Judge: Anne Richardson, Case: 23STCV12776, Date: 2023-12-19 Tentative Ruling

DEPARTMENT 40 - JUDGE ANNE RICHARDSON - LAW AND MOTION RULINGS
The Court issues tentative rulings on certain motions.The tentative ruling will not become the final ruling until the hearing [see CRC 3.1308(a)(2)]. If the parties wish to submit on the tentative ruling and avoid a court appearance, all counsel must agree and choose which counsel will give notice. That counsel must 1) email Dept 40 by 8:30 a.m. on the day of the hearing (smcdept40@lacourt.org) with a copy to the other party(ies) and state that all parties will submit on the tentative ruling, and 2) serve notice of the ruling on all parties. If any party declines to submit on the tentative ruling, then no email is necessary and all parties should appear at the hearing in person or by Court Call. 

Case Number: 23STCV12776    Hearing Date: December 19, 2023    Dept: 40

Superior Court of California

County of Los Angeles

Department 40

Background

Plaintiff Charlene Manuyco, as an individual, on behalf of herself and on behalf of the State of California and other Aggrieved Employees, sues Defendants Los Pericos Food Products, LLC (Los Pericos) (a food products manufacturer), Employee Force Providers, Inc. (EFP) (a staffing agency), and Does 1-50.

The operative June 5, 2023 Complaint alleges claims of (1) Violation of the Private Attorneys General Act [Labor Code § 2698 et seq], (2) Retaliation in Violation of Cal. Lab. Code §§ 98.6, 1102.5, & 6310, and (3) Wrongful Termination in Violation of Public Policy, stated against all Defendants equally.

The PAGA claim arises from allegations that during Plaintiff’s employment with Los Pericos and EFP—alleged joint employers—Defendants engaged in conduct amounting to various Labor Code violations of Plaintiff’s and other aggrieved employees’ rights. These include meal period violations, rest period violations, wage statement violations, off-the-clock work resulting in minimum time and overtime violations, regular rate violations (e.g., overtime, double time, meal and rest period premiums, and sick pay), violations for untimely payment of wages, unlawful rounding violations, timekeeping manipulation, and unlawful reductions. Plaintiff alleges that Los Pericos is a manufacturer of food products, and EFP is a staffing agency.

The retaliation and wrongful termination claims arise from allegations that Plaintiff engaged in protected activity pursuant to various Labor Code sections when she made protected complaints to Defendants regarding the need to supply employees with gloves to protect employees for the effect of the harsh chemicals and cleaning agents with which the employees worked, and that, in retaliation for making that complaint, Plaintiff Manuyco’s employment was terminated on August 22, 2022.

On September 13, 2023, Los Pericos and EFP filed a motion to compel arbitration of all claims alleged in the Complaint—including the representative PAGA claims—and for a stay of proceedings in the action.

On December 5, 2023, Plaintiff Nanuyco opposed the motion.

On December 12, 2023, Los Pericos and EFP replied to the opposition.

Los Pericos and EFP’s motion is now before the Court.

Evidentiary Objections

Opposition Objection to Pimentel Declaration

Objection No. 1: OVERRULED. Personal knowledge as to documents kept in the course of business during time of Plaintiff’s employment.

Motion to Compel Arbitration

Preliminary Discussion – Timeliness of Opposition

The Court notes that the opposition to the motion to compel is timely. (Cf. Reply, p. 3.)

The requirements of Code of Civil Procedure sections 1290 to 1291.2 are applicable to petitions filed with this Court in the first instance, i.e., a petition that initiates a proceeding before this Court. (See, e.g., Code Civ. Proc., § 1290.4 [unless otherwise provided by contract, a petition to enforce an arbitration agreement must be served in the manner provided by law for the service of summons in an action].) Here, Defendants have instead filed a motion in a civil action initiated by another party: Plaintiff Manuyco. Those sections are thus inapplicable.

Instead, Code of Civil Procedure section 1005, subdivision (b) controls, which provides that the opposition must be filed nine court days before the hearing date, which here, places the deadline for the opposition on December 6, 2023. The opposition was filed on December 5, 2023. It is therefore timely.

