Court affirms arbitration award for NetApp on employee labor law claims

Filed 3/ 3/ 26 CERTIFIED FO R PUBLICATION IN THE COURT OF APPEAL OF THE STATE OF CA LIFORNIA FIRST APPELLAT E DISTRICT DIVISION FOUR ALEXANDER SOROKUNO V, Plaintiff and Appell ant, v. NETAPP, INC., Defendant and Resp ondent. A171964 (Alameda County Super. Ct. No. RG 19037264) Plaintiff Alexander Sorokuno v sued his former e mployer Ne tApp, Inc. (NetApp), alleging v arious violatio ns of the Labor Code. He also sought civi l penalties and wages pursuant to the Pri vate Attorneys General Act of 200 4 (Lab. Code, § 2698 et seq.) (PAGA). 1 The trial court granted NetApp’ s petition to compel a rbitration of Soroku nov’s individua l claims, and followi ng the arbitration, the arbitrator entered a n award in NetApp’ s favor on each of those claims. The tr ial court then confir med the arbitration award. While the arbitration was still pending, the tri al court denied Sorokunov’s motion for summary adjudi cation of his PAGA claim. After con firmation of the arbitration award, t he court granted Ne tApp’s motion for judgment on the pleadings on the PA GA cause of action o n the ground th at Sorokunov’s lack of standing as an aggr ieved employee was conclusively determ ined by the arbitration awa rd. 1 All undesignated st atutory referenc es are to the Labor Code.

2 On appeal, Sorokun ov contends the court erred by (1) co mpelling arbitration of his in dividual claim s; (2) denying his motion f or summary adjudication; (3) con firming the arbitrat ion award; an d (4) applying the principles of issue p reclusion to concl ude that he lacke d standing to pursue the PAGA claims. We affirm the judg ment. BACKGROUND Sorokunov was emp loyed by NetApp fro m 2016 through Jun e 2019. His compensation c onsisted of an annual salary and “comm issions.” His commissions for the relevant time period were governed by two documents: his individual Goal Sheet and the Comp ensation Plan for fis cal year 2019 (Plan). Under section 4.2.1. 1 of the Plan, “Com missions are based on the achievement of reve nue goals (‘ Go al ’) as set forth in the Participant’s Goal Sheet. Commission s are calculated as a percentage of s ales revenue the Participant achieve s in his or her T erritory during the p eriod defined in the Goal Sheet” and are “earned only when (a) a customer has p aid the Comp any the full contract am ount . . . and (b) the Company has made all adjustments for refunds, credits, price changes, c ancellations or de-b ookings unless otherwise prohibite d by applicable law.” Under the w indfall provision in section 6.7 of th e Plan, NetApp reserved the right t o limit an emp loyee’s commissions t o avoid a windfall. Under that provisio n, a windfall may occur if an employ ee’s goal for a particular territory is exceeded by more than 200 perce nt. If NetApp invok es this provision, “a Pa rticipant may receiv e a Goal adjustment or a lower

3 Commission . . . pay ment than the amount provided for i n the Participant’s Goal Sheet.” 2 Sorokonov and abou t another 300 other salespeople earned commissions for sal es in excess of 200 p ercent of the go als NetApp set for them in fiscal year 2 019. In May 2019, NetApp informed Sorokunov and the other employees tha t NetApp was invok ing the windfall pro vision. He explained by email that “Under the terms of NetApp’s [Plan], NetApp may limit commission pa yments to avoid a w indfall to any partic ipant whose go al attainment exceeds 200%. [¶]. .. [Y]our perform ance in FY19 result ed in a windfall under the t erms of the plan. A s a result, furth er commissions abo ve 200% of goal attain ment will not be pai d.” At a subsequent compan y meeting, NetApp ex ecutives explained t hat the windfall pro vision was being invoked in the inter est of the comp any and its shareho lders to avoid windf alls in commissions whe re there was widesp read attainme nt over participants’ goals due to forecast ing errors. As a result, Sorokunov ’s last check for fiscal year 2019 wa s $31,402. 42 less than it would have been if he had been pai d 0.8048 percen t on the $3,844,42 2.46 in April sal es. Sorokunov resigned the next month, and later submitt ed a PAGA notice to the Labor and Workforce Deve lopment Agenc y (LWDA) and Net App. In January 2020, af ter waiting the requ ired time for th e LWDA to investigate, Soroku nov filed his Fir st Amended Compl aint. As relevant her e, the complaint allege s that NetApp’s pra ctice of promisin g commissions but reserving the rig ht not to pay earn ed commissions viol ates section 2751, subdivision (a) of th e Labor Code (sectio n 2751(a)), wh ich requires NetApp to 2 In his complaint, S orokunov identified other provisions that he alleged gave “NetAp p the right [to] deter mine commissi on rates retroactivel y and not to pay earn ed commissions.” On appeal, his o pening brief does not focus on any specific provision other than the w indfall provi sion.

4 put its offers for co mmissions in a writ ing that states the method by which commissions shall b e computed an d paid. 3 The complaint al leges further th at “[w]hen NetApp ret roactively reduc es earned commissi ons, declares windfa lls and uses the other Plan provisions to d eprive employe es of earned commissions, NetAp p violates [sect ion] 221 of the Lab or Code,” and that when “NetApp purp orts to pay commiss ions according t o the Goal Sheets, as required by law and contract, but secret ly takes back its pro mises for commissions in the f ine print of its ‘confi dential’ Plan so that employe es and others do not know what commissi ons NetApp shall actually pay,” it viol ates section 223. 4 The complaint alleg es that these violations are unlawful, unfair, dishonest, a nd deceptive pr actices prohibited b y the Unfair Competition Law (B us. & Prof. Cod e § 17200 et seq.) (UCL), and tha t NetApp’s applicatio n of these policies re sulted in a bre ach of contract. Sorokunov also soug ht PAGA penal ties for the violation of sections 2751(a), 221, and 223. Lastly, the co mplaint alleges an in dividual claim for v iolation of section 202, subdi vision (a), based on NetApp’s failur e to pay Sorokunov’s earned but unpaid c ommissions at the time of his resign ation. 3 Section 2751 (a) reads, “W he never an employer enters into a contract of employment with an employee f or services to be rend ered within this st ate and the contemplat ed method of p ayment of the emplo yee involves commissions, the co ntract shall be in wr iting and shall set forth the metho d by which the commi ssions shall be comp uted and paid.” 4 Section 221 reads, “ It shall be unlawful for any employer to collect or receive from an emp loyee any part of wa ges theretofore paid by said emplo yer to said employee.” Section 223 reads, “ Where any statute o r contract requires an employer to mai ntain the designate d wage scale, i t shall be unlawful t o secretly pay a lower wage while pu rporting to pay the wage designated by statute or by contra ct.”

5 In December 2020, t he court granted Ne tApp’s motion to compel arbitration of Sorok unov’s individual no n-PAGA claims, bu t denied it s request to stay proc eedings on the PAGA claims. In August 2023, whi le the arbitration w as pending, Sor okunov moved for summary adjudi cation of his PA GA claim that the P lan violated section 2751(a) becau se it failed to provid e “the method by wh ich the commissions shall be computed a nd paid.” In M ay 2024, t he court de nied the mot ion on the grounds that So rokunov had no t presented undispu ted evidence that th e Plan was subject to section 2751, and al ternatively, if sectio n 2751 applied, NetApp had present ed evidence tha t its compensation plan complied with t he requirements of the statute sufficie nt to defeat a motio n for summary adjudication. Thereafter, in July 2024, the arbitrator entered an award finding in NetApp’s favor on e ach of Sorokuno v’s individual clai ms. Initially, t he arbitrator concluded that NetApp’ s exercise of the windf all provision did not amount to a breach of contract and that there was no m erit to Soroku nov’s wage fraud claims. As relevant here, in connection with Sorokunov’s claim under the UCL, the arbitrator foun d that NetApp had not violated Labor Code sections 22 1, 223, or 2751. The arbitrator explained, “Section 2 21 provides that ‘[i]t shall be un lawful for any emplo yer to collect or recei ve from an employee any pa rt of wages heretofo re paid by said empl oyer to said employee.’ The key word in the sta tute is ‘paid;’ there is no mention of ‘earned.’ This statu te would arguably a pply if NetApp had tried to recoup t he commissions paid in the February and March checks on the ground that t he cap had been exceed ed in those two months; it does not apply to whatever t he contract defines as ‘earned’ but unpaid. Of course, the payments in February and March may not have been ‘ear ned’ at that time bu t simply advan ces on

