Judge: Malcolm Mackey, Case: 22STCV27159, Date: 2023-03-21 Tentative Ruling
Case Number: 22STCV27159 Hearing Date: March 21, 2023 Dept: 55
COSTLEY
v. HOMEAGLOW INC. 22STCV27159
Hearing Date: 3/21/23,
Dept. 55.
#6: MOTION TO COMPEL ARBITRATION OF PLAINTIFF’S
INDIVIDUAL PAGA CLAIM AND TO DISMISS THE NON-INDIVIDUAL PAGA CLAIM.
Notice: Okay
Opposition
MP:
Defendant
RP:
Plaintiff
Summary
On 6/22/22, Plaintiff KIMBERLY COSTLEY filed a PAGA Complaint
alleging that she has worked as a housekeeper, since December of 2018, for
Defendant that has misclassified its California employees as independent
contractors.
MP
Positions
Moving party requests an order compelling arbitration,
and dismissing the PAGA claim, on grounds including the following:
·
In 2017, when Plaintiff Kimberly Costley
contracted with Defendant Homeaglow Inc. for use of the Homeaglow platform to
connect with individuals looking for cleaning services, she expressly agreed to
resolve any disputes through binding bilateral arbitration, pursuant to the
Federal Arbitration Act.
·
This is required under the Supreme Court’s
decision in Viking River Cruises, Inc. v. Moriana, 142 S.Ct. 1906 (2022), which
confirmed that an agreement to arbitrate claims on an individual basis only,
like the parties’ Arbitration Provision here, must be enforced as written under
the FAA. Viking River also requires the remaining non-individual PAGA claim to
be dismissed because Plaintiff lacks standing to pursue that claim.
·
Plaintiff only opted out of arbitration
provisions of a second agreement in 2022.
The parties expressly stated in the Arbitration Provision that it would
survive the termination of the Contractor Agreement, and stated in the 2022 opt
out provision that it applies only to the 2022 provision.
·
The Arbitration Provisions are not
unconscionable.
RP
Positions
Opposing party advocates denying, or staying, for
reasons including the following:
·
When Plaintiff accepted the 2022
Agreement, the 2022 Agreement superseded the 2018 Agreement. Thus, the 2022
Agreement controls. When there are two inconsistent agreements between the same
parties on the same subject matter, the later agreement supersedes the former.
·
Because Plaintiff opted out of the
arbitration provision of the 2022 Agreement, no agreement to arbitrate exists
between the parties.
·
The arbitration agreement is unconscionable. It is procedurally unconscionable because it
is a take-it-or-leave-it arbitration clause that contractors must sign to work
or continue to work for Homeaglow. Third-party
discovery is only available with arbitrator approval (JAMS Rule 17(d)), which
is highly inadequate in a complex independent contractor-misclassification
case. Homeaglow expressly states that
filing a government complaint will not extend any statutory limitation period.
See pg. 5 of Ex. B to the Chen Decl.
Broadly written jury trial waivers like this one amount to “an
unconscionable predispute jury trial waiver.” See Lange v. Monster Energy Co.,
46 Cal. App. 5th 436, 452 (2020). The
2018 Agreement is one-sided, as it expressly allows arbitration to benefit
several potential parties, but prevents contractors from including other
contractors in an action by way of class, collective, or representative action.
·
Plaintiff’s representative PAGA claim should
proceed in court, or be stayed pending the outcome of the arbitration or the
California Supreme Court’s decision in Adolph v. Uber Technologies, Inc.,
Supreme Court Case No. S274671.
·
Challenges to the existence of a contract
as a whole must be determined by the court prior to ordering arbitration,
regardless of any delegation clause included in the arbitration agreement.
Sanford v. MemberWorks, Inc., 483 F.3d 956, 962 (9th Cir. 2007).
Tentative
Ruling
The motion is granted.
Plaintiff and Defendant shall arbitrate the
controversies between them, including the entire Complaint, in accordance with
their agreement to arbitrate.
This entire case is ordered dismissed forthwith.
Both subject agreements state harmoniously that the
first arbitration provision survives onward
(e.g., “DEFENDANT’S NOTICE OF ERRATA TO DECLARATION OF XIAO WEI CHEN IN
SUPPORT OF DEFENDANT HOMEAGLOW INC.’S MOTION TO COMPEL ARBITRATION OF
PLAINTIFF’S INDIVIDUAL PAGA CLAIM AND TO DISMISS THE NONINDIVIDUAL PAGA CLAIM”,
filed 2/17/23, ex. B., p. 4 (“Termination of this Agreement shall not affect
accrued rights or obligations of the parties. In addition, the provisions of
this Agreement related to Arbitration and Proprietary Rights shall survive
termination of this Agreement.”), and ex. D, p. 4 (same consistent provision)).
Opposing party’s opposition missed much applicable and
governing law about ascertaining superseding agreements, in an overly
generalized analysis. Whether
arbitration agreements are separate and independently enforceable depends upon
the particular contract language. Romo
v. Y-3 Holdings, Inc. (2001) 87
Cal.App.4th 1153, 1159 (fact that one section contemplates a signature separate
from one required in another section indicates separate agreements). An arbitration provision in a separate
agreement applies to another contract where it is closely connected in
purpose. Marsch v. Williams (1994) 23 Cal.App.4th 250, 256 (“Where, as
here, the parties have separate contractual relationships, which involve
separate enterprises and most importantly separate commercial risks, an
arbitration clause which governs one contractual relationship cannot be imposed
in the other relationship….”). For
ascertaining any agreement to terms of duration, courts consider express terms,
those implied from the nature and circumstances of the contract, and otherwise
generally construe agreements as being terminable at will. Zee Medical
Distrib. Ass'n v. Zee Medical (2000) 80 Cal. App. 4th 1, 10. "Essential to a novation is that it
‘clearly appear' that the parties intended to extinguish rather than merely
modify the original agreement." Howard
v. County of Amador (1990) 220 Cal. App. 3d 962, 977.
