Judge David S. Cunningham, Case 21STCV37205 2022-10-20 Tentative Ruling

Judge: David S. Cunningham, Case: 21STCV37205, Date: 2022-10-20 Tentative Ruling

Moving Party: Cornerstone PEO, LLC (“Cornerstone PEO”) and Cornerstone Underwriters, LLC (“Cornerstone Underwriters”) (jointly “Cornerstone Defendants”)

This is a putative class action. Chavez is a Certified Nursing Assistant (“CNA”). She alleges that Go RN, LLC (“Go RN”), Cornerstone PEO, and Cornerstone Underwriters employed her at various times during the alleged class period. She seeks to represent Defendants’ hourly, non-exempt CNAs and healthcare employees, asserting “wage and hour” causes of action under the Labor Code, a UCL cause of action, and a PAGA cause of action.[1]

On 4/21/21, Chavez e-signed an arbitration agreement provided by Cornerstone PEO.

“[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.4^th 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.4^th 390, 396, emphasis in original.)

The burden of proof rests with the petitioner. (See Rosenthal, supra, 14 Cal.4^th 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.4^th 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. Prac. Guide: Alt. Disp. Res. (The Rutter Group 2021) ¶ 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.)

Chavez declares that she “worked for Go RN . . . from June 2019 to September 2021[.]” (Chavez Decl., ¶ 2.) She states that Go RN informed her in March 2021 that she “would be transitioned to a new employer” – Cornerstone PEO – and that she was “later advised by Go RN” that Cornerstone Underwriters “was the actual legal name of [her] new employer[.]” (Id. at ¶ 7.) She says her “paychecks continued to be issued on a weekly basis from Cornerstone PEO.” (Ibid.)

Jake Ryan is Cornerstone PEO’s Director of Payroll. His declaration tells a bit of a different story in terms of Chavez’s employment status. He declares that Cornerstone PEO “is a full service professional employer organization that provides payroll, workers compensation, risk management, payroll taxes, and human resources services to its clients.” (Ryan Decl., ¶ 3.) He asserts:

* “[i]n or around [3/28/21],” Go RN hired Chavez, and she “went through [Cornerstone PEO’s] onboarding process” (ibid.).

Setting aside the factual dispute regarding employer identity, it is undisputed that, during the onboarding process, Chavez received “the onboarding instructions and the new hire documents,” including the subject arbitration agreement, which is titled “Arbitration Agreement[.]” (Id. at ¶ 7 and Ex. A, bolding in original; see also Chavez Decl., ¶ 9.)

The agreement provides that arbitration is the “sole recourse” for Chavez to resolve employment-related disputes, New Jersey law and the American Arbitration Association (“AAA”) rules govern, and the arbitration must be held in New Jersey:

I agree that my sole recourse for resolving any dispute with Cornerstone PEO arising under my employment, including but not limited to wage claims, shall be to arbitrate such dispute. Such arbitration shall be pursuant to the arbitration laws of the State of New Jersey and the rules, then obtaining, of the [AAA]. Venue of any action shall be in New Jersey. Cornerstone PEO is based in Medford, New Jersey, and Applicant acknowledges that this agreement is to be partially performed in Medford, New Jersey.

Just above the signature line, it states: “Yes, I agree with these terms.” (Ibid., bolding in original.)

Chavez’s e-signature and printed name appear on the signature lines. (See ibid.) She does not dispute that she e-signed it.

However, she argues that she was “only able to review” the onboarding documents on her cell phone, and “[t]he majority of the documents,” notably, the agreement, “were illegible and difficult to navigate through given their small font size.” (Chavez Decl., ¶ 9.)

Cornerstone Defendants claim “nothing in the presentation of the onboarding documents required Plaintiff to view them on her phone.” (Reply, p. 2.)

