Ninth Circuit holds non-individual PAGA claims remain in court pending arbitration: Diaz v. Macy’s West Stores, Inc.

In Diaz v. Macy’s West Stores, Inc., (9th Cir.)           F.3d           (May 13, 2024), the Court of Appeals for the Ninth Circuit held that arbitrating an individual PAGA claim does not strip a plaintiff’s standing to pursue non-individual claims in court, and that non-individual claims may be stayed pending arbitration.

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Plaintiff sued defendant for Labor Code violations then amended her complaint to assert individual and non-individual PAGA claims. Defendant moved to compel the individual PAGA claim to arbitration and dismiss the non-individual claims. The district court compelled the individual claim but denied dismissal, instead staying the non-individual claims pending arbitration. Defendant appealed the denial of dismissal.

The Ninth Circuit affirmed. Relying primarily on the California Supreme Court’s clarification in Adolph v. Uber Technologies, Inc. (2023) 14 Cal.5th 1104, the court held that arbitrating an individual PAGA claim does not strip a plaintiff’s standing to pursue non-individual claims in court. Thus, the district court correctly denied dismissal. The Ninth Circuit also affirmed the stay of the non-individual claims pending the arbitration’s completion, consistent with Adolph‘s guidance, and found it unnecessary to address the agreement’s class action carve-out.

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