Tag: 2025 News

Packers Sanitation Services Ltd., LLC is a food safety solutions company that employed Jose A. Parra Rodriguez (Parra) in California from April 2019 to July 2021.

In February 2022, Parra – acting “in a Representative Capacity only” – filed a complaint against Packers for civil penalties under PAGA based on violations of the Labor Code and California Code of Regulations, including provisions dealing with overtime and meal and rest period requirements. Parra alleged Packers committed these violations against Parra “and all other aggrieved employees.”

In March 2022, Packers moved to compel arbitration based on an agreement Parra assertedly signed shortly after he was hired. Packers filed its motion before the United States Supreme Court decided  Viking River Cruises, Inc. v. Moriana(2022) 596 U.S. 639 (Viking River).

Apparently anticipating that Viking River would require wholesale enforcement of contractual waivers of the right to assert representative claims, Packers argued the action had to be dismissed because it was a “PAGA claim[ ]” and in the arbitration agreement Parra had waived his right to assert “representative claims, including under PAGA.” As an alternative to dismissal, Packers asked the trial court to stay the action pending a decision in Viking River.

The trial court held an evidentiary hearing during which the parties presented conflicting evidence on the genuineness of the electronic signature on the arbitration agreement. The trial court denied the motion. Although it found Parra electronically signed the agreement, it interpreted “current law” to mean the law as it stood in 2019, when the parties entered the agreement.

The Court of Appeal affirmed in the published case of Rodriguez v. Packers Sanitation Services -D083400 (February 2025).

Packers contends on appeal that the trial court erred because it incorrectly equated “current law” with Iskanian’s rule (Iskanian v. CLS Transportation Los Angeles, LLC (2014) 59 Cal.4th 348) against splitting PAGA claims into their individual and non-individual components.

It argues that Viking River held the Iskanian anti-splitting rule was preempted by the FAA, and preemption holdings are retroactive. In Packers’ view, Viking River simply announced how the FAA has always operated, such that its holding should be considered “current law” in 2019, when the parties entered their agreement. Packers argues that the arbitration agreement therefore requires arbitration of Parra’s individual PAGA claim.

Parra responds that Packers’ interpretation of “current law” is incorrect because the phrase is ambiguous and the ambiguity should be construed against the drafter (i.e. Packers). He also contends Packers’ characterization of his complaint is incorrect.

The Court of Appeal wrote that “An individual PAGA claim is the component of a PAGA claim that seeks civil penalties based on Labor Code violations sustained by the plaintiff. (Adolph v. Uber Technologies, Inc. (2023) 14 Cal.5th 1104, 1119 (Adolph); Gregg v. Uber Technologies, Inc. (2023) 89 Cal.App.5th 786, 792.) A non-individual PAGA claim is the component of a PAGA claim that seeks civil penalties based on Labor Code violations sustained by current and former employees other than the plaintiff. (Adolph, at p. 1119; Gregg, at p. 792.)”

In a part of the Viking River decision that has been characterized as “dicta” the Supreme Court stated that when an individual PAGA claim is compelled to arbitration, the non-individual PAGA claims that remain should be dismissed for lack of statutory standing. In Adolph, the California Supreme Court, which has the last word on interpretation of state law standing, disagreed. The Adolph court held that an employee who has been compelled to arbitrate individual PAGA claims maintains statutory standing to pursue non-individual PAGA claims in court.

Balderas v. Fresh Start Harvesting, Inc. (2024) 101 Cal.App.5th 533, 536 (Balderas) took the implications of Adolph a step further. It explained that under Adolph, there are only two standing requirements, and an individual action seeking PAGA relief is not a standing requirement. And after reviewing Parra’s complaint, the Court of Appeal found that “aspects of the complaint are consistent with Parra’s position that he has not asserted an individual PAGA claim.”

The Court of Appeal affirmed the order on the ground that Parra is not asserting individual PAGA claims in this case, and the trial court therefore could not have erred by failing to compel such claims to arbitration.

