Filed 1/13/15; unmodified opn. attached CERTIFIED FOR PUBLICATION

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION FOUR

ELIZABETH MONTANO,
Plaintiff and Respondent,

v.
THE WET SEAL RETAIL, INC.,
Defendant and Appellant. B244107
(Los Angeles County Super. Ct. No. BC472230)

ORDER MODIFYING OPINION

[NO CHANGE IN JUDGMENT]

THE COURT:*

It is ordered that the opinion filed on Janu ary 7, 2015 in the ab ove-entitled matter, is
modified as follows: On Page 11, footnote 7 is to be deleted. There is no change in judgment.

*EPSTEIN, P. J. WILLH ITE, J. MANELLA, J.Filed 1/7/15 (unmodified version) CERTIFIED FOR PUBLICATION

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION FOUR

ELIZABETH MONTANO,
Plaintiff and Respondent,

v.
THE WET SEAL RETAIL, INC.,
Defendant and Appellant. B244107
(Los Angeles County Super. Ct. No. BC472230)

APPEAL from an order of the Supe rior Court of Los Angeles County, Deirdre Hill, Judge. Affirmed in part, dismissed in part. Sheppard, Mullin, Richter & Hampton, Ryan D. McCort ney and Jason M. Guyser for Defendant and Appellant. Scott Cole & Associates, Matthew R. Bain er and Molly A. DeSario for Plaintiff and Respondent.

_____________ _______________ _____________2 The Wet Seal Retail, Inc. (Wet Seal) appeals from the denial of its motion to compel arbitration of this wage and hour act ion brought by employee Elizabeth Montano. Wet Seal also challenges the grant of Montan o’s motion to compel di scovery responses. We affirm the order denying the motion to co mpel arbitration and dismiss the challenge to the discovery order as nonappealable.

FACTUAL AND PROC EDURAL SUMMARY In October 2011, Montano filed this putative class action against Wet Seal, alleging that it failed to offer all required meal and rest periods to its California nonexempt retail employees; failed to provide all regular and overtime pay when due or when employment terminated; and failed to provide accurate semi-monthly itemized wage statements, in violation of the Labor and Business and Professions Codes, Industrial Welfare Commission Wage Order No. 7, an d Title 8 of the California Code of Regulations. She brought this ac tion on behalf of herself and, as a class action, on behalf of all persons similarly situated and damage d by the alleged conduct during the specified time period. Her complaint included a repr esentative claim under the Private Attorneys General Act (PAGA) (Lab. Code, § 2699). 1 Montano propounded various discovery requests to Wet Seal, which responded with objections but no substan tive information. After an uns uccessful effort to meet and confer, Montano filed a motion to compel disc overy responses. Before the hearing date for that motion, Wet Seal moved to compel arbitration of Montano’s individual claims and to stay the action pending co mpletion of arbitration. Wet Seal’s motion to compel arbitrati on was based on a “Mutual Agreement to Arbitrate Claims” (arbitration agreement) si gned by Montano, whic h provided: “You and the Company hereby agree that any and all di sputes, claims or controversies arising out of or relating to this Agreement, the empl oyment relationship between the parties, the termination of this Agreement or the termination of the empl oyment relationship, that are

1 All further undesignated statutory re ferences are to the Labor Code.3 not resolved by their mutual agreement shall be re solved by final and binding arbitration by a neutral arbitrator.” 2 Montano opposed the motion to compel ar bitration on several grounds, including that the arbitration agreement was procedural ly and substantively unconscionable. The unconscionability argument was based in part on the arbitration agreement’s waiver of the right to bring class actions and represen tative PAGA actions: “The parties also waive their right to join or consolid ate claims with others or to make claims with others as a representative or a member of a class or as a private attorney general. The waiver in the preceding sentence is a material or important term of this arbitration agreement. If either party initiates or joins in a lawsuit or arbitrati on against the other party in violation of this
waiver and the waiver is found to be un enforceable for any reason by a court or arbitrator, then this entire ar bitration agreement is void and unenforceable by the parties.” On March 28, 2012, the trial court hear d Montano’s motion to compel discovery and Wet Seal’s motion to comp el arbitration. The transcript reflects the parties’
awareness of the trial court’s tentative rulin g to invalidate the ar bitration agreement’s
PAGA waiver and sever that invalid waiver from the remainder of the arbitration agreement, which was otherwis e enforceable, compel arbitration of Montano’s individual claims, stay the action pending completion of arbitration, and defe r Montano’s motion to compel further discovery responses as moot. 3 At the conclusion of the hearing, the court
took the matter under submission and indicate d the final order would be sent to the parties.

