Judge: Barbara M. Scheper, Case: 21STCV08700, Date: 2023-05-10 Tentative Ruling
Case Number: 21STCV08700 Hearing Date: May 10, 2023 Dept: 30
Calendar
No. 10
Freed vs. Mashcole Property Management, Inc., et.
al.,
Case No. 21STCV08700
Tentative Ruling re:
Defendant’s Motion to Compel Arbitration
Defendant Mashcole Property Management,
Inc. (Defendant) moves to compel Plaintiff Jeremiah Freed’s (Plaintiff)
individual claims under the Private Attorneys General Act (PAGA) to binding
arbitration and to dismiss Plaintiff’s representative PAGA claims. The
motion is granted as to Plaintiff’s individual PAGA claims. The Court stays
this action as to Plaintiff’s representative PAGA claims.
“On petition of a party to an
arbitration agreement alleging the existence of a written agreement to arbitrate
a controversy and that a party thereto refuses to arbitrate such 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 revocation of the
agreement.” (Code Civ. Proc. § 1281.2,
subds. (a), (b).)
A proceeding to compel arbitration is
in essence a suit in equity to compel specific performance of a contract. (Freeman v. State Farm Mutual Auto Insurance
Co. (1975) 14 Cal.3d 473, 479.) Such enforcement may be sought by a party
to the arbitration agreement. (Code Civ. Proc., § 1280, subd. (e)(1).)
The petition to compel arbitration
functions as a motion and is to be heard in the manner of a motion, i.e., the
facts are to be proven by affidavit or declaration and documentary evidence
with oral testimony taken only in the court’s discretion. (Code Civ. Proc.,
§1290.2; Rosenthal v. Great Western Fin.
Securities Corp. (1996) 14 Cal.4th 394, 413–414.) The petition to compel
must set forth the provisions of the written agreement and the arbitration
clause verbatim, or such provisions must be attached and incorporated by
reference. (Cal. Rules of Court, rule 3.1330; see Condee v. Longwood Mgmt. Corp. (2001) 88 Cal.App.4th 215, 218 (Condee).)
Once petitioners allege that an
arbitration agreement exists, the burden shifts to respondents to prove the
falsity of the purported agreement, and no evidence or authentication is
required to find the arbitration agreement exists. (See Condee, supra, 88
Cal.App.4th at p. 219.) However, if the existence of the agreement is
challenged, “petitioner bears the burden of proving [the arbitration agreement’s]
existence by a preponderance of the evidence.” (Rosenthal v. Great Western Fin. Securities Corp. (1996) 14 Cal.4th
394, 413; see also Espejo v. Southern
California Permanente Medical Group (2016) 246 Cal.App.4th 1047,
1058–1060.)
Plaintiff’s Complaint asserts claims against
Defendant, his former employer, under the Labor Code and PAGA for alleged violations
of wage-related and meal and rest period provisions. Plaintiff has asserted
both individual claims and “representative” PAGA claims on behalf of similarly
situated employees. (Comp. ¶ 14.)
Defendant moves to compel
arbitration based on a “Mutual Agreement to Arbitrate Claims” (the Agreement)
signed by Plaintiff as part of his onboarding process on October 10, 2019.
(Senia Decl. ¶ 8, Ex. A.) Under the Agreement, Plaintiff and Defendant “agree
to arbitrate before a neutral arbitrator any and all disputes or claims between
[the parties] that arise out of or relate to [Plaintiff’s] recruitment,
employment or separation from the Company.” (Senia Decl., Ex. A, p. 1.) The
Agreement also includes a waiver of all claims brought “in any purported
class[,] collective, or representative proceeding,” “regardless of whether the
action is filed in arbitration or in court.” (Id. p. 3.)
Waiver
Plaintiff does not dispute the
existence or the applicability of the Agreement to his individual claims, but argues
that Defendant has waived its right to compel arbitration. The Court disagrees.
“[A]lthough voluntary arbitration agreements
comply with public policy and enjoy specific enforcement under state law, a
party to an arbitration agreement may by its conduct ‘waive’ its right to
compel arbitration.” (Davis v. Blue Cross of Northern California (1979)
25 Cal.3d 418, 425.) “[N]o single test delineates the nature of the conduct of
a party that will constitute such a waiver.” (Id. at 426.) A party
resisting arbitration on the grounds of waiver “bears a heavy burden . . . and
any doubts regarding a waiver allegation should be resolved in favor of
arbitration.” (St. Agnes Medical Center v. PacifiCare of California (2003)
31 Cal.4th 1187, 1195.)
“In determining
waiver, a court can consider “(1) whether the party's actions are inconsistent
with the right to arbitrate; (2) whether 'the litigation machinery has been
substantially invoked' and the parties 'were well into preparation of a
lawsuit' before the party notified the opposing party of an intent to
arbitrate; (3) whether a party either requested arbitration enforcement close
to the trial date or delayed for a long period before seeking a stay; (4)
whether a defendant seeking arbitration filed a counterclaim without asking for
a stay of the proceedings; (5) ‘whether important intervening steps [e.g.,
taking advantage of judicial discovery procedures not available in arbitration]
had taken place'; and (6) whether the delay 'affected, misled, or prejudiced'
the opposing party.” (Sobremonte v. Superior Ct. Bank of Am. Nat. Tr. &
Sav. Ass'n (1998) 61 Cal.App.4th 980, 992.) “[W]hether litigation results
in prejudice to the party opposing arbitration is critical in waiver
determinations.”(Gloster v. Sonic Automotive, Inc. (2014) 226
Cal.App.4th 438, 448.)
