Arbitration loss precludes superior court PAGA suit

A series of cases has analyzed how to handle an individual claim that is properly subject to arbitration and a companion Private Attorneys General Act (PAGA) claim that cannot be forced into arbitration. Do the two cases proceed side by side? Will they lead to inconsistent results? We are beginning to see how this choreography plays out in cases such as the one below. 

Losing a windfall 

Alexander Sorokunov was employed by NetApp from 2016 through June 2019. His compensation consisted of an annual salary and “commissions.” His commissions for the relevant period were governed by two documents— his individual goal sheet and the compensation plan for fiscal year 2019. Commissions are calculated as a percentage of sales revenue the participant achieves in their territory during the period defined in the goal sheet and are “earned only when (a) a customer has paid the Company the full contract amount . . . and (b) the Company has made all adjustments for refunds, credits, price changes, cancellations or de-bookings unless otherwise prohibited by applicable law.” 

Under the windfall provision of the plan, NetApp reserved the right to limit an employee’s commissions to avoid a windfall. Under that provision, a windfall may occur if an employee’s goal for a particular territory is exceeded by more than 200%. If NetApp invokes this provision, a participant may receive a goal adjustment or a lower commission than the amount provided for in the participant’s goal sheet.