2 The arbitration agreement encompasse d claims including but not limited to claims for wrongful terminati on, breach of contract, breach of any duty “o wed by you to the Company or by the Company to you,” any tort claim, any claim for wages or other compensation due, penalties, benefits, reimbursement of expenses, and any claim for discrimination or harassment, retaliation, violation of an y federal, state or other governmental constitution, statute, ordinance or regulation (as originally enacted and as amended), including but not lim ited to the California Labor Code, California Civil Code, and California Wage Orders.

3 We granted Wet Seal’s motion to take j udicial notice of the tentative ruling.4 Later that day, the court issued its fina l order, but apparently did not send it to the parties. In that order, the co urt declined to sever the invalid waiver provision, stating in relevant part: “In terms of severing the PAGA waiver provis ion, the paragraph in which
it is contained states that if the waiver is found to be unenforceab le for any reason by a court, then the entire arbitr ation agreement is void and unenforceable by the parties. Thus, the PAGA waiver is not severable.” Having determined that the entire arbitration agreement was unenforceable, the court denied We t Seal’s motion to compel arbitration. As to Montano’s motion to compel discovery, the final order stated in relevant part: “The Court does not find that any of the objections have merit, and in light of its ruling on the motion to compel arbitration, the motion to compel further discovery responses is granted.”
Based on the court’s Civil Case Summa ry—which indicated that the court had adopted its tentative ruling as its final ruli ng—the parties mistaken ly assumed that the
court had adhered to its tentative decision to sever the invalid PAGA waiver, enforce the class action waiver, grant arbitration of the individual claims, stay the action, and defer the motion to compel discovery as moot. Based on this mistaken belief, the parties stipulated to the filing of a first amended complaint in which Mont ano would dismiss all arbitrable claims, leaving only the representative clai m for civil penalties under the PAGA. The trial court approved the parties’ stipulation, which erroneously stated that
the court had severed the invalid PAGA waive r, enforced the class action waiver, granted the motion to compel arbitrati on of the individual claims, stayed the action, and deferred the motion to compel discovery as moot. With court approval, Montano filed a first amended complaint that alleged onl y a representative PAGA claim. Subsequently, the parties discovered the court actually had denied the motion to compel arbitration and had gr anted the motion to compel di scovery. Wet Seal timely appealed from the order denying the motion to compel arbitration. (Code Civ. Proc., § 1294, subd. (a).) We deferred oral argum ent in this case pending decisions by the5 California Supreme Court in Sonic-Calabasas A, Inc. v. Moreno (2013) 57 Cal.4th 1109
and Iskanian v. CLS Transportation Los Angeles, LLC (2014) 59 Cal.4th 348 ( Iskanian ). 4

DISCUSSION
I
Under section 2 of the Federa l Arbitration Act (9 U.S.C. § 2 (FAA)), an agreement to arbitrate is “valid, irrevocab le, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract .” This section reflects a liberal federal policy favoring arbitration, but the savings clau se permits agreements to arbitrate to be invalidated by ‘generally app licable contract defenses, such as fraud, duress, or unconscionability,’ but not by defe nses that apply only to arb itration or that derive their meaning from the fact that an agreem ent to arbitrate is at issue.” ( AT & T Mobility LLC v. Concepcion et ux. (2011) 563 U.S. ___, 131 S.Ct. 1740, 1745–1746 ( Concepcion ).)
In Discover Bank v. Superior Court (2005) 36 Cal.4th 148, the California Supreme Court applied this savings clause to find grounds for revocation where the arbitration agreement between a bank and a credit card holder contained a class action waiver, finding the waiver unconscionable. “[W]hen th e waiver is found in a consumer contract of adhesion in a setting in which disputes between the contracting parties predictably involve small amounts of damages, and when it is alleged that the party with the superior bargaining power has carried out a scheme to deliberately cheat large numbers of consumers out of individually small sums of money, then, at leas t to the extent the obligation at issue is governed by California law, the waiv er becomes in practice the exemption of the party ‘from re sponsibility for [its] own fraud, or willful injury to the person or property of another.’ (Civ. Code, § 1668.) Un der these circumstances, such

