Judge: Helen Zukin, Case: 22STCV13634, Date: 2022-09-15 Tentative Ruling
Case Number: 22STCV13634 Hearing Date: September 15, 2022 Dept: 207
Background
This action arises from Plaintiff Corinne Specter’s
(“Plaintiff”) employment with Defendants CSS Payroll Co., L.P., and City
Storage Systems LLC (collectively “Defendants”). Plaintiff’s Complaint asserts
one cause of action against Defendants under the Private Attorneys General Act
(“PAGA”) codified at Labor Code § 2698 et seq. Plaintiff alleges Defendants
failed to provide overtime wages, meal periods, or rest breaks to her and other
of Defendants’ employees. Defendants move the Court to compel arbitration of
Plaintiff’s individual PAGA claims and dismiss any claims brought under PAGA in
a representative capacity on behalf of Defendants’ other employees. Plaintiff
opposes the motion.
Request for Judicial Notice
Plaintiff requests the Court take judicial notice of the
California Supreme Court’s granting review in the case styled Adolph v. Uber Technologies, Inc. Plaintiff’s request is unopposed and is granted.
Objections to Evidence
Plaintiff’s objections to the declarations of Nora
Stilestein and Andrew Neeld are overruled.
Legal Standard for Motions to Compel
Arbitration
Under both
the Title 9 section 2 of the United States Code (known as the Federal
Arbitration Act) and the Title 9 of Part III of the California Code of Civil
Procedure commencing at section 1281 (known as the California Arbitration Act,
hereinafter “CAA”), arbitration agreements are valid, irrevocable, and
enforceable, except on such grounds which exist at law or equity for voiding a
contract. (Winter v. Window Fashions Professions, Inc. (2008) 166
Cal.App.4th 943, 947.)
California
Code of Civil Procedure section 1281.2 permits a party to file a motion to
request the Court order the parties to arbitrate a controversy. (Code Civ.
Proc., § 1281.2.) Under Code of Civil Procedure section 1281.2, the Court must
grant the motion “if the Court determines that an agreement to arbitrate the
controversy exists”, unless one of four limited exceptions apply. (Ibid.) The statutory exceptions arise where: (a) the
right to compel arbitration has been waived by the petitioner; (b) grounds
exist for rescission of the agreement; (c) pending litigation with a third
party creates the possibility of conflicting rulings on common factual or legal
issues; or (d) the petitioner is a state or federally chartered depository
institution seeking to compel arbitration pursuant to a contract whose
agreement was induced by fraud or without respondent’s consent. (Ibid.)
Under Code of
Civil Procedure section 1281.2, the party moving to compel arbitration bears
the burden of demonstration “that an agreement to arbitrate the controversy
exists.” (Code Civ. Proc., § 1281.2.) “With
respect to the moving party’s burden to provide evidence of the existence of an
agreement to arbitrate, it is generally sufficient for that party to present a
copy of the contract to the court.” (Baker v. Italian Maple Holdings, LLC
(2017) 13 Cal.App.5th 1152, 1160 [emphasis in original].) “Once such a document
is presented to the court, the burden shifts to the party opposing the motion
to compel, who may present any challenges to the enforcement of the agreement
and evidence in support of those challenges.” (Ibid.; see also Pinnacle
Museum Tower Assn. v. Pinnacle Market Development (US), LLC (2012) 55
Cal.4th 223, 236 [“The party seeking arbitration bears the burden of proving
the existence of an arbitration agreement, and the party opposing arbitration
bears the burden of proving any defense, such as unconscionability”].)
Section
1281.2 “was intended primarily to prevent conflicting rulings resulting from
arbitration proceedings and other related litigation arising out of the same
transaction.” (Whaley v. Sony Computer Entertainment America, Inc.
(2004) 121 Cal.App.4th 479, 488.) In enacting section 1281.2 “the Legislature
has … authorized trial courts to refuse enforcement of an arbitration agreement
where, as here, there is a possibility of conflicting rulings” (C.V. Starr
& Co. v. Boston Reinsurance Corp. (1987) 190 Cal. App. 3d 1637, 1642.)