The California Insurance Commissioner has expanded emergency insurance protections for Southern California homeowners affected by recent wildfires to include those impacted by the Hughes Fire. The Commissioner’s latest Bulletin includes ZIP Codes for those residents near the Hughes Fire who are now covered under the mandatory one-year moratorium on insurance non-renewals and cancellations, ensuring more wildfire survivors have continued access to coverage.

This moratorium order shields those within the perimeters or adjoining ZIP Codes of the Hughes Fire in Los Angeles County for one year from the Governor’s Executive Order N-14-25 on January 27, 2025. This is in addition to the Commissioner’s moratorium orders in January which protect residents in and adjacent to ZIP Codes of the Palisades, Eaton, Hurst, Lidia, Sunset, and Woodley fires in Los Angeles County, regardless of whether they suffered direct property loss.

With ongoing recovery efforts across the region, the Commissioner said he remains committed to issuing additional supplemental bulletins as necessary to cover more areas in Los Angeles and Ventura counties impacted by wildfires.

Residents can go to the Department of Insurance website to see if their ZIP Code is included in the mandatory moratorium. Consumers should contact the Department of Insurance at 800-927-4357 at insurance.ca.gov if they believe their insurance company is in violation of this law, or have additional claims-related questions.

In addition, given the overwhelming support by local elected leaders and consumers for the residential moratorium law that Commissioner Lara has implemented since 2019 to protect millions of homeowners across the state, Commissioner Lara is sponsoring the Business Insurance Protection Act (SB 547) this year jointly authored by Senator Sasha Renée Pérez and Senator Susan Rubio to expand this law to include commercial policies. This measure will cover businesses, homeowners’ and condominiums associations, affordable housing units and residential developments, and non-profits, among other essential businesses.

Since these wildfires started, the Insurance Commissioner claims to have taken multiple actions to speed recovery and prevent fraud including:

– – Increasing insurance coverage in high-risk areas: Commissioner Lara, as part of his Sustainable Insurance Strategy, issued his Net Cost of Reinsurance in Ratemaking Regulation and Catastrophic Modeling in Ratemaking Regulation which require insurance companies — for the first time — to increase coverage in high-risk areas, ensuring more options for Californians while limiting the costs passed on to consumers. These regulations work hand-in-hand with other reforms that Commissioner Lara has spearheaded that will have the effect of maintaining and increasing insurance coverage options for Californians across the state. Under the regulations, insurance companies using reinsurance costs and/or catastrophic modeling must increase coverage in wildfire-prone regions.
– – Pause on non-renewing and cancelling policies: Commissioner Lara issued a Notice calling on all insurance companies to stop any pending non-renewals or cancellations for any properties located near wildfires, if they are not already protected by the mandatory moratorium. This includes non-renewals issued up to 90 days prior to January 7, but taking effect after the start of the wildfires. This pause on non-renewing and cancelling policies would last six months as impacted communities begin the recovery process. In addition, Commissioner Lara called on insurers to offer beyond the 60-day grace period under existing law for policyholders in the immediate affected wildfire areas, to pay their home insurance premiums given the challenges that many policyholders in these areas are having right now.
– – Insurance support workshops: Commissioner Lara announced two more insurance support workshops on March 8 in Los Angeles and March 15 in Pasadena to help survivors understand their insurance policies and the claims process, while also providing information about available resources for rebuilding and recovery. These workshops are open to all those impacted by the recent wildfires. Call 800-927-4357 to schedule a one-on-one appointment with a Department of Insurance expert.
– – Protecting Access to Medically Necessary Health Care and Medication: Commissioner Lara issued a Notice directing companies to submit emergency plans detailing how they will ensure continued access to medically necessary health care services, including prescription drugs, for the duration of the declared State of Emergency due to the Palisades, Eaton, and other fires.
– – Cracking Down on Fraud: Commissioner Lara sent the Department’s enforcement team to safeguard Angelenos from fraudsters who are targeting wildfire survivors and issued a warning against illegal activities including soliciting by public adjusters for seven days after evacuation orders end.
– – Alerting Residents to Evacuation Benefits: Many consumers are unaware that they may have coverage under their homeowners’ and renters’ insurance policies to help them with evacuation and recovery expenses. Commissioner Lara reminded residents in Los Angeles County who have been ordered to evacuate due to the wildfires that their homeowners’ or renters’ insurance may help with evacuation and relocation costs under Additional Living Expenses coverage, known as ALE. ALE coverage typically includes food and housing costs, furniture rental, relocation and storage, and extra transportation expenses, among other costs. Also, those with uninhabitable homes — even if there is no wildfire damage — could have coverage under ALE.
– – Ensuring no out-of-pocket insurance costs for debris removal: Commissioner Lara worked closely with local, state, and federal leaders to ensure that the program’s costs are not deducted from a policyholder’s primary insurance benefits needed to rebuild. He also issued a Consumer Alert and Notice detailing how the program will interact with insurance — a benefit available to all eligible property owners who choose to participate in the 2025 Los Angeles Wildfires Debris Removal Program.

