Judge David S. Cunningham, Case 20STCV04089 2022-12-15 Tentative Ruling

Judge: David S. Cunningham, Case: 20STCV04089, Date: 2022-12-15 Tentative Ruling

The Court grants Plaintiff leave to file a motion to conduct discovery to find a new putative class representative.

Salsbury is “[a] California corporation with its corporate headquarters and principal place of business in Los Angeles[.]” (Second Amended Complaint (“SAC”), ¶ 10(a).)

Culmin Staffing Group, Inc. (“Culmin”) is “[a] Delaware corporation with its principal place of business in New Jersey” and “conduct[s] business in numerous counties” in California, “including in Los Angeles County[.]” (Id. at ¶ 11(a)-(b).)

Chavez “is a California resident[.]” (Id. at ¶ 8.) He alleges that Salsbury and Culmin jointly employed him and that he worked for them as a general laborer from June 2017 to September 2019. (See ibid.)

Chavez filed the instant case (20STCV04089) on 1/31/20. He seeks to represent a class of Salsbury’s and Culmin’s current and former hourly, non-exempt California employees, alleging “wage and hour” violations under the Labor Code – e.g., failure to pay overtime and failure to provide meal and rest breaks – and a representative PAGA claim.

He also filed an individual action against Salsbury and Culmin (20STCV32978) on 8/28/20, which settled on 2/2/22. He alleged discrimination and retaliation claims.

On 10/20/22, the Court heard Salsbury’s motion to compel arbitration. Salsbury argued that the arbitration provision in the settlement agreement in the individual action “requires Chavez to arbitrate the claims in the instant case.” (Id. at p. 2.) The Court granted the motion “as to Chavez’s individual claims, including the individual PAGA claim[,]” and continued the hearing for supplemental briefing regarding delegation and class arbitration. (Id. at p. 1.)

The first issue is “whether the ‘class arbitration’ issue should be decided by the arbitrator or the Court[.]” (10/20/22 Ruling Re: Motion to Compel Arbitration, p. 1.)

Plaintiff cites Sandquist v. Lebo Automotive, Inc. (2016) 1 Cal.5^th 233, Green Tree Financial Corp. v. Bazzle (2003) 539 U.S. 444, and JPay, Inc. v. Kobel (11^th Cir. 2018) 904 F.3d 923, contending the arbitrator should decide the issue. (See Plaintiff’s Supp. Brief, pp. 1-4.)

Culmin cites Shivkov v. Artex Risk Solutions, Inc. (9^th Cir. 2020) 974 F.3d 1051 and asserts that the Court must decide the issue. (See Culmin’s Supp. Brief, p. 4.)

Salsbury also cites Shivkov and claims the Court must decide the issue because the FAA applies. (See Salsbury’s Supp. Brief, pp. 5-6.)

The parties’ arbitration agreement states that the FAA governs. (See 10/20/22 Ruling Re: Motion to Compel Arbitration, pp. 2-3.)

“In cases subject to the FAA, ‘gateway’ questions of arbitrability are for the court to decide unless the parties clearly and unmistakably provided otherwise.” (Knight, et al., Cal. Prac. Guide: Alt. Disp. Res. (The Rutter Group 2021) ¶ 5:356.4.) “On the other hand, procedural questions that grow out of the dispute and bear on its final disposition are not ‘questions of arbitrability’ and, therefore, always are left up to the arbitrator.” (Ibid.)

The United States Supreme Court “held in a plurality opinion that when an arbitration provision does not expressly permit or prohibit classwide arbitration, the decision is for the arbitrator, not the court.” (Id. at ¶ 5:356.5 [citing Green Tree].)

Federal Courts of Appeals are split. (See, e.g., id. at ¶ 5:356.6; see also, e.g., JPay, supra, 904 F.3d at 935; Shivkov, supra, 974 F.3d at 1057 [“[W]e join seven of our sister circuits in holding that the availability of class arbitration is a gateway issue that a court must presumptively decide.”].)

In Sandquist v. Lebo Automotive, Inc. (2016) 1 Cal.5^th 233, the California Supreme Court agreed with the High Court plurality:

. . . neither appellate decisions subsequent to Green Tree, nor the policy concerns Lebo Automotive raises, persuade us the Green Tree plurality was wrong. To the contrary, we agree with the plurality that the determination whether a particular agreement allows for class arbitration is precisely the kind of contract interpretation matter arbitrators regularly handle. Along with the Green Tree plurality, we find nothing in the FAA or its underlying policies to support the contrary presumption, that this question should be submitted to a court rather than an arbitrator unless the parties have unmistakably provided otherwise.

(Sandquist, supra, 1 Cal.5^th at 260; see also Knight, supra, at ¶ 5:356.7 [“Thus, when an arbitration agreement, drafted by an employer and required to be signed by an employee as a condition of employment, does not expressly permit or prohibit class arbitration but contains a broad provision including disputes ‘having any relationship or connection whatsoever’ with the employee's employment, and an additional clause naming specific disputes that are not arbitrable (but would otherwise be within the broad inclusive clause), the provisions suggest the decision is for the arbitrator. Any ambiguities are resolved in favor of arbitration and against the employer's interpretation as the drafting party. The availability of class arbitration is to be resolved by the arbitrator instead of the court.”].)

On balance, the Court is inclined to follow the High Court plurality and the California Supreme Court. The Court finds Green Tree and Sandquist persuasive, and, since the arbitration provision appears to be silent as to class arbitration, the “class arbitration” issue should be deferred to the arbitrator.[1]

The second issue is “whether the agreement allows class arbitration.” (10/20/22 Ruling Re: Motion to Compel Arbitration, p. 1.)

The parties disagree as to whether Plaintiff should be allowed to conduct discovery to locate a new putative class representative.

Instead of resolving the dispute here, the Court grants Plaintiff leave to file an appropriate motion, which will give the parties a full opportunity to brief the matter.

[1] The Court notes that the Ninth Circuit decision – Shivkov – fails to discuss Green Tree and Sandquist.