Judge: David S. Cunningham, Case: 22STCV08725, Date: 2022-10-13 Tentative Ruling
Case Number: 22STCV08725 Hearing Date: October 13, 2022 Dept: 11
Tentative Ruling Re: Motion to Compel Arbitration Re: 22STCV08725 (Sanchez)
Date: 10/13/22
Time: 10:30
am
Moving Party: Jado Properties, Inc., James Filipan,
Stefanie Filipan (jointly “Defendants”)
Opposing Party: None
Department: 11
Judge: David
S. Cunningham III
________________________________________________________________________
TENTATIVE RULING
Defendants’ motion to compel arbitration is granted as to Plaintiff’s
individual claims, including his individual PAGA claim.[1]
Defendants’ request to strike the
class claims is granted.
The case is stayed as to the representative PAGA claim.
BACKGROUND
Defendants own and operate a steak and seafood restaurant.
Plaintiff worked for Defendants as a dishwasher. He seeks to represent a class of similar
current and former non-exempt employees, asserting that Defendants engaged in
“wage and hour” violations – e.g., failing to provide meal and rest breaks and
failing to pay overtime. He also brings
a representative claim under PAGA.
Here, Defendants move to compel arbitration.
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. 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.)
Plaintiff
worked for Defendants from 6/14/21 to 9/29/21.
(See S. Filipan Decl., ¶ 3.)
During the onboarding process, Defendants provided the subject
arbitration agreement to him. (See id.
at ¶ 5.)
The
agreement is titled “Agreement to Arbitrate (Binding Arbitration)[.]” (Id. at Ex. A, p. 1, bolding in original.)
It
states that “binding arbitration” is the “exclusive method” to resolve “[a]ny
controversy, dispute or claim[,]” the Federal Arbitration Act (“FAA”) governs,
and the parties “agree[] to be bound” by the agreement:
Scope of
Arbitration
Any controversy,
dispute or claim (“Dispute(s)”) between you and Stevens Steak & Seafood
House Restaurant (“the Company”), or its officers, directors, owners, agents or
other Employees, subsidiaries, affiliates, parent, or related entities, related
in any manner to your employment shall be resolved by binding arbitration at
the request of any party. The arbitrability of any Dispute under this policy
shall be determined by application of the substantive provisions of the [FAA].
To the extent that the FAA is inapplicable, the arbitration law of the state in
which you work or last worked for the Company shall apply. Arbitration shall be
the exclusive method for resolving any Dispute; provided, however, that any
party may request provisional relief from a court of competent jurisdiction, as
provided under federal or state law. Even if the Company does not sign or
acknowledge its receipt of this policy, the Company, like you, agrees to be
bound by this policy and agrees to arbitrate all Disputes.
(Ibid.,
bolding in original.)
It identifies
covered and uncovered claims:
The Disputes that
are to be arbitrated under this policy include, but are not limited to, claims
for breach of trade secret law, claims regarding breaches of confidentiality,
violation of non-disclosure/non-solicitation provisions,
embezzlement/conversion, Employee theft, claims for wages and other
compensation, claims for breach of contract (express or implied), claims for
violation of public policy, wrongful termination, tort claims, claims for
unlawful discrimination and/or harassment (including, but not limited to, race,
religious creed, color, national origin, ancestry, physical disability, mental
disability, gender identity or expression, medical condition, marital status,
age, pregnancy, breastfeeding, sex or sexual orientation) to the extent allowed
by law, and claims for violation of any federal, state, or other government
law, statute, regulation, or ordinance.
The Disputes not
subject to binding arbitration include: (a) any claims for Workers'
Compensation or unemployment benefits; or (b) Disputes that are expressly
excluded by statute or that are expressly required to be arbitrated under a
different procedure pursuant to the terms of an Employee benefit plan.
(Ibid.)
It
contains “jury waiver,” “class and representative waiver,” and severability
provisions:
BOTH THE COMPANY
AND YOU UNDERSTAND THAT BY USING ARBITRATION TO RESOLVE DISPUTES, WE ARE BOTH
GIVING UP ANY RIGHT THAT WE MAY HAVE TO A JUDGE OR JURY TRIAL.