Kristin Casey began working in 2015 as a real estate agent for D.R. Horton, a national homebuilding company. She agreed to binding arbitration of disputes with her employer. A separate clause in her agreement, titled “Governing Law,” provides in full: “The construction and interpretation of this Agreement shall at all times and in all respects be governed by the laws of the State of California.”

She was a successful agent for D.R. Horton and became one of the company’s top performers. In late 2022 she was assigned to work with Kris Hansen at a remote development site in Fairfield.

Starting on their second day working together, Hansen made a series of unwanted sexual remarks, and Casey felt unsafe and became physically nauseous when she was around Hansen. Casey ultimately went on medical leave because of the strain, and she resigned in September 2023.

Casey filed a lawsuit against D.R. Horton and Hansen. She alleged several causes of action under the Fair Employment and Housing Act based upon sexual harassment.

D.R. Horton filed a motion to compel arbitration, which was joined by Hansen. Casey opposed the motion, relying on the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021 (9 U.S.C. §§ 401–402, EFAA or Act). The trial court granted the motion to compel, reasoning that the EFAA was inapplicable because the parties’ employment agreement specified that California law governed. Casey then filed this petition for a writ of mandate.

The Court of Appeal granted Casey’s petition and directed the trial court to vacate its order granting the motion to compel arbitration in the published case of Casey v. Superior Court -A170650 (February 2025). In doing so, it held that the EFAA preempts attempts under state law to compel arbitration of cases relating to a sexual harassment dispute, and parties cannot contract around the law by way of a choice-of-law provision.

D.R. Horton’s argument is essentially that parties who select state law in their arbitration agreements effectively opt out of the FAA and the EFAA even if their contracts involve interstate commerce.

The Federal Arbitration Act (FAA) and California’s corollary, the California Arbitration Act (Code Civ. Proc., § 12803 et seq., CAA), generally embody a liberal policy in favor of the enforcement of arbitration agreements. The statutes can work in tandem. Thus, where the FAA applies to an arbitration agreement in California, the CAA may provide the procedures to enforce such an agreement if the parties selected California law and the state procedures do not offend policies embodied in the FAA.

But the federal and state schemes differ in one key aspect that controls the resolution of this case: whereas both the FAA and CAA provide exceptions to the enforcement of arbitration agreements when grounds exist for the revocation of any contract (section 2; § 1281), the FAA, unlike the CAA, also excepts agreements “as otherwise provided in [the EFAA]”—i.e., all cases relating to a sexual harassment dispute. (Section 2.)

The EFAA, a relatively new statute enacted in 2022, provides that a “person alleging conduct constituting a sexual harassment dispute” may elect that “no predispute arbitration agreement . . . shall be valid or enforceable with respect to the case which is filed under Federal, Tribal, or State law and relates to the . . . sexual harassment dispute.” (9 U.S.C. § 402(a).).

In general, there are three situations in which state law is preempted, one of which is conflict preemption, where it is impossible to comply with both state and federal requirements, or where state law stands as an obstacle to the accomplishment and execution of the full purpose. The Court of Appeal concluded that “The EFAA’s purpose is plainly obstructed by an attempt to use state law to force a person who is alleging sexual harassment to arbitrate their dispute.”

