Judge Gregory Keosian, Case 22STCV00981 2022-07-25 Tentative Ruling

“If a court of competent jurisdiction, whether in this State or not, has ordered arbitration of a controversy which is an issue involved in an action or proceeding pending before a court of this State, the court in which such action or proceeding is pending shall, upon motion of a party to such action or proceeding, stay the action or proceeding until an arbitration is had in accordance with the order to arbitrate or until such earlier time as the court specifies.” (Code Civ. Proc. § 1281.4.)

“Trial courts generally have the inherent power to stay proceedings in the interests of justice and to promote judicial efficiency.” (Freiberg v. City of Mission Viejo (1995) 33 Cal.App.4th 1484, 1489.) The decision of a trial court to stay proceedings is thus generally a matter of discretion. (Bains v. Moores (2009) 172 Cal.App.4th 445, 480.)

Defendant moves to stay the present PAGA proceeding on the grounds that an arbitration agreement between the parties provides that any such action shall be stayed pending resolution of any other claims raised by Plaintiff. The agreement states:

If either Party has non-PAGA claims against each other, then the Parties agree that those non-PAGA claims must first be pursued in arbitration, regardless of which claims or actions were filed first. The pending court PAGA action shall be stayed pending full and final resolution of the arbitration pursuant to California Code of Civil Procedure Section 1281.2 and related law.

(Motion at p. 2.) Defendant argues that Plaintiff has raised claims for disability discrimination and retaliation in another action in federal court, and that in December 2022, the parties stipulated to have these claims sent to arbitration per the arbitration agreement. (Simon Decl. ¶¶ 4–5, Exh. 1.) Thus Defendant claims that this PAGA action must be stayed per the terms of the agreement.

Plaintiff in opposition contends that there are no common factual or legal issues between this wage-and-hour action and the discrimination action now being arbitrated, and that the contractual provision at issue, requiring that all PAGA claims be stayed pending resolution of all other claims, regardless of the absence of common issues, is an invalid restraint upon employees’ non-waivable right to bring a PAGA claim, which is a claim belonging to California’s Labor Workforce Development Agency, rather than the employee personally. (Opposition at pp. 2–3.)

Plaintiff is correct that the stay provision at issue here is invalid. “In bringing such an action, the aggrieved employee acts as the proxy or agent of state labor law enforcement agencies, representing the same legal right and interest as those agencies, in a proceeding that is designed to protect the public, not to benefit private parties.” (Amalgamated Transit Union, Local 1756, AFL-CIO v. Superior Court (2009) 46 Cal.4th 993, 1003.) Employers may not by private agreement place hurdles between employees, their non-waivable PAGA rights, and the State’s interest in enforcing its labor laws. (See Iskanian v. CLS Transportation Los Angeles, LLC (2014) 59 Cal.4^th 348, 383.)[1] Although law may prescribe a stay of litigation on PAGA claims when claims involving overlapping issues are sent to arbitration, a private agreement may not mandate a stay of PAGA claims when there is no such overlap.

Defendant argues that this court should also stay proceedings pending the decision in the United States Supreme Court case, Viking River Cruises, Inc. v. Moriana, in which the Court is to determine whether California’s rule against waiver of employees’ PAGA rights is preempted by the Federal Arbitration Act (FAA). (Motion at pp. 9–10.) But there are two difficulties with this argument. The first is that the decision in Viking River Cruises can have no bearing upon this case, as the arbitration agreement that Defendant cites specifically disclaims any applicability to PAGA claims at all.

This Agreement does not apply to or compel the arbitration of claims brought under California’s Private Attorney General Act of 2014, California Labor Code Sections 2699 et seq. (“PAGA claims”). Notwithstanding any other provision in this Agreement to the contrary, PAGA claims must be pursued in the appropriate court of law.

