Judge: Eddie C. Sturgeon, Case: 37-2021-00016367-CU-OE-CTL, Date: 2024-01-26 Tentative Ruling

SUPERIOR COURT OF CALIFORNIA,

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HALL OF JUSTICE

TENTATIVE RULINGS - January 25, 2024

01/26/2024  09:00:00 AM  C-67 COUNTY OF SAN DIEGO

JUDICIAL OFFICER:Eddie C Sturgeon

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Civil - Unlimited  Other employment Motion Hearing (Civil) 37-2021-00016367-CU-OE-CTL STEVENS VS KAMPS PROPANE INC [IMAGED] CAUSAL DOCUMENT/DATE FILED: Motion - Other, 10/09/2023

Defendant Kamps Propane, Inc,'s Motions to Compel Arbitration of Plaintiffs David Stevens and Michael Adams are GRANTED in part and DENIED in part. In sum, the court finds that: (1) Plaintiff Stevens individual claims are arbitrable other than his representative PAGA claims; and (2) Plaintiff Adam falls under the exemption from FAA as provided in 9 U.S.C. section 1 and therefore only those claims not barred from arbitration under Labor Code section 229 are arbitrable. Based on those conclusions and the below analysis, in addition to any other argument the parties would like to make, the court invites a discussion on what causes of action Labor Code section 229 would keep from arbitration.

1. Motion to Compel Plaintiff Stevens to Arbitration Code of Civil Procedure section 1281.2 provides: '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: (a) The right to compel arbitration has been waived by the petitioner; or (b) Grounds exist for the revocation of the agreement. (c) A party to the arbitration agreement is also a party to a pending court action or special proceeding 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[.]' (Code Civ. Proc., § 1281.2.) The moving party must prove by a preponderance of the evidence the existence of the arbitration agreement and that the dispute is covered by the agreement. (Rosenthal v. Great Western Fin. Securities Corp. (1996) 14 Cal.4th 394, 413.) The burden then shifts to the resisting party to prove by a preponderance of the evidence a ground for denial, e.g., unconscionability or waiver.

(Ibid.) Doubts about the applicability of an arbitration agreement to a particular dispute should be resolved in favor of sending the parties to arbitration. (Serv. Emps. Int'l Union v. City of L.A. (1994) 24 Cal.App.4th 136, 143.) The parties agree that the 2019 arbitration agreement is not controlling but dispute whether the 2014 or 2004 arbitration agreement should govern. In particular, Plaintiffs ague that Defendant did not sufficiently authenticate Plaintiff's signature or acknowledgment of the 2014 arbitration agreement and that Plaintiff does not recall ever acknowledging such an agreement. But Defendant was 'not required to introduce such evidence until the authenticity of the [arbitration agreement] was challenged.' (Espejo v. Southern California Permanente Medical Group (2016) 246 Cal.App.4th 1047, 1056; Ruiz v. Moss Calendar No.: Event ID:  TENTATIVE RULINGS