In August 2002, Michael Ayala was severely injured in a preplanned attack by inmates while at his job as a correctional officer at the Lancaster State Prison

He filed a workers’ compensation claim and alleged that the injury was caused by the serious and willful misconduct of his employer, California Department of Corrections and Rehabilitation (CDCR).

Labor Code section 4553 provides that ‘[t]he amount of compensation otherwise recoverable shall be increased one-half . . . where the employee is injured by reason of serious and willful misconduct” by the employer. Ayala and CDCR agreed that the injury caused Ayala 85 percent permanent disability, but they could not agree whether CDCR engaged in serious and willful misconduct.

A WJC found that CDCR did not engage in serious and willful misconduct. However, on reconsideration, the Workers’ Compensation Appeals Board (the Board) rescinded the decision and reversed, finding that CDCR had engaged in serious and willful misconduct. Over a dissent, a Board majority found that CDCR “failed to act on a credible threat of inmate violence that was specifically reported to be planned for the day of the attack and took the facility off lockdown despite this threat even though it possessed additional information . . . that this had long been planned.”

The Board’s determination established Ayala’s entitlement to an additional 50 percent of “compensation otherwise recoverable” per section 4553. Ayala and CDCR disagreed, however, about what constituted the “amount of compensation otherwise recoverable” under that section.

While he was temporarily totally disabled Ayala was paid his full salary because he was on industrial disability leave and enhanced industrial disability leave. However the WCJ found that the compensation upon which the penalty applies was what Ayala would have been paid in temporary disability. But on reconsideration, the Board again rescinded and reversed the workers’ compensation judge’s decision, this time finding that the base compensation was what Ayala was paid on industrial disability leave and enhanced industrial disability leave.

The Court of Appeal reversed in the published case of Cal. Dept. Corrections & Rehabilitation v. Workers’ Comp. App. Bd. -E079076 (August 2023).

The Court of Appeal concluded that “Compensation,” as the term is used in section 4553, includes only items provided by Division 4 of the Labor Code, but industrial disability leave is provided by the Government Code. Accordingly, the “amount of compensation otherwise recoverable” under section 4553 does not include industrial disability leave.

Ayala petitioned the California Supreme Court for review, supported by the Board as amicus curiae. The Supreme Court granted the petition. However it agreed with and affirmed the Court of Appeal in the case of Dept. of Corrections & Rehabilitation v. Workers’ Comp. Appeals Bd -S282013 (February 2024)

The question in this case is whether, for purposes of calculating the 50 percent premium under Labor Code section 4553, “compensation otherwise recoverable” includes industrial disability leave payments, a benefit that the Government Code makes available to certain public employees in lieu of workers’ compensation disability payments.

The Workers’ Compensation Appeals Board answered yes to this question. The Court of Appeal, however, disagreed, explaining that the board’s conclusion is plainly inconsistent with the statutory definition of “ ‘compensation’ ” as limited to “compensation under” the workers’ compensation law. (Lab. Code, § 3207.)

“We agree with the Court of Appeal and affirm its judgment.” The California Supreme Court went on to say “we are mindful of our obligation to give appropriate deference to the Board’s reasoned interpretations of the statute it administers. We have accordingly given careful consideration to the Board’s position that the section 4553 award should be calculated based on the IDL payments Ayala received.”

“But we cannot give effect to that position because it is contrary to the plain language of the statute. (Larkin, supra, 62 Cal.4th at p. 158.) The Board does not convincingly contend otherwise. Neither its decision in this case nor its amicus curiae submission to this court ever explains how the statutory definition of “compensation” as including only “compensation under” division 4 of the Labor Code can be stretched to cover IDL payments provided by the Government Code.”

“The Board’s position instead relies largely on … cases that did not purport to answer the question now before us, and whose holdings create no conflict with the straightforward reading of the statutory text we adopt today.”