The Court finds that the motion should be denied because Cornerstone Defendants fail to meet their burden to show assent. Cornerstone Defendants’ response appears in the argument section of the reply brief. There is no citation to evidence. Nor is any evidence attached to the reply brief. The only evidence in the record on this point is Chavez’s declaration. It states that the arbitration agreement could only be viewed on her cell phone and was illegible and had small font. Absent contrary evidence, Cornerstone Defendants fail to establish assent.

Cornerstone Defendants’ reliance on Randas v. YMCA of Metropolitan Los Angeles (1993) 17 Cal.App.4^th 158 fails to change the analysis. They contend “one who accepts or signs an instrument, which on its face is a contract, is deemed to assent to all its terms, and cannot escape liability on the ground that he has not read it” or did not understand it. (Reply, p. 2 [quoting Randas, supra, 17 Cal.App.4^th at 163].) The Court disagrees. “While failing to read or understand a contract’s arbitration clause is generally not a defense [citation], the contract cannot be deceptive and hide the arbitration clause.” (Knight, supra, at ¶ 5:90.1, emphasis added.) In other words, the “arbitration clause must be conspicuous[.]” (Ibid., capitalizing and bolding deleted.) Chavez’s declaration suggests that Cornerstone Defendants submitted the arbitration agreement to her in an illegible and inconspicuous manner.

Assuming arguendo that an agreement to arbitrate exists, Chavez contends it is unenforceable due to unconscionability.

“[U]nconscionability has both a ‘procedural’ and a ‘substantive’ element,” the former focusing on “oppression” or “surprise” due to unequal bargaining power, the latter on “overly harsh” or “one-sided” results. “The prevailing view is that [procedural and substantive unconscionability] must both be present in order for a court to exercise its discretion to refuse to enforce a contract or clause under the doctrine of unconscionability.” But they need not be present in the same degree. “Essentially a sliding scale is invoked which disregards the regularity of the procedural process of the contract formation, that creates the terms, in proportion to the greater harshness or unreasonableness of the substantive terms themselves.” In other words, the more substantively oppressive the contract term, the less evidence of procedural unconscionability is required to come to the conclusion that the term is unenforceable, and vice versa.

(Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83, 114, internal citations omitted, emphasis in original.)

Chavez argues that the agreement is procedurally unconscionable because it was presented on a take-it-or-leave-it basis, and Cornerstone PEO failed to attach the AAA rules. (See Opposition, pp. 13-15.)

Arbitration agreements presented on a take-it-or-leave-it basis have been deemed procedurally unconscionable. (See, e.g., Sanchez v. Carmax Auto Superstores California, LLC (2014) 224 Cal.App.4th 398, 402 [“The arbitration agreement was presented to [plaintiff] on a take-it-or-leave-it basis, and his signature was a condition of employment with [defendant]. It was therefore a standard contract of adhesion imposed and drafted by [defendant], which had superior bargaining power. As [plaintiff] had no real choice whether to sign, the agreement was procedurally unconscionable.”]; see also Little v. Auto Stiegler, Inc. (2003) 29 Cal.4th 1064, 1071 [“The procedural element of an unconscionable contract generally takes the form of a contract of adhesion, ‘“which, imposed and drafted by the party of superior bargaining strength, relegates to the subscribing party only the opportunity to adhere to the contract or reject it.”’”].)

But “a predispute arbitration agreement is not invalid merely because it is imposed as a condition of employment.” (Lagatree v. Luce, Forward, Hamilton & Scripps (1999) 74 Cal.App.4th 1105, 1122–1123.) “[T]he mandatory nature of an arbitration agreement does not, by itself, render the agreement unenforceable.” (Ibid.; see also Knight, supra, at ¶ 5:146 [“The mere fact an adhesion contract is involved does not per se render the arbitration clause unenforceable. Rationale: Such contracts are ‘an inevitable fact of life for all citizens – businessman and consumer alike.’”].)

Moreover, “the failure to attach a copy of the AAA rules [does] not render the agreement procedurally unconscionable.” (Lane v. Francis Capital Management LLC (2014) 224 Cal.App.4^th 676, 691.)

