Judge Deirdre Hill, Case 21TRCV00424 2023-03-02 Tentative Ruling

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Motion to Compel Plaintiff Joana Flores’ Individual PAGA Claims to Arbitration and to Dismiss Representative PAGA Claims or, Alternatively to Stay the Representative PAGA Claims

The motion is GRANTED IN PART and DENIED IN PART. Plaintiff Joana Flores is ordered to arbitrate her individual PAGA claims. The representative PAGA claims are stayed.

On June 10, 2021, plaintiff Joana Flores, individually and on behalf of other aggrieved employees pursuant to the California Private Attorneys General Act, filed a complaint against Alliance Ground International LLC for enforcement under PAGA of Labor Code violations.

Under CCP § 1281, a “written agreement to submit to arbitration an existing controversy or a controversy thereafter arising is valid, enforceable and revocable, save upon such grounds as exist for the revocation of any contract.”

Under CCP § 1281.2, “On petition of a party to an arbitration agreement alleging the existence of a written agreement to arbitrate a controversy and that a party thereto refuses to arbitrate such controversy, the court shall order the petitioner and the respondent to arbitrate the controversy if it determines that an agreement to arbitrate the controversy exists, unless it determines that: . . . (c) A party to the arbitration agreement is also a party to a pending court action . . . with a third party, arising out of the same transaction or series of related transactions and there is a possibility of conflicting rulings on a common issue of law or fact. . . . (d) . . . . If the court determines that a party to the arbitration is also a party to litigation in a pending court action . . . with a third party as set forth under subdivision (c) herein, the court (1) may refuse to enforce the arbitration agreement . . . ; (2) may order intervention or joinder as to all or only certain issues; (3) may order arbitration among the parties who have agreed to arbitration and stay the pending court action . . . pending the outcome of arbitration proceeding; or (4) may stay arbitration pending the outcome of the court action or special proceeding.”

Defendant Alliance Ground International LLC requests an order compelling plaintiff’s individual claims under PAGA to arbitration and to dismiss Flores’ representative PAGA claims or, alternatively, to stay the representative PAGA claims pending the outcome of arbitration.

“As stated in Cione v. Foresters Equity Services, Inc. (1997) 58 Cal. App. 4th 625, 634 ‘The right to arbitration depends upon contract; a petition to compel arbitration is simply a suit in equity seeking specific performance of that contract. There is no public policy favoring arbitration of disputes that the parties have not agreed to arbitrate.’” Lopez v. Charles Schwab & Co., Inc. (2004) 118 Cal. App. 4th 1224, 1229.

Defendant argues that plaintiff Flores entered into a valid and binding arbitration agreement on November 16, 2018 and again on April 12, 2019 “that embraces all the claims in the Complaint and specifically requires her to pursue her PAGA claims on an individual basis in arbitration” under the U.S. Supreme Court case Viking River Cruises, Inc. v. Moriana (2022) 142 S. Ct. 1906. See Vivian Castillo decl., Exh. A and B (Arbitration Agreement and Waiver of Class and Collective Actions). The court notes that both agreements appear to be exactly the same except, as stated below, only the one dated November 16, 2018 is signed.

Defendant further argues that the arbitration agreements cover plaintiff’s claims and that no ground exists to invalidate the agreements. Defendant also contends that the agreements contain a class action waiver. Defendant also asserts that to the extent any clause is found unenforceable, the remainder of the agreement should be upheld.

Defendant asserts that the agreement satisfies the FAA’s requirement of a nexus to interstate commerce because it operates in interstate commerce by providing its cargo handling services around the country, and as an office supervisor, plaintiff’s employment revolved around these transactions made in interstate commerce. Defendant also notes that the arbitration agreements state that they would be enforceable under the FAA. See Agreements, para. 8. Defendant also argues that plaintiff is not an exempt “transportation worker” as she does not physically move goods and does not load or unload cargo.

