Judge: Frank M. Tavelman, Case: 19STCV35008, Date: 2022-10-14 Tentative Ruling

Case Number: 19STCV35008    Hearing Date: October 14, 2022    Dept: A

LOS ANGELES SUPERIOR COURT

NORTH CENTRAL DISTRICT - BURBANK

DEPARTMENT A

MOTION TO COMPEL ARBITRATION

SUMMARY OF RULING:

The motion to compel arbitration for the individual claim is granted but stayed.  

The motion to dismiss the representative PAGA action is denied without prejudice, and the representative PAGA action is stayed.

ALLEGATIONS:

Herman Huynh (“Plaintiff”) filed suit against Atlas Assembly Inc. and GlenAir Inc. (“Defendants”) on October 2, 2019, alleging both individual and representative causes of action under the Labor Code Private Attorneys General Act (“PAGA”).

Because Plaintiff’s claim involves both representative and individual claims under PAGA, the parties stipulated to a stay of the action pending the Supreme Court’s decision in Viking River Cruises Inc. v. Moriana (2022) 142 S.Ct. 190, which addressed whether the Federal Arbitration Act requires enforcement of a bilateral arbitration agreement providing that an employee cannot raise representative claims.

HISTORY:

The Court received the Defendants’ Motion to Compel Arbitration on August 24, 2022. The Court received the Plaintiff’s opposition to the Motion on September 21, 2022. The Court received the Defendant’s reply to the Motion on October 7, 2022.

RELIEF REQUESTED:

Defendant moves to compel Plaintiff to arbitrate his individual PAGA claims, and seeks to dismiss the representative PAGA claim.

ANALYSIS:

I.          LEGAL STANDARD

Under California law, the court has authority to compel arbitration pursuant to CCP § 1281.2 where a written agreement for such arbitration exists and one of the parties refuses to arbitrate. The party seeking to compel arbitration bears the burden of proving by a preponderance of the evidence the existence of a valid and enforceable arbitration agreement. (Engalla v. Permanente Medical Group, Inc. (1997) 15 Cal.4th 951, 972.) If the court determines the arbitration agreement exists, the burden shifts to the respondents to prove the falsity of the purported agreement. (Ibid.) Specifically, the statute provides, “[o]n 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 arbitrate the controversy exists.” 

II.        PLAINTIFF’S REQUEST FOR JUDICIAL NOTICE

Plaintiff requests the Court take judicial notice of nine cases. Eight of the cases are Los Angeles Superior Court cases, and the remaining one is a case on the California Supreme Court docket.

Evidence Code § 451(a) provides: “Judicial notice shall be taken of… (a) The decisional, constitutional, and public statutory laws of this state.”

Defendant objects to this request because the cases are unpublished, and correctly asserts that unpublished opinions cannot be relied upon as authority in California Courts.  The California Rules of Court 8.1115 governs citating opinions, but does not discuss trial court orders.   The Court is unaware of any authority for citing to a trial court order.  As cited by the MP, the Court of Appeal addressed this issue partially in County of San Bernardino v. Cohen writing that trial court orders are not even citable under the CRC 8.1115, and they bear no precedential weight in the Court of Appeal.  (County of San Bernardino v. Cohen (2015) 242 Cal.App.4th 803, 816.).  This Court does not view a trial court order as an “opinion” governed by CRC 8.1115 and thus is not expressly covered by that rule of court.    Nonetheless, at best at trial court order may be informative as to the pattern and practice of a particular trial courts as to a given issue.

The Court overrules the objection to these citations; however, the Court declines to take those rulings into consideration as to this case.  “In re Another Judge” is not very persuasive authority.

III.       MERITS

The only decision before the Court is whether the representative PAGA claim should be heard in court before or after the individual claim is arbitrated, and whether the representative claim should be dismissed entirely for lack of standing. Plaintiffs concede that there was a valid arbitration agreement that includes Plaintiff’s individual PAGA claim. (McEwan Decl. ¶ 4, Exh. 1.)  

