Judge: Ashfaq G. Chowdhury, Case: 23GDCV01005, Date: 2024-03-22 Tentative Ruling
Case Number: 23GDCV01005 Hearing Date: March 22, 2024 Dept: E
Hearing Date: 03/22/2024
– 8:30am
Case No: 23GDCV01005
Trial Date: UNSET
Case Name: JESSE FLORES, individually and on behalf of all other Aggrieved
Employees; v. MANPOWER US INC., MANPOWERGROUP US INC., ZARA USA, INC., and DOES
1-50
TENTATIVE RULING ON DEFENDANT’S MOTION TO
COMPEL ARBITRATION
RELIEF
REQUESTED
“Defendants, Manpower US Inc. and
ManpowerGroup US Inc. (“Manpower Defendants”) will and hereby do move the Court
for an Order (i) compelling Plaintiff Jesse Flores (“Plaintiff”) to arbitrate
her claims on an individual basis, including her individual claims brought
under the Private Attorneys General Act (“PAGA”), pursuant to the terms of a
valid and enforceable arbitration agreement; (ii) staying Plaintiff’s
non-individual PAGA claims; and (iii) staying proceedings pending completion of
the individual arbitration.
Manpower Defendants
bring this Motion because the Court lacks subject matter jurisdiction over
Plaintiff’s individual claims due to a binding, written arbitration agreement
governing the dispute. Under the agreement, Plaintiff agreed to arbitrate all
claims on an individual basis.1 Under the Federal Arbitration Act
and the California Arbitration Act, the Court must order arbitration consistent
with the agreement and stay Plaintiff’s non-individual PAGA claims pending
individual arbitration.
[Footnote 1 states, “By
its terms and California jurisprudence, the agreement Plaintiff executed with
applies to all Defendants, including Zara USA, Inc.”]
Manpower Defendants
base this Motion upon this Notice of Motion and Motion, the accompanying
Memorandum of Points and Authorities, the Declaration of Malinda Searle, the
accompanying exhibits, all papers and pleadings filed in this action, and any
other evidence and argument as presented in connection with the hearing on this
Motion.”
PROCEDURAL
Proof of Service
Timely Filed (CRC Rule 3.1300): Ok
16/21 Court Days Lapsed (CCP 1005(b)): Ok
Proper Address: Ok
Moving Party: Defendants, Manpower US Inc. and
ManpowerGroup US Inc. (Manpower Defendants or Movants)
Defendant, Zara USA, Inc. filed a notice of
joinder to Manpower Defendants’ Motion to Compel Arbitration.
Responding Party: Plaintiff, Jesse Flores
Moving Papers (Movants): Notice; Memorandum;
Searle Declaration; Proposed Order; Proof of Service;
Moving Papers: Notice of Joinder by Zara
Opposition Papers: Opposition
Reply Papers (Movants) : Reply; Request for
Judicial Notice
Reply: Reply by Zara
BACKGROUND
Manpower Defendants
move to compel arbitration of Plaintiff’s individual PAGA claims and stay her
non-individual PAGA claims and any other proceedings.
LEGAL
STANDARD – COMPEL ARBITRATION
CCP § 1281.2, governing orders to arbitrate
controversies, provides:
“On petition of a party to an arbitration agreement alleging the
existence of a written agreement to arbitrate a controversy and that a party to
the agreement refuses to arbitrate that controversy, the court shall order the
petitioner and the respondent to arbitrate the controversy if it determines
that an agreement to arbitrate the controversy exists, unless it determines
that:
(a) The right to compel arbitration has been waived by the petitioner;
or
(b) Grounds exist for the rescission of the agreement.
(c) A party to the arbitration agreement is also a party to a
pending court action or special proceeding with a third party, arising out of
the same transaction or series of related transactions and there is a
possibility of conflicting rulings on a common issue of law or fact. For
purposes of this section, a pending court action or special proceeding includes
an action or proceeding initiated by the party refusing to arbitrate after the
petition to compel arbitration has been filed, but on or before the date of the
hearing on the petition. This subdivision shall not be applicable to an
agreement to arbitrate disputes as to the professional negligence of a health
care provider made pursuant to Section 1295....”
