Judge Kenneth R. Freeman, Case 22STCV01224 2023-03-29 Tentative Ruling

Grant/ motion to compel arbitration on an individual basis; dismiss the representative PAGA claim, pursuant to Viking River Cruises, but stay enforcement of its dismissal order, pending either of the following two occurrences: 1) the California Supreme Court’s publication of Adolph; or 2) the California State Legislature’s revision of the PAGA standing requirements (and the Governor’s signing of any law establishing such revisions) so as to comply with Viking River Cruises; set a nonappearance case review for October 4, 2023; order the parties to submit a joint statement by September 29, 2023, confirming that an arbitrator has been selected (to the extent the arbitrator is different than the arbitrator to whom Plaintiff already submitted the arbitration demand on the representative PAGA claim), notifying the Court of the arbitration hearing date and the date of anticipated completion of arbitration of the individual claims; stay the instant litigation pending resolution of the arbitration proceeding pursuant to CCP §1281.4

This is a wage-and-hour class and representative action.[1] Plaintiff Roberta Brown alleges that she was employed by Defendant as a non-exempt employee. [First Amended Complaint (“FAC”), ¶14, 15.] Plaintiff alleges she was not paid for all hours worked because employees were required to work off the clock and because Defendants unlawfully rounded the hours worked by Plaintiff such that they were not paid for all hours worked. [FAC, ¶17.] In addition, Plaintiff alleges that Defendants failed to incorporate all forms of non-discretionary compensation into the regular rate, including differentials and incentives. [Id.] Plaintiff alleges that she was regularly required to work shifts in excess of five hours without being provided a lawful meal period. [FAC, ¶19.] Defendants allegedly failed to compensate Plaintiff one additional hour of pay at her regular rate as required by California law when meal periods were not timely or lawfully provided in a compliant manner. [FAC, ¶21.]

Additionally, Plaintiff was allegedly not systematically not authorized and permitted to take one net ten-minute paid, rest period for every four hours worked or major faction thereof. [FAC, ¶24.] Plaintiff alleges that Defendants also failed to provide accurate, lawful itemized wage statements to Plaintiff in part because of the specified violations. [FAC, ¶27.] Further, Defendants allegedly failed to comply with their duty to accurately Plaintiff for all wages owed within 72 hours of the time of termination of employment. [FAC, ¶29.]

Based on these allegations and the other allegations set forth in the Complaint, Plaintiff brings the following individual claims:

6. Knowing and Intentional Failure to Comply with Itemized Wage Statement Provisions; and

In addition to individual claims, Plaintiff brings a representative claim for civil penalties on behalf of all aggrieved employees pursuant to the California Private Attorney General Act (“PAGA”) (Labor Code §§2698, et seq.).

Defendant Aya Healthcare Services moves for an order compelling all claims, including the individual PAGA claim, to arbitration on an individual basis. Defendant also seeks an order dismissing the representative PAGA claim pursuant to Viking River Cruises Inc. v. Mariana (2022) 142 S. Ct 1906 or, alternatively, staying that claim pending completion of the arbitration.

A written agreement to submit to arbitration, a controversy thereafter arising is valid, enforceable, and irrevocable, save upon such grounds as exist for the revocation of any contract. CCP §1281. California has a strong public policy in favor of arbitration. Moncharsh v. Heily & Blasé (1992) 3 Cal.4th 1, 9.

On petition of a party to an arbitration agreement alleging the existence of a written agreement to arbitrate a controversy and where a party thereto refuses to arbitrate such controversy, the court shall order the petitioner and the respondent to arbitrate if it determines an agreement to arbitrate the controversy exists. CCP §1281.2; Gorlach v. Sports Club Co. (2012) 209 Cal.App.4^th 1497, 1505 (noting that “when presented with a petition to compel arbitration, the trial court's first task is to determine whether the parties have in fact agreed to arbitrate the dispute”). The initial burden is on the party petitioning to compel arbitration to prove the existence of the agreement by a preponderance of that evidence. Villacreses v. Molinari (2005) 132 Cal.App.4th 1223, 1230. The trial court sits as the trier of fact in assessing whether an agreement to arbitrate exists, 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. Ruiz v. Moss Bros. Auto Group, Inc. (2014) 232 Cal.App.4^th 836, 842 (referencing Engalla v. Permanente Medical Group, Inc. (1997) 15 Cal.4^th 951, 972).