4 As both sides agree, Iskanian is binding on this court. In so acknowledging, Wet Seal notes that counsel in Iskanian already have made known their intention to seek review of the decision by the United Stat es Supreme Court (petition for certiorari was filed on Sept. 22, 2014, No. 14-341), and asks that we refrain from deciding this appeal until that avenue of review has been exhausted. We believe the parties are entitled to our judgment on this case, and we decline the request to stay our decision.6 waivers are unconscionable under California la w and should not be enforced.” (36 Cal 4th at pp. 162–163.) Under appropriate circ umstances, the Supreme Court noted, a court may refuse to enforce the cla ss action waiver and instead or der the parties to classwide arbitration. ( Id . at pp. 172–173.) Two years later, the California Supreme Court extended Discover Bank to a workplace arbitration agreement in Gentry v. Superior Court (2007) 42 Cal.4th 443 ( Gentry ). The court held that a class action waiver in an employment arbitration agreement should not be enforced in an over time case if the trial court concludes, based on enumerated factors, that “clas s 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 di sallowance of the class action will likely lead to a less comprehensive enforcement of over time laws for the employees alleged to be affected by the employer’s violations . . . .” (42 Cal.4th at p. 463.)
In Concepcion , supra , 131 S.Ct. 1740, the United St ates Supreme Court expressly
overruled what it called the Discover Bank rule, which classifies most collectivearbitration waivers in consumer contracts as unconscionable and essentially allows any party to a consumer contract to demand classwide arbitration. ( Id. at p. 1750.) “Requiring the availability of cl asswide arbitration interferes with fundamental attributes of arbitration and thus creates a scheme inconsistent with the FAA.” ( Id . at p. 1748.) Noting that the principal purpose of the FA A is to ensure that private arbitration agreements are enforced accord ing to their terms, the court concluded that “class arbitration, to the extent it is manufactured by Discover Bank rather than consensual, is inconsistent with the FAA.” ( Id . at p. 1751.) Concepcion did not address the Gentry case. Nor did it address whether California law applicable to waivers of statutory repres entative actions such as the PAGA, which are
a means to enforce state labor laws for the benefit of the public, is preempted by the FAA. That brings us to the Iskanian decision, in which the California Supreme Court resolved these questions.7 II
Iskanian involved facts very similar to t hose in our case. The employee had
entered into an arbitration agreement in which employee and employer expressly waived the right to assert class action and represen tative action claims against each other, in arbitration or otherwise. ( Iskanian
, supra , 59 Cal.4th at pp. 360–361.) The employee then sought to bring a class action lawsuit against his employer on behalf of himself and similarly situated employees for failure to compensate for overtime, meal, and rest periods. He also sought to bring a repr esentative action under th e PAGA. The Supreme
Court held that Gentry’s rule against employment clas s waivers is preempted by the FAA. (59 Cal.4th at p. 364.) It reached a different conclusion as to the PAGA claims. Under the PAGA, an aggrieved employee may bring a civil action individually
and on behalf of other current or former employees to re cover civil penalties for Labor Code violations. (§ 2699, subd. (a).) A PAGA representative action is in the nature of a qui tam proceeding in which the employe e plaintiff is authorized to file suit as the proxy or agent of the state’s labor law enforcement agencies for recovery of civil penalties. ( Iskanian
, supra , 59 Cal.4th at pp. 380–381.) The PAGA action “‘is fundamentally a law enforcement action designed to protect the pu blic and not to benefit private parties’ ( People v. Pacific Land Research Co. (1977) 20 Cal.3d 10, 17.)” ( 59 Cal.4th at p. 381.)
As stated in Arias v. Superior Court (2009) 46 Cal.4th 969, 98 1, before bringing a PAGA action, the employee must first give written no tice of the alleged Labor Code violation to both the employer and the Labor and Work force Development Agency (Agency). (§ 2699.3, subd. (a).) If th e Agency does not respond w ithin the allotted time, or provides notice of its intention not to inves tigate, the employee may then bring a civil action against the employer. (§ 2699.3, subd. (a)(2)(A).) If th e Agency investigates the matter within the allotted time, but either doe s not issue a citation or issues an untimely citation, the employee may commence a civil action. (§ 2699.3, subd. (a)(2)(B).) The Agency receives 75 percent of the recovered civil penalties fo r enforcement of labor laws and education of employers and employees; aggrieved empl oyees receive 25 percent of the penalties. (§ 2699, subd. (i).)8 In enacting the PAGA, “[t]he Legislature declared that adequate financing of labor law enforcement was necessary to achieve maximum complia nce with state labor laws, that staffing levels for labor law enforcemen t agencies had declined and were unlikely to keep pace with the future growth of the labor market, and that it was therefore in the public interest to allow a ggrieved employees, acting as pr ivate attorneys general, to recover civil penalties for Labor Code violati ons, with the understanding that labor law enforcement agencies were to retain primac y over private enforcemen t efforts. (Stats. 2003, ch. 906, § 1.)” ( Arias v. Superior Court, supra, 46 Cal.4th at p. 980.) Given that “the Legislature’s purpose in enacting the PAGA was to augment the limited enforcement capability of the . . . Ag ency by empowering em ployees to enforce the Labor Code as representa tives of the Agency. . . . [a ]n agreement by employees to waive their right to bring a PAGA action serves to disable one of the primary mechanisms for enforcing the La bor Code. Because such an ag reement has as its ‘object, . . . indirectly, to exempt [the employer] from responsibility for [its] own . . . violation of law,’ it is against public policy and may no t be enforced. (Civ. Code, § 1668.)” ( Iskanian, supra , 59 Cal.4th at p. 383.) “Such an agreement also violates Civil Code section 3513’s injunction that ‘a law es tablished for a public reason cannot be contravened by a private agreement.’ ( Ibid .) The PAGA was clearly established for a public reason, and agreements requiring th e waiver of PAGA rights would harm the state’s interests in enforcing the Labor Code and in receiving the proceeds of civil penalties used to deter violations.” ( Iskanian, supra , at p. 383.) The court rejected the employer’s claim th at the arbitration di d not violate public policy because it prohibited on ly representative claims, not individual PAGA claims. “[W]hether or not an individual claim is permissible under the PAGA, a prohibition of representative claims frustrates the PAGA’s objec tives. As one Court of Appeal has observed: ‘[A]ssuming it is authorized, a singl e-claimant arbitration under the PAGA for individual penalties will not result in the penalties contemplated under the PAGA to punish and deter employer prac tices that violate the rights of numerous employees under the Labor Code. That plaintiff and other em ployees might be able to bring individual9 claims for Labor Code violations in separate arbitrations does not serve the purpose of the PAGA, even if an individual claim has collateral estoppel effects. ( Arias, supra , 46 Cal.4th at pp. 985–987.) Other employees wo uld still have to assert their claims in individual proceedings.’ ( Brown v. Ralphs Grocery Co . (2011) 197 Cal.App.4th 489, 502, fn. omitted.)” ( Iskanian
, supra , 59 Cal.4th at p.384.)
The court then considered whether the state law ru le prohibiting waiver of representative PAGA claims was preempted by the FAA. “We conclude that the rule against PAGA waivers does not frustrate the FA A’s objectives because . . . the FAA aims
to ensure an efficient fo rum for the resolution of private disputes, whereas a PAGA action is a dispute between an em ployer and the state Agency.” ( Iskanian
, supra , 59 Cal.4th at p. 384.) “[A] PAGA claim lies out side the FAA’s coverage because it is not a dispute between an employer and an empl oyee arising out of their contractual relationship. It is a dispute between an employer and the state , which alleges directly or through its agents—either th e Agency or aggrieved employees—that the employer has violated the Labor Code.” ( Id . at pp. 386–387.) 5

