Judge Kerry Bensinger, Case Number: 23STCV24838, Date: 2024-02-08 Tentative Ruling

MOVING PARTY: Defendants Medix Staffing Solutions, Inc. and Medix Staffing Solutions, LLC

This is a discrimination and wrongful termination action. On October 11, 2023, Plaintiff, Ingrid Rodriguez, filed a Complaint against her former employer, Defendants, Medix Staffing Solutions, Inc., and Medix Staffing Solutions, LLC, and its client, PATH[1], alleging claims for:

4. Retaliation for Harassment and/or Discrimination Complaints in Violation of Government Code § 12940(h)

7. Failure to Pay Minimum Wage in Violation of Labor Code §§ 1194, 1194.2, 1197, 1197.1

9. Failure to Authorize and Permit Meal Breaks in Violation of Labor Code §§ 226.7, 512

10. Failure to Authorize and Permit Rest Breaks in Violation of Labor Code § 226.7

11. Failure to Provide Accurate Wage Statements in Violation of Labor Code § 226(a)

On December 7, 2023, Defendants Medix Staffing Solutions, Inc. and Medix Staffing Solutions, LLC (collectively, “Medix Defendants”), filed their Answer to the Complaint. Medix Defendants pleaded an affirmative defense based on the existence of an arbitration agreement.

On January 12, 2024, Medix Defendants filed this motion for an order compelling Plaintiff to arbitrate her claims and dismissing, or in the alternative, staying this action pending arbitration.

On January 26, 2024, Plaintiff filed an opposition. On the same day, Defendant PATH also filed an opposition.

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.

Medix Defendants move to compel arbitration and stay the proceedings in this matter. Plaintiff argues there is no enforceable arbitration agreement because she never agreed to arbitrate her claims against PATH. PATH resists arbitration on similar grounds, arguing it is neither a signatory nor a third party beneficiary of the agreement. The court begins with the underlying fundamentals and moves on to address the parties’ arguments.

Plaintiff was employed by Medix Staffing Solutions as a Case Manager to work on assignment at Defendant PATH on or about March 27, 2023. (Complaint, ¶ 19.) As part of Plaintiff’s employment application, Plaintiff signed an Arbitration Agreement wherein she agreed to arbitrate any claims that arose out of her employment with Defendant. (Mrumlinksi Decl., ¶ 5, Exh. 1.) The Agreement is between Plaintiff and Medix Staffing Solutions, LLC. (Id.) Pursuant to the Arbitration Agreement, Plaintiff and Medix Staffing Solutions, LLC agreed to mutual binding arbitration. (Id.) Specifically, Plaintiff and Defendant voluntarily agreed that:

This Agreement is intended to be as broad as legally permissible, and, except as it otherwise provides, this Agreement applies to any and all disputes that may arise between Employee (sometimes “you” or “your”) and COMPANY, including without limitation any dispute arising out of or related to Employee’s application, employment and/or separation of employment with COMPANY, and survives after the employment relationship ends. This Agreement applies to a covered dispute, past, present, or future, that COMPANY may have against Employee or that Employee may have against: (1) COMPANY; (2) COMPANY’s parent companies, subsidiaries, related companies and affiliates and d/b/as; (3) its and their officers, directors, shareholders, owners, members, employees, managers or agents (in their capacity as such or otherwise); (4) COMPANY’s benefit plans or the plans’ sponsors, fiduciaries, administrators, affiliates or agents; and (5) clients or customers for whose benefits Employee performs services. It is understood and agreed by the COMPANY and the Employee that clients and customers of the COMPANY, including without limitation their officers, agents, employees, successors, assigns and affiliates, are intended to be third party beneficiaries to this Agreement and are entitled to enforce this Agreement accordingly. Each and all of the entities or individuals listed in (1) through (5) of the preceding clause can enforce this Agreement.

As such, Medix Defendants have shown that a valid agreement to arbitrate exists. Neither Plaintiff nor PATH present any arguments to the contrary.

The¿FAA¿applies to contracts that involve interstate commerce. (9 U.S.C. §§ 1,¿2.) Because arbitration is a matter of contract, the¿FAA¿also applies if it is so stated in the agreement.¿ (See¿Victrola 89, LLC v. Jaman Properties 8 LLC¿(2020) 46 Cal.App.5th 337, 355 (“[T]he presence of interstate commerce is not the only manner under which the¿FAA¿may apply. … [T]he parties may also voluntarily elect to have the¿FAA¿govern enforcement of the Agreement”].)

The FAA governs written arbitration agreements in the employment context.¿ (Circuit City Stores, Inc. v. Adams (2001) 532 U.S. 105, 109, 113.)¿ The FAA provides, “A written provision in any . . . contract evidencing a transaction involving commerce to settle by arbitration a controversy thereafter arising out of such contract or transaction, or the refusal to perform the whole or any part thereof . . . shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.”¿ (9 U.S.C. § 2.)

Here, the Arbitration Agreement states, “The parties agree that this Agreement is enforceable under and subject to the Federal Arbitration Act (9 U.S.C. §§ 1 et seq.) (“FAA”). The parties agree that this Agreement shall be construed, interpreted, and its validity and enforceability determined in accordance with the FAA. If a court determines the FAA does not apply to a particular dispute or to one or both parties, the parties stipulate and agree that the arbitration law of the state where the arbitration is to be convened will apply.” (Mrumlinksi Decl., Exh. 1.)