Once petitioners allege that an arbitration agreement exists, the burden shifts to respondents to prove the falsity of the purported agreement, and no evidence or authentication is required to find the arbitration agreement exists. Condee v. Longwood Mgt. Corp. (2001) 88 Cal.App.4th 215, 219. See also Brodke v. Alphatec Spine Inc. (2008) 160 Cal.App.4th 1569, 1575-76 (petition or motion to compel arbitration must allege arbitration agreement exists, and cannot contest it). But see Bouton v. USAA Casualty Ins. Co. (2008) 167 Cal.App.4th 412, 423-24 (“in considering a Code of Civil Procedure section 1281.2 petition to compel arbitration, a trial court must make the preliminary determinations whether there is an agreement to arbitrate and whether the petitioner is a party to that agreement (or can otherwise enforce the agreement)”); Segal v. Silberstein (2007) 156 Cal.App.4th 627, 633 (“petitioner bears the burden of proving the existence of a valid arbitration agreement….”); Giuliano v. Inland Empire Personnel, Inc. (2007) 149 Cal.App.4^th 1276, 1284 (“‘petitioner bears the burden of proving the existence of a valid arbitration agreement by the preponderance of the evidence….’”); Rosenthal v. Great Western Fin. Securities Corp. (1996) 14 Cal.4^th 394, 413 (as to a petition to compel arbitration, “petitioner bears the burden of proving its existence by a preponderance of the evidence”); Banner Ent., Inc. v. Sup. Ct. (1998) 62 Cal.App.4th 348, 356 (citing Rosenthal, supra).

“‘Absent a clear agreement to submit dispute to arbitration, courts will not infer that the right to a jury trial has been waived.’ [Citation.]” Sparks v. Vista Del Mar Child & Family Services (2012) 207 Cal.App.4^th 1511, 1518 (abrogated on other grounds by Harris v. TAP Worldwide, LLC (2016) 248 Cal.App.4^th 373).

“Unless the parties clearly and unmistakably provide otherwise, the question whether they agreed to arbitrate the particular dispute is to be decided by the court, not the arbitrator.” California Practice Guide, Alternative Dispute Resolution¶5:212 (The Rutter Group 2022) (referencing First Options of Chicago, Inc. v. Kaplan (1995) 514 US 938, 944; Howsam v. Dean Witter Reynolds, Inc. (2002) 537 U.S. 79, 83-84, 123 S.Ct. 588, 591-592; BG Group PLC v. Republic of Argentina (2014) 572 U.S. 25, 34, 134 S.Ct. 1198, 1206-1207—“courts presume that the parties intend courts, not arbitrators, to decide … disputes about ‘arbitrability’”; Jackpot Harvesting, Inc. v. Applied Underwriters, Inc. (2019) 33 Cal.App.5th 719, 730).

Defendant has submitted the following evidence in support of the motion. Amber Zeeb attests that she is the Chief People Officer and Executive Vice President, Global Employee Services & Infrastructure for Aya Healthcare, Inc. [Zeeb Decl., ¶2.] Ms. Zeeb declares that she is familiar with the policies and procedures used by Aya Services to hire and onboard employees, and is familiar with the policies, procedures and practices for maintaining personnel files for employees of Aya Services in the regular course of business. [Zeeb Decl., ¶4.]

Ms. Zeeb declares that Plaintiff Brown was a Certified Nursing Assistant who worked for Aya Services at multiple healthcare facilities between approximately September 2020 and January 2021. [Zeeb Decl., ¶5.] She attaches as Exhibit 1 to her Declaration a true and correct copy of the Arbitration Agreement between Plaintiff and Aya Services signed on September 25, 2020. [Zeeb Decl., ¶6.]

