LaCour v. Marshalls of CA, LLC

Facts

The agreement. Robert LaCour worked for Marshalls as a Loss Specialist. In March 2014 he signed an arbitration agreement containing paragraph 5, a “Class Action, Collective Action, and Private Attorney General Waiver,” whose opening sentence provides that the parties “agree to bring any dispute in arbitration on an individual basis only and not on a class, collective, or private attorney general representative action basis.” (LaCour v. Marshalls of CA, LLC (2025) 117 Cal.App.5th 505, 508.)

Subparagraph (c) — the provision the appeal turns on — states that “[t]here will be no right or authority for any dispute to be brought, heard or arbitrated as a private attorney general representative action,” that the PAGA waiver “shall be severable from this Agreement in any case in which a civil court of competent jurisdiction finds the [PAGA Waiver] is invalid, unenforceable, revocable, unconscionable, void or voidable,” and that “[i]n such instances and where the claim is brought as a private attorney general claim, such private attorney general claim must be litigated in a civil court of competent jurisdiction.” (LaCour, supra, 117 Cal.App.5th at p. 508.) A concluding proviso applicable to all three lettered subparagraphs adds that the waiver “shall be severable in any case in which the dispute is filed as an individual action and severance is necessary to ensure that the individual action proceeds in arbitration.” (Ibid.)

The complaint. After his termination LaCour sued on behalf of himself, other current and former employees, and the State, pleading a single cause of action under PAGA for a range of wage-and-hour Labor Code violations. The pleading is deliberately aggregate: “The complaint pleads all alleged violations of the Labor Code and all requested relief in the aggregate,” alleging throughout that “[p]laintiff and the aggrieved employees” suffered violations, and it “does not seek separate recovery of penalties attributable to Labor Code violations suffered by LaCour personally, as distinct from violations suffered by others similarly situated.” (LaCour, supra, 117 Cal.App.5th at pp. 508–509.) That pleading posture is what places the case in the “headless PAGA” debate, though the court ultimately decides it on other grounds.

The motion. Marshalls moved to compel arbitration under Viking River Cruises, Inc. v. Moriana (2022) 596 U.S. 639, arguing that the rule of Iskanian v. CLS Transportation Los Angeles, LLC (2014) 59 Cal.4th 348 invalidating wholesale PAGA waivers is preempted by the Federal Arbitration Act to the extent it bars agreed arbitration of the “individual component” of a PAGA claim, and that the severance clause here operated exactly as the one in Viking River did. (LaCour, supra, 117 Cal.App.5th at p. 509.)

Procedural history

The trial court (Hon. Noël Wise) denied the motion to compel, reasoning that “[i]n light of the law that every claim asserted under the PAGA is a claim asserted by the plaintiff as a proxy or agent of the state, there is no such thing as an ‘individual PAGA claim.’” (LaCour, supra, 117 Cal.App.5th at p. 509.) Marshalls appealed from the denial of its motion to compel arbitration of the single-count complaint. (Id. at p. 508.)

A procedural feature of this decision matters for anyone citing it. The Court of Appeal filed an opinion on December 23, 2025, then filed the operative opinion on December 24, 2025, whose face states that the prior opinion is vacated. The superseding document carries the docket designation A170191A, although its caption retains A170191. Practitioners should confirm they are working from the December 24 version. The substitution was not, however, consequential to the result: the First District docket for A170191 shows that no petition for review was filed, no depublication request was made, the opinion was not depublished, and remittitur issued February 24, 2026, closing the case. The decision is final and citable.

The court also decided against a moving backdrop and said so. The opinion notes that Leeper v. Shipt, Inc. (2024) 107 Cal.App.5th 1001, review granted April 16, 2025, S289305, held that every PAGA action necessarily includes an individual component and ordered arbitration of it, and that two later published decisions disagree — Rodriguez v. Packers Sanitation Services LTD., LLC (2025) 109 Cal.App.5th 69, review granted May 14, 2025, S290182, and CRST Expedited, Inc. v. Superior Court (2025) 112 Cal.App.5th 872, review granted September 17, 2025, S292005. (LaCour, supra, 117 Cal.App.5th at p. 519 & fn. 12.) All three grants of review were pending when this opinion issued.

