Judge: Bruce G. Iwasaki, Case: 24STCV06509, Date: 2024-08-29 Tentative Ruling

Case Number: 24STCV06509    Hearing Date: August 29, 2024    Dept: 58

Judge Bruce Iwasaki

Department 58

Hearing Date:             August 29, 2024         

Case Name:                 Desmond Marbley v. SAS Retail Services, LLC, et al.

Case No.:                    24STCV06509

Motion:                       Motion to Compel Arbitration

Moving Party:             Defendant SAS Retail Services, LLC

Tentative Ruling:      Defendant’s Motion to Compel Arbitration is denied. 

I.  Background

            Plaintiff was employed by Defendant SAS Retail Services, LLC from July 2023 through January 3, 2024, when he was terminated from employment.  Plaintiff was a merchandiser and classified as a non-exempt, hourly employee.  On March 15, 2024, Plaintiff filed this action alleging a representative PAGA action against Defendant for failing to provide meal and rest breaks, denying earned wages and failing to provide accurate wage statements from January 9, 2023 to the present.  The operative complaint is the First Amended Complaint filed on March 22, 2024. 

II.  Discussion

            A.  Legal Standard

            “A written provision in any [] contract evidencing a transaction involving commerce to settle by arbitration a controversy thereafter arising out of such contract or transaction, or the refusal to perform the whole or any part thereof, or an agreement in writing to submit to arbitration an existing controversy arising out of such a contract, transaction, or refusal, shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.”  (9 U.S.C. § 2.)

            “If any suit or proceeding be brought in any of the courts of the United States upon any issue referable to arbitration under an agreement in writing for such arbitration, the court in which such suit is pending, upon being satisfied that the issue involved in such suit or proceeding is referable to arbitration under such an agreement, shall on application of one of the parties stay the trial of the action until such arbitration has been had in accordance with the terms of the agreement, providing the applicant for the stay is not in default in proceeding with such arbitration.”  (9 U.S.C. §3.)

            Under California and federal law, public policy favors arbitration as an efficient and less expensive means of resolving private disputes. (Moncharsh v. Heily & Blasé (1992) 3 Cal.4th 1, 8-9; AT&T Mobility LLC v. Concepcion (2011) 563 U.S. 333, 339.) Accordingly, whether an agreement is governed by the California Arbitration Act or the Federal Arbitration Act, courts resolve doubt about an arbitration agreement’s scope in favor of arbitration. (Moncharsh, supra, 3 Cal.4th at p. 9; Comedy Club, Inc. v. Improv West Associates (9th Cir. 2009) 553 F.3d 1277, 1284; see also Engalla v. Permanente Med. Grp., Inc. (1997) 15 Cal.4th 951, 971-72 (“California law incorporates many of the basic policy objectives contained in the Federal Arbitration Act, including a presumption in favor of arbitrability [citation] and a requirement that an arbitration agreement must be enforced on the basis of state law standards that apply to contracts in general.”).)  “[U]nder both the FAA and California law, ‘arbitration agreements are valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.’” (Higgins v. Superior Court (2006) 140 Cal.App.4th 1238, 1247.)

            “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 of Civ. Proc, section 1281.4, para. 1).)

            B. Evidentiary Objections and Requests for Judicial Notice

            Plaintiff’s Request for Judicial Notice of three trial court orders ruling on motions to compel arbitration in other actions is denied.  Although trial court rulings are subject to judicial notice, they are not controlling authority.

            Defendant’s Request for Judicial Notice of a statement of decision issued in Gomez v. SAS Retail Services, LLC and the complaint in Balderas v. Fresh Start Harvesting, Inc. is denied. 

            Defendant’s Evidentiary Objections to the Boyamian Declaration are sustained. 