Class Action
Waiver and Sequence of Representative Claims
Any Dispute
covered by this policy will be arbitrated on an individual basis. To the
maximum extent permitted by law, you hereby waive any right to bring on behalf
of persons other than yourself, or to otherwise participate with other persons
in, any class, collective, or representative action. If a court adjudicating a
case involving the Company and you were to determine that there is an
unwaivable right to bring a representative action (including, but not limited
to, a representative action under [PAGA], or other federal, state or local
statute or ordinance of similar effect), any such representative action shall
be brought only In court, and not in arbitration, and shall be stayed until the
individual claim is adjudicated or resolved in the arbitration proceeding.
* * *
. . . If any term,
provision, covenant, or condition of this policy is held by a court of
competent jurisdiction or an arbitrator to be invalid, void, or unenforceable,
the remaining terms and provisions of this policy will remain in full force and
effect and shall in no way be affected, impaired or invalidated. In addition,
if any claim(s} within a Dispute is determined to be not subject to
arbitration, that claim(s) may be severed and the remaining claim(s) shall remain
and continue in arbitration pursuant to this policy.
(Id. at Ex. A, pp. 1-2, 4,
bolding and capitalizing in original.)
It explains how to initiate
arbitration and addresses arbitrator selection, the arbitration process,
discovery, and motion practice:
Initiation of
Arbitration and Selection of Arbitrator
Binding arbitration
shall be conducted in accordance with the state-specific Arbitration Act in the
state in which the claims arose, and the rules and procedures for employment
disputes set forth by the internal employment rules of the dispute resolution organization
selected by the parties.
The parties shall
meet and confer to select a specific arbitrator or reputable dispute resolution
organization by mutual agreement. If the parties are unable to agree on a
neutral arbitrator or dispute resolution organization, any party may elect to
obtain a list of arbitrators from one of the following dispute resolution
organizations: Judicial Arbitration and Mediation Service (“JAMS”), Alternative
Dispute Resolution (“ADR”), or Signature Resolution Group (“SRG”). The rules
for JAMS, ADR, and SRG can be found online at www.jamsadr.com,
www.adrseNices.org, or www.signatureresolution.com, respectively, or may be
obtained from Cindy Padilla upon request. If the parties cannot agree on a
specific arbitrator, the parties will follow the procedures established by the
dispute resolution organization selected for striking unacceptable arbitrators
from the list of available arbitrators until a final selection is made.
The demand for
arbitration must be in writing and must be made by the aggrieved party within
the statute of limitations period provided under applicable federal and/or
state law for the particular claim. Failure to make a written demand within the
applicable statutory period constitutes a bar to raise that claim in any forum.
Arbitration proceedings will be held in the county in which you were last
employed, unless the parties stipulate in writing to a different venue.
The Arbitration
Process
The arbitrator
selected by the parties shall apply the substantive law (and the law of
remedies, if applicable) of the state in which the claim arose, or federal law,
or both, as applicable to the claim(s) asserted. The arbitrator is without
jurisdiction to apply any different substantive law or law of remedies.
The arbitrator shall
apply the state-specific Evidence Code to the proceeding or, if none available,
the Federal Rules of Evidence. The parties shall be entitled to conduct all
discovery to which they would have been entitled had the parties' controversy
been filed in court; provided, however, that the arbitrator shall have the
discretion to issue protective orders or otherwise limit discovery where
reasonably necessary, taking into account the parties' mutual desire to have a
speedy, less-formal, cost-effective dispute-resolution mechanism. The
arbitrator shall have the authority to hear motions for summary disposition by
any party and shall apply the substantive standards governing such motions
under the applicable federal and/or state law. The hearing{s) on dispositive
motions shall be made in accordance with the briefing and hearing schedule
established by the arbitrator in accordance with the employment rules of the
dispute resolution organization selected.
The arbitration
shall be final and binding upon the parties, except as provided in this Binding
Arbitration policy.
(Id. at Ex. A, pp. 2-3, bolding
in original.)