The bottom line is that there is some procedural unconscionability since Cornerstone PEO provided the agreement on a take-it-or-leave-it basis, but more is required.

Chavez contends the agreement is substantively unconscionable because it lacks mutuality, New Jersey is an unreasonable venue, it fails to incorporate the AAA rules by reference, it fails to provide for a written arbitration decision, and it fails to mention attorney fees, remedies, and discovery. (See Opposition, pp. 16-19.)

Chavez claims there is a lack of mutuality because the plain language only requires her employment-related disputes to be arbitrated. (See Opposition, pp. 16-17.)

Cornerstone Defendants admit that the agreement is silent as to Cornerstone PEO’s “agreement to arbitrate its claims against Plaintiff,” yet they contend the filing of the instant motion demonstrates their “mutual agreement to arbitration.” (Reply, p. 4.)

This factor demonstrates substantive unconscionability. The agreement states: “I agree that my sole recourse for resolving any dispute with Cornerstone PEO arising under my employment, including but not limited to wage claims, shall be to arbitrate such dispute.” (Ryan Decl., Ex. A, emphasis added.) The italicized words show that the agreement lacks mutuality; only Chavez is obligated to arbitrate.[2]

Chavez argues: “An arbitration provision requiring proceeding at a location that would impose a great financial burden on the employee is substantively unconscionable.” (Opposition, p. 17 [citing Lucas v. Gund, Inc. (C.D. Cal. 2006) 450 F. Supp.2d 1125 and Labor Code section 925].)

Cornerstone Defendants ask the Court to sever the venue provision. (See Reply, p. 5.)

This factor also demonstrates substantive unconscionability. In Lund, the district court found that an “agreement requiring arbitration in New Jersey imposed too great a financial burden on [a] California resident[.]” (Chin, et al., Cal. Prac. Guide: Employment Litig. (The Rutter Group 2022) ¶ 18:621.9a [discussing Lund].) The situation here is the same, and there is no severance clause in the agreement.

Here the purported arbitration agreement states that an arbitration shall be pursuant to the arbitration laws of the State of New Jersey, and the rules then obtaining of the [AAA]. Chavez had no familiarity as to the purpose or function of the AAA or their rules. [Citation.] None of the Cornerstone Defendants ever provided Chavez with any copies of the AAA rules or laws or an internet link that she could click on to review the AAA rules or laws. [Citation.] Defendants failed to make known to Chavez the substance of the AAA rules, or how to ascertain them, nor did Defendants guide Chavez to the AAA rules.

* Failing to attach arbitration rules fails to support a finding of unconscionability. (See Peng v. First Republic Bank (2013) 219 Cal.App.4^th 1462, 1472; see also, e.g., Cisneros Alvarez v. Altamed Health Services Corp. (2021) 60 Cal.App.5^th 572, 589-590 [“The law requires more than the simple failure to provide the employee with a copy of the rules.”]; Reply, p. 12.)

* Chavez does not challenge the AAA rules themselves. (See Cisneros Alvarez, supra, 60 Cal.App.5^th at 590 [“As our Supreme Court has explained, in cases which find procedural unconscionability based on the failure of the employer to provide a copy of arbitration rules, ‘plaintiff's unconscionability claim depended in some manner on the arbitration rules in question. [Citations.] These cases thus stand for the proposition that courts will more closely scrutinize the substantive unconscionability of terms that were “artfully hidden” by the simple expedient of incorporating them by reference rather than including them in or attaching them to the arbitration agreement. [Citation.] [Plaintiff's] argument accordingly might have force if her unconscionability challenge concerned some element of the AAA rules of which she had been unaware when she signed the arbitration agreement. But her challenge to the enforcement of the agreement has nothing to do with the AAA rules; her challenge concerns only matters that were clearly delineated in the agreement she signed. [Defendant's] failure to attach the AAA rules therefore does not affect our consideration of [plaintiff's] claims of substantive unconscionability.’”].)

