Judge: Anne Richardson, Case: 23STCV24757, Date: 2024-02-13 Tentative Ruling

Case Number: 23STCV24757    Hearing Date: February 13, 2024    Dept: 40

Superior Court of California

County of Los Angeles

Department 40

Background

Plaintiff David Grylls sued Defendants Virgin Galactic, LLC (VG), Galactic Co., LLC (Galactic), and Does 1 through 10 pursuant to an October 10, 2023 Complaint alleging claims of (1) Wrongful Termination in Violation of Public Policy, (2) Discrimination in Violation of Government Code Section 12940(a), (3) Retaliation for Harassment and/or Discrimination Complaints in Violation of Government Code Section 12940(h), (4) Failure to Prevent in Violation of Government Code Section 12940(k), (5) Failure to Provide CFRA Leave in Violation of Government Code 12945.2(k), (6) Retaliation for Using CFRA Leave in Violation of Government Code Section 12945.2(q), (7) Failure to Pay Overtime in Violation Sections 510, 1194, 1998, (8) Failure to Authorize and Permit Meal Breaks in Violation of Labor Code Sections 226.7 and 512, (9) Failure to Provide Accurate Wage Statements in Violation of Labor Code Section 226(a), and (10) Failure to Pay Wages of Owed Timely in Violation of Labor Code Sections 201 to 203.

On November 20, 2023, the Court related this matter with 23STCV27067, a case between the same parties for PAGA claims only.

On January 18, 2024, Defendants VG and Galactic filed a motion to compel arbitration in this action. According to a proof of service, the motion was personally served on Plaintiff’s counsel at the address appearing on the Complaint’s caption page.

Plaintiff Grylls has failed to oppose the motion to compel arbitration despite, most recently, filing a case management conference statement on January 30, 2024. That statement fails to address Defendants VG and Galactic’s January 29, 2024 case management conference statement’s reference to the motion to compel arbitration and its hearing on February 13, 2024.

Defendants VG and Galactic’s motion to compel arbitration is now before the Court.

Motion to Compel Arbitration

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 v. Keating (1984) 465 U.S. 1, 15-16; Broughton v. Cigna Healthplans (1999) 21 Cal.4th 1066, 1074-78, superseded by statute on another ground as stated in Ferguson v. Corinthian Colleges, Inc. (9th Cir. 2013) 733 F.3d 928, 937.).)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: GRANTED.

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.)

Here, Defendants attach a copy of an electronic arbitration agreement purportedly executed by Defendant Grylls. (Mot., pp. 7-9; see Mot., Witte Decl., Exs. B [acceptance of employment], D [electronic arbitration agreement], E [other onboarding documents executed by Plaintiff].) Defendants attach a declaration from Joy Witte, People Generalist for Galactic since November 2020, which explains the records showing the November 9, 2020 hiring of Plaintiff Grylls and the onboarding process for new employees, including the process by which Plaintiff signed an arbitration agreement and other documents as a condition of employment. (See Mot., Witte Decl., ¶¶ 1-13, Exs. B, D, E; Complaint, ¶ 16 [termination on July 11, 2023].)

No opposition or reply/notice of non-opposition appear in the record.

The Court finds in favor of Defendants.

The Court first determines that the Witte declaration meets the requirements established in Espejo v. Southern California Permanente Medical Group (2016) 246 Cal.App.4th 1047, 1062 and Ruiz v. Moss Bros. Auto Group, Inc., supra, 232 Cal.App.4th at p. 844.

The Court next determines that an arbitration agreement executed by the parties sufficiently carries Defendants’ burden as to this issue. (Mot., Witte Decl., Ex. D; see Gamboa v. Northeast Community Clinic (2021) 72 Cal.App.5th 158, 164-165 [the moving party bears the initial burden of producing prima facie evidence of a written agreement to arbitrate the controversy, which can be met by the moving party by attaching a copy of the arbitration agreement purporting to bear the opposing party’s signature].)

Accordingly, the Court determines that an agreement to arbitrate exists between the parties.

II.

Scope of the Arbitration Agreement

“[T]he decision as to whether a contractual arbitration clause covers a particular dispute rests substantially on whether the clause in question is ‘broad’ or ‘narrow.’” (Bono v. David (2007) 147 Cal.App.4th 1055, 1067.) “‘A “broad” clause includes those using language such as “any claim arising from or related to this agreement”‘ [Citation] or ‘arising in connection with the [a]greement’ [Citation.]” (Rice v. Downs (2016) 248 Cal.App.4th 175, 186 [italics omitted].) “But clauses requiring arbitration of a claim, dispute, or controversy ‘arising from’ or ‘arising out of’ an agreement, i.e., excluding language such as ‘relating to this agreement’ or ‘in connection with this agreement,’ are ‘generally considered to be more limited in scope than would be, for example, a clause agreeing to arbitrate “‘any controversy … arising out of or relating to this agreement[.]’” [Citations.]” (Id. at p. 186-87 [italics omitted].) “Several Ninth Circuit cases have held that agreements requiring arbitration of ‘any dispute,’ ‘controversy,’ or ‘claim’ ‘arising under’ or ‘arising out of’ the agreement are intended to encompass only disputes relating to the interpretation and performance of the agreement.” (Id. at p. 187.)

Defendants argue that the arbitration agreement encompasses all the FEHA, CFRA, Labor Code, and wrongful termination claims because those types of claims are within the scope of the parties’ arbitration agreement. (Mot., pp. 10-12, citing Mot., Witte Decl., Ex. D, ¶ 2.)

