Judge Holly J. Fujie, Case 21STCV31959 2023-01-05 Tentative Ruling

MOVING PARTY: Defendant Parkway Motorcars Valencia Inc. (“Moving Defendant”)

This action arises out of an employment relationship. On August 30, 2021, Plaintiff filed a complaint (the “Complaint”) asserting representative claims on behalf of himself and other aggrieved employees pursuant to the Private Attorneys General Act (“PAGA”).

On December 7, 2022, Moving Defendant filed a motion to compel arbitration (the “Motion”) on the ground that during his employment, Plaintiff signed an arbitration agreement (the “Arbitration Agreement”). The Motion argues that Plaintiff’s individual claims must be resolved in binding arbitration pursuant to the U.S. Supreme Court’s holding in Viking River Cruises, Inc. v. Moriana (2022) 142 S.Ct. 1906 (“Viking River Cruises”). The Motion additionally requests that the Court dismiss/strike the balance of Plaintiff’s PAGA action once Plaintiff’s individual claims are ordered to arbitration.

Plaintiff’s Request for Judicial Notice is GRANTED. With respect to Exhibit 2, the Court takes judicial notice of the document but not to the truth of the matters stated therein. (See (Fremont Indemnity Co. v. Fremont General Corp. (2007) 148 Cal.App.4th 97, 113.)

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.) 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 (“Armendariz”).) 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.)

Moving Defendant provides evidence of the Arbitration Agreement, which was executed on September 17, 2019. (Declaration of Tina Pucci (“Pucci Decl.”) ¶ 4, Exhibit A.) The Arbitration Agreement provides:

“Employee and Company agree to resolve by final and binding arbitration any dispute, claim, or controversy, including but not limited to those related to Employee's employment with or termination of employment by Company, its affiliated entities, or their respective officers, directors, employees, or agents. Such disputes, claims, or controversies shall include, but not be limited to: tort claims; benefits claims; family or medical leave claims; claims of discrimination, retaliation, or harassment under federal or state law; claims of wrongful termination; claims for unpaid wages, reimbursements, meal and/or rest breaks; unfair competition, and misappropriation of trade secrets; and, any other claim that could be brought under local, state, or federal employment statutes or common law.

Excluded from arbitration arc claims that, as a matter of law, cannot be resolved by arbitration, such as claims arising under the National Labor Relations Act; claims for benefits under the Workers' Compensation Act; claims for unemployment insurance benefits; and claims seeking injunctive or declaratory relief regarding use or unauthorized disclosure of confidential information. Additionally, nothing in this Agreement shall prevent Employee from filing a complaint with the Department of Fair Employment and Housing ("DFEH"), the United States Equal Employment Opportunity Commission ("EEOC"), or any other agency that permits such filings despite an agreement to arbitrate, although any claim Employee chooses to pursue following the conclusion of a proceeding before either body will be subject to this Agreement.

Also excluded from arbitration are representative actions. Such actions will be heard by a court only. No arbitrator shall have the authority under this Agreement to order that any dispute(s) be arbitrated on a class, collective, or representative basis or hear any such dispute(s) and this restriction on jurisdiction cannot be severed from this Agreement. Employee agrees to request that any representative action(s) be judicially stayed pending the arbitration of any and all related claims covered by or under the terms of this Agreement.”

The Court finds that Moving Defendants have provided sufficient evidence of the Arbitration Agreement.

Plaintiff does not dispute the validity of the Arbitration Agreement but argues that: (1) Viking River Cruises is inapplicable to the Arbitration Agreement; and (2) Moving Defendant waived its right to compel arbitration.

The right to compel arbitration may be waived. (See St. Agnes Medical Center v. PacifiCare of California (2003) 31 Cal.4th 1187, 1195.) A party who resists arbitration on the ground of waiver bears a heavy burden, and any doubts regarding a waiver allegation should be resolved in favor of arbitration. (Id.) Although no single test delineates the nature of the conduct that will constitute a waiver of arbitration, the California Supreme Court has identified six factors relevant for consideration: (1) whether the party's actions are inconsistent with the right to arbitrate; (2) whether the litigation machinery has been substantially invoked and the parties were well into preparation of a lawsuit before the party notified the opposing party of an intent to arbitrate; (3) whether a party either requested arbitration enforcement close to the trial date or delayed for a long period before seeking a stay; (4) whether a defendant seeking arbitration filed a counterclaim without asking for a stay of the proceedings; (5) whether important intervening steps [e.g., taking advantage of judicial discovery procedures not available in arbitration] had taken place; and (6) whether the delay affected, misled, or prejudiced the opposing party. (Id. at 1096.)

Plaintiff provides evidence that counsel for Plaintiff and Moving Defendant have corresponded about this litigation between August 2021 and July 2022. (See Declaration of Kelsey M. Szamet (“Szamet Decl.”) ¶¶ 4-15.) Moving Defendant first communicated its desire to arbitrate Plaintiff’s claims to Plaintiff in October 2022. (Szamet Decl. ¶ 17.)

The Court finds that there is an insufficient showing to establish that Moving Defendant waived its right to arbitrate, despite the amount of time between Plaintiff filing the Complaint and Moving Defendant filing the Motion.

In Viking River Cruises, the U.S. Supreme Court upheld the California rule that provisions in arbitration agreements providing for wholesale waivers of the right to bring PAGA actions are unenforceable as against public policy, but that the individualized claims in a plaintiff’s PAGA action could be severed and ordered to arbitration. (See Viking River Cruises, supra, 142 S.Ct. 1906, 1923-25.)

Plaintiff argues that Viking River Cruises is distinguishable because the Arbitration Agreement at issue in this action does not include a waiver of representative claims. The Court in Viking River Cruises, however, abrogated the previous California rule that precluded division of PAGA actions into individual and non-individual claims through an agreement to arbitrate. (Viking River Cruises, supra, 142 S.Ct. at 1924.) The Viking River Cruises Court further distinguished PAGA claims that are representative claims on behalf of other employees, and those which arise out of individual Labor Code violations suffered by the plaintiff bringing the PAGA action. (See id. at 1916.) While the Arbitration Agreement excludes “representative actions” from the scope of arbitrable disputes, Moving Defendant only seeks to compel Plaintiff to arbitrate the alleged Labor Code violations that Plaintiff experienced personally. These individualized disputes fall within the scope of arbitrable disputes as defined by the Arbitration Agreement. The Court finds that these claims are subject to arbitration under Viking River Cruises.

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.)[1] The question of a plaintiff’s standing to pursue representative PAGA claims after their individual claims are ordered to arbitration in light of Viking River Cruises remains unsettled and will likely be resolved when the California Supreme Court issues a ruling 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 light of the foregoing, the Court GRANTS the Motion in part. The Court orders that Plaintiff’s individual PAGA claims to be sent to arbitration. The Court declines to dismiss the remainder of Plaintiff’s PAGA claims and orders that the representative action be stayed pending the California Supreme Court’s forthcoming decision in Adolph. The Court sets a status conference on July 6, 2023 at 8:30 a.m. in this department. The parties are ordered to file a joint status report by June 29, 2023. Should the Adolph decision be issued before the status conference date, either party may request an earlier status conference by ex parte application.

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.

[1] 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.”).)