not require that class procedures be available in arbitration even if state
public policy favored class proceedings for the enforcement of certain claims.
Concepcion, 131 S.Ct. at 1753. Consequently, rules such as those announced by the
California Supreme Court in Gentry and Discover Bank are preempted by the FAA
because they attempt to enforce state policy through the procedural mechanism of a class
action.
While PAGA, like the rules in Gentry and Discover Bank, exists to promote
California’s public policy in favor of the enforcement of California law, it is distinct
because it executes this purpose by granting private plaintiffs substantive rights to relief
through qui tam provisions. The fact that PAGA accomplishes state policy goals through
granting substantive rights rather than access to procedures distinguishes the Franco rule
from the rules in Gentry and Discover Bank, and leads to the conclusion that the Franco
rule is not preempted under the analysis in Concepcion. Under Concepcion, the FAA is
focused on preserving the procedural integrity of arbitration by preventing states from
imposing costly, complex, and time consuming formalities upon the arbitration process.
The FAA does not, however, place a categorical limit on a state’s power to use private
enforcement mechanisms to accomplish public policy goals above and beyond the
CV-13-2122 CAS (CWx) (06/13)

CIVIL MINUTES - GENERAL

Page 15 of 19

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Date

JS-6

Case No.

CV 13-2122 CAS (CWx)

June 25, 2013

Title

KEITH CUNNINGHAM V. LESLIE’S POOLMART, INC. ET AL.

resolution of individual claims. Consequently, although the FAA preempts state law
imposing the presence of certain procedures in the arbitration, the FAA does not preempt
state laws ensuring that a plaintiff may assert substantive rights in arbitration.8
Certain courts have reached different conclusions in conflict with the Court’s
analysis, and found that because representative claims under PAGA increase the amount
of damages at stake in a case and lead to a slower, more costly dispute resolution process,
the Franco rule is inconsistent with arbitration. Quevedo, 798 F. Supp. 2d at 1142;
Miguel v. JP Morgan Chase Bank, N.A., 2013 WL 452418, at *10 (C.D. Cal. 2013)
(“[R]equiring requiring arbitration agreements to permit representative PAGA claims to
go forward would be inconsistent with the Supreme Court’s holding in Concepcion
because it would sacrifice the advantages achieved by arbitration.”). This reading
interprets Concepcion as severely limiting a state’s power to implement laws that utilize
private claims for relief in the service of enforcing state law and policy. Any novel law
granting an unwaivable right to pursue a complex claim is, on this analysis, void as
inconsistent with the FAA, regardless of state policy. The Court does not read
Concepcion so expansively. The Court finds that Concepcion is more narrowly focused
on state rules regulating arbitration procedure, and does not touch upon a state’s power to
grant private litigants novel claims for relief – such as PAGA claims – that utilize private
enforcement mechanisms to promote public policy.
Finally, it bears mentioning that the Court’s decision does not rest on the notion
that a plaintiff must retain the right to pursue a representative PAGA action in arbitration
because representative actions are practically necessary for the effective vindication of
plaintiff’s rights. As the Supreme Court recently affirmed in Italian Colors Restaurant,
courts cannot require the use of class or other special proceedings to ensure that a
plaintiff can prosecute a claim that would otherwise be too costly or impractical to
8

Other decisions have also recognized that representative PAGA actions are
distinct from class actions, and have therefore declined to extend the holding of
Concepcion to PAGA cases. Brown, 197 Cal. App. 4th at 503 (“United States Supreme
Court authority does not address a statute such as the PAGA, which is a mechanism by
which the state itself can enforce state labor laws, for the employee suing under the
PAGA does so as the proxy or agent of the state’s labor law enforcement agencies.”);
Urbino, 882 F. Supp. 2d at 1167 (“[Concepcion] concerned the enforceability of a
consumer class arbitration waiver, rather than a representative PAGA claim waiver.”).
CV-13-2122 CAS (CWx) (06/13)

CIVIL MINUTES - GENERAL

Page 16 of 19

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Date

JS-6

Case No.

CV 13-2122 CAS (CWx)

June 25, 2013

Title

KEITH CUNNINGHAM V. LESLIE’S POOLMART, INC. ET AL.

litigate. Italian Colors Restaurant, 2013 WL 3064410, at * 5 – 6. Here, however, the
issue is not whether plaintiff will have access to an effective method of vindicating his
rights under PAGA. If plaintiff cannot pursue a representative PAGA action, he will
have been forbidden any means of asserting his right to seek the twenty-five percent
share of civil penalties that he is entitled to pursue under California law. The Court’s
conclusion therefore does not rest on the continuing vitality of the “effective vindication”
doctrine, which was limited by Italian Colors Restaurant. See id.
Accordingly, the Court rejects defendant’s argument that, under Concepcion, the
Court should compel plaintiff to arbitrate an “individual PAGA claim.” The remaining
issue to decide is whether plaintiff should be compelled to arbitrate his representative
PAGA claim, or whether it must proceed in this Court. As mentioned above, the parties’
arbitration agreement is broad, extending to all claims “that the Company may have
against [plaintiff] or that [plaintiff] may have against the Company.”
When parties have agreed to arbitrate all of their disputes, it is improper to infer,
from this fact alone, that their agreement encompasses class claims. Stolt-Nielsen S.A. v.
AnimalFeeds International Corp., 130 S.Ct. 1758, 1775 (2010). “This is so because
class-action arbitration changes the nature of arbitration to such a degree that it cannot be
presumed the parties consented to it by simply agreeing to submit their disputes to an
arbitrator.” Id. Among other differences, when class arbitration takes place, the rights of
several absent parties are adjudicated in a single arbitration, necessitating the use of
complex proceedings. Id. at 1776. This reasoning does not, however, apply when
considering whether an agreement to arbitrate encompasses representative PAGA claims.
As discussed in detail above, unlike class claims, PAGA claims do not bind absent
employees, and hence do not require the complex proceedings that must be used when
binding absent class members. Arias, 46 Cal. 4th at 975.
Accordingly, an agreement to arbitrate a representative PAGA claim can be
inferred solely from an agreement to arbitrate claims arising out of employment.9 The
9