            C.  FAA applies by agreement

            Pursuant to the parties’ arbitration agreement, the FAA applies.  (Shaddock Dec., Ex. E, “Mutual Agreement to Arbitrate, p. 1, para. 3.)  “The FAA applies to contracts that involve interstate commerce (9 U.S.C. §§ 1, 2), but since arbitration is a matter of contract, the FAA also applies if it is so stated in the agreement.”  (Davis v. Shiekh Shoes, LLC (2022) 84 Cal.App.5th 956, 963.) 

            D.  The arbitration agreement

            Defendant moves to compel arbitration pursuant to the parties’ arbitration agreement, which was electronically signed by Plaintiff when he was hired.  (Shaddock Dec., ¶¶21-23.)  The arbitration agreement states as follows:

            “It is not uncommon for disputes to arise between an employer and an employee. Arbitration is a speedy, impartial and cost-effective way to resolve these disputes. For this reason, except as otherwise provided in this Mutual Agreement to Arbitrate Claims (“Agreement”), you and Advantage Sales & Marketing LLC (hereinafter, the “Company”) agree to resolve in binding arbitration all claims or controversies (“Claims”) that the Company may have against you, or that you (and no other party) may have against any of the following: (1) the Company...Under this Agreement, any Claims will be decided by an arbitrator rather than by a judge or jury. Both you and the Company may seek to enforce this Agreement.”  (Shaddock Dec., Ex. E, “Mutual Agreement to Arbitrate, p. 1, para. 1.) 

            Under the parties’ arbitration agreement, “claims” are defined to “include, but are not limited to, all statutory, contractual and/or common law claims including, but not limited to, claims arising under Title VII of the Civil Rights Act or 1964; the Age Discrimination in Employment Act; the Equal Pay Act of 1963; the California Fair Employment and Housing Act; the California Labor Code; the Fair Labor Standards Act; the Americans with Disabilities Act; and other federal, state and local employment laws.”  (Id. at para. 3.)   

            D.  Whether “individual PAGA claims” exist

            Plaintiff argues there is no such thing as an “individual PAGA claim.” Defendant argues an “individual PAGA claim” is not a separate cause of action, but a component of a PAGA action that can, after application of FAA preemption principles, be compelled to arbitration. 

            Whether a PAGA claim can ever be an “individual claim” was discussed in Viking River Cruises, Inc. v. Moriana (“Viking”) (2022) 596 U.S. 639, 645-646 and Adolph v. Uber Technologies, Inc. (“Adolph”) (2023) 14 Cal.5th 1104, 1124.  Both cases analyzed whether PAGA claims could be split into “individual PAGA claims” and “representative PAGA claims” for purposes of arbitration.  Both cases determined that a PAGA claim could be split in such a way.  As explained in Viking River Cruises, Inc., the phrase “representative PAGA claims” has two meanings depending on the issue being discussed: 

“PAGA's unique features have prompted the development of an entire vocabulary unique to the statute, but the details, it seems, are still being worked out. An unfortunate feature of this lexicon is that it tends to use the word ‘representative’ in two distinct ways…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,’ (citations omitted), 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  other employees.”  (Viking, supra, 596 U.S. at 648.) 

Viking also referred to PAGA claims based on code violations suffered by employees other than the PAGA plaintiff as “non-individual claims” and those suffered by the PAGA plaintiff personally as “individual claims.” 

            Thus, depending on context, both individual PAGA claims and “representative” or non-individual PAGA claims can exist and they are segregable. 

            E.  Plaintiff does not allege an individual PAGA claim that would be subject to the arbitration agreement

            Defendant’s motion to compel arbitration is limited to arbitration of Plaintiff’s individual PAGA claims.  Defendant does not ask that the Court compel arbitration of the representative claims and only asks that the representative action be stayed pending arbitration of Plaintiff’s individual PAGA claim.  Defendant argues Plaintiff can only have standing to sue in a representative capacity if he is an “aggrieved employee,” and the issue of whether he is an “aggrieved employee” must be arbitrated before Plaintiff can proceed with his representative action in court. 