“[T]he presence of a nonarbitrable cause of action is not sufficient by itself
to invoke the trial court’s discretion to deny arbitration under Code of Civil
Procedure section 1281.2, subdivision (c).” (Laswell v. AG Seal Beach, LLC
(2010) 189 Cal.App.4th 1399, 1409.) “The mere fact that some claims are
arbitrable and some are not is surely not the ‘peculiar situation’ meant to be
addressed by section 1281.2(c).” (RN Solution, Inc. v. Catholic Healthcare
West (2008) 165 Cal.App.4th 1511, 1521.)
For
section 1281.2(c) to apply, “[a] party to the arbitration agreement” must also
be “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 must be “a possibility of conflicting rulings on a common issue of law or
fact.” (§ 1281.2(c), italics added.) For purposes of section 1281.2(c), a third
party is a party who is not bound by the arbitration agreement. (See, e.g., id.
at 1521.) “[C]ourts have routinely relied on the allegations contained in the
operative pleading to determine whether there is the possibility of conflicting
rulings within the meaning of section 1281.2, subdivision (c).” (Abaya v.
Spanish Ranch I, L.P. (2010) 189 Cal.App.4th 1490, 1499 [citations omitted].)
Analysis
As an initial matter, the Court
finds a valid agreement to arbitrate exists as between Plaintiff and
Defendants. Plaintiff argues Defendants have not authenticated Plaintiff’s
electronic signature on the arbitration agreement. However, Plaintiff does not
dispute she signed the document in question. Plaintiff has submitted no
evidence claiming she did not sign the document or otherwise call the validity
of the signature into question. Rather, Plaintiff “disputes that Plaintiff
signed any arbitration agreement that Plaintiff would forego PAGA claims.”
(Opp. at 8.) This “dispute” is not based on the alleged invalidity of the
signature on the document, but rather Plaintiff’s claim that the scope of the
agreement did not include her individual claims under PAGA. In other words,
Plaintiff does not dispute whether she signed the document, she disputes the
legal effect of the document she signed. As there appears to be no dispute that
Plaintiff signed the agreement in question, and the Court finds Defendants have
sufficiently authenticated the agreement and Plaintiff’s signature upon it. (Neeld
Decl. at ¶¶4-7.)
The Court further finds the
arbitration agreement in question applies to Plaintiff’s individual claim under
PAGA. Plaintiff argues the agreement does not specifically reference PAGA. The
Court agrees. However, the Court notes the scope of the agreement is stated
broadly and does apply to “all claims in a federal, state or local court or
agency under applicable federal, state or local laws, arising out of or relating
to the Company Group, or the termination thereof, including any and all claims
Employee may have against Employer or any member of the Company Group….” (Ex. B
to Neeld Decl. at ¶8.) The agreement specifically calls out claims brought for
failure to pay overtime and provide meal and rest breaks under the Labor Code
as covered by the arbitration clause: “The parties to this Agreement
specifically agree that all claims under the California Labor Code, including,
but not limited to, claims for overtime, unpaid wages, and claims involving
meal and rest breaks shall be subject to this Agreement….” (Id.) As set
forth above, these are precisely the claims Plaintiff has raised against
Defendants in this action. In light of this express language in the agreement,
the Court rejects Plaintiff’s argument that her individual PAGA claims are not
covered by the agreement.
Plaintiff also argues her PAGA
claims cannot be covered by the arbitration agreement because California law
did not permit the arbitration of a plaintiff’s individual claims under PAGA
where the plaintiff was also asserting representative claims under PAGA.
However, this argument is belied by the express contractual language to the
contrary in the agreement itself in which Plaintiff agreed to arbitrate her
individual claims against Defendants for Labor Code violations.
Defendants, citing the recent
Supreme Court ruling in Viking River Cruises, Inc. v. Moriana (2022) 142
S.Ct. 1906 (“Viking River”), ask the Court to compel arbitration of Plaintiff’s
individual PAGA claims and dismiss her claims brought in a representative
capacity. Viking River holds that in cases subject to the Federal Arbitration Act, an arbitration agreement
may compel the arbitration of “individual PAGA claims” belonging to the
plaintiff; that is, claims for Labor Code violations the plaintiff themselves
suffered. (Id. at 1924-1925.) Viking River held California state
law providing a PAGA action “cannot be divided into individual and
non-individual claims” was preempted. (Id. at 1925.)
