Judge Daniel M. Crowley, Case Number: 23STCV18291, Date: 2024-06-06 Tentative Ruling

Defendant Aston Carter Inc.’s motion to compel Plaintiff Dameta Afeni O’Brien’s individual PAGA claims to arbitration is denied.

Defendants One Medical Group, Inc.’s and 1Life Healthcare, Inc.’s joinder to Defendant Aston Carter Inc.’s motion is denied.

Defendant Aston Carter, Inc. (“Aston Carter”) (“Defendant”) moves for an order compelling Plaintiff Dameta Afeni O’Brien’s (“O’Brien”) (“Plaintiff”) individual PAGA claims to arbitration and dismissing, or alternatively staying, Plaintiff’s non-individual PAGA claims pending individual arbitration, pursuant to the parties’ Arbitration Agreement. (Notice of Motion, pg. 1; 9 U.S.C. §§1, et seq.; C.C.P. §§1281.2, et seq.) Aston Carter moves on the grounds Plaintiff signed a valid arbitration agreement in conjunction with her employment with Aston Carter that requires arbitration of Plaintiff’s individual PAGA claims alleged in this case. (Notice of Motion, pg. 2.)

Defendants One Medical Group, Inc. (“One Medical”) and 1Life Healthcare, Inc. (“1Life”) join Aston Carter’s motion for an order compelling arbitration of Plaintiff’s individual PAGA claims and dismissing, or alternatively staying, Plaintiff’s non-individual PAGA claims pending individual arbitration on the grounds that Plaintiff executed a valid, written arbitration agreement that requires arbitration of her individual PAGA claims against Aston Carter, 1Life, and One Medical. (Notice of Joinder, pg. 2; 9 U.S.C. §§1, et seq.; C.C.P. §§1280, et seq.)

Aston Carter’s 3/8/24 request for judicial notice of Exhibits 1-32 is denied as not relevant.

Aston Carter’s 3/8/24 request for judicial notice of Exhibit 33, JAMS Employment Arbitration Rules, is granted.

Plaintiff filed her initial complaint on August 2, 2023. Plaintiff filed a first amended complaint (“FAC”) on October 6, 2023. Plaintiff filed the operative second amended complaint (“SAC”) on January 24, 2024, against One Medical, Aston Carter, and 1Life (collectively, “Defendants”) for a single cause of action for civil penalties under PAGA in her representative capacity on behalf of aggrieved employees who worked for Defendants. (See SAC ¶4.)

Aston Carter the instant motion on March 8, 2024. One Medical and 1Life filed their joinder to Aston Carter’s motion on May 16, 2024. Plaintiff filed her opposition on May 23, 2024. Aston Carter filed its reply on May 30, 2024, as did One Medical and 1Life.

Federal law provides for enforcement of this Arbitration Agreement. The Federal Arbitration Act, 9 U.S.C. §§1, et seq. (“FAA”), establishes a strong federal policy in favor of arbitration of disputes where a written arbitration agreement exists. Section 2 of the FAA provides, in pertinent part that “[a] written provision . . . to settle by arbitration a controversy thereafter arising out of such contract . . . shall be valid, irrevocable, and enforceable.” (9 U.S.C. §2.) The purpose of the FAA is to “reverse the longstanding judicial hostility to arbitration agreements.” (Gilmer v. Interstate/Johnson Lane Corp. (1991) 500 U.S. 20, 24.) The FAA places arbitration agreements “on an equal footing with other contracts and [requires courts] to enforce them according to their terms.” (AT&T Mobility, LLC v. Concepcion (2011) 563 U.S. 333, 339; see also Rent-A-Center West, Inc. v. Jackson (2010) 561 U.S. 63, 67 [“The FAA reflects the fundamental principle that arbitration is a matter of contract.”].) The FAA will preempt not only a state law that “discriminat[es] on its face against arbitration,” but also a state law that “covertly accomplishes the same objective by disfavoring contracts that (oh so coincidentally) have the defining features of arbitration agreements.” (Kindred Nursing Centers Limited Partnership v. Clark (2017) 137 S.Ct. 1421, 1426.)

Here, the Arbitration Agreement expressly states that it is governed by the FAA. (Decl. of Shultis ¶11, Exh. B at pg. 3 of 3 [“This Agreement is governed by the FAA and, to the extent not inconsistent with or preempted by the FAA, by the laws of the state of California without regard to principles of conflicts of law. I acknowledge and agree that Aston Carter, Inc.’s business and/or the client’s business, and my employment with Aston Carter, Inc. affect interstate commerce.”].)

