Judge: David S. Cunningham, Case: 24STCV15574, Date: 2025-01-22 Tentative Ruling

Case Number: 24STCV15574    Hearing Date: January 22, 2025    Dept: 11

Solano (24STCV15574)

 

Tentative Ruling Re: Motion to Compel Arbitration

 

Date:                         1/22/25

Time:                        1:45 pm

Moving Party:          Hawaiian Gardens Casino (“Defendant”)

Opposing Party:       Daisy Solano (“Plaintiff”)

Department:             11

Judge:                       David S. Cunningham III

________________________________________________________________________

 

TENTATIVE RULING

 

Defendant’s motion to compel arbitration is granted.

 

The class claims are stricken.

 

The representative Private Attorneys General Act (“PAGA”) claim is stayed.

 

BACKGROUND

 

Plaintiff used to work for Defendant.  She alleges that Defendant subjected her and other current and former employees to numerous wage-and-hour violations.

 

Here, Defendant moves 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.)

 

Plaintiff worked for Defendant from January 15, 2018 to sometime in March 2024.  (See Fausto Decl., ¶¶ 2, 4.)  As part of Defendant’s policy and practice, she signed Defendant’s arbitration agreement on June 15, 2020.  (See id. at ¶ 5.)

 

The arbitration agreement is attached to the declaration of Karen Fausto, Defendant’s director of human resources, at exhibit A.  It states:

 

AGREEMENT TO ARBITRATE

 

In consideration of or continuance of the at-will employment relationship between Hawaiian Gardens Casino (the "Company") and Employee and the mutual desire of the parties to enter in this Agreement, the Company and Employee hereby agree that any and all disputes, claims or controversies arising out of or relating to this Agreement, the employment relationship between the parties, or the termination of the employment relationship, that are not resolved by their mutual agreement shall be resolved by final and binding arbitration by a neutral arbitrator. This Agreement includes any claims the Company may have against Employee, or that Employee may have against the Company or any of its officers, directors, employees, agents, parents, subsidiaries, or affiliated entities.

 

The claims covered by this Agreement include, but are not limited to, claims for: wrongful termination; breach of express or implied contract or covenant, breach of any duty owed to Employee by Company or to Company by Employee; fraud, misrepresentation, defamation, and any other tort claims; claims for wages, tips, penalties, other compensation or reimbursement of expenses; claims for discrimination, retaliation or harassment, based on among other things, race, sex, pregnancy, religion, national origin, ancestry, age, marital status, physical or mental disability, medical condition, gender identity or expression, sexual orientation, or any other protected characteristic; violation of any federal or state constitution, statute, ordinance or regulation, including but not limited Title VII of the Civil Rights Act of 1964, Age Discrimination in Employment Act of 1967, Americans with Disabilities Act, Fair Labor Standards Act, Employee Retirement Income Security Act, Consolidated Omnibus Budget Reconciliation Act, Family and Medical Leave Act, California Fair Employment and Housing Act, California Family Rights Act, California Labor Code, California Civil Code, and the California Wage Orders, or any other state, federal or local law.

 

This Agreement shall not apply to any dispute if an agreement to arbitrate such dispute is prohibited by law. Those disputes include a claim by the employee: (a) for state Workers' Compensation benefits; (b) for unemployment insurance benefits filed with the appropriate government entity; (c) arising under the National Labor Relations Act and filed through a charge with the National Labor Relations Board; (d) arising under the California Private Attorneys' General Act ("PAGA") or (e) or any other claims which are otherwise expressly prohibited by law from being subject to arbitration under this Agreement.

 

This Agreement does not preclude the Employee from filing an administrative charge or complaint with the appropriate government entity if such filing is protected or required by law. Notwithstanding the unavailability of class or collective arbitration under this Agreement, nothing in this Agreement is intended to limit an employee's rights under Section 7 of the National Labor Relations Act (including any right to engage in concerted activity such as discussing his/her claims with other employees or filing similar or coordinated individual claims in arbitration) and Employee will not experience any retaliation for exercising such rights.

 

Employees may learn more about their legal rights by visiting websites hosted by federal and state governmental agencies. Current links to some of these websites are listed below, although they are subject to change by the hosting agencies: www.dir.ca.gov; www.dir.ca.gov/dlse;   www.fehc.ca.gov; www.dir.ca.gov/iwc; www.dol.gov; www.dol.gov/compliance/laws/comp-flsa.htm; www.dol.gov/dol/topic/wages/index.htm;  and www.eeoc.gov/.

