Plaintiff and Respondent, v. ZARA USA, INC., (B343994)

B343994

California Superior Local Rules

Filed 2/26/26 Gerlach v. Zara USA CA2/2 NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA SECOND APPELLATE DISTRICT DIVISION TWO AUSTIN GERLACH, Plaintiff and Respondent, v. ZARA USA, INC., Defendant and Appellant. B343994 (Los Angeles County Super. Ct.

No. 24STCV20987) APPEAL from an order of the Superior Court of Los Angeles County, Alison Mackenzie, Judge. Affirmed. Sheppard, Mullin, Richter & Hampton, Adam R. Rosenthal, Tyler J. Johnson and Rachel N. Schuster for Defendant and Appellant. Haig B. Kazandjian Lawyers, Haig B. Kazandjian, Cathy Gonzalez, David Van Pelt and Robert D. Wilson III for Plaintiff and Respondent. ______________________________

2 Appellant Zara USA, Inc. (Zara) appeals from the denial of its motion to compel arbitration of a complaint filed by respondent Austin Gerlach (Gerlach) under the Private Attorneys General Act of 2004 (PAGA) (Lab. Code, § 2698 et seq.).1 Zara contends that Gerlach affirmatively alleges individual PAGA claims subject to arbitration; that Gerlach may not avoid arbitration by foregoing his individual PAGA claims; and, in any event, Gerlach is required to arbitrate whether he has standing to pursue any PAGA claim, including nonindividual PAGA claims. We affirm. I. BACKGROUND A.

The Arbitration Agreement Gerlach was employed by Zara as a sales associate from January to July 2023. On January 19, 2023, as part of the hiring process, Gerlach signed an arbitration agreement (Agreement).

The Agreement provides that “Covered Claims” between Zara and Gerlach “must be resolved by binding arbitration and not in court.” Examples of “Covered Claims . . . include claims for wages and other compensation, breach of contract, theft of trade secrets or unfair competition, violation of public policy, wrongful termination; tort claims; claims for unlawful retaliation, discrimination and/or harassment; and claims for violation of any federal, state, or other government law, statute, regulation, or ordinance . . . .” 1 All further statutory references are to the Labor Code unless otherwise indicated.

3 The Agreement requires that Covered Claims “be brought on an individual basis only” and that “[n]either party may submit a multi-plaintiff, class, collective, or representative action for resolution . . . .” “In the event a court determines that this [provision] is unenforceable with respect to any claim, it shall not apply to that claim, and that claim may then only proceed in court as the exclusive forum.” B. Gerlach’s Complaint On August 19, 2024, Gerlach filed a complaint asserting a single cause of action under PAGA against Zara.

The complaint alleges that Zara committed various violations of the Labor Code and that Gerlach “suffered at least one” such violation. Gerlach seeks “representative PAGA penalties, attorneys fees and costs” not on his own behalf but on behalf of “all other aggrieved employees” (uppercase omitted). C. Zara’s Motion to Compel Arbitration Zara moved to compel arbitration of Gerlach’s “individual PAGA claims” and to stay court proceedings on the “representative PAGA claims.” Gerlach opposed the motion. The trial court denied Zara’s motion.

The court observed that Gerlach had “allege[d] only a representative PAGA claim” to recover “civil penalties for Labor Code violations inflicted against other employees[,]” which is not subject to arbitration. The court also concluded that the Agreement did not require arbitration of Gerlach’s standing to bring such a representative PAGA claim. D. Appeal Zara’s appeal from the December 9, 2024 order denying its motion to compel arbitration is timely. (See Code Civ. Proc., § 1294, subd. (a) [authorizing appeal from “[a]n order dismissing or denying a petition to compel arbitration”].)

4 II. DISCUSSION A. Standard of Review “Where, as here, ‘there is no “factual dispute as to the language of [the] agreement” [citation] or “conflicting extrinsic evidence” regarding the terms of the contract [citation], our standard of review of a trial court order granting or denying a motion to compel arbitration . . . is de novo.’ [Citation.]” (Rice v. Downs (2016) 248 Cal.App.4th 175, 185.) We review questions of statutory

interpretation, as well as the scope of the parties’ arbitration agreement, de novo. (Adolph v. Uber Technologies, Inc. (2023) 14 Cal.5th 1104, 1120 (Adolph) [statutory

interpretation]; Ahern v. Asset Management Consultants, Inc. (2022) 74 Cal.App.5th 675, 687 (Ahern) [interpretation of arbitration agreement].) B. PAGA, Generally PAGA was enacted “in response to widespread violations of the Labor Code and significant underenforcement of those laws. [Citations.]” (Adolph, supra, 14 Cal.5th at p. 1116.) It is intended “to augment the limited enforcement capability of the [Labor and Workforce Development] Agency [(LWDA)] by empowering employees to enforce the Labor Code as representatives of the Agency.” (Iskanian v.