Chavez says California law requires an arbitrator to “issue a written arbitration decision that will reveal, however briefly, the essential findings and conclusions on which the award is based.” (Opposition, p. 18.) Chavez claims the agreement is silent and does not “compel[] the arbitrator to make such an award at the conclusion of arbitration.” (Ibid.)

Cornerstone Defendants claim the AAA rules “provide for . . . a written award[.]” (Reply, p. 5.)

Chavez argues that the agreement is silent concerning attorney fees, remedies, and discovery. (See Opposition, pp. 18-19.)

Cornerstone Defendants assert that the AAA rules “provide for . . . reasonable discovery . . . and all types of relief[.]” (Opposition, p. 5.)

* there is procedural unconscionability because the agreement was provided to Chavez on a take-it-or-leave-it basis;

* the lack of mutuality and the provision mandating venue in New Jersey create a significant level of substantive unconscionability;

Chavez claims Cornerstone PEO sent her a text on 4/20/21, informing her that she must sign the arbitration agreement to “get paid for work [she] already completed.” (Chavez Decl., ¶¶ 10-11.) The text states:

(Chavez Decl., Ex. A, capitalizing in original.) Chavez argues that the agreement is null and void because the text violated section 206.5. (See Opposition, pp. 10-11.)

Cornerstone Defendants respond that they did not “threaten[] to withhold . . . Plaintiff’s wages” and “were simply articulating that they would be unable to pay [] her wages until they had the necessary information to process payroll.” (Reply, pp. 3-4.)

(a) An employer shall not require the execution of a release of a claim or right on account of wages due, or to become due, or made as an advance on wages to be earned, unless payment of those wages has been made. A release required or executed in violation of the provisions of this section shall be null and void as between the employer and the employee. Violation of this section by the employer is a misdemeanor.

In researching this issue, the Court found Pulli v. Pony International, LLC (2012) 206 Cal.App.4^th 1507. The plaintiff there sued his former employer and other entities. He alleged that they “fraudulently induced him to enter into an employment agreement” with the employer and that the employer “wrongfully terminated his employment.” (Pulli, supra, 206 Cal.App.4^th at 1510.)

The employment agreement contained an arbitration clause. The employer moved to compel arbitration, and the plaintiff opposed, claiming “the employment agreement was unenforceable pursuant to . . . section 206.5[.]” (Ibid.)

On appeal, the Court of Appeal reversed the trial court’s denial of the motion. The Court of Appeal held:

* “section 206.5 restricts the execution of a release of wage claims and has no application to a release of jury trial rights” (id. at 1519, emphasis in original);

* “section 206.5 prohibits an employer from obtaining a release of a claim for wages . . . and does not preclude a party from waiving its right to a jury trial by entering into an [employment] agreement containing an arbitration provision” (id. at 1520);

* “the existence of an invalid release of a wage claim pursuant to section 206.5 in an [employment] agreement does not provide a defense to the enforcement of an arbitration provision contained in the same agreement” (id. at 1521, emphasis in original).

Chavez’s argument appears unavailing under Pulli; however, it is unnecessary to decide this issue given that the motion independently fails due to lack of assent and unconscionability.

Here, the Arbitration Agreement does not contain any provision agreeing to arbitrate claims on a class wide basis. Without such explicit provision demonstrating the parties agreed to arbitrate on a class wide basis, Plaintiff’s class claims cannot be compelled to arbitration.

(Motion, p. 5 [arguing that the agreement’s silence concerning class claims acts as a class waiver].)

Nevertheless, the Court notes that, “[i]n cases subject to the FAA, ‘gateway’ questions of arbitrability are for the court to decide unless the parties clearly and unmistakably provided otherwise.” (Knight, supra, at ¶ 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 Financial Corp. v. Bazzle (2003) 539 U.S. 444 (“Green Tree”)].)