Plaintiff raises the contractual defense of lack of assent. Her argument is two-fold: (1) there is no agreement to arbitrate because Plaintiff did not specifically acknowledge or agree to arbitrate her claims, and (2) she did not agree to arbitrate her claims as to PATH, which is not a party to the agreement.

“In California, general principles of contract law determine whether the parties have entered a binding agreement to arbitrate. An essential element of any contract is the consent of the parties, or mutual assent. Further, the consent of the parties to a contract must be communicated by each party to the other. (Civ.Code, § 1565, subd. 3.) Mutual assent is determined under an objective standard applied to the outward manifestations or expressions of the parties, i.e., the reasonable meaning of their words and acts, and not their unexpressed intentions or understandings.” (Harris v. TAP Worldwide, LLC (2016) 248 Cal.App.4th 373, 381, quoting Serafin v. Balco Properties Ltd., LLC (2015) 235 Cal.App.4th 165, 173 [cleaned up].)

Against this background, Plaintiff’s arguments fail. Plaintiff does not dispute having signed the arbitration agreement on March 1, 2023. (See Mrumlinksi Decl., Exh. 1.) The agreement itself is entitled, “Mutual Arbitration Agreement”. (Id.) As stated above, the arbitration agreement provides,

This Agreement applies to a covered dispute, past, present, or future, that COMPANY may have against Employee or that Employee may have against: (1) COMPANY; (2) COMPANY’s parent companies, subsidiaries, related companies and affiliates and d/b/as; (3) its and their officers, directors, shareholders, owners, members, employees, managers or agents (in their capacity as such or otherwise); (4) COMPANY’s benefit plans or the plans’ sponsors, fiduciaries, administrators, affiliates or agents; and (5) clients or customers for whose benefits Employee performs services. It is understood and agreed by the COMPANY and the Employee that clients and customers of the COMPANY, including without limitation their officers, agents, employees, successors, assigns and affiliates, are intended to be third party beneficiaries to this Agreement and are entitled to enforce this Agreement accordingly. Each and all of the entities or individuals listed in (1) through (5) of the preceding clause can enforce this Agreement.

(Mrumlinksi Decl., Exh. 1, emphasis added.) By its very terms, Plaintiff agreed to arbitrate her claims against clients of the Medix Defendants. It is further undisputed that PATH is a client of the Medix Defendants. The arbitration agreement is valid and encompasses Plaintiff’s claims against Medix Defendants and PATH.

PATH argues in conclusory fashion that the motion should be denied because it is a non-signatory to the agreement, has not sought to compel arbitration, and is neither an agent of the Medix Defendants nor a third-party beneficiary of the agreement. These arguments run contrary to the law and to the plain language of the arbitration agreement.

“[T]here are six theories by which a nonsignatory may be bound to arbitrate: ‘(a) incorporation by reference; (b) assumption; (c) agency; (d) veil-piercing or alter ego; (e) estoppel; and (f) third-party beneficiary. [Citation.] Under the third party beneficiary theory, a nonsignatory may be compelled to arbitrate where the nonsignatory is a third party beneficiary of the contract. [Citation.] Whether a nonsignatory is an intended third party beneficiary to the contract is determined from the parties’ intent, as gleaned from the contract as a whole and the circumstances under which it arose. [Citation.]” (Philadelphia Indem. Ins. Co. v. SMG Holdings, Inc. (2019) 44 Cal.App.5th 834, 841.) “A nonsignatory plaintiff can be compelled to arbitrate a claim even against a nonsignatory defendant, when the claim is itself based on, or inextricably intertwined with, the contract containing the arbitration clause.” (JSM Tuscany, LLC v. Superior Ct. (2011) 193 Cal.App.4th 1222, 1241.)

Here, the arbitration agreement expressly provides that clients and customers of the Medix Defendants are third party beneficiaries of the contract. Further, Plaintiff agrees to arbitrate her claims against Medix Defendants’ clients and customers. It is uncontested that PATH is a client or customer of the Medix Defendants and that Plaintiff’s claims against PATH are inextricably intertwined with the arbitration agreement. Indeed, the allegations in the Complaint arise out of Plaintiff’s work placement with PATH. (See, e.g., Complaint, ¶¶ 19-34.) PATH is a third party beneficiary of the contract. They cannot avoid arbitration simply because they did not seek to compel arbitration of Plaintiff’s claims.

If a court of competent jurisdiction, whether in this State or not, has ordered arbitration of a controversy which is an issue involved in an action or proceeding pending before a court of this State, 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 an arbitration is had in accordance with the order to arbitrate or until such earlier time as the court specifies.¿

¿ Here, the court will order this action to arbitration. Thus, Medix Defendants’ motion to stay the action pending arbitration is granted.¿¿

Accordingly, the motion to compel 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 8, 2024 at 9:00 a.m.

Kerry Bensinger

Judge of the Superior Court

[1] People Assisting The Homeless, a non-profit corporation.