CLS Transportation Los Angeles, LLC (2014) 59 Cal.4th 348, 383 (Iskanian), abrogated on other grounds by Viking River Cruises, Inc. v. Moriana (2022) 596 U.S. 639 (Viking River).) The version of PAGA that controls here was in effect from mid-2016 to mid-2024. 2 It states that any provision of the Labor 2 “[E]xtensive amendments to the PAGA statutes” were enacted effective July 1, 2024. (Stone v. Alameda Health System

5 Code “that provides for a civil penalty to be assessed and collected by the [LWDA] . . . for a violation of [the Labor Code], may, as an alternative, be recovered through a civil action brought by an aggrieved employee on behalf of himself or herself and other current or former employees pursuant to the procedures specified in

Section 2699.3.” (§ 2699, former subd. (a).) “To have standing to bring a PAGA action, a plaintiff must be an ‘aggrieved employee,’ which the statute defines as ‘any person who was employed by the alleged violator and against whom one or more of the alleged violations was committed.’ (§ 2699, [former] subd. (c).)” (Adolph, supra, 14 Cal.5th at p. 1116.) The named plaintiff in a PAGA action “acts ‘“as the proxy or agent”’ of the state. [Citations.]” (Adolph, supra, 14 Cal.5th at p. 1116.) “Thus, ‘[e]very PAGA claim is “a dispute between an employer and the state,” [citations]’ and ‘[r]elief under PAGA is designed primarily to benefit the general public, not the party bringing the action. [Citations.]’ [Citation.]” (Seifu v.

Lyft, Inc. (2023) 89 Cal.App.5th 1129, 1137; see also Adolph, supra, at p. 1117 [“A PAGA claim for civil penalties ‘“‘is fundamentally a law enforcement action[]’”’”].) (2024) 16 Cal.5th 1040, 1075, fn. 18.) These amendments do not apply here, where Gerlach’s PAGA notice was filed before June 19, 2024. (See § 2699, subd. (v)(2) [the 2024 amendments to PAGA “shall not apply to a civil action with respect to which the notice required by”

section 2699.3 “was filed before June 19, 2024”].) Our analysis and conclusions are based on the pre- amendment version of PAGA only, and “we express no opinion on operation of the newly amended provisions.” (Stone, supra, at p. 1075, fn. 18.)

6 As used in this opinion, the term “individual PAGA claim” refers to “the component of a PAGA claim that seeks civil penalties based on Labor Code violations sustained by the plaintiff. [Citations.]” (Rodriguez v.

Packers Sanitation Services LTD., LLC (2025) 109 Cal.App.5th 69, 75, review granted May 14, 2025, S290182 (Rodriguez).) The term “nonindividual PAGA claim” refers to “the component of a PAGA claim that seeks civil penalties based on Labor Code violations sustained by current and former employees other than the plaintiff. [Citations.]” (Ibid.) Such a claim may also be referred to as a representative PAGA claim. (Ibid.) Agreements to arbitrate individual PAGA claims are enforceable for agreements covered by the Federal Arbitration Act (FAA) (9 U.S.C. § 1 et seq.). 3 (Adolph, supra, at p. 1119.) But agreements to waive nonindividual PAGA claims or to “categorical[ly] waive[] . . . the right to bring a PAGA action” violate public policy and are unenforceable. (Adolph, supra, 14 Cal.5th at pp. 1117–1118.) C.

Gerlach Does Not Allege Individual PAGA Claims Zara argues that Gerlach’s complaint affirmatively asserts individual PAGA claims subject to arbitration. We disagree.

The complaint “appears to have been drafted with the goal of carving out the claims’ individual components.” (Rodriguez, supra, 109 Cal.App.5th at p. 77, review granted.) It refers to Gerlach as the “representative plaintiff” (uppercase omitted) and expressly disavows seeking “any redress or remedy for any of his individual claims including but not limited to his individual PAGA claims.” Gerlach repeats this disavowal throughout the 3 There is no dispute that the Agreement at issue in this case is covered by the FAA.

