Judge: Douglas W. Stern, Case: 21STCV41319, Date: 2022-08-09 Tentative Ruling

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Case Number: 21STCV41319    Hearing Date: August 9, 2022    Dept: 52

Tentative Ruling

            Defendants Bargain Rent-A-Car dba Lexus of Cerritos and AutoNation, Inc.’s Motion to Compel Arbitration

Defendants Bargain Rent-A-Car dba Lexus of Cerritos and AutoNation, Inc. move to compel plaintiff Sultan Ahmad to arbitrate this action. 

The Federal Arbitration Act Applies

The Federal Arbitration Act (FAA) applies to the parties’ arbitration agreement.  The FAA applies to contracts evidencing interstate commerce, which means when “the ‘transaction’ in fact ‘involv[es]’ interstate commerce, even if the parties did not contemplate an interstate commerce connection.”  (Allied-Bruce Terminix Companies, Inc. v. Dobson (1995) 513 U.S. 265, 281.)  Interstate commerce is interpreted broadly.  “Congress’ Commerce Clause power ‘may be exercised in individual cases without showing any specific effect upon interstate commerce’ if in the aggregate the economic activity in question would represent ‘a general practice… subject to federal control.’  [Citations.]  Only that general practice need bear on interstate commerce in a substantial way.”  (Citizens Bank v. Alafabco, Inc. (2003) 539 U.S. 52, 56.)  Congress’ power to regulate interstate commerce even permits it “to regulate purely local activities that are part of an economic ‘class of activities’ that have a substantial effect on interstate commerce.” (Gonzales v. Raich (2005) 545 U.S. 1, 17.)

            The dispute resolution agreement between Ahmad and defendants evidences interstate commerce.  It provides, “Any arbitration hereunder shall be governed by the Federal Arbitration Act… and not by any state law concerning arbitration.”  (Ramirez Decl., Ex. 1.)  The agreement concerns plaintiff’s employment with defendant Bargain Rent-A-Car dba Lexus of Cerritos, which is owned by defendant AutoNation, Inc.  (Ramirez Decl., ¶¶ 1-3.)  In the aggregate, the economic activity of defendants—selling cars—is part of a general practice subject to federal control.

Arbitration of PAGA Action

            Plaintiff’s complaint alleges a single cause of action for civil penalties under the Private Attorneys General Act (PAGA).  The United States Supreme Court recently held that binding arbitration agreements apply to an employee’s individual PAGA claims.  “[T]he FAA preempts the rule of Iskanian [v. CLS Transp. Los Angeles, LLC (2014) 59 Cal.4th 348] insofar as it precludes division of PAGA actions into individual and non-individual claims through an agreement to arbitrate.”  (Viking River Cruises, Inc. v. Moriana (2022) 596 U.S. ___, 142 S.Ct. 1906, 1924 (Viking River).)  Because the parties’ agreement included a waiver of representative PAGA claims and a severability clause, the employer was “entitled to enforce the agreement insofar as it mandated arbitration of [the employee’s] individual PAGA claim.”  (Id. at p. 1925.)    

            Here, the parties’ agreement similarly includes a waiver of representative PAGA claims: “The Agreement shall not be construed to allow or permit the consolidation or joinder of other claims or controversies involving any other allegedly aggrieved parties, and no matter whatsoever will proceed as a class action, collective action, private attorney general action or any similar representative action.”  (Ramirez Decl., Ex. 1.)  The agreement also includes a severability clause, which explicitly applies to the waiver of representative PAGA claims.  (Ibid., “Severability and Related Matters”.)  As in Viking River, defendants are entitled to enforce the agreement as to plaintiff’s individual PAGA claims.

Disposition

            The motion is granted.  Plaintiff Sultan Ahmad is hereby ordered to arbitrate the individual claims alleged in his complaint.  The entire action is hereby stayed pending the resolution of the arbitration proceeding.