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.



Notice:  Okay



MP:  Defendant

RP:  Plaintiff





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·         When Plaintiff accepted the 2022 Agreement, the 2022 Agreement superseded the 2018 Agreement.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.