Judge Blaine K. Bowman, Case Number: 37-2023-00051497-CU-OE-CTL, Date: 2024-05-03 Tentative Ruling

Judge: Blaine K. Bowman, Case: 37-2023-00051497-CU-OE-CTL, Date: 2024-05-03 Tentative Ruling

SUPERIOR COURT OF CALIFORNIA,

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HALL OF JUSTICE

TENTATIVE RULINGS - May 02, 2024

05/03/2024 08:30:00 AM C-74 COUNTY OF SAN DIEGO

JUDICIAL OFFICER:Blaine K. Bowman

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Civil - Unlimited Other employment Motion Hearing (Civil) 37-2023-00051497-CU-OE-CTL GRIFFIE VS UNITED EDUCATION INSTITUTE [IMAGED] CAUSAL DOCUMENT/DATE FILED:

Defendant United Education Institute's motion to compel arbitration of Plaintiffs' individual Private Attorneys General Act (PAGA) claims is GRANTED. 9 U.S.C. §2. UEI's request for a stay is GRANTED. 9 U.S.C. § 3.

UEI seeks to compel arbitration of Plaintiffs' individual PAGA claims pursuant the 'ALTERNATIVE DISPUTE RESOLUTION PROGRAM ARBITRATION AGREEMENT' signed by both Plaintiffs.

Preliminarily, Plaintiffs do not dispute that the Federal Arbitration Act applies.

The court's role under the [Federal Arbitration] Act is . . . limited to determining (1) whether a valid agreement to arbitrate exists and, if it does, (2) whether the agreement encompasses the dispute at issue. See 9 U.S.C. § 4; Simula, Inc. v. Autoliv, Inc., 175 F.3d 716, 719–20 (9th Cir.1999); see also Republic of Nicaragua v. Standard Fruit Co., 937 F.2d 469, 477–78 (9th Cir.1991). If the response is affirmative on both counts, then the Act requires the court to enforce the arbitration agreement in accordance with its terms.

Chiron Corp. v. Ortho Diagnostic Systems, Inc. (9th Cir. 2000) 207 F.3d 1126, 1130.

The Agreement contains the following provisions: 2. Binding Arbitration: By entering into this Agreement, both Me and the Company are agreeing to FINAL and BINDING arbitration. Any Claim as defined in this Agreement below shall be resolved by arbitration only and no court action may be brought by Me or the Company to resolve any Claim.

. . . .

3. Covered Claims: For purposes of this Agreement, 'Claim' shall be defined as any dispute, matter, controversy, demand, action, cause of action, or claim of any kind or nature whatsoever by Employee or the company relating to, arising out of, in connection with, or involving Employee's employment or termination of employment, whether for damages or for other legal or equitable relief, and whether arising under federal, state or local law. By way of example only, Claim includes without limitation, any claim under federal, state and local statutory or common law . . . .

. . . .

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3100595 11 CASE NUMBER: CASE TITLE: GRIFFIE VS UNITED EDUCATION INSTITUTE [IMAGED] 37-2023-00051497-CU-OE-CTL 5. Waiver of Class and Representative Actions: Under this Agreement, both Me and the Company agree any class action, collective action, representative action and/or other procedure for consolidation or joinder of Claims of multiple parties is waived. No arbitrator acting hereunder shall have the power to decide any class, collective, representative, joined or consolidated claims. No Party under this Agreement may attempt to proceed hereunder as a member or representative of any class, putative class, or group purporting to have similar Claims. Only a court of competent jurisdiction may rule upon the enforceability of this Paragraph. If any provision of this Paragraph is deemed void or unenforceable, it shall be severed and the remainder of this Paragraph and the Agreement as a whole shall be enforceable.

The Parties agree that the foregoing class, collective and/or representative action waiver shall be enforced to the fullest extent permitted by law, but that any class, collective and/or representative action deemed non-waivable shall be litigated in court, where such claims shall be stayed pending completion of the arbitration of Employee's individual claims.

