Judge Christopher K. Lui, Case 22STCV33199 2023-03-29 Tentative Ruling

Pursuant to California Rule of Court 3.1308(a)(1), the Court does not desire oral argument on the motion addressed herein. As required by Rule 3.1308(a)(2), any party seeking oral argument must notify ALL OTHER PARTIES and the staff of Department 76 of their intent to appear and argue. Notice to Department 76 may be sent by email to smcdept76@lacourt.org or telephonically at 213-830-0776. If notice of intention to appear is not given and the parties do not appear, the Court will adopt the tentative ruling as the final ruling.

Plaintiff alleges wage and hour violations and safety violations against his employer. Plaintiff alleges that he suffered retaliation for making workplace safety complaints and after he suffered an on-the-job injury and requested accommodation of his disability.

Defendants Frontier-Kemper Constructors, Inc. and Tutor Perini Corporation move to compel arbitration and stay this litigation.

Defendants Frontier-Kemper Constructors, Inc. and Tutor Perini Corporation’s motion to compel arbitration and stay this litigation is DENIED.

As an initial matter, the Court notes that Plaintiff’s Opposition spans 20 unnumbered pages and bears an incorrect table of contents purporting to state the Conclusion on Page 14. Plaintiff did not obtain a court order permitting an oversized brief, and the Court will disregard any argument presented at Pages 16 – 20 of the Opposition.

Defendants Frontier-Kemper Constructors, Inc. and Tutor Perini Corporation move to compel arbitration and stay this litigation.

California favors arbitration. (Haworth v. Superior Court (2010) 50 Cal.4^th 372, 380.) Civ. Proc. Code, §1281.2 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 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.

Under 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. (Cable Connection, Inc. v. DIRECTV, Inc. (2008) 44 Cal.4th 1334, 1343; Code Civ. Proc., § 1281.) A party petitioning to compel arbitration has the burden of establishing the existence of a valid agreement to arbitrate and the party opposing the petition has the burden of proving by a preponderance of evidence any fact necessary to its defense. (Banner Entertainment, Inc. v. Superior Court (1998) 62 Cal.App.4th 348, 356.) The court may weigh the evidence by considering affidavits, declarations, documents and oral testimony. (Id. at 357.)

Defendant relies upon the Collective Bargaining Agreement (“CBA”) attached to the Declaration of Sylvia Corsini, which contains the following arbitration clause at Article XIX of, section L, page 39 of the Master Agreement:

(Master Agreement, Article XIX, section L, page 39, Corsini Decl., Exh. A [bold emphasis and underlining added].)

Plaintiff alleges the following causes of action: (1) Whistleblower Retaliation in Violation of Labor Code§ 1102.5; (2) Disability Discrimination in Violation of FEHA; (3) Failure to Engage in the Interactive Process in Violation of FEHA; (4) Failure to Provide Accommodations in Violation of FEHA; (5) Retaliation in Violation of FEHA; (6) Failure to Prevent Discrimination, and Retaliation in Violation of FEHA; (7) Wrongful Termination in Violation of Public Policy; (8) Failure to Provide a Meal Period in Violation of Labor Code §512; (9) Failure to Provide a Rest Break in Violation of Labor Code §226.7; (10) 10. Failure to Pay Overtime Compensation Pursuant to Labor Code§§ 510, 1192, and 1192.2; (11) Failure to Pay Minimum Wage in Violation of Cal. Labor Code §§ 1182.12, 1194, 1194.2, 1198; (12) Failure to Provide Accurate Wage Statements in Violation of Labor Code § 226; (13) Waiting Time Penalties Pursuant to Labor Code§§ 201-203; (14) Violation of Business and Professions Code § 17200; (15) Violation of Labor Code§ 6310; and (16) Failure to Permit Inspection of Personnel and Payroll Records Pursuant to Labor Code§§ 1198.5 and 226.