Plaintiffs Michelle Arzate and others filed a class action complaint alleging that ACE American Insurance Company misclassified them as exempt employees and failed to provide them with the benefits required for nonexempt employees under state law, such as overtime pay and meal and rest periods. In an amended complaint, the plaintiffs added claims on an individual and representative basis under the Private Attorneys General Act of 2004.

The trial court granted the defendant’s motion to compel arbitration, but the court’s order did not address who was to commence the arbitration. The court ordered the parties “to submit a joint statement by September 8, 2023, confirming that an arbitrator has been selected and notifying the [c]ourt of the arbitration hearing date and the date of anticipated completion.”

The plaintiffs filed a petition for a writ of mandate challenging the trial court’s order, which was summarily denied on July 19, 2023 (Arzate v. Superior Court, No. B328586), followed by a petition for review in the Supreme Court, which was denied on September 20, 2023 (Arzate v. Superior Court, No. S281211).

On August 25, 2023, while their petition remained pending before the Supreme Court, the plaintiffs filed a motion in the trial court to lift the stay in the case. The plaintiffs argued that ACE was required to initiate the arbitration process, and that by failing to do so within the agreement’s 30-day time period, ACE had waived its right to arbitration.

On February 2, 2024, the trial court agreed with the plaintiffs’ assessment and granted the motion, finding that ACE’s inaction “was inconsistent with its right to arbitrate.”The trial court concluded that the obligation to commence arbitration lay with the defendant, ACE American Insurance Company, which had filed the motion to compel arbitration, rather than with the plaintiffs, a group of ACE employees who had consistently resisted arbitration. In the court’s view, ACE waived its right to arbitrate the dispute by failing to commence the arbitration.

The Court of Appeal disagreed with the trial court and reversed in the published case of Arzate v. ACE American Insurance Company -B336829 (February, 2025).

ACE argues that the trial court erred by finding it breached the arbitration agreements and waived its right to arbitration by failing to initiate arbitration within 30 days of the court’s order compelling arbitration. The Court of Appeal agreed.

The plaintiffs argue that ACE is the only party that “want[ed]” arbitration. ACE filed a motion to compel arbitration, whereas the plaintiffs always preferred to remain in court and resisted arbitration. The plaintiffs conclude that ACE was thus required to submit a demand within 30 days of the court order compelling arbitration. When it failed to do so, it breached the arbitration agreement and waived any right to arbitration.

The arbitration agreements at issue require any person having “employment related legal claims” to “submit them to . . . arbitration.” They also require “A party who wants to start the [a]rbitration [p]rocedure should submit a demand within the time periods required by applicable law.”

The agreements also specified that “In the event an employee demands arbitration, the employee must also send with the demand letter a check or money order for $200 made payable to the [AAA]. The $200.00 sent by the employee will be used to pay a part of the administrative fees charged by the [AAA], the organization that will be providing arbitration services. The remaining fees charged by AAA will be paid by ACE. In the case of a court ordered arbitration, the demand for arbitration must be filed in accordance with these rules and procedures within thirty (30) calendar days from the date of entry of the court order or such other time period as determined by the court.”

“In this case, the language regarding the party that ‘wants’ or ‘demands’ arbitration occurs in the context of an agreement by the plaintiffs, ‘in the event [they] have any employment related legal claims, [that they] will submit them to final and binding neutral third-party arbitration.’ ACE’s arbitration policy, which was incorporated in the arbitration agreements, made the point even clearer, stating that ‘arbitration by a neutral third party is the required and final means for the resolution of any employment-related legal claim not resolved by the internal dispute resolution processes,’ and that the policy ‘prevents both ACE and the employee from going to court over employment-related disputes.’ “

The plaintiffs also claim that ACE, by failing to initiate arbitration, acted unconscionably and “effectively block[ed] every forum for redress including arbitration itself.” However the Court of Appeal noted that “The reason this case has not proceeded in arbitration is that the plaintiffs have thus far declined to pursue it there. We now make clear that it is the plaintiffs who must prosecute their case, including submitting a demand as specified in the arbitration agreements, so that it may proceed.”