The agreement here provides “Employer
and Employee expressly agree that this Agreement is governed exclusively by the
Federal Arbitration Act (9 U.S.C. §§ 1-16) (the “FAA”) and shall apply to any
and all claims between the Parties, as well as any arbitration proceedings,
decisions or awards rendered hereunder. The Parties expressly agree that this Agreement,
including the validity, effect and interpretation of this Agreement, shall be
governed by the FAA even in the event that Employer, the Company Group, and/or
Employee are otherwise exempted from the FAA. Any claims in this regard shall
be resolved exclusively by the Arbitrator (as defined below). In the event, but
only in the event, the Arbitrator determines that the FAA does not apply, then
California law governing arbitration agreements shall apply.” (Ex. B. to Neeld
Decl. at ¶2.) Plaintiff has thus agreed the FAA applies and will be bound by
this provision in the agreement. (See e.g. Aviation Data v. American Express (2007) 152 Cal.App.4th 1522, 1534-1535.) To the extent Plaintiff argues the FAA does not govern,
this is an argument for the arbitrator not the Court pursuant to the terms of
the agreement. Accordingly, the Court finds the FAA applies and thus Viking
River governs.
Under Viking River,
Plaintiff’s individual PAGA claims can be divided from her representative PAGA
claims for purposes of arbitration. The parties appear to acknowledge that, if Viking
River is held to apply, it compels the Court to grant Defendants’ motion
and order arbitration of her individual PAGA claims. However, the parties
disagree as to what should happen to Plaintiff’s remaining representative PAGA
claims. Defendants, citing Viking River, ask the Court to dismiss her
representative claims. Plaintiff instead asks the Court to stay her remaining
claims while California courts adjudicate the question of an individual
employee’s standing to assert representative PAGA claims following the Supreme
Court’s decision in Viking River.
In Viking River, the
Supreme Court reasoned that once a plaintiff’s individual PAGA claims were sent
to arbitration, the plaintiff loses standing to assert representative PAGA
claims. (Viking River, supra, 142 S.Ct. at 1925.) However, California
law conveys PAGA standing on any person defined as an “aggrieved employee.” (Lab.
Code § 2699(a).) An “aggrieved employee” is “any person who was employed by the
alleged violator and against whom one or more of the alleged violations was
committed.” (Lab. Code § 2699(c).) A plaintiff may have standing as an
“aggrieved employee” even where they have no right to monetary recovery or any
unredressed injury at all, and even where they have settled all “individual claims”
of any kind or those claims are substantively barred. (Kim v. Reins
International California, Inc. (2020) 9 Cal.5th 73, 82, 90-91; see also Zuniga
v. Alexandria Care Center, LLC (2021) 67 Cal.App.5th 871, 883 [plaintiff
retained standing as an aggrieved employee despite settlement of her individual
claims]; Johnson v. Maxim Healthcare Services, Inc. (2021) 66 Cal.App.5th
924, 930 [fact that plaintiff’s non-PAGA claims were time-barred did “not
nullify the alleged Labor Code violations nor strip Johnson of her standing to
pursue PAGA remedies”].)
As the California Supreme Court
has held:
Nothing in
the legislative history suggests the Legislature intended to make PAGA standing
dependent on the existence of an unredressed injury, or the maintenance of a
separate, unresolved claim. Such a condition would have severely curtailed
PAGA's availability to police Labor Code violations because, as noted, many
provisions do not create private rights of action or require an allegation of
quantifiable injury. Instead, true to PAGA's remedial purpose, the Legislature
conferred fairly broad standing on all plaintiffs who were employed by the
violator and subjected to at least one alleged violation.
(Kim, supra, 9 Cal.5th at
90-91.)
