Judge: David S. Cunningham, Case: 21STCV03405, Date: 2025-02-14 Tentative Ruling


Case Number: 21STCV03405    Hearing Date: February 14, 2025    Dept: 11

Date:                           2/14/25

Time:                          11:00 am

Moving Party:           Lava DS LLC dba InStaff (“InStaff”) and Unis, LLC and Unis Company, Inc. (collectively “Unis”)

Opposing Party:        Andre Greene

Department:              11

Judge:                         David S. Cunningham III

________________________________________________________________________

 

TENTATIVE RULING

 

The hearing on the motion to compel arbitration is continued.  The Court will hold an evidentiary hearing with live testimony regarding the transportation-worker exception.

 

BACKGROUND

 

InStaff, which provides staffing services to other companies, placed Greene to work at a Unis warehouse in Fontana, California.

 

Greene alleges that InStaff and Unis jointly employed him and subjected him and other current and former employees to numerous wage-and-hour violations.

 

Here, InStaff and Unis move to compel arbitration of Greene’s individual claims.

 

DISCUSSION

 

Existence and Assent

 

“[W]hen a petition to compel arbitration is filed and accompanied by prima facie evidence of a written agreement to arbitrate the controversy, the court itself must determine whether the agreement exists and, if any defense to its enforcement is raised, whether it is enforceable.”  (Rosenthal v. Great Western Fin. Securities Corp. (1996) 14 Cal.4th 394, 413.)

 

“Under ‘both federal and state law, the threshold question . . . is whether there is an agreement to arbitrate.’”  (Cruise v. Kroger Co. (2015) 233 Cal.App.4th 390, 396, emphasis in original.)

 

The burden of proof rests with the petitioner.  (See Rosenthal, supra, 14 Cal.4th at 413 [requiring the petitioner to prove the existence of the agreement “by a preponderance of the evidence”].)  To meet the burden, “the provisions of the written agreement and the paragraph that provides for arbitration . . . must be stated verbatim or a copy must be physically or electronically attached to the petition and incorporated by reference.”  (Cal. Rules of Court, rule 3.1330; see also Condee v. Longwood Management Corp. (2001) 88 Cal.App.4th 215, 218 [same].)

 

“Competent evidence is required to establish both the existence of the arbitration agreement and any ground for denial.”  (Knight, et al., Cal. Practice Guide: Alternative Dispute Resolution (The Rutter Group December 2023 Update) ¶ 5:321.)  “The verified petition (and attached copy of the agreement) normally proves the existence of the arbitration agreement.  Affidavits or declarations may be necessary when factual issues are tendered.”   (Ibid.)

 

Greene started working for InStaff in March 2022.  (See Stein Decl., ¶¶ 8-10.)  During the onboarding process, he e-signed InStaff’s arbitration agreement.  (See ibid.)

 

The arbitration agreement is attached to the declaration of Leo Stein, InStaff’s vice president of human resources, at exhibit B.  It states:

 

MUTUAL AGREEMENT TO ARBITRATE

 

If any legally actionable dispute arises which cannot be resolved by mutual discussion between us, we each agree to resolve that dispute by binding arbitration before an arbitrator experienced in employment law.  Said arbitration will be conducted in accordance with the rules applicable to employment disputes of the Judicial Arbitration and Mediation Services and applicable federal and/or state law.  We agree that this agreement includes any such disputes that the Company and its related entities may have against you, or you may have against the Company and/or its related entities and/or employees, arising out of or relating in any way to your employment or its termination including any claims of discrimination or harassment in violation of applicable law and any other aspect of your compensation, training, employment or it’s termination.  We further agree that this arbitration is the exclusive and binding remedy for any such dispute and will be used instead of any court action, which is hereby expressly waived, except for any request by either part for temporary or preliminary injunctive relief pending arbitration in accordance with applicable law or an administration claim with an administrative agency.

 

We agree that the arbitration provided herein shall be conducted in Los Angeles County, California unless otherwise mutually agreed.  This agreement cannot be changed or modified by oral statements of either party.

 

(Id. at Ex. B, p. 10.)

 

InStaff and Unis meet their burden because:

 

* facts and terms like these suffice to establish an agreement to arbitrate;

 

* it is undisputed that Greene e-signed the agreement; and

 

* assent is uncontested.

 

Federal Arbitration Act (“FAA”)

 

InStaff and Unis contend the FAA governs because their “business activities regularly and consistently involve interstate commerce.”  (Motion, p. 10.)

 

Greene claims the FAA is inapplicable, and the California Arbitration Act applies instead, due to an exception.  He asserts that the FAA does not apply to transportation workers.  (See Opposition, pp. 6-9.)

 

The Court believes the hearing should be continued.  The FAA applies if the agreement’s wording says it applies or if “the underlying contract facilitates interstate commercial transactions or directly or indirectly affects commerce between states.”  (Knight, supra, at ¶ 5:50.2, emphasis in original.)  InStaff’s agreement does not mention the FAA.  To show an impact on interstate commerce, InStaff and Unis cite paragraph 3 of the Stein declaration: “InStaff, UNIS, LLC, and UNIS COMPANY, INC. are affiliated companies. InStaff provides employees and other services to businesses across the United States, including UNIS, LLC and UNIS COMPANY, INC.  Reflecting their multi-state operations, Defendants advertise on the internet.”  (Stein Decl., ¶ 3; see also Motion, p. 10.)  The statement is too conclusive.  The Court grants InStaff and Unis leave to submit additional evidence about their business activities.