6 what it was projecte d might be the total earned b y the end of the fisca l year. That need not be de cided here, thou gh, because there was no attempt to recoup or ‘ clawb ack ’ those paymen ts.” Next, the arbitrator explained, “Sec tion 223 applies t o wherever ‘ any statute or contract r equires an emp loyer to maintain t he designated wage scale,’ an employer cannot secretly pay less while purp orting to pay per th e scale. Here ther e is no statute requ iring the maintena nce of any wage scal e; and while there is a rguably a ‘wage scal e’ in the contrac t, the limitation in the Windfall Clause does not result in NetApp ‘secretly’ paying less. Rather NetApp paid ‘advances’ per the form ula in the Goal Sh eet, but those advan ces were always subject to the possibil ity of the Windfall Cl ause being invoked. That was plain on t he face of the Plan, and Claimant conce ded he had rea d that in the Plan. . . . In short, there was no ‘secrecy’ to the p ossibility of invoking the cap, its actual invocation a nd its effect on his April check.” Finally, the arbitrator found that se ction 2751 was n ot applicable to the commissions govern ed by the Plan and t hat alternativ ely, the requirements of section 2751 were satisfied. With res pect to the first ground, the arbitra tor explained that “ ‘co mmissions’ as defined by the stat ute, . . . requires the employee be paid pr imarily for sellin g a product or servic e and the amount be a percentage of the price of the product or service the e mployee sold. [Citation.] Claiman t did not make any s ales himself bu t supported a sales team and his incent ive pay was not a pe rcentage of reve nue arising from those sales. . . . Clai mant’s ‘commission’ was also not a strai ght percentage of revenue from his sal es support but r ather was calculate d on a formula bas ed on a different levels (sic) of quota attain ment and the s ales performance of territories in which he provided no support. . . . Accordi ngly, there is insufficient evidenc e that the ‘com missions’ Claimant was paid come withi n

7 [section] 2751; rathe r, the evidence is un disputed that his ‘commissions’ as defined in the contr act do not sati sfy either element of t he statutory definition.” As to th e second ground, the arbitrator ex plained, “Claimant argues that the fact that there was and is a discretionar y element to NetApp’s commissio n system, there was not a ‘method’—tha t is, a purely mathematical one— that allows commiss ions to be computed and paid as allegedly required b y the statute. . . . N either the wording o f [section 2751 ] nor its legislative hi story support th e notion that com missions must be susceptible to mech anical calculation w ithout any ele ment of discretion.” In September 2024, the court granted N etApp’s petition to c onfirm the arbitration award. Thereafter, relying on its order confirmi ng the arbitrat ion award, the court gra nted NetApp’s motion for judgment on the pleadings o n the PAGA claims. DISCUSSION I. Code of Civil Proced ure section 128 1.2 requires a trial court to grant a petition to compel a rbitration “if [the co urt] determines that an agreemen t to arbitrate the contro versy exists.” The p arty seeking to compel arbitration has the initial burd en to plead and prov e the existence of a valid arbitrat ion agreement that appl ies to the dispute by a preponderanc e of the evidence. Once that burden is satisfied, the party opposing arbitr ation must prove by a preponderance of th e evidence any defense to the agre ement’s enforcement. (Ibid.; see Avery v. I ntegrated Healthc are Holdings, Inc. (2013) 218 Cal.App. 4th 50, 59.) The United States Supreme Court has directed that “[w]hen deciding whether the parties agreed to arbi trate a certain matt er . . . courts generall y. . . should apply ord inary state law prin ciples that gov ern the formation of

8 contracts.” (Firs t Options of Chicago, Inc. v. Kaplan (1995) 514 U. S. 938, 944 and 945, citing Mits ubishi Motors Cor p. v. Soler Chrysler- Plymouth, Inc. (1985) 473 U.S. 614, 626; see also Morga n v. Sundance, Inc. (2022) 596 U. S. 411, 418 [ar bitration agreem ents are “ ‘as enforce able as other contra cts, but not more so’ ”].) Th e same is true under California la w. (Aanderud v. Superior Court (201 7) 13 Cal.App.5th 880, 890 [“ an arbitration agreement is governed by contrac t law and is co nstrued like other co ntracts to give effect to the intention of the parties”]; Chan v. Drexel Burnham L ambert, Inc. (1986) 178 Cal.App. 3d 632, 640 [“The existence of a valid agreement to arbitrate involves general con tract principles” ]; see also Fuentes v. Empire Nissan, Inc. (Feb. 2, 2026, No. S280256) _ Cal.5th_ [2026 Cal. LEXIS 48 1, at * 23, citing Quach v. Cali fornia Commerce Club, Inc. (2024) 16 Cal.5th 5 62, 579 [“ ‘the policy “ ‘favor ing’ ” arbitration is not one of prom oting arbitration o ver litigation, but inste ad of ensuring that arbitration agreeme nts are not disfavored, i.e., that they are treated lik e other contracts’ ”].) “An order granting a petition to co mpel arbitration is not appealable, but is reviewable on appeal from a subs equent judgme nt on the award.” (Jenks v. DLA Piper Rudnick Gray Cary US LLP (201 5) 243 Cal.App. 4th 1, 7–8.) We review the trial court’s ord er de novo when th e decision does not depend on conflictin g extrinsic evid ence. (Id. at p. 8; A bramson v. Juniper Networks, Inc. (2004) 115 Cal.Ap p.4th 638, 650.) NetApp’s petition so ught to compel arbitration of Sorokunov’ s individual claims u nder section 26 of the Plan, which s tates: “Subject to a Participant’s right t o opt out, as provide d in Paragraph 26(c) below, Extern al Dispute Resolution shall be available t o NetApp or a U.S. Participan t as the exclusive means to r esolve a Dispu te after Internal Disp ute Resolution has been attempted and there has been no r esolution of the Dispute to NetAp p’s

9 or the Participant’s satisfaction within 90 days after submission to the [Sa les Comp Review Board ].” Sorokunov’s PAGA claim was excluded from NetA pp’s petition under the “ class and collective action waiver, ” whic h reads, “Private attorney general re presentative ac tions under the Calif ornia Labor Code are not arbitrable, not within the scope of t he arbitration provisions in Paragraph 28(a) an d may be maintaine d in a court of law.” Sorokunov does not dispute that t he above provision pur ports to establish a bilatera l obligation to arbitrate his i ndividual claims. He contends, however, that two provisions in the Plan ren der NetApp’s prom ise to arbitrate illusory because they permit NetApp unilaterall y to amend, suspend, or termina te the arbitrat ion provision and ap ply those changes to any wage claims kn own but not pr eviously filed for inte rnal dispute resolution with the Sales Comp R eview Board. First, Paragraph 2.6 of the Plan states: “NetApp reserves th e right to revise the Plan, and the policies an d programs reference d in this Plan, at any time and without ad vanced notice, t o the extent permit ted by applicable l aw.” Second, Paragraph 25 of the Plan state s: “The Comp any reserves the right to amend (incl uding but not limite d to adding to, deleting or otherwise modifying), suspend and/or termin ate the Plan at any time in its sole discretion, consisten t with and to t he extent permitted by applicable law, but such action shall no t apply to any Dispu te in Internal D ispute Resolution or External Dispute R esolution as pr ovided in Paragraph s 17 and 26 herein.” NetApp responds th at Sorokunov ’s argu ment fails to recogni ze the fundamental limit o n its ability to alter the arbitration agre ement imposed by the covenant of good faith and fair deali ng implied in e very contract. In general, “ [a] c ontract is unenforce able as illusory wh en one of the parties has the unfe ttered or arbitrary r ight to modify or terminate the

10 agreement or assum es no obligatio ns thereunder.” (Harr is v. TAP Worldwide, LLC (2016) 248 Ca l.App.4th 373, 385.) H owever, where the contract gives one p arty the power to m odify or termin ate, “ ‘ “it is not fat al if the exercise of the p ower is subject to pr escribed or imp lied limitations such as the duty to exerci se it in good fa ith and in accordance with fair dealings.” ’ ” (24 Ho ur Fitness, Inc. v. S uperior Court (1998) 66 Cal.App.4th 1199, 1214 (24 Hour Fitness) [“ discretionary pow er to modif y the terms of the personnel handbook in [written] notice i ndisputably carries with it the dut y to exercise that righ t fairly and in good f aith. [Citatio n.] So construed, the modification provisi on does not ren der the contract illus ory”].) In Peleg v. Neiman Marcus Group, In c. (2012) 204 C al.App. 4th 1425, 1433, 143 6 (Peleg), the court fo und the following unilateral modifica tion provision illusory: “ This Agreemen t can be amended, m odified, or revoked in writing by the Comp any at anytime, but only upon thirt y (30) days’ advanc e notice to the Covere d Employee of that amendment, modification, or revocation. Howeve r, any amendment, modification, or revocation will ha ve no effect on any Clai m that was filed for arbitration prior to the effective date of such amendment, modification, or rev ocation.” The c ourt explained that this “modification p rovision improp erly creates two cat egories of claims: those filed within 3 0 days of notic e—the protected cate gory—and those th at have accrued or are known to the emplo yer but are not filed within 30 da ys— the unprotected cat egory.” (Id. at p. 1457.) Init ially, applying Texa s law under the agreemen t’s choice of law pro vision, the court concluded that the provision was illuso ry because Texas la w requires that both filed claims and those that have accr ued or of which t he employer has k nowledge must be expressly excluded f rom the scope of an employer’s unilater al modification provision. (I bi d.)

