Judge Kerry Bensinger, Case Number: 22STCV14052, Date: 2024-01-30 Tentative Ruling

Counsel may submit on the tentative ruling by emailing Dept. 31 before 8:30 the morning of the hearing. The email address is smcdept31@lacourt.org. Please do not call the court to submit on the tentative. Please do not submit to the tentative ruling on behalf of the opposing party. Please do not e-mail the Court if you plan to appear and argue.

In deciding whether to submit on the tentative ruling or attend the hearing and present oral argument, please keep the following in mind:

The tentative rulings authored by this court reflect that the court has read and considered all pleadings and evidence timely submitted to the court in connection with the motion, opposition, and reply (if any). Because the pleadings were filed, they are part of the public record.

Oral argument is not an opportunity to simply regurgitate that which a party set forth in its pleadings. Nor, is oral argument an opportunity to "make a record" when there is no court reporter present and the statements and arguments of counsel are already part of the record because they were set forth in the pleadings. Finally, simply because a party or attorney disagrees with the court's analysis and ruling or is not satisfied with it does not necessarily warrant oral argument when no new arguments will be articulated.

If you submit on the tentative, you must immediately notify all other parties email that you will not appear at the hearing. If you submit on the tentative and elect not to appear at the hearing, the opposing party may nevertheless appear at the hearing and argue the motions. If all parties to the motion submit, this tentative ruling will become the final ruling after the hearing date and it will be memorialized in a minute order. This tentative ruling is not an invitation, nor an opportunity, to file further documents relative to the hearing in question. No such document will be considered by the Court.

**Tentative rulings on Motions for Summary Judgment will only be available for review in the courtroom on the day of the hearing.

This is a class action lawsuit for recovery of unpaid wages and penalties brought pursuant to Private Attorneys General Act (PAGA). On April 7, 2020, Plaintiff, Diana Gonzalez, filed a Complaint against Defendants, V.F. Corporation which conducts business in California as Pennsylvania V.F. Corporation (“V.F. Corporation”); and Volt Information Sciences, Inc. (“Volt”), for: (1) Minimum Wage Violations (Labor Code §§1182.12, 1194, 1194.2 and 1197); (2) Failure to Pay All Overtime Wage (Labor Code §§ 204, 510, 558, 1194, and 1198); (3) Meal Period Violations (Labor Code §§ 226.7 and 512); (4) Rest Period Violations (Labor Code §§ 226.7 and 516); (5) Wage Statement Violations (Labor Code § 226, et seq.); (6) Waiting Time Penalties (Labor Code §§ 201-203); (7) Failure to Reimburse for Necessary Business Expenses (Labor Code § 2802, et seq.); and (8) Unfair Competition (Bus. & Prof. Code § 17200, et seq). This action was originally filed in Santa Clara Superior Court. As alleged, Plaintiff was employed by Defendants as a logistics specialist in 2019. The parties entered into an employment agreement which contained an arbitration clause.

The following is taken from the parties’ joint stipulation filed on September 28, 2022.

On June 10, 2020, Plaintiff filed the operative First Amended Complaint (FAC) to add the Ninth Cause of Action for civil penalties under PAGA.[1] The Ninth Cause of Action is brought individually and in Plaintiff’s representative capacity.

The parties thereafter participated in an unsuccessful mediation. As a result, the parties entered into a stipulation to dismiss Plaintiff’s class claims pursuant to an enforceable arbitration agreement which dismissed without prejudice Plaintiff’s individual and class action allegations, and to transfer the action to the Los Angeles County Superior Court. Pursuant to the stipulation, which was submitted to the Santa Clara Superior Court on December 3, 2021, Plaintiff’s lawsuit was to proceed solely under the Ninth Cause of Action for civil penalties under PAGA.

Arbitration of Plaintiff’s individual claims commenced on April 6, 2022 before Arbitrator Pamela Hemminger. On September 14, 2022, in light of the United States Supreme Court ruling in the matter of Viking River Cruises, Inc. v. Moriana (2022) 596 U.S. 639 (Viking River) and the California Supreme Court’s then-pending ruling in Adolph v. Uber Technologies, Inc. (2023) 14 Cal.5th 1104 (Adolph), the parties agreed to stay the action.

On October 26, 2023, Defendant Volt filed this Motion to Compel Arbitration and Stay Action Pending Arbitration Outcome. Volt seeks to compel arbitration of Plaintiff’s individual PAGA claims.

