Judge Gregory Keosian, Case Number: 22STCV39814, Date: 2023-11-14 Tentative Ruling

Judge: Gregory Keosian, Case: 22STCV39814, Date: 2023-11-14 Tentative Ruling

Case Number: 22STCV39814 Hearing Date: November 14, 2023 Dept: 61

Defendants Culinart of Califorina, Inc. and Culinart Group, Inc.’s Motion to Compel Arbitration is GRANTED as to Plaintiff’s individual claims. Plaintiff’s representative claims are stayed pending resolution of the arbitration.

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.)

Defendants Culinart of Califorina, Inc. and Culinart Group, Inc. (Defendants) seek to compel the arbitration of Plaintiff Daniel Alvarez’s (Plaintiff) PAGA claims, pursuant to an agreement between Plaintiff and Compass Group USA, Inc., and its subsidiaries, applicable to “all legal claims between us, including without limitation those that may arise out of or be related to my employment, compensation, or termination of employment.” (Bailey Decl. Exh. A.) Defendants are subsidiaries of Compass USA, Inc. (Bailey Decl. ¶ 2.)

Defendant argues that Plaintiff’s individual PAGA claims ought to be arbitrated pursuant to the U.S. Supreme Court’s decision in Viking River Cruises, Inc. v. Moriana (2022) 142 S.Ct. 1906, in which the 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 in the Viking River Cruises case: to compel Plaintiff’s individual claims to arbitration, and dismiss their representative claims. (Motion at pp. 12–15.)

Plaintiff in opposition argues that the arbitration agreement does not apply to PAGA representative claims, because it contains an express carve-out for “claims for unpaid wages and related penalties filed with the US DOL, CA Division of Labor Standards Enforcement, or similar state agency and appeals resulting therefrom.” (Opposition at pp. 2–6; Bailey Decl. Exh. A.) Plaintiff further argues that if individual claims are ordered to arbitration, that does not deprive him of standing to prosecute the other claims in a representative capacity. (Opposition at pp. 7–12.)

Plaintiff’s argument concerning the carve-out for PAGA claims is unpersuasive, as the carve-out does not apply to claims belonging to or brought by a state agency, but by its terms claims “filed with” the relevant agencies, i.e. claims brought before an agency as an administrative tribunal. Plaintiff’s claim that the agreement’s terms must be interpreted in light of the law at the time of its execution — with particular reference to the prohibition on the arbitration of PAGA claims that prevailed in California prior to Viking River Cruises — the agreement is not susceptible to such an interpretation. (Opposition at pp. 5–6.) Although individual PAGA claims at the time of the agreement’s execution would have not been thought arbitrable, such claims would have fallen under another carve-out: that for “claims for which this Agreement would be invalid as a matter of federal law, or state or local law that is not preempted by federal law.” (Bailey Decl. Exh. A.) The arbitration agreement therefore applies.

Defendant is thus entitled to compel arbitration of Plaintiff’s individual PAGA claims. The FAA applies here by dint of Defendant’s interstate operations, and by the agreement’s express invocation of the Act. (Bailey Decl. Exh. A.) Under the holding of Viking River Cruises, California’s prohibition on the waiver of representative PAGA claims is not preempted by the FAA, but 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 Plaintiff’s individual claims.

But even though the motion must be granted as to Plaintiff’s individual claims, Plaintiff’s 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 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.

That 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 claims. Plaintiff’s representative PAGA claims are STAYED pending resolution of the arbitration.