Generally, a member of a union is bound by the terms of a collective bargaining agreement even if he was not formally a party to it and may not even belong to the union which negotiated it. (Mendez v. Mid-Wilshire Health Care Center (2013) 220 Cal.App.4th 534, 542, citing Florio v. City of Ontario (2005) 130 Cal.App.4^th 1462, 1466.)

Thus, as a member of the union, Mendez was bound by the terms of the collective bargaining agreement. (See Florio v. City of Ontario (2005) 130 Cal.App.4th 1462, 1466 [30 Cal. Rptr. 3d 841] [“‘a member of a bargaining unit is bound by the terms of a valid collective bargaining agreement, though he is not formally a party to it and may not even belong to the union which negotiated it’”].)

Plaintiff argues that Defendants have not proven they are signers of the Master Labor Agreement because the attached agreement is not signed by either Defendant, but only the Southern California Contractors Association Inc. (“SCCA”) and Defendants have not proven they are members fo the SCCA.

However, in order for a union member to be bound by a collective bargaining agreement to arbitrate statutory violations, there must be and clear and unmistakable waiver of employees’ statutory rights to a judicial forum for claims. (Vasquez v. Superior Court (2000) 80 Cal.App.4th 430, 434.)

In determining whether there has been a sufficiently explicit waiver, the courts look to the generality of the arbitration clause, explicit incorporation of statutory antidiscrimination requirements, and the inclusion of specific antidiscrimination provisions. The test is whether a collective bargaining agreement makes compliance with the statute a contractual commitment subject to the arbitration clause. (Citations omitted.)

"Broad, general language is not sufficient to meet the level of clarity required to effect a waiver in a [collective bargaining agreement]. In the collective bargaining context, the parties 'must be particularly clear' about their intent to arbitrate statutory discrimination claims." ( Carson v. Giant Food, Inc. (4th Cir. 1999) 175 F.3d 325, 331.) A waiver in a collective bargaining agreement is sufficiently clear if it is found in an explicit arbitration clause. "Under this approach, the [collective bargaining agreement] must contain a clear and unmistakable provision under which the employees agree to submit to arbitration all [state and federal statutory] causes of action arising out of their employment." (Carson, at p. 331.) A waiver in a collective bargaining agreement may also be sufficiently clear if broad, nonspecific language in the arbitration clause is coupled with "an 'explicit incorporation of statutory antidiscrimination requirements' elsewhere in the contract. [Citation.] If another provision, like a nondiscrimination clause, makes it unmistakably clear that the discrimination statutes at issue are part of the agreement, employees will be bound to arbitrate their [state and federal statutory] claims." ( Id. at p. 332.) A simple agreement not to engage in acts violative of a particular statute will not suffice; the agreement must establish the intent of the parties to incorporate "in their entirety" the discrimination statutes. ( Brown v. ABF Freight Systems, Inc., supra, 183 F.3d at p. 322.) Compliance with a particular statute must be an express contractual commitment in the collective bargaining agreement. [*436] ( Bratten v. SSI Services, Inc. (6th Cir. 1999) 185 F.3d 625, 631; Quint v. A.E. Staley Mfg. Co. (1st Cir. 1999) 172 F.3d 1, 9.)

Here, the arbitration clause only refers to wage and hour and Labor Code violations. There is no reference to waiver of FEHA or other antidiscrimination or whistleblower retaliation statutes or claims whatsoever. As such, the first through seventh and fifteenth causes of action do not come within the scope of the arbitration clause and are not subject to arbitration.

The Court examines whether the eighth through fourteenth and sixteenth causes of action based on wage and hour violations should be compelled to arbitration.

