Judge Gregory Keosian, Case 21STCV36053 2022-10-04 Tentative Ruling

Judge: Gregory Keosian, Case: 21STCV36053, Date: 2022-10-04 Tentative Ruling

Case Number: 21STCV36053 Hearing Date: October 4, 2022 Dept: 61

Defendants Santa Anita Convalescent Hospital & Retirement Center, Inc.. and Golden State Health Centers Inc.’s Motion to Compel Arbitration is GRANTED as to Plaintiffs’ individual PAGA claims. Plaintiffs’ representative claims are STAYED pending resolution of the arbitrations.

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.)

Defendants Santa Anita Convalescent Hospital & Retirement Center, Inc.. and Golden State Health Centers (Defendants) move to compel arbitration of the individual PAGA claims raised by Plaintiffs Esteban Roman, William Flores, Maria Nunez, and Micah Matthews (Plaintiffs) pursuant to arbitration agreements executed by Plaintiffs as a condition of their employment. Defendants present the declaration of Tiffany Walters, HR director for Defendant Golden State Health Centers, who authenticates arbitration agreements, executed by Plaintiffs, that require arbitration of all claims and controversies arising out of Plaintiffs’ employment with Defendant Golden State or its affiliated entities, which includes Defendant Santa Anita. (Walters Decl. ¶ 2, Exhs. A–D.)

Plaintiffs do not contest that they signed the agreements at issue. But they argue that their representative PAGA claims are not subject to arbitration, that Defendants have waived their right to arbitrate by delaying the present motion, and that rather than granting the motion, their claims should be stayed pending decisions by the California Supreme Court concerning arbitration waiver and the intersection between PAGA and arbitration. (Opposition at pp. 6–9.)

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.) Thus Defendants now move to compel arbitration of Plaintiffs’ individual PAGA claims.

No waiver has occurred in the present case. It is true that Defendant first appeared in this case on September 22, 2021, and has since engaged in some discovery, which acts 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. “[W]here ... a party promptly initiates arbitration and then abandons arbitration because it is resisted by the opposing party and foreclosed by existing law, the mere fact that the parties then proceed to engage in various forms of pretrial litigation does not compel the conclusion that the party has waived its right to arbitrate when a later change in the law permits arbitration.” (Bower v. Inter-Con Security Systems, Inc. (2014) 232 Cal.App.4th 1035, 1048.) Moving to compel arbitration prior to the Viking River Cruises decision would have been futile, and the present motion was brought within a reasonable time the avenue of arbitration became open to Defendant. Accordingly, no waiver has occurred.

Defendant is thus entitled to compel arbitration of Plaintiffs’ individual PAGA claims. The FAA applies here by dint of Defendant’s involvement in interstate commerce, and the agreements’ express invocation of the FAA’s coverage, which Plaintiffs do not dispute. (Walters Decl. ¶ 8, EXhs. A–D) 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 its own determination that the representative cases before it had to be dismissed 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, and 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 rather 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 calim, 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 Plaintiffs’ individual claims to arbitration, required under Viking River Cruises, does not compel an adverse conclusion as to Plaintiffs’ status as aggrieved employees, any more than if Plaintiffs’ individual claims for Labor Code violations had been settled. Plaintiffs’ 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.