Judge: David S. Cunningham, Case: 23STCV01490, Date: 2024-05-07 Tentative Ruling



Case Number: 23STCV01490    Hearing Date: May 7, 2024    Dept: 11

Martinez (23STCV01490)

 

Tentative Ruling Re: Motion to Compel Arbitration

 

Date:                           5/7/24

Time:                          10:30 am

Moving Party:           American Guard Security, American Guard Services, Inc. (collectively “ASG” or “Defendants”)

Opposing Party:        Carlos Martinez (“Plaintiff”)

Department:              11

Judge:                         David S. Cunningham III

________________________________________________________________________

 

TENTATIVE RULING

 

Defendants’ request for judicial notice is granted.

 

Plaintiff’s objection 1 is overruled, objection 2 is sustained, and objection 3 is sustained in part (“bearing Plaintiff’s April 13, 2022, signature”).

 

Defendants’ motion to compel arbitration is granted as to Plaintiff’s individual claims.

 

The Court severs section 9, the modification section, of the arbitration agreement.

 

The Court strikes Plaintiff’s class claims.

 

The case is stayed as to the Plaintiff’s representative Private Attorneys General Act (“PAGA”) claim until the arbitration is finished.

 

BACKGROUND

 

Defendants provide security services to clients.  Plaintiff started working for Defendants as a security officer in April 2022.  He claims Defendants subjected him and other current and former security officers to numerous wage-and-hour violations.

 

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. 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.)

 

According to Defendants, Plaintiff e-signed their arbitration agreement on April 13, 2022.

 

Defendants’ agreement is attached to the declaration of Defendants’ manager of human resources, Tamra Curtis, at exhibit A.  The agreement states:

 

AMERICAN GUARD SERVICES, INC. EMPLOYMENT ARBITRATION POLICY

 

PLEASE READ THIS POLICY CAREFULLY AND MAKE SURE YOU UNDERSTAND ITS TERMS.

 

American Guard Services, Inc. and its subsidiaries (referred to as the “Company”) acknowledge that disagreements may arise between an individual employee and the Company or between employees in a context that involves the Company. The Company believes that the resolution of such disagreements is best accomplished through consultations with management and Human Resources, and, where that fails, by arbitration administered by the American Arbitration Association (“AAA”). Employees and the Company benefit from the use of private arbitration because it usually results in quicker, less costly resolution of disagreements than litigation in state or federal courts. For these reasons, the Company has adopted this Employment Arbitration Policy (“Policy”), consistent with and pursuant to the Federal Arbitration Act.

 

This Policy is a binding contract between the Company and its employees. Acceptance of employment or continuation of employment with the Company is deemed to be acceptance of this Policy. However, this Policy is not a promise that employment will continue for any specified period of time or end only under certain conditions. Employment at the Company is a voluntary (at will) relationship existing for no definite period of time and this Policy does not change that relationship.

 

1. Scope of Policy. The agreement between each individual employee and the Company to be bound by the Policy creates a contract requiring both parties to resolve most employment-related disputes (excluded disputes are listed below) that are based on a legal claim through final and binding arbitration. Arbitration is the exclusive forum for the resolution of such disputes, and the parties mutually waive their right to a trial before a judge or jury in federal or state court in favor of arbitration under the Policy.

 

Any dispute covered by this Policy will be arbitrated on an individual basis, and the parties mutually waive their right to participate in, or receive money from, any class, collective, or representative proceeding. No dispute between an employee and the Company may be consolidated or joined with a dispute between any other employee and the Company, nor may an individual employee seek to bring his/her dispute on behalf of other employees as a class or collective action or other representative proceeding. The arbitrator may not consolidate more than one individual’s claims, and may not otherwise preside over any form of a class, collective, or representative proceeding. Any arbitration ruling by an arbitrator consolidating the disputes of two or more employees or allowing class or collective action arbitration would be contrary to the intent of this Policy and would be subject to immediate judicial review.

 

Employees are encouraged to bring disputes to their supervisors and to Human Resources before initiating arbitration. If an employment-related dispute is not resolved after approaching Human Resources and the dispute is based on a legal claim not expressly excluded from this Policy, any party to the dispute may initiate the arbitration process.