Issue

Whether an arbitration agreement executed in March 2014 — eight years before Viking River introduced the distinction between “individual” and “non-individual” PAGA claims into federal law — should be construed as an agreement to arbitrate the individual component of a PAGA action, such that severance of the invalid PAGA waiver sends that component to arbitration. Framed as the court framed it after setting aside the parties’ competing authorities, the question is whether, “under the governing contract language, LaCour and Marshalls agreed to arbitrate individual PAGA claims.” (LaCour, supra, 117 Cal.App.5th at p. 520.)

Holding

Reasoning

1. The competing readings of paragraph 5. Marshalls read the agreement as a whole. The opening sentence commits the parties to individual-basis arbitration; subparagraph (c) severs an invalid PAGA waiver and routes “private attorney general” claims to court; and the concluding proviso severs the waiver where “severance is necessary to ensure that the individual action proceeds in arbitration.” Read together, Marshalls argued, the parties intended that upon invalidation of the waiver, representative claims go to court while individual claims are arbitrated — in effect, that “the language of the Arbitration Agreement anticipated exactly the result reached in Viking River,” making its severability clause “substantively indistinguishable” from the one there. (LaCour, supra, 117 Cal.App.5th at p. 520.) LaCour read subparagraph (c) as an unqualified waiver of any PAGA claim in any forum, whose severability clause — like the “poison pill” in DeMarinis v. Heritage Bank of Commerce (2023) 98 Cal.App.5th 776 — affirmatively shows the parties never agreed to arbitrate PAGA actions once Iskanian invalidated the waiver. (Id. at p. 520.)

2. The court resolves it on contract law and nothing else. The most consequential move in the opinion is a refusal. Rather than enter the headless-PAGA fray, the court held: “We conclude that LaCour has the better of the argument, and we arrive at that conclusion based on the contract language alone. We see no need to address the parties’ contending positions concerning Leeper, DeMarinis, or any of the other post-Viking River cases they cite.” (LaCour, supra, 117 Cal.App.5th at p. 520.) With three grants of review pending on the headless-PAGA question, that restraint is deliberate and it defines the decision’s precedential reach.

3. Ordinary contract principles, measured at formation. The court applied the standard framework — intent at the time of formation, the contract read as a whole rather than provision by provision, plain meaning where language is clear and explicit — quoting Ford v. The Silver F, Inc. (2025) 110 Cal.App.5th 553, 565–566. (LaCour, supra, 117 Cal.App.5th at p. 520.) It paired that with the FAA’s countervailing limit: ambiguities about scope favor arbitration, but “arbitration is a matter of consent, not coercion,” and “‘[W]e do not override the clear intent of the parties, or reach a result inconsistent with the plain text of the contract, simply because the policy favoring arbitration is implicated.’” (Id. at p. 521, quoting Ford, supra, 110 Cal.App.5th at p. 566.)

4. Anachronism as the dispositive point. Applying that framework to a 2014 document, the court found the Viking River distinction simply unavailable to the drafters: as of the relevant benchmark, “the distinction Viking River drew between ‘individual PAGA claims’ and ‘non-individual PAGA claims’ was, if not unknown to California law, dimly perceived at best.” (LaCour, supra, 117 Cal.App.5th at p. 521.) The court supported that with research rather than assertion, identifying a single pre-2014 authority anywhere — a federal district court decision, Quevedo v. Macy’s, Inc. (C.D.Cal. 2011) 798 F.Supp.2d 1122 — that had ordered a PAGA action split, and noting that the only published California decision to address the argument held the other way. (Ibid., fn. 13.)

From that premise the court drew a drafting inference: “if the contract language was intended to mean what Marshalls now claims it means, we would have expected more clarity.” (LaCour, supra, 117 Cal.App.5th at p. 521.) It then showed precisely what the clause would have had to say — subparagraph (c) referring to a “non-individual private attorney general claim,” and the proviso to “the individual PAGA action” — and observed that “as drafted, the descriptive terms ‘non-individual’ and ‘PAGA’ are omitted.” (Ibid.) The omission is the holding. The court read the proviso’s reference to “individual action[s]” as most likely distinguishing PAGA actions from ordinary individual Labor Code suits, citing Kim v. Reins International California, Inc. (2020) 9 Cal.5th 73, 81. (Id. at p. 522.)