To dismiss Plaintiff’s
representative PAGA claims would create the incongruous possibility that she
prevails on her individual claims in arbitration (establishing that she was
“employed by the alleged violator” and “one or more of the alleged violations
was committed” against her) only to find that the representative PAGA claims
which that finding would qualify her to prosecute have been dismissed. This is
not a result that can be squared with the broad concept of standing articulated
in Kim, Zuniga, and Johnson, cited above.
While the Supreme Court must
“decide questions of state law when necessary for the disposition of a case
brought to it for decision, although the highest court of the state had not
answered them,” its decisions do not “finally settle the questions of state law
involved[.]” (Meredith v. City of Winter Haven (1943) 320 U.S. 228,
237-238.) To be sure, the question of standing for representative PAGA claims
in light of Viking River is an open one, which California courts have
not yet passed on. (See Viking River, supra, 142 S.Ct. at 1925 (conc.
opn. of Sotomayor, J.) [“Of course, if this Court's understanding of state law
is wrong, California courts, in an appropriate case, will have the last
word.”].) This hotly contested issue is likely to be resolved in the near
future, and as the parties have noted in their briefing, the California Supreme
Court has recently granted review in the case of Adolph v. Uber
Technologies, Inc. (Apr. 11, 2022, G059860), review granted July 20, 2022,
S274671.)
‘[L]aw in
the sense in which courts speak of it today does not exist without some
definite authority behind it. The common law so far as it is enforced in a
State, whether called common law or not, is not the common law generally but
the law of that State existing by the authority of that State without regard to
what it may have been in England or anywhere else.’
…
‘The
authority and only authority is the State, and if that be so, the voice adopted
by the State as its own (whether it be of its Legislature or of its Supreme
Court) should utter the last word.’
(Erie R. Co. v. Tompkins (1938)
304 U.S. 64, 79, quoting Black & White Taxicab & Transfer Co. v.
Brown & Yellow Taxicab & Transfer Co. (1928) 276 U.S. 518, 533-534,
535 (diss. opn. of Holmes, J.))
Accordingly, the Court DENIES
Defendants’ request to dismiss Plaintiff’s representative PAGA claims and
instead will stay those claims pending the completion of arbitration of
Plaintiff’s individual claims.
Finally, Plaintiff asks the Court
to stay this action in its entirety or allow supplemental briefing by the
parties on unconscionability. The Court DENIES both requests. Plaintiff asks
the Court to stay the action pending resolution of Adolph v. Uber
Technologies, Inc. However, Plaintiff has made no showing on the potential
applicability of Adolph to her individual PAGA claims. Rather it appears
Adolph may impact Plaintiff’s ability to assert representative PAGA
claims. This supports a stay as to those claims, but the same cannot be said of
her individual claims under PAGA. Plaintiff has thus not demonstrated a stay of
Plaintiff’s entire action would be warranted or appropriate under the
circumstances present here.
As to Plaintiff’s request for
supplemental briefing, Plaintiff has made no showing as to the necessity of
such supplemental briefing. If Plaintiff wished to argue the agreement is void
for unconscionability, she could have raised that argument in her opposition.
The Court notes, for example, the opposition filed by Plaintiff was well below
the page limit imposed by California Rules of Court, rule 3.1113, and there
appears to be no reason why Plaintiff could not have addressed
unconscionability in her opposition. Nor has Plaintiff demonstrated any good
cause for such supplemental briefing. Plaintiff’s opposition does not set forth
any basis for arguing the agreement is unconscionable and unenforceable.
Instead, Plaintiff appears to be requesting a chance to file a second
opposition in the event her initial opposition is successful in defeating
Defendants’ motion. The Court finds the piecemeal adjudication of motions to be
inefficient and unwarranted, especially where, as here, Plaintiff has made no
showing as to why she could not have raised the unconscionability argument in
her original opposition. Plaintiff’s request for supplemental briefing is thus
denied.
Conclusion
Defendants’ motion to compel arbitration is GRANTED as to
Plaintiff’s individual claims under PAGA and otherwise DENIED. Plaintiff’s
representative PAGA claims are stayed pending the outcome of the arbitration.