Judge: Mark A. Young, Case: 20SMCV00508, Date: 2022-10-18 Tentative Ruling
Case Number: 20SMCV00508 Hearing Date: October 18, 2022 Dept: M
CASE NAME: Iniguez v. Benihana Marina Corp.
CASE NO.: 20SMCV00508
MOTION: Petition/Motion to Compel Arbitration
HEARING DATE: 10/18/2022
BACKGROUND
On March 30, 2020, Plaintiff Sheila Iñiguez filed the instant Private Attorneys General Act (“PAGA”) action against Defendant Benihana Marina Corp. The operative First Amended Complaint (“FAC”) states three causes of action based on PAGA for: 1) Unlawful Deduction of Tips; 2) Failure to Reimburse All Necessary Business Expenditures; and 3) Failure to Provide Sick Leave. (Labor Code, §§ 246, & 247, 351, 2802.) Plaintiff alleges that she worked for Defendant at their Santa Monica location from May 2019 through approximately December 2019. Defendant violated the above Labor Code sections by improperly deducting tips, failing to reimburse employees for necessary business expenditures, and by failing to provide sick leave.
On September 21, 2022, Defendant filed the instant motion to compel arbitration of Plaintiff’s individual PAGA claim, and to dismiss all non-individual PAGA claims. Defendant further requests that Plaintiff return or destroy all copies of the aggrieved employee class list. Plaintiff opposes.
Legal Standard
Under California and federal law, public policy favors arbitration as an efficient and less expensive means of resolving private disputes. (Moncharsh v. Heily & Blase (1992) 3 Cal.4th 1, 8-9; AT&T Mobility LLC v. Concepcion (2011) 563 U.S. 333, 339.) Accordingly, whether an agreement is governed by the California Arbitration Act (“CAA”) or the Federal Arbitration Act (“FAA”), courts resolve doubts about an arbitration agreement’s scope in favor of arbitration. (Moncharsh, supra, 3 Cal.4th at 9; Comedy Club, Inc. v. Improv West