California law incorporates many of the basic policy objectives contained in the Federal Arbitration Act (FAA), including a presumption in favor of arbitrability. (Engalla v. Permanente Medical Group, Inc. (1997) 15 Cal.4th 951, 971-72.) Under both the FAA and California law, arbitration agreements are valid, irrevocable, and enforceable, except on such grounds that exist at law or equity for voiding a contract. (Winter v. Window Fashions Professions, Inc. (2008) 166 Cal.App.4th 943, 947.) The petitioner bears the burden of proving the existence of a valid arbitration agreement by a preponderance of the evidence, the party opposing the petition then bears the burden of proving by a preponderance of the evidence any fact necessary to demonstrate that there should be no enforcement of the agreement, and the trial court sits as a trier of fact to reach a final determination on the issue. (Rosenthal v. Great Western Financial Securities Corp. (1996) 14 Cal.4th 394, 413.) Pursuant to Code of Civil Procedure section 1281.2, the Court can compel parties to an arbitration agreement to arbitrate their dispute.

Volt timely filed its Reply on December 15, 2023. Thereafter, on January 19, 2024, Plaintiff filed a Notice of Supplemental Authority. Volt objects to the Notice of Supplemental Authority (NOSA) because it improperly includes supplemental arguments. In other words, the NOSA is, effectively, a sur-reply. The court agrees. Accordingly, the court does not consider the NOSA in ruling on this motion.

There is no dispute over the conscionability or enforceability of the agreement. The parties agree the Federal Arbitration Act governs. The principal issues to be decided are (1) whether the arbitration agreement applies to individual PAGA claims, and (2) whether the arbitration agreement constitutes an impermissible wholesale waiver of the right to bring a PAGA action in court. The Court addresses each argument in turn.

Plaintiff argues the arbitration agreement does not apply to PAGA claims because the agreement, when signed, excluded claims prohibited by federal law, which at the time included PAGA claims. In support, Plaintiff points to the following arbitration language:

“This agreement to arbitrate does not apply to claims for workers’ compensation, unemployment compensation benefits, claims or charges before any administrative agency having jurisdiction over such claims, or any other claim that is not subject to arbitration under federal law. If any claims are deemed non-arbitrable, then those claims will be stayed until resolution of any arbitrable claims.” (Emphasis added)

(Baker Decl., Ex. A., ¶ 5c.) Plaintiff’s argument relies on the use of the present tense verb “is”. Using a temporal landmark, Plaintiff then asserts that California law at the time the contract was signed precluded arbitration of PAGA claims. Building on that premise, Plaintiff advances the argument that the parties did not intend and could not have intended for individual PAGA claims to be arbitrated. Plaintiff cites Iskanian v. CLS Transportation Los Angeles (2014) 59 Cal.4th 348 and Correira v. NB Naker Electric, Inc. (2019) 32 Cal.App.5th 602 as the applicable law at the time the agreement was made.

Plaintiff’s argument fails. In Iskanian and Correira, the California Supreme Court and Court of Appeal, respectively, held that pre-dispute arbitration agreements compelling representative PAGA claims into arbitration were unenforceable. As the Court of Appeal stated in Correira: “Although Iskanian did not decide the issue of whether courts have the authority to order a PAGA representative action into arbitration, several California Courts of Appeal have held a PAGA arbitration requirement in a predispute arbitration agreement is unenforceable based on Iskanian's view that the state is the real party in interest in a PAGA claim. These courts reasoned the state must have consented to the agreement to effectively waive the right to bring the PAGA claim into court. We agree with this analysis as applied to the circumstances before us.” (Correira, 32 Cal.App.5th at p. 609.)

Here, Volt seeks only to compel Plaintiff’s individual PAGA claims into arbitration. Further, the arbitration agreement expressly provides that Plaintiff’s individual claims must be arbitrated. (Baker Decl., Ex. A., ¶ 5d.) Plaintiff demanded arbitration for her individual non-PAGA claims. The individual PAGA claim runs with the individual non-PAGA claim. Each arises under the same set of alleged facts and events. Plaintiff does not point to any authority providing that individual PAGA claims cannot be compelled to arbitration pursuant to a valid arbitration agreement.

Plaintiff argues the individual and representative PAGA claims cannot be “split,” with individual PAGA claims heading off to arbitration and representative claims staying in the judicial forum. Plaintiff cites Viking River. There, the Supreme Court split the plaintiff’s PAGA claim because the severability clause in that case expressly permitted the Court to do so.[2]

Citing Barrera, supra, Volt responds that the arbitration agreement here has a severability clause requiring arbitration of individual PAGA claims. The court agrees. Here, the arbitration agreement states, in relevant part:

“I understand and agree that, except where prohibited by federal law, all claims subject to this agreement to arbitrate must be pursued on an individual basis, and that both I and Volt waive any right to bring or be a party to any class, collective or representative action. I agree that any issues pertaining to the enforceability, application or validity of this agreement to arbitrate shall be decided only by a court of competent jurisdiction and not by an arbitrator.”