11 The court in Peleg t hen discussed “ California law on ill usory arbitration contracts to decide whether the law cho sen by the part ies is in conflict with a fundamental policy of California.” (Id. at p. 1463.) The cou rt confirmed tha t, under California la w, “ [a] unilater al modification prov ision that is silent as to whether contract ch anges apply to claims, accrued or k nown, is impliedl y restricted by the [im plied] covenant [of good faith and f air dealing] so that changes do not appl y to such claims.” (I bi d.) In such cas es, the contracts ar e not illusory. (Ibid.) The court expl ained, howev er, that if “a modific ation provision expressly addresses whet her contract changes apply to claims th at have accrued or are known to the emplo yer, the covenan t cannot create implied terms that c ontradict the e xpress language. [C itations.] An arbitration agreeme nt that express ly exempts all claim s, accrued or known, from contract chang es is valid and enfor ceable without resort to the covena nt. If, on the other han d, an arbitration ag reement expres sly applies a contrac t change to such clai ms, the covena nt cannot vary the p lain language, and the agreement is illusor y.” (Ibid.) Ultimate ly, the court conc luded that becaus e “Texas law is more demanding than Ca lifornia law, which, depending on t he circumstances, may imply such a res triction . . ., it can hardly be sai d that Texas law is contrar y to a fundame ntal policy of Califor nia. ” (Id. at p. 1466.) Sorokunov argu e s th at the language in the Peleg agreement is indistinguishable fr om the NetAp p language and that under California la w, as set forth in Peleg, the arbitration agre ement is illusor y. Specifically, he argues that because NetApp’s modificati on provision ex pressly exempts onl y filed claims but not known or accrued b ut not filed claims, NetApp ’s reliance on the implied cove nant conflicts w ith the plain langu age of the arbitratio n agreement. (See Mo ua v. Optum Servs., Inc. (C.D.Cal. 2018) 320 F.Supp.3d 1109, 1114 [Under Peleg, modificat ion provision that states that “the onl y

12 claims exempt from unilateral mod ification [by the defe ndant’s parent company] are those that have been serv ed on the Corpo rate Employee Relations Departme nt” renders arbi tration agreement i llusory and that “because the expres s terms provide which claims will be exempt from modifications, the c ovenant of goo d faith and fair deal ing cannot apply to save the Policy from being unenforceabl e”].) NetApp disputes th at its modification p rovision is at a ll similar to that at issue in Peleg. It argues th at, unlike i n Peleg, its agreement “does not give NetApp the express right to cancel arbitration as to cla ims it knows about but which have not been submitte d to the dispute resol ution process. It merely states that NetApp cannot mod ify the agreeme nt as to claims alre ady in the dispute resol ution process.” (Emphasis omitte d.) We agree. Because the agreem ent in Peleg stated t hat modificati ons of the agreement would ap ply to all clai ms except those alrea dy filed, the court could not imply a co ntrary restriction o n the agreement. H ere, however, the Agreement provides that modifica tion is allowed only if “consistent with an d to the extent permit ted by applicable la w” and then ex pressly excludes application of any m odifications to filed claims. Under 24 H our Fitness and Peleg, modification of an arbitration pro vision after a cl aim is known, even if not yet filed, is precl uded by the cov enant of good faith and fair dealing. (24 Hour Fitness, supra, 66 Cal.Ap p. 4th at p. 12 14; Peleg, supra, 204 Cal.App. 4th 14 65.) Thus, under th e agreement before us, NetApp cannot apply any modificati ons of its agreement to known but unfile d claims because that would be incon sistent with an d not permitted by applicable law. 5 5 We acknowledge th at the use of th e word “but” in th e modi fication provision is arg uably confusing insof ar as it suggests that applying modifications of the agreement to filed cl aims might ot herwise be permitte d

13 Casas v. Carmax Au to Superstores Ca lifornia LLC (20 14) 224 Cal.App. 4th 1233 is ins tructive on this poin t. In that case, the modification provisi on provided th at “ ‘[a]ll claims aris ing before alteration or termination shall be subject to the [agreement] in effect at the time the Arbitration Request Form is received by the Company. ’ ” (Id. at p. 1237.) The court observed that under Peleg, “[t]o the extent th at this express statement would su bject a claim to a m odified agreement w here the claim arose before a modif ication, but w as not submitted to arbitration until after incorporation of tha t modification into t he arbitration agreement, the covenant of good fai th and fair dealing c annot vary the plain language, and the contract is illuso ry.” (Casas, at p. 12 3 7.) The court held that the arbitration agreeme nt was not illu sory, however, in ligh t of a second provision, which stated that “if an y of the arbitration ru les ‘is held to be in conflict with a man datory provisio n of applicable la w, the conflicting Rule o r Procedure shall be modified auto matically to comply with the mandatory provision’ until the rules can be for mally modified to c omply with the law. ” (Ibid.) The court ex plained that t his express statemen t “means that shou ld an employee assert a claim that arose b efore modification of the agreement, CarMax could not a pply the modifi cations to that clai m.” (I bi d.) Because t he relevant provision i n this case per mits a modification by NetApp only tha t is “consistent with an d to the extent permitted by applic able law,” it also means that NetApp cannot apply modific ations to accrued or kn own claims that have not been filed. under applicable la w. Sorokunov has n ot argued, how ever, this confusion would support denia l of the petition to arbitrate. Nor d oes he suggest that an employee would nec essarily conclud e from the languag e of the provision th at the applicable law d oes not include any other restrictions on NetApp’s abi lity to modify the arbitr ation agreeme nt.

14 Sorokunov’s argum ent to the contr ary is not persuasiv e. He argues that “the maxim ‘th e expression of o ne thing ordinarily implies the exclusio n of other things, ’ ” applies here to preclud e this court from im plying other exemptions “ unless the evidence sh ows ‘a clear intent t o the contrary.’ ” (Se e PV Little Italy, LLC v. MetroWork C ondominium Assn., (2012) 210 Cal.App. 4th 132, 151, citing White v. Western Title Ins urance Co. (1985) 40 Cal.3d 87 0, 881, f n. 4. [the familiar maxim, expressio un ius est exclusio alterius (the inclusi on of one thing i mplies exclusion of others), applies to contract interpretat ion].) As he points o ut, prior to 2018, th e modification provision read in rel evant part as f ollows: “The Comp any reserves the right to amend (including but not limite d to adding to, delet ing or otherwise modifying), suspend and/or termin ate the Plan at any time in its sole discretion, consisten t with and to t he extent permitted by applicable law.” Sorokunov acknowl edges that bec ause this language made no distinction between protected a nd unprotected c laims, the covena nt of good faith and fair dealing would apply and the provision w ould not be illusory. He argues, however, that by a mending the agree ment to add only th e express exclus ion of filed claims, NetA pp necessarily i ntended that no ot her exceptions applie d so that modification s would apply to kn own but not fil ed claims. The trial court rejec ted this argum ent by noting that the amendme nt was “plainly intend ed to ensure th at the Company can not amend the Plan while an employee’s claim is in proc ess.” We need not s peculate as to NetApp’s intent reg arding the am endment, however, b ecause the amend ment merely set forth a s pecific exempti on to the right to mo dify and did not eliminate other rest rictions impose d under the existing language. (See PV Little Italy, LLC v. MetroWork C ondominium Assn., s upra, 210 Cal.App. 4th at p. 15 2. [“If the plain language of th e instrument is

