Judge Holly J. Fujie, Case 21STCV21933 2022-09-30 Tentative Ruling

This action arises out of an employment relationship. Plaintiff’s complaint (the “Complaint”) asserts representative claims on behalf of herself and other aggrieved employees pursuant to the Private Attorneys General Act (“PAGA”).

On August 16, 2022, Moving Defendant filed a motion to compel arbitration (the “Motion”) on the grounds that during her employment, Plaintiff signed a binding arbitration agreement (the “Arbitration Agreement”) that requires that she adjudicate her individual claims against Moving Defendant in binding arbitration. The Motion additionally seeks the dismissal of Plaintiff’s PAGA claim to the extent that it relates to Labor Code violations experienced by any person other than Plaintiff pursuant to Viking River Cruises, Inc. v. Moriana (2022) 142 S.Ct. 1906 (“Viking River Cruises”).

On September 12, 2022, Plaintiff filed an ex parte application to stay this matter in its entirety, which the Court denied, though the Court additionally deemed the application a noticed motion to be heard concurrently with the Motion. On September 16, 2022, Plaintiff filed an opposition to the Motion (the “Opposition”), which incorporates the ex parte application and does not raise new arguments.^{^[1]}

Plaintiff’s Request for Judicial Notice is GRANTED as to the existence of the exhibits but not to the truth of the matters stated therein.

The purpose of the Federal Arbitration Act (“FAA”) is to move the parties in an arbitrable dispute out of court and into arbitration as quickly and easily as possible. (Moses H. Cone Memorial Hosp. v. Mercury Constr. Corp. (1983) 460 U.S. 1, 23.) The FAA is consistent with the federal policy to ensure the enforceability, according to their terms, of private agreements to arbitrate. (Mastrobuono v. Shearson Lehman Hutton, Inc. (1995) 514 U.S. 52, 57.) Under California Code of Civil Procedure (“CCP”) section 1281, a written agreement to submit to arbitration an existing controversy or a controversy thereafter arising is valid, enforceable, and irrevocable, save upon such grounds as exist for the revocation of any contract. (CCP § 1281.) California law, like federal law, favors enforcement of valid arbitration agreements. (Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83, 97.) On petition of a party to an arbitration agreement alleging the existence of a written agreement to arbitrate a controversy and that a party to the agreement refuses to arbitrate that controversy, the court shall order the petitioner and the respondent to arbitrate the controversy unless grounds exist not to compel arbitration. (CCP § 1281.2.) Under California law, the burden of persuasion is always on the moving party to prove the existence of an arbitration agreement with the opposing party by a preponderance of the evidence. (Gamboa v. Northeast Community Clinic (2021) 72 Cal.App.5th 158, 169.)

In support of the Motion, Moving Defendant provides evidence of the Arbitration Agreement signed by Plaintiff on February 7, 2017. (See Declaration of Zahra Ghorbani (“Ghorbani Decl.”) ¶ 9, Exhibit A.)

“The ADR Policy will be mandatory for ALL DISPUTES ARISING BETWEEN EMPLOYEES, ON THE ONE HAND, AND YOUR EMPLOYER, AND/OR ITS EMPLOYEES AND OFFICERS (HEREINAFTER COLLECTIVELY THE ‘COMPANY’), ON THE OTHER HAND. Any disputes which arise and which are covered by the ADR Policy must be submitted to final and binding resolution through the procedures of the Company’s ADR Policy.

For parties covered by this Alternative Dispute Resolution Policy, alternative dispute resolution, including final and binding arbitration, is the exclusive means for resolving covered disputes (as defined below); no other action may be brought in court or in any other forum. This agreement is a waiver of all rights to a civil court action for a covered dispute; only an arbitrator, not a Judge or Jury, will decide the dispute.” (Ghorbani Decl., Exhibit A at 1.)

The Arbitration Agreement further states that it applies to “any dispute arising out of or related to [Plaintiff’s] employment, the terms and conditions of [Plaintiff’s] employment and or the termination of [Plaintiff’s] employment… .” (Id.)

The Court finds that Moving Defendant has provided sufficient evidence to demonstrate the existence of the Arbitration Agreement. Plaintiff’s allegations arise out of her employment and are therefore governed by the Arbitration Agreement. (See Ghorbani Decl., Exhibit A at 1-2.)

Furthermore, Plaintiff’s individual PAGA claims are severable from the non-individual claims and are subject to arbitration. In Viking River Cruises, the U.S. Supreme Court abrogated the rule prohibiting the separation of PAGA claims into individual and representative claims for purposes of arbitration previously set forth by the California Supreme Court in Iskanian v. CLS Transportation Los Angeles, LLC (2014) 59 Cal.4th 348 (“Iskanian”).