 

2. Covered Disputes. The disputes covered under this Policy include any dispute between an employee and the Company and any dispute between an employee and any other person where: (1) the employee seeks to hold the Company liable on account of the other person’s conduct, or (2) the other person is also covered by this Policy and the dispute arises from or relates to employment, including termination of employment, with the Company. The disputes covered under the Policy also include any dispute the Company might have with a current or former employee which arises or relates to employment.

 

A dispute is based on a legal claim and is subject to this Policy if it is not specifically excluded from the Policy and if it arises from or involves a claim under any federal, state or local statute, ordinance, regulation or common law doctrine regarding or relating to employment discrimination, terms and conditions of employment, or termination of employment including, but not limited to, the following: Title VII of the Civil Rights Act of 1964, the Civil Rights Act of 1991, the Age Discrimination in Employment Act, the Older Workers Benefits Protection Act, the Americans With Disabilities Act (and the Americans with Disabilities Amendments Act), the Equal Pay Act, the Family and Medical Leave Act, the Worker Adjustment Retraining and Notification Act, Title II of the Genetic Information Nondiscrimination Act of 2008, the Fair Labor Standards Act, and all applicable amendments and regulations; state human rights and non-discrimination laws; state and local labor code and wage and hour claims, whistleblower or retaliation claims; breach of contract, promissory estoppel, or any other contract claim, and defamation, employment negligence, or any other tort claim.

 

The arbitrator will be bound by the applicable law of the jurisdiction under which the dispute arises. This Policy covers any dispute subject to arbitration which is brought on or after the applicable effective date, as set forth in Section E of this Policy, even if the alleged act or omission occurred prior to the applicable effective date.

 

An issue is subject to arbitration only if it states a claim under applicable federal, state, or local law. An arbitrator (or a court of law with jurisdiction if an employee attempts to initiate a court action of a claim otherwise covered under this policy in court) shall dismiss, without a hearing on the merits, any matter which does not state a claim under applicable federal, state, or local law.

 

3. Excluded Disputes. This Policy does not preclude an employee from filing a claim or charge with a governmental administrative agency, such as the National Labor Relations Board, the Department of Labor, or the Equal Employment Opportunity Commission, or from filing a workers’ compensation or unemployment compensation claim in a statutorily-specified forum.

 

In addition, this Policy does not preclude either an employee or the Company from seeking emergency or temporary injunctive relief in a court of law in accordance with applicable law. However, after the court has issued a ruling concerning the emergency or temporary injunctive relief, the employee and the Company are required to submit the dispute to arbitration pursuant to this Policy.

 

4. Arbitration Rules and Procedures. Arbitration shall be held pursuant to the Employment Arbitration Rules of the AAA then in effect and available at: http://www.adr.org.

 

5. Judicial Proceedings and Enforcement of Awards. Either party may bring an action in a court of competent jurisdiction to compel arbitration under this Policy, to enforce an arbitration award, or to vacate an arbitration award.

 

6. Confidentiality. Both parties agree that the Company has valuable trade secrets and proprietary and confidential information. Both parties agree that in the course of any arbitration proceeding all necessary steps will be taken to protect from public disclosure such trade secrets and proprietary and confidential information.

 

7. Severability. The provisions of this Agreement are severable, and if any one or more are determined to be void or otherwise unenforceable, the remaining provisions shall continue to be in full force and effect. If, in any action to enforce this Agreement, a Court of competent jurisdiction rules that the parties agreement to arbitrate under the Employment Arbitration Rules of the American Arbitration Association is not enforceable, then the parties agree that such Dispute shall be resolved by final and binding arbitration under the California Arbitration Act, California Code of Civil Procedure Section 1280, et seq.

 

8. Service of Notice. Any notice necessary or proper for the initiation or continuation of an arbitration under these procedures, for any related court action, or for the entry of judgment on an award made under these procedures may be served on a party by the U.S. Mail or by a commercial express delivery service, addressed to the party or its representative at the last known address or by personal service, in or outside the state where the arbitration is to be held.

 

9. Amendment or Termination of Arbitration Policy. The Company reserves the right to amend, modify, or terminate the Policy after providing at least 60 days notice of its intent and the substance of any amendment, modification or termination of the Policy. Notice may be effected by posting the notice on the Company’s intranet website. No such amendment or termination shall affect any arbitration procedure which has already been commenced pursuant to this Policy.