Plaintiff
commenced this action on March 5, 2021. Defendant filed its Answer on April 21,
2021, which asserted “Arbitration/Class Waiver Agreements” as an affirmative
defense. (Answer ¶ 4.) Defendant then demanded arbitration in August 2021,
after which Plaintiff requested that Defendant delay its Motion to Compel
Arbitration so that the parties could attempt settlement. (Lambert Reply Decl.
¶ 3.) In October 2021, the parties agreed to stay formal discovery and
litigation during meditation. (Lambert Reply Decl. ¶ 4.) On February 22, 2022,
Plaintiff cancelled the scheduled mediation on the basis that he did not
receive necessary discovery from Defendant. (Greifinger Decl. ¶ 15.) Defendant
subsequently moved to compel arbitration on March 8, 2022. The action was then
stayed on April 6, 2022, pending the decision of the U.S. Supreme Court in Viking River Cruises, Inc.
v. Moriana (2022)
142 S.Ct. 1906 (Viking River).
These facts do not satisfy Plaintiff’s “heavy
burden” to show waiver. Defendant’s actions were not inconsistent with the
right to arbitrate; Defendant notified Plaintiff of its intention to compel
arbitration at the outset of this action and filed its demand for arbitration
shortly thereafter. Defendant’s delay in filing its motion was consistent with
the parties’ mutual agreement to first attempt mediation. (Lambert Reply Decl.
¶ 3.) Plaintiff has also presented no evidence showing that he was prejudiced by
Defendant’s conduct.
Representative PAGA claims
While the parties agree that Plaintiff’s
individual claims are arbitrable pursuant to Viking River, Defendant
argues that Plaintiff’s representative PAGA claims must be dismissed pursuant
to the Agreement’s waiver of class, collective, or representative claims. (Senia
Decl. ¶ 8, Ex. A, p. 3.) However, Viking
River did not abrogate California law holding that a contractual waiver provision is invalid “if construed as a wholesale
waiver of PAGA claims.” (Viking River, 142 S.Ct. at 1924; see Iskanian
v. CLS Transportation Los Angeles, LLC (2014) 59 Cal.4th 348, 383.) The
section in the Agreement purporting to waive Plaintiff’s representative claims remains
unenforceable based on this rule. As in Viking River, pursuant to the
Agreement’s severability clause (Senia Decl., Ex. A, p. 5), Defendant may
only “enforce the
agreement insofar as it mandated arbitration of [plaintiff’s] individual PAGA
claim.” (Viking River, 142 S.Ct. at 1925.)
The remaining question is whether
Plaintiff has standing to assert his non-individual PAGA claims after his
individual PAGA claims have been compelled to arbitration. In Viking River,
the Court concluded that the plaintiff did not retain
standing: “[A]s we see it, PAGA provides no mechanism to enable a court to
adjudicate non-individual PAGA claims once an individual claim has been
committed to a separate proceeding. Under PAGA's standing requirement, a
plaintiff can maintain non-individual PAGA claims in an action only by virtue
of also maintaining an individual claim in that action.” (Id. at 1925.)
However, Justice
Sotomayor’s concurrence clarified that the issue of standing under PAGA was a
question ultimately to be decided by California courts:
The Court concludes that the FAA poses no bar to the adjudication
of respondent Angie Moriana's “non-individual” PAGA claims, but that PAGA
itself “provides no mechanism to enable a court to adjudicate non-individual
PAGA claims once an individual claim has been committed to a separate
proceeding.” … Thus, the Court reasons, based on available guidance from
California courts, that Moriana lacks “statutory standing” under PAGA to
litigate her “non-individual” claims separately in state court. … Of
course, if this Court's understanding of state law is wrong, California courts,
in an appropriate case, will have the last word.
(Viking River, 142
S.Ct. at 1925.)
In Gregg v. Uber Technologies, Inc. (2023) 89
Cal.App.5th 786, the Court of Appeal concluded that “an alleged ‘aggrieved
employee’ [Citation] is not stripped of standing to assert non-individual PAGA
claims in court simply because he or she has been compelled to arbitrate his or
her individual PAGA claim.” (Id. at 344; accord Nickson v. Shemran, Inc. (Cal. Ct. App. 2023) 306 Cal.Rptr.3d 835, 845.) The California Supreme Court has also taken up the issue of PAGA
standing in Adolph v. Uber Technologies, Inc., No. G059860, 2022 WL
1073583 (Cal. Ct. App., Apr. 11, 2022), review granted (Cal. July 20, 2022).
The Court agrees with the parties that a stay of the representative claims is
appropriate pending issuance of the decision in Adolph.