Judge: Gregory Keosian, Case: 23STCV02711, Date: 2023-05-01 Tentative Ruling
Case Number: 23STCV02711 Hearing Date: May 1, 2023 Dept: 61
Defendant Nationstar Mortgage
LLC’s Motion to Compel Arbitration is GRANTED
as to Plaintiff Eduardo Murillo’s individual claims. Plaintiff’s representative
PAGA 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.)
Defendant Nationstar
Mortgage, LLC (Defendant) presents an arbitration agreement electronically
executed by Plaintiff Eduardo Murillo (Plaintiff) on February 25, 2021.
(Moseley Decl. ¶¶ 8–10, Exh. B.) The agreement provides for arbitration as
follows:
Except as it otherwise provides, the disputes
subject to arbitration include any and all claims or controversies, past,
present or future, involving legally-protected or recognized rights, arising
out of, or relating to employee’s application, selection process, employment,
and/or separation of employment that the Company may have against employee or
that employee may have against the Company and/or it successors and assigns,
and their former, current and future officers, directors and employees, in
their capacity as such or otherwise – all of which may enforce this Agreement
as direct or third-party beneficiaries.
(Moseley Decl. Exh.
B.)
The agreement
contains a delegation clause, which states as follows:
The Arbitrator, and not any federal, state,
or local court or agency, shall have exclusive authority to resolve any dispute
relating to the interpretation, applicability, enforceability or formation of
this Agreement including, but not limited to any claim that all or any part of
this Agreement is void or voidable.
(Moseley Decl. Exh.
B.)
The delegation
clause expressly does not apply to the agreement’s class and collection action
waivers, as the agreement provides that any claim that the waivers are “unenforceable,
inapplicable, unconscionable, or void or voidable, will be determined only by a
court of competent jurisdiction and not by the Arbitrator.” (Ibid.)
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 Viking River Cruises case is inapplicable, as
that case involved an express waiver of PAGA representative claims, which
included a severability provision allowing for arbitration of whatever
“portion” of those claims might lawfully be arbitrated, while the present
agreement contains is no waiver of Plaintiff’s representative claims at all.
(Opposition at pp. 9–12, citing Viking River Cruises, supra, 142
S.Ct. at p. 1925.) 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. 12–15.)
Plaintiff
advances a number of plausible arguments against the arbitrability of his
individual PAGA claims. Unlike in Viking River Cruises, the agreement
here contains only waivers of class and collective actions, and does not
purport to waive Plaintiff’s ability to bring representative claims like PAGA.
(See Wing v. Chico Healthcare &
Wellness Centre, LP (2022) 78 Cal.App.5th
22, 29 [a holding that the FAA requires courts to enforce class or collective
action waivers did not apply to PAGA claims].) The arbitration clause itself
applies to a broad array of claims, but only those “that the Company may have against employee or that employee may have against
the Company” or its representatives, rather than any claims brought by the
employee on behalf of the state, such as PAGA claims. (Moseley Decl. Exh. B.)
What’s more, the arbitrator lacks the power to grant any form of relief under
PAGA, as the agreement limits the arbitrator to “such remedies . . . that would
be available to a party in his or her individual capacity in a court of law for
the disputes presented to and decided by the arbitrator.” (Ibid.)
However, Defendant
is correct that the issue of the applicability of the arbitration clause to
Plaintiff’s individual PAGA claims has been clearly and unmistakably delegated
to the arbitrator. A “clear and unmistakable” delegation of authority to the
arbitrator to decide threshold issues of arbitrability is enforceable. (Malone v. Superior Court
(2014) 226 Cal.App.4th 1551, 1560.) Here, the agreement’s express “exclusive
authority” to decide disputes concerning the “applicability” of the arbitration
agreement, to the exclusion of any concurrent authority of courts, is a clear
and unmistakable delegation of authority on that point. (Ibid. [holding
delegation of “exclusive authority to resolve any dispute relating to
the interpretation, applicability, or enforceability of this binding arbitration agreement” was sufficiently clear and
unmistakable delegation of the issue of arbitrability].) The exception in the
agreement for decisions concerning the applicability of the class and
collective action waivers does not render the delegation clause less clear, contrary
to Plaintiff’s argument. (Opposition at p. 15.) Accordingly, the motion to
compel arbitration shall be GRANTED as to Plaintiff’s individual PAGA claim.
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 conclusion 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.
Said reading was not
necessarily correct. In Kim v. Reins (2020) 9 Cal.5th 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. This much was
held in the recent case of 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.