Judge: Bruce G. Iwasaki, Case: 24STCV19392, Date: 2024-11-20 Tentative Ruling

Case Number: 24STCV19392    Hearing Date: November 20, 2024    Dept: 58

Judge Bruce G. Iwasaki

Department 58

Hearing Date:             November 20, 2024

Case Name:                Ngo v. Unical Aviation, Inc.

Case No.:                   24STCV19392

Matter:                        (1.) Motion to Compel Arbitration

                                    (2.) Demurrer

Moving Party:             (1.) Defendant Unical Aviation, Inc. and Specially Appearing Defendant Sharon Green

                                    (2.) Defendant Platinum Equity Advisors, LLC

Responding Party:      (1.) Plaintiff Raymond Ngo

                                    (2.) Plaintiff Raymond Ngo

In this employment action, Plaintiff Raymond Ngo (Plaintiff) filed a Complaint on August 2, 2024, alleging claims for FEHA violations, breach of contract, false promise, conversion, unfair business practices, and numerous wage and hour Labor Code claims against his former employer, Defendants Unical Aviation, Inc., Platinum Equity Advisors, LLC, and Sharon Green.

            On October 16, 2024, Defendant Unical Aviation, Inc. (Unical) and Sharon Green (Green) filed a motion to compel arbitration pursuant to the parties’ arbitration agreement. Alternatively, Defendant Green argues she should be dismissed for lack of personal jurisdiction. In opposition, Plaintiff argues the arbitration agreement does not apply to Plaintiff’s claims.

            The motion to compel arbitration is granted as to Defendant Unical and Green; the matter is stayed pending arbitration.

            On October 16, 2024, Defendant Platinum Equity Advisors, LLC (Platinum) demurred to the First Amended Complaint. Plaintiff filed an opposition.

            In a footnote in the demurrer, Defendant Platinum requested that the claims in the FAC be sent to arbitration if the Court did not sustain the demurrer. (Dem., 25, fn. 5.) The request to compel arbitration of Plaintiff’s claims against Defendant Platinum Equity Advisors, LLC is also granted. For this reason, the demurrer is moot in this Court. The parties are free to present law and motion matters to the arbitrator.

Legal Standard

Under Code of Civil Procedure section 1281.2, a court may order arbitration of a controversy if it finds that the parties have agreed to arbitrate that dispute. Because the obligation to arbitrate arises from contract, the court may compel arbitration only if the dispute in question is one in which the parties have agreed to arbitrate. (Weeks v. Crow (1980) 113 Cal.App.3d 350, 352.) Since arbitration is a favored method of dispute resolution, arbitration agreements should be liberally interpreted, and arbitration should be ordered unless the agreement clearly does not apply to the dispute in question. (Id. at p. 353; Segal v. Silberstein (2007) 156 Cal.App.4th 627, 633.)

Analysis

            Defendant Unical moves to compel arbitration of Plaintiff’s claims and dismiss the action. Further, Defendant Green argues she is entitled to enforce the arbitration agreement as a third-party beneficiary. In the alternative, Defendant Green moves to dismiss this action against her based on a lack of personal jurisdiction.

            In support of its motion to compel arbitration, Defendant Unical relies on a 2016 arbitration agreement between the parties.

By way of background, Plaintiff began working for Unical in the Lot Receiving Department on April 3, 2008. (Rodriguez Decl., ¶ 7.) On July 5, 2013, Plaintiff resigned from Unical to pursue an opportunity at a different company, and Unical terminated his employment at that time. (Rodriguez Decl., ¶ 7.) In June 2015, Plaintiff re-applied for a position at Unical and was re-hired on June 15, 2015. (Rodriguez Decl., ¶ 8.) In connection to this new position, Plaintiff completed all new hire paperwork in June 2015 including an application, pre-employment drug testing, and I-9 forms. (Rodriguez Decl., ¶ 8.) Importantly to this motion, on March 25, 2016, Plaintiff was also presented with, and signed, a standalone arbitration agreement (Arbitration Agreement). (Rodriguez Decl., ¶ 9, Ex. A.)

In this Arbitration Agreement, both Unical and Plaintiff agreed to arbitrate “any and all claims or controversies between the [Unical] and [Plaintiff] (or between [Plaintiff] and any present or former officer, director, agent, or employee of the Company or any parent, subsidiary, or other entity affiliated with the [Unical]) relating in any manner to the employment or the termination of employment.” (Rodriguez Decl., ¶ 9, Ex. A.) The Agreement expressly provides that arbitrable claims include claims such as “contract claims, tort claims, and claims relating to compensation, benefits, and stock options, as well as claims based on any federal , state, or local law, statute, or regulation, including but not limited to any claims arising under Title VII of the Civil Rights Act of 1964, the Age Discrimination in Employment Act, the Americans with Disabilities Act, the Fair Labor Standards Act, the Family and Medical Leave Act, the California Fair Employment and Housing Act, the California Labor Code, the California Unfair Competition Law, and the California Wage Orders.” (Rodriguez Decl., ¶ 9, Ex. A.)[1]

Defendant argues that all of Plaintiff’s claims fall within this scope of this binding Arbitration Agreement.              

