Westmoreland v. Kindercare Education LLC

Facts

Rochelle Westmoreland was a director for Kindercare from April 2016 to January 2019. When hired, she electronically signed a “Mutual Arbitration Agreement Regarding Wages and Hours,” governed by the FAA, requiring arbitration of “covered claims” (wage-and-hour claims) and excluding “‘claims alleging discrimination, harassment, or retaliation’” and “‘any claims … that cannot be required to be arbitrated as a matter of law.’” (Westmoreland v. Kindercare Education LLC (2023) 90 Cal.App.5th 967, 970–971.)

Two clauses drove the case. A “Waiver of Class and Collective Claims” provided that covered claims “‘will be arbitrated only on an individual basis’” and that the parties “‘waive the right to participate in … any class, collective, or representative proceeding.’” (Westmoreland, supra, 90 Cal.App.5th at p. 971.) And a “Savings Clause & Conformity Clause” — which Westmoreland called a “poison pill” — provided that ordinarily an unenforceable provision would be severed and “‘the remainder of the agreement shall not be affected,’” but “‘[p]rovided, however, that if the Waiver of Class and Collective Claims is found to be unenforceable, then this agreement is invalid and any claim brought on a class, collective, or representative action basis must be filed in a court of competent jurisdiction, and such court shall be the exclusive forum for such claims.’” (Id. at pp. 971–972.)

After her termination, Westmoreland sued, alleging Kindercare paid final wages by a fee-laden electronic paycard in violation of Labor Code sections 201 through 203 — pleaded individually and as a class action — and asserting a PAGA claim. (Westmoreland, supra, 90 Cal.App.5th at p. 972.)

Procedural history

Kindercare originally moved to compel Westmoreland’s individual non-PAGA claims and to stay her PAGA claim; the trial court granted the motion in January 2020. (Westmoreland v. Kindercare Education LLC (2023) 90 Cal.App.5th 967, 972.) On Westmoreland’s petition, the Court of Appeal issued an alternative writ of mandate directing denial of the motion, citing Securitas Security Services USA, Inc. v. Superior Court (2015) 234 Cal.App.4th 1109: although “‘the superior court correctly concluded the PAGA waiver is unenforceable, it erred by severing the unenforceable PAGA waiver from the remainder,’” and any ambiguity in the poison pill should be “‘resolved against’” Kindercare as drafter, so that “‘the unenforceable PAGA waiver is not severable … and, therefore, renders the entire agreement unenforceable.’” (Id. at pp. 972–973.) The trial court complied, and the California and United States Supreme Courts denied review and certiorari. (Id. at p. 973.)

Kindercare then filed a renewed motion to compel, arguing that “new law” — Western Bagel Co., Inc. v. Superior Court (2021) 66 Cal.App.5th 649, and later Viking River Cruises, Inc. v. Moriana (2022) 596 U.S. 639 — required compelling at least part of the case. (Westmoreland, supra, 90 Cal.App.5th at pp. 970–971.) The trial court denied it, and Kindercare appealed. Although an order denying a renewed motion is not appealable, the court exercised its discretion to treat the appeal as a writ petition to reach the merits. (Id. at p. 970.)

Issue

Whether, after Viking River, an employer may compel arbitration of an employee’s individual (non-representative) claims where the arbitration agreement contains a “poison pill” providing that the agreement “is invalid” if its class/representative-action waiver is unenforceable — and where a wholesale waiver of representative PAGA claims is, in fact, unenforceable. (Westmoreland v. Kindercare Education LLC (2023) 90 Cal.App.5th 967, 970–971, 979–982.)

Holding

Reasoning

Read the agreement for the parties’ intent. The court applied the ordinary rule that an arbitration agreement is construed to “give effect to the intent of the parties expressed in the language and structure” of the agreement itself. (Westmoreland v. Kindercare Education LLC (2023) 90 Cal.App.5th 967, 979, citing Lamps Plus, Inc. v. Varela (2019) 587 U.S. 176.) The poison pill was “an unambiguous expression of the parties’ intent to avoid parallel litigation before an arbitrator and before a court.” (Ibid.)

Four claims, and the one the waiver could not touch. Westmoreland’s complaint contained “four analytically distinct claims”: individual Labor Code claims, class Labor Code claims, an “individual” PAGA claim, and a “representative” PAGA claim on behalf of other aggrieved employees. (Westmoreland, supra, 90 Cal.App.5th at pp. 979–980.) Absent the poison pill, Kindercare “could have compelled arbitration of Westmoreland’s non-PAGA claims,” “waive[d] class claims” under Concepcion, and (post-Viking River) compelled the individual PAGA claim. (Id. at p. 980.) But the class/representative waiver also purported to bar the fourth category — the representative PAGA claim — putting that clause “‘in conflict with a mandatory provision of applicable law,’” which triggered the poison pill. (Ibid.)