Legal Standard

The Federal Arbitration Act (“FAA”), while a federal statute, applies in California courts and requires state courts to enforce arbitration agreements as required by the federal common law developed under the FAA. (See Southland Corp. v. Keating (1984) 465 U.S. 1, 15-16; Broughton v. Cigna Healthplans (1999) 21 Cal.4th 1066, 1074-78, superseded by statute on another ground as stated in Ferguson v. Corinthian Colleges, Inc. (9th Cir. 2013) 733 F.3d 928, 937.).) The FAA preempts and invalidates state law and state judicial decisions that disfavor arbitration or require arbitration provisions to pass higher scrutiny. (Southland Corp. v. Keating, supra, at p. 12; Perry v. Thomas (1987) 482 U.S. 483, 490.) If the parties designate the FAA applies, then California arbitration law is preempted. (See, e.g., Rodriguez v. American Techs., Inc. (2006) 136 Cal.App.4th 1110, 1121-1122.) However, courts have found that where the FAA is found not to apply, the California Arbitration Act (Code Civ. Proc. § 1280 et seq.) applies. (See Valencia v. Smyth (2010) 185 Cal.App.4th 153, 178.)

 A court’s inquiry is limited to a determination of (1) whether a valid arbitration agreement exists and (2) whether the arbitration agreement covers the dispute. (9 U.S.C. § 4; Chiron Corp. v. Ortho Diagnostics Systems, Inc. (9th Cir. 2000) 207 F.3d 1126, 1130; Howsam v. Dean Witter Reynolds, Inc. (2002) 537 U.S. 79, 84; see Simula, Inc. v. Autoliv, Inc. (9th Cir. 1999) 175 F.3d 716, 720 [if the finding is affirmative on both counts the FAA requires the Court to enforce the arbitration agreement in accordance with its terms].) “An order to arbitrate the particular grievance should not be denied unless it may be said with positive assurance that the arbitration clause is not susceptible of an interpretation that covers the asserted dispute.” (United Steelworkers of America v. Warrior & Gulf Navigation Co. (1960) 363 U.S. 574, 582-583.) 

 Moreover, the general rule is that the FAA governs all agreements to arbitrate in contracts “involving interstate commerce.” (Higgins v. Superior Court (2006) 140 Cal.App.4th 1238, 1247.) The term “involving” commerce “is broad and is indeed the functional equivalent of “affecting’ commerce.” (Allied-Bruce Terminix Companies, Inc. v. Dobson (1995) 513 U.S. 265, 273-274.) The U.S. Supreme Court has held that this broad interpretation includes employment contracts. (See Circuit City Stores v. Adams (2001) 532 U.S. 105, 106.) The defendant bears the burden of proving applicability of the FAA by showing that its activities constitute interstate commerce. (Hoover v. Am. Income Life Ins. Co. (2012) 206 Cal.App.4th 1193, 1207.) Failure to demonstrate that the employment agreement affects interstate commerce renders the FAA inapplicable. (See Lane v. Francis Capital Management LLC (2014) 224 Cal.App.4th 676, 687-688; Woolls v. Superior Court (2005) 127 Cal.App.4th 197, 212.)

Even where the FAA governs the interpretation of arbitration clauses, California law governs whether an arbitration agreement has been formed in the first instance. (Baker v. Osborne Development Corp. (2008) 159 Cal.App.4th 884, 893.) 

 The party seeking arbitration has the “burden of proving the existence of a valid arbitration agreement by a preponderance of the evidence.” (Ruiz v. Moss Bros. Auto Group, Inc. (2014) 232 Cal.App.4th 836, 842.) “Once that burden is satisfied, the party opposing arbitration must prove by a preponderance of the evidence any defense to the petition.” (Lacayo v. Cataline Restaurant Group Inc. (2019) 38 Cal.App.5th 244, 257.) “The trial court sits as the trier of fact, weighing all the affidavits, declarations, and other documentary evidence, and any oral testimony the court may receive at its discretion, to reach a final determination.” (Ruiz v. Moss Bros. Auto Group, Inc., supra, at p. 842.) 