Where a party seeks to arbitrate nonwaivable statutory civil rights in the workplace (Fitz v. NCR Corp. (2004) 118 Cal.App.4th 702, 711-12), such as the wage and hour claims[1] involved here, there are:

five minimum requirements for the lawful arbitration of such rights pursuant to a mandatory employment arbitration agreement. Such an arbitration agreement is lawful if it "(1) provides for neutral arbitrators, (2) provides for more than minimal discovery, (3) requires a written award, (4) provides for all of the types of relief that would otherwise be available in court, and (5) does not require employees to pay either unreasonable costs or any arbitrators' fees or expenses as a condition of access to the arbitration forum. Thus, an employee who is made to use arbitration as a condition of employment 'effectively may vindicate [his or her] statutory cause of action in the arbitral forum.' " (Citation omitted.)

(Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83, 102.)

Initially, we see no reason why Armendariz's "particular scrutiny" of arbitration agreements should be confined to claims under FEHA. Rather, under the Supreme Court's analysis, such scrutiny should apply to the enforcement of rights under any statute enacted "for a public reason."

(Mercuro v. Superior Court (2002) 96 Cal. App. 4th 167, 180 [bold emphasis added].)

Armendariz held that to the extent that the arbitration agreement was silent on these issues, these requirements must be implied as a matter of law. (Armendariz, supra, 24 Cal.4th at pp. 106, 107, 113 [interpreted the agreement to provide for adequate discovery, a written arbitration award, and the employer's payment of arbitration costs].) To the extent that the agreement expressly limited these rights, Armendariz held that the agreement was contrary to public policy and unenforceable. (Id. at p. 104 [stated that a provision limiting damages was unlawful].)

(Sanchez v. Western Pizza Enterprises, Inc. (2009) 172 Cal.App.4th 154, 176 [bold emphasis added].)

The Arbitration Agreement incorporates by reference the American Arbitration Association National Rules for Employment Disputes. (Master Agreement, Article XIX, section L, page 40, Corsini Decl., Exh. A.) There is no indication that the applicable AAA rules do not provide for selection of a neutral arbitrator.

“Adequate discovery is indispensable for the vindication of statutory claims. (Citation omitted.) “ ‘[A]dequate’ discovery does not mean unfettered discovery … .” (Citation omitted.) And parties may “agree to something less than the full panoply of discovery provided in Code of Civil Procedure section 1283.05.” (Citation omitted.) However, arbitration agreements must “ensure minimum standards of fairness” so employees can vindicate their public rights. (Citation omitted).” (Fitz v. NCR Corp. (2004) 118 Cal.App.4th 702, 715-16 [bold emphasis added].)

There is no indication that the applicable AAA Rules fail to provide for more than minimal discovery. Also, the arbitration agreement appears to be silent as to permitted discovery in Statutory Disputes. As such, this requirement is implied by law. (Sanchez, supra, 172 Cal.App.4th at 176.)

The arbitration agreement appears to be silent as to a written award in Statutory Disputes. As such, this requirement is implied by law. (Sanchez, supra, 172 Cal.App.4th at 176.)

The Arbitrator shall have full authority to fashion such remedies and award relief consistent with limitations under federal and state law, and precedent established thereunder, whether by way of damages or the award of attorneys' fees and other costs, orders to cease and desist, or any and all other reasonable remedies designed to correct any violation which the Arbitrator may have found to have existed, including such remedies as provided under applicable state or federal law or regulation. . . .

The Arbitrator shall not have any authority to award relief that would require amendment of the Master Labor Agreement or other agreement(s) between the Union and a Contractor or the Contractors, or which conflicts with any provision of any collective bargaining agreement or such other agreement(s). Any arbitration outcome shall have no precedential value with respect to the interpretation of the Master Labor Agreement or other agreement(s) between the Union and a Contractor or the Contractors.

