Key facts
- On October 23, 2026, California's Fifth District Court of Appeal issued its decision in Castillo v. Belkorp AG, affirming the Stanislaus County Superior Court's denial of a motion to compel arbitration.
- The employee brought PAGA claims only on behalf of other employees and pleaded no individual claim; the court held that with no individual claim to arbitrate, the employer's arbitration agreement did not apply.
- The court said the 2024 PAGA amendments define who qualifies to bring a PAGA action, not what type of claims that employee must pursue.
- The appellate courts are divided, and the California Supreme Court will hear the related Leeper v. Shipt case on the morning of November 3, 2026, in San Francisco.
On October 23, 2026, California's Fifth District Court of Appeal ruled that when an employee files a PAGA action asserting only non-individual claims on behalf of other employees, the employer cannot rely on an arbitration agreement to move the case into arbitration. The court affirmed the Stanislaus County Superior Court's order.
The case: an employee suing only on behalf of co-workers
The case is Castillo v. Belkorp AG, LLP. The plaintiff, a former service technician, filed a PAGA lawsuit in Stanislaus County Superior Court in February 2025. PAGA, California's Private Attorneys General Act, lets employees act on behalf of the state to recover civil penalties for Labor Code violations. The complaint contained only non-individual claims, meaning claims for other affected employees; the plaintiff did not seek any recovery of his own.
Belkorp AG moved to compel arbitration in July 2025. The trial court denied the motion, and the Fifth District affirmed.
The court's reasoning: no individual claim, nothing to arbitrate
The court held that the 2024 PAGA amendments define who qualifies as an aggrieved employee, not what type of claims that employee must pursue, so an employee is not required to bring an individual claim alongside non-individual claims. The employer's arbitration agreement covered individual claims; because there was no individual claim in the case, the agreement had nothing to apply to.
The court also noted that neither Viking River Cruises nor Adolph v. Uber had actually considered a PAGA action with only non-individual claims.
A split among appellate courts: Supreme Court hears Leeper on November 3
According to reports, the Fifth District's position aligns with the Fourth District and Division Six of the Second District, while Divisions One and Five of the Second District have taken the opposite view. The Court of Appeal in Leeper v. Shipt likewise held that every PAGA action necessarily includes an individual component, which must be arbitrated under an arbitration agreement.
The California Supreme Court has taken up the dispute and will hear argument in Leeper on the morning of November 3, 2026, in San Francisco. The question is whether an employee can avoid an arbitration agreement simply by leaving individual claims out of the complaint.
Attorney guidance: employers should review arbitration clauses; both sides should keep pay records
Shenqi Cai, senior attorney at Lingtu Law, recommends that business owners who employ workers in California have an attorney review the arbitration clauses in their employee handbooks and onboarding documents soon, and not assume those clauses will stop a PAGA lawsuit. Employers should also keep complete records of hours worked, pay stubs, and meal and rest breaks.
Cai noted that this is a lower-court decision, not the final word. The appellate courts currently disagree, and the Supreme Court's ruling will set the direction. Employees with overtime, wage or rest-break concerns should likewise keep their pay stubs and work schedules.
Until the Supreme Court rules, employers and employees face different results depending on which appellate district hears their case.