 

10. Effective Date. This Policy became effective on March 1, 2015 for all persons employed by the Company or its subsidiaries. This Policy shall become effective on the date of hire for all other employees of the Company or its subsidiaries employed on or after that date.

 

All arbitrations shall be conducted in accordance with the Policy in effect on the date the Company receives the Demand for Arbitration. This Policy supersedes any and all prior versions and has been revised effective March 1, 2015.

 

(Curtis Decl., Ex. A, emphasis in original.)

 

Facts and terms like these normally suffice to demonstrate an agreement to arbitrate, but Plaintiff raises an assent challenge.  He declares that he does not recall reviewing or signing the agreement.  (See Martinez Decl., ¶ 4.)  He also declares, on information and belief, that Defendants copied/pasted his signature “to other documents without [his] consent.”  (Ibid.)

 

The first point is unhelpful.  Lack of memory is not a defense.  Nor is failure to read.  (See, e.g., Ramos v. Westlake Services LLC (2015) 242 Cal.App.4th 674, 687 [“[T]he fact that [the plaintiff] signed a contract in a language he may not have completely understood would not bar enforcement of the arbitration agreement.  If [the plaintiff] did not speak or understand English sufficiently to comprehend the English Contract, he should have had it read or explained to him.”].)  This is especially true here since Plaintiff does not claim he could not understand English. 

 

The second point fails for two reasons.  One, in general, party statements and declarations based on information and belief constitute hearsay.  (See, e.g., Edmon & Karnow, Cal. Practice Guide: Civ. Procedure Before Trial (The Rutter Group June 2023 Update) ¶¶ 8:1104 [addressing interrogatory answers and verifications], 9:60 [addressing declarations pertaining to law and motion], 9:60.8, 10:114 [addressing declarations pertaining to summary judgment], 7:1022.1, 7:1063 [addressing declarations pertaining to anti-SLAPP motions], 8:107 [addressing declarations pertaining to protective orders].)  Two, Plaintiff’s assertion concerns other documents, not the arbitration agreement.  He does not contend the e-signature on the agreement was copied/pasted without consent.  

 

To the extent Plaintiff is attempting to make an authentication argument, the Court disagrees.  “Authentication of a writing means (a) the introduction of evidence sufficient to sustain a finding that it is the writing that the proponent of the evidence claims it is or (b) the establishment of such facts by any other means provided by law.”  (Knight, supra, at ¶ 5:321.1 [quoting Evidence Code section 1400].)  “An ‘electronic signature is attributable to a person if it was the act of the person’ and this may be shown in any manner.”  (Id. at ¶ 5:321.3.)  “[A] party may establish that the electronic signature was ‘the act of the person’ by presenting evidence that a unique login and password known only to that person was required to affix the electronic signature, along with evidence detailing the procedures the person had to follow to electronically sign the document and the accompanying security precautions.” (Bannister v. Marinidence Opco, LLC (2021) 64 Cal.App.5th 541, 545.)  The supplemental declaration of Sam Wafaa, Defendants’ compliance coordinator, tenders the required information.[1]

 

Ultimately, Defendants’ burden is satisfied.  An agreement to arbitrate appears to exist.

 

Federal Arbitration Act (“FAA”)

 

The Court finds that the FAA governs because the agreement expressly states that Defendants “adopted” it “pursuant to the [FAA]” (Curtis Decl., Ex. A), and it affects interstate commerce.  (See id. at ¶ 3 [“AGS is a full-service security company with locations in 22 states across the nation. 5 AGS places security officers at client worksites in varying states to ensure a safe and secure 6 environment. This includes retail stores across the nation, cruise ships, corporate board or 7 shareholder meetings, seminars, charity fund-raisers, and employee or group functions.”].)

 

Enforcement

 

Plaintiff contends the agreement is unconscionable.  (See Opposition, p. 3.)

 

Unconscionability is a contract defense.  (See Torrecillas v. Fitness International, LLC (2020) 52 Cal.App.5th 485, 492.)  Under the FAA, unconscionability can be utilized to “invalidate [an] arbitration agreement[].”  (Ibid.)  Courts apply state law to test whether the agreement is unconscionable.  (See, e.g., Lagatree v. Luce, Forward, Hamilton & Scripps (1999) 74 Cal.App.4th 1105, 1119.)

