Plaintiff Who Camouflages Wage and Hour Claims in PAGA Cause of Action Able to Defeat Motion to Compel Arbitration — For Now

Betancourt v. Prudential Overall Supply 3/7/17, 4DCA/2

This case exalts form over substance.  Plaintiff filed a wage/hour representative action purporting to contain a single cause of action under PAGA.  However – and this is a big however – he alleged various Labor Code violations (the usual slew, including unpaid minimum wages, overtime, meal/rest, wage statements) AND prayed not just for penalties under PAGA, but also for recovery of minimum wages, overtime, Labor Code 226 damages, etc.  There was an arbitration agreement.  As we all know, normal wage/hour claims are subject to arbitration while PAGA claims (per Iskanian) are not. The issue wasn’t lost on counsel for Prudential, who filed a motion to compel arbitration and argued that the relief plaintiff was seeking was relief that was in fact subject to arbitration.  The trial court denied Prudential’s motion to compel arbitration.  Held: Affirmed.

At the hearing, the trial court explained that a motion to compel arbitration was not the proper vehicle to challenge plaintiff’s pleading; instead, the trial court invited defendant to file a motion to strike. 

Two issues with that  – First, the essence of a complaint is determined by the allegations. The courts of this state have long since departed from holding a plaintiff strictly to the ‘form of action’ he has pleaded and instead have adopted the more flexible approach of examining the facts alleged (to determine if a demurrer should be sustained.)  And so, if plaintiff alleged wage/hour violations and sought wage/hour remedies in addition to PAGA penalties, it shouldn’t really matter that plaintiff is trying to camouflage his wage/hour claims as a PAGA case.  

Therefore, the second problem – To the extent plaintiff’s complaint is for wage/hour claims, why can’t the trial court send those claims  — regardless of the label or lack thereof — to arbitration? The answer is, It can do exactly that and could have entered an order that says: “All wage and hour claims/causes of action are sent to arbitration except the PAGA cause of action, which is stayed pending the outcome of arbitration.”