Ely v. Walnut Creek Assocs. 2, Inc.

Ely v. Walnut Creek Assocs. 2, Inc.

Opinion

Plaintiff Landen Ely filed a complaint alleging a single cause of action under the Labor Code Private Attorneys General Act of 2004 (Lab. Code,¹ § 2698 et seq.; PAGA). The complaint sought to recover civil penalties under section 558, subdivision (a), which includes both a set fine and the recovery of underpaid wages. Defendants Walnut Creek Associates 2, Inc. (doing business as Walnut Creek Honda), Gordon S. Walton, Steve Sklavos, and David Trzesniewski (jointly, defendants) moved to compel arbitration of Ely's request for underpaid wages under section 558, subdivision (a). The trial court found such claims were not arbitrable and denied the motion. On appeal, defendants argue the trial court erred in concluding unpaid wages constituted a civil penalty not subject to arbitration. Although we adopt a partially different analysis than that applied by the trial court, we affirm the order denying defendants' motion to compel arbitration.

I. BACKGROUND

Defendant Walnut Creek Associates 2, Inc. employed Ely as an automobile technician at its car dealership. At the time he was hired, Ely signed an arbitration agreement, which stated in relevant [*2]  part: "[T]his Agreement is intended to apply to the resolution of disputes that otherwise would be resolved in a court of law or before a forum other than arbitration. This Agreement requires all such disputes to be resolved only by an arbitrator through final and binding arbitration and not by way of court or jury trial. . . . [¶] Except as it otherwise provides, this Agreement also applies, without limitation, to disputes regarding the employment relationship, . . . compensation, breaks and rest periods, . . . and state statutes, if any, addressing the same or similar subject matters, and all other state statutory and common law claims."

Ely subsequently filed a complaint asserting a single PAGA cause of action.² The complaint asserts it is brought "on behalf of [Ely] as a private attorney general representing the claims of the State of California," and "is not adjudicating any claims of employees, including [his] own." The complaint alleges various Labor Code violations and seeks civil penalties and unpaid wages. Specifically, the complaint seeks "civil penalties due from all Defendants on behalf of themselves, other aggrieved employees and the State, as provided by Labor Code § 2699[, subdivision] [*3]  (i), including but not limited to, penalties and unpaid wages due pursuant to Labor Code § 558 and § 1197.1 . . . ."³ The complaint also prays to recover such damages for a three-year time period prior to the filing of Ely's PAGA letter with the Labor and Workforce Development Agency (LWDA).

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