On a petition to compel arbitration, the court must grant the petition unless it finds (1) no written agreement to arbitrate exists, (2) the right to compel arbitration has been waived, (3) grounds exist for revocation of the agreement, or (4) litigation is pending that may render the arbitration unnecessary or create conflicting rulings on common issues. (Code Civ. Proc., § 1281.2; see Condee v. Longwood Management Corp. (2001) 88 Cal.App.4th 215, 218-219.)

In determining the enforceability of an arbitration agreement, the court considers “two ‘gateway issues’ of arbitrability: (1) whether there was an agreement to arbitrate between the parties, and (2) whether the agreement covered the dispute at issue.” (Omar v. Ralphs Grocery Co. (2004) 118 Cal.App.4th 955, 961.) If these issues are satisfied in favor of the movant, (3) the party opposing arbitration must prove by a preponderance of the evidence any defense to the petition. (Lacayo v. Cataline Restaurant Group Inc., supra, 38 Cal.App.5th at p. 257.)

Order Compelling Arbitration: DENIED.

I.

Whether Arbitration Agreement Exists

“Parties are not required to arbitrate their disagreements unless they have agreed to do so. [Citation.] A contract to arbitrate will not be inferred absent a ‘clear agreement.’ [Citation.] When determining whether a valid contract to arbitrate exists, we apply ordinary state law principles that govern contract formation. [Citation] In California, a ‘clear agreement’ to arbitrate may be either express or implied in fact. [Citation.]” (Davis v. Nordstrom, Inc. (9th Cir. 2014) 755 F.3d 1089, 1092-93 [applying California law].) The court is only required to make a finding of the agreement’s existence, not an evidentiary determination of its validity. (Condee v. Longwood Management Corp., supra, 88 Cal.App.4th at p. 219.)

The burden of persuasion is always on the moving party to prove the existence of an arbitration agreement with the opposing party by a preponderance of the evidence. (Gamboa v. Northeast Community Clinic (2021) 72 Cal.App.5th 158, 164-165, citations omitted.)

Here, in the moving papers, Defendants Los Pericos and EFP attached copies of two documents purportedly amounting to an agreement to arbitrate between Plaintiff Manuyco and EFP. The first document contains an agreement in Spanish with a signature attributed to Plaintiff Manuyco, while the second is an English version “substantively identical” to the first, without a signature. No signatures appear in either document attributable to EFP, nor is there any signature line for EFP or any party other than the employee. Neither is EFP directly named in the agreement; rather, the Agreement refers to “This Job Agency (‘Company’).” (Mot., Notice, Pimentel Decl., ¶¶ 7-8, Exs. 1 [arbitration agreement with signature, in Spanish], 2 [same agreement in English, not signed]; see Mot., Notice, Points and Authorities, pp. 14-15.)

Defendants make various arguments for why the agreement is equally applicable to Los Pericos. (Mot., Notice, Points and Authorities, pp. 15-17.)

Defendants otherwise argue that determinations as to the validity or enforceability of this agreement should be determined by an arbitrator. (Mot., Notice, Points and Authorities, p. 20.)

In response, Plaintiff Manuyco argues that no agreement to arbitrate exists between the parties because the agreement signed by Plaintiff Manuyco does not identify by name the “Company” at issue in the contract. Plaintiff Manuyco relies on Flores v. Nature’s Best Distribution, LLC (2016) 7 Cal.App.5th 1 (Flores) for the proposition that where an agreement to arbitrate signed as part of an employment onboarding packet does not identify or define the term “company,” the agreement is not enforceable because it fails to reflect the employee’s agreement to submit her claims against Defendants to binding arbitration. Plaintiff also argues that if the agreement is not enforceable as to EFP, it cannot be enforced by Los Pericos as some kind of affiliated company or otherwise. (Opp’n, pp. 3-6.)

Plaintiff makes other arguments against contract formation, including that the failure to name EFP or Los Pericos in the purported arbitration agreement shows a lack of mutual assent to contract formation. She argues that the additional evidence submitted by Defendants—including copies of onboarding documents signed by EFP agents—is irrelevant to the determination of whether an agreement to arbitrate was executed between Plaintiff and EFP. Last, Plaintiff argues that Los Pericos cannot enforce the arbitration agreement as a non-signatory, and that contract formation should be decided by the Court, not an arbitrator. (Opp’n, pp. 6-9.)