7 pleading, stating that “[t]he only recovery [he] seeks in this case are for representative PAGA penalties, attorneys fees and costs”; that he “brings claims on behalf of the [aggrieved employees] only and does not seek recovery for any individual PAGA claims”; and that he “seeks representative PAGA penalties on behalf of [aggrieved employees] only.” Although Gerlach alleges that he “suffered at least one [L]abor [C]ode violation as a result of [Zara’s] policies and practices,” in context this allegation seeks to establish Gerlach’s standing as an aggrieved employee to pursue nonindividual PAGA claims and does not itself assert an individual PAGA claim. (See Adolph, supra, 14 Cal.5th at p. 1114 [“To have PAGA standing, a plaintiff must be an ‘aggrieved employee’—that is, (1) ‘someone “who was employed by the alleged violator”’ and (2) ‘“against whom one or more of the alleged violations was committed[]”’”]; Rodriguez, supra, 109 Cal.App.5th at pp. 76–77, review granted [a plaintiff “is required to allege that he is an aggrieved employee in order to meet the standing requirements for PAGA non-individual claims”]; see also Schifando v.

City of Los Angeles (2003) 31 Cal.4th 1074, 1081 [complaints are to be “read . . . in context”].) We are persuaded that Gerlach does not assert any individual PAGA claim “seek[ing] civil penalties based on Labor Code violations sustained by” him. (Rodriguez, supra, 109 Cal.App.5th at p. 75, review granted.) Rather, he only alleges nonindividual or representative PAGA claims “that seek[] civil penalties based on Labor Code violations sustained by current and former employees other than” him. (Ibid., italics added.)

8 Because Gerlach “is not asserting individual PAGA claims in this case, . . . the trial court therefore could not have erred by failing to compel such claims to arbitration.” (Rodriguez, supra, 109 Cal.App.5th at p. 75, review granted; see also id. at p. 80 [“If the plaintiff’s complaint asserts no individual PAGA claim, there is no existing dispute over his or her right to obtain an individual PAGA remedy, and he or she cannot properly be ordered to arbitrate such a claim”].) D.

Gerlach Is Not Required to Allege, Nor Has He Necessarily Alleged, Individual PAGA Claims Zara next contends that Gerlach may not avoid arbitration by forfeiting his individual PAGA claims, because a PAGA action necessarily includes both individual and nonindividual PAGA claims. 4 Appellate courts are divided on whether PAGA allows an aggrieved employee to bring a lawsuit seeking civil penalties for 4 In Rodriguez, supra, 109 Cal.App.5th 69, review granted, the court identified “[t]he relevant question” in reviewing the denial of a motion to compel arbitration to be whether the “complaint does assert an individual PAGA claim, not whether it should include such a claim.” (Id. at p. 81.) Having concluded that the plaintiff’s complaint did not assert an individual PAGA claim, the Rodriguez court deemed “the parties’ dispute over the propriety of bringing a PAGA action that asserts only non- individual PAGA claims . . . not ripe for . . . consideration.” (Ibid.) The court noted that the defendant “ha[d] not argued that [the plaintiff]’s failure to assert an individual PAGA claim ma[de] his complaint deficiently pled.” (Id. at p. 78, fn. 4.) Here, we must address the issue because Zara requests, as an alternative to reversal, that we direct the trial court on remand to strike Gerlach’s complaint “due to its facial deficiency.”

9 Labor Code violations sustained only by other employees.5 (Compare Leeper v. Shipt, Inc. (2024) 107 Cal.App.5th 1001, 1005, review granted April 16, 2025, S289305 (Leeper) [“every PAGA action necessarily includes an individual PAGA claim”] and Williams v. Alacrity Solutions Group, LLC (2025) 110 Cal.App.5th 932, 943, review granted July 9, 2025, S291199 [agreeing with Leeper that “the inclusion of an individual PAGA claim [is] mandated by PAGA’s text”], with CRST Expedited, Inc. v.

Superior Court (2025) 112 Cal.App.5th 872, 883, review granted Sept. 17, 2025, S292005 (CRST Expedited) [holding, under the prior version of PAGA, that a plaintiff may bring a PAGA action asserting individual PAGA claims, nonindividual PAGA claims, or both]; Galarsa v. Dolgen California, LLC (2025) 115 Cal.App.5th 1, 4, 15, review granted Dec. 17, 2025, S293545 (Galarsa) [confirming CRST Expedited’s

interpretation of § 2699, former subd. (a), to permit headless PAGA actions]; Rodriguez, supra, 109 Cal.App.5th at p. 81, fn. 5, review granted [questioning, in dicta, Leeper’s

interpretation of and as conjunctive]; Balderas v. Fresh Start Harvesting, Inc. (2024) 101 Cal.App.5th 533, 536 [holding “that an employee who does not bring an individual claim against her employer may nevertheless bring a PAGA action for herself and other employees of the company”].) The issue is now pending before the California Supreme Court. (See Galarsa, supra, at p. 4, fn. 2; McDoniel v. Kavry Management, LLC (2025) 114 Cal.App.5th 949, 980, fn. 22.) 5 An action purporting to assert only nonindividual PAGA claims is sometimes called a “‘headless’ PAGA action.” (LaCour v. Marshalls of CA, LLC (2025) 117 Cal.App.5th 505, 519, fn. 12 (LaCour).)

