Judge: Gregory Keosian, Case: 21STCV36053, Date: 2022-08-30 Tentative Ruling

Case Number: 21STCV36053    Hearing Date: August 30, 2022    Dept: 61

Defendant Los Angeles Apparel, Inc.’s Motion to Compel Arbitration is GRANTED as to Plaintiffs’ individual claims. Plaintiffs’ representative claims are STAYED pending resolution of the arbitration.

Plaintiffs Annette Cuenca and Claudia Jimenez’s Motion to Enforce Stipulation is placed off-calendar.

Defendant to provide notice.

I.                   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 Plaintiffs’ individual PAGA claims on the grounds that they have signed arbitration agreements applicable to any claims arising from their employment. (Andrade Decl. Exhs. A, B.) 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 pp. 19–20.)

Plaintiffs in opposition argue that Defendant has waived the right to compel arbitration by participating in this litigation for nigh on a year, and entering into a stipulation providing for discovery and mediation proceedings. (Opposition at pp. 3–4.) Plaintiffs also argue that the U.S. Supreme Court’s decision to dismiss the representative claims rested upon an interpretation of state law not binding upon this court. (Opposition at pp. 7–8.) Finally, Plaintiffs argue that in the alternative to granting this 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 pp. 9–10.)

No waiver has occurred in the present case. It is true that Defendant first appeared in this case on October 28, 2021, and has since entered into a stipulation for discovery and mediation, and that this delay and this act may be construed as the taking of “steps inconsistent with an intent to invoke arbitration.” (St. Agnes Medical Center (2003) 31 Cal.4^th, 1187, 1196.) But prior to the holding in Viking River Cruises, rendered on June 15, 2022, Defendant could have had no hope of seeking arbitration on Plaintiffs’ claims under California state law. This motion, filed on July 28, 2022, was brought within a reasonable time the avenue of arbitration became open to Defendant. Accordingly, no waiver has occurred.

Defendant is entitled to compel arbitration of Plaintiffs’ individual PAGA claims. The FAA applies here by dint of Defendant’s interstate and international operations, which Plaintiffs do not dispute. (Andrade Decl. ¶¶ 6–8.) And 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.

Plaintiffs’ representative claims, however, need not be dismissed. The U.S. Supreme Court reached that determination 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.” (Id. 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 according to the high court’s reading of California state law.

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. 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 Plaintiffs’ individual PAGA claims, and Plaintiffs’ representative claims are STAYED pending resolution of the arbitration.

Plaintiff’s motion to compel compliance with stipulation asks that this court order Defendant to serve a list of aggrieved employees, finalize a Belaire West notice to be sent to said employees, and to present a non-opt out list for same. As Plaintiffs’ representative actions are stayed pending arbitration, the motion is placed off-calendar.