15 unambiguous, a cou rt may not ‘read int o’ the document additional terms i n order to conform its meaning to wh at the court’s ‘intuiti on’ tells it the part ies must have intended. Rather, the co urt ‘is simply to as certain and declare what is in terms or i n substance contain ed therein, not to insert what has been omitted, or to o mit what has been i nserted.’ ”].) As disc ussed above, when read as a who le, the provisio n precludes applicat ion of a modified agreement to know n but unfiled cl aims because such action would be inconsistent with an d not permitte d by applicable law. 6 Accordingly, we are not persuaded by So rokunov’s argu ment that the arbitration agreeme nt was illusory. In l ight of this concl usion, we do not reach NetApp’s alte rnative argument th at if the modifi cation provision is unenforceable, the t rial court proper ly applied the seve rance provision to render the arbitrati on agreement e nforceable. Nor do we reach Sorokunov’s argument that, in t he interests of ju stice, we should de cline to apply the implied covenant to save an arbitr ation a greement that “ree ks of bad faith and unfairness.” Al though Sorokunov a rgued in the tri al court that other terms of the arbitra tion agreement rend ered it unconscio nable, he has not reasserted those arg uments on appeal. 6 Sorokunov suggests that the follo wing “purposes” of the amendment are “immediately ev ident: First, th e CEO and other to p executives intende d to make retroactive changes to NetApp’s wage contracts ‘with the benefit of hindsight.’ Second, whenever NetA pp wants to avoid i ts promises to pay commissions or arbi trate, NetApp could argue its commissio ns or arbitration promises are illusor y under Peleg.” We note briefly that nei ther explanation for the amendment i s particularly persu asive. Sorokun ov does not explain how the provision e xcluding filed cl aims from arbitrat ion impacts NetAp p’s ability to modify wa ges retroactively. N or has Sorokuno v cited any author ity suggesting that a pa rty could avoid a co ntractual oblig ation by arguing th at its own promise was illusory.

16 II. Sorokunov contends the trial court erre d in denying hi s motion for summary adjudicati on. Under Code of Civil Procedure section 437c, subdivision (f)(1), a plaintiff “ may move for summary adjudi cation as to one or more causes of ac tion within an action” if the plaint iff contends that th ere is no defense to the cause of action. “[T] he plaintiff me ets ‘his or her burden of showing that ther e is no defense t o a cause of action’ if the plaintiff ‘prove[s] each eleme nt of the cause of action entitling t he party to judgment on the cause of actio n.’ ” (Donohue v. A MN Services, LL C (2021) 11 Ca l.5th 58, 80; Code Civ. Pr oc., § 437c, subd. (p) (1).) A motion for “ ‘ summary adjudication is prop erly granted on ly when “all the pa pers submitted sho w that there is no tria ble issue as to any material fact and that the moving party is entitled to a judgment as a matt er of law.” ’ ” (Camp bell v. FPI Management, I nc. (2024) 98 Cal.Ap p.5th 1151, 1 162.) “We review a ruling on summary ju dgment or summar y adjudication de novo and ‘decide ind ependently whe ther the facts not su bject to triable dispute warrant jud gment for the moving party or a de termination a cause of action has no merit as a matter of law.’ [Citation.] In s o doing, we liberall y construe the eviden ce in favor of th e party opposing th e motion and resolv e all doubts concernin g the evidence i n their favor.” (Ca mpbell v. FPI Management, I nc., supra, 98 Cal.A pp.5th at p. 1161.) Sorokunov’s first ca use of action alleged that the Plan viola tes section 2751(a) by fail ing to set forth the metho d by which the commi ssions shall be computed a nd paid. This claim was submitted to ar bitration. His fourth cause of actio n seeks PAGA penal ties for the viol ation of section 2751(a), alle ged in the first caus e of action.

17 In his motion for su mmary adjudication, Sorokunov sought a determination of wh ether the Plan comp lied with section 27 51(a). He argued that the motion pre sented only the follo wing legal que stion: Does section 2751 permit “employers to both (1) offer to pay c ommissions in amounts ascertaine d by specific m athematical calcul ations and (2) reserve discretion to: (a) m ake retroactive c hanges to the met hod of computing commissions, (b) tak e deductions from (‘ adjust’) the a mounts it counts as ‘commissionable rev enue,’ and (c) t ake deductions from (‘ adjust’) the amou nts computed under the mathematica l formulas in its writ ten commission contracts.” In ru ling on the motion, the court clearly de lineated, however, what was not at iss ue in the motion: “ The issue of whethe r the commission contracts permit Ne tApp to take discret ionary deductio ns from earned wag es concerns whether N etApp violate d Labor Code 2 21– 224. Th at is not at issue in this motion. This motion is about wh ether the undis puted facts show th at NetApp violated La bor Code [section] 2 751(a).” On a ppeal, Sorokuno v does not challenge this el ement of the co urt’s ruling. With respect to secti on 2751(a), the trial court first rejecte d Sorokunov’s argume nt that the sta tute requires that th e contract set forth a “purely mechanical method” for calc ulating commission s. Instead, the court interpreted the statute to re quire a written contr act that co vers how commissions are cal culated and paid suf ficient to meet the general requirements for en forceable contracts. The cour t then denied the m otion, finding that Soroku nov had “not pr esented undisputed evidence that the commission contract s were subject to La bor Code [sectio n] 2751(a)” and t hat he had “not present ed undisputed evidence that the co mmission contracts were in violation of Labor Code [se ction] 2751(a).” Wi th respect to the seco nd ground, the court ad ded, “Defendan t has presented evid ence suggesting tha t

18 the commission cont racts included ‘ the method by whi ch the commissions shall be computed a nd paid.’ Taking al l factual inferenc es in favor of Defendant, a trier of fact could find that the commission contracts meet the general contractual requirements fo r enforceable contracts.” On appeal, Sorokun ov contends tha t, because there is n o dispute over the terms of the Pla n, his motion r aised only a question of st atutory interpretation—whe ther section 27 51(a) required that t he Plan set ou t a purely mathematica l method by which c ommissions were to be calculated and paid. His argument, however, ignor es the alternative basis of the court’s decision—that triab le issues of fact exis t as to whether the Plan was subj ect to the requirements of section 2751(a). In opposition to the motion in the trial c ourt, NetApp a rgued, “Plaintiff seeks a summary ad judication rulin g, on a PAGA-wide basis, that NetApp did not provide alle gedly aggrieve d employees with co mpensation plans that comply with Section 2751. Section 275 1 applies only t o contracts involving ‘commissions,’ as th at term is defined in Labor Code Section 204.1: ‘compensation paid to any person for se rvices rendered i n the sale of such employer’s property or services and based proportionately upon the amount o r value thereof. ’ (La b. Code § 204.1 (emphasis added).) However, this is not a class action, and so there is no defin ed certified class. Plaintiff has present ed no facts in his separ ate statement that lay a fou ndation that even one NetApp employee w as subject to Section 2751—as discussed below, not eve n as to himself. Inste ad, Plaintiff assume s that the com pensation of every California employee who participat ed in NetApp’s incen tive compensation plan (‘Participants’) qualifies as a ‘comm ission’ agreement go verned by Labor Code Section 2751. It was Plaintif f’ s bu rden to present spec ific facts that employees were gov erned by Sectio n 2751 and experie nced violations, and he

19 did not because he c annot. [¶] Plaintiff admits t hat he was an engin eer, ‘not a salesperson.’ . . . His compensation t arget was 75% salar y, and only 25% was connected in an y way to sales activi ty. Even that 25% was based on a complex formula wit h different perce ntages applied at different levels of quota attainment b y both his sales tea m and other sales te ams he did not support.” In his reply in the tr ial court, Sorokunov insisted that, a s a factual matter, the evidenc e showed that he wa s involved in s ales, but argued tha t “the Court need not decide whether Mr. Sorokunov or a ny other employee was primarily invol ved in sales” becaus e section 2751 defin es “commission s” to include both com missions as def ined by Labor Code section 204.1 and, under section 2 7 5 1, subdivision (c), as any “ ‘offer by th e employer to pay a fixed percentage of s ales or profits a s compensation for work to be performed’ ” and “NetApp admits it offers commissions to Plan Participan ts who work in Califor nia.” The court apparentl y agreed with NetA pp when it ruled th at “Plaintiff has not presented u ndisputed evid ence that the comm ission contracts were subject to Labor Co de [section] 27 51(a).” In his opening brief, Sorokunov ma de no attempt to sh ow that the court erred in finding tha t triable issues of fa ct existed as to whether “commissions” earn ed by Sorokuno v or any other empl oyee under the Plan fell within the scope of section 2751. To the contrary, de spite this issue having been argued in the trial cour t and relied on by t he trial court, Sorokunov focuses h is entire argum ent on appeal on th e proper interpretation of sec tion 2751 (a) —i.e., whether it requir es a purely