Plaintiffs' complaint alleges one cause of action under PAGA based on alleged violations of various provisions of the California Labor Code. Pursuant to the broad definition of 'Claim' in the Agreement which also specifically includes claims arising under state law, and, considering that the complaint alleges a PAGA cause of action under the California Labor Code, the court finds UEI establishes that a valid agreement to arbitrate exists and that the agreement encompasses the dispute at issue in Plaintiffs' complaint.

Plaintiffs raise several arguments in opposition.

Plaintiffs first argue that this is a PAGA action and not a class action. However, the waiver provision of section 5 of the Agreement applies, not only to class actions, but also to a 'representative action and/or other procedure for consolidation or joinder of Claims of multiple parties.' As such, the waiver includes a waiver of PAGA claims. Plaintiffs also argue that the 'wholesale waiver of representative PAGA actions' is unenforceable. Such argument ignores the holding of Viking River Cruises, Inc. v. Moriana (2022) 569 U.S. 639, 142 S.Ct. 1906, 213 L.Ed.2d 179. After an analysis of PAGA, Viking River concludes, [w]e hold that the FAA preempts the rule of Iskanian insofar as it precludes division of PAGA actions into individual and non-individual claims through an agreement to arbitrate. This holding compels reversal in this case. The agreement between Viking and Moriana purported to waive 'representative' PAGA claims. Under Iskanian, this provision was invalid if construed as a wholesale waiver of PAGA claims.

And under our holding, that aspect of Iskanian is not preempted by the FAA, so the agreement remains invalid insofar as it is interpreted in that manner. But the severability clause in the agreement provides that if the waiver provision is invalid in some respect, any 'portion' of the waiver that remains valid must still be 'enforced in arbitration.' Based on this clause, Viking was entitled to enforce the agreement insofar as it mandated arbitration of Moriana's individual PAGA claim. The lower courts refused to do so based on the rule that PAGA actions cannot be divided into individual and non-individual claims. Under our holding, that rule is preempted, so Viking is entitled to compel arbitration of Moriana's individual claim.

Viking River Cruises, 142 S.Ct. at 1924–1925.

As in Viking River, section 5 of the Agreement purports to waive 'any class action, collective action, representative action and/or other procedure for consolidation or joinder of Claims of multiple parties.' Under that portion of Iskanian that survives Viking River, the Agreement is invalid if interpreted in this manner. However, section 5 also contains a severability clause which allows for severance of invalid provisions and enforcement of all remaining provisions. Thus, as in Viking River, under the terms of the Agreement, UEI is entitled to enforce the Agreement insofar as it mandates arbitration of Plaintiffs' individual PAGA claims. Accordingly, under the analysis of Viking River, Plaintiffs' individual PAGA claims are subject to arbitration. The court is not persuaded by Plaintiffs' reliance on DeMarinis v. Heritage Bank of Commerce (2023) 98 Cal.App.5th 776 because the agreement at issue did not contain Calendar No.: Event ID: TENTATIVE RULINGS

3100595 11 CASE NUMBER: CASE TITLE: GRIFFIE VS UNITED EDUCATION INSTITUTE [IMAGED] 37-2023-00051497-CU-OE-CTL a severability clause. ['[E]mployers are free to draft a severability clause like the one that Viking River interpreted in conjunction with the PAGA waiver to permit arbitration of just the individual PAGA claim . .

. here, Heritage Bank did not do so.' DeMarinis, 98 Cal.App.5th at 787.] Plaintiff also argues that the Agreement is unconscionable and unenforceable as a result. Pinnacle Museum Tower Assn. v. Pinnacle Market Development (US), LLC (2012) 55 Cal.4th 223 summarizes the applicable analysis.

