Case Name: Wan v. SolarCity, Inc.

Case No.: 1-14-CV-268607

Defendant SolarCity Corp. (“Defendant”) brings a motion to compel plaintiff Wayne Jenn-Wei Wan’s (“Plaintiff”) individual claims to arbitration and dismiss his PAGA action on behalf of others.

Defendant’s request for judicial notice is DENIED. The documents for which judicial notice is requested are not relevant and only relevant material may be judicially noticed. (See Mangini v. R. J. Reynolds Tobacco Co. (1994) 7 Cal.4th 1057, 1063, overruled on other grounds.)

Plaintiff alleges that Defendant provides solar energy and related products and services to residential, commercial, government, and non-profit customers. (Complaint, ¶ 5.) Plaintiff worked for Defendant as a “Field Energy Advisor” based out of Defendant’s Morgan Hill, CA, office from October 2013 to February 2014. (Complaint, ¶ 5.) Plaintiff’s Complaint sets forth a single cause of action under the Private Attorneys General Act (“PAGA”), Labor Code section 2698, et seq., alleging various Labor Code violations.

Defendant argues that, prior to commencing employment with Defendant, Plaintiff signed an agreement (the “Arbitration Agreement”) wherein he agreed to arbitrate on an individual basis any disputes related to his employment. Defendant contends that the Federal Arbitration Act (“FAA”) governs the enforceability of the Arbitration Agreement and that federal law and public policy compel the conclusion that Plaintiff must submit his claims to arbitration.

Plaintiff responds that he has not asserted any individual claims in his Complaint, so there are no individual claims to submit to arbitration. Plaintiff is correct. As stated above, the only cause of action asserted in the Complaint is a PAGA claim and “every PAGA action, whether seeking penalties for Labor Code violations as to only one aggrieved employee—the plaintiff bringing the action—or as to other employees as well, is a representative action on behalf of the state.” (Iskanian v. CLS Transportation Los Angeles, LLC (2014) 59 Cal. 4th 348, 387, quoting conc. opn. of Chin, J., post, at p. 394.) In other words, Plaintiff is acting as an agent of the state and is not bringing any individual claims on his own behalf. Consequently, there are no individual claims to send to arbitration.

Plaintiff argues further that he cannot waive the right to bring his PAGA claim in court. Plaintiff’s position is supported by the Supreme Court’s recent ruling in Iskanian in which the Court stated that where “an employment agreement compels the waiver of representative claims under the PAGA, it is contrary to public policy and unenforceable as a matter of state law.” (Iskanian v. CLS Transportation Los Angeles, LLC, supra, 59 Cal. 4th at p. 384.) The Iskanian Court explained further:

Of course, any employee is free to forgo the option of pursuing a PAGA action. But it is against public policy for an employment agreement to deprive employees of this option altogether, before any dispute arises. (Ante, at pp. 382–384.) The question is whether this public policy contravenes the FAA. Nothing in the text or legislative history of the FAA nor in the Supreme Court’s construction of the statute suggests that the FAA was intended to limit the ability of states to enhance their public enforcement capabilities by enlisting willing employees in qui tam actions. Representative actions under the PAGA, unlike class action suits for damages, do not displace the bilateral arbitration of private disputes between employers and employees over their respective rights and obligations toward each other. Instead, they directly enforce the state’s interest in penalizing and deterring employers who violate California’s labor laws. In crafting the PAGA, the Legislature could have chosen to deputize citizens who were not employees of the defendant employer to prosecute qui tam actions. The Legislature instead chose to limit qui tam plaintiffs to willing employees who had been aggrieved by the employer in order to avoid “private plaintiff abuse.” (Sen. Com. on Judiciary, Analysis of Sen. Bill No. 796 (Reg. Sess. 2003–2004) as amended Apr. 22, 2003, p. 7.) This arrangement likewise does not interfere with the FAA’s policy goal.

(Iskanian v. CLS Transportation Los Angeles, LLC, supra, 59 Cal. 4th at p. 387, italics in original.)

Defendant recognizes that this Court is bound by the California Supreme Court’s decision in Iskanian, but submits that Iskanian was wrongly decided because it is inconsistent with the FAA in that it prohibits arbitration of a particular type of claim and interprets generally applicable state law in a manner that disfavors arbitration. Whether or not Iskanian was decided correctly, Defendant is correct that this Court is bound by California precedent. (Auto Equity Sales, Inc. v. Superior Court (1962) 57 Cal. 2d 450, 455 [“Courts exercising inferior jurisdiction must accept the law declared by courts of superior jurisdiction. It is not their function to attempt to overrule decisions of a higher court.”].) Therefore, arguments that the Court should ignore Iskanian and apply federal law instead are unavailing.

A PAGA action must be brought by an “aggrieved employee.” (Lab. Code, § 2698. subd. (d).) An “aggrieved employee” is a person who was employed by the alleged violator and against whom one or more of the alleged violations was committed. (Lab. Code, § 2699, subd. (c).) Defendant argues that the Arbitration Agreement provides that an arbitrator shall decide whether an employee is an aggrieved person under PAGA. However, enforcement of such a provision in light of the fact that the PAGA waiver is unenforceable would be nonsensical. If this provision were enforced in the manner proposed by Defendant, it would mean that Plaintiff would need to go through arbitration to determine whether the alleged labor violations occurred prior to bringing a civil action to determine whether the violations occurred. Defendant cites to no authority supporting the proposition that such an end-run around Iskanian is permissible by requiring an employee not only to allege that violations were committed against the employee but also to prove the violations were committed against the employee before bringing suit.

In sum, for the reasons discussed above, Defendant’s motion is DENIED.