The subject arbitration agreements provide for the
arbitrator to decide enforceability. Parties
may agree that arbitrators have jurisdiction to decide whether arbitration
provisions are enforceable, but such language must so provide “‘clearly and
unmistakably.’” Parada v. Sup. Ct.
(2009) 176 Cal.App.4th 1554, 1566. JAMS
Rule 11 authorizes arbitrators to decide what issues are arbitrable. Greenspan v. LADT, LLC (2010) 185
Cal.App.4th 1413, 1442.
The arbitration provision is not unconscionable.
"[A] compulsory predispute arbitration agreement
is not rendered unenforceable just because it is required as a condition of
employment or offered on a 'take it or leave it' basis." Lagatree v. Luce, Forward, Hamilton &
Scripps (1999) 74 Cal. App. 4th 1105, 1127.
Accord Giuliano v. Inland Empire Personnel,
Inc. (2007) 149 Cal.App.4th 1276, 1292.
The arbitration provisions incorporate the Statute of
Limitations applicable by law, without any shortening of that. Distinguishably, an arbitration agreement
requiring the assertion of all claims within six months of the date the claim
arose, was an unconscionable provision. Martinez
v. Master Protection Corp. (2004) 118 Cal.App.4th 107, 117.
JAMS rules provide for adequate discovery. "‘[A]dequate’ discovery does not mean
unfettered discovery....'" Fitz
v. NCR Corp. (2004)118 Cal.App.4th 702, 715. An AAA provision allowing arbitrators to
control the extent of discovery did not constitute substantive
unconscionability. See Roman v. Sup. Ct. (2009) 172 Cal.App.4th 1462, 1476.
“[A]n otherwise enforceable agreement to arbitrate
need not contain an express waiver of the right to jury trial.”
O'Donoghue v. Sup. Ct.
(2013) 219 Cal.App.4th 245, 256-57.
Arbitration provisions worded to benefit others are
very commonly enforced. Intended
third-party beneficiaries may enforce arbitration provisions. Macaulay v. Norlander (1992) 12
Cal.App.4th 1, 7–8; Michaelis v.
Schori (1993) 20 Cal.App.4th 133, 139 (agreement expressly included arbitration
of claims as to signatory’s employees). Generally,
just signatories to arbitration agreements have standing to enforce them, with
exceptions as to nonsignatory persons
“who are agents or alter egos of a signatory party or intended third party
beneficiaries of an arbitration agreement.”
Bouton v. USAA Casualty Ins. Co. (2008) 167 Cal.App.4th 412,
424. Accord Smith v. Microskills San Diego L.P.
(2007) 153 Cal. App. 4th 892, 896.
The Iskanian opinion
correctly decided a PAGA waiver is unenforceable as to non-individual claims,
without any FAA preemption, but arbitration can be compelled as to individual
plaintiffs’ waived claims, and the remaining claims of representative actions
should be dismissed, due to lack of standing upon plaintiffs’ removal from the
action and into arbitration. Viking
River Cruises v. Moriana (2022)
142 S. Ct. 1906, 1924-25 (opinion after
granting petition for writ of certiorari to the Court of Appeal of
California). “The viability of
nonindividual PAGA claims after the individual claims are compelled to
arbitration is an open question for further exploration by California
courts.” Lewis v. Simplified Labor
Staffing Solutions, Inc. (2022) 85 Cal.App.5th 983, 1000 n. 8 (citing Gavriiloglou v. Prime Healthcare
Management, Inc. (2022) 83 Cal.App.5th 595 (arbitration of individual PAGA
claim does not preclude the employee from pursuing nonindividual PAGA claims.)) There is a rule against PAGA waivers and
predispute arbitration agreements, notwithstanding the Federal Arbitration
Act. Contreras v. Sup. Ct. (2021)
61 Cal.App.5th 461, 471-72.
See also Winns v.
Postmates Inc. (2021) 66 Cal. App. 5th 803, 815 n. 4 (California cases never overruled Iskanian,
although the Viking opinion was then anticipated to address Ikanian).
The Court exercises its
discretion to decide and not delay the ruling pending a related decision-- Adolph v. Uber Techs., Inc., No.
G059860, 2022 WL 1073583 (Cal. Ct. App. Apr. 11, 2022), rev. grt’d (July
20, 2022). A trial court would not abuse
discretion in delaying litigation pending an appeal of a case involving
the same issues. California Canning Mach.
Co. v. Sup. Ct. (1935) 3 Cal.2d 606, 608;
Reed v. Sup. Ct (2001) 92 Cal. App. 4th 448, 455.
Additionally, a case can be
dismissed on the grounds that all issues are susceptible to arbitration by
agreement and plaintiff did not attempt to exhaust arbitration. 24 Hour
Fitness, Inc. v. Sup. Ct. (1998) 66 Cal. App. 4th 1199, 1208; Charles J. Rounds Co. v. Joint Council of
Teamsters (1971) 4 Cal.3d 888, 899.
Finally, the Court is not
persuaded by the parties’ cites from other jurisdictions. California appellate courts are not bound to
follow decisions of lower federal courts.
People v. Sup. Ct. (2002) 103 Cal. App. 4th 409, 431. Trial court rulings are not binding
precedent. E.g., Schachter v.
Citigroup, Inc. (2005) 126 Cal.App.4th 726, 738. Rulings in other trial court cases are
irrelevant absent some additional showing like the elements of claim or issue
preclusion. Drummond v. Desmarais
(2009) 176 Cal.App.4th 439, 448.