You and Aya mutually agree that any and all claims arising out of or relating to your employment with Aya or the end of such employment, whether asserted during or following your employment with Aya, will be subject to binding arbitration and not by a lawsuit or resort to court process. You and Aya agree that the binding arbitration required by this Agreement applies to all covered claims arising from Your past or current assignments or position, as well as any and all covered claims arising from any future assignments or positions with Aya, regardless of whether there is a break in service between such assignments or positions. The claims covered by this Agreement include, but are not limited to, contract claims, quasi-contract claims, equity claims, tort claims, wrongful termination claims, claims of discrimination, harassment or retaliation, wage claims, penalty claims, any claiming based on or arising out of any offer letter, agreement, handbook, or policy of Aya, claims for breach of confidentiality or misappropriation of trade secrets, claims for injunctive relief, claims alleging breach of privacy rights, and claims based on or alleging violations of the California Labor Code, California Fair Employment and Housing Act, the Americans With Disabilities Act, California Pregnancy Leave Law, or any other applicable public policy, federal, state or other governmental law, constitution, statute, regulation or ordinance. This Agreement is binding upon, and inures to the benefit of, the Parties and their respective successors and assigns. In addition, You agree that this Agreement is intended to benefit and may be enforced not only by Aya, but also by any of Aya’s officers, directors, owners, clients, shareholders, employees, managers, agents, attorneys, insurers, sureties, benefit plans, clients, and its affiliated, related, parent, sister, or associated business entities (including, but not limited to Aya Healthcare, Inc.). [Zeeb Decl., Exh. 1 at 1, ¶2.]

The Arbitration Agreement further provides under the “Arbitration Procedures” paragraph:

The binding arbitration and selection of a neutral arbitrator will be conducted in conformity with the procedures of the Federal Arbitration Act (9 U.S.C. § 1 et seq.) and the California Arbitration Act (Cal. Code Civ. Proc., § 1280 et seq.), and if You are employed outside of California, in accordance with any other applicable arbitration law. [Zeeb Decl., Exh. 1 at 1, ¶3.]

Additionally, at ¶5’s “WAIVER OF RIGHT TO BRING CLASS, COLLECTIVE, OR REPRESENTATIVE ACTION,” the Agreement provides:

TO THE FULLEST EXTENT PERMITTED BY LAW, YOU AND AYA AGREE THAT NO CLAIM COVERED BY THIS AGREEMENT MAY BE PURSUED AS A CLASS, COLLECTIVE, OR REPRESENTATIVE ACTION AND ALL SUCH CLAIMS MUST BE PURSUED ONLY ON AN INDIVIDUAL BASIS. Ex. 1, §§ 3, 5. [Zeeb Decl., Exh. 1 at 2, ¶5.]

The Agreement has the printed name of “Roberta Brown” at the bottom, and as attested to by Ms. Zeeb, is signed by Plaintiff Zeeb by way of electronic signature. [Zeeb Decl., Exh. 1 at 2.] It is dated September 25, 2020. [Id.]

Based on the Zeeb Declaration and Exhibit 1, Defendant has shown by a preponderance of evidence that an agreement to arbitrate exists with Plaintiff Brown. Plaintiff does not dispute the existence of the Agreement, and does not dispute that she signed the Agreement electronically.

The Agreement covers the scope of the wage-and-hour claims alleged in the operative FAC. The Agreement provides the parties agreed to arbitrate “any and all claims arising out of or relating to your employment with Aya or the end of such employment, whether asserted during or following your employment with Aya.” The individual claims and PAGA claim brought here decidedly fall within the scope of the agreement.

Plaintiff has not disputed the existence of the agreement, or that she electronically signed it.

The Federal Arbitration Act (“FAA”) provides for enforcement of arbitration provisions in any contract “‘evidencing a transaction involving commerce.’” California Practice Guide, Alternative Dispute Resolution¶5:50 (The Rutter Group 2022) (citing 9 USC §2; Rent-A-Center West, Inc. v. Jackson (2010) 130 S.Ct. 2772, 276; Rogers v. Royal Caribbean Cruise Line (9^th Cir. 2008) 547 F.3d 1148, 1153-1154).

