Judge Armen Tamzarian, Case Number: 24STCV09856, Date: 2024-08-27 Tentative Ruling

Judge: Armen Tamzarian, Case: 24STCV09856, Date: 2024-08-27 Tentative Ruling

Case Number: 24STCV09856 Hearing Date: August 27, 2024 Dept: 52

Tentative Ruling:

Defendant United Services Automobile Association’s Motion to Compel Arbitration and Stay Proceedings

Defendant United Services Automobile Association moves to compel arbitration of plaintiff Jad Abulhusn’s individual claims under the Private Attorneys General Act (PAGA) and stay the representative PAGA claims. (See Viking River Cruises, Inc. v. Moriana (2022) 596 U.S. 639, 662-663; Adolph v. Uber Technologies, Inc. (2023) 14 Cal.5th 1104, 1113-1114 (Adolph) [discussing arbitrable “individual” PAGA claims and nonarbitrable representative or “non-individual” claims].)

Plaintiff opposes the motion solely by arguing his complaint does not allege any individual PAGA claims. He contends the complaint brings only representative or non-individual PAGA claims. Plaintiff relies on Balderas v. Fresh Start Harvesting, Inc. (2024) 101 Cal.App.5th 533 (Balderas), which held, “[A]n employee who does not bring an individual claim against her employer may nevertheless bring a PAGA action for herself and other employees of the company.” (Id. at p. 536.) “The inability for an employee to pursue an individual PAGA claim does not prevent that employee from filing a representative PAGA action.” (Id. at p. 537.) The court held the plaintiff had standing to bring a PAGA action based on the following principle: “There are only two requirements for PAGA standing. ‘The plaintiff must allege that he or she is (1) “someone ‘who was employed by the alleged violator’ ” and (2) someone “ ‘against whom one or more of the alleged violations was committed.’ ” ’ ” (Id. at pp. 538-539, quoting Adolph, supra, 14 Cal.5th at p. 1122.)

Plaintiff’s reliance on Balderas is misplaced. The Court of Appeal did not review a motion to compel arbitration. Rather, it reversed the trial court’s order striking the plaintiff’s complaint on the basis that the plaintiff had no standing “because she had not filed an individual action seeking PAGA relief for herself.” (Balderas, supra, 101 Cal.App.5th at p. 536.) That an employee has standing to bring non-individual PAGA claims (without individual PAGA claims) has no bearing on the extent to which an employer can compel arbitration of disputes involved in non-individual PAGA claims.

Assuming plaintiff brings only representative or non-individual PAGA claims in this action, plaintiff still agreed to arbitrate an essential element of that dispute. The parties’ arbitration agreement provides, “Arbitration under [the agreement], rather than trial before a court or jury, is the final, exclusive, and binding means for resolving all Disputes that are not otherwise settled or resolved by the Parties.” (Martinez Decl., Ex. A, ¶ 4.A.) It defines “Dispute” as “all legal and equitable claims, demands, and controversies, of whatever nature or kind, whether in contract, tort, under statute or regulation, or some other law, (i) between the Company and an Employee or Applicant.” (Id., ¶ 2.G.) The agreement lists examples of covered disputes, including “the employment or potential reemployment of an Employee, including the terms, conditions, and termination of such employment with the Company” (id., ¶ 2.G.2) and “any other matter relating to or concerning the relationship between the Employee and the Company including, by way of example and without limitation, … failure to pay wages; failure to comply with any mandatory leave or reinstatement obligations, etc.” (Id., ¶ 2.G.3.)

This agreement broadly applies to employment disputes, including Labor Code violations. “To have PAGA standing, a plaintiff must be an ‘aggrieved employee’ — that is, (1) ‘someone “who was employed by the alleged violator” ’ and (2) ‘ “against whom one or more of the alleged violations was committed.” ’ ” (Adolph, supra, 14 Cal.5th at p. 1114.) Determining whether defendant violated plaintiff’s rights under the Labor Code is both (a) necessary for him to have standing in this action, and (b) an arbitrable “Dispute” under the parties’ arbitration agreement.

The Federal Arbitration Act generally requires enforcing written agreements “to settle by arbitration a controversy … arising out of” a contract. (9 U.S.C. § 2.) Similarly, the California Arbitration Act generally requires ordering arbitration of a “controversy” when a party establishes “the existence of a written agreement to arbitrate a controversy.” (Code Civ. Proc., § 1281.2.) Plaintiff’s non-individual PAGA claims include a “controversy” he agreed to arbitrate: whether defendant committed any Labor Code violations against him. Plaintiff has not established any basis permitting the court to refuse to enforce the arbitration agreement as to that controversy.

Adolph contemplated this scenario. The California Supreme Court noted that Uber had “no convincing argument” against the plaintiff’s proposal that “his PAGA action could proceed in the following manner if he were ordered to arbitrate his individual PAGA claim: First, the trial court may exercise its discretion to stay the non-individual claims pending the outcome of the arbitration pursuant to section 1281.4 of the Code of Civil Procedure. Following the arbitrator’s decision, any party may petition the court to confirm or vacate the arbitration award under section 1285 of the Code of Civil Procedure. If the arbitrator determines that Adolph is an aggrieved employee in the process of adjudicating his individual PAGA claim, that determination, if confirmed and reduced to a final judgment [citation], would be binding on the court, and Adolph would continue to have standing to litigate his nonindividual claims. If the arbitrator determines that Adolph is not an aggrieved employee and the court confirms that determination and reduces it to a final judgment, the court would give effect to that finding, and Adolph could no longer prosecute his non-individual claims due to lack of standing.” (Adolph, supra, 14 Cal.5th at pp. 1123-1124.) That procedure is appropriate in this action.

Disposition

Defendant United Services Automobile Association’s motion to compel arbitration and stay the action is granted. The court hereby orders plaintiff Jad Abulhusn to arbitrate the controversy over whether he is an “aggrieved employee” under PAGA. The court hereby stays the entire action pending resolution of the arbitration proceeding.