Under Iskanian, an employment agreement that compels the waiver of representative claims under PAGA is contrary to public policy and unenforceable as a matter of state law and an employee’s individual PAGA claims cannot not be severed and sent to arbitration even if the parties agreed to arbitrate individual claims. (See Iskanian, supra, 59 Cal.4th at 384.) In Viking River Cruises, however, the U.S. Supreme Court held that in cases subject to the FAA, an arbitration agreement may compel the arbitration of individual PAGA claims belonging to the plaintiff—claims for Labor Code violations the plaintiff personally suffered and preempted the portion of the Iskanian holding that barred the division of a PAGA action into individual and non-individual claims. (Viking River Cruises, supra, 142 S.Ct. at 1924-25.)

The Opposition does not raise arguments contesting the validity or enforceability of the Arbitration Agreement or the divisibility of Plaintiff’s individual claims from her representative claims, and the Court finds that Plaintiff has conceded these points to Moving Defendant. (See Badie v. Bank of America (1998) 67 Cal.App.4th 779, 784-85.)

The Motion requests that the Court dismiss the representative action for lack of standing once Plaintiff’s individual claim is sent to arbitration. The Opposition argues that the matter should be stayed in its entirety pending the California Supreme Court’s forthcoming decision in Adolph v. Uber Technologies, Case No. S27467 (“Adolph”). In Adolph, the California Supreme Court will address the scope of the ruling in Viking River Cruises and consider whether an aggrieved employee who has been compelled to arbitrate claims under PAGA that are premised on Labor Code violations actually sustained by the aggrieved employee maintains statutory standing to pursue PAGA claims arising out of events involving other employees in court or in any other forum the parties agree is arbitrable.

In Viking River Cruises, the U.S. 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 Cruises, supra, 142 S.Ct. at 1925.) California law, however, conveys PAGA standing on any person defined as an “aggrieved employee.” (Lab. Code § 2699, subd. (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, subd. (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 claim” 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).)

While the U.S. Supreme Court must decide questions of state law when necessary for the disposition of a case brought to it for decision when the highest court of the state has not answered them, its decisions do not finally settle the questions of state law involved. (See Meredith v. City of Winter Haven (1943) 320 U.S. 228, 237-38.)[2] The question of a plaintiff’s standing to pursue severed representative PAGA claims in light of Viking River Cruises remains unsettled and will likely be resolved when the California Supreme Court issues a ruling in Adolph.

Based on the foregoing, the Court declines to stay the matter in its entirety. Plaintiff does not raise arguments challenging the applicability of the Viking River Cruises holding and Adolph concerns a plaintiff’s ability to maintain standing to pursue representative PAGA actions after their individual claims have been severed and sent to arbitration, and therefore does not impact the arbitrability of her individual claims. The issue of Plaintiff’s standing to pursue the representative claims remains unresolved, however, as discussed above. Accordingly, the Court will issue a stay only as to the remaining representative claims pending the California Supreme Court’s decision in Adolph or the conclusion of the arbitration proceedings.

The Court therefore GRANTS the Motion in part. Plaintiff’s individual claims are compelled to proceed in arbitration. The remaining representative action is STAYED. The Court sets a status conference on April 26, 2023 at 8:30 a.m. in this department. The parties are ordered to file a joint status report by April 19, 2023. If the California Supreme Court issues its decision in Adolph before the status conference date, either party may submit an ex parte application to advance the date of the status conference.

In consideration of the current COVID-19 pandemic situation, the Court strongly encourages that appearances on all proceedings, including this one, be made by LACourtConnect if the parties do not submit on the tentative. If you instead intend to make an appearance in person at Court on this matter, you must send an email by 2 p.m. on the last Court day before the scheduled date of the hearing to SMC_DEPT56@lacourt.org stating your intention to appear in person. The Court will then inform you by close of business that day of the time your hearing will be held. The time set for the hearing may be at any time during that scheduled hearing day, or it may be necessary to schedule the hearing for another date if the Court is unable to accommodate all personal appearances set on that date. This rule is necessary to ensure that adequate precautions can be taken for proper social distancing.

Parties who intend to submit on this tentative must send an email to the Court at SMC_DEPT56@lacourt.org as directed by the instructions provided on the court website at www.lacourt.org. If the department does not receive an email and there are no appearances at the hearing, the motion will be placed off calendar.

Hon. Holly J. Fujie

Judge of the Superior Court

[1] As the Opposition incorporates the ex parte application in its entirety and does not raise new arguments, the Court refers to the documents collectively as the Opposition.

[2] In her concurring opinion, Justice Sotomayor acknowledged the California Supreme Court’s authority to determine the issue of a Plaintiff’s standing to adjudicate severed PAGA representative claims in light of the Viking River Cruises holding. (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.”).)