Successful arbitration can bar additional claims on the grounds of “issue preclusion”
In a win for employers, the California Court of Appeals in Rodriguez v. Lawrence Equipment, Inc. recently found that issue preclusion prevents a litigant from having standing to continue on a Private Attorneys General Act of 2004 (PAGA) claim when previously in arbitration his wage and hour claims failed.
Let’s set the stage. A former employee sued his employer for wage and-hour violations. In addition he sought civil penalties and wages pursuant to PAGA. The trial court ordered arbitration of plaintiff’s wage and hour claims due to the existence of a fully executed arbitration agreement between the parties. The single PAGA cause of action, however, was stayed. Come arbitration, the arbitrator found in favor of the company and against the former employee on the purported wage and hour Labor Code violations.
After the trial court entered judgment on the arbitration award, the former employer brought a motion for judgment on the pleadings claiming that the remaining PAGA cause of action was barred by issue preclusion since the plaintiff’s standing as an aggrieved employee was predicated on the disproven wage and hour violations. The trial court granted the motion and dismissed the former employee’s case. He appealed, contending that the elements of issue preclusion had not been satisfied, but the higher court affirmed the trial court’s decision. The elements of issue preclusion – (1) final adjudication, (2) identical issues, (3) actually litigated and necessarily decided, and (4) asserted against the same party – had in fact been satisfied, said the court.
Lessons learned. Preventing lawsuits in the first place is the ideal scenario. Employers should ensure that their policies and handbooks are up to date and that wage and hour laws are fully conformed to. Dotting your i’s and crossing your t’s is the far better approach than the problem of cleaning up mistakes later. In addition, consider having employees sign arbitration agreements. This case was won because there was an up to date arbitration agreement. Rosasco Law Group can help you decide what is best for your workplace. And in the off chance that litigation is part of your future, call our office to determine whether arbitration is the best course of action for your situation.
