Judge Jill Feeney, Case Number: 22STCV31128, Date: 2023-11-03 Tentative Ruling

This is an action for violation of the California Private Attorneys General Act (“PAGA”) arising from alleged Labor Code violations. Plaintiff alleges that he was employed by Defendants between June and August 2021. Throughout his employment, Defendants committed labor code violations, including failure to pay wages, failure to provide meal periods, failure to provide rest periods, failure to maintain records, failure to pay wages at termination, and failure to provide itemized wage statements.

California law reflects a strong public policy in favor of arbitration as a relatively quick and inexpensive method for resolving disputes. To further that policy, California Code of Civil Procedure section 1281.2 requires a trial court to enforce a written arbitration agreement unless one of three limited exceptions applies. Those statutory exceptions arise where (1) a party waives the right to arbitration; (2) grounds exist for revoking the arbitration agreement; and (3) pending litigation with a third party creates the possibility of conflicting rulings on common factual or legal issues.” (Acquire II, Ltd. v. Colton Real Estate Group (2013) 213 Cal.App.4th 959, 967 [citations omitted]; Code Civ. Proc. § 1281.2.)

In deciding a petition to compel arbitration, trial courts must decide first whether an enforceable arbitration agreement exists between the parties, and then determine the second gateway issue whether the claims are covered within the scope of the agreement. (Omar v. Ralphs Grocery Co. (2004) 118 Cal.App.4th 955, 961.) The party seeking arbitration has the “burden of proving the existence of a valid arbitration agreement by a preponderance of the evidence, while a party opposing the petition bears the burden of proving by a preponderance of the evidence any fact necessary to its defense.” (Ruiz v. Moss Bros. Auto Group, Inc. (2014) 232 Cal.App.4th 836, 842.) The trial court “sits as the trier of fact, weighing all the affidavits, declarations, and other documentary evidence, and any oral testimony the court may receive at its discretion, to reach a final determination.” (Id.) General principles of contract law govern whether parties have entered a binding agreement to arbitrate. (Pinnacle Museum Tower Assn. v. Pinnacle Market Development (US), LLC (2012) 55 Cal.4th 223, 236; see also Winter v. Window Fashions Professions, Inc. (2008) 166 Cal.App.4th 943, 947.)

Whether there is a written agreement to arbitrate is a matter of contract, and courts must enforce arbitration contracts according to their terms. (Banc of California, National Association v. Superior Court of Los Angeles County (2021) 69 Cal.App.5th 357, 366.) A party cannot be required to submit to arbitrate any dispute to which he has not agreed to arbitrate. (Id.)

The above-named employer, (the “Company”) and Employee hereby agree to resolve by final and binding arbitration any and all claims or controversies for which a court or other governmental dispute resolution forum otherwise would be authorized by law to grant relief, in any way arising out of, relating to or associated with Employee’s employment, continued employment, or the termination of such employment with the Company or any of its present or future parents, affiliates, or subsidiaries. This mutual agreement to arbitrate includes any claims that the Company may have against Employee, or that Employee may have against the Company or against any of its officers, directors, employees, agents, or parent, subsidiary, or affiliate entities (present or future). The Company and Employee agree that arbitration, as provided for in this Agreement, shall be the exclusive forum for the resolution of any covered dispute between the parties. In agreeing to arbitration, both the Company and Employee explicitly waive their respective rights to trial by jury

Notwithstanding the foregoing, nothing in this Agreement shall preclude Employee from pursuing, filing, participating in or being represented in a representative claim brought under the state Private Attorneys General Act of 2004 (“PAGA”). All Arbitrable Disputes subject to this Agreement must be arbitrated as individual claims…The Parties further agree that any representative claims, including but not limited to those under the PAGA, that are found not subject to arbitration under the law shall be resolved in court, and are stayed pending the outcome of the arbitration.