Federal Courts of Appeals are split. (See, e.g., id. at ¶ 5:356.6; see also, e.g., JPay, Inc. v. Kobel (11^th Cir. 2018) 904 F.3d 923, 935.)

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

If an enforceable agreement to arbitrate existed, the “class arbitration” issue would need to be deferred to the arbitrator.

Cornerstone Defendants rely on Viking River Cruises, Inc. v. Moriana (2022) 142 S.Ct. 1906 (“Viking River”) and argue that Chavez’s PAGA claims are arbitrable. (See Reply, p. 6.)

Additionally, this issue is unripe. The PAGA cause of action is only alleged against Go RN. (See First Amended Complaint, p. 16.) Plaintiffs have not amended the complaint to allege PAGA against Cornerstone Defendants. (See Opposition, p. 21.)

As a matter of guidance, the Court points out that, before Viking River, the applicable law was Iskanian v. CLS Transportation Los Angeles, LLC (2014) 59 Cal.4^th 348. “Iskanian’s principal rule prohibits waivers of ‘representative’ PAGA claims in the first sense.” (Viking River, supra, 142 S.Ct. at 1916, underlined case name added.) “That is, it prevents parties from waiving representative standing to bring PAGA claims in a judicial or arbitral forum.” (Ibid., emphasis in original.) “But Iskanian also adopted a secondary rule that invalidates agreements to separately arbitrate or litigate ‘individual PAGA claims for Labor Code violations that an employee suffered,’ on the theory that resolving victim-specific claims in separate arbitrations does not serve the deterrent purpose of PAGA.” (Id. at 1916-1917, underlined case name added; see also, e.g., Knight, supra, at ¶ 5:49.4m [citing California case law for the proposition that a “single count under PAGA could not be ‘split into an arbitrable individual claim and a nonarbitrable representative claim”].)

In Viking River, the plaintiff “executed an agreement to arbitrate any dispute arising out of her employment.” (Viking River, supra, 142 S.Ct. at 1916.) “The agreement contained a ‘Class Action Waiver’ providing that in any arbitral proceeding, the parties could not bring any dispute as a class, collective, or representative PAGA action.” (Ibid.) “It also contained a severability clause specifying that if the waiver was found invalid, any class, collective, representative, or PAGA action would presumptively be litigated in court.” (Ibid.) “But under that severability clause, if any ‘portion’ of the waiver remained valid, it would be ‘enforced in arbitration.’” (Ibid.)

“After leaving her position” with the defendant, the plaintiff “filed a PAGA action . . . in California court.” (Ibid.) “Her complaint contained a claim that [the defendant] had failed to provide her with her final wages within 72 hours, as required by” Labor Code sections 101 and 102. (Ibid.) “But the complaint also asserted a wide array of other code violations allegedly sustained by other . . . employees, including violations of provisions concerning the minimum wage, overtime, meal periods, rest periods, timing of pay, and pay statements.” (Ibid.) The defendant “moved to compel arbitration of [the plaintiff’s] ‘individual’ PAGA claim” – i.e., “the claim that arose from the violation she suffered — and to dismiss her other PAGA claims.” (Ibid.) “The trial court denied that motion, and the California Court of Appeal affirmed, holding that categorical waivers of PAGA standing are contrary to state policy and that PAGA claims cannot be split into arbitrable individual claims and nonarbitrable ‘representative’ claims.” (Ibid.)

The Court of Appeal’s ruling “was dictated by . . . Iskanian.” (Ibid., underlined case name added.) “Iskanian’s principal prohibition required the lower courts to treat the representative-action waiver” in Viking River “as invalid insofar as it was construed as a wholesale waiver of PAGA standing.” (Id. at 1917, underlined case name added.) “The agreement's severability clause, however, allowed enforcement of any ‘portion’ of the waiver that remained valid, so the agreement still would have permitted arbitration of [the plaintiff’s] individual PAGA claim even if wholesale enforcement was impossible.” (Ibid.) “But because” Iskanian “prohibits division of a PAGA action into constituent claims, the state courts refused to compel arbitration of that claim as well.” (Ibid.)

