Judge Holly J. Fujie, Case 22STCV26952 2023-02-06 Tentative Ruling

DEPARTMENT 56 JUDGE HOLLY J. FUJIE, LAW AND MOTION RULINGS. The court makes every effort to post tentative rulings by 5.00 pm of the court day before the hearing. The tentative ruling will not become the final ruling until the hearing [see CRC 3.1308(a)(2)], and are also available in the courtroom on the day of the hearing [see CRC 3.1308(b)]. If the parties wish to submit on the tentative ruling and avoid a court appearance, all counsel must agree and choose which counsel will give notice. That counsel must 1) call Dept 56 by 8:30 a.m. on the day of the hearing (213/633-0656) and state that all parties will submit on the tentative ruling, and 2) serve notice of the ruling on all parties. If any party declines to submit on the tentative ruling, then no telephone call is necessary and all parties should appear at the hearing in person or by Court Call. Court reporters are not provided, and parties who want a record of motions and other proceedings must hire a privately retained certified court reporter.

MOVING PARTY: Defendant Bruce’s Prime Ribs & Spirits, Inc. (“Moving Defendant”)

This action arises out of an employment relationship. On August 18, 2022, 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 12, 2022, Moving Defendant filed a motion to compel arbitration (the “Motion”) on the ground that during his employment with Moving Defendant, 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 the balance of Plaintiff’s PAGA action once Plaintiff’s individual claims are ordered to arbitration.

Moving Defendant’s Request for Judicial Notice is GRANTED. Plaintiff’s Request for Judicial Notice is GRANTED. 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 December 29, 2018. (Declaration of Jeannie Mayer-Curato (“Mayer-Curato Decl.”) ¶ 6, Exhibit F.) The Arbitration Agreement provides, in part:

“1. Any and all claims or controversies arising out of Employee’s application or candidacy for employment, employment, or cessation of employment with the Company shall be resolved through final and binding arbitration using the ADR Services, Inc., Arbitration Rules.

6. To the fullest extent permitted by law, the Parties agree that they shall not join or consolidate claims submitted for arbitration under this Agreement with those of any other persons, and that no form of class, collective, or representative action shall be maintained without the mutual consent of the Parties. Notwithstanding any arbitration rules that may provide otherwise, any dispute over the validity, effect, or enforceability of this paragraph, including whether the arbitration may proceed as a class, collective, or representative action, shall be for a court of law and not an arbitrator to decide.

11. If, for any reason, any provision of this Agreement is determined by an arbitrator or a court of competent jurisdiction to be illegal or otherwise invalid, all other provisions of this agreement shall remain in full force and effect, insofar as they are consistent with existing law.”

The Court finds that Moving Defendant has provided sufficient evidence of the Arbitration Agreement.

Plaintiff does not dispute the validity of the Arbitration Agreement but argues that Viking River Cruises is inapplicable to the Arbitration Agreement because the Arbitration Agreement lacks a severability clause. Plaintiff also argues that in the event that his individual claims are deemed arbitrable, the balance of the representative claim should be stayed rather than dismissed pending the California Supreme Court’s review in Adolph v. Uber Technologies, Case No. S27467 (“Adolph”).

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 may 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 contains a wholesale waiver of the right to bring representative actions but lacks a provision that expressly provides for the severability of any unenforceable provision. The Court is not persuaded by Plaintiff’s argument. First, the Arbitration Agreement prohibits representative or collective actions but does not specifically identify claims brought under PAGA. Second, although Paragraph 11, set forth above, impliedly allows the severance of unenforceable portions of the Arbitration Agreement, as that provision provides that the remainder of the Arbitration Agreement’s terms would remain in effect if a portion of the Arbitration Agreement was found unenforceable. (See Mayer-Curato Decl., Exhibit F at ¶ 11.) Moreover, courts have discretion to sever or limit the application of unconscionable provisions and enforce the remainder of an arbitration agreement. (Ramos v. Superior Court (2018) 28 Cal.App.5th 1042, 1068.) Plaintiff has not argued that other portions of the Arbitration Agreement are unconscionable, and the Court finds that severance is appropriate. Plaintiff’s individual PAGA claims are therefore subject to arbitration.

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.

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 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 August 7, 2023 at 8:30 a.m. in this department. The parties are ordered to file a joint status report by July 31, 2023. Should the Adolph decision be issued before the status conference date, either party may request an earlier status conference by ex parte application.

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.”).)