3066330  6 CASE NUMBER: CASE TITLE:  STEVENS VS KAMPS PROPANE INC [IMAGED]  37-2021-00016367-CU-OE-CTL Bros. Auto Group, Inc. (2014) 232 Cal.App.4th 836, 846 [finding that an employer bears the burden of proof to authenticate a signature only once the employee contests its validity].) '[T]he burden of authenticating an electronic signature is not great.' (Ruiz, supra, 232 Cal.App.4th at 844 [citing Civ. Code § 1633.9].) Civil Code section 1633.9(a) provides that an 'electronic signature is attributable to a person if it was the act of the person' and the 'act of the person may be shown in any manner, including a showing of the efficacy of the security procedure applied to determine the person to which the . . . electronic signature was attributable.' In Ruiz v. Moss Bros. Auto Group, Inc., the court held that a motion to compel arbitration could not be granted where the opposing party disputed that they had signed an arbitration agreement and the moving party submitted only a declaration summarily asserting that the opposing party had signed the agreement without stating why that was so. The declaration submitted in Ruiz 'did not explain how, or upon what basis, [the declarant] inferred that the electronic signature on the 2011 agreement was 'the act of Ruiz.' [Citation.] This left a critical gap in the evidence supporting the petition. Indeed, [the declarant] did not explain that an electronic signature in the name of 'Ernesto Zamora Ruiz' could only have been on the 2011 agreement (i.e., on the employee acknowledgement form) by a person using Ruiz's 'unique login ID and password'; that the date and time printed next to the electronic signature indicated the date and time the electronic signature was made; that all [] employees were required to use their unique login ID and password when they logged into the HR system and signed electronic forms and agreements; and the electronic signature on the 2011 agreement was, therefore made by Ruiz on September 21, 2011, at 11:47 a.m. Rather than offer this or any other explanation of how [the declarant] inferred the electronic signature on the 2011 agreement was the act of Ruiz, Main only offered her unsupported assertion that Ruiz was the person who electronically signed the 2011 agreement.' (Ruiz, supra, 232 Cal.App.4th at 844.) Here, Defendant has met the standard called for in Ruiz. Defendant supplied two declarations from its employees. One from Mr. Craig Linden, filed with Defendant's moving papers, who is Defendant's manager. He avers that '[o]n or about October 30, 2014, I instructed Mr. Stevens to log into ADP to review the updated Arbitration Agreement. I informed him that I was available to answer any questions about the Agreement. Following review of the document, I recieved a notification that Mr. Stevens had executed the Arbitration Agreement via ADP.' (ROA 92, Linden Decl., ¶7.) A second declaration from Ms. Kelli Ritter, a Director of Defendant's parent company, describes the process in which employees used ADP at the time Plaintiff would have signed the 2014 Agreement, including how the process allowed only employees to access their documentation. (ROA 113, Ritter Decl., ¶¶ 3-10.) Defendant has shown by the preponderance of the evidence that Plaintiff agreed to the 2014 Arbitration Agreement and Plaintiff's bare declaration that he has no recollection of acknowledging the agreement or using ADP is insufficient to prove otherwise.

Because the 2014 Agreement is controlling and contains a valid arbitration agreement, it is enforceable as to Plaintiff's individual claims-including Plaintiff's individual PAGA claims.

The remaining representative PAGA claims are stayed pending the arbitration pursuant to Code of Civil Procedure section 1281.4.

2. Motion to Compel Plaintiff Adams to Arbitration The parties agree that an arbitration agreement, signed in 2021, exists as to Plaintiff Adams. Rather, the central question is whether the Federal Arbitration Act ('FAA') applies to Plaintiff Adams. If it does not, Plaintiffs argue that California law bars arbitration of claims for unpaid wages notwithstanding an agreement to arbitrate and renders class/PAGA waivers unenforceable.

Under 9 U.S.C. section 1, the FAA does not apply to 'contracts of employment of seamen, railroad employees, or other class of workers engaged in foreign or interstate commerce[.]' The Ninth Circuit and California courts have found that 'last-leg' or 'last phase' truck drivers qualify as being 'engaged in a single, unbroken stream of interstate commerce.' (See, e.g., Mendoza v. Domino's Pizza, LLC (9th Cir. 2023) 73 F.4th 1135, 1136 [where Domino's purchased ingredients from out-of-state and intrastate Calendar No.: Event ID:  TENTATIVE RULINGS

3066330  6 CASE NUMBER: CASE TITLE:  STEVENS VS KAMPS PROPANE INC [IMAGED]  37-2021-00016367-CU-OE-CTL truck drivers delivered those ingredients from in-state warehouses to franchisees, the drivers fell under the FAA exemption]; Nieto v. Fresno Beverage Co. (2019) 33 Cal.App.5th 274, 284 [where beverage company purchased beverages from out-of-state and intrastate truck drivers delivered those beverages from in-state warehouses to in-state customers, the drivers fell under FAA exemption]; Betancourt v. Transportation Brkoerage Specialists, Inc. (2021) 62 Cal.App.5th 552, 558-561 [Amazon 'last mile' delivery drivers fall under FAA exemption].) Where 'goods shipped in interstate commerce were not transformed or altered at the warehouses, the entire journey represented one continuous stream of commerce.' (Domino's, supra, 73 F.4th at 1137.) This rule does not apply in cases where the products or ingredients that cross state lines are sufficiently altered (e.g., from ingredients to meals) prior to final delivery. (E.g., Domino's, supra, 73 F.4th at 1138 [citing and distinguishing Immediato v. Postmates, Inc.

