Judge: Joseph Lipner, Case: 22STCV29951, Date: 2023-10-26 Tentative Ruling
Case Number: 22STCV29951 Hearing Date: November 30, 2023 Dept: 72
SUPERIOR COURT OF CALIFORNIA
COUNTY OF LOS ANGELES
DEPARTMENT 72
TENTATIVE
RULING
|
BIANCA BALL, Plaintiff, v. CDC RESTAURANT GROUP, INC., Defendants. |
Case No:
22STCV29951 Hearing Date: November 30, 2023 Calendar Number: 5 |
Defendants CDC Restaurant Group, Inc. dba Chick-fil-A
Restaurants (“CDC”) and Jeremia Cillpam (collectively, “Defendants”) move the
Court for an order compelling Plaintiff Bianca Ball to submit her individual Private
Attorney General Act (“PAGA”) claims to binding arbitration and dismissing her
non-individual PAGA claims.
Defendants’ motion to compel arbitration of Plaintiff’s
individual PAGA claims is GRANTED.
Defendants’ motion to dismiss the non-individual PAGA claims
is DENIED.
Defendants’ request for a stay on the non-individual PAGA
claims is DENIED.
Plaintiff’s request to compel arbitration of the
non-individual PAGA claims is DENIED.
The Court’s stay on this action is LIFTED as to the
non-individual PAGA claims.
CDC Restaurant Group is a California corporation that owns
and operates Chick-fil-A restaurants. Its corporate headquarters is in
Hollywood, California.
This action arises out of Plaintiff’s employment with CDC as
a human resources coordinator from November, 2021 to May, 2022.
On September 14, 2022, Plaintiff filed this action under PAGA,
alleging violations of Labor Code sections 210; 225.3; 558; 1174.5; 1197.1; and
26.99.
Plaintiff alleges that she is an aggrieved employee under
PAGA and seeks civil penalties for these Labor Code violations. In particular,
Plaintiff alleges that Defendants had policies or practices of failing to pay
overtime wages, failing to pay minimum wages for all hours worked, failing to
provide meal breaks, failing to provide rest breaks, failing to provide
itemized wage statements, failing to pay all wages owed, failing to reimburse
employees costs resulting from their duties, failing to provide sick leave,
preventing employees from disclosing skills, knowledge, and experience gained
while working for Defendants, and preventing employees from engaging in lawful
conduct during non-work hours. Plaintiff alleges that she suffered each of
these harms and is therefore representative of other aggrieved employees.
Defendants filed an answer on December 7, 2022.
The action was temporarily stayed so that the parties could
participate in mediation. The parties participated in mediation on February 14,
2023.
Defendants filed this motion on May 15, 2023. Plaintiff
filed an opposition and Defendants filed a reply.
On October 26, the Court ordered additional briefing on (1)
the effect of Adolph v. Uber Technologies, Inc. (2023) 14 Cal.5th 1104
on the resolution of the motion; (2) whether the Federal Arbitration Act
(“FAA”) applies to this case; and (3) if the FAA does not apply, whether the
Court should deny the motion as a result. Plaintiff and Defendants both filed
additional briefs on these issues.
Plaintiff objects to a portion of ¶ 3 of the Declaration of
Lonnie D. Giamela. The Court is not able to determine the portion objected to,
since the first Giamela declaration does not have a third paragraph and the
quoted portion of the declaration does not match any portion of ¶ 3in Giamela’s
supplemental declaration. The Court therefore overrules the objection.
Plaintiff objects to ¶ 8 of the Declaration of Summer
Stearns. The Court overrules the objections. Stearns’ supplemental declaration
filed on November 20, 2023 alongside Defendants’ supplemental briefing, and in
particular ¶ 3 of that declaration, cures any authentication objection. Given
the timing of the most recent filings, if Plaintiff at the hearing asks for an
opportunity to submit any evidence or argument in connection with the November
20, 2023 Stearns Declaration, the Court will grant Plaintiff leave to do
so.