In opposition, Plaintiff argues that the 2016 Arbitration Agreement does not apply to Plaintiff’s claims because Plaintiff was terminated on March 23, 2020 and then re-hired in May 18, 2020. Specifically, Plaintiff argues that his purported employment “furlough” and rehire by Defendant Unical to a new position a few weeks later in a reduced capacity[2] constituted an implied termination that created a new employment contract and nullified prior contractual obligations.

In response, Defenant contends that all Plaintiff’s claims from 2015 to 2023 are subject to this Arbitration Agreement because Plaintiff never experienced a loss of employment after 2015.

The 2016 Arbitration Agreement applies to all of Plaintiff’s claims in this action.

            Neither the Complaint nor the First Amended Complaint allege there was any termination prior to the alleged July 2023 termination. (Compl., ¶ 32; FAC ¶ 32.) Additionally, the evidence shows that Plaintiff was furloughed, not terminated. Defendants’ undisputed evidence shows that, on or around April 10, 2020, in response to the Covid-19 pandemic, Unical temporarily furloughed certain employees, including Plaintiff. (Rodriguez Decl., ¶ 10.) The furlough notice explained that Plaintiff remained an employee of Unical: 

“Although you are being furloughed, you will still be a Unical employee, still have all your benefits, as well as your PTO, and health insurance premiums will be paid. You can use your unused PTO or take it without pay by submitting for the time off through Unical’s Mobile app. You will receive your normal paycheck for the this pay period on Thursday April 2, 2020 for any hours you worked or time off with pay that is submitted through the website or mobile app.

. . .

If you find another job during this period, please notify human resources immediately of your voluntary resignation.” (Rodriguez Decl., ¶ 10, Ex. B.)

Additionally, Plaintiff also continued to receive wage statements throughout the furlough period. (Rodriguez Decl., ¶ 10.) Then, in a letter dated May 13, 2020, Unical offered Plaintiff a different position within the company. (Rodriguez Decl., ¶ 11, C-D.) The letter explained: “[w]e appreciate all the hard work you have put into your position at the company, and we do not want to lose you as an invaluable employee.” (Rodriguez Decl., ¶ 11, Ex. C.) Accordingly, on May 18, 2020, Plaintiff was transferred from the title of Senior Sales Executive to Lot Receiving Data Analyst. (Rodriguez Decl. ¶11, Ex. D.) Further, Unical’s own internal records show that Plaintiff was “suspended” during the furlough and became active on May 18, 2020 upon his return from furlough. (Rodriguez Decl., ¶ 11, Ex. E.)

Notwithstanding this evidence, Plaintiff contends it was termination because Unical provided no set return date from the furlough such that Plaintiff was effectively separated from his employment with Unical. Plaintiff also notes that, on March 26, 2020, he received an email from Defendant’s Vice President of Human Resources, Lorynn Negron (Negron), advising him of the “final effective date” of the separation, that he will receive his final paycheck, and that he will be paid out for any accrued Paid Time Off. (Ngo Decl., ¶¶ 5-6, Ex. A.) This email also included an attached “FAQs.” (Ngo Decl., ¶¶ 5-6, Ex. B.)

To support his claim that he was terminated from his employment, Plaintiff selectively highlights statements from this email and “FAQs.” (Opp., 3:9-4:6.) For example, Plaintiff notes that he was denied access to the Unical intranet and database during this time, and he was permitted to file for unemployment. However, without a clear legal definition of what constitutes a termination of the employment relationship under the law, it is not clear that these facts are sufficient to demonstrate a termination.

Plaintiff also cites inapposite case authority. Plaintiff first cites DiGiacinto v. Ameriko-Omserv Corp. (1997) 59 Cal.App.4th 629 for the proposition that a change in employment terms for an at-will employee constitutes a termination of an old written employment contract.

DiGiacinto is inapposite. In DiGiacinto, the plaintiff was suing for a breach of written employment agreement. In evaluating this claim, the court considered an employee’s action for breach of contract against his employer where the employer had unilaterally modified a compensation term in a written employment contract by imposing a new written contract reducing the employee’s pay for a lower-level position. The court explained, “an at-will employee who continues in the employ of the employer after the employer has given notice of changed terms or conditions of employment has accepted the changed terms and conditions.” (Id. at p. 637.) The employee's continued employment after notice of the reduced compensation term (the new offer) was therefore acceptance of a new unilateral contract. (Ibid.) As the reply notes, DiGiacinto spoke only to the acceptance of new conflicting employment terms in the context of contract law. Contrary to Plaintiff’s argument, this case does not concern whether Plaintiff’s furlough constituted a severance of the employment relationship.

