ORDER RE: STATUS OF PLAINTIFFS' PAGA CLAIM

DEAN D. PREGERSON, District Judge.

Having considered the parties' submissions and heard oral argument, the court adopts the following order to resolve the parties' dispute concerning the status of Plaintiffs' claim under California's Private Attorneys General Act, Cal. Lab. Code § 2699, ("PAGA").

I. BACKGROUND

The court assumes the parties' familiarity with the factual background of this action, which has been recounted in a prior Order. (See Dkt. 49.) As relevant here, Plaintiffs Brandyn Ridgeway and Tim Smith signed an arbitration agreement with their former employer, Defendant Nabors Completion and Production Services ("Nabors"). (Dkt. 28-3.) Subsequently, Plaintiffs brought suit, alleging that Nabors failed to pay prevailing wages for public works and failed to provide accurate wage statements. (See First Am. Compl., Dkt. 21.) Plaintiffs' Complaint contains individual wage-and-hour claims as well as a PAGA claim.1 (Id.)

Defendants filed motions to compel arbitration. (Dkts. 26, 29.) This court concluded that the arbitration agreement was unenforceable due to procedural and substantive unconscionability. (Dkt. 49.) The Ninth Circuit reversed, holding that the agreement was generally enforceable, with the exception of several discovery provisions that were severed. See Ridgeway v. Nabors Completion & Prod. Servs. Co., 725 F. App'x 472, 474 (9th Cir. 2018). The Circuit also invalidated an amendment to the arbitration agreement, which required Plaintiffs to waive their PAGA claim. Id.

The Ninth Circuit directed this court on remand to "consider the limited issue of whether to certify Plaintiffs' PAGA claims" pursuant to Section 4(C) of the arbitration agreement. Id. Section 4(C) reads, in relevant part:

The parties filed a joint status report and supplemental briefing, which state opposing views on how to interpret the Ninth Circuit's order. (Dkts. 99, 106-07.) Plaintiffs contend that this court must enforce Section 4(C) of the arbitration clause by "permit[ting] reasonable discovery as to the representative [PAGA] claim and set[ting] a date for briefing and hearing as to whether the PAGA claim `should proceed on a consolidated, class, collective or other representative basis' and, if so, . . . `define the scope of the class.'" (Dkt. 99 at 4.)

Defendant Nabors, on the other hand, contends that this court should refer all claims, including the PAGA claim, directly to arbitration. (Id. at 7.) If the court were to decline to do so, Nabors requests, in the alternative, that this action be stayed pending the resolution of Plaintiffs' and the putative PAGA class members' individual arbitrations. (Id. at 9.)

II. DISCUSSION

The parties dispute how the action should proceed on remand in light of the Ninth Circuit's order. In particular, they disagree as to (1) whether the district court retains a gatekeeping role with respect to the PAGA claim, and (2) whether the PAGA claim should be stayed.

A. Whether to Enforce Section 4(C) of the Arbitration Agreement

Plaintiffs propose that, consistent with the Ninth Circuit's order and Section 4(C) of the arbitration clause, this court determine the appropriateness and scope of a representative PAGA proceeding. The court agrees.

Defendant Nabors, conversely, argues that this court should not abide by the Case 2:15-cv-03436-DDP-JPR Document 109 Filed 07/23/18 Page 4 of 7 Page ID #:1309 Ninth Circuit's directive because PAGA actions are not certified in the same way as Rule 23 class actions, and so the district court cannot "certify a PAGA class." (Dkt. 99 at 9.) Nabors' position, however is an extremely narrow reading of the Circuit's directive.

Specifically, Nabors argues that representative PAGA claims do not require Rule 23 certification. Yet that does not mean that the district court has no work left to do under Section 4(C). Rather, the district court must determine the appropriateness of a representative PAGA proceeding and, consistent with the terms of Section 4(C), "define the scope of the [PAGA] class" before allowing the arbitrator to decide liability issues. (Dkt. 28-3.) Moreover, it is evident from the Ninth Circuit's order that the instruction to determine "whether to certify a PAGA class," is shorthand for enforcing the terms of Section 4(C). Ridgeway, 725 F. App'x at 474.

Next, Nabors argues that Section 4(C) of the arbitration agreement divests this court of jurisdiction to make any "substantive determinations regarding Plaintiffs' PAGA claims—including those regarding discovery, manageability, or the size and scope of a PAGA `class.'" (Dkt. 106 at 1.) Nabors' reading not only lacks textual support; it is contravened by the language of the agreement itself. Section 4(C) directs this court to "decide whether the Dispute should proceed on a consolidated, class, collective or other representative basis and . . . define the scope of the class." (Dkt. 28-3.) It further states that "[n]one of the foregoing determinations shall be submitted to the arbitrator." (Id.) As a result, Nabors' argument conflicts with the plain language of the agreement and the Ninth Circuit's directive to enforce that agreement.