Defendant argues that Plaintiff must arbitrate his individual claim, and since the individual claim must be arbitrated, the representative claim should be dismissed for lack of standing.  

In opposition, Plaintiff argues that the employment agreement itself states that individual PAGA action must be stayed while the representative PAGA action proceeds in court first. Additionally, Plaintiff argues that California case law should govern and allow Plaintiff to have standing to bring the representative claim, even if the individual claim goes to arbitration.

In the California Supreme Court case Iskanian v. CLS Transportation Los Angeles, LLC (2014) 59 Cal.4th 348, the Court held that employment agreements that compelled the waiver of an employee’s right to bring representative PAGA claims in a judicial or arbitral forum were impermissible and unenforceable, and invalidated arbitration agreements that purported to require separate arbitration or litigation of individual PAGA claims and non-individual, i.e., representative, PAGA claims. (Id. at 383-384.)

Both parties agree that the Supreme Court case Viking River preempts Iskanian’s indivisibility rule insofar as it precludes division of PAGA actions into individual and non-individual claims through an agreement to arbitrate. (Viking River, supra, 142 S.Ct. at 1924.)  If an arbitration agreement contains a “waiver of PAGA claims” and a severability clause, then the employer is “entitled to enforce the agreement insofar as it mandate[s] arbitration of [the employee’s] individual PAGA claim.” (Viking River, supra, 142 S.Ct.. at 1925.) Under Iskanian, arbitration of the individual claims would be precluded, but now under Viking River, the claims are severable.

Plaintiff asserts that the language of the Arbitration Agreement suggests that the individual arbitration should be stayed pending the resolution of the representative claim in court. The relevant language is as follows:

·         Disputes regarding the scope or enforceability of the Class and Representative Action Waiver may be resolved only by a civil court of competent jurisdiction and not by an arbitrator. [¶] . . . [¶] [U]ntil a court decides all issues necessary to determine whether the case may properly proceed as a representative action resolving whether individuals other than you have been aggrieved or subject to violations of the law, the arbitrator shall take no action with respect to the matter. However, once any issues regarding . . . the permissibility of a representative action have been decided by the court, and once any interlocutory appellate review has been exhausted, the arbitrator will have the authority to decide the substantive claims on an individual or a . . . representative basis, as may be determined and directed by the court, provided, however, that the court’s decision on these issues will remain subject to any additional appellate or other interlocutory review that may be permitted by law.” (emphasis added) (McEwan Decl., Ex. 1, p. 8.)

·         “[U]ntil a court decides all issues necessary to determine whether the case may properly proceed as a representative action resolving whether individuals other than you have been aggrieved or subject to violations of the law, the arbitrator shall take no action with respect to the matter” (McEwan Decl., Exh 1 pp. 5–6.)

·         “However, once any issues regarding class certification, collective action certification or the permissibility of a representative action have been decided by the court has been exhausted, the arbitrator will have authority to decide the substantive claim on an individual or a class….” (Id at p12).

Plaintiff concludes that the plain language means that the representative PAGA claim should proceed in court first before the arbitrator can act on Plaintiff’s individual claim. In the alternative, Plaintiff contends the arbitration language is ambiguous and “any ambiguities caused by the draftsman of the contract must be resolved against that party.” (Neal v. State Farm Ins. Cos. (1961) 188 Cal.App.2d 690, 695; Civ. Code § 1654.) Defendants maintain that the plain language requires individual PAGA claims to be arbitrated once this Court determines that the Arbitration Program is enforceable.