            Plaintiff’s complaint does not allege any individual PAGA claim.  Plaintiff expressly alleges that the action is brought in his “representative capacity.”  There is no language in the FAC indicating any intent to assert any Labor Code violation claims on Plaintiff’s individual behalf. 

            Plaintiff is entitled to bring an action solely in a representative capacity without alleging individual PAGA claims.  (Balderas v. Fresh Start Harvesting, Inc. (2024) 101 Cal.App.5th 533, 538-539.)  “The Adolph court concluded that the Viking River requirement of having to file an individual PAGA cause of action to achieve standing to file a representative PAGA suit was incorrect.”  (Id. at 538 (citing .)  Thus, a PAGA plaintiff need not allege or prove individual PAGA claims in a representative PAGA action.  A PAGA plaintiff need only plead and prove standing under the definition of an “aggrieved employee” set forth under Labor Code section 2699, subdivision (c).[1]  (Id.)

             Defendant conflates assertion of an individual PAGA claim with standing under Labor Code section 2699, subd. (c)(1).  Defendant assumes a PAGA claim necessarily includes recovery for Labor Code violations personally suffered by a PAGA plaintiff.  However, under Adolph, these two concepts are distinct.  (Adolph, supra, 14 Cal.5^th at 1121.)  Standing is defined solely by the requirements set forth under Labor Code section 2699, subd. (c)(1)’s definition of “aggrieved employee.”  (Id.)  No additional requirements should be imposed on this statutory definition, including existence of a legally viable cause of action by the plaintiff.  (Id.)  Thus, in Johnson v. Maxim Healthcare Services, Inc. (2021) 66 Cal.App.5^th 924, 930, a PAGA plaintiff who satisfied the statutory definition of “aggrieved employee” did not lack standing to assert a representative PAGA action merely because plaintiff’s own individual claims for Labor Code violations would have been time barred. 

            “For PAGA standing, a plaintiff need only have been employed by the violator and affected by “one or more” of the alleged violations of the Labor Code. (Lab. Code, § 2699, subd. (a), (c) (“aggrieved employee” defined)…This requirement strikes a reasonable balance, requiring a plaintiff to have a connection to the employer's unlawful practices, while also advancing the state's interest in vigorous enforcement…A representative action under PAGA is not a class action but is a law enforcement action in which the plaintiff acts on behalf of the state, not on behalf of other employees. The plaintiff is not even the real party in interest in the action—the government is.”  (Cal. Judges Benchbook: Civ. Proc. Before Trial, §10.27 (quoting Huff v. Securitas Security Services USA, Inc. (2018) 23 Cal.App.5th 745, 757).)  “[T]he fact that individual claims may be time-barred does not nullify alleged Labor Code violations nor strip a plaintiff of standing to pursue PAGA remedies.”  (Chin, et al., California Practice Guide:  Employment Litigation (Rutter Group 2024), ¶17:776 (discussing definition of “aggrieved employee” and Johnson v. Maxim Healthcare Services, Inc. (2021) 66 Cal.App.5th 924, 930).) 

            In addition, the title of Labor Code section 2699 indicates an aggrieved employee can bring a PAGA claim on behalf of himself or herself and/or on behalf of other employees:  “Actions brought by an aggrieved employee or on behalf of self or other current or former employees.”  (Lab, Code, § 2699, subd. (a)(emphasis added).)  The penalties awarded under section 2699 are also calculated per aggrieved employee, making it possible for a plaintiff to remove his or her own claims from the PAGA action.  (Lab. Code, § 2699, subd. (f).)  These facts indicate that it is possible for a PAGA plaintiff to remove his or her own PAGA claims from an action. 

             Defendant’s motion to compel arbitration of Plaintiff’s individual PAGA claim is therefore denied.  Defendant fails to establish that Plaintiff’s action alleges any individual PAGA claim.

III.  Conclusion

            Defendant’s Motion to Compel Arbitration is denied.