 

In arbitration, each side in the dispute presents its case, including evidence, to a neutral third party called an "arbitrator," rather than to a judge or jury. The arbitrator is either an attorney or a retired judge. The parties are entitled to be represented by their own legal counsel in the arbitration proceeding. After reviewing the evidence and considering the arguments of the parties, the arbitrator makes a decision and award to resolve the dispute. The arbitrator's decision is final and binding which means there will be no trial by a judge or jury, or an appeal of the arbitrator's decision except as provided below. Arbitration normally is more informal, much speedier and less expensive than a lawsuit. Because of the large number of cases awaiting trial in many courts, a dispute normally can be heard much more quickly by an arbitrator than by a judge or jury.

 

By signing this Agreement, the parties agree that any arbitration shall be conducted before one neutral arbitrator selected by the parties and shall be conducted under the Employment Arbitration Rules of the Judicial Arbitration and Mediation Service ("JAMS"), Alternative Dispute Resolution ("ADR") or Signature Resolution Group. Employee may obtain a copy of the arbitration rules for these services at the following websites: jamsadrservices.com, adrservices.com or signatureresolution.com. Upon request, the Company will print a copy of the rules for Employee.

 

Employee and Company will select an arbitrator by mutual agreement from one of the arbitrator services listed above. If the Employee and Company are unable to agree on a mutual arbitrator, either party may elect to obtain a list of arbitrators from the arbitration service. The Employee and Company will alternately strike names from the list with the Employee striking the first name, until only one name remains, who shall be the arbitrator.

 

By signing this Agreement, Employee acknowledges that he/she has had an opportunity to review the arbitration rules before signing this Agreement. The arbitration shall take place in Los Angeles County, California or if the employee lives outside of Los Angeles County, in the county where the Employee resides. The arbitrator shall have the authority to order discovery by way of deposition, interrogatory, document production, or otherwise, as the arbitrator considers necessary to a full and fair exploration of the issues in dispute, consistent with the expedited nature of arbitration. The arbitrator is authorized to award any remedy or relief available under applicable law that the arbitrator deems just and equitable, including any remedy or relief that would have been available to the parties had the matter been heard in a court. Nothing in this Agreement shall prohibit or limit the parties from seeking remedies under California Code of Civil Procedure section 1281.8, including, but not limited to, injunctive relief from a court of competent jurisdiction. The arbitrator shall have the authority to provide for the award of attorney's fees and costs if such award is authorized by applicable law.

 

The decision of the arbitrator shall be issued as a written opinion and shall provide the reasons for the award unless the parties agree otherwise. The arbitrator shall not have the power to commit errors of law or legal reasoning and the award may be vacated or corrected on appeal to a court of competent jurisdiction for any such error. The availability of judicial review shall be governed by the California Arbitration Act, California Code of Civil Procedure sections 1280, et seq.

 

Except as otherwise indicated above, this Agreement shall be enforceable under and subject to the Federal Arbitration Act, 9 U.S.C. Sections 1 et. seq. The parties agree that all disputes arising out of or in connection with, or in the application of, any of its provisions shall be fully and finally resolved through arbitration under the administration of Federal Arbitration, Inc. and in accordance with its Rules for Arbitration, including its Supplemental Rules on Employment Arbitration.

 

Employee shall not be required to pay any cost or expense of the arbitration that he or she would not be required to pay if the matter had been heard in a court.

 

BY SIGNING THIS AGREEMENT, THE PARTIES WAIVE THEIR RIGHT TO HAVE ANY DISPUTE, CLAIM OR CONTROVERSY DECIDED BY A JUDGE OR JURY IN A COURT. BY SIGNING THIS AGREEMENT, THE PARTIES AGREE THAT EACH MAY BRING CLAIMS AGAINST THE OTHER ONLY IN THEIR INDIVIDUAL CAPACITIES, AND NOT AS A PLAINTIFF OR CLASS MEMBER IN ANY PURPORTED CLASS, REPRESENTATIVE OR COLLECTIVE ACTION. CLAIMS MAY NOT BE ARBITRATED ON A CLASS, REPRESENTATIVE OR COLLECTIVE BASIS. THE ARBITRATOR CAN DECIDE ONLY YOUR AND THE COMPANY'S INDIVIDUAL CLAIMS. THE ARBITRATOR CANNOT CONSOLIDATE OR JOIN THE CLAIMS OF OTHER PERSONS OR PARTIES WHO MAY BE SIMILARLY SITUATED.