The court further concludes that the issue of whether the PAGA claim is manageable is relevant to the court's decisionmaking under Section 4(C). Contrary to Nabors' position, the question of manageability is not one of the "questions of liability" exclusively reserved for the arbitrator under Section 4(C). (Dkt. 28-3.) Instead, the issue of manageability is necessary to this court's determination of whether the action "should proceed" as a representative PAGA action, (id.), and properly within the purview of this Case 2:15-cv-03436-DDP-JPR Document 109 Filed 07/23/18 Page 5 of 7 Page ID #:1310 court.

Therefore, in accordance with the Ninth Circuit's order and Section 4(C) of the arbitration agreement, the court will permit the parties to engage in reasonable discovery on the representative PAGA claim in order to discover facts concerning "the size, scope, and manageability" of that claim. (Dkt. 107 at 4.)

B. Whether to Stay the Proceedings

Defendant Nabors has also requested a stay pending the resolution of 93 individual JAMS arbitrations initiated by putative PAGA class members in April 2018. (Dkt. 99 at 3, 6.) Nabors speculates that the individual arbitrations might result in a conclusion that the named plaintiffs, and other putative plaintiffs, have no viable claim. Therefore, Nabors contends that it would conserve resources to stay this action pending the outcome of the 93 individual arbitrations, as well as Plaintiffs' individual arbitrations.

The court finds it would be premature to stay this action because it is unknown whether any of the 93 individuals would fall within the scope of a future PAGA class, or even whether a PAGA class would be approved by this court. Moreover, Nabors has represented that the 93 individual arbitrations are currently subject to a bankruptcy stay. (Dkt. 99 at 10.) In light of these circumstances, the court finds that a stay pending the outcome of the individual arbitrations is unnecessary and likely to cause undue delay.

Nabors cites to a string of cases where district courts have exercised their discretion to stay representative PAGA claims pending the resolution of individual arbitrations. (Dkt. 99 at 9.) See, e.g., Galvan v. Michael Kors USA Holdings, Inc., 2017 WL 253985 (C.D. Cal. Jan. 19, 2017); Alvarez v. AutoZone, Inc., 2015 WL 13427751, at *2 (C.D. Cal. July 8, 2015). In those cases, courts exercised the discretion to stay entire actions when both arbitrable and non-arbitrable claims were at issue. Here, all the claims are arbitrable, and the district court's brief intervention in deciding the scope of the PAGA claim is made in aid of eventual arbitration. As a result, those cases do not squarely apply here. The cases are also distinguishable because they involve situations where a PAGA Case 2:15-cv-03436-DDP-JPR Document 109 Filed 07/23/18 Page 6 of 7 Page ID #:1311 claim was stayed pending the outcome of one individual arbitration, whereas Nabors has requested a stay pending the resolution of at least 93 arbitrations for individuals who may not be part of a future PAGA class.

Finally, Nabors suggests that this action is subject to a bankruptcy stay. (Dkt. 99 at 10.) However, Plaintiffs have presented a copy of the bankruptcy order, in which the bankruptcy court expressly excluded the present litigation from the scope of its stay. The order, issued in February 2017, reads:

As a result, the court is free to proceed apace with the resolution of Plaintiffs' PAGA claim.

However, the court does not agree with Plaintiffs that it must decide the appropriateness and scope of the PAGA class first, before sending Plaintiffs' individual, non-PAGA claims to arbitration. Plaintiffs counter that language in Section 4(C) requires the court to decide the viability and scope of the PAGA claim before sending Plaintiffs' individual, non-PAGA claims to arbitration. This language reads:

Considered in context, this sentence clarifies that individual claims, regardless of the court's decision on the representative claims, will "still" be sent to arbitration. (Id.) The language does not impose a temporal requirement on when the individual claims are sent to arbitration. Because Section 4(C) indicates that all Case 2:15-cv-03436-DDP-JPR Document 109 Filed 07/23/18 Page 7 of 7 Page ID #:1312 individual claims must eventually be arbitrated, the court sees no reason to postpone the arbitration of Plaintiffs' individual, non-PAGA claims.

III. CONCLUSION

For the reasons stated above, the court orders the parties to meet and confer and jointly propose dates for discovery, briefing, and a hearing on the appropriateness and scope of Plaintiffs' representative PAGA claim by Monday, August 6, 2018. In addition, pursuant to Section 4(C) of the arbitration agreement, Plaintiffs' individual, non-PAGA claims are dismissed.

IT IS SO ORDERED.