(Motion at p. 2.) Thus these claims are decidedly unlikely to be compelled to arbitration, at least under this agreement. What’s more, the decision in Viking River Cruises has already been issued. (U.S., June 15, 2022, No. 20-1573) 2022 WL 2135491.)[2]

Defendant in reply argues that Plaintiff is judicially estopped from opposing the present stay, as he agreed to the stipulation to arbitration in the federal case. (Reply at pp. 1–4.) But judicial estoppel only “prohibits a party from taking inconsistent positions in the same or different judicial proceedings.” (M. Perez Co., Inc. v. Base Camp Condominiums Assn. No. One (2003) 111 Cal.App.4th 456, 463.) There is no inconsistency here. Plaintiff has agreed to arbitrate his arbitrable claims under the agreement. Such a stipulation entails nothing as to the enforceability of a concurrent provision regarding the stay of unrelated PAGA claims, and Defendant identifies no representations or orders made in federal proceedings concerning this provision.

Finally, Defendant argues for the first time in reply that the rule of exclusive concurrent jurisdiction mandates a stay, as another PAGA action involving the same subject matter was filed against Defendant in the case Franco v. Genuine Parts Co., LASC Case No. 21STCV34234, filed November 23, 2021.

“Under the rule of exclusive concurrent jurisdiction, when two California superior courts have concurrent jurisdiction over the subject matter and all parties involved in litigation, the first to assume jurisdiction has exclusive and continuing jurisdiction over the subject matter and all parties involved until such time as all necessarily related matters have been resolved. The rule is based upon the public policies of avoiding conflicts that might arise between courts if they were free to make contradictory decisions or awards relating to the same controversy, and preventing vexatious litigation and multiplicity of suits.” (People ex rel. Garamendi v. American Autoplan, Inc. (1993) 20 Cal.App.4^th 760, 769–70.) The rule of exclusive concurrent jurisdiction may apply to PAGA claims brought in different courts. (See Shaw v. Superior Court of Contra Costa County (2022) 78 Cal.App.5^th 745, 262.)

To assess the similarity of the subject matters of this and the Franco cases, it is useful to lay out what violations are alleged. The violations alleged in the present case are as follows:

There is a great deal of overlap between the cases, and each claim raises only one cause of action distinct from the other: Plaintiff alleges a failure to pay sick pay at the proper rate under Labor Code § 246, and Franco alleges a failure to provide a seating/break area under the applicable wage orders. The subject matter is otherwise overwhelmingly similar. This is a case that is properly subject to the rule of exclusive concurrent jurisdiction: “the rule of exclusive concurrent jurisdiction does not require absolute identity of parties, causes of action or remedies sought in the initial and subsequent actions.” (Shaw v. Superior Court (2022) 78 Cal.App.5th 245, 256.)

Plaintiff in supplemental briefing argues that the court can make no determination as to whether exclusive concurrent jurisdiction applies because the court has not been provided access to the LWDA letters for the Franco action, meaning that the action, or certain parts thereof, may be dismissed for Franco’s failure to exhaust administrative remedies under Labor Code § 2699.3, subd. (a)(1)(A).) (Supp. Brief at pp. 2–3.) But this argument is unpersuasive, because it does not address the requirements of exclusive concurrent jurisdiction — identity of parties, subject matter, and timing — but rather speculates that Franco’s claims might contain substantive defects. Such speculation is possible in any instance in which exclusive concurrent jurisdiction applies, and furnishes no basis to deny the motion.

[1] The United States Supreme Court recently upheld this holding in the case Viking River Cruises, Inc. v. Moriana (U.S., June 15, 2022, No. 20-1573) 2022 WL 2135491, at *9, *11 [holding that the FAA does not “mandate the enforcement of waivers of representative capacity as a categorical rule,” and that Iskanian’s rule prohibiting “the wholesale waiver of PAGA claims” was “not preempted by the FAA”].)

[2] The Court held that the FAA does not “mandate the enforcement of waivers of representative capacity as a categorical rule,” and that Iskanian’s rule prohibiting “the wholesale waiver of PAGA claims” was “not preempted by the FAA.” (Viking River Cruises, Inc. v. Moriana (U.S., June 15, 2022, No. 20-1573) 2022 WL 2135491, at *9, *11.) But the Court also held that Iskanian was preempted “insofar as it precludes division of PAGA actions into individual and non-individual claims through an agreement to arbitrate.” (Id. at p. 11.)