 

If Employee has any questions about this Agreement or wishes to have any of its terms explained, please direct your question to the Director of Human Resources. Employee may also wish to consult an attorney about the pros and cons of this Agreement.

 

The original version of this Agreement is in English. Any discrepancy or conflicts between the English version and any other language version will be resolved with reference to and by interpreting the English version.

 

The Company reserves its rights to amend or modify this Agreement at any time in its sole and absolute discretion provided that the Employee is provided with written notice of the same.

 

I ACKNOWLEDGE THAT I HAVE CAREFULLY READ THIS AGREEMENT, THAT I UNDERSTAND ITS TERMS, AND THAT I HAVE ENTERED INTO THIS AGREEMENT VOLUNTARILY AND NOT IN RELIANCE ON ANY PROMISES OR REPRESENTATIONS BY THE COMPANY OTHER THAN THOSE CONTAINED IN THIS AGREEMENT.

 

(Fausto Decl., Ex. A, pp. 4-7, emphasis in original.)

 

The Court finds Defendant’s burden satisfied because:

 

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

 

* it is undisputed that Plaintiff signed the agreement; and

 

* assent is uncontested.

 

Federal Arbitration Act (“FAA”)

 

Plaintiff concedes that the FAA governs.  (See Opposition, p. 2.)

 

Unconscionability and Enforcement

 

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.)

 

The party opposing arbitration bears the burden to prove that the arbitration agreement is unconscionable.  (See Ajamian v. CantorCO2e, L.P. (2012) 203 Cal.App.4th 771, 795.)

 

Plaintiff does not argue that Defendant’s agreement is unconscionable or that it does not cover her causes of action.  (See id. at pp. 2-8 [merely contending the representative PAGA claim should not be stayed pending completion of the arbitration].)

 

The Court finds the agreement enforceable since it expressly applies to all employment-related claims and disputes.  (See Fausto Decl., Ex. A, p. 4.)

 

Class Claims

 

The Court intends to strike the class claims.  The agreement states:

 

. . . BY SIGNING THIS AGREEMENT, THE PARTIES AGREE THAT EACH MAY BRING CLAIMS AGAINST THE OTHER ONLY IN THEIR INDIVIDUAL CAPACITIES, AND NOT AS A PLAINTIFF OR CLASS MEMBER IN ANY PURPORTED CLASS, REPRESENTATIVE OR COLLECTIVE ACTION. CLAIMS MAY NOT BE ARBITRATED ON A CLASS, REPRESENTATIVE OR COLLECTIVE BASIS. THE ARBITRATOR CAN DECIDE ONLY YOUR AND THE COMPANY'S INDIVIDUAL CLAIMS. THE ARBITRATOR CANNOT CONSOLIDATE OR JOIN THE CLAIMS OF OTHER PERSONS OR PARTIES WHO MAY BE SIMILARLY SITUATED.

 

(Id. at Ex. A, p. 6, emphasis in original.)  Given that the FAA applies, the class waiver is enforceable.  (See, e.g., Knight, supra, at ¶ 5:49.4c [discussing AT&T Mobility LLC v. Concepcion (2011) 563 U.S. 333]; see also, e.g., Iskanian v. CLS Transportation Los Angeles, LLC (2014) 59 Cal.4th 348, 359-360 [finding that the FAA preempts “a state’s refusal to enforce [] a [class] waiver on grounds of public policy or unconscionability”].)

 

 

PAGA

 

Defendant contends Plaintiff’s individual PAGA claim should be arbitrated and the representative PAGA claim should be stayed.  (See Motion, pp. 15-20; see also Reply, pp. 5-9.)

 

Plaintiff disagrees.  She asserts that the Court has discretion to deny Defendant’s stay request.  She claims the relevant factors support denial.  (See Opposition, pp. 2-7.)

 

Prior to Viking River Cruises, Inc. v. Moriana (2022) 142 S.Ct. 1906 (“Viking River”), Iskanian 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[.]”  (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 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.

 

This is a recurring issue in numerous cases on the Court’s docket.  Considering Iskanian, Viking River, and Adolph, the Court’s approach has been to compel individual PAGA claims to arbitration and to stay representative PAGA claims until the arbitrations finish.  The Court believes the same should be done here.[1]

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


[1] The Court declines to follow Plaintiff’s unpublished Superior Court decisions.  (See Opposition, p. 7.)