III As we have discussed, the waiver provis ion in the arbitration agreement provides: “The parties also waive their ri ght to join or consolidate clai ms with others or to make claims with others as a representative or a member of a class or as a private attorney general.” Under Iskanian , Montano’s purported waiver of her right to bring a

5 We recognize that several federal district courts in this state have found PAGA waivers to be enforceable under the FAA and Concepcion. ( Ortiz v. Hobby Lobby Stores
, Inc. (E.D. Cal. 2014) ___ F.Supp. 3d ___, ___ [listing unpublishe d district court cases in which PAGA waivers were foun d to be enforceable].) Ho wever, “‘[d]ecisions of the lower federal courts interpreting federal law, although persuasive, are not binding on state courts. [Citation.]’ ( Raven v. Deukmejian (1990) 52 Cal.3d 336, 352.)” ( People v. Zapien (1993) 4 Cal.4th 929, 989.) Until the Un ited States Supreme Court resolves this issue, we are bound to follow the California Supreme Court’s decision in Iskanian that PAGA waivers are invalid under state law. ( Auto Equity Sales
, Inc. v. Superior Court (1962) 57 Cal.2d 450, 455; see 9 Witkin, Cal. Proc. (5th ed. 2008) Ap peal, § 492, p. 551.)10 representative action under the PAGA cannot be enforced. ( Iskanian, supra , 59 Cal.4th at p. 383.)
Based on its determination that the PA GA waiver was invalid, the trial court applied the arbitration agreement’s nonsever ability provision. Base d on that provision,
the trial court declared the entire arbitr ation agreement was void and unenforceable. 6 On appeal, Wet Seal does not challenge the tria l court’s application of the nonseverability provision. We conclude that Wet Seal’s motion to compel arbitration was properly
denied.
IV Finally, we turn to the portion of the order granting Montano’s motion to compel further discovery responses. Wet Seal assert s the trial court should not have reached the merits of the discovery motion while its motion to compel arbitration was
“undetermined.”
Wet Seal relies on Code of Civil Proced ure section 1281.4, which provides that while a motion to compel arbitration is “unde termined, the court in which such action or proceeding is pending shall, upon motion of a party to su ch action or proceeding, stay the action or proceeding until th e application for an order to arbitrate is determined and, if arbitration of such controversy is ordered, until an arbitrati on is had in accordance with
the order to arbitrate . . . .” (Italics added.) Wet Seal argue s that an application for an order to arbitrate is “undetermined” for pur poses of section 1281 .4 until the completion of the appeal from the denial of that application. In support of this proposition, Wet Seal cites this court’s language in Smith v. Superior Court (1962) 202 Cal.App.2d 1 28: “The order denying the petition to compel arbitration is an appealable order (C ode Civ. Proc., § 1294, subd. (a)), and until determination upon appeal ‘s uch application is undetermin ed’ within the meaning of