(CCP § 1281.2(a)-(c).)
There is a strong
public policy in favor of arbitration of disputes and any doubts concerning the
scope of arbitrable disputes should be resolved in favor of arbitration. (Moncharsh
v. Heily & Blase (1992) 3 Cal.4th 1, 9.) Arbitration agreements should
be liberally interpreted, and arbitration should be ordered unless the
agreement clearly does not apply to the dispute in question. (Vianna v.
Doctors’ Management Co. (1994) 27 Cal.App.4th 1186, 1189.)
The Court’s starting
point is whether a valid agreement to arbitrate exists. (Cruise v. Kroger
Co. (2015) 233 Cal.App.4th 390, 396.) In ruling on a motion to compel
arbitration, the court must first determine whether the parties actually agreed
to arbitrate the dispute, and general principles of California contract law
help guide the court in making this determination. (Mendez v. Mid-Wilshire
Health Care Center (2013) 220 Cal.App.4th 534, 541.) A petition to compel
arbitration is a suit in equity to compel specific performance of a contract. (Frog
Creek Partners, LLC. v. Vance Brown, Inc. (2012) 206 Cal.App.4th 515,
532.)
ANALYSIS
Preliminary Matter
Plaintiff argues that her Complaint alleges only
a “representative” claim because it filed the Complaint as a Representative
Plaintiff on behalf of all other Aggrieved Employees.
Plaintiff appears to
be making this argument under the following theory: Since representative PAGA claims
cannot be compelled to arbitration, and since Plaintiff’s only claim is a
representative claim, there is no individual claim that can be compelled to
arbitration.
The Court does not
find this argument availing. The Complaint does in fact appear to be asserting both
an individual and a representative claim.
First, Plaintiff’s
Opposition contradicts its own argument. Opposition explicitly admits that “Plaintiff
further seeks civil penalties on behalf of himself as a Representative
Plaintiff and all other Aggrieved Employees.” (Oppo. p. 6.)
Second, the Complaint
itself indicates Plaintiff is seeking relief for an individual and
representative claim. The caption of the Complaint reads, “Jess Flores,
individually and on behalf of all other Aggrieved Employees.” Although the Complaint
indicates that Jesse Flores is referred to as “REPRESENTATIVE PLAINTIFF,” Plaintiff’s
attempt to argue there is no individual claim seems as if it is trying to get
around the fact that Plaintiff asserts an induvial claim based on a technical
labeling.
As indicated in ¶63, “REPRESENTATIVE
PLAINTIFF and the other hourly-paid or non-exempt employees, are “AGGRIEVED
EMPLOYEES” within the meaning of California Labor Code section 2699(c) as they
are all current or former employees of DEFENDANT, and one or more of the
alleged violations was committed against them.” (Compl. ¶63.) Plaintiff
distinguishes between herself the individual, and the other employees.
Plaintiff seems to
misunderstand how the phrase “representative” and “individual” are used in the
context of PAGA.
“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 v. Uber Technologies, Inc. (2023)
14 Cal.5th 1104, 1114 citing Kim v. Reins International California, Inc. (2020)
9 Cal.5th 73, 83, 84.)
In explaining the use
of the word “representative” :
In the first sense, PAGA actions are “representative” in that they are
brought by employees acting as representatives—that is, as agents or proxies—of
the State. But PAGA claims are also called “representative” when they are
predicated on code violations sustained by other employees. In the first sense,
“ ‘every PAGA action is ... representative’ ” and “[t]here is no
individual component to a PAGA action,” Kim, 9 Cal.5th at 87, 259
Cal.Rptr.3d 769, 259 Cal.Rptr.3d, 459 P.3d at 1131 (quoting Iskanian,
59 Cal.4th at 387, 173 Cal.Rptr.3d 289, 327 P.3d at 151), because every PAGA
claim is asserted in a representative capacity. But when the word
“representative” is used in the second way, it makes sense to distinguish
“individual” PAGA claims, which are premised on Labor Code violations actually
sustained by the plaintiff, from “representative” (or perhaps quasi-representative)
PAGA claims arising out of events involving *649 other
employees. For purposes of this opinion, we will use “individual PAGA claim” to
refer to claims based on code violations suffered by the plaintiff. And we will
endeavor to be clear about how we are using the term “representative.”