 

Turning to the transportation-worker exception, Greene is correct; the FAA “exempts . . . ‘contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce[]’” – in other words, transportation workers – “from the statute’s ambit[.]”  (Southwest Airlines Co. v. Saxon (2022) 596 U.S. 450, 454 (“Southwest”).)  “The party opposing arbitration bears the burden of demonstrating that the exemption applies.”  (Performance Team Freight Systems, Inc. v. Aleman (2015) 241 Cal.App.4th 1233, 1241.)  The opposing party must demonstrate that the agreement is “both a ‘contract of employment’ and one entered into with a ‘worker’ of the type described in” section 1.  (Amos v. Amazon Logistics, Inc. (4th Cir. 2023) 74 F.4th 591, 596.)

 

Greene fails to prove the first element.  He contends the arbitration agreement should be treated like an employment contract because it was “presented” to him “at the same time as other employment-related documents, including an I-9 form.”  (Opposition, p. 9.)  An I-9 form is a federal document used by employers “to verify the identity and employment authorization of individuals hired for employment in the United States.”  (https://www.uscis.gov/i-9.)  Greene does not say what the other documents are.  He fails to show that any of them constitutes an employment contract rather than a standalone agreement or is part of an employment contract.

 

The showing for the second element is also lacking.  Greene’s “primary job duties entailed moving shipping containers to and from warehouse loading docks and ensuring that they were correctly positioned for loading and unloading.”  (Greene Decl., ¶ 3.)  “The shipping containers . . . primarily contained consumer goods that were manufactured and shipped from overseas.”  (Id. at ¶ 4.)  “The goods would typically arrive by cargo ship at the Port of Los Angeles or the Port of Long Beach, where truck drivers would pick them up and deliver them to the warehouse.”  (Ibid.)  “Once the goods arrived at the warehouse,” Greene claims “they were unloaded, inventoried, and stored, until they were shipped out again.”  (Ibid.)  What is missing, though, is admissible evidence showing that Greene, himself, loaded or unloaded products that came from, or were shipped to, other states.  His evidence merely demonstrates that he moved containers within the warehouse yard, which is not enough.  (See Reply, pp. 5-7 [discussing, in part, the Marquez declaration and Lopez testimony].)

 

At this point, Ortiz v. Randstad Inhouse Services, LLC (9th Cir. 2024) 95 F.4th 1152 does not change the result.  A fuller record is necessary to determine whether Ortiz is analogous or distinguishable.  (Cf., e.g., London v. A-1 Quality Logistical Solutions, LLC (S.D. Ohio Sept. 23, 2024, No. 1:23-cv-107) 2024 WL 4266359, at *2-*3 [finding no exemption where warehouse worker merely moved products within the warehouse and did not load products onto trucks for shipment].)

 

The hearing is continued as to both elements.  The Court intends to hold an evidentiary hearing with live testimony, and each side will receive an opportunity to supplement the record.

 

Unconscionability and Enforcement

 

Greene contends:

 

* Labor Code section 432.6 bars arbitration of Labor Code claims (see Opposition, pp. 9-10);

 

* the class waiver is unenforceable under Gentry v. Superior Court (2007) 42 Cal.4th 443 (see id. at pp. 10-12); and

 

* the claims for unpaid wages cannot be arbitrated.  (See id. at pp. 13-14 [citing Labor Code section 229].)

 

For now, the Court declines to rule.  The outcome of each of these arguments depends on whether the FAA applies.

 

Nevertheless, as a matter of guidance, the Court notes that (1) Greene fails to cite evidence supporting the Gentry elements (see, e.g., Reply, pp. 8-9), and (2) the section 229 argument appears to be overbroad.  (See id. at pp. 10-11.)

 

Nonsignatory

 

Unis claims it is entitled to enforce InStaff’s arbitration agreement based on agency, equitable-estoppel, and third-party-beneficiary principles.  (See Motion, pp. 13-16.)

 

This issue is unopposed.  (See Opposition, pp. 6-14.)

 

“Certain persons who did not sign the agreement to arbitrate may be entitled to enforce it and prosecute the arbitration in their own names.”  (Knight, supra, at ¶ 5:262.)  For example, third-party beneficiaries (see id. at ¶ 5:263), employees (see id. at ¶ 5:265.7), associates (see ibid.), agents (see id. at ¶ 5:266.5), and assigns.  (See id.at ¶ 5:266.7.)  Another example is when equitable estoppel applies.  (See id. at ¶ 5:266.15.)  “[A] nonsignatory defendant may invoke an arbitration clause to compel a signatory plaintiff to arbitrate its claims when the causes of action against the nonsignatory are ‘intimately founded in and intertwined’ with the underlying contract obligations.”  (Marenco v. DirecTV LLC (2015) 233 Cal.App.4th 1409, 1419-1420.)

 

In light of these rules, the Court agrees with Unis.  The operative complaint alleges that InStaff and Unis were/are agents, joint venturers, joint-employers, and alter-egos.  (See First Amended Complaint, ¶¶ 11-24.)  At minimum, the allegations support application of the agency and equitable-estoppel exceptions such that Unis should be permitted to enforce InStaff’s agreement against Greene.