 

“[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.”  (Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83, 114, internal quotation marks omitted.)  “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.”  (Ibid.)  “But they need not be present in the same degree.”  (Ibid.)  “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.”  (Ibid.)  “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.”  (Ibid.)

 

Procedural Unconscionability

 

For procedural unconscionability, Plaintiff claims the agreement is a contract of adhesion.  He asserts that no one explained the legal significance of the agreement to him.  (See Opposition, pp. 2-5.)

 

The Court disagrees.  “[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.)  Stated differently, “the 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.’”], emphasis in original.) 

 

Plaintiff’s assertion – that Defendants rushed him and did not explain the legal impact of the agreement to him – is unpersuasive.  Plaintiff fails to declare that he requested an explanation or that he failed to receive opportunities to read the agreement and to consult attorneys before signing.  (See Martinez Decl., ¶¶ 3-5; see also Reply, pp. 4-5.)  To repeat, failure to read is not a defense.

 

Substantive Unconscionability

 

For substantive unconscionability, Plaintiff contends the agreement:

 

* gives Defendants “a unilateral right to amend, modify, or terminate” the agreement (Opposition, pp. 6-7);

 

* “requires employees to bear costs unique to arbitration” (id. at pp. 7-8, emphasis deleted);

 

* preemptively waives the right to a jury trial (see id. at p. 8);

 

* includes a confidentiality clause (see id. at pp. 8-9); and

 

* waives representative PAGA claims (see id. at pp. 9-10).

 

The first point is correct.  Section 9 is the modification section.  The plain language is nonmutual, so the section is substantively unconscionable:

 

9. Amendment or Termination of Arbitration Policy. The Company reserves the right to amend, modify, or terminate the Policy after providing at least 60 days notice of its intent and the substance of any amendment, modification or termination of the Policy. Notice may be effected by posting the notice on the Company’s intranet website. No such amendment or termination shall affect any arbitration procedure which has already been commenced pursuant to this Policy.

 

(Curtis Decl., Ex. A, § 9, emphasis in original.)

 

Nevertheless, the Court agrees with Defendants that section 9 can be severed.  (See Reply, p. 9 n.1; see also Curtis Decl., Ex. A, § 7.)  The Court intends to sever it.

 

Plaintiff’s second point is unavailing.  The agreement requires the arbitration to be administered by the AAA pursuant to the AAA’s Employment Arbitration Rules.  (See id. at § 4.)  Defendants stipulate that the Rules require them to pay the arbitration costs.  (See Reply, p. 6.)

 

The third point is also unavailing.  Plaintiff cites two cases for the proposition that California prohibits predispute waivers of the right to a jury trial – Grafton Partners LP v. Superior Court (2005) 36 Cal.4th 944 (“Grafton”) and Holley-Gallegly v. TA Operating LLC (C.D. Cal. Sept. 16, 2022, No. EDCV 22-593 JGB (SHKx)) 2022 WL 9959778.  (See Opposition, p. 8.)  Grafton goes against Plaintiff’s position.  The opinion says predispute arbitration agreements are enforceable notwithstanding the fact that they waive jury trials.  (See Grafton, supra, 36 Cal.4th at 955.)  Holley-Gallegly is distinguishable.   The waiver provision there “reache[d] beyond” the limits of a normal waiver provision.  (Holley-Gallegly, supra, 2022 WL 9959778, at * 5.)  It required the employee to waive his right to a jury trial even if the court found the agreement unenforceable.  Plaintiff fails to identify similar language in Defendants’ agreement.

 

The fourth point fails.  Plaintiff cites Ting v. AT&T (9th Cir. 2003) 319 F.3d 1126, claiming the confidentiality section is overbroad.  (See Opposition, pp. 8-9.)  The Ting confidentiality clause “require[d] ‘[a]ny arbitration [to] remain confidential.’” (Ting, supra, 319 F.3d at 1151.)  Defendants’ confidentiality section is narrower:

 

6. Confidentiality. Both parties agree that the Company has valuable trade secrets and proprietary and confidential information. Both parties agree that in the course of any arbitration proceeding all necessary steps will be taken to protect from public disclosure such trade secrets and proprietary and confidential information.