(Viking River Cruises, Inc. v. Moriana (2022)
596 U.S. 639, 648-649.)
In ¶63, Plaintiff
alleges she is an aggrieved employee and that an alleged violation was
committed against her, thus Plaintiff asserts an individual claim.
Agreement
to Arbitrate
Where a petition is opposed, the burden is on
the party seeking to compel arbitration to establish the existence of a valid
agreement to arbitrate. (Banner Entertainment, Inc. v. Superior Court
(1998) 62 Cal.App.4th 348, 356.) The determination of
arbitrability is a legal question subject to de novo review. An appellate
court will uphold the trial court's resolution of disputed facts if supported
by substantial evidence. (Nyulassy v. Lockheed Martin Corp. (2004)
120 Cal.App.4th 1267.)
Movants attach the agreement to arbitrate in Exhibit 1
of the Searle Declaration.
Plaintiff argues that Defendants failed to demonstrate
that a valid arbitration agreement exists between all parties.
Plaintiff’s argument is based on the fact that
ManpowerGroup US Inc. is the only defendant named in the agreement to
arbitrate, and Manpower US Inc. and Zara USA, Inc. are not parties to the
agreement to arbitrate.
Plaintiff’s argument is unavailing.
The Court does not find Defendants’ argument that all
Defendants are all parties to the agreement based on the agency argument in Thomas
v. Westlake (2012) 204 Cal.App.4th 604, 614-615. Notably, the Complaint
didn’t technically allege agency in the same manner in Thomas.
However, Movants’ citation to Garcia v. Pexco, LLC
(2017) 11 Cal.App.5th 782 is on point.
As stated in Garcia :
Courts recognize
exceptions to the general rule which allow nonsignatories to compel arbitration
of a dispute arising out of the scope of the agreement. (Suh v.
Superior Court (2010) 181 Cal.App.4th 1504, 1513, 105 Cal.Rptr.3d
585.) One of the exceptions is equitable estoppel. (Ibid.) Under this
exception, “a nonsignatory defendant may invoke an arbitration clause to compel
a signatory plaintiff to arbitrate its claim when the causes of action against
the nonsignatory are ‘intimately founded in and intertwined with’ the
underlying contract obligations.” (Boucher, supra, 127
Cal.App.4th at p. 271, 25 Cal.Rptr.3d 440.) The doctrine applies where the
claims are “ ‘ “based on the same facts and are inherently inseparable’ ” from
the arbitrable claims against signatory defendants.” (Metalclad Corp. v.
Ventana Environmental Organizational Partnership (2003) 109
Cal.App.4th 1705, 1713, 1 Cal.Rptr.3d 328.)
(Garcia
v. Pexco, LLC (2017) 11 Cal.App.5th 782, 785-786.)
In Garcia, Select Staffing (Real Time) hired
Garcia and assigned Garcia to work for Pexco. As part of the hiring process
with Real Time, Garcia filled out an employment application which included an
arbitration agreement between Garcia and Real Time. Pexco was not a signatory to
the arbitration agreement.