(5) Does not require employee to pay unreasonable costs or any arbitrator’s fees or expenses as a condition to access to arbitration:

The Contractor shall pay all fees and costs related to the services of the American Arbitration Association and the services of the Arbitrator; however, the Arbitrator may reallocate such fees and costs in the arbitration award, giving due consideration to the individual employee's ability to pay. Each party shall pay for its own costs, expenses, and attorneys' fees, if any. However, if any party prevails on a statutory claim which affords the prevailing party costs or attorneys' fees, or if there is a written Agreement providing for an award of costs or attorneys' fees, the Arbitrator may award costs and reasonable attorneys' fees to the prevailing party. Any issue regarding the payment of fees of costs, and any disputes about the manner of proceeding shall be decided by the Arbitrator selected. The Union shall not be a party to such and shall bear no costs or fees of the arbitration.

The Court agrees with Plaintiff that this clause does not meet the requirement of Armendariz because the arbitrator’s ability to reallocate fees and costs in the arbitration award, even giving due consideration to the individual employee’s ability to pay, still leaves the possibility that the employee is required to pay arbitration costs or fees as condition to access to arbitration.

The arbitration provision states, “Each party … shall pay an equal share of the fees and costs of the arbitrator and AAA” and “the arbitrator may award to the prevailing party reimbursement of its reasonable attorneys' fees and costs (including, for example, expert witness fees and travel expenses), and/or the fees and costs of the arbitrator.”

In Newton v. American Debt Services, Inc. (N.D.Cal. 2012) 854 F.Supp.2d 712, 725, the district court explained the problem with a generic clause authorizing awards of costs and fees to the prevailing party: “This provision contravenes California's Consumers Legal Remedies Act, which requires that court costs and attorney's fees be awarded to a prevailing plaintiff but only permits attorney's fees to a prevailing defendant ‘upon a finding by the court that the plaintiff's prosecution of the action was not in good faith.’ [(Civ. Code § 1780.)] By eliminating this protection for customers, this provision would expose potential plaintiffs to the risk of having to pay Defendants' attorney's fees even if they brought suit in good faith. By [*1062] permitting exposure to Defendant's attorney's fees and litigation costs, the Agreements may deter customers with legitimate disputes from bringing suit in contravention of their statutory rights.” (See also Ajamian, supra, 203 Cal.App.4th at p. 800 [attorney fee provision was unconscionable where, among other things it imposed an obligation to pay the employer's attorney fees “where [the plaintiff] would have no such obligation under at least one of her California statutory claims”].)

Further, an “arbitration clause should not impose excessive costs relative to the recovery sought.” (Gutierrez v. Autowest, Inc. (2003) 114 Cal.App.4th 77, 89, fn. 9 [7 Cal. Rptr. 3d 267].) As we have mentioned, the arbitration filing fee for Gostev's nonmonetary claim is $6,250, while the Terms of Service purport to limit damages to $50.

These provisions contribute to our conclusion the arbitration provision is “‘unreasonably [favorable to the more powerful party.’” (Sonic, supra, 57 Cal.4th at p. 1145.)

Accordingly, the minimum Armendariz requirements are not satisfied. A severance analysis does not apply, because severance applies to unconscionable provisions. The Armendariz requirement is a separate inquiry from the unconscionability analysis.

In the previous part of this opinion, we focused on the minimum requirements for the arbitration of unwaivable statutory claims. In this part, we will consider objections to arbitration that apply more generally to any type of arbitration imposed on the employee by the employer as a condition of employment, regardless of the type of claim being arbitrated. These objections fall under the rubric of unconscionability.

(Armendariz v. Found. Health Psychcare Servs., Inc. (2000) 24 Cal.4th 83, 113.)

The severance analysis applies to unconscionable clauses. (Civil Code, § 1670.5; Armendariz, supra, 24 Cal.4th at 121-22.) As such, the Court cannot sever the portion of the arbitration clause in the CBA which fails to satisfy the minimum Armendariz requirement.

[1] “California has long regarded the timely payment of employee wage claims as indispensable to the public welfare … ” (Vasquez v. Franklin Management Real Estate Fund, Inc. (2013) 222 Cal.App.4th 819, 829.)