In ZB, N.A. v. Superior Court, the Supreme Court today holds a superior court should not have compelled arbitration of a claim for underpaid wages under the Private Attorneys General Act.  But it does so not because there was anything wrong with the arbitration agreement (see here and Iskanian v. CLS Transportation Los Angeles, LLC (2014) 59 Cal.4th 348), but because the plaintiff’s claim wasn’t valid under PAGA in the first place.

The court’s unanimous opinion by Justice Mariano-Florentino Cuéllar concludes that, although the Labor Commissioner can recover underpaid wages, the recovery “is not a civil penalty that a private citizen has authority to collect through the PAGA.”  The court said it granted review “to resolve the split of authority over whether an employer may compel arbitration of an employee’s PAGA claim requesting unpaid wages,” but its decision today is based on a ground that was raised by Justice Leondra Kruger during oral argument and that prompted a call for supplemental briefing.

The opinion doesn’t mention that the case might be moot.  Last week, counsel for the plaintiff in the underlying case filed with the court a notice of settlement.

The court affirms the decision by the Fourth District, Division One, Court of Appeal, that overturned the arbitration order, although it disagrees with the appellate court’s conclusion that underpaid wages can be recovered under PAGA.  The high court also disapproves 2012 and 2019 opinions by the same division (a petition for review can still be filed in the 2019 case), a 2008 opinion by the First District, Division One, a 2006 opinion by the Fourth District, Division Three, a 2005 opinion by the Second District, Division Seven, and a 2019 opinion by the Second District, Division Two (which is a grant-and-hold for ZB).