Court Opinion

ID: 4150234
Source: CourtListenerOpinion
Date Created: 2017-03-03 21:01:03.926982+00
Date Added: 2024-06-11T09:23:08.145989
License: Public Domain

NOT FOR PUBLICATION                           FILED
                    UNITED STATES COURT OF APPEALS                        MAR 3 2017
                                                                      MOLLY C. DWYER, CLERK
                                                                       U.S. COURT OF APPEALS
                           FOR THE NINTH CIRCUIT

  PLACIDO VALDEZ, on behalf of himself            No. 15-56236
 and others similarly situated,
                                                 D.C. No.
                 Plaintiff-Appellee,             2:14-cv-09748-DDP-E

   v.
                                                 MEMORANDUM *
 TERMINIX INTERNATIONAL
 COMPANY LIMITED PARTNERSHIP,
 DBA Antimite Termite and Pest Control, a
 Delaware Limited Partnership,

                 Defendant-Appellant.

                   Appeal from the United States District Court
                      for the Central District of California
                   Dean D. Pregerson, District Judge, Presiding

                          Submitted February 16, 2017**
                              Pasadena, California

Before: M. SMITH and OWENS, Circuit Judges, and HELLERSTEIN,*** District
Judge.

        *
             This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
        **
             The panel unanimously concludes that this case is suitable for
decision without oral argument. See Fed. R. App. P. 34(a)(2).
        ***
             The Honorable Alvin K. Hellerstein, United States Senior District
Judge for the Southern District of New York, sitting by designation.
      Defendant-Appellant Terminix International Company Limited Partnership

(Terminix) appeals from the district court’s order denying its motion to dismiss or

compel arbitration of Plaintiff-Appellee Placido Valdez’s representative claim

under California’s Private Attorneys General Act (PAGA). We have jurisdiction

pursuant to 9 U.S.C. § 16(a)(1)(B) and our review is de novo. See Sakkab v.

Luxottica Retail N. Am., Inc., 803 F.3d 425, 429 (9th Cir. 2015). We reverse the

portion of the district court’s order denying the motion to compel arbitration of the

PAGA claim, and remand to the district court to consider whether to dismiss or

stay the action pending arbitration.

      Terminix insists that the district court should have dismissed the PAGA

claim for three reasons. First, Terminix contends that the Federal Arbitration Act

(FAA) preempts California’s rule that a waiver of the right to bring a PAGA claim

is invalid (the Iskanian rule). See Iskanian v. CLS Transp. Los Angeles, LLC, 59

Cal. 4th 348 (2014). That argument fails, however, in light of our recent decision

in Sakkab. There, we held that “the Iskanian rule does not stand as an obstacle to

the accomplishment of the FAA’s objectives, and is not preempted.” Sakkab, 803

F.3d at 427.

      Next, Terminix contends that if Sakkab applies, “its reasoning is

questionable” in light of DIRECTV, Inc. v. Imburgia, 136 S. Ct. 463 (2015).

Specifically, Terminix argues that in light of Imburgia, Iskanian’s rule must be

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preempted “because it relies on an arbitration-specific contract defense.” That

aspect of Imburgia, however, did not announce new law. Rather, it evinces a

garden-variety application of the FAA preemption test. Like Imburgia, moreover,

Sakkab correctly applied existing precedent regarding the FAA’s “savings clause.”

Sakkab acknowledged that the relevant state defense—the Iskanian rule—“must be

a ‘ground[] . . . for the revocation of any contract.” 803 F.3d at 432 (quoting 9

U.S.C. § 2). It concluded “that the Iskanian rule is a ‘generally applicable’

contract defense,” id. at 433, because it “bars any waiver of PAGA claims,

regardless of whether the waiver appears in an arbitration agreement or a non-

arbitration agreement,” id. at 432 (emphasis added). Terminix’s argument that

Imburgia casts doubt on Sakkab is thus meritless.

      Finally, Terminix contends that the district court erred in concluding that

PAGA claims categorically cannot proceed to arbitration. The district court

reasoned that a PAGA claim “belongs to the state, and the state has not waived the

judicial forum,” even where a private employee signs an employment contract

requiring that PAGA claims be pursued in arbitration.

      The district court’s holding on this point is incorrect.1 Iskanian and Sakkab

clearly contemplate that an individual employee can pursue a PAGA claim in

      1
       We note that the district court did not have the benefit of our opinion in
Sakkab when it decided this case.

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arbitration, and thus that individual employees can bind the state to an arbitral

forum. To start, Iskanian recognized that although “[t]he government entity on

whose behalf the plaintiff files suit is always the real party in interest in the suit,”

59 Cal. 4th at 382, “the judgment in a PAGA representative action is binding not

only on the named employee plaintiff but also on government agencies and any

aggrieved employee not a party to the proceeding,” id. at 380 (quotation marks and

alterations omitted). Employees can bind government agencies because they

“represent[] the same legal right and interest” as the government in PAGA

proceedings. Id. at 380 (quoting Arias v. Superior Court, 46 Cal. 4th 969, 986

(2009)). Indeed, “[a]n employee plaintiff suing . . . under the PAGA does so as the

proxy or agent of the state’s labor law enforcement agencies.” Id. (emphasis

added) (quoting Arias, 46 Cal. 4th at 986). Accordingly, an individual employee,

acting as an agent for the government, can agree to pursue a PAGA claim in

arbitration. Iskanian does not require that a PAGA claim be pursued in the judicial

forum; it holds only that a complete waiver of the right to bring a PAGA claim is

invalid. See, e.g., id. at 391 (concluding that “Iskanian must proceed with bilateral

arbitration on his individual damages claims, and CLS must answer the

representative PAGA claims in some forum” (emphasis added)).

      Sakkab likewise recognized that individual employees may pursue PAGA

claims in arbitration. See, e.g., Sakkab, 803 F.3d at 436 (“[T]here is no need to

                                            4
protect absent employees’ due process rights in PAGA arbitrations.”); id. at 438

(“[W]hether arbitration of representative PAGA actions is likely to ‘generate

procedural morass’ depends, first and foremost, on the procedures the parties

select.”). We have also upheld district court decisions compelling arbitration of

PAGA claims. See, e.g., Wulfe v. Valero Ref. Co.-Cal., 641 F. App’x 758, 760 (9th

Cir. 2016) (“The district court did not err in compelling arbitration of Wulfe’s

[PAGA] claim.”).

      Given that PAGA claims are eligible for arbitration, we must decide if the

PAGA claim here falls within the scope of the arbitration clause. It does. The

parties mutually agreed “to arbitrate covered Disputes.” That clause of the parties’

agreement applies even after the representative action waiver is severed. See ER

114 (stating that, in the event that a Plan provision is severed, “[a]ll remaining

provisions shall remain in full force and effect”). Additionally, since the PAGA

claim “relat[es] to [Valdez’s] employment relationship with the Company,” and

arises under a “state” “employment related law[],” it constitutes a covered dispute.

See ER 111. The district court therefore erred by denying the motion to compel

arbitration of the PAGA claim.2

REVERSED and REMANDED.

      2
          Valdez’s request for judicial notice is denied. See Dkt. No. 18.

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