The FAA restricts a court’s inquiry related to compelling arbitration to two threshold questions: (1) whether there was an agreement to arbitrate between the parties; and (2) whether the agreement covers the dispute. (Howsam v. Dean Witter Reynolds, Inc. (2002) 537 U.S. 79, 84.) Here, both criteria are satisfied. First, Plaintiff agreed to arbitration when she entered into the Arbitration Agreement with Aston Carter. (Decl. of Shultis ¶10, Exh. A.) Second, the Arbitration Agreement expressly covers,

[A]ll disputes, claims, complaints, or controversies (“Claims”) that I might have against Aston Carter, Inc., and/or any of its subsidiaries, affiliates, officers, directors, employees, agents, and/or any of its clients or customers (collectively and individually the “Company”) or that the Company may have against me, including contract claims; tort claims; discrimination and/or harassment claims; retaliation claims; claims for wages, compensation, penalties or restitution; and any other claim under any federal, state, or local statute, constitution, regulation, rule, ordinance, or common law, arising out of and/or directly or indirectly related to my application for employment with the Company, and/or my employment with the Company, and/or the terms and conditions of my employment with the Company, and/or termination of my employment with the Company (collectively “Covered Claims”).

California law also favors arbitration for dispute resolution. The California Arbitration Act (“CAA”), codified at C.C.P. §1281 et seq., provides, “A written agreement to submit to arbitration an existing controversy or a controversy thereafter arising is valid, enforceable and irrevocable, save upon such grounds as exist for the revocation of any contract.” (C.C.P. §1281; see also Grafton Partners L.P. v. Superior Court (2005) 36 Cal.4th 944, 955 [“[U]nlike predispute jury waivers, predispute arbitration agreements are specifically authorized by statute.”].)

“California law, like federal law, favors enforcement of valid arbitration agreements.” (Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83, 97, 99.) The public policy in favor of arbitration is so strong that California courts have held that an employee is “bound by the provisions of the [arbitration] agreement regardless of whether [he] read it or [was] aware of the arbitration clause when [he] signed the document.” (Brookwood v. Bank of America (1996) 45 Cal.App.4th 1667, citing Macaulay v. Norlander (1992) 12 Cal.App.4th 1.) The only prerequisite for a court to order arbitration is a determination that the parties have entered into an agreement to arbitrate the dispute. (United Transportation Union v. Southern California Rapid Transit District (1992) 7 Cal.App.4th 804, 808.) Thus, arbitration must be ordered “unless the agreement clearly does not apply to the dispute in question.” (Vianna v. Doctors’ Management Co. (1994) 27 Cal.App.4th 1186, 1189.)

Aston Carter proved the existence of an arbitration agreement with Plaintiff. Aston Carter submitted evidence that on May 27, 2022, at 6:02 PM EST, Plaintiff electronically signed the Arbitration Agreement. (Decl. of Shultis ¶10, Exh. A.)

Based on the foregoing, Aston Carter proved the existence of a valid Arbitration Agreement that is enforceable by Aston Carter.

To the extent the Agreement covers Defendants, it applies to “claims” between Plaintiff and Defendants. Throughout the Agreement, the contract for arbitration uses the term “claims” to characterize the scope of coverage of the Agreement. For example, the Agreement begins with a section that defines “Claims” and “Covered Claims.” (Decl. of Shultis ¶11, Exh. B at pg. 1 of 3.) The next section is entitled: “The Following Claims Are Not Covered by this Agreement.” (Decl. of Shultis ¶11, Exh. B at pg. 1 of 3.) The Agreement also specifies that claims not covered by the agreement include “any claim that is expressly precluded from arbitration by a governing federal law or by a state law that is not preempted by the Federal Arbitration Act (“FAA”) or other federal law.” (Decl. of Shultis ¶11, Exh. B at pgs. 1-2 of 3.)

Nothing in the terms of the Agreement permits the Arbitrator to serve in the capacity of a quasi-special master, issuing interim, non-final rulings on issues for a lawsuit still active in Court. Instead, the Agreement concerns legal claims that result in an award, based on the available remedies for the cause of action at issue: (1) the Arbitrator will have the authority to decide a motion to dismiss and/or a motion for summary judgment by any party and shall apply The Federal Rules of Civil Procedure governing such motions; (2) the arbitrator shall issue a final and binding written award, subject to review on the grounds set forth in the FAA; and

(3) the Arbitrator’s award shall have no preclusive effect as to the issues or claims in any dispute with anyone who is not named party to the arbitration. (Decl. of Shultis ¶11, Exh. B at pg. 2 of 3.) No “award” can issue for a bare finding of “aggrieved employee” status. That is not a standalone cause of action. It is an element of an “individual” PAGA claim, and Plaintiff chooses not to assert that “individual” PAGA claim, leaving nothing to send to arbitration and no claim for an arbitrator to resolve.

Defendants incorrectly assume that the agreement contained a valid waiver for “non-individual” PAGA claims and incorrectly assumes that Plaintiff is bound to arbitrate claims against Defendant only on an individual basis. (Decl. of Shultis ¶11, Exh. B at pg. 1 of 3.) The Agreement has a severability clause providing:

If any court of competent jurisdiction finds any part or provision of this Agreement void, voidable, or otherwise unenforceable, such a finding will not affect the validity of the remainder of the Agreement, and all other parts and provisions remain in full force and effect.

(Decl. of Shultis ¶11, Exh. B at pg. 1 of 3.) This severability clause, as was the case in Viking River Cruises, Inc. v. Moriana (2022) 596 U.S. 639, reh’g denied, 143 S. Ct. 60, allows Plaintiff to bifurcate a PAGA claim into an “individual” PAGA claim and “non-individual representative” PAGA claim. As explained further below, Plaintiff does not allege an individual PAGA claim in the SAC and instead, pursuant to Viking River, asserts only the “non-individual” PAGA claim.

