Judge: Lee W. Tsao, Case: 23STCV14753, Date: 2024-01-09 Tentative Ruling

Case Number: 23STCV14753    Hearing Date: January 9, 2024    Dept: C

Jose Morales vs Rose Meat Services, Inc.

Case No.: 23STCV14753

Hearing Date: January 9, 2024 @ 9:30 a.m.

#5

Tentative Ruling

Defendant Rose Meat Services, Inc.’s Motion to Compel Arbitration is DENIED.

Plaintiff to give notice.

Procedural History

This PAGA action, filed June 26, 2023, arises out of a class action complaint previously filed on February 16, 2022 (LASC Number 22STCV05975) alleging minimum wage and overtime violations.  The latter case was stayed on April 7, 2022, by Judge Nelson.  In doing so, Judge Nelson wrote, “Nothing in this order stays the filing of an Amended Complaint pursuant to Labor Code Section 2699.3(a)(2)(C) by a plaintiff wishing to add a Private Attorney General Act (“PAGA”) claim.”  On July 15, 2022, the parties stipulated to arbitration in the class action lawsuit.  Then, on August 30, 2022, pursuant to the stipulation, Judge Nelson compelled the case to arbitration.

Plaintiff brings this lawsuit based solely on the class’s PAGA claims instead of amending the class action complaint in accordance with Judge Nelson’s April 7, 2022 order

Request for Judicial Notice

Defendant requests Judicial Notice as to:

·        The previous Complaint in Morales v. Rose Meat Services, Inc., Los Angeles Superior Court bearing Case No. 22STCV05975;

·        Parties’ Stipulation Agreement;

·        Order compelling Case No. 22STCV05975 to arbitration; and

·        February 16, 2022 Letter from Plaintiff’s Counsel to Labor and Workforce Development Agency (LWDA)

Evidence Code section 452(d) provides that the Court may take judicial notice of “[r]ecords of (1) any court of this state or (2) any court of record in the United States or of any state of the United States.” In addition, courts may take judicial notice of matters of public record, including “records and reports of administrative bodies.”

The Court grants judicial notice of the requested documents.

Legal Standard

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 opposing party has the burden to establish any defense to enforcement.  (Gatton v. T-Mobile USA, Inc. (2007) 152 Cal.App.4th 571, 579 (“The petitioner, T–Mobile here, bears the burden of proving the existence of a valid arbitration agreement and the opposing party, plaintiffs here, bears the burden of proving any fact necessary to its defense.”); Pinnacle Museum Tower Assn. v. Pinnacle Market Development (US), LLC (2012) 55 Cal.4th 223, 236 [“The party seeking arbitration bears the burden of proving the existence of an arbitration agreement, and the party opposing arbitration bears the burden of proving any defense, such as unconscionability.”].)   

In California, there is a “strong public policy in favor of arbitration.”  (Moncharsh v. Heily & Blase (1992) 3 Cal.4th 1, 9.)  Accordingly, “doubts concerning the scope of arbitrable issues are to be resolved in favor of arbitration.”  (Ericksen, Arbuthnot, McCarthy, Kearney & Walsh, Inc. v. 100 Oak St. (1983) 35 Cal.3d 312, 323.)  Further, “under both the FAA and California law, ‘arbitration agreements are valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.’”  (Higgins v. Sup. Ct. (2006) 140 Cal.App.4th 1238, 1247.)  This policy, however, is tempered by the recognition that arbitration must be based on an enforceable contract, as “[t]here is no public policy favoring arbitration of disputes which the parties have not agreed to arbitrate.”  (Engineers & Architects Assn. v. Community Development Dept. (1994) 30 Cal.App.4th 644, 653.) 