[u]nconscionability consists of both procedural and substantive elements. The procedural element addresses the circumstances of contract negotiation and formation, focusing on oppression or surprise due to unequal bargaining power. (See Armendariz, at p. 114, 99 Cal.Rptr.2d 745, 6 P.3d 669; Little v. Auto Stiegler, Inc. (2003) 29 Cal.4th 1064, 1071, 130 Cal.Rptr.2d 892, 63 P.3d 979 [procedural unconscionability 'generally takes the form of a contract of adhesion'].) Substantive unconscionability pertains to the fairness of an agreement's actual terms and to assessments of whether they are overly harsh or one-sided. (Armendariz, at p. 114, 99 Cal.Rptr.2d 745, 6 P.3d 669; Mission Viejo Emergency Medical Associates v. Beta Healthcare Group (2011) 197 Cal.App.4th 1146, 1159, 128 Cal.Rptr.3d 330.) A contract term is not substantively unconscionable when it merely gives one side a greater benefit; rather, the term must be 'so one-sided as to 'shock the conscience.' ' (24 Hour Fitness, Inc. v. Superior Court, supra, 66 Cal.App.4th at p. 1213, 78 Cal.Rptr.2d 533.) The party resisting arbitration bears the burden of proving unconscionability. (Engalla v. Permanente Medical Group, Inc., supra, 15 Cal.4th at p. 972, 64 Cal.Rptr.2d 843, 938 P.2d 903; Mission Viejo Emergency Medical Associates v. Beta Healthcare Group, supra, 197 Cal.App.4th at p. 1158, 128 Cal.Rptr.3d 330.) Both procedural unconscionability and substantive unconscionability must be shown, but 'they need not be present in the same degree' and are evaluated on ' 'a sliding scale.' ' (Armendariz, supra, 24 Cal.4th at p. 114, 99 Cal.Rptr.2d 745, 6 P.3d 669.) '[T]he more substantively oppressive the contract term, the less evidence of procedural unconscionability is required to come to the conclusion that the term is unenforceable, and vice versa.' (Ibid.) As indicated, procedural unconscionability requires oppression or surprise. ' 'Oppression occurs where a contract involves lack of negotiation and meaningful choice, surprise where the allegedly unconscionable provision is hidden within a prolix printed form.' ' Morris v. Redwood Empire Bancorp (2005).

Pinnacle, 55 Cal.4th at 246-247.

Plaintiffs raise several arguments on the issue of substantive unconscionability. As discussed above, Plaintiffs' argument that the wholesale PAGA waiver renders the entire Agreement unenforceable is contrary to the holding of Viking River. The court is not persuaded by Plaintiffs' arguments with respect to the confidentiality clause. Section 7 of the Agreement reads: 7. Confidentiality: The Parties agree, to the extent authorized by applicable law, that all matter relating to the dispute or the events underlying it shall be confidential and will not be disclosed to anyone other than participants and witnesses in the arbitration, as necessary to conduct discovery, and, in the case of the Company, to persons within the Company whose position in the Company makes it necessary for them to know about the dispute.

Preliminarily, the provision applies equally to both Plaintiffs and UEI. Also, Sanchez v. Carmax Auto Superstores California, LLC (2014) 224 Cal.App.4th 398 rejects arguments similar to those Plaintiffs raise.

The second provision requiring confidentiality is not unconscionable. In regard to 'the fairness or desirability of a secrecy provision with respect to the parties themselves, ... we see nothing unreasonable or prejudicial about it,' and it is not substantively unconscionable. (Woodside Homes of Cal., Inc. v. Superior Court (2003) 107 Cal.App.4th 723, 732 [132 Cal.Rptr.2d 35].) Calendar No.: Event ID: TENTATIVE RULINGS

3100595 11 CASE NUMBER: CASE TITLE: GRIFFIE VS UNITED EDUCATION INSTITUTE [IMAGED] 37-2023-00051497-CU-OE-CTL Sanchez, 224 Cal.App.4th at 408. Plaintiff also raises arguments as to the scope of the confidentiality provision. However, the provision by its terms is limited 'to the extent authorized by applicable law.' Also, the provision contains an express exception for 'participants and witnesses in the arbitration, as necessary to conduct discovery.' The court is not persuaded by the non-binding authority Plaintiffs rely on. Nor is the court persuaded by Plaintiffs reliance on Ramos v. Superior Court (2018) 28 Cal.App.5th 1042, because, unlike the provision at issue in Ramos which the court found stifled the 'employee's ability to investigate and engage in discovery' [Ramos, 28 Cal.App.5th at 1065] the confidentiality provision specifically allows for communication with witnesses to conduct discovery. Plaintiffs raise the issue of applicability of the confidentiality provision to potential discrimination and wrongful termination claims, but such claims are not pled in the complaint and not before the court on this motion.