No opposition or reply/notice of non-opposition appear in the record.

The Court finds in favor of Defendants.

The parties’ agreement provides: “Employer and Employee hereby agree that the sole and exclusive means to resolve any and all claims or controversies between them, or between Employee and any present or former officer, director, agent, or employee of Employer, relating in any manner to the employment or termination of employment of Employee, shall be by final and binding arbitration under the auspices of the American Arbitration Association (‘AAA’). The Parties agree that any claim, dispute, and/or controversy that Employee may have against Employer (or its owners, directors, officers, managers, employees, or agents), or Employer may have against Employee, shall be submitted to and determined exclusively by binding arbitration under the Federal Arbitration Act, 9 U.S.C. §§ 1 et seq. (“FAA”), in conformity with the procedures of the American Arbitration Association’s Employment Arbitration Rules & Mediation Procedures (‘the AAA Rules’).” (Mot., Witte Decl., Ex. D, ¶ 2.)

The FEHA, CFRA, Labor Code, and wrongful termination claims clearly “relat[e] in [some] manner to the employment or termination of employment of [Plaintiff Grylls from employment with Defendants],” with the parties agreeing to “final and binding arbitration under the auspices of the American Arbitration Association” as to these claims. (Mot., Witte Decl., Ex. D, ¶ 2.)

Accordingly, the Court determines that the agreement to arbitrate between the parties encompasses the claims alleged in the Complaint.

III.

Interstate Commerce

A motion to compel arbitration based on the FAA must show not only that that the employer engaged in interstate commerce but also that “the employment relationship involved interstate commerce.” (Lane v. Francis Capital Management LLC, supra, 224 Cal.App.4th at pp. 687-688.) 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, supra, 185 Cal.App.4th at p. 178.)

Defendants argue that the parties’ arbitration agreement provides that “[t]he FAA applies to th[e] Agreement because [Defendants’] business involves interstate commerce.” (Mot., p. 10, citing Mot., Witte Decl., Ex. D, ¶¶ 2, 12.)

No opposition or reply/notice of non-opposition appear in the record.

The Court finds in favor of Defendants.

Here, either the agreement provides grounds for finding interstate commerce is involved (Mot., Witte Decl., Ex. D, ¶¶ 2, 12), or the Court can enforce the arbitration agreement pursuant to California law (Valencia v. Smyth, supra, 185 Cal.App.4th at p. 178).

The Court thus determines that Defendants have carried their burden in moving for an order compelling arbitration of Plaintiff’s claims.

IV.

Defenses to the Arbitration Agreement

A “party opposing arbitration must prove by a preponderance of the evidence any defense to the petition” to compel arbitration in the matter. (Lacayo v. Cataline Restaurant Group Inc., supra, 38 Cal.App.5th at p. 257.)

Here, because no opposition was filed in response to Defendants VG and Galactic’s motion despite service of this motion on the same address listed in Plaintiff’s Complaint’s caption page (compare Mot., Proof of Service, with Complaint, p. 1), Plaintiff fails to carry his burden to show valid defenses to enforcement of the parties’ arbitration agreement.

Defendants’ motion is thus GRANTED.

V.

Dismissal or Stay of Action

“If a court of competent jurisdiction, whether in this State or not, has ordered arbitration of a controversy which is an issue involved in an action or proceeding pending before a court of this State, the court in which such action or proceeding is pending shall, upon motion of a party to such action or proceeding, stay the action or proceeding until an arbitration is had in accordance with the order to arbitrate or until such earlier time as the court specifies.” (Code Civ. Proc., § 1281.4; see also 9 U.S. Code, § 3 [similar].)

Defendants request a stay of this action pending resolution of the arbitration proceedings. (Mot., pp. 19-20.)

No opposition or reply/notice of non-opposition appear in the record.

The Court finds in favor of Defendants.

The Court ORDERS this action STAYED until an arbitration is had in accordance with this order or until such earlier time as the Court specifies.

Defendants also seek an order to stay the related case, LASC Action No. 23STCV27067, a PAGA case, “pending resolution of this motion.” (Memo. at pp. 19:23 – 20:6.) As a practical matter, that action has been effectively so stayed, and Defendants have not requested that the other matter be stayed after the motion’s resolution. In any event, that PAGA action would presumably be adjudicated in accordance with Adolph v. Uber Technologies, Inc. (2023) 14 Cal.5th 1104, 1123-1124.

VI.

Attorney Fees and Costs

            In their Motion and in the introduction of the Memorandum of Points and Authorities, Defemdants “seek to recover costs and fees associated with bringing said motion to compel, pursuant to Cal. Code Civ. Proc. §§ 128.5 and 128.7.” (Notice of Motion at p. 2:17-18; Memo. at p. 7:13-14.) Nothing more is said about fees or costs in the motion or the memorandum. Nor are fees or costs set forth in either of the declarations filed in support of the motion. (See Joy Witte, Jamie Lee Declarations). Accordingly, the Court has no support for such request nor even a requested number, and denies the request. 

Conclusion

Defendants Virgin Galactic, LLC and Galactic Co., LLC’s Motion to Compel Arbitration is GRANTED.

The Court ORDERS this action STAYED until an arbitration is had in accordance with this order or until such earlier time as the Court specifies.

However, the Court declines to order any arbitration or further stay in relation to LASC Action No. 23STCV27067.