10 Relevant to our resolution of this appeal, the split of authority concerns the meaning of “and” as used in

section 2699, subdivision (a)’s provision that a PAGA action may be “brought by an aggrieved employee on behalf of [the PAGA plaintiff] and other current or former employees” (italics added).6 Zara urges us to follow Leeper, which held that “based on the unambiguous language in

section 2699, subdivision (a),[7] any PAGA action necessarily includes both an individual PAGA claim and a representative PAGA claim.” (Leeper, supra, 107 Cal.App.5th at p. 1009, review granted.) The court reasoned that “[t]he unambiguous and ordinary meaning of the word ‘and’ is conjunctive, not disjunctive.

Thus, the clause ‘on behalf of the employee and other current or former employees’ [citation] means that the action described has both an individual claim component (plaintiff’s action on behalf of the plaintiff himself or herself) and a representative component (plaintiff’s action on behalf of other aggrieved employees).” (Ibid.) The court in CRST Expedited disagreed with Leeper’s holding—at least to the extent that it applies to the prior version 6 The relevant statutory language in the applicable version of

section 2699 provides that a PAGA action may be “brought by an aggrieved employee on behalf of himself or herself and other current or former employees pursuant to the procedures specified in

Section 2699.3.” (§ 2699, former subd. (a).) The current version of the statute provides that a PAGA action may be “brought by an aggrieved employee on behalf of the employee and other current or former employees against whom a violation of the same provision was committed pursuant to the procedures specified in

Section 2699.3.” (§ 2699, subd. (a).) 7 Leeper discussed the language used in the current version of

section 2699, subdivision (a).

11 of

section 2699. (See CRST Expedited, supra, 112 Cal.App.5th at p. 897, review granted [“this opinion does not decide whether a headless PAGA action can be brought under the version of PAGA that has been in effect since July 1, 2024”].) The CRST Expedited court conducted a thorough analysis of

section 2699, former subdivision (a)’s phrase “‘on behalf of himself or herself and other current or former employees’ in a sentence that uses the permissive verb ‘may.’ [Citation.]” (CRST Expedited, supra, 112 Cal.App.5th at p. 883, review granted.) The court “recognize[d] that and usually, but not always, is interpreted as a conjunctive that means ‘also’ or ‘an additional thing.’ [Citation.] In exceptional situations, however, it is sometimes ‘“fair and rational”’ to construe and disjunctively. [Citation.]” (Ibid.) The court found those “exceptional circumstances” present given that “PAGA is not an ordinary statute, the problems it attempts to remedy are unusual, and Viking River[, supra, 596 U.S. 639] drastically altered the legal landscape in which PAGA is applied.” (CRST Expedited, supra, at p. 883.) The CRST Expedited court concluded, “[f]irst, the and in former subdivision (

a) of

section 2699 is ambiguous. Second, PAGA’s purpose of encouraging enforcement of California’s labor laws is best served by interpreting the ambiguous and liberally to include both and and or.” (CRST Expedited, supra, 112 Cal.App.5th at p. 883, review granted.) Accordingly, a PAGA plaintiff is permitted to “bring a PAGA action seeking the recovery of civil penalties (1) for the Labor Code violations suffered only by the employee, (2) for the Labor Code violations suffered only by other employees, or (3) both.” (Ibid.)

12 We are unpersuaded by Zara’s critiques of CRST Expedited. Zara contends that CRST Expedited’s

interpretation of

section 2699, former subdivision (a) “conflicts with numerous pre-Viking River cases.” Any such conflict is irrelevant because CRST Expedited’s statutory

interpretation is dependent on the significant changes to the legal landscape effected by Viking River. (See CRST Expedited, supra, 112 Cal.App.5th at pp. 889– 890, 906–907, review granted; see also Galarsa, supra, 115 Cal.App.5th at pp. 4–5, review granted [“the significant change in the legal landscape caused by Viking River . . . must be considered, rather than ignored, when deciding (1) whether PAGA[’s] text[] [is] ambiguous and (2) what