The High Court granted review and reversed, holding, eight to one, that the FAA preempts Iskanian “insofar as it precludes division of PAGA actions into individual and non-individual claims through an agreement to arbitrate.” (Id. at 1924.) The opinion instructs:

This holding compels reversal in this case. The agreement between [the defendant] and [the plaintiff] purported to waive “representative” PAGA claims. Under Iskanian, this provision was invalid if construed as a wholesale waiver of PAGA claims. And under our holding, that aspect of Iskanian is not preempted by the FAA, so the agreement remains invalid insofar as it is interpreted in that manner. But the severability clause in the agreement provides that if the waiver provision is invalid in some respect, any “portion” of the waiver that remains valid must still be “enforced in arbitration.” Based on this clause, [the defendant] was entitled to enforce the agreement insofar as it mandated arbitration of [the plaintiff’s] individual PAGA claim. The lower courts refused to do so based on the rule that PAGA actions cannot be divided into individual and non-individual claims. Under our holding, that rule is preempted, so [the defendant] is entitled to compel arbitration of [the plaintiff’s] individual claim.

The remaining question is what the lower courts should have done with [the plaintiff’s] non-individual claims. Under our holding in this case, those claims may not be dismissed simply because they are “representative.” Iskanian’s rule remains valid to that extent. But as we see it, PAGA provides no mechanism to enable a court to adjudicate non-individual PAGA claims once an individual claim has been committed to a separate proceeding. Under PAGA's standing requirement, a plaintiff can maintain non-individual PAGA claims in an action only by virtue of also maintaining an individual claim in that action. [Citation.] When an employee's own dispute is pared away from a PAGA action, the employee is no different from a member of the general public, and PAGA does not allow such persons to maintain suit. [Citation.] As a result, [the plaintiff] lacks statutory standing to continue to maintain her non-individual claims in court, and the correct course is to dismiss her remaining claims.

* Iskanian is preempted to the extent it bars dividing PAGA claims into individual and representative claims;

* the presence of a severability clause allows the defendant to compel the plaintiff’s individual PAGA claim to arbitration; and

* once the plaintiff’s individual PAGA claim is compelled to arbitration, he or she lacks standing to maintain the representative PAGA claim.

The High Court’s standing ruling is nonbinding. In fact, the California Supreme Court is set to decide the standing question in a case called Adolph v. Uber Technologies, Inc.

If an enforceable agreement existed, and if the issue were ripe, the Court would be inclined to:

* stay the case as to the representative PAGA claim until the California Supreme Court rules.

Cornerstone Underwriters is a nonsignatory. It claims it can enforce the arbitration agreement because it is an alleged agent of Cornerstone PEO. (See Motion, pp. 5-6.)

The argument appears to be uncontested. (See Opposition, pp. 20-21 [merely arguing that Go RN cannot enforce the agreement].)

[1] “UCL” means Unfair Competition Law. “PAGA” means Private Attorneys General Act.

[2] Cornerstone Defendants fail to cite authority finding mutuality satisfied by the defendant’s act of filing a motion to compel notwithstanding one-sided language in the arbitration agreement.

[3] The Court reiterates that there is no severance clause, though this is not the only reason for finding the severance option inadequate.

[4] The parties disagree about whether the FAA applies. The unconscionability analysis is the same, regardless, but the Court agrees with Cornerstone Defendants because the evidence demonstrates that their business involves interstate commerce. (See Ryan Decl., ¶ 3 [declaring that Conerstone PEO provides “services to clients in 49 states throughout the United States[,]” and the “clients have employees that provide services in a multitude of states including California and New Jersey”].)

[5] Chavez cites Third Circuit case law (see Opposition, p. 6 [citing Sutter, supra, 675 F.3d 215]), but the California Supreme Court rejected the Third Circuit rule. (See Sandquist, supra, 1 Cal.5^th at 255, 257-259.)