(1st Cir. 2022) 54 F.4th 67, 78].) Here, Defendant purchases some of its products out-of-state. (E.g., ROA 102, Defendant's Mot. at 4:22-24 ['Defendant is a propane compant. It purchases from various wholesalers-including the out-of-state wholesaler, Kiva Energy. The wholesaler, Kiva Energy, imports propane from out-of-state via railcar and truck.'].) Defendant's delivery drivers, such as Plaintiff Adams, then deliver the propane to residential and commercial customers within California. (Id. at 6:24-25 ['Delivery drivers for Kamps Propane, such as Michael Adams, delivered propane to Kamps' residential and commercial clients in the state of California.'].) Defendant argues that because it is a distinct entity from the wholesalers that it purchases propane from, the flow of commerce is not one unbroken chain. But that conclusion is directly contradicted by Domino's and Nieto.

Defendant also argues that its products are 'combined with the services that Kamps offers' such as installation of propane tanks in a manner that disrupts the flow of commerce to take this case outside FAA exemption. But there is no evidence that Plaintiff Adams performed any of these additional services (cf. ROA 105, Paiste Decl., ¶¶ 4-5) and, even if he did, the actual products-the propane tanks-remained unaltered from their journey out-of-state to Defendant's customers in-state. The court finds that Plaintiff Adams was a 'last leg' delivery driver exempt from FAA coverage under section 1 of the FAA.

While the agreement contains a provision that '[t]he parties acknolwedge and agree that Kamps Propane through it sbusiness and commercial operation engages in interstate commerce sufficiently that this arbitration agreement is governed by and interpreted under the Federal Arbitration Act,' that does not prevent application of the exemption (which is also provided for in the FAA).

Because the FAA is inapplicable to Planitiff, Labor Code section 229 applies and authorizes a suit for unpaid wages even if the parties agreed to arbitrate the claims. Specifically, Labor Code section 229 states: 'Actions to enforce the provisions of this article for the collection of due and unpaid wages claimed by an individual may be maintained without regard to the existence of any private agreement to arbitrate.' Section 229 therefore prevents arbitration of Plaintiffs' causes of action for unpaid wages. In Lane v. Francis Capital Management LLC (2014) 224 Cal.App.4th 676, 684 the Court of Appeal held that 'Section 229 is found in article 1 of division 2, part I, of chapter 1 of the Labor Code, encompassing section 200 through 244. Thus, if a cause of action seeks to collect due and unpaid wages pursuant to sections 200 through 244, that action can be maintained in court, despite an agreement to arbitration.' The parties here do not clearly state which causes of action they believe would be unarbitrable under Section 229 and therefore the parties are invited to argue that point.

Further, Plaintiff argues that because the FAA does not apply, the class waiver is unenforceable under California law as stated in Gentry v. Superior Court (2007) 42 Cal.4th 443 and the PAGA claims are unarbitrable under Iskanian v. CLS Transportation Los Angeles, LLC (2014) 59 Cal.4th 348, 387. The court agrees.

Any individual claims not covered by Section 229 are arbitrable, however, even under California law.

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3066330  6 CASE NUMBER: CASE TITLE:  STEVENS VS KAMPS PROPANE INC [IMAGED]  37-2021-00016367-CU-OE-CTL After hearing from counsel, those claims which are arbitrable will be ordered to arbitration with the rest of the claims stayed pursuant to Code of Civil Procedure section 1281.4.

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