As
set forth below, the arbitration agreement provides that the parties will
settle their disputes according to the California Arbitration Act (“CAA”)
except where it conflicts with the goals and policies of the FAA. The agreement
also states that it is not intended to preclude the application of the FAA if
the FAA would be applicable. The Court finds that this is not a clear statement
that the FAA governs enforcement of the arbitration agreement, in contrast with
the agreement in Williams v. Eaze Solutions, Inc. (N.D. Cal. 2019) 417
F.Supp.3d 1233, 1238, cited by Defendants, where the agreement stated that “the
terms of service state[d] that the ‘Federal Arbitration Act will govern the
interpretation and enforcement’ of its dispute resolution provisions[.]” (Ibid.)
The FAA provides for enforcement of arbitration provisions
in any contract “evidencing a transaction involving [interstate] commerce.” (9
U.S.C. § 2; Nixon v. AmeriHome Mortgage Company, LLC (2021) 67
Cal.App.5th 934, 945.) A transaction involves interstate commerce when it turns
out in fact to involve interstate commerce, even if it was not the intent of
the parties. (Allied-Bruce Terminix Companies, Inc. v. Dobson (1995) 513
U.S. 265, 277-278.) The party claiming that the contract involves interstate
commerce and that the FAA preempts state law has the burden of proof.
(Woolls v. Superior Court (2005) 127 Cal.App.4th 197, 211.)
Where the FAA applies, it preempts any state rule that
either facially or covertly discriminates against arbitration. (9 U.S.C. § 2; Kindred
Nursing Centers Ltd. Partnership v. Clark (2017) 581 U.S. 246, 251.)
Here, Plaintiff was a resident of California and worked in
California for the entirety of her employment with Defendants.
Defendant argues that its contracts with its employees
necessarily involve interstate commerce because it purchases food and beverages
from out of state. Defendant argues that either the scope of the employee’s
work or the nature of the employer’s business can disjunctively trigger FAA
preemption, and that the nature of the employee’s work is irrelevant. (Carbajal
v. CWPSC, Inc. (2016) 245 Cal.App.4th 227, 239, citing Lane v. Francis
Capital Management LLC (2014) 224 Cal.App.4th 676, 688.) The Court disagrees
with this reading of Carbajal. Carbajal cited to Lane for
the proposition that an employer that both fails to present evidence as to the
nature of its business and the scope of the employee’s work fails to show that
the FAA applies, but it did not reach the inverse conclusion that the nature of
a business is independently sufficient to trigger the FAA. (Ibid.) The
court went on to contrast Lane and Woolls v. Superior Court
(2005) 127 Cal.App.4th 197, 214, where the FAA did not apply because the party
asserting preemption failed to “present[ ] any facts to show the instant transaction
involved interstate commerce” (Wolls at p. 214) with Shepard v.
Edward Mackay Enterprises, Inc. (2007) 148 Cal.App.4th 1092, 1101, which
applied the FAA where materials involved in the transaction were manufactured
outside of California (Shepard at p. 1101). (Carbajal, supra,
at p. 239.) The Carbajal court did not apply the FAA on the basis of the
nature of the business alone – it did not apply the FAA at all, finding that,
similarly to in Lane, the moving party had not presented evidence about the
nature of its business or the employee’s work. (Ibid.) Lane, Wolls,
Shepard, and Carbajal, read together, indicate that it is the transaction
that is the focus of the analysis, not the general nature of the moving party’s
business. Here, Plaintiff was not involved in the purchase, transportation,
preparation, or distribution of food. Plaintiff was a human resources
coordinator. Thus, even if Defendants’ business purchased food from out of
state, that act does not automatically subject all of its employees to the FAA
if those particular employees’ roles do not involve that food.