In opposition, plaintiff argues that she is a “transportation worker” and thus she is exempt from being compelled to arbitration under the FAA, citing to Southwest Airlines Co. v. Saxon (2022) 142 S. Ct. 1783. Plaintiff states in her declaration that she performs several job functions directly related to how, when, and under what circumstances flights and their cargo can enter into and depart from LAX. Plaintiff also argues that defendant has not shown that an arbitration agreement exists as defendant has not authenticated either one. She states in her declaration that she does not recall signing one. Plaintiff further argues that defendant waived any right to seek arbitration by failing to properly and timely assert and enforce that purported right. Plaintiff also asserts that even if the court decides that plaintiff’s “individual PAGA claim” requires arbitration, the non-individual PAGA claim need not be dismissed because plaintiff does not lose standing as a PAGA representative, citing to Kim v. Reins International California, Inc. (2020) 9 Cal. 5^th 73, 85. Plaintiff notes that the California Supreme Court has granted review in July 2022 in Adolph v. Uber Techs., Inc. on this issue. Plaintiff requests that if the court grants the motion as to plaintiff’s individual claims, then it stay the arbitration and proceed with the PAGA representative claims under CCP §1281.2(d)(4).

The arbitration agreements state that “[i]n exchange for Employee’s [initial or continued employment with Employer or other consideration . . . ], the Parties hereto agree that any dispute between Employee and Employer or any Employer Entities that is not resolved to Employee’s satisfaction pursuant to Employer’s policy or procedure regarding the resolution of disputes shall be submitted to final and binding arbitration. The term ‘Dispute” includes, but is not limited to, any claim, controversy, or dispute arising out of or related to the Employee’s employment . . . under . . . any other federal, state, or local law, common law, statute, ordinance or regulation, public policy or contract. . . .” Further, “All Disputes between the Parties and any Employer Entities will be arbitrated individually, and the Parties waive the right to participate in any class or collective action against the other Party and any Employer Entities. The Parties understand and agree that they will not consolidate their claims with the claims of any other individual or entity. . . .”

The court rules as follows: The court finds the existence of an agreement to arbitrate—specifically, the one plaintiff signed when she was hired in November 2018. She does not deny signing the agreement, only that she cannot recall whether she did. The court notes that the one dated April 12, 2019 is not signed. Rather under “Employee” it looks like the letter J only and refers to “Joane Flores” when plaintiff is “Joana.”

As to encompassing her individual PAGA claim, the agreement’s language is broad as it covers “any claim, controversy, or dispute arising out of or related to the Employee’s employment.”

Also, the court finds, defendant has not waived a right to arbitration. “A party seeking to prove waiver of a right to arbitration must show ‘(1) knowledge of an existing right to compel arbitration; (2) acts inconsistent with that existing right; and (3) prejudice to the party opposing arbitration . . . .’” Cinel v. Barna (2012) 206 Cal. App. 4th 1383, 1389-1390. Defendant asserted the “arbitration agreement” as its 3^rd affirmative defense in its answer. Defendant has not engaged in discovery or acted inconsistent with a right to arbitration. The motion to compel arbitration was filed on January 20, 2023. “[A]ny doubts regarding a waiver allegation should be resolved in favor of arbitration.” St. Agnes Medical Center v. PacifiCare of California (2003) 31 Cal. 4^th 1187, 1195 (citation omitted).

