Judge Gregory Keosian, Case 21STCV31865 2022-10-03 Tentative Ruling

Judge: Gregory Keosian, Case: 21STCV31865, Date: 2022-10-03 Tentative Ruling

Case Number: 21STCV31865 Hearing Date: October 3, 2022 Dept: 61

Defendant Snak King Corporation’s Motion to Compel Arbitration is GRANTED as to Plaintiff’s individual claims. Plaintiff’s representative claims are STAYED pending resolution of the arbitration.

I. OBJECTIONS

Plaintiff Francisco Malagon objects to portions of the evidence submitted in support of the motion to compel arbitration. Plaintiff’s objections to the declaration of Christine Gonzales are OVERRULED, as Gonzales has laid a foundation in personal knowledge to describe the process by which she directed the propounding of the arbitration agreements at issue here.

II. MOTION TO COMPEL ARBITRATION

On petition of a party to an arbitration agreement to arbitrate a controversy, a court must order the petitioner and respondent to arbitrate the controversy if it determines the arbitration agreement exists, unless (1) the petitioner has waived its right to arbitrate; (2) grounds exist for the revocation of the agreement; or (3) “[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.)

“[T]he party moving to compel arbitration bears the burden of establishing the existence of a valid agreement to arbitrate, and the party opposing arbitration bears the burden of proving by a preponderance of the evidence any fact necessary to its defense. The role of the trial court is to sit as a trier of fact, weighing any affidavits, declarations, and other documentary evidence, together with oral testimony received at the court's discretion, to reach a determination on the issue of arbitrability.” (Hotels Nevada v. L.A. Pacific Center, Inc. (2006) 144 Cal.App.4th 754, 758.)

Defendant moves to compel arbitration of Plaintiff’s individual PAGA claims on the grounds that he has signed an arbitration agreement applicable to any claims arising from his employment. (Gonzales Decl. Exh. A.) Although PAGA claims have historically been deemed non-waivable and non-arbitrable (See Correia v. NB Baker Electric, Inc. (2019) 32 Cal.App.5th 602, 620), Defendants point to the recent case of Viking River Cruises, Inc. v. Moriana (2022) 142 S.Ct. 1906, in which the United States Supreme Court held that the Federal Arbitration Act (FAA) preempted California’s rule prohibiting “division of PAGA actions into individual and non-individual claims through an agreement to arbitrate,” and allowed PAGA defendants “to compel arbitration of [a PAGA plaintiff’s] individual claim.” (Id. at p. 1925.) Defendant argues that the proper course here is the same approach adopted by the Supreme Court: to compel Plaintiffs’ individual claims to arbitration, and dismiss their representative claims. (Motion at p. 20.)

Plaintiff in opposition argues that the arbitration agreement is unconscionable. (Opposition at pp. 10–16.) Plaintiff further argues that the Viking River case does not require this court to dismiss his representative PAGA claims, as such language was a non-binding federal interpretation of state law. (Opposition at pp. 16–20.) Plaintiff finally argues that in the alternative to granting the motion, this case should be stayed pending a decision by the California Supreme Court in the case of Adolph v. Uber Technologies, Case No. S274671. (Opposition at p. 10.)

Defendant is entitled to compel arbitration of Plaintiffs’ individual PAGA claims. The FAA applies here by dint of Defendant’s interstate and international operations, and by the agreement’s express invocation of the Act. (Gonzales Decl. ¶ 2, Exh. A.) Under the rule of Viking River Cruises, although California’s prohibition on the waiver of representative PAGA claims is not preempted by the FAA, its prohibition on the separation between individual, arbitrable claims and collective, non-arbitrable claims has explicitly been preempted. (Viking River Cruises, supra, 142 S.Ct. at p. 1924–1925.) The motion must therefore be GRANTED as to Plaintiffs’ individual claims.

Plaintiff’s arguments concerning the unconscionability of the agreement are not persuasive. “Unconscionability requires a showing of both procedural unconscionability and substantive unconscionability.” (Ajamian v. CantorCO2e, L.P. (2012) 203 Cal.App.4th 771, 795.) Arbitration contracts presented to employees on a take-it-or-leave-it basis and imposed upon employees as a condition of “necessary employment” are at least minimally procedurally unconscionable. (See Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83, 113.) Here, Plaintiff has demonstrated that the agreement presented here was procedurally unconscionable, as it was a contract of adhesion presented to him as a mandatory condition of employment, without explanation, and only in English, when Malagon can only read and write Spanish. (Malagon Decl. ¶¶ 4–5.) However, Plaintiff presents no argument concerning the substantive unconscionability of the agreement, save that it is unsigned by Defendant and therefore, despite its expressly bilateral terms, lacks mutuality. (Motion at pp. 15–16.) But Defendant’s assent to the contract may be inferred in the absence of a signature by facts demonstrating its ratification of its terms, such as by the fact that it was authored by Defendant, prepared in a document entitled “Snak King’s Arbitration Program,” and propounded upon Plaintiff as a mandatory condition of employment. (Gonzales Decl. Exh. A; see Serafin v. Balco Properties Ltd., LLC (2015) 235 Cal.App.4th 165, 176 [holding employer evidenced consent to arbitration agreement without signature when “not only was the agreement authored by Balco, and printed on Bay Alarm's letterhead, but Balco's later conduct evinces an intent to be bound by the arbitration agreement when it invoked the arbitration process”].) The agreement is not substantively unconscionable.

But even though the motion must be granted as to Plaintiff’s individual claims, Plaintiffs’ representative claims need not be dismissed. The U.S. Supreme Court reached that determination in Viking River Cruises expressly based on its determination that “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.” (Viking River Cruises, supra, 142 S.Ct. at p. 1925.) This was manifestly not a command for California courts to adopt a particular interpretation of California state law, as such an act would be beyond the power of the federal courts. (Johnson v. Fankell (1997) 520 U.S. 911, 916 [“Neither this Court nor any other federal tribunal has any authority to place a construction on a state statute different from the one rendered by the highest court of the State.”].) It was an attempt to direct federal proceedings in that particular case according to the high court’s reading of California state law as it existed prior to the rendering of the Viking River Cruises decision.

Said reading was not necessarily correct. In Kim v. Reins (2020) 9 Cal.5^th 73, the court held that a PAGA plaintiff possessed standing as an “aggrieved employee” to pursue a PAGA claim, notwithstanding that his individual claims had been dismissed as a result of settlement. (Id. at p. 80.) Although such a settlement might compensate an employee for his injury, it does not deprive them of status as an aggrieved employee, defined in PAGA as “any person who was employed by the alleged violator and against whom one or more of the alleged violations was committed.” (Id. at p. 82, citing Lab. Code § 2699, subd. (a).) As the settlement did not obviate the existence of an employment relationship or violation, it did not abrogate standing.

The same is true here. The paring away of Plaintiff’s individual claims to arbitration, required under Viking River Cruises, does not compel an adverse conclusion as to Plaintiff’s status as an aggrieved employee, any more than if Plaintiff’s individual claims for Labor Code violations had been settled. Plaintiff’s representative claims, then, need not be dismissed, but may be stayed pending resolution of the individual arbitrations. (Code Civ. Proc. § 1281.4.)

The motion is therefore GRANTED as to Plaintiff’s individual PAGA claims, and Plaintiff’s representative claims are STAYED pending resolution of the arbitration.