Olabi v. Neutron Holdings, Inc.

Filed: 6/19/20 CERTIFIED FOR PUBLICATION

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

FIRST APPELLATE DISTRICT

DIVISION FIVE

YASSIN OLABI, Plaintiff and Respondent, A156990 v. NEUTRON HOLDINGS, INC., (San Francisco City and County Super. Ct. No. CGC-18-569564) Defendant and Appellant.

Yassin Olabi sued Neutron Holdings, Inc. (doing business as Lime) for Labor Code violations under the Private Attorneys General Act of 2004 (PAGA; Lab. Code, § 2698 et seq.)1 and for unfair competition (Bus. & Prof. Code, § 17200 et seq.). Lime filed a petition to compel arbitration. Prior to the hearing, Olabi dismissed the unfair competition claim. The trial court denied the petition. Because the language of the arbitration agreement broadly excludes PAGA actions, we affirm. BACKGROUND A. The Legislature enacted the Private Attorney General Act in September 2003 after determining that law enforcement agencies lacked the resources to enforce adequately California’s labor laws. (Iskanian v. CLS Transportation Los Angeles, LLC (2014) 59 Cal.4th 348, 379.) In a PAGA action, an aggrieved employee—acting as a proxy for state enforcement

1 Undesignated statutory references are to the Labor Code.

1

agencies—may sue an employer on behalf of herself and other aggrieved employees for Labor Code violations. (Id. at p. 381.) When the parties have a preexisting arbitration agreement, California law blocks the employer from enforcing the agreement with respect to representative PAGA claims for civil penalties; however, the agreement may be enforceable with respect to other claims, including claims for victim-specific relief (like unpaid wages). (Id. at pp. 384-389, 391-392; ZB, N.A. v. Superior Court (2019) 8 Cal.5th 175, 198.) B. Lime rents electric bicycles and scooters in metropolitan areas. In August 2018, Olabi entered into an agreement with Lime to locate, recharge, and redeploy its scooters. The agreement contains an “Arbitration Provision” that required Olabi and Lime to arbitrate “any and all disputes between or among them,” including Olabi’s classification as an independent contractor. However, the same section contains an exception for PAGA representative actions: “this Arbitration Provision . . . shall [not] apply to a representative action brought on behalf of others under [PAGA]; any representative action brought under PAGA on behalf of others must be litigated in a court of competent jurisdiction.” C. In the fall of 2018, Olabi filed a complaint alleging Lime intentionally misclassified him and others as independent contractors, resulting in the violation of various Labor Code provisions, such as the right to a minimum wage. (§ 558.) Olabi’s operative first amended complaint included causes of action under the Unfair Competition Law (Bus. & Prof. Code, § 17200 et seq.) and PAGA (§ 2698 et seq.). Olabi brought the PAGA claim on behalf of himself and others.