Defendants argue that Plaintiff’s role involved
communicating with out-of-state parties on a daily basis, which it explains
means working with a Georgia brokerage firm called “Decisely” to ensure
compliance with the Affordable Care Act and acting as the primary point of
contact between CDC employees and a Colorado-based retirement benefits company
called “Empower Retirement”. (Supp. Stearns Decl. ¶ 5.) The job description
that Stearns refers to in the same paragraph makes no reference to either of
these companies or their locations, and there is no other evidence provided
that shows that Plaintiff conducted these duties. (Supp. Stearns Decl. ¶ 5,
Exh. B.) Based on the very tenuous links to interstate commerce that were found
adequate in Shepard, the Court finds that this evidence provided by
Defendant is adequate to show that the transaction involved interstate
commerce.
The party moving to
compel arbitration must establish the existence of a written arbitration
agreement between the parties. (Code of 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. (See Condee v. Longwood Management Corp.
(2001) 88 Cal.App.4th 215, 218 (Condee ); see also Cal. Rules of Court,
rule 3.1330 [“A petition to compel arbitration or to stay proceedings pursuant
to Code of Civil Procedure sections 1281.2 and 1281.4 must state, in addition
to other required allegations, the provisions of the written agreement and the
paragraph that provides for arbitration. The provisions must be stated verbatim
or a copy must be physically or electronically attached to the petition and
incorporated by reference”].)
Once the party moving to compel arbitration presents proof
of the existence of the arbitration agreement, the burden shifts to the party
opposing the motion to compel. The
opposing party may present any challenges to the enforcement of the agreement
and evidence in support of those challenges. [Citation].” (Baker v. Italian
Maple Holdings, LLC (2017) 13 Cal.App.5th 1152, 1160.)
As discussed above, where the FAA applies, it preempts any
state rule that either facially or covertly discriminates against arbitration.
(9 U.S.C. § 2; Kindred Nursing Centers Ltd. Partnership v. Clark (2017)
581 U.S. 246, 251.)
Although the FAA has
a policy favoring arbitration, this policy “does not authorize federal courts
to invent special, arbitration-preferring procedural rules[;]” rather, the
policy is intended “to overrule the judiciary's longstanding refusal to enforce
agreements to arbitrate and to place such agreements upon the same footing as
other contracts.” (Morgan v. Sundance, Inc. (2022) 596 U.S. 411, 418.
“[A]rbitration is a matter of contract and a party cannot be required to submit
to arbitration any dispute which he has not agreed so to submit.” (AT &
T Technologies, Inc. v. Communications Workers of America (1986) 475 U.S.
643, 648.)
The arbitration agreement which Defendants contend that
Plaintiff signed reads, in relevant part, as follows:
“The
parties agree to submit to final and binding arbitration any dispute,
controversy or claim that arises from the employment relationship, unless
arbitration of the dispute would be prohibited by law. This means that a
neutral arbitrator, rather than a court or jury, will decide the dispute. This
will be the parties' sole and exclusive remedy.
This
Agreement extends to all claims relating to Employee's employment and
termination of employment, including, but not limited to: Claims for breach of
contract or an express or implied covenant of good faith and fair dealing;
intentional or negligent infliction of emotional distress; defamation; wrongful
termination or constructive discharge; unlawful discrimination or harassment
including claims arising under the Fair Employment and Housing Act, the Civil
Rights Act of 1964, and the Americans with Disabilities Act; wage and hour
claims under state and federal law; claims under the Employee Retirement Income
Security Act ("BRISA") and the Consolidated Omnibus Budget
Reconciliation Act ("COBRA"); and any allegation of injury to physical,
mental or economic interests. This Agreement extends to claims that could be
brought in court, or before an administrative body, such as the Labor
Commissioner, unless the law compels that such claims be brought before the
administrative body. The arbitrator will have authority to determine all issues
between the parties, including the validity or enforceability of this
Agreement.
The
parties will settle their dispute(s) according to the provisions of California
Arbitration Act ("CAA"), including provisions for discovery, provided
that the CAA does not undermine the goals and policies of the Federal
Arbitration Act ("FAA"). The parties' designation of the CAA does not
preclude the application of the FAA if the FAA would be applicable.”
(Stearns Decl. ¶ 8, Exh. H.)
Plaintiff contends that she has no recollection of ever
being asked to sign an arbitration agreement during her employment. (Ball Decl.
¶ 5.)
