Court of Appeal addresses preclusive effect of arbitration on PAGA standing: Rodriguez v. Lawrence Equipment, Inc.

In Rodriguez v. Lawrence Equipment, Inc.,           Cal.App.5th           (Nov. 12, 2024), the Court of Appeal (Second Appellate District, Division Three) held that an arbitrator’s findings determining an employee suffered no individual Labor Code violations can preclude plaintiffs from pursuing PAGA claims based on the same alleged violations.

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Plaintiff sued for individual wage and hour violations and a related PAGA claim. After the trial court compelled arbitration of the non-PAGA claims, an arbitrator ruled against Plaintiff for all her individual Labor Code claims. The trial court confirmed the arbitration award, and the Court of Appeal affirmed. The trial court subsequently granted Defendant judgment on the pleadings as to Plaintiff’s PAGA claim due to a lack of standing. 

Plaintiff appealed, and the Court of Appeal affirmed the trial court’s judgment. Following Rocha v. U-Haul Co. of California (2023) 88 Cal.App.5th 65, 77 and Adolph v. Uber Technologies, Inc. (2023) 14 Cal.5th 1104, 1124, the court applied issue preclusion. It found all elements met because the arbitrator’s explicit findings that Plaintiff personally suffered no underlying violations were identical to the issue of her “aggrieved employee” status, were actually litigated, and necessarily decided. The court rejected Plaintiff’s argument that the issues were not identical for her specific Labor Code claims. While acknowledging the general principle that arbitrators need not issue findings or reasons (Rodrigues v. Keller (1980) 113 Cal.App.3d 838, 842), the court emphasized that in this case, the arbitrator did provide clear adverse findings against Plaintiff on her individual claims, which formed the basis for preclusion.

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