A recent court ruling has mandated arbitration for an employee's wage and hour claims against his former employer, dismissing his class action and PAGA lawsuit. The complaint was filed by Jorge Sotelo in the Court of Appeal of the State of California, First Appellate District, Division Two, on June 21, 2024, against Performance Contracting Group (PCG).
Jorge Sotelo worked as a union carpenter for Performance Contracting, Inc. (PCI), a subsidiary of PCG, from January 13 to February 25, 2020. During his employment, he agreed through his union to arbitrate any individual wage and hour claims and waived any class action or PAGA claims. On May 4, 2021, Sotelo filed a class action complaint against PCG alleging violations of state wage and hour laws and unfair competition. PCG responded on June 17, 2021, raising arbitration as an affirmative defense.
The case saw multiple procedural developments over the following months. On August 20, 2021, PCG stipulated to Sotelo filing a first amended complaint that included a PAGA claim. This was followed by PCG reiterating its arbitration defense in November 2021. In early 2022, PCG served case management statements indicating its intent to compel arbitration but did not initially check the box for binding private arbitration participation.
On April 18, after the case was designated complex on April 8, PCG sent a letter to Sotelo advising him that his claims were subject to binding arbitration and demanded dismissal of the lawsuit or it would move to compel arbitration. Subsequently, on June 3, PCG filed its motion to compel arbitration and dismiss Sotelo’s class and PAGA claims.
The trial court granted this motion on July 12. It found that PCG had not acted inconsistently with its right to arbitrate despite participating in litigation; there had been no significant invocation of litigation machinery; and the delay in asserting arbitration rights was not unreasonable. The court noted that no cross-complaint had been filed by PCG nor had it taken advantage of judicial discovery procedures unavailable in arbitration.
Sotelo appealed this decision arguing that his former employer waived its right to invoke arbitration due to their actions during litigation. However, the appellate court affirmed the trial court's decision stating substantial evidence supported that PCG consistently asserted its right to arbitrate throughout the process.
In terms of relief sought by Sotelo from the court initially included seeking damages for alleged wage violations under state law along with penalties under PAGA provisions. However, these claims have now been directed towards individual arbitration rather than proceeding as a class action or under PAGA statutes.
The attorneys involved include Judge Mayfield presiding over the case with Stewart and Miller also concurring in the judgment affirmation. The Case ID is A165880.