The two declarations of Summer Stearns, taken together, show
that Plaintiff accessed the onboarding platform HigherMe, which contained the
arbitration agreement, and digitally executed the arbitration agreement. Accordingly,
Defendants have met their burden of showing that Plaintiff was a party to the
arbitration agreement.
“Labor Code section 229 provides that actions ‘for the
collection of due and unpaid wages claimed by an individual may be maintained
without regard to the existence of any private agreement to arbitrate.’ The FAA
preempts Labor Code section 229, requiring enforcement of an arbitration
agreement covering such a claim.” Garrido v. Air Liquide Industrial U.S. LP
(2015) 241 Cal.App.4th 833, 844–845, quoting Lab. Code § 229 and citing Perry
v. Thomas (1987) 482 U.S. 483, 491.) “In contrast, when only the CAA applies,
an action under Labor Code section 229 may be maintained in court.” (Id.
at p. 845.)
Because the FAA applies to the arbitration agreement, Labor
Code section 229 is preempted by the FAA.
Plaintiff
argues that Defendants have waived the enforcement of the arbitration agreement
by participating in litigation. The
Court disagrees.
“The relevant
factors establishing waiver include whether the party's actions are
inconsistent with the right to arbitrate; 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;
whether a party delayed for a long period before seeking a stay; whether
important intervening steps [e.g., taking advantage of judicial discovery
procedures not available in arbitration] had taken place; and whether the delay
affected, misled, or prejudiced the opposing party.” (Hoover, supra,
206 Cal.App.4th at p. 1204.) “[T]he bad
faith or willful misconduct of a party may constitute a waiver and thus justify
a refusal to compel arbitration.” (Davis v. Blue Cross of Northern
California (1979) 25 Cal.3d 418, 426 [internal quotations and citations
omitted].)
“[A] party may be
said to have “waived” its right to arbitrate by an untimely demand, even
without intending to give up the remedy. In this context, waiver is more like a
forfeiture arising from the nonperformance of a required act.” (Burton v.
Cruise (2010) 190 Cal.App.4th 939, 944 [citation omitted].) However, some
California appellate courts hold that “a delay is found unreasonable only when
it is combined with the attempt by the party asserting a right to arbitrate to
obtain an advantageous litigation position during the delay.” (Gloster v.
Sonic Automotive, Inc. (2014) 226 Cal.App.4th 438, 449.) “[T]he absence of
a reasonable explanation for delay is a significant factor weighing in favor of
finding waiver.” (Davis v. Shiekh Shoes, LLC (2022) 84 Cal.App.5th 956,
969.)
Defendants
were aware of their right to arbitrate because they repeatedly informed
Plaintiff of their intent to compel arbitration during the pendency of this
matter. (Supp. Giamela Decl. ¶ 3.) Thus, the only analysis remaining is whether
Defendants engaged in conduct inconsistent with that right.
In
Bower v. Inter-Con Security Systems, Inc. (2014) 232 Cal.App.4th 1035,
1044-1049, the moving party attempted to settle the case on a class-wide basis
and obtained discovery from the plaintiffs prior to filing a motion to compel
arbitration. (Ibid.) The court found that this conduct was inconsistent
with the party’s right to arbitrate because it took advantage of discovery,
delayed arbitration of the individual claim, and attempted to settle the claim
class-wide instead of on an individual basis as compelled by the arbitration
agreement. (Id. at 1045.)
In
Garcia v. Haralambos Beverage Co. (2021) 59 Cal.App.5th 534, 543-545, a
moving party acted in a manner inconsistent with its right to arbitrate where
it engaged in class-wide mediation, represented in status conference statements
that it did not intend to arbitrate, and responded to the plaintiff’s discovery
requests and meet and confers. (Ibid.)
Conversely,
in Gloster v. Sonic Automotive, Inc. (2014) 226 Cal.App.4th 438, 449,
the moving parties deferred a motion to compel arbitration while awaiting the
results of another defendant’s demurrer, which would have simplified the
arbitration motion, and filed the motion four months after the demurrer’s
resolution. (Ibid.) The moving parties filed no motions of their own and
restricted their litigation activity to responding to discovery and attending
case management conferences. (Ibid.) The court found that the moving
parties had not waived arbitration. (Id. at 450.)