20 mathematical meth od for determining t he commission to be paid. 7 While he finally reaches the i ssue in his reply bri ef, Sorokunov c annot rely on this belated a rgument to meet his appellate burden. (People v. J TH Tax, Inc. (2013) 212 C al.App. 4th 1219, 12 32.) On appeal, includin g an appeal from a s ummary adjudicatio n, the appellant has the b urden of demonstrat ing prejudicial e rror. (Byars v. SCM E Mortgage Bankers, I nc. (2003) 10 9 Cal.A pp.4th 1134, 1140.) Even if the trial court had misin terpreted section 2 751(a), it would not necessarily follow th at it erred in denying Sorokunov’s mo tion because the al ternative ground remains unchallenged. (See Campbell v. FPI Ma nagement, Inc., supra, 98 Cal.App.5th 11 51, 1173.) The trial court’s de nial of Soro kunov’s motion for summary adjudicati on could be affirmed solely on this basis. Nonetheless, given the relevance of the issue to the re maining argu ments asserted on appeal, we address Sorokunov’s ar gument that the tri al court misinterprete d section 2751(a). Sorokunov contends that under s ect ion 2751(a), NetApp wa s required to set forth in its Pl an a mathema tical method by whi ch commissions wou ld be computed a nd was required to p ay those commission s as calculated. Sorokunov does not dispute that the init ial calculation of co mmissions und er the Plan complies w ith section 275 1. He contends, how ever, that the inclusion of the win dfall provision in th e Plan, which allows NetApp to li mit an employee’s comm issions under certai n circumstances, violates 7 As set forth above, the arbitrator also f ound merit in NetA pp’s argument when it fo und that there was “insufficient evi dence that the ‘commissions’ Claimant was paid come within [section] 275 1; rather, the evidence is undispu ted that his ‘commis sions’ as define d in the contract do not satisfy either el ement of the st atutory definition.” As with his argume nt addressing the deni al of his motion for s ummary adjud ication, Sorokunv als o does not address thi s element of th e arbitrator’s award in his opening brief.

21 section 2751 by permitting “a discre tionary process for determining the commissions due.” He argues that, give n the substant ial protections for wages under the La bor Code, the co mmissions must be paid in full under the mathematical form ula set forth in the Plan and that NetA pp cannot inclu de in the Plan a provisi on that allows it to apply discretionary limits on the amounts paid. Section 2751 was en acted, in part, to ad dress “the wage risk inherent in all commission-base d employment” that arises when co mmissions are “promised orally as an inducement to th e employee” b ut “are unenforceable due to the opaquene ss of the commi ssion structure.” (Le tt v. Paymentech, In c. (N.D.Cal. 1999) 81 F.Supp.2d 992, 99 4.) Accordingly, s e ction 2751 seeks to protect employees b y requiring “a writt en contract expl aining the commiss ion structure at the tim e of employme nt.” (Ibid.) NetApp’ s Plan, as the trial court concluded, me ets this stand ard. It explains the c ommission structure — the method of comp uting and payi ng commissions—at the time of employment. It also sets forth the ci rcumstances under which modification of the initial calculatio n might occur. 8 An employee earnin g commissio ns under 8 The windfall provis ion in section 6. 7 of the Plan reads in full as follows: “The Comp any reserves the rig ht to limit a P articipant’s Commission . . . pay ments to avoid a Wi ndfall. Nonexclusiv e examples of a Windfall include, bu t are not limit ed to: [¶] [] a Partic ipant’s payment far exceeds the Particip ant’s contributi ons towards the Go als, . . . or [¶] [] a d eal that contributes gre ater than 50% of a P articipant’s an nual Sales Goal; or [¶] [] a Partic ipant’s Goal at tainment ex ceeds 200%. [¶] Wh ere these or related scenarios oc cur, the Sales Leade r, or his or her de signee, will review the Participant’s att ainment to det ermine whether a W indfall has occurred. If a Windfall occurs, the Company r eserves the right to limit a Participan t’s Commission . . . pay ment based on a Sa les Leader’s, or his or her desi gnee’s, evaluation of the sit uation, to the e xtent permitted by applicable law. In t he case of a Windfall, a Participant may re ceive a Goal a djustment or a lower

22 the Plan would be i n a position to both understand the met hod by which commissions were e arned and seek relie f should NetAp p violate the agreement. T he Plan complies with the requirement of section 2751, subdivision (a) that a written contract s et forth the “me thod by which the commissions shall b e computed an d paid.” Had the Legislature intended to im pose specific restrictio ns on the methods by which c ommissions cou ld be calculated, it could have done so. Section 2751, howev er, provides a differ ent type of prot ection: It requires that the method be set forth in writing. Contrary to Soroku nov’s argument, the trial court’s int erpretation of section 2751 does no t deny employees th e protection for wages afforded the m in the Labor Code. There is no dispute that commissio ns are wages and thus that they are subjec t to the various prot ections afforded employees under t he Labor Code. (See § 200 [“ ‘wages’ includ es all amounts for la bor performed”]; § 221 [it is unl awful “for any emplo yer to collect or receiv e from an employ ee any part of wages th eretofore paid by sai d employer to s aid employee”]; § 223 [it is unl awful to “secretly pa y a lower wage while purporting to pay the wage designated by statute or by contra ct”].) As the tri al court ruled, however, whether t hose protections were violated by NetApp was not at issue in Sorokunov’s moti on for summary adjudication. Accor dingly, Sorokunov has not persuaded u s that the trial court erred in denyin g his motion for summary adjudicati on. 9 Commission . . . pay ment than the amou nt provided for i n the Participant’s Goal Sheet.” 9 In light of this conc lusion, we do n ot reach NetApp’s alternative argument that Soro kunov’s challen ge to the denial of h is motion is moot.

23 III. Under Code of Civil Procedure sectio n 1285.4, a peti tion to confirm a n arbitrator’s award “ need only set forth (1) the names of the arbitrators, (2) the arbitra tion agreement (by d escription or attach ed copy), and (3) the award and written o pinion of the ar bitrators (by descrip tion or attached copy).” (Eternity In vestments, Inc. v. Brown (2007) 1 51 Cal. App.4th 739, 745.) “If a petition . . . is d uly served and filed, the court shall confirm the award as made, unless in acc ordance with this ch apter it cor rects the award and confirms it as correc ted, vacates th e award or dis misses the proceedin gs.” (Code Civ. Proc., § 1286.) Accordin gly, once a petition t o confirm that meets the statutory requir ements has be en served, “ ‘the burd en is on the party attacking the award to affirmatively est ablish the exis tence of error.’ ” (Rivera v. Shivers (2 020) 54 Cal. App.5th 82, 94.) Under the Californi a Arbitration Act (C ode Civ. Proc., § 1280 et seq.), the court can vacate an arbitration awar d if “[t]he arbitrator s exceeded their powers and the awa rd cannot be correct ed without affe cting the merits of t he decision upon the co ntroversy subm itted.” (Code Civ. P roc. § 1286.2, subd. (a)(4); see also 9 U.S.C. § 10(a) [a ward may be vacate d “ where the arbitrators exceede d their powers”].) “Arbitrators do not ordinarily exceed their contractually c reated powers simpl y by reaching a n erroneous conclusion on a cont ested issue of l aw or fact, and arbi tral awards may not ordinarily be vacate d because of suc h error, for ‘ “[t]he ar bitrator’s resolutio n of these issues is wh at the parties barga ined for in the arbit ration agreement.” ’ ” (Gu eyffier v. Ann Summ ers, Ltd. (2008) 43 Cal.4th 1 179, 1184.) This is so “e ven when . . . err ors [of fact or law] appear on the face of the award or cause substantial injustice to the parties. ” (Richey v. AutoNation, Inc. (2015) 60 Cal.4th 909, 916 (Richey); se e also Moshonov v.