interpretation best promotes PAGA’s purposes”].) In Viking River, the United States Supreme Court held that the FAA preempts the holding of Iskanian, supra, 59 Cal.4th 348 “insofar as it precludes division of PAGA actions into individual and non-individual claims through an agreement to arbitrate.” (Viking River, supra, 596 U.S. at p. 662.) Prior to Viking River, “no California court had ever intimated there are two constituent pieces to a PAGA action— an individual piece and a non-individual piece.” (LaCour, supra, 117 Cal.App.5th at p. 522.) It was after Viking River that plaintiffs began to file headless PAGA actions to avoid arbitrating individual PAGA claims. (See LaCour, supra, at p. 519, fn. 12; CRST Expedited, supra, at pp. 882–883.) Nor do we agree that CRST Expedited conflicts with statements of legislative intent. (See Galarsa, supra, 115 Cal.App.5th at pp. 12–13, review granted [concluding that a 2003 drafting change of or to and in PAGA “does not unambiguously demonstrate an intent to use and in a strictly conjunctive sense”].)

13 Finding CRST Expedited’s analytical approach and conclusions persuasive, we will follow it. Under

section 2699, former subdivision (a), Gerlach was not required to allege, nor did he allege, an individual PAGA claim subject to arbitration. E. Gerlach Is Not Required to Arbitrate His Standing Zara argues that, even if Gerlach is permitted to bring only nonindividual PAGA claims, he must still arbitrate whether he has standing to bring those claims.

Assuming, without deciding, that nonindividual PAGA standing may be arbitrable in some cases, we conclude that the Agreement does not encompass the issue. (See Ahern, supra, 74 Cal.App.5th at p. 687 [“whether the parties’ dispute falls within the scope of [an arbitration] agreement” is a “threshold question[] presented by every motion or petition to compel arbitration”].) Because “arbitration is a matter of consent[,] . . . ‘a party can be forced to arbitrate only those issues it specifically has agreed to submit to arbitration[]’ [citation].

This means that parties cannot be coerced into arbitrating a claim, issue, or dispute ‘absent an affirmative “contractual basis for concluding that the party agreed to do so.”’ [Citations.]” (Viking River, supra, 596 U.S. at p. 660.) “‘In determining the scope of an arbitration clause, “[t]he court should attempt to give effect to the parties’ intentions, in light of the usual and ordinary meaning of the contractual language and the circumstances under which the agreement was made.”’ [Citations.]” (Ahern, supra, 74 Cal.App.5th at pp. 687–688.)

Section 5 of the Agreement provides that claims “must be brought on an individual basis only, and arbitration on an individual basis is the exclusive remedy.” The Agreement further provides that “in the event a court determines that . . .

Section 5

14 is unenforceable with respect to any claim, it shall not apply to that claim, and that claim may then only proceed in court as the exclusive forum. Should such a claim be initiated in the arbitral forum, the arbitrator shall summarily reject it as beyond the scope of this Agreement.” There is no dispute that

Section 5 of the Agreement may not be enforced to require arbitration of Gerlach’s nonindividual PAGA claims. (See Iskanian, supra, 59 Cal.4th at p. 384 [“where . . . an employment agreement compels the waiver of representative claims under the PAGA, it is contrary to public policy and unenforceable as a matter of state law”], abrogated on other grounds by Viking River, supra, 596 U.S. 639.) Thus, those claims may only proceed in court. “We fail to see how an agreement that excludes [nonindividual] representative claims can nonetheless be reasonably interpreted to require [Gerlach] to arbitrate [his] standing to bring a [nonindividual] representative claim.” (Perez v.

U-Haul Co. of California (2016) 3 Cal.App.5th 408, 420.) Nothing in the Agreement suggests that was the parties’ intention. Accordingly, the trial court properly denied Zara’s motion to compel arbitration as to the standing issue. F. All Other Issues Are Moot Our conclusions render moot the parties’ other arguments, including whether the Agreement, as a whole, is unconscionable and whether the trial court should have stayed litigation of Gerlach’s nonindividual PAGA claims.

15 III. DISPOSITION The December 9, 2024 order denying the motion to compel arbitration is affirmed. Gerlach is entitled to his costs on appeal. NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS. SIGGINS, J. * We concur: CHAVEZ, Acting P. J. RICHARDSON, J. * Retired Presiding Justice of the Court of Appeal, First Appellate District, assigned by the Chief Justice pursuant to

article VI,

section 6 of the California Constitution.

Document details

Collection	California Superior Local Rules
Citation	B343994
Type	court_rule
Language	en
Format	pdf
Source	CA_LOCAL
Identifier	07cddea9af431519024d712c254782ac51400528

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