Moreover, the right to arbitration depends upon contract, and “[t]here is no public policy favoring arbitration of disputes that the parties have not agreed to arbitrate.”  (Lopez v. Charles Schwab & Co., Inc. (2004) 118 Cal. App. 4th 1224, 1229.)  There is a “ ‘strong public policy in favor of arbitration as a speedy and relatively inexpensive means of dispute resolution.’ “  (Moncharsh v. Heily & Blase (1992) 3 Cal.4th 1, 8-9)  However, it is essential to the proper operation of that policy that “ ‘[t]he scope of arbitration is ... a matter of agreement between the parties' [citation], and ‘ “[t]he powers of an arbitrator are limited and circumscribed by the agreement or stipulation of submission.” ‘ [Citations.]”  (Ibid.)  An agreement that the FAA governs the parties’ dispute is binding and enforceable, and thus, that the parties’ agreement is to be read and interpreted under the FAA.  (See Gloster v. Sonic Automotive, Inc. (2014) 2016 Cal.App.4th 438, 446-47.) 

Analysis

Plaintiff voluntarily signed a valid and enforceable arbitration agreement and class action waiver entitled “Mutual Agreement to Arbitrate Claims” (the “Agreement”). (Eskandarian Decl. ¶ 4, Ex. A.) Section 3 of the Agreement confirms the agreement to arbitrate all disputes and defines what claims are covered stating:

Understanding and acknowledging the nature of arbitration, Employer and Employee voluntarily and mutually consent to the resolution by final and binding arbitration of all disputes, claims or controversies of any kind between them, whether now in existence or that may arise in the future, including but not limited to all disputes arising out of, relating to, and/or in connection with Employee’s employment with Employer, candidacy and/or application for employment, and/or termination of employment, to the fullest extent allowed by law (“Claims”) … (Id. Ex. A at ¶ 3.)

The Agreement makes clear that the mutual agreement to arbitrate all disputes, claims and controversies of any kind specifically includes the claims made by Plaintiff in the Complaint:

“Claims include, but are not limited to, the following, whether brought by Employer or Employee: wage and hour claims, including but not limited to claims for overtime, minimum wage, vacation, paid sick leave, paid time off, meal and/or rest breaks, paystub disclosures, unpaid wages, deduction, expense reimbursement,…claims for benefits,… and overpayment of wages; …any claim for alleged wrongful conduct by Employee of any kind; and claims for violation of any federal, state, local, or other law, including but not limited to… the California Labor Code…

(Id.) The Agreement only excludes from arbitration “the right to bring representative actions under the California Private Attorney General Act (PAGA).” (Id. at ¶ 4.)

The initial conference with the arbitrator in the previous matter was held on May 25, 2023.  At that time, the parties and the arbitrator discussed whether the arbitration should include the PAGA claims. Plaintiff’s counsel attests that the arbitrator seemed inclined to find that due to the plain language of the agreement, Plaintiff had not consented to arbitrate PAGA claims. (Ross Decl. ¶ 7.)

Due to the stay in the prior proceedings, Plaintiff was unable to amend his complaint to add the PAGA claims, and the case was ordered to arbitration without the stay being lifted. (Ross Dec. ¶ 6.)

Here, Plaintiff has promptly filed the instant complaint for PAGA claims only.  Defendant argues in Reply that the Complaint includes individual claims which are subject to arbitration. (Complaint, ¶¶ 66-67.) In the court’s view, by alleging “Plaintiff seeks penalties under Labor Code …” and “Plaintiff and the Aggrieved Employees are entitled to…” Plaintiff simply refers to himself as the named representative with respect to the PAGA claims.  Thus, the court determines that the Complaint raises only PAGA claims, not individual ones.   

The Court finds that there is an express carve out in the arbitration agreement for representative claims. The Court notes that the parties did agree to arbitrate all claims, however in Case No. 22STCV05975 there were no PAGA claims made, and therefore the Court is unpersuaded that the parties stipulated to arbitrate such claim.

Accordingly, based on the plain language of the arbitration agreement, the Court finds that the arbitration agreement does not apply to the PAGA claims.  Defendant’s motion is therefore DENIED.