24 Walsh (2000) 22 Cal.4th 771, 775 [it is settled that ar bitrators do not exceed their powers “merel y by rendering an erroneous decision on a legal or factu al issue, so long as the issue was with in the scope of the co ntroversy submitte d to the arbitrators”].) Rather, “the excess -of-authority exc eption applies, an d an arbitral award m ust be vacated, whe n a court deter mines that the arbitration has been undertaken to enfo rce a contract th at is ‘illegal and against the public p olicy of the state.’ ” (Sheppard, Mullin, Richter & Hampton, LLP v. J- M M anufacturing Co., Inc. (2018) 6 Cal. 5th 59, 73; Richey, supra, 60 C al.4th at p. 916 [“A rbitrators may exceed their p owers by issuing an award th at violates a party’s unwaiva ble statutory rights o r that contravenes an expl icit legislative expre ssion of public policy”].) We review de novo a trial court order confirming an ar bitration award, including its determ ination whether the arbitrator exceeded his powers in granting relief. (Valencia v. Mendoza (2024) 10 3 Cal.App. 5th 427, 442.) “[E]valuating a chal lenge to an arbitrati on award is a two-step process—first the court must dete rmine whether t he award is revie wable, and only if review is appropriat e does the court consider whether t he award should be upheld.” (SingerLe wak LLP v. G antman (2015) 241 Cal.A pp.4th 6 10, 622.) Here, Sorokuno v contends th e trial cou rt erred in refusing to vacate the arbitration award o n the ground that th e award enforce d illegal contract provisions against t he public policy of the State of Ca lifornia. He argues: “When the Legislat ure gave emplo yees the right to wa ges free from deductions taken fo r the employer’ s benefit (§§ 221–224), d eclared th at right unwaivable (§ 219), made it a crime to v iolate that rig ht (§ 225), prohibited the use or enforc ement of contracts purporting to give employers the right t o violate that right (§ 2751), and imposed penalties for vi olating that r ight (§§ 225.5, 2699, su bd. (f)), the Legis lature made it clea r that employ ees’

25 rights to wages free of employer de ductions is a funda mental right and tha t courts must not enf orce contracts vi olating those rights.” We agree with Soro kunov that, insofar as he claimed that the arbitral award violated his u nwaivable rights un der sections 27 51, 221, and 223, the trial court should h ave determine d whether the arbitr ator committed clear legal error. (Richey, supra, 60 Cal.4th a t p. 918; see, e.g., Honchariw v. FJM Private Mortg age Fund, LLC (2022) 83 Ca l.App.5th 8 93, 899 – 901; Brown v. TGS Management Co., LLC (2020) 57 Cal.App.5t h 303, 3 14, 316; Ahdout v. Hekmatja h (2013) 213 Cal.Ap p.4th 21, 37 – 38.) Acceding to Sorokunov’s request that we decide in th is appeal whet her “the arbitrator enforced unlawful c ontract terms t o deprive plaintiff of his unwaivable statutory rights,” w e conclude that the answer is no. In its summary adju dication ruling, the trial court consi dered and rejected Sorokunov ’s argu me nt that the windfall provision violated section 2751(a), and in our di scussion above, we found no error in the trial court’s conclusion. Accordingly, no f urther discussion of that statute is required. With respect to secti on 221, the arbitrat or found that N etApp had not attempted to “collec t or receive” fro m Sorokunov “any p art of wages heretofore paid” to him by NetAp p in violation of sectio n 221. As noted above, the arb itrator concluded that the word “paid” in section 221 means simply what it says, rejecting Sorkunov’ s argument th at, because he claime d to have already “ear ned” the commissio ns that NetAp p declined to pay hi m by invoking the win dfall provision, Net App was “collec t[ing] or receiv[ing]” from him amounts t hat it had a lre ady “paid” him. Wi th respect to section 223, th e arbitrator found th at, given the inclusio n of the windfall

26 provision in the Pla n, NetApp did not “secretly” pay So rokunov less t han promised under a co ntractual wage scal e. Sorokunov does not develop a meaningf ul argument th at the arbitrator clearly erred in find ing no violatio n of these provisions. He cites Prachasaisoradej v. Ralphs Grocery Co., Inc. (200 7) 42 Cal.4 th 217, 228, fo r the proposition that it is prohibited for e mployers to ta ke deductions from amounts the employ er “ has offered or promised to pay. .. as compensation f or that employee’s lab or.” But he fails to address the subs equent holding in th at case that “[t]he wag e-protection statute s and rules do n ot . . . forbid a syst em in which, even thou gh services have alr eady been perf ormed, the final amount of wages ca nnot be determined until after speci fied contingencies have come to pass.” (Id. at p. 239.) As the court explain ed, “numerous California cases hav e held that, where t he parties so un derstand and agre e, final compensation, or at least a portion thereof, may b e contingent on event s that occur after the employee has performed service, an d even where he or she has already rece ived advance sums. In such circumst ances, the employ er may set off, against future payments, an y excess amoun ts previously paid. Such a system does not violate section 2 21’s prohibition on t he employer’s recapture of wages already earned or p aid.” (Ibid; see DeLeon v. Verizon Wireless, LLC (2 012) 207 Cal.A pp.4th 800, 808 –809 [co mmissions are e arned only when condition s of contract ha ve been satisfied]; S teinhebel v. Los Angeles Time s Communications, LLC (2005) 12 6 Cal.A pp.4th 696, 7 05 – 706 [employer that makes advanc es on commissions to employees may lat er reconcile any overpa yments by deductio ns from future co mmissions].) Her e, the parties’ agreeme nt included the win dfall provision, which we concluded above was lawful. We disagree that N etApp’s invocation o f the provision caused it to collect o r receive wages from Sorokunov in violation of

27 section 221 or to sec retly pay him less t han it agreed t o in violation of section 223. Accordi ngly, we find no bas is to reverse the trial court’s confirmation of the arbitration award. IV. “ ‘ “ ‘A motion for ju dgment on the plea dings is equiv alent to a demurrer and is governed by the sa me de novo standard of review.’ ” ’ [Citation.] . . . ‘All p roperly pleaded, ma terial facts are deemed true, but n ot contentions, deducti ons, or conclusio ns of fact or law; judicia lly noticeable matters may be considered.’ [Cita tion.] Judgment is p roperly ‘granted wh en the pleadings f ail to state facts suff icient to constitute a cause of action.’ ” (Rodriguez v. Lawre nce Equipment, I nc. (2024) 106 Cal.App. 5th 645, 654 –6 55 (Rodriguez).) Here, applying the g eneral principle s of issue preclusion, the trial court concluded that the a rbitrator’s aw ard, which finally det ermined that the individual Labor Co de violations alleged by Sorokunov h ad not occurred, conclusively establis hed that he wa s not an aggrieved e mployee with standing to prosecut e a PAGA clai m based on the same alleged Labo r Code violations. On this ground, the court gr anted NetApp’ s motion for judgment on the pleadings. We review the tri al court’s orde r de novo. (Rodrigue z, sup ra, 106 Cal.App. 5th at p. 654.) “Issue preclusion ‘pr ecludes relitiga tion of issues argued and decided in prior proceedings.’ [Citations.] The doctrine is applied ‘only if several threshold requir ements are fulfilled,’ namely: (1) ‘the i ssue sought to be precluded from r elitigation must be identical to that decided in a former proceeding’; (2) ‘this issue must ha ve been actually liti gated in the former proceeding’; (3) ‘it must have been necessarily decided in the former proceeding’; (4) ‘the decision in the former proceed ing must be final and on

28 the merits’; an d (5) ‘the party against whom precl usion is sought must be the same as, or in privity with, the par ty to the former proce eding.’ ” (Rocha v. U-Haul Co. of Calif ornia (2023) 8 8 Cal.App.5th 65, 7 8 (Rocha).) PAGA defines an “aggrieved emplo yee” who has standi ng to bring a PAGA claim as “any person w ho was employed by the allege d violator [of the Labor Code] a gainst whom one or m ore of the alleged v iolations was committed.” (§ 269 9, subd. (c).) “[U]nless and until th ere is a finding on th e merits regarding th e alleged viola tion, allegations of a Lab or Code violation by an alleged employee or former e mployee are alone s ufficient to establis h PAGA standing.” (Rocha, supra, 88 Ca l.App.5th at p. 77; see Stone v. Alameda Health System (2024) 16 Cal.5t h 1040, 107 6 [“the statute p lainly requires that t he plaintiff have ‘su stain[ed] a L abor Code violation c ommitted by his or her e mployer’ ”].) In Gavriiloglou v. P rime Healthcare M anagement, Inc. (2022) 83 Cal.App.5th 59 5, 600, 60 3 (Gavriilog lou), the court held t hat an arbitr ation aw ard concluding “that the alleged Labor Code violations did not occur” against the p laintiff did not precl ude that same plaintiff from qualifying as an “ag grieved employee” u nder PAGA ba sed on the same alleged Labor Code violations because t he plaintiff was acti ng in different capacities in bringin g her individua l claim and her PAG A claim, and she was “not litigating the s ame right.” T he court reasoned tha t in the arbitration, Gavriiloglou was liti gating her own indi vidual right to damages for Labor Code violations, wh ereas in the PA GA action she was li tigating the state’s right to statutory pe nalties for Labor Co de violations. (Id. a t p. 60 3.) The court concluded tha t she was not litigat ing the same ri ght because “ ‘[Individual] emplo yees do not ow n a personal claim f or PAGA civil