Defendants’ Executive Director testifies that he has access to Defendants’ personnel files and that Exhibit 1 to his declaration is a true and correct copy of the arbitration agreement Plaintiff signed at the beginning of his employment during the onboarding process. (Flake Decl., ¶¶2, 3.) Plaintiff signed the agreement on June 28, 2021. (Flake Decl., Exh. 1.)

Accordingly, the Court finds an arbitration agreement exists between Plaintiff and Defendants. The scope of the arbitration agreement also covers the instant action because this is a claim involving Plaintiff’s employment and termination.

Plaintiff argues that the arbitration agreement explicitly carves out claims brought pursuant to PAGA. Plaintiff points to the provision which states “nothing contained in this Agreement shall preclude Employee from pursuing, filing, participating in or being represented in a representative claim brought under the Private Attorneys General Act of 2004.” (Flake Decl., Exh. 1.) However, this provision does not prohibit the arbitration of PAGA claims. The agreement merely provides that nothing in the agreement will prevent Plaintiff from filing or being represented in a PAGA claim.

Plaintiff cites Duran v. EmployBridge Holding Company (2023) 92 Cal.App.5th 59, 65 in support of his argument. However, the agreement in Duran stated that PAGA claims “are not arbitrable under this Agreement.” (Duran v. EmployBridge Holding Company (2023) 92 Cal.App.5th 59, 63.) Here, Defendants’ arbitration agreement merely states the agreement will not prevent Plaintiff from filing or being represented in a representative claim under PAGA. Unlike the agreement in Duran, the agreement here does not state PAGA claims are not arbitrable.

Additionally, the agreement explicitly provides that “Arbitrable Disputes subject to this Agreement must be arbitrated as individual claims” and “any representative claims, including but not limited to those under the PAGA, that are found not subject to arbitration under the law shall be resolved in court.” (Flake Decl., Exh. 1.) In other words, Plaintiff’s individual PAGA claims must be arbitrated and Plaintiff’s representative claims not covered under the agreement must be resolved in court. Thus, Plaintiff’s PAGA representative claims not covered under the agreement must remain in court.

The agreement is consistent with Adolph v. Uber Technologies, Inc., where the California Supreme Court ruled that even if a court compels a PAGA representative to arbitrate his individual claims, the representative is not enjoined from pursuing the PAGA claim because the arbitrated individual claims remain part of the same lawsuit as the representative claims remaining in court and the representative remains an “aggrieved employee” who may continue the PAGA claims. (Adolph v. Uber Technologies, Inc. (2023) 14 Cal.5th 1104.) Here, Plaintiff is not precluded from litigating his representative claims in Court even if his individual claims must be arbitrated.

If an application has been made to a court of competent jurisdiction, whether in this State or not, for an order to arbitrate a controversy which is an issue involved in an action or proceeding pending before a court of this State and such application is undetermined, the court in which such action or proceeding is pending shall, upon motion of a party to such action or proceeding, stay the action or proceeding until the application for an order to arbitrate is determined and, if arbitration of such controversy is ordered, until an arbitration is had in accordance with the order to arbitrate or until such earlier time as the court specifies.

The Court may except any severable issues (such as a PAGA claim) from a stay. The last line of Code Civ. Proc., § 1281.4 indicates that a court may choose to decline to issue a stay (even a mandatory one) if an issue is severable. Although the representative PAGA claim is severable from Plaintiff’s individual claim, the parties do not dispute that the two claims may well involve overlapping issues. Since the arbitration of Plaintiff’s individual claim will likely involve overlapping issues with the representative claim remaining in court, the action is stayed for the time being, without prejudice, pending arbitration.

Although Plaintiff argues that he should not be precluded from bringing his representative claim, Defendants do not challenge Plaintiff’s ability to bring a representative claim and the agreement explicitly allows Plaintiff to do so. Plaintiff also argues that the Court should not pre-judge the outcome or effect of arbitration. However, nothing about staying the action pre-judges the outcome or effect of arbitration.