Here,
Defendants filed their motion to compel arbitration eight months after the case
was filed. During that time, Defendants filed an answer and the parties engaged
in mediation. Defendants did not file any other motion in this matter during
that time.
On
October 3, 2022, Defendants sent Plaintiff a meet and confer letter requesting
to submit the matter to arbitration. Defendants’ April 4, 2023 Case Management
Statement also asserted that Plaintiff’s claims were subject to arbitration.
Prior
to mediation, Plaintiff’s counsel obtained extensive employment records and
data for the putative class from Defendants in what Plaintiff’s counsel refers
to as ‘informal discovery.’ (Glitz Decl. ¶ 4.) The parties have not propounded
any formal written discovery in this matter. (Supp. Giamelo Decl. ¶ 5.)
Plaintiff also contends that Defendant sought and obtained information during
that mediation on Plaintiff’s intent to recover damages for all class members
in litigation, rather than arbitration. (Glitz Decl. ¶ 7.)
The
parties engaged in mediation on February 14, 2023. Plaintiff contends that the
mediation was aimed at reaching a global resolution of all claims on a
class-wide basis. (Glitz Decl. ¶ 6.) Plaintiff also contends that Defendants
only changed course and decided to demand arbitration rather than mediating the
claims when they discovered that Plaintiff intended to seek damages for all
class members in litigation, including those who were alleged to have signed
arbitration agreements. (Glitz Decl. ¶ 7.) Defendants contend that Glitz could
not have known Defendants’ intention in mediating the matter, but do not deny
that an objective of the mediation was to resolve the claims on a class-wide
basis. (Supp. Giamela Decl. ¶ 5.)
As
discussed above, a party’s intent as to actions that may waive arbitration is
irrelevant. (Burton, supra, 190 Cal.App.4th at p. 944.) Thus, if
Defendants engaged in mediation that in fact concerned the class-wide
settlement of the claims, as the record suggests, then that action was
inconsistent with an intent to arbitrate the claims regardless of what thoughts
Defendants held in their mind while doing so. However, this is the only action
that appears inconsistent with intent to arbitrate. Unlike in Garcia and
Bower, Defendants did not engage in formal discovery, either by
propounding or responding to it. Furthermore, unlike in Garcia,
Defendants repeatedly stated their intent to arbitrate, rather than denying
such intent. Finally, as mentioned above, Defendant has not filed any other
motions in this case. Thus, the Court finds that the factors to be considered,
on balance, do not support a finding of waiver.
Plaintiff argues that Defendant waived arbitration by
failing to file a fictitious name statement as required by Business &
Professions Code section 17910. Plaintiff contends that Defendants operated
under the fictitious name of “Chik-fil-A Hollywood” but failed to register the
DBA until March of 2023 at the earliest.
“[A] party who fails to file a valid statement cannot
‘maintain any action upon or on account of any contract made ... in the
fictitious business name in any court of this state until the fictitious
business name statement’ has been filed.” (Villareal v. LAD-T, LLC (2022)
84 Cal.App.5th 446, 454 [quoting Bus. & Prof. Code, § 17918].) “Failure to
comply with the fictitious-name statutes does not make the parties' promises,
agreements, and transactions invalid as such. Noncompliance merely prevents a
fictitiously named business from enforcing obligations owed to it until it
places on record its true nature and ownership.” (Hydrotech Systems, Ltd. v.
Oasis Waterpark (1991) 52 Cal.3d 988, 1001.)
Defendants have provided evidence of CDC’s fictitious name
notice as to the name “Chik-fil-A Hollywood.” (Stearns Decl. ¶ 3, Ex. B.) Thus,
this is not a basis for waiver here.