The term “involving commerce” is functionally equivalent to “affecting commerce” and “signals an intent to exercise Congress’ commerce power to the full.” California Practice Guide, Alternative Dispute Resolution¶5:50.1 (The Rutter Group 2022) (citing Allied-Bruce Terminix Cos., Inc. v. Dobson (1995) 513 U.S. 265, 277 (emphasis added by Rutter Guide).

The words “evidencing a transaction” “mean only that the transaction must turn out, in fact, to involve interstate commerce. i.e., the parties need not have intended any interstate activity when they entered into the contract.” California Practice Guide, Alternative Dispute Resolution, ¶5:50.2 (The Rutter Group 2022) (citing Allied-Bruce Terminix Cos., Inc. v. Dobson, supra, 513 U.S. at 277; Shepard v. Edward Keshishyan Enterprises, Inc. (2007) 148 Cal.App.4th 1092, 1097). Additionally, the dispute need not arise from the particular part of the transaction involving interstate commerce. The FAA applies if the underlying transaction as a whole involved interstate commerce. Shepard v. Edward Keshishyan Enterprises, Inc., supra, 148 Cal.App.4th at 1101. A party seeking to enforce an arbitration agreement has the burden of showing FAA preemption. See Lane v. Francis Capital Management, LLC (2014) 224 Cal.App.4^th 676, 687 (citing Woolls v. Superior Court (2005) 127 Cal.App.4^th 197, 211).

The party claiming that the contract involves interstate commerce and that the FAA preempts state law has the burden of proof. California Practice Guide, Alternative Dispute Resolution¶5:51.1 (The Rutter Group 2022) (citing Woolls v. Sup.Ct. (Turner), supra, 127 Cal.App.4^th at 211-214; Shepard, supra, 148 Cal.App.4^th at 1101). However, when no evidence is offered, the wording of the agreement, not the interstate commerce analysis, determines applicable law. Valencia v. Smyth (2010) 185 Cal.App.4^th 153, 179.

Here, Ms. Zeeb declares that Aya provides various payroll and backend services to Aya Services, among other things. [Zeeb Decl., ¶3.] She attests that Aya Services is a staffing company that dispatches travel clinicians to temporary work assignments at approximately 3,300 healthcare facilities or campuses nationwide, including 500 facilities or campuses in California. [Id.] The term “clinician,” Zeeb declares, includes all hourly, non-exempt employees placed in clinical and non-clinical positions at healthcare facilities including but not limited to nurses, therapists and technicians.. [Id.] Additionally, the Agreement itself provides that the binding arbitration and selection of the neutral arbitrator will be conducted in conformity with the FAA. [Zeeb Decl., Exh. 1 at 1, ¶3.]

These statements demonstrate that the arbitration agreement between Plaintiff Brown and Defendant Aya evidences a transaction involving interstate commerce. For these reasons, the FAA controls.

The FAC omits the class allegations appearing in the initial complaint. Thus, the class claims are no longer part of this litigation.

Plaintiff does not argue the agreement is unconscionable. Since parties opposing arbitration have the burden to prove any fact necessary to a defense to enforcement (Gatton v. T-Mobile USA, Inc. (2007) 152 Cal.App.4th 571, 579), the Court need not address unconscionability here.

The final issue requires the Court to examine the arbitrability of the PAGA claim. In Viking River Cruises, Inc. v. Moriana (2022) 142 S. Ct. 1906, the Supreme Court, while preserving the right of an aggrieved person to bring a representative action under PAGA on behalf of aggrieved employees, abrogated Iskanian’s prohibition on enforcing an individual PAGA claim in arbitration. The Viking River Cruises court determined that “the FAA preempts the rule of Iskanian insofar as it precludes division of PAGA actions into individual and non-individual claims through an agreement to arbitrate.” Viking River Cruises, 142 S. Ct. at 1924. The Supreme Court explained:

The agreement between Viking and Moriana purported to waive “representative” PAGA claims. Under Iskanian, this provision was invalid if construed as a wholesale waiver of PAGA claims. And under our holding, that aspect of Iskanian is not preempted by the FAA, so the agreement remains invalid insofar as it is interpreted in that manner. But the severability clause in the agreement provides that if the waiver provision is invalid in some respect, any “portion” of the waiver that remains valid must still be “enforced in arbitration.” Based on this clause, Viking was entitled to enforce the agreement insofar as it mandated arbitration of Moriana’s individual PAGA claim. The lower courts refused to do so based on the rule that PAGA actions cannot be divided into individual and non-individual claims. Under our holding, that rule is preempted, so Viking is entitled to compel arbitration of Moriana’s individual claim. Viking River Cruises, 142 S.Ct. 1906, 1924-1925.