It also addresses arbitration
awards, reconsideration, and costs and fees:
The Arbitration
Award
Following the
hearing and the submission of the matter to the arbitrator, the arbitrator
shall issue a signed and dated written decision and award. The arbitrator shall
use his/her best efforts to issue the written award no later than thirty (30)
days from the date the arbitration hearing concludes or the post-hearing briefs
(if requested) are received, whichever is later. The arbitrator's award shall
decide all issues submitted by the parties, and the arbitrator may not decide
any issue not submitted. The arbitrator shall prepare in writing and provide to
the parties a decision and award which includes factual findings and the
reasons upon which the decision is based. The arbitrator shall be permitted to
award only those remedies in law or equity as are requested by the parties and
allowed by law.
Any party shall have
the right, within twenty (20) days of issuance of the arbitrator's decision, to
file a motion for reconsideration (accompanied by a supporting brief) with the
arbitrator, and the arbitrator shall have jurisdiction to consider and rule upon
such motion. Any other party shall have twenty (20) days from the date the
motion for reconsideration is submitted to file a written response. The
arbitrator thereupon shall reconsider the issues raised by the motion and,
promptly, either confirm or change the decision, which (except as provided by
law) shall then be final and conclusive upon the parties, except to the extent
rights for appeal are provided under the FAA or applicable state law.
Costs of
Arbitration
The cost of the
arbitrator and other incidental costs of arbitration that would not be incurred
in a court proceeding shall be borne by the Company; provided, however, that if
you are the party initiating the claim, you will contribute an amount equal to
the filing fee to initiate a claim in the court of general jurisdiction in the
state in which you were last employed by the Company. The parties shall each
bear their own costs and attorneys' fees in any arbitration proceeding;
provided, however, that the arbitrator shall have the authority to require any
party to pay the costs and attorneys' fees of another party, as is permitted
under federal or state law, as a part of any remedy that may be ordered.
(Id. at Ex. A, p. 3, bolding in
original.)
It discusses modification:
Modification to Binding
Arbitration Policy
Only James Filipan
may modify this policy in a signed writing and only as is necessary to make
this policy enforceable under any federal, state, or local law or other
applicable case law effective after this policy's initial dissemination to its
workforce. Otherwise, no Employee can modify this policy in any manner or enter
into any agreement that is contrary to this policy. . . .
(Id. at Ex. A, pp. 3-4, bolding
in original.)
Just above the signature lines,
it emphasizes:
I HEREBY ACKNOWLEDGE
THAT I HAVE RECEIVED AND AGREE TO THE BINDING ARBITRATION POLICY AND THE CLASS
ACTION WAIVER.
(Id. at Ex. A, p. 4, capitalizing
in original.)
Importantly, Plaintiff’s
signature and printed name appear on the signature lines. (See ibid.)
There is no dispute that he signed the agreement.
These provisions and facts
demonstrate an agreement to arbitrate.
Enforcement
Defendants’ motion is
unopposed. Plaintiff did not file an
opposition challenging the enforceability of the arbitration agreement.
The Court agrees with Defendants
that the agreement covers Plaintiff’s causes of action, so the motion is
granted as to Plaintiff’s individual claims.
Class Claims
The Court strikes the class claims. The
agreement contains a “class waiver” provision.
The FAA, which
expressly applies here, preempts California law as to class waivers and
requires Plaintiff’s claims to be arbitrated on an individual basis. (See, e.g., Knight, supra, at ¶ 5:49.4d
[discussing Iskanian v. CLS Transportation Los Angeles, LLC (2014) 59
Cal.4th 348 and AT&T Mobility LLC v. Concepcion (2011)
563 U.S. 333].)
PAGA Claims and Stay Request
Relying on Viking River
Cruises, Inc. v. Moriana (2022) 142 S.Ct. 1906 (“Viking River”),
Defendants argue that Plaintiff’s individual PAGA claim should be arbitrated
and the representative PAGA claim should be dismissed. (See Motion, pp. 6-7.)
Before Viking River, the
applicable law was Iskanian. “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 United States Supreme 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.
(Id. at 1924-1925, underlined case names added.)
The opinion continues:
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.
(Id. at 1925, underlined case
name added.)
Four takeaways seem apparent:
* Iskanian’s
prohibition against waiving representative PAGA claims stands;
* 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.
Accordingly, the Court:
* compels
Plaintiff’s individual PAGA claim to arbitration; and
* stays the case
as to the representative PAGA claim until the California Supreme Court rules.