Plaintiff Manuyco also provides her sworn declaration, which admits that Plaintiff signed the purported arbitration agreement. The declaration also explains that the agreement was presented to Plaintiff by Martha Griffin, that Plaintiff asked what it was, that Griffin referred Plaintiff to a “Leonardo,” and that Leonardo informed Plaintiff that the agreement had to do with tax deductions and claims for disability and sick leave. (Opp’n, Manuyco Decl., ¶¶ 1-4.)

 In reply, Defendants argue that Flores is distinguishable because in Flores, the appellate court found that the absence of various pieces of information—including ambiguity as to whether the scope of the agreement encompassed the lawsuit’s claims and failure to identify the governing rules and procedures for arbitration—showed no contract formation occurred. In contrast, argue Defendants, Plaintiff here merely challenges the failure to name EFP directly into the agreement, which Defendants contend is not fatal pursuant to Serafin v. Balco Properties Ltd. (2015) LLC, 235 Cal.App.4th 165, 174-175. Defendants also argue that the arbitration agreement names EFP through references to “The Employment Agency,” the only reasonable interpretation of which is a reference to EFP. (Reply, pp. 6-8.)

Defendants otherwise argue that questions of contract formation and scope of claims encompassed in the agreement are for the arbitrator to decide, as based on the FAA, AAA Rules, and the agreement’s delegation clause, and that Plaintiff’s opposition failed to rebut authority permitting Los Pericos to enforce the agreement. (Opp’n, pp. 8-10.)

The Court finds in favor of Plaintiff Manuyco.

Put simply, no agreement to arbitrate exists. While “[a] contract may be explained by reference to the circumstances under which it was made, and the matter to which it relates” (Civ. Code, § 1647), “[i]t is essential to the validity of a contract, not only that the parties should exist, but that it should be possible to identify them. (Civ. Code, § 1558.) Here, the arbitration agreement completely fails to identify EFP or Los Pericos by name. (Mot., Notice, Pimentel Decl., Exs. 1-2.) While the contract does name “The Employment Agency,” such naming is much too general to identify EFP.

To support this conclusion, the Court refers to Flores v. Nature’s Best Distribution, LLC (2016) 7 Cal.App.5th 1 and Villareal v. LAD-T, LLC (2022) 84 Cal.App.5th 446. While the facts in Flores were such that there were three bases for determining that no enforceable agreement existed between the parties (Flores, supra, at pp. 9-11), Flores does not stand for the proposition that the failure to name a party on a contract is an insufficient basis to find that the contract is not enforceable. At most, Flores relied on three bases for finding that no enforceable contract existed in that case, which does not foreclose this Court’s determination that a failure to name EFP in the arbitration agreement is fatal. Moreover, in Villareal, the court of appeal determined that a trial court did not err in denying a motion to compel arbitration where the agreement inaccurately defined “DT Los Angeles Toyota” instead of “Toyota of Downtown Los Angeles (LAD-T)” as the contracting party, specifically because the employer did not ensure that the employee “knew the true identities of the individuals with who[m] [he was] dealing.” (Villareal, supra, at pp. 461-462.)

The Court reiterates that “[i]t is essential to the validity of a contract, not only that the parties should exist, but that it should be possible to identify them.” (Civ. Code, § 1558.) EFP here has failed to do so. As EFP cannot rely on this Agreement, neither can Los Pericos as an ostensible third party beneficiary of the contract.

Moreover, and although not briefed by the parties, even if the Court had found an agreement to arbitrate Plaintiff’s individual claims (which it has not), there is no question that Plaintiff’s non-individual PAGA claims could not be compelled to arbitration. (Adolph v. Uber Technologies, Inc. (2023) 14 Cal.5th 1104, 1114.)

Defendants’ motion is DENIED.  

Conclusion

Defendants Los Pericos Food Products, LLC, and Employee Force Providers, Inc.’s Motion to Compel Arbitration is DENIED.