Plaintiff argues that if the FAA applies and Plaintiff is
compelled to arbitrate her individual PAGA claims, she should also be permitted
to arbitrate the non-individual PAGA claims asserted in the Complaint under the
arbitration agreement. Defendants argue that the Court should stay Plaintiff’s
non-individual PAGA claims pending arbitration.
Neither option is appropriate.
“ PAGA authorizes ‘an aggrieved employee,’ acting as a proxy
or agent of the state Labor and Workforce Development Agency (LWDA), to bring a
civil action against an employer ‘on behalf of himself or herself and other
current or former employees to recover civil penalties for Labor Code
violations they have sustained.” (Adolph v. Uber Technologies, Inc.
(2023) 14 Cal.5th 1104, 1113, quoting Lab. Code, § 2698.) “Where a plaintiff
has brought a PAGA action comprising individual and non-individual claims, an
order compelling arbitration of the individual claims does not strip the
plaintiff of standing as an aggrieved employee to litigate claims on behalf of
other employees under PAGA.” (Id. at 1114.)
“To have PAGA standing, a plaintiff must be an aggrieved
employee — that is, (1) someone who was employed by the alleged violator and
(2) against whom one or more of the alleged violations was committed.” (Adolf,
supra, 14 Cal.5th at p. 1113.) Settlement of a plaintiff’s individual
claims does not nullify their status as an aggrieved employee because “[t]he remedy
for a Labor Code violation, through settlement or other means, is distinct from
the fact of the violation itself.. (Kim v. Reins International California,
Inc. (2020) 9 Cal.5th 73, 84 [emphasis in original].)
Adolph is clear that Plaintiff maintains standing to
litigate her non-individual claims in court; thus, a stay as requested by
Defendants is not proper. The remaining question is whether Plaintiff should be
permitted to proceed with her non-individual PAGA claims in arbitration.
“Relief under PAGA is designed primarily to benefit the
general public, not the party bringing the action.” (Kim, supra,
9 Cal.5th at p. 81.) A PAGA claim for civil penalties is fundamentally a law
enforcement action where the government entity on whose behalf the plaintiff
files suit is the real party in interest. (Adolph, supra, 14
Cal.5th at p. 1119.) The judgment in a representative PAGA action “is binding
not only on the named employee plaintiff but also on government agencies and
any aggrieved employee not a party to the proceeding.” (Arias v. Superior
Court (2009) 46 Cal.4th 969, 985.) “Because collateral estoppel applies not
only against a party to the prior action in which the issue was determined, but
also against those for whom the party acted as an agent or proxy, a judgment in
an employee's action under the act binds not only that employee but also the
state labor law enforcement agencies.” (Id. at p. 986 [internal
citations omitted].)
The fact that the resolution of Plaintiff’s non-individual
claims would collaterally estop the state government and other aggrieved
employees, some of whom may not have signed arbitration agreements, is
troubling. “Of course, any employee is free to forgo the option of pursuing a
PAGA action. But is against public policy for an employment agreement to
deprive employees of this option altogether, before any dispute arises.” (Iskanian
v. CLS Transportation Los Angeles, LLC (2014) 59 Cal.4th 348, 387,
abrogated on other grounds by Viking River Cruises, Inc. v. Moriana
(2022) 142 S.Ct. 1906.) Although the course of action Plaintiff suggests here
does not technically involve a prospective agreement to arbitrate
non-individual claims, it functionally allows Plaintiff and Defendants to bind
employees who are not signatories to an arbitration agreement to have their
PAGA claims resolved by arbitration instead of by litigation. Those parties are
at least as much intended beneficiaries of the PAGA claims as is Plaintiff.
Furthermore, there is the issue that ordering arbitration of the non-individual
claims would compel Defendants to arbitrate disputes which they had not
agreed to arbitrate. Thus, the Court finds that requiring arbitration of the
non-individual PAGA claims would run counter to the purpose of PAGA and would
likely violate state contract law as well.
The Court therefore denies Defendants’ motion to dismiss the
non-individual claims, denies Defendants’ request for a stay on the
non-individual claims, and denies Plaintiff’s request for an order to compel
arbitration of the non-individual claims.