Adolph v. Uber Technologies, Inc. (2023) 14 Cal. 5th 1104, 1113, explicitly holds that an individual remedy is unnecessary to possess standing to pursue PAGA penalties, it necessarily follows that Plaintiff is not obligated to seek any individual remedy, in the form of any “individual” PAGA penalties, to possess standing to pursue PAGA penalties for fellow employees:

As Kim and Johnson make clear, a worker becomes an “aggrieved employee” with standing to litigate claims on behalf of fellow employees upon sustaining a Labor Code violation committed by his or her employer. (See Kim, supra, 9 Cal.5th at pp. 84–85, 259 Cal.Rptr.3d 769, 459 P.3d 1123; Johnson, supra, 66 Cal.App.5th at p. 930, 281 Cal.Rptr.3d 478; § 2699, subd. (c).) Standing under PAGA is not affected by enforcement of an agreement to adjudicate a plaintiff's individual claim in another forum. Arbitrating a PAGA plaintiff's individual claim does not nullify the fact of the violation or extinguish the plaintiff’s status as an aggrieved employee, any more than the time-barring of remedies did in Johnson or the settlement of the individual damages claims did in Kim. (See Kim, at pp. 84–85, 259 Cal.Rptr.3d 769, 459 P.3d 1123; Johnson, at p. 930, 281 Cal.Rptr.3d 478.) The operative complaint alleges that Adolph experienced Labor Code violations while driving for Uber. Under Kim, Adolph’s allegations that Labor Code violations were committed against him while he was employed by Uber suffice to confer standing to bring a PAGA action.

Further, the Second Appellate District recently concluded that an “individual” PAGA claim did not need to be filed in order to have standing to pursue a “non-individual” PAGA claim: “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.” (Balderas v. Fresh Start Harvesting, Inc., 101 Cal.App.5th 533, 2024 WL 1673112 at *3 (2024), as modified (Apr. 18, 2024).) This is consistent with the holding in Adolph that states only two requirements to have standing to bring a “non-individual” PAGA claim:

There are only two requirements for PAGA standing. “The plaintiff must allege that he or she is (1) ‘someone “who was employed by the alleged violator”’ and (2) someone ‘“against whom one or more of the alleged violations was committed.”’”

(Balderas, 101 Cal.App.5th 533, 2024 WL 1673112 at *3, quoting Adolph, 14 Cal.5th at pg. 1120.)

Viking River does not operate to divest Plaintiff of standing to pursue “non-individual” PAGA claims. Adolph rejected that contention under California State law. (Adolph, 14 Cal.5th at pgs. 1119-1120.) While Viking River may stand for the proposition that Plaintiff must arbitrate an “individual” PAGA claim, so long as she chooses to assert one, nothing in Viking River or the FAA gives any Court the authority to force a plaintiff to arbitrate a claim that he or she elects not to pursue anywhere. Once the United States Supreme Court decided to opine on the nature of a PAGA claim, dividing it into “individual” and “non-individual” claims with assistance from a contractual severance clause, it created two claims, both of which are available to Plaintiff as Plaintiff’s claims, and both of which are under Plaintiff’s control.

Defendants incorrectly imply that Adolph requires that an arbitrator decide “aggrieved employee” status. Such an argument would be inconsistent with the full holding in Adolph. (See Adolph, 14 Cal. 5th at pgs. 1123-1124.) All that Adolph holds, consistent with arbitration procedures generally, is that the elements of a claim that are decided in arbitration serve a res judicata function in any subsequent court proceedings. If there is an individual PAGA claim in arbitration, that is what would occur. But nowhere does Adolph say that an “individual” PAGA claim is a condition precedent to the right to assert a “non-individual” PAGA claim. Nor does Adolph state the question of “aggrieved employee” status should be compelled to arbitration outside of ancillary determination of that question as part of the overall resolution of an individual PAGA claim. To suggest otherwise would impose a logical fallacy. The premise that if Plaintiff’s individual PAGA claim were arbitrated, the “aggrieved employee” status would be determined as part of that individual PAGA claim arbitration, cannot result in the conclusion that Plaintiff must arbitrate the question of “aggrieved employee” status. This would be a flawed syllogism.

Here, Plaintiff elects not to pursue an individual PAGA claim, instead seeking to recover only for the “non-individual” PAGA claim. Thus, there would be no claim to refer to arbitration. As such, Defendants’ argument that “Plaintiff’s non-individual claims must be dismissed for lack of standing” is incorrect. (Motion, at pg. 3.) Moreover, the question of “aggrieved employee” status can be addressed in Court for the first time as an element of the “non-individual” PAGA claim. There is no structural reason why that cannot happen. Adolph states nothing to the contrary.

Accordingly, Aston Carter’s motion to compel arbitration is denied, and One Medical’s and 1Life’s joinder to Aston Carter’s motion is denied.

Hon. Daniel M. Crowley

Judge of the Superior Court