Of course, where an agreement specifically states that the parties have not agreed
to arbitrate representative PAGA claims, a Court cannot compel such claims to
arbitration. See, e.g., Brown v. Superior Court, — Cal. Rptr. 3d. —, 2013 WL 2449501,
at *11 (Cal. Ct. App. 2013) (“There is no basis for requiring arbitration of the claim on a
representative basis because defendant has not agreed to arbitrate any representative
CV-13-2122 CAS (CWx) (06/13)

CIVIL MINUTES - GENERAL

Page 17 of 19

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Date

JS-6

Case No.

CV 13-2122 CAS (CWx)

June 25, 2013

Title

KEITH CUNNINGHAM V. LESLIE’S POOLMART, INC. ET AL.

Court therefore finds that plaintiff’s representative PAGA claim falls within the scope of
the arbitration agreement. Since plaintiff’s representative PAGA claim is a not akin to a
class claim, but is instead a claim seeking individual relief in the form of a twenty-five
percent share of penalties otherwise recoverable by the State of California, plaintiff’s
PAGA claim is nothing more than “a claim that [plaintiff] may have against the
Company.” Plaintiff should be compelled to arbitrate his representative PAGA claim.
C.

Claim for Injunctive Relief

Under the Broughton-Cruz rule, California law provides that claims for public
injunctive relief brought under the UCL must be adjudicated in a court, not before an
arbitrator. Cruz, 30 Cal. 4th at 315. “The central premise of Broughton–Cruz is that the
judicial forum has significant institutional advantages over arbitration in administering a
public injunctive remedy, which as a consequence will likely lead to the diminution or
frustration of the public benefit if the remedy is entrusted to arbitrators.” Kilgore v.
Keybank, Nat. Ass’n, — F.3d —, 2013 WL 1458876, at *5 (9th Cir. 2013). Under the
Ninth Circuit’s decision in Davis v. O’Melveny & Myers, claims for public injunctive
relief under the UCL and California’s Labor Code are subject to the Broughton-Cruz rule,
and hence are not arbitrable. 485 F.3d 1066, 1082 (9th Cir. 2007).
Following the Supreme Court’s decision in Concepcion, courts have questioned the
continuing vitality of the Broughton-Cruz rule. See, e.g., Arellano v. T-Mobile USA,
Inc., 2011 WL 1842712, at *2 (N.D. Cal. 2011).10 The Court agrees with these decisions.
“When state law prohibits outright the arbitration of a particular type of claim, the
analysis is straightforward: The conflicting rule is displaced by the FAA.” Concepcion,
131 S.Ct. at 1747. Moreover, even though California public policy favors a judicial as
opposed to an arbitral resolution of claims for public injunctive relief, this state public
policy cannot override the FAA. Id. at 1753; see also Italian Colors Restaurant, 2013 WL
3064410, at *4.

actions.”).
10
The Ninth Circuit has yet to address whether the Broughton-Cruz rule is still
good law. Kilgore, 2013 WL 1458876 at *5.
CV-13-2122 CAS (CWx) (06/13)

CIVIL MINUTES - GENERAL

Page 18 of 19

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Date

JS-6

Case No.

CV 13-2122 CAS (CWx)

June 25, 2013

Title

KEITH CUNNINGHAM V. LESLIE’S POOLMART, INC. ET AL.

Accordingly, the Court concludes that plaintiff’s claim for injunctive relief is
subject to arbitration.11
V.

CONCLUSION

In accordance with the foregoing, defendant’s motion to compel arbitration is
hereby granted in part and denied in part. Defendant’s motion is denied insofar as it
seeks an order preventing plaintiff from pursuing a representative PAGA claim in
arbitration. Otherwise, defendant’s motion is granted, and plaintiff’s claims must
proceed in arbitration. These proceedings are hereby STAYED pending the completion
of arbitration. The parties are ORDERED to file a joint status report regarding the
posture of the arbitration every one hundred and eighty days from the date of this order,
and within twenty days of the resolution of the arbitration.
IT IS SO ORDERED.
00
Initials of Preparer

:

00

CMJ

11

Plaintiff makes one additional argument, which is unavailing. Plaintiff argues
that a waiver of the right to pursue a labor and employment class action is void under the
National Labor Relations Act, 29 U.S.C. § 141, et seq (“NLRA”), and concludes that he
may pursue an action under the UCL seeking to enforce his rights under the NLRA.
While this argument has been accepted by the National Labor Relations Board, D.R.
Horton Inc., 357 N.L.R.B. No. 184 (January 3, 2012), it has been rejected by courts, who
have found that there is no reason to interpret the NLRA to override the FAA. Jasson v.
Money Mart Exp., Inc., 879 F. Supp. 2d 1038, 1047 (N.D. Cal. 2012); Morvant v. P.F.
Chang’s China Bistro, Inc., 870 F. Supp. 2d 831, 842 – 845 (N.D. Cal. 2012).
CV-13-2122 CAS (CWx) (06/13)

CIVIL MINUTES - GENERAL

Page 19 of 19