The court also finds that plaintiff does not fall under the “transportation worker exemption” under the FAA. The agreement states that it is governed by the FAA. Agreement, ¶8. See Davis v. Shiekh Shoes, LLC (2022) 84 Cal. App. 5^th 956, 963 (finding the FAA applies “if it is so stated in the agreement”). Plaintiff claims that she is exempt under §1 of the FAA, which exempts “contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce.” See 9 USC §1. In Southwest Airlines Co. v. Saxon (2022) 142 S. Ct. 1783, the issue was whether Saxon, a Southwest ramp supervisor, fell into the “class of workers engaged in foreign or interstate commerce.” Id. at 1787. The Court explained that a person is a “member of a ‘class of workers’ based on what she does at [the employer], not what [the employer] does generally.” Id. The Court accepted that “Saxon belongs to a class of workers who physically load and unload cargo on and off airplanes on a frequent basis.” Id. at 1788. The Csourt then held that “class of airplane cargo loaders is ‘engaged in foreign or interstate commerce’ under §1.” Id. at 1789. The court explained, “Thus, any class of workers directly involved in transporting goods across state or international borders falls within §1’s exemption” and “any such worker must at least play a direct and ‘necessary role in the free flow of goods’ across borders.” Id. at 1789-90. Defendant asserts that plaintiff is an “Office Supervisor” who “is responsible for supervising office agents, who provide customer service, computer data entry, and prepare freight transfer manifests” and that she “does not load or unload cargo from airplanes.” Vivian Castillo decl., ¶¶10-11. On the other hand, plaintiff states in her declaration that she performs “several different job functions closely related to how, when, and under what circumstances flights and their cargo can enter into and depart from” LAX. Plaintiff decl., ¶3. She states one such job function is ensuring hazardous cargo is compliant prior to it importing or exporting from LAX. “This job function requires me to physically go to and often enter the cargo aircraft to ensure that the cargo is placed on the aircraft properly.” Id., ¶4. She lists other functions: physically check that the live animals received from an aircraft are in compliance with CDC; submit paperwork to the USCA for perishable cargo; drive documents to and from the aircraft that are necessary to those aircraft taking off from LAX; call in to arrange for parking for aircraft from coming into LAX; coordinate with local hotels to alert them that aircrew, and sometimes TSA are coming in for lodging; escort and drive the crew and pilots to and from the aircraft either entering or leaving from LAX; inform Customs and Border Protection of flights that have landed and flights that have departed; and to contact the Department of Aviation for scheduling flights coming in and going out. Id., ¶¶5-12. The court finds that plaintiff’s job duties or functions are distinguishable from Saxon as she is not “directly” involved in transporting goods across borders.

Further, as the FAA applies, the U.S. Supreme Court case Viking River is binding precedent, such that defendant is entitled to enforce the arbitration agreement against plaintiff’s individual PAGA claims. The Court stated “Iskanian [v CLS Transp. Los Angeles, LLC (2014) 59 Cal. 4^th 348]’s prohibition on contractual division of PAGA actions into constituent claims unduly circumscribes the freedom of parties to determine the issues subject to arbitration and the rules by which they will arbitrate . . . and does so in a way that violates the fundamental principle that arbitration is a matter of consent.” Id. at 1923 (citations omitted). Under Iskanian, plaintiff’s individual PAGA claims would have been indivisible from the representative claims, precluding arbitration of the individual claims. In Viking River, the Court held that “Viking was entitled to enforce the [arbitration] agreement insofar as it mandated arbitration of Moriana’s individual PAGA claim.” Id. at 1925.

As to statutory standing under PAGA, the Viking River case stated that “[w]hen 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” and that “the correct course is to dismiss her remaining claims.” Id. at 1925. But, the Court also recognized “if this Court’s understanding of state law is wrong, California courts, in an appropriate case, will have the last word.” Id. at 1925. The California Supreme Court has held that a plaintiff retains standing even after their individual claims are settled. See Kim v. Reins International California, Inc. (2020) 9 Cal. 5^th 73, 80. Under PAGA, any “aggrieved employee” has standing to sue under PAGA. Labor Code §2699(a). An “aggrieved employee” is defined as someone “who was employed by the alleged violator” and “against whom one or more of the alleged violations was committed.” Thus, the court is inclined to find that plaintiff retains standing to assert the representative PAGA claims but notes that the issue is under review in the pending California Supreme Court case Adolph v. Uber Techs case rules differently (granting review on July 20, 2022). The court is thus not inclined to dismiss the representative PAGA claims.

Accordingly, in light of the above, plaintiff has agreed to arbitrate her individual PAGA claims. She has not made any showing that the agreements are procedurally or substantively unconscionable.

The motion is therefore GRANTED as to plaintiff’s individual PAGA claims and STAYED as to the PAGA representative claims.