The Supreme Court also addressed what “should have been done” with the plaintiff’s non-individual claims, stating:

The remaining question is what the lower courts should have done with Moriana's non-individual claims. Under our holding in this case, those claims may not be dismissed simply because they are “representative.” Iskanian’s rule remains valid to that extent. But as we see it, PAGA provides no mechanism to enable a court to adjudicate non-individual PAGA claims once an individual claim has been committed to a separate proceeding. Under PAGA's standing requirement, a plaintiff can maintain non-individual PAGA claims in an action only by virtue of also maintaining an individual claim in that action. See Cal. Lab. Code Ann. §§ 2699(a), (c). When an employee's own dispute is pared away from a PAGA action, the employee is no different from a member of the general public, and PAGA does not allow such persons to maintain suit. See Kim [v. Reins Int’l. California, Inc.] 9 Cal.5th [73,] 90, 259 Cal.Rptr.3d 769, 259 Cal.Rptr.3d, 459 P.3d at 1133 (“PAGA's standing requirement was meant to be a departure from the ‘general public’ ... standing originally allowed” under other California statutes). As a result, Moriana lacks statutory standing to continue to maintain her non-individual claims in court, and the correct course is to dismiss her remaining claims. Viking River Cruises, 142 S.Ct. at 1925.

Synthesizing Iskanian with Viking River Cruises, the Court cannot dismiss Plaintiff Brown’s non-individual PAGA representative claim simply because it is “representative.” However, consistent with Viking River Cruises, given the Court’s findings that: 1) the FAA applies; and 2) that the individual claims (including the individual PAGA claim) must be committed to arbitration, it is appropriate to dismiss the representative PAGA claim. Viking River Cruises, supra, at 1925. Plaintiff lacks standing to bring the representative PAGA claim.

Plaintiff, though, argues that she has already asserted the PAGA representative claim in arbitration “and will pursue them in that forum to the extent required by the arbitration agreement.” [Opposition at 3:15-16.] However, Plaintiff cannot circumvent the mandate of Iskanian and Viking River by attempting to arbitrate her representative PAGA claim. Iskanian itself prohibits arbitration of representative PAGA claims (and that portion of Iskanian is left undisturbed by Viking River). As set forth above, Viking River mandates dismissal of the representative PAGA claim (i.e., the non-individual claim) where the individual claims are committed to arbitration. Plaintiff’s argument to the contrary is not persuasive, in light of Viking River.

While the Court is cognizant of Galarsa v. Dolgen California, LLC, 2023 WL 2212196, Gavriiloglou v. Prime Healthcare Management, Inc. (2022) 83 Cal.App.5^th 595, and Piplack v. In-N-Out Burgers (March 7, 2023) ___ Cal.5^th ___, 2023 WL 2384502, it determines it must follow Viking River, pending further action by the California Supreme Court or the Legislature.

The Court recognizes that the California Supreme Court will be addressing this very PAGA representative standing issue in Adolph v. Uber Technologies, Inc., No. S274671 at an indeterminate point in the future. As of March 21, 2023, the Adolph matter has been fully briefed, with no oral argument affirmatively set. In light of this, the Court will stay enforcement of its dismissal order, pending either of the following two occurrences: 1) the California Supreme Court’s publication of Adolph; or 2) the California State Legislature’s revision of the PAGA standing requirements (and the Governor’s signing of any law establishing such revisions) so as to comply with Viking River Cruises. Following one of these two occurrences, the parties shall file a joint statement with the Court, notifying it on how the parties wish to proceed.

[1] The case was initially brought as a putative class action and representative claim. However, the First Amended Complaint was filed pursuant to a September 21, 2022 stipulation, and omits the class claims.