Addressing Plaintiff's other arguments, Sonic-Calabasas A, Inc. v. Moreno (2013) 57 Cal.4th 1109 allows employers to enforce arbitration agreements that waive an employee's ability to seek dispute resolution through the California Labor Commissioner. Plaintiffs fail to establish the provision that 'the Company and I shall have the right to conduct reasonable discovery as determined by the Arbitrator chosen' as overly harsh or one-sided. The Agreement specifically allows both parties the ability to conduct discovery and places identical limitations on both. Such provisions comport with the requirements of Armendariz. Moreover, under section 6, the arbitration is to be conducted pursuant to the Judicial Arbitration and Mediation Services (JAMS) Employment Arbitration Rules and Procedures which rules have been judicially 'accepted as fair.' See, Murrey v. Superior Court (2023) 87 Cal.App.5th 1223, 1242. Plaintiffs fail to establish that the provision requiring '. . . each Party shall bear its own costs, expenses, and attorneys' fees in such arbitration' and '. . . the Arbitrator shall have the authority to award reasonable attorneys' fees and costs as part of any remedy or award in accordance with applicable law and applying the same standards' as overly harsh or one-sided. Plaintiffs fail to provide authority to support their arguments based on the current state of the law and fail to establish such circumstances as grounds for a finding of substantive unconscionability.

Based on the foregoing, the court finds Plaintiffs fail to establish any substantive unconscionability.

Under Pinnacle and the authorities set forth above, Plaintiffs must show both procedural and substantive unconscionability to defeat enforcement of the Agreement. Because Plaintiffs fail to establish any substantive unconscionability, the court finds Plaintiffs fail to meet Plaintiff's burden of proving unconscionability.

UEI also seeks a stay of Plaintiffs' representative PAGA claims pending completion of arbitration of Plaintiffs' individual PAGA claims. In opposition Plaintiffs seek to litigate Plaintiffs' representative PAGA claims concurrently with the arbitration of Plaintiffs' individual PAGA claims. As set forth above, section 5 of the Agreement provides: '. . . any class, collective and/or representative action deemed non-waivable shall be litigated in court, where such claims shall be stayed pending completion of the arbitration of Employee's individual claims']. Thus, the parties have agreed to the stay UEI seeks.

Aside from the agreement of the parties, the court exercises its discretion [see, Nickson v. Shemran, Inc.

(2023) 90 Cal.App.5th 121, 135] in favor of issuing a stay of Plaintiffs' representative PAGA claims pending arbitration of Plaintiffs' individual claims. The court finds a stay necessary to promote judicial economy and to avoid the possibility of inconsistent rulings. None of the arguments Plaintiffs raise or the authorities Plaintiffs rely on require a different result.

The court stays this matter pending completion of arbitration of Plaintiffs individual PAGA claims. 9 U.S.C. § 3.

The court sets a Status Conference for November 8, 2024 at 10:30am.

If this tentative ruling is confirmed the Minute Order will be the final order of the court and the parties shall not submit any further order on this motion.

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3100595 11 CASE NUMBER: CASE TITLE: GRIFFIE VS UNITED EDUCATION INSTITUTE [IMAGED] 37-2023-00051497-CU-OE-CTL Unless the ruling(s) above indicate that an appearance is necessary, parties who wish to submit, who are satisfied with the above tentative ruling(s), and/or who do not otherwise wish to argue the motion(s) are encouraged to give notice to the Court and each other of their intention not to appear.

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