29 penalties [citation], and whatever perso nal claims [ind ividual] employees might have for relie f are not at stake.’ ” (I bi d.) In Rocha, supra, 88 Cal.App.5th at pages 73, 7 6, and 79, the court disagreed with the a pproach taken in G avriiloglou and c oncluded that an arbitrator ’s ad judication of a Labor Code violati on in favor of an emp loyer in the context of two e mployees’ pers onal claims for dam ages precluded those employees from alle ging that they had standing under PAGA to seek civil penalties based on t he same purported violation. The court explained tha t the issue of whether the plaintiffs are “a ggrieved emplo yees” based on the alleged section Labo r Code violation was “actually litigated i n the arbitration, and was necessary t o resolution of t he claims in arbitr ation.” (Rocha, supra, 88 Cal.App.5th at p. 79.) The arbi trator’s finding was fi nal and binding on the employees, who were parties to the arbitration. (I bid.) The court concluded that “determining whether a plaintiff suffered a Labor Code violation is no differ ent in the conte xt of an individual Labor Code claim [for damages] than it is in the context of determining an e mployee’s standing t o bring a PAGA claim. Therefore, in t hese two scenarios, the plaintiff ‘ “is in fact litigating the sa me right.” ’ ” (I d. at p. 82.) The court re asoned that this “approach is necess ary in order to avoid inconsistent a djudications as to whether a particula r Labor Code violati on occurred.” (Id. at p. 78.) After these case s were decided, in A dolph v. Uber Technologies, Inc. (2023) 14 Ca l.5th 1104, 112 4, the Calif ornia Supreme C ourt cited Rocha in support of the proposition as serted by the employ ee that “[i]f the ar bitrator determines that Ad olph is not an aggrieved employee and the co urt confirms that determination and reduces it to a final judg ment, the co urt would give effect to that fi nding, and Adolph c ould no longer prosec ute his non- individual claims du e to lack of sta nding.” Then, in Sto ne v. Alameda Health

30 System, supra, 1 6 Cal.5th 1040, 1076 – 10 77, the Court cited Adolph and Rocha in support of the proposition that “[w]hen liabili ty for [an] underlying violation has not b een established, any PAGA claims s eeking penalties for the alleged violation must also fail.” Next, in Rodriguez, supra, 106 Cal.App. 5th at p ages 65 6 to 665, a c ase procedurally identic al to this case, the c ourt relied on A dolph and Rocha in holding that an arbi trator’s previous adj udication of La bor Code violations in favor of the defenda nt employer pre cluded plaintiff fro m asserting a PAGA cause of action base d on those same Lab or Code violati ons. The court reasoned that, insofar as the Gavriiloglou court co nflated t he requirements for issue preclusion and those of cla im preclusion, only t he latter of which requires that the ca pacity of the plaintif f be the same, it is d istinguishable. (Rodriguez, supra, 1 06 Cal.App.5th at p. 657.) Finally, in Prime Healthcare Manage ment, Inc. v. Superior Court (2 025) 117 Cal.App.5th 127 (Prime Healthcare), the court confir med its prior determination that the arbitration awa rd in defendant ’s favor did not bar Gavriiloglou’s PAGA claim. The court reiterate d its prior reasoning, but citing Contreras v. S uperior Court (2021) 61 Cal.App.5th 46 1, 474, a lso held that “the preliminar y or ‘gateway’ issue of the employe e’s standing as an ‘aggrieved employee ’ ” must be dec ided by the court rath er than by an arbitrator. (Prime Healthcare, supra, at p. 141.) The court further reasoned that, to the extent t he arbitrator in that case had reject ed Gavriiloglou’s alleged individual L abor Code claims on the ground tha t she was an “exem pt employee,” there wa s “no finding on the question of whe ther Gavriiloglou qualifies as an aggri eved employee.” (Id. at p. 139.) The court continued, “It follows that where t he arbitrator was no t tasked with deciding whether the employee was aggri eved or not, and ma de no express fi nding on that issue,

31 the arbitrator’s find ings are not binding on the judicial determination of th e PAGA claims.” (Id. at p. 141.) Relying on Gavriiloglou, Soro kunov con tends that Rocha is factually distinguishable, Ro driguez was wrongl y decided, and the statement quot ed above from Adolph i s not controlling. He argues that t he court erred in giving preclusive eff ect to the arbit rator’s award to bar the P AGA case from proceeding because the parties wer e not the same or in privity in the arbitration an d PAGA case, and b ecause the issu es in the PAGA cas e are not identical to those de cided by the ar bitrator. He also ar gues that considerations of policy mak e application of issue preclusion inappro priate in this case. As discussed below, we believe that Rod riguez properly re solved the disagreement between Gavriiloglou and Rocha in favor of the applic ation of issue preclusion un der these circum stances. A. “ ‘ “In accordance w ith due process, [issue preclusion] ca n be asserted only against a party to the first lawsuit, or one in privity with a party.” ’ [Citation.] ‘The bar is asserted against a party who h ad a full and fair opportunity to litiga te the issue in the fi rst case but los t.’ ” (Rodriguez, supra, 106 Cal.App. 5th at p. 662.) Here, the trial court found that Sor okunov, as the plai ntiff in both the arbitration and the trial court proce edings, had a full and fair opportunity t o litigate his individu al Labor Code claim s. The trial cou rt found that his “inability to prove h is individual Labor Code claims m eans that plaintiff c an no longer allege any individual Labor C ode claims wit h plausible merit” a nd thereafter he is not an aggri eved employee as d efined by th e PAGA and does not have standing t o prosecute a claim on behalf of the LWDA. In so holdi ng,

32 the court rejected S orokunov’s argu ment that “ dismis sal of this case would be an injustice because the arbitrator’s deci sion was in error an d there is a public interest in en forcing the stat e’s Labor Code.” T he court explained, “This order holds on ly that this pa rticular plaintiff lac ks standing under Labor Code [section ] 2699, subdi vision to prosecute the claims that thi s plaintiff had asserte d in this case as pro xy and agent of the LWDA under th e PAGA. This order d oes not prevent the LWDA from pro secuting its own action regarding the same alleged Labor Code violation s. This order does n ot prevent any other N etApp employe es from asserting in dividual claims against NetApp in a rbitration or in cour t, or from seeki ng to assert claims against NetApp as proxy or agent of the LWDA u nder the PAGA.” Sorokunov contends the trial court erred by concluding that his standing to prosecut e a PAGA claim was an issue separ ate from the merits of the PAGA claim. H e argues that “stand ing cannot be pulled from a PAGA claim and treated a s if the LWDA is not involved.” He sugg ests that “[w]henever there is ‘no standing’ because there were no Labor Code violations, there is a lso a judgment against the LWDA. Wh enever a judgment finds an e mployee ‘has standi ng’ because he suffered a Labor Co de violation, there is al so a judgment for th e LWDA. [¶] The court cannot ap ply issue preclusion to d efeat plaintif f’ s stan ding without also ap plying it against the LWDA, who . . . may be bound by an y judgment in a PA GA case through issue preclusion.” (I talics omitted.) He also notes that, as practical matter, because the LWDA can bring claims going back only one ye ar (Code Civ. Proc., § 340, subd. (b)), “[e]ven if the L WDA filed a su it against NetApp the same day the superi or court entered its j udgment on the pleadings, the judgment would ext inguish all the LWD A’s claims for NetApp’s violations of the Labor Code fro m September 30, 2018 throu gh October 7, 2023.”

