A recent court decision has reignited a significant legal battle between former employees and their previous employer over alleged labor violations. On September 17, 2024, Marylourdes Hormigas and Joe Castro filed a complaint in the Solano County Superior Court against Apartment Management Consultants, LLC (AMC), challenging the dismissal of their claims under the Private Attorneys General Act (PAGA) and seeking various forms of relief.
The plaintiffs, Hormigas and Castro, accuse AMC of multiple Labor Code violations including unpaid wages, overtime compensation, skipped meal and rest breaks, and improper wage statements. They initially sought civil penalties under PAGA for these violations on behalf of themselves and other affected employees. Additionally, they pursued injunctive relief, restitution, and disgorgement of benefits under California's Unfair Competition Law (UCL). However, AMC moved to dismiss the non-individual PAGA claims after successfully compelling arbitration for the individual claims in a separate action. The trial court agreed with AMC's motion and dismissed the entire case.
Hormigas was hired by AMC as a community manager in December 2018 while Castro joined as a porter in January 2019. Both signed binding arbitration agreements with AMC that included clauses waiving their rights to participate in class or representative actions. Hormigas resigned from her position in September 2019 followed by Castro in February 2021. In June 2020, Hormigas filed her initial complaint which was later amended to include Castro as a co-plaintiff.
The core of the dispute revolves around whether the plaintiffs retained standing to pursue non-individual PAGA claims after their individual claims were sent to arbitration. AMC's argument leaned heavily on the U.S. Supreme Court's decision in Viking River Cruises v. Moriana which suggested that once individual PAGA claims are compelled to arbitration, non-individual claims should be dismissed due to lack of standing.
However, this interpretation was challenged by the California Supreme Court’s ruling in Adolph v. Uber Technologies Inc., which clarified that compelling individual claims to arbitration does not strip plaintiffs of standing to litigate non-individual PAGA claims on behalf of other employees. This pivotal decision directly contradicted the trial court’s rationale for dismissing Hormigas' and Castro’s case.
Upon appeal, it was determined that the trial court erred both procedurally and substantively. Not only did it rely on an unsupported premise that individual claims had been ordered to arbitration without concrete evidence but also failed to address unresolved issues regarding the enforceability of the arbitration agreements themselves.
Plaintiffs seek reversal of the dismissal order along with reinstatement of their non-individual PAGA claims and UCL claim against AMC. They argue that under Adolph’s precedent they maintain standing despite arbitration proceedings for their individual grievances.
The case is represented by attorneys Richman J., Stewart P.J., Miller J., while Judge Richman authored the opinion reversing the trial court’s dismissal order under Case ID A167657.