Judge Curtis A. Kin, Case 22STCV12697 2022-10-13 Tentative Ruling

Judge: Curtis A. Kin, Case: 22STCV12697, Date: 2022-10-13 Tentative Ruling

Case Number: 22STCV12697 Hearing Date: October 13, 2022 Dept: 72

MOTION TO COMPEL ARBITRATION

Date: 10/13/22 (8:30 AM)

Case: Lucrecia Ordonez v. Holy Guacamole, LLC et al. (22STCV12697)

TENTATIVE RULING:

Defendants Holy Guacamole, LLC and Joe Pipersky’s Motion to Compel Arbitration is GRANTED.

In this motion, defendants Holy Guacamole, LLC and Joe Pipersky seek to compel arbitration of plaintiff Lucrecia Ordonez’s claims against them.

The Court finds that plaintiff agreed to arbitration of the causes of action asserted in this action by signing the Arbitration Agreement (“Agreement”) May 1, 2017. (Pipersky Decl. ¶ 5 & Ex. C.)

Plaintiff does not dispute that the Agreement covers the first through sixth causes of action. Rather, plaintiff alleges that the seventh cause of action for Failure to Provide Meal and Rest Breaks pursuant to Labor Code §§ 226.7 and 512 is exempt from arbitration under Labor Code § 229. (Opp. at 5:3-6; see Lab. Code § 229 [“Actions to enforce the provisions of this article for the collection of due and unpaid wages claimed by an individual may be maintained without regard to the existence of any private agreement to arbitrate”].)

However, the seventh cause of action is not for the “collection of due and unpaid wages,” as set forth in Labor Code § 229, but is “one for a failure to provide mandated meal or rest breaks.” (See Lane v. Francis Capital Management LLC (2014) 224 Cal.App.4th 676, 684, citing Kirby v. Immoos Fire Protection, Inc. (2012) 53 Cal.4th 1244, 1256-57 [pertaining to applicability of Labor Code § 229.7 to an action under Labor Code § 226.7]; see also Kirby, 53 Cal.4th at 1257 [“[A] section 226.7 claim is not an action brought for nonpayment of wages; it is an action brought for non-provision of meal or rest breaks”].) Although plaintiff could recover an “additional hour of pay” if plaintiff prevails on the seventh cause of action, and such pay constitutes a wage (Lab. Code § 226.7(c); Naranjo v. Spectrum Security Services, Inc. (2022) 13 Cal.5th 93, 101), this remedy does not transform the seventh cause of action into an action for the “collection of due and unpaid wages.” The “characterization of the nature of an action” “turns instead on the nature of the underlying legal violation the action seeks to remedy, not the form of relief that might be available to cure that violation.” (Naranjo, 13 Cal.5th at 111.) Accordingly, Labor Code § 229 does not bar arbitration of the seventh cause of action.

Even if Labor Code § 229 were applicable to the seventh cause of action, it would still be arbitrable under the Federal Arbitration Act (“FAA”). 9 U.S.C. § 2 states in part: “A written provision in . . . a contract evidencing a transaction involving commerce to settle by arbitration a controversy thereafter arising out of such contract . . . shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.”

Plaintiff contends that her employment did not have a connection with interstate commerce. The term “evidencing a transaction involving commerce” does not mean that the parties must have contemplated substantial interstate activity at the time they entered into the agreement; rather, the transaction must merely turn out, in fact, to have involved interstate commerce. (Shepard v. Edward Mackay Enterprises, Inc. (2007) 148 Cal.App.4th 1092, 1097; see also Allied Bruce Terminix Companies, Inc. v. Dobson (1995) 513 U.S. 265, 281-82.)

The owner of the Holy Guacamole, defendant Pipersky, declares that the restaurant accepts credit and debit cards as forms of payment and uses a credit card service processor located in Colorado. (Pipersky Decl. ¶¶ 9, 11.) Pipersky ascertained from a list of online payments that 8.9% of the online sales were from customers outside of California. (Pipersky Decl. ¶ 12.) While plaintiff worked at the restaurant, the restaurant purchased pre-bottled hot sauces from a company in North Carolina, its equipment and furniture from a company in Pennsylvania, its workers compensation insurance from a company headquartered in Nebraska, its general liability insurance from a company headquartered in Ohio, and its phone and Internet services from a company headquartered in New York. (Pipersky Decl. ¶¶ 14-19.) Even though the restaurant only has one location in California (Pipersky Decl. ¶ 1), defendants demonstrate that plaintiff’s employment involved interstate commerce. This is all that is required under the FAA.

Because plaintiff signed the Agreement as part of her employment and her employment involved interstate commerce, even if Labor Code §229 applied to the seventh cause of action, Labor Code § 229 would be preempted by 9 U.S.C. § 2. (Perry v. Thomas (1987) 482 U.S. 483, 491 [“This clear federal policy places § 2 of the Act in unmistakable conflict with California's § 229 requirement that litigants be provided a judicial forum for resolving wage disputes. Therefore, under the Supremacy Clause, the state statute must give way”].)

For the foregoing reasons, plaintiff’s seventh cause of action must be resolved in arbitration under state or federal law.

In addition, plaintiff argues that the agreement to arbitrate is unenforceable because it is unconscionable. (See Civ. Code § 1670.5(a).) An arbitration agreement must be both procedurally and substantively unconscionable to be unenforceable. (Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83, 114; Mission Viejo Emergency Med. Assocs. v. Beta Healthcare Group (2011) 197 Cal.App.4th 1146, 1159 [unnecessary to decide whether insurance policy was adhesion contract and procedurally unconscionable because it was not substantively unconscionable].)

Plaintiff contends that the arbitration agreement was a contract of adhesion because it was presented on a take it or leave it basis. (Ordonez Decl. ¶ 3.) Even if the Agreement were adhesive, this alone does not render the agreement unenforceable. (Serpa v. California Sur. Investigations, Inc. (2013) 215 Cal.App.4th 695, 704; Graham v. Scissor-Tail, Inc. (1981) 28 Cal.3d 807, 817-18.)

Plaintiff also contends that the Agreement does not provide for adequate discovery, as required by Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83, 102. Plaintiff does not explain how the Agreement provides for less than adequate discovery. The Agreement contains no limitation on discovery. (Pipersky Decl. ¶ 5 & Ex. C.) To the extent that the arbitrator may allow less discovery than plaintiff would have in a court action, parties agreeing to arbitration are allowed “to agree to something less than the full panoply of discovery provided in section 1283.05.” (Armendariz, 24 Cal.4th at 105-06.) “Adequate discovery does not mean unfettered discovery.” (Fitz v. NCR Corp. (2004) 118 Cal.App.4th 702, 715.)

Accordingly, plaintiff fails to sufficiently demonstrate why the Agreement is unenforceable due to procedural and substantive unconscionability.

For the foregoing reasons, the motion to compel arbitration of plaintiff’s claims against defendants is GRANTED. Pursuant to CCP § 1281.4, this action is STAYED pending completion of arbitration between the parties.