When explaining why equitable estoppel applied, the
court in Garcia explained:
Like Boucher and
unlike DMS Services, all of Garcia's claims are
intimately founded in and intertwined with his employment relationship with
Real Time, which is governed by the employment agreement compelling
arbitration. Garcia cannot avoid his obligation to arbitrate his
causes of action arising out of his employment relationship by framing his
claims as merely statutory. On these facts, it is inequitable for the
arbitration about Garcia's assignment with Pexco to proceed
with Real Time, while preventing Pexco from participating. This
is because Garcia's claims against Pexco are rooted in his
employment relationship with Real Time, and the governing arbitration
agreement expressly includes statutory wage and hour
claims. Garcia does not distinguish between Real Time
and Pexco in any way. All of Garcia's claims are based on
the same facts alleged against Real Time. Garcia cannot attempt to
link Pexco to Real Time to hold it liable for alleged wage and hour
claims, while at the same time arguing the arbitration provision only applies
to Real Time and not Pexco. Garcia agreed to arbitrate his wage and
hour claims against his employer,
and Garcia alleges Pexco and Real Time were his joint
employers. Because the arbitration agreement
controls Garcia's employment, he is equitably estopped from refusing
to arbitrate his claims with Pexco.
(Garcia
v. Pexco, LLC (2017) 11 Cal.App.5th 782, 787-788.)
Plaintiff alleged in her
Complaint:
7. The AGGRIEVED
EMPLOYEES worked for all of the DEFENDANTS or for any of the DEFENDANTS as
non-exempt, hourly-paid employees. Nothing in this Complaint should be
interpreted as limiting the AGGRIEVED EMPLOYEES to non-exempt, hourly-paid
employees who worked for all DEFENDANTS only.
8. The definition of
“employer” for purposes of the California Labor Code includes irregular working
arrangements, and was specifically drafted in order to prevent evasion and
subterfuge of California’s labor laws. To that end, REPRESENTATIVE PLAINTIFF is
informed and believes, and based thereon alleges, that DEFENDANTS, including
any as of now unknown entities, must be classified as joint-employers for
purposes of liability for civil penalties under the Private Attorneys General
Act (“PAGA”). As such, DEFENDANTS are each liable for civil penalties for
violation of the California Labor Code as to REPRESENTATIVE PLAINTIFF and the
other AGGRIEVED EMPLOYEES.
(Compl.
¶¶7-8.)
Similar to Garcia,
all Plaintiff’s claims are based on the same facts alleged against all parties.
Further, Plaintiff makes no attempt to distinguish between any of the named
Defendants.
Opposition’s citation to Hernandez
v. Meridian Management Service, LLC is unavailing. That case is inapposite.
In that case, non-signatory defendants were trying to compel Plaintiff to
arbitration based on an arbitration agreement between Plaintiff and an entity
that was not even a party to the case.
Based on equitable
estoppel, Defendants have demonstrated that a valid arbitration agreement
exists between all parties.
Unenforceable Waiver of
Plaintiff’s Right to Bring a Representative PAGA Action
Plaintiff
is correct to note that under Iskanian and Viking River Cruises that
the agreement cannot waive representative claims under PAGA. However, the Court
fails to see how this agreement waives representative claims under PAGA. Plaintiff
points to section 1D of the Arbitration Agreement, but that portion simply
states that they agree to arbitrate PAGA claims on an individual basis only. This
language does not seem to waive representative PAGA claims.
Unconscionable
Plaintiff
argues that the arbitration agreement is both procedurally and substantively
unconscionable. The Court does not find this argument availing.
Stay
Defendants
argue for the representative claims be stayed until further proceedings pending
arbitration of Plaintiff’s individual PAGA claim.
Plaintiff argues the
Court has discretion and can decline to stay the representative claims.
“Moreover, case law
establishes that a stay of proceedings as to any inarbitrable claims is
appropriate until arbitration of any arbitrable claims is concluded.” (McGill
v. Citibank, N.A. (2017) 2 Cal.5th 945, 966.)
Here, the Court plans to
stay the non-individual claims (representative claims) pending the resolution
of the individual claim that is being submitted to arbitration.
TENTATIVE RULING
Defendants’
motion to compel Plaintiff, Jesse Flores, to arbitrate her individual claims
brought under PAGA is GRANTED. The representative/non-individual PAGA claims
are stayed pending proceedings pending completion of the individual
arbitration.