Plaintiff also cites Hartstein v. Hyatt Corporation (9th Cir. 2023) 82 F.4th 825. In Hartstein v. Hyatt Corp., the federal court considered whether a temporary layoff, with no specified return date, was a discharge for purposes of Labor Code section 201. (Hartstein v. Hyatt Corp., supra, 82 F.4th at 832.) Thus, considering the limited context of Labor Code section 201, the court determined that if there is no definite return date, the furlough was a discharge for purposes of triggering the Labor Code’s requirement for the prompt payment of final wages; the court confirmed that this interpretation was in accord with California’s public policy supporting the prompt payment of wages. (Ibid.)

Hartstein does not help Plaintiff. The court only considered whether a plaintiff was entitled to certain statutory rights under the law. None of these cases considered whether an arbitration agreement applied to a parties’ claims.

Plaintiff’s opposition argument that he had been terminated prior to July 2023 is irrelevant to whether the motion to compel Plaintiff’s claims to arbitration can be granted.

“An arbitration agreement is governed by contract law. It is construed like other contracts to give effect to the intention of the parties and the ordinary rules of contract interpretation apply.” (Hernandez v. Sohnen Enterprises, Inc. (2024) 102 Cal.App.5th 222, 241.)

As noted above, the plain language of the Arbitration Agreement states that it applies to “any and all claims or controversies between the [Unical] and [Plaintiff] (or between [Plaintiff] and any present or former officer, director, agent, or employee of the Company or any parent, subsidiary, or other entity affiliated with the [Unical]) relating in any manner to the employment or the termination of employment.” (Rodriguez Decl., ¶ 9, Ex. A.) The Arbitration Agreement does not limit its application to claims and controversies arising from a specific “employment contract” between Plaintiff and Defendant. (See Reply 6: 15-20.)

Plaintiff cites no legal authority that an employment termination somehow either revokes or nullifies the Arbitration Agreement. Nor does Plaintiff identify any provision of the Arbitration Agreement that would render it inapplicable to claims accruing after the 2020 furlough. Moreover, unlike in DiGiacinto, Plaintiff identifies no new arbitration agreement that would supersede the 2016 Arbitration Agreement. Accordingly, the Arbitration Agreement applies to Plaintiff’s claims.

            Finally, Defendant Unical argues that Defendant Green is an intended third-party beneficiary to the Arbitration Agreement.

            A party seeking to compel arbitration must generally establish that he or she was a party to an arbitration agreement. (DMS Services, LLC v. Superior Court (2012) 205 Cal.App.4th 1346, 1352-1353; JSM Tuscany, LLC v. Superior Court (2011) 193 Cal.App.4th 1222, 1236.) However, California courts have recognized certain exceptions which permit a nonsignatory to an agreement with an arbitration clause “to compel arbitration of, or be compelled to arbitrate, a dispute arising within the scope of that agreement.” (DMS Services, supra, 205 Cal.App.4th at p. 1353; see also Metalclad Corp. v. Ventana Environmental Organizational Partnership (2003) 109 Cal.App.4th 1705, 1713-1714.)

            Here, Defendant Sharon Green may enforce the Arbitration Agreement under the third-party beneficiary theory.

            To invoke the third-party beneficiary exception, the nonsignatory “ ‘ha[s] to show that the arbitration clause ... was made expressly for [its] benefit.’ ” (Fuentes v. TMCSF, Inc. (2018) 26 Cal.App.5th 541, 551–552.)

Here, the Arbitration Agreement had its own list of intended third-party beneficiaries. The Arbitration Agreement requires arbitration of any employment disputes “between the [Unical] and [Plaintiff] (or between [Plaintiff] and any present or former officer, director, agent, or employee of the Company or any parent, subsidiary, or other entity affiliated with the [Unical])” (Rodriguez Decl., ¶ 9, Ex. A.) Here, the evidence and allegations show Defendant Green is the Chief Executive Officer of Unical. (Rodriguez Decl., ¶ 4; FAC ¶ 26.) As such, she may enforce the Arbitration Agreement as an intended third-party beneficiary to the Agreement.

Thus, the motion is granted as to Defendant Green, as well.[3]

For similar reasons, the motion to compel arbitration is also granted with respect to Plaintiff’s claims against Defendant Platinum.[4]

CONCLUSION

            Accordingly, the Court grants Unical Aviation, Inc. and Specially Appearing Defendant Sharon Green’s motion to compel arbitration. The request to compel arbitration is also granted as to the Defendant Platinum Equity Advisors, LLC; the demurrer to the First Amended Complaint is moot. The matter is stayed pending arbitration.  The Court will set a hearing date for a post-arbitration status conference.