5. Foresight was not required — and would not have helped. The court declined to charge the parties with anticipating the doctrine. “The parties would have had to be clairvoyant to anticipate that, eight years later, the high court would introduce new terminology into the PAGA lexicon as a matter of federal law, giving the Paragraph 5 proviso clarity only in hindsight.” (LaCour, supra, 117 Cal.App.5th at p. 522.) The court was careful about what foresight would even have been directed at: “Although Iskanian was not yet on the books, perhaps an exceptionally astute attorney specializing in the law of arbitration might have foreseen that the Stolt-Nielsen and AT&T Mobility line of cases might one day put in jeopardy any holding from a California court that wholesale PAGA waivers are unenforceable on public policy grounds.” (Ibid.) The premise matters: in March 2014 Iskanian did not yet exist, and what an astute lawyer might have anticipated was a threat to some future California public-policy holding, not to Iskanian in particular. Even so, “it was hardly predictable that the top court would take the path that it did.” (Ibid.) The court was candid about the counterfactual: “To be sure, had Viking River been the law in March 2014, we might have agreed with Marshalls’ proposed interpretation of Paragraph 5. But it wasn’t.” (Id. at p. 522.)

6. A correction to the trial court, without a change in result. The court did not adopt the trial court’s categorical rationale. It acknowledged that from May 2022 forward, the statement that there is “no such thing as an ‘individual PAGA claim’” in California law “may have been stated too broadly.” (LaCour, supra, 117 Cal.App.5th at p. 522.) The affirmance rests on the contract, not on the trial court’s premise — a distinction that matters when the case is cited.

7. The concurrence: Viking River’s provenance questioned. Streeter, J., author of the majority, wrote separately at length. He begins: “I concur in full, of course, but add some additional thoughts of my own. This case turns on garden-variety contract analysis focusing on the mutual intention of the parties in 2014.” (Conc. opn. of Streeter, J., 117 Cal.App.5th at p. 523.) Expressly setting aside the headless-PAGA dispute, he writes “to underscore just how much of a sea change Viking River was, and to identify certain issues that may need to be addressed — some by the high court itself — as we grapple with the fallout from it.” (Id. at p. 523.)

Part I makes a federalism argument. But for Justice Sotomayor’s concurrence, four Justices “appear to have been prepared to order the dismissal of Angie Moriana’s PAGA action without condition or qualification,” a disposition that “would have run contrary to bedrock precedent under Article III of the United States Constitution.” (Conc. opn. of Streeter, J., 117 Cal.App.5th at pp. 523–524.) Invoking Murdock v. City of Memphis (1874) 87 U.S. 590 and Martin v. Hunter’s Lessee (1816) 14 U.S. 304 — which, borrowing a phrase from Henry M. Hart, Jr., The Relations Between State and Federal Law (1954) 54 Colum. L.Rev. 489, 503–504, the concurrence pairs as the “twin pillars” of federal-state relations — he offers a stark dilemma: either the plurality overlooked a fundamental limit on its power, or Part IV of its opinion “constitutes an advisory opinion, which was also beyond their Article III power. [Citation.] It was one or the other.” (Ibid., fn. 2.) He characterizes the result bluntly: “The dismissive approach the high court took to California law in Viking River is a jarring departure from these long-established principles and norms,” noting the oddity of calling PAGA case law “embryonic” given “more than 230 published PAGA opinions” filed in the nearly two decades since enactment. (Id. at p. 524.)

Part III presses the point through Erie. “So far as I can discern,” the concurrence states, the only effort Viking River made “to anchor its ‘individual PAGA claim’ and ‘non-individual PAGA claim’ definitions in federal law” was a footnote citation to Carpenter; but conflict preemption “is a power to negate, not a power to create,” and Carpenter “predates Justice Brandeis’s groundbreaking opinion in Erie R. Co. v. Tompkins (1938) 304 U.S. 64 [82 L.Ed. 1188, 58 S.Ct. 817], which fundamentally and profoundly changed the way federal courts view their authority to displace state law with federal law.” (Conc. opn. of Streeter, J., 117 Cal.App.5th at p. 528.) Part IV borrows David Currie’s phrase “The Devil’s Own Mess” for the resulting doctrinal tangle. (Id. at p. 531.)