No ambiguity — the 2016 waiver could only fail as to PAGA. The court departed from the trial court’s view that the poison pill was ambiguous about whether the “entire waiver” or some portion had to be unenforceable to void the agreement. (Westmoreland, supra, 90 Cal.App.5th at pp. 980–981.) When the agreement was signed in 2016, class-action waivers were enforceable after AT&T Mobility LLC v. Concepcion (2011) 563 U.S. 333, so “the most significant open question concerning … a ‘waiver of representative claims’ concerned claims under PAGA” — specifically Iskanian’s rule that PAGA claims could not be waived. (Id. at p. 981.) The poison pill was therefore “unambiguous”: “[s]o long as the waiver of PAGA claims is unenforceable, then the agreement ‘is invalid.’” (Ibid.) There was no need to resort to dueling construction presumptions (contra proferentem versus Lamps Plus). (Ibid.)

Viking River confirms — and the contrast is the point. While the appeal was pending, Viking River held that the FAA did not preempt Iskanian’s bar on waiving the representative PAGA claim, but did preempt Iskanian insofar as it barred dividing a PAGA action into individual and representative components. (Westmoreland, supra, 90 Cal.App.5th at pp. 981–982.) Critically, the Viking River agreement contained a “‘severability clause’” under which “‘any “portion” of the waiver that remained valid would be “enforced in arbitration,”’” which is why the defendant there could compel the individual claim even though the waiver was invalid as to the representative claim. (Id. at pp. 981–982.) “Had Kindercare simply included a waiver of representative claims … and not included the poison pill …, the result here could have been substantially similar to that in Viking River,” and to the post-Viking River cases (Tesla, Piplack, Galarsa) that divided PAGA claims. (Ibid.) But Kindercare’s poison pill did the opposite — it “effectively prevents us from sending Westmoreland’s ‘individual’ claims … to arbitration, while allowing litigation in court of her ‘representative’ claims.” (Ibid.)

The drafter is held to its choice. The provision “‘presents an all-or-nothing proposition’” and “leaves no room for Kindercare to choose to bifurcate Westmoreland’s claims between arbitration and court; it instead invalidates the agreement.” (Westmoreland, supra, 90 Cal.App.5th at p. 982, quoting Securitas, supra, 234 Cal.App.4th at p. 1126.) Kindercare had used the poison pill “to prevent litigation on parallel tracks if it ever became clear that even one of Westmoreland’s potential class or representative claims could not be waived” — and that risk having materialized, “[a]s a consequence of Kindercare’s drafting decisions,” the whole agreement fell. (Ibid.)

Significance

Westmoreland is the canonical California authority on the arbitration “poison pill,” and it is frequently cited in PAGA-arbitration briefing for a simple, powerful proposition: an employer that drafts a non-severability clause tying the life of the whole agreement to the enforceability of its class/representative-action waiver can lose the entire agreement — including its right to arbitrate the employee’s individual claims — once Viking River and Iskanian render the representative-PAGA waiver unenforceable. The decision turns the employer’s anti-bifurcation strategy against it: the very clause meant to prevent parallel-track litigation instead forces all claims into a single forum, and that forum is court. Because so many pre-2022 employment agreements contain some version of this clause, Westmoreland gives plaintiffs a clean, textual route to defeat arbitration altogether rather than merely carving out the representative PAGA claim.

The holding is narrow in the way that matters: it is a decision about this contract’s language, not a rule that all PAGA-waiver agreements are void. The court was explicit that, absent the poison pill, Viking River would have permitted Kindercare to compel the individual claims while the representative PAGA claim proceeded in court — the ordinary post-Viking River split later reinforced by Adolph v. Uber Technologies, Inc. (2023) 14 Cal.5th 1104, which confirmed the employee retains standing to litigate the representative claim. The lesson cuts both ways: for employees, comb the agreement for non-severability or “blow-up” language keyed to the class/representative waiver; for employers, a poison pill drafted before Viking River is now a liability, not a shield.

The mechanics reward a close look, because the poison pill operated claim by claim, and only one of the four claims was beyond the employer’s reach. Absent the poison pill, Westmoreland’s individual Labor Code claims could have been compelled to individual arbitration; her class Labor Code claims could have been waived under Concepcion; and, after Viking River, her “individual” PAGA claim could have been compelled as well. Only the fourth category — the “representative” PAGA claim brought on behalf of other aggrieved employees — was one a wholesale predispute waiver could not touch under Iskanian, and it was that single unwaivable claim that tripped the non-severability clause. (Westmoreland, supra, 90 Cal.App.5th at pp. 979–980.) The contrast with Viking River therefore turns on one drafting choice. The Viking River agreement carried an ordinary severability clause preserving any valid portion of the waiver for arbitration, so the invalid representative-claim waiver simply fell away and the employer kept its right to arbitrate the individual claim; Kindercare’s clause did the reverse, declaring the entire agreement invalid the instant any part of the class or representative waiver failed. That single difference — a preserve-the-valid-remainder clause versus an all-or-nothing “blow-up” clause — is what flipped the outcome from a bifurcated arbitration into a wholesale return to court. The court even acknowledged the irony that the agreement’s own “language and structure … necessitates a result similar to the ‘claim joinder’ rule in PAGA that Viking River deemed problematic when imposed by state law.” (Id. at p. 982.) The decisive distinction is that here the joinder-like result flows from the parties’ own contract rather than from state fiat, so it raises no preemption problem: enforcing an employer’s chosen language under generally applicable principles of contract construction falls within the FAA’s savings clause (9 U.S.C. § 2) rather than running afoul of it, honoring — not disfavoring — the agreement the parties actually wrote.