 

(Curtis Decl., Ex. A, § 6, emphasis in original.)  On balance, given that it primarily relates to trade secrets and proprietary information, it is not unconscionable.  (See Hasty v. American Automobile Assn. of Northern California, Nevada & Utah (2023) 98 Cal.App.5th 1041, 1061-1062 [instructing that “a confidentiality provision in an arbitration agreement is not per se unconscionable when it is based on a legitimate commercial need (such as to protect trade secrets or proprietary information”)], emphasis in original; see also Baltazar v. Forever 21, Inc. (2016) 62 Cal.4th 1237, 1250 [“‘“[A] contract can provide a ‘margin of safety’ that provides the party with superior bargaining strength a type of extra protection for which it has a legitimate commercial need without being unconscionable. [Citation.]”’ Here, the basis for the extra measure of protection is a legitimate commercial need to protect Forever 21’s ‘valuable trade secrets and proprietary and confidential information’ from public disclosure. Although Baltazar may dislike the wording of the confidentiality provision, she does not dispute that it is based on a legitimate commercial need. Moreover, nothing in the agreement precludes employees from seeking comparable protection for their personal information during arbitration proceedings, as circumstances may warrant.”].)

 

The Court turns to Plaintiff’s fifth point.[2]  Prior to Viking River Cruises, Inc. v. Moriana (2022) 142 S.Ct. 1906 (“Viking River”), Iskanian v. CLS Transportation Los Angeles, LLC (2014) 59 Cal.4th 348 controlled.  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 Iskanianinsofar 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 stand out:

 

* 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 defendant is allowed 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.  The California Supreme Court reversed it in Adolph v. Uber Technologies, Inc. (2023) 14 Cal.5th 1104.

 

Considering Iskanian, Viking River, and Adolph, and because the FAA applies, the Court is inclined to compel Plaintiff’s individual PAGA claim to arbitration and to stay the case as to the representative PAGA claim.

 

Class Waiver

 

The agreement’s class waiver is enforceable under the FAA; therefore, Plaintiff’ class claims should be stricken.  (See, e.g., Iskanian, supra, 59 Cal.4th at 359-360 [finding that the FAA preempts “a state’s refusal to enforce [] a [class] waiver on grounds of public policy or unconscionability”].)

 

 

 

 



[1] The supplemental Wafaa declaration states:

 

2. When an employee is hired, he provides his personal email address to AGS. AGS then sends an email to the provided personal email address to register that email address and a corresponding password in the system to create a unique employee account in the dashboard system. Once the employee account is created by the new employee in the dashboard system, no one other than the employee (with his confidential password) can access this employee's account. Furthermore, until and unless the employee creates an account as described above, the dashboard system does not allow anyone to access the system and execute any documents. 

 

3. An electronic signature in the name of "Carlos Martinez Jr." could only have been placed on the April 13, 2022 Arbitration Agreement by a person using a unique login ID and his self- assigned password. The date and time printed next to the electronic signature indicated the date and time the electronic signature was made. All AGS applicants are required to create and use their unique login ID and self-assigned password known only to them and not communicated by an applicant to AGS when they log into the Dashboard HR system and sign electronic forms and agreements.

 

4. AGS personnel do not use the link sent to an applicant's personal email address to create a unique password for an applicant or to access the Dashboard to in tum gain access to onboarding documents requiring electronic signatures. AGS does not create unique passwords to access the Dashboard system to place applicant electronic signatures on documents. The electronic signature on the April 13, 2022 Arbitration Agreement was made by Martinez on April 13, 2022 at 2:27 p.m. Martinez's unique password was used to access the Agreement at the time on the timestamp.

 

(Supp. Wafaa Decl., ¶¶ 2-4.)

 

Defendants submitted the supplemental Wafaa declaration in reply.  If requested, Plaintiff should receive an opportunity to respond.

[2] Initially, Plaintiff brought his individual and representative PAGA claims in a separate action (case number 23STCV07368), but the Court granted consolidation on April 22, 2024, so the PAGA claims are at issue here.