The concurrence ends with a concrete proposal, and this is the passage most likely to be cited: because “[t]he primary rights theory is a rule of pleading, and the plaintiff is ‘the master of its own pleadings’” — the inner quotation is from Starview Property, LLC v. Lee (2019) 41 Cal.App.5th 203, 212 — Streeter, J. would hold that “only when a PAGA plaintiff affirmatively pleads that a PAGA cause of action comprises separate ‘individual’ and ‘non-individual’ components does the federal claim splitting rule enunciated in Viking River kick in, along with its special terminology.” Any broader reading — one importing the federal, nonstatutory concept “into every PAGA cause of action” — “raises serious constitutional questions that are best avoided by a narrower interpretation of the holding in that case.” (Conc. opn. of Streeter, J., 117 Cal.App.5th at p. 533.)

Significance

The majority’s contribution is a method, not a rule about PAGA. It holds that the arbitrability of the individual component of a PAGA action is, first and last, a question of what the parties actually agreed to — assessed at formation, with no thumb on the scale from doctrine that postdates the signature. For the very large population of California arbitration agreements executed before May 2022, that is a powerful defense-side problem and a plaintiff-side opportunity: language drafted against the pre-Viking River understanding will rarely contain the vocabulary needed to show an agreement to split a PAGA claim.

Equally important is what the decision withholds. By resolving the appeal “based on the contract language alone” and expressly declining to address Leeper, DeMarinis and the post-Viking River cases (LaCour, supra, 117 Cal.App.5th at p. 520), the court kept out of a conflict now before the Supreme Court in three separate grants of review. LaCour therefore cannot be cited as taking a side on whether a headless PAGA action necessarily contains an individual claim.

The concurrence is the decision’s most striking feature and should be read as what it is — the separate view of one justice, not the holding of the court. Its practical proposal, that Viking River’s claim-splitting rule engages only where the plaintiff affirmatively pleads the two components, offers a pleading-based path through the headless-PAGA problem that a reviewing court may find attractive precisely because it avoids the constitutional questions the concurrence raises.

Two cautions on currency. The opinion is recent and sits in an area where Leeper, Rodriguez and CRST are all under review; the governing law may change. And the operative document is the December 24, 2025 opinion — the December 23 version was vacated on the court’s own motion, with the vacating order recording that “[n]o substantive changes have been made.”

Key quotes

“We conclude that LaCour has the better of the argument, and we arrive at that conclusion based on the contract language alone.” (LaCour v. Marshalls of CA, LLC (2025) 117 Cal.App.5th 505, 520.)

“[T]he fact that that is the case today tells us nothing about whether LaCour and Marshalls actually made such an agreement more than a decade ago. We agree with LaCour that they did not.” (Id. at p. 522.)

“The parties would have had to be clairvoyant to anticipate that, eight years later, the high court would introduce new terminology into the PAGA lexicon as a matter of federal law, giving the Paragraph 5 proviso clarity only in hindsight.” (Id. at p. 522.)

“The dismissive approach the high court took to California law in Viking River is a jarring departure from these long-established principles and norms.” (Conc. opn. of Streeter, J., 117 Cal.App.5th at p. 524.)

Read the full opinion (CourtListener) →

Practice pointer

Open questions

The headless-PAGA conflict. The court declined to reach it, and it is pending. Leeper (review granted Apr. 16, 2025, S289305), Rodriguez v. Packers Sanitation Services (review granted May 14, 2025, S290182) and CRST Expedited (review granted Sept. 17, 2025, S292005) all await disposition. (LaCour, supra, 117 Cal.App.5th at p. 519 & fn. 12.) All three remained pending on the Supreme Court’s docket as of September 3, 2026.

Agreements drafted after Viking River. The holding turns on what was foreseeable in 2014. It says nothing about a post-2022 agreement that does use the Viking River vocabulary, where the anachronism reasoning is unavailable to the employee.

Extrinsic evidence. The court reached its conclusion “based on the contract language alone” (id. at p. 520) and had no occasion to consider whether extrinsic evidence of the parties’ 2014 understanding could alter the analysis.

The concurrence’s pleading rule. Whether Viking River’s claim-splitting rule engages only when a plaintiff affirmatively pleads individual and non-individual components is, for now, the view of a single justice writing separately. (Conc. opn. of Streeter, J., 117 Cal.App.5th at p. 532.)

An internal date reference. The opinion states that LaCour signed in March 2014 (117 Cal.App.5th at p. 508), reasons from “March 2014” at page 522, and returns to it on the same page (“had Viking River been the law in March 2014”), but at page 521 identifies “January 2014” as “the temporal benchmark we must use in ascertaining the parties’ mutual intent.” Three references to March against one to January suggest the latter is a slip; in any event nothing in the analysis appears to turn on the difference.