(Baker Decl., Ex. A., ¶ 5d.) Near the signature line, the agreement states in bold lettering, “I understand and agree that if any of the terms above are deemed invalid or unenforceable, the remaining terms will remain in effect.” (Id., emphasis added.)

The foregoing arbitration agreement is similar to the arbitration language at issue in Barrera.[3] Acknowledging that the provision did not contain language as explicit as Viking River, which expressly identified representative PAGA actions, the Barrera court nevertheless upheld the trial court’s order splitting the plaintiffs’ PAGA claims because the arbitration agreement provided that “any arbitration .... will be on an individual basis ....” (Barrera, at p. 84, italics in original.) Here, the arbitration provision similarly provides that “all claims subject to this agreement to arbitrate must be pursued on an individual basis, ….” The arbitration provision here is not ambiguous. It requires arbitration of all individual claims. Plaintiff’s individual PAGA claims are no different.

Plaintiff’s PAGA Claims Against Defendant V.F. Corporation Must Be Arbitrated

Volt argues Plaintiff’s individual PAGA claims against V.F. Corporation must also be compelled to arbitration because V.F. Corporation is a third-party beneficiary to the arbitration agreement.

Plaintiff contends her claims against V.F. Corporation cannot be compelled to arbitration because the arbitration agreement does not specifically identify V.F. Corporation.

“I understand and agree that both Volt and I waive our respective rights to trial by jury in connection with any claims covered by this agreement to arbitrate. Instead, any disputes arising out of or related to my employment with and/or termination from Volt, my assignment with any Volt client and/or end of such assignment, including claims relating to Volt and/or Volt’s clients’ employees/agents, shall be settled by final and binding arbitration pursuant to the Federal Arbitration Act.”

(Baker Decl., Ex. A, ¶ 5d.) In other words, the agreement contemplates arbitration of any claims arising out of or related to Plaintiff’s employment with and/or termination from Volt. Plaintiff’s allegations are asserted against Volt and V.F. Corporation as joint employers. They arise from Plaintiff’s employment with Volt. Plaintiff unduly focuses on the “Volt and I” language and ignores the scope of the disputes to be arbitrated—namely, any disputes arising out of related to her employ with Volt, including claims relating to Volt and/or Volts’ clients’ employees/agents. Volt establishes the agreement encompasses Plaintiff’s claims against V.F. Corporation.

Plaintiff resists Volt’s request to have this court stay the representative PAGA claims. Plaintiff argues the state court matter should not be stayed because the chance of inconsistent rulings is slight. The possibility remains problematic. For example, should the matters proceed simultaneously, and the arbitrator determines the Plaintiff is not an aggrieved party, the representative action would be in jeopardy. Better to resolve the individual claims first. This is precisely the procedure outlined in Adolph. (See Adolph, supra, 14 Cal.5th at pp. 1123-1124.)

Volt also points out that under the FAA an action must be stayed if any part of the claim is determined to be arbitrable. “If any suit or proceeding be brought in any of the courts of the United States upon any issue referable to arbitration under an agreement in writing for such arbitration, the court in which such suit is pending, upon being satisfied that the issue involved in such suit or proceeding is referable to arbitration under such an agreement, shall on application of one of the parties stay the trial of the action until such arbitration has been had in accordance with the terms of the agreement, providing the applicant for the stay is not in default in proceeding with such arbitration. (9 U.S.C. § 3, emphasis added.)

Further, a stay is mandatory even under California law where the issues may overlap. (See Franco v. Arakelian Enterprises, Inc. (2015) 234 Cal.App.4th 947, 966 [holding that under Code of Civil Procedure section 1281.4, “because the issues subject to litigation under the PAGA might overlap those that are subject to arbitration of Franco's individual claims, the trial court must order an appropriate stay of trial court proceedings.”].) On its face, Plaintiff’s individual PAGA claims may overlap with the representative PAGA claims.

Accordingly, the motion to compel the individual PAGA claims to arbitration is GRANTED. The action is stayed as to all parties pending the conclusion of the arbitration. The court sets a post-arbitration status conference for November 15, 2024 at 9:00 a.m.

Kerry Bensinger

Judge of the Superior Court

[1] The FAC does not appear in the court’s electronic files.

[2] “The agreement contained a “Class Action Waiver” providing that in any arbitral proceeding, the parties could not bring any dispute as a class, collective, or representative PAGA action.” (Viking River, supra, 596 U.S. 639, at p. 647, emphasis added.)

[3] “In signing this Agreement, both the Company and I agree that all legal claims or disputes covered by the Agreement must be submitted to binding arbitration and that this binding arbitration will be the sole and exclusive final remedy for resolving any such claim or dispute. We also agree that any arbitration between the Company and me will be on an individual basis and not as a representative, class or collective action.” (Barrera, 95 Cal.App.5th at p. 72.)