Torres & Tolman Victorious in Published California Appeal

Victory.

We are proud to announce that we recently secured an important appellate victory for our clients Nicole DeMarinis, Kelly Patire, and a larger group of aggrieved employees and putative class members in Nicole DeMarinis et al. v. Heritage Bank of Commerce. This important appellate opinion has now been certified by the court for publication. Link is here.

To remind our readers, PAGA is a California statute that essentially gives an employee standing to represent the state of California in pursuing labor code violations on behalf aggrieved employees.

In its opinion, the Court concluded that any form of agreement that attempts to disallow a person’s ability to bring PAGA claims (a PAGA waiver), even if limited to only waiving the ability to bring labor code claims on behalf of other aggrieved employees and not one’s self, is invalid and constitutes a “wholesale” waiver under the U.S. Supreme Court’s recent decision in Viking River.

To reach this conclusion, the Court issued a detailed analysis of the evolution of the law regarding PAGA waivers by discussing the Viking River, Federal Arbitration Act and preemption, PAGA and case law (such as Iskanian) interpreting PAGA, as well as the California Supreme Court’s recent decision in Adolph v. Uber. In short: it was a comprehensive analysis. Since Viking River, litigants have encountered uncertainty surrounding Iskanian’s ongoing application to PAGA. Most significantly, perhaps, is the ongoing misunderstanding surrounding PAGA waivers brought about by Viking River’s use of the term, “wholesale waiver”. Indeed, the opinion astutely addresses this misunderstanding: 

 We acknowledge that certain language in Viking River lends itself to Heritage Bank's mistaken view that a PAGA waiver is “wholesale” only when it waives both individual and nonindividual PAGA claims. Specifically, the Viking River court stated that due to the severability clause, “the agreement still would have permitted arbitration of [the plaintiffs] individual PAGA claim even if wholesale enforcement was impossible.” (Viking River, supra, 569 U.S. at p. _ [142 S. Ct. at p. 1917], italics added.) As we have explained, however, Iskanian's prohibition against wholesale PAGA waivers applies whenever an employee is required to forgo their substantive right to seek civil penalties as an agent or proxy of the state in any forum, either as an individual or nonindividual PAGA claim. (Iskanian, supra, 59 Cal.4th at p. 360.) Nothing in Viking River purports to change Iskanian's principal rule in this respect. (Viking River, supra, 596 U.S. at p. _ [142 S. Ct. at p. 1925].)   

 (Demarinis v. Heritage Bank of Commerce (Dec. 11, 2023, No. A167091) ___Cal.App.5th___ [2023 Cal. App. LEXIS 1009, at *23-1].) (hereinafter “DeMarinis”).)

It is based upon this misunderstanding of Viking River’s holding that Appellant had argued that “an unenforceable wholesale PAGA waiver is one that waives both individual and nonindividual claims, and thus, Iskanian's principal rule (as well as the effect of the poison pill) may be avoided if we interpret the waiver provision as waiving only nonindividual PAGA claims.” (Id. at *17.) Many others have made this same argument, and in certain Federal courts (including the Northern District of California) they have prevailed. (See, e.g., Martinez-Gonzalez v. Elkhorn Packing Co., LLC (N.D.Cal. 2022) 635 F. Supp. 3d 883, 898-899 (“The arbitration agreement here is not a wholesale waiver—waiving both individual and representative claims—because it waives only ‘representative claims.’”)

But the Court clearly rejected this misunderstanding of the law in a direct and straightforward manner: “even if the individual PAGA claims were expressly subject to arbitration, requiring plaintiffs to completely waive their rights to bring nonindividual PAGA claims in any forum would still constitute a "wholesale" PAGA waiver that violates public policy under Iskanian.” (DeMarinis at *18.)  

Given the ongoing misapprehension surrounding PAGA waivers post-Viking River, the clear and unambiguous analysis supplied by this Opinion serves as a significant contribution to an area of law that is of substantial and ongoing public interest in the employment and business space.  

Much thanks to our clients—Ms. DeMarinis and Ms. Patire—without whom this important result would not have been possible.