This is unique matter because of the language in the arbitration agreement.  Typically, Courts would stay or dismiss the representative action, but permit the individual action to proceed. In this instance, the Dispute Resolution Program agreement has unique language that appears to prevent such action.  The arbitration agreement expressly states that when there is an issue regarding a representative action that must be decided by the Court, an arbitrator shall take no action with respect to “the matter.”   The phrase “the matter” is ambiguous, and parties have taken opposite positions regarding the application of that term.  Further reading in that paragraph states, only after the representative action is resolved can the matters move forward.  The paragraph expressly states, “However, once any issues regarding class certification, collective action certification or the permissibility of a representative action have been decided by the court, and once any interrogatory appellate review has been exhausted, the arbitrator will have authority to decide the substantive claims on an individual or a class or a collective or representative basis… (emphasis added).”  The inclusion of the “individual” claim in the paragraph would lead to the inference that the paragraph was intended to apply to individual claims.  As such, the Court believes that since the Court will stay the representative class pending the ruling by the California Supreme Court, the Court must likewise stay the individual claim pursuant to the language in section 4 of the Dispute Resolution Program agreement. 

However, the Court disagrees with Plaintiff to the extent that, if ultimately permitted to do so, the representative claim must precede any individual claim that would be sent to arbitration.  Should a representative PAGA action be permitted if the individual action is sent to arbitration, the actions can proceed in any order or simultaneously under the terms of the agreement.

The U.S. Supreme Court in Viking River opined that a plaintiff loses standing to assert a representative PAGA claim once plaintiff’s own individual claims are compelled to arbitration. (Viking River, supra, 142 S.Ct. at p. 1925.) However, the California Supreme Court has held that a plaintiff retains standing even after their individual claims are settled. (Kim v. Reins International California, Inc. (2020) 9 Cal.5th 73, 80.)  This Court acknowledges that the Kim case pre-dated the U.S. Supreme Court’s decision in Viking River Cruises, nevertheless the Court is also aware that the California Supreme Court has taken the issue up for review in Adolph v. Uber Technologies.

The California Supreme Court granted review in Adolph v. Uber Technologies, Case No. S274671, on July 20, 2022, and on August 1, 2022, set the issue to be briefed as: “Whether an aggrieved employee who has been compelled to arbitrate claims under the Private Attorneys General Act (PAGA) that are ‘premised on Labor Code violations actually sustained by’ the aggrieved employee…maintains statutory standing to pursue ‘PAGA claims arising out of events involving other employees’ in court or in any other forum the parties agree is arbitrable.” 

As the California Supreme Court will opine on standing related to a representative PAGA action, this Court will defer its ruling only as to the issue of dismissal of the remaining representative claims pending the California Supreme Court’s decision in Adolph. If Plaintiff retains standing to assert the representative PAGA claims, those claims are stayed pending the arbitration of the individual claims.

IV.       CONCLUSION

Defendant’s Motion to Compel Arbitration of Plaintiff’s individual PAGA claims is GRANTED, but stayed pursuant to the Dispute Resolution Program agreement. The Court declines to dismiss Plaintiff’s representative PAGA action, and the representative claims are STAYED pending California Supreme Court’s ruling in Adolph and resolution of arbitration.

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RULING:

In the event the parties submit on this tentative ruling, or a party requests a signed order or the court in its discretion elects to sign a formal order, the following form will be either electronically signed or signed in hard copy and entered into the court’s records.

ORDER

Defendants Atlas Assembly, Inc. and GlenAir Inc.'s Motion to Compel Arbitration came on regularly for hearing on October 14, 2022, with appearances/submissions as noted in the minute order for said hearing, and the court, being fully advised in the premises, did then and there rule as follows:

THE MOTION TO COMPEL ARBITRATION as to the individual PAGA claims is GRANTED, but STAYED pending a determination regarding the representative claims. Plaintiff’s representative claims are STAYED pending the California Supreme Court’s ruling in Adolph and resolution of arbitration.

IT IS SO ORDERED.

DATE:  October 14, 2022                              _______________________________

                                                                        F.M. TAVELMAN, Judge

                                                                        Superior Court of California

County of Los Angeles