33 Sorokunov cites onl y Arias v. Superi or Court (2009) 4 6 Cal. 4th 969 in support of his argu ment that the LWD A would be bo und by the judgment against Sorokunov. In that case, t he Court held t hat a plaintiff bringing a PAGA claim was no t required to meet t he requirement s for a class action because the action d id not raise the sam e due process co ncerns. (Id. at p. 985.) The c ourt explained that “[b]ecause an aggrie ved employee’s acti on under the Labor Co de Private Attorney s General Act of 2004 functions as a substitute for an act ion brought by the g overnment itsel f, a judgment in th at action binds all thos e, including nonpart y aggrieved em ployees, who would be bound by a judgmen t in an action broug ht by the gover nment.” (Arias, at p. 98 6.) Arias does not sugg est in any way that a PAGA action that is dismissed on the pleadings du e to the plaintif f’ s la ck of standing, rath er than decided on the merits of the underlying La bor Code violations, would be binding o n the LWDA. To the c ontrary, as the trial court acknowled ged, the adjudication of Soro kunov’s individ ual Labor Code cla ims has no claim preclusive or issue p reclusive effect a gainst the LWDA. (Howitson v. Evans Hotels, LLC (20 22) 81 Cal.A pp.5th 475, 487 – 489.) Finally, S orokunov’s argument regarding the practical re alities of PAGA liti gation is better addressed in connec tion with his p olicy argument, whic h we consider below. It does not establish that NetApp c annot meet the sa me-party requirement for application of iss ue preclusion. B. “ ‘ “ ‘The “identical i ssue” requirement a ddresses whether “i dentical factual allegations” are at stake in the two proceedings, not whether the ultimate issues or di spositions are t he same. [Citation.]’ ” ’ [Citation.] ‘An issue decided in a pr ior proceeding estab lishes [issue pre clusion] even if som e

34 factual matters or le gal theories th at could have been presented with respe ct to that issue were n ot presented.’ ” (Ro driguez, supra, 106 Cal.App.5th at p. 659.) “ ‘ “ An issue is actually litigate d [for purposes of issue preclusion] ‘[w]hen [it] is proper ly raised, by the ple adings or other wise, and is submit ted for determination, a nd is determined. . . .’ ” ’ [Citation.] ‘Courts have understood the “ ‘ne cessarily decide d’ ” prong to “requir e[ ] only that the i ssue not have been ‘entir ely unnecessary’ to t he judgment in the initial proceeding.” ’ ” (Id. at p. 660.) Whether Soroku nov is an “aggriev ed employee” for the purposes of PAGA standing is b ased on his ability to allege that he suffered a L abor Code violation. As explai ned in Rocha and R odriguez, to the extent his PA GA standing is depende nt on his having suf fered the same Labor Code violatio ns that have bee n adjudicated in arbitration, his st anding and the under lying violations are c onsidered identical issues. In its order grantin g judgment on t he pleadings, the co urt rejected Sorokunov’s ar gu ment that he had not submitte d all of his Labor Code clai ms to arbitration and that he therefore had individual L abor Code clai ms with plausible merit that would support stan ding as an agg rieved employee for purposes of his PAG A claim. Sorokunov reasserts this argument on appe al. He contends th at “[t]he arbitrator’s award was st rictly confined to w hether NetApp violated the Labor Code b ased on its $31,402.42 d eduction from plaintiff under the Windfalls provi sion. [¶] T he PAGA com plaint, in contrast, alleges Ne tApp violated sectio ns 221, 223, and 2751 in ways other than the ‘windfall’ d eduction: (1) m aking retroactive ch anges to contracts to reduce wages on p ast sales, (2) ma king discretionary red uctions to th e sales revenue amoun ts used to compute wages, and (3) taki ng discretionary deductions from wa ges using provisions other than the Windfalls provision.

35 [¶] T he arbitrator never addresses whether NetA pp violated sections 221, 223, or 2751 in any of these ways.” (Footnote om itted.) NetApp disagrees, a sserting that “t he same alleged La bor Code violations—Sections 202, 203, 2 21, 223, a nd 2751 —were at issue in the arbitration th at are at issue in the PAGA action; [] the parties actually litigated whether Pl aintiff suffered a ny of those allege d Labor Code violations; [] [and th e arbitrator] found t hat Plaintiff d id not suffer any of th e alleged Labor Code violations.” N etApp is correct. Sorokun ov included eac h of these arguments in its arbitratio n demand and the arbitrator’s aw ard addresses each statute in connectio n with his UCL clai m. Unlike in Prime Healthcare, Soro kunov does not ar gu e that, des pite the arbitrator’s r ejection of his alleged Labo r Code violation s, he nonetheless qu alifies as an aggrie ved employee under PA GA. (See Prime Healthcare, supra, 117 Cal.App. 5th at p. 148 [noting that PAGA’s definit ion of an “aggrieved employee” does not “incorporate by refe rence any other statutes governing exempt or nonexe mpt employees under ot her portions of t he Labor Code”].) In his reply, Soroku nov agues that, eve n if the arbitra tor determined that he had no t suffered any of the alleged Labo r Code violations, the arbitrator’s decision reflects legal conclu sions, not factu al findings su bject to issue preclusion. We disagree. T he arbitrat or determined b oth as a matter of fact and law t hat Sorokunov h ad not suffered any of the alle ged Labor Code violations and, as di scussed above, we a gree with that concl usion. The trial court did not err in finding that the arbitrator’s finding s were subject to issu e preclusion. Nor did the trial court err by relying on tho se conclusive f indings to determine th at Sorokunov was n ot an aggrieved employee or to g rant NetApp’s motion for judgment on th e pleadings on the ground that he lack ed standing.

36 C. As Sorokunov asser ts, even when t he threshold require ments of issue preclusion are satisf ied, “courts ma y not apply issue pr eclusion if considerations of po licy or fairness outw eigh the doctrin e’s purpose in a particular case. [Ci tation.] ‘ “In decidin g whether the d octrine is applicabl e in a particular situa tion a court must ba lance the need to limit litigation against the right of a fair adversar y proceeding in which a party may fully present his case.” ’ ” (Bullock v. City of Antioch (2022) 78 Cal.App.5th 40 7, 416.) Sorokunov argues: “The PAGA claim is that NetApp uses a Plan that violates a statute of frauds (§ 2751) to sy stematically take m illions of dollar s in deductions from e mployees’ earn ed commission wag es in violation of sections 221 and 22 3—both crimes (§ 22 5). [¶] To a ffirm the superior court, this Court would ha ve to hold that courts must give pre clusive effect to the statutory interpreta tions of arbitrators about whether empl oyers have committed crimes a gainst employees. T his Court would also have to hold that courts must co nfirm such arbit ration awards and enter judgment dismissing the State ’s case against e mployers for their cri mes against hundreds or even th ousands of other em ployees. All b ased upon one employee’s individu al arbitration and without examini ng the arbitrator’s interpretation of the statutes.” As discussed above, the court’s order gra nting judgment on the pleadings does not h ave any binding or p reclusive effect o n the state’s abil ity to assert those same claims in a differen t action. Sorokunov argues that th is is not true as a prac tical matter because, by the time a PAG A suit is dismissed, the se claims may be ti me barred. Un der PAGA, however, “ [a] s a condition of suit, an aggrieved employee acting on behalf of t he state and

37 other current or for mer employees must provide notice to the employer an d the responsible stat e agency ‘of the spec ific provisions of [the Labor Code] alleged to have been violated, inclu ding the facts and t heories to support th e alleged violation. ’ ” (Williams v. Su perior Court (2 017) 3 Cal.5th 531, 545.) The “evident purpos e” of this notice requirement is to afford the LWDA th e opportunity to decid e whether to al locate resources to an investigation of t he violations alleged a nd to allow the empl oyer to submit a response to the LWDA. (Id. at pp. 5 45– 546.) Onl y if the agency e lects not to investig ate, or investigates without issuing a citation, may the employee b ring a PAGA action. (Id. at p. 545.) Accordingly, the state is not wi thout the ability to protect its interests when it determ ines such course of act ion is appropriat e. DISPOSITION The judgment is affi rmed. NetApp is entitled to recover its costs on appeal. GOLDMAN, J. WE CONCUR: STREETER, Acting P. J. MOORMAN, J. * * Judge of the Mendocino Supe rior Court, assigned by the Chi ef Justice pursuant to article VI, section 6 of the California Constitut ion.

38 Trial Court: Alameda Count Sup erior Court Trial Judge: Honorable Noël Wis e Counsel for Plaintiff and Appellant: Law Office Of Franc is J. Flynn, Jr., Francis J. Flynn, Jr.; Hoffman + Shapleigh Law, Chr istopher J. Hoff man Counsel for Defenda nt and Respondent: Sheppard, Mullin, R ichter & Hamp ton, Thomas Roy Kaufm an, Paul S. Cowie, Patricia M. Jeng, G al Gressel