6 As previously discussed, the nonsever ability clause provides that the waiver provision “is a material or important term of this arbitration agreem ent. If either party initiates or joins in a lawsuit or arbitration against the othe r party in violation of this waiver and the wavier is found to be un enforceable for any reason by a court or arbitrator, then this entire ar bitration agreement is void and unenforceable by the parties.”11 section 1281.4 . (Code Civ. Proc. § 1049.)” 7 (202 Cal.App.2d at p. 131, italics added.) However, Smith has never been cited for this propos ition in a published decision. We rejected the proposition in Berman v. Renart Sportswear Corp. (1963) 222 Cal.App.2d
385. In Berman , as in this case, the defendant had appealed the order denying a motion to compel arbitration. Claiming that the tr ial court should have stayed the action, the defendant filed a petition for writ of prohibition. In denying that petition, we stated the trial court had no obligation to stay the ac tion under Code of Civil Procedure section 1281.4, because “[o]bvious ly, the request for a stay of proc eedings falls with the denial of arbitration.” (222 Cal.App.2d at p. 390.) In this case, the court denied the moti on to compel arbitration and granted the motion to compel further discove ry responses on the same date . When the court ruled on the discovery motion, the motion to compel arbitration was no longer pending, and the request for arbitration had been denied. Th e court thus had no obligation to stay the action under Code of Civil Procedure section 1281.4. ( Berman v. Renart Sportswear Corp. , supra , 222 Cal.App.2d at p. 390.) Wet Seal recognizes that it has a more fundamental problem. A trial court order is appealable only when made so by statute. ( Griset v. Fair Political Practices Com. (2001) 25 Cal.4th 688, 696.) There is no statutory provision for a ppeal of an order compelling discovery. (See Doe v. United States Swimming, Inc. (2011) 200 Cal.App.4th 1424, 1432; Code Civ. Proc., § 904.1.) Wet Seal ur ges us to treat the appeal as a petition for mandate and reach the merits through a writ pr oceeding. It argues that a writ proceeding is appropriate because, in light of the trial court’s tentative ruling to compel arbitration and stay the action, it had no reason to argu e the merits of a discovery motion that, according to the tentative ruling, was moot.

7 Code of Civil Procedure section 1049 prov ides that “[a]n action is deemed to be pending from the time of its comm encement until its final de termination upon appeal . . . .” (Italics added.) The word “pending” does not appear in Code of Civil Procedure section 1281.4.12 We are not persuaded by this argument, particularly in light of counsel’s remarks at the March 28 hearing. By stating “ if Your Honor affirms the tentative . . . ” Wet Seal’s counsel acknowledged the court’s right to cha nge its tentative ruling. (Italics added.) And Montano’s counsel encouraged the cour t to exercise that right, by arguing the discovery motion was not moot in light of Montano’s intention to pursue her representative PAGA action. There is no requirement for a trial court to issue a tentative ru ling, or to announce its final ruling before taking a matter under su bmission. We find no support in the record for Wet Seal’s claim of a due process violati on, which was mentioned for the first time at oral argument in this court. Finding no ba sis to treat the appeal from the nonappealable order as a petition for writ of mandate, we conc lude that this portion of the appeal must
be dismissed.

DISPOSITION The portion of the appeal seeking revi ew of the nonappealable order granting discovery is dismissed. In all other respects, the order is affirmed. The parties are to bear their own costs on appeal.
CERTIFIED FOR PUBLICATION

EPSTEIN, P. J. We concur:

WILLHITE, J.

MANELLA, J.