The doctrine did not spring from nowhere, and it has only hardened since. Westmoreland’s writ-stage analysis drew on Securitas Security Services USA, Inc. v. Superior Court (2015) 234 Cal.App.4th 1109, which held that an unenforceable representative-action waiver, coupled with a non-severability clause, renders the entire arbitration agreement unenforceable, and that any ambiguity in such a clause is construed against the drafting employer. (Westmoreland, supra, 90 Cal.App.5th at pp. 972–973, 982.) After Viking River, a published First District decision — DeMarinis v. Heritage Bank of Commerce (2024) 98 Cal.App.5th 776 — reached the same result on materially identical facts and expressly followed Westmoreland, reasoning that where the agreement forbids severance “in whole or in part,” the unenforceability of the representative-PAGA waiver voids the entire agreement rather than merely carving out the representative claim. The Securitas–Westmoreland–DeMarinis line confirms that the poison-pill argument is not a one-off: it is a recognized, repeatable route to keep an employee’s individual claims in court whenever the agreement ties the survival of the whole to the validity of its class or representative waiver. That a later, on-point published decision treats Westmoreland as authority — following, not questioning, its holding — indicates the decision remains good law; as always, confirm its current status with a citator before relying on it.

The interplay with Adolph v. Uber Technologies, Inc. (2023) 14 Cal.5th 1104 sharpens why the poison pill matters. In the ordinary post-Viking River case, an employer with a clean severability clause compels the individual PAGA claim to arbitration while the representative claim waits in court, and Adolph guarantees the employee retains standing to litigate that representative claim once the individual arbitration concludes. The poison pill short-circuits that entire sequence: because the agreement cannot survive the invalid representative-PAGA waiver, there is no arbitration to compel, no bifurcation, and no post-arbitration standing question to manage — everything proceeds in a single judicial forum. For the employee that is a cleaner and faster path than the arbitrate-then-return-to-court route Adolph contemplates, which is why identifying a “blow-up” clause at the motion-to-compel stage can decide the forum for the entire case. The screen is textual: look past the waiver itself to the severability paragraph, and flag any language making the waiver’s conditions non-severable “in whole or in part,” declaring the agreement “null and void” or “invalid” upon the waiver’s failure, or routing all class or representative claims to court — each is a trigger that, once the representative-PAGA waiver is held unenforceable under Iskanian and Viking River, pulls the whole agreement down with it.

Key quotes

“Had Kindercare simply included a waiver of representative claims in its arbitration agreement, and not included the poison pill at the end of the agreement, the result here could have been substantially similar to that in Viking River.” (Westmoreland v. Kindercare Education LLC (2023) 90 Cal.App.5th 967, 982.)

“The provision is unambiguous and ‘presents an all-or-nothing proposition.’ … The provision leaves no room for Kindercare to choose to bifurcate Westmoreland’s claims between arbitration and court; it instead invalidates the agreement.” (Westmoreland, supra, 90 Cal.App.5th at p. 982.)

“As a consequence of Kindercare’s drafting decisions, and absent further stipulation between the parties, the arbitration agreement is ‘invalid’ and so Kindercare must litigate all of Westmoreland’s claims in court.” (Westmoreland, supra, 90 Cal.App.5th at p. 982.)

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Practice pointer

Open questions

Westmoreland resolves a question of contract construction, so its reach depends on the exact language of each agreement — it does not decide how differently worded severability or “blow-up” clauses will fare, and it left open (by hypothesizing the contrary) what would have happened had Kindercare drafted a Viking River-style severability clause preserving the valid portion of the waiver. The court also flagged, without resolving, that the parties could alter the outcome “by further stipulation,” leaving unsettled whether and how an employer might cure a triggered poison pill after the fact. And because the decision predates Adolph v. Uber Technologies, it did not address how the poison-pill analysis interacts with Adolph’s confirmation that a plaintiff whose individual PAGA claim is arbitrated retains standing to pursue the representative claim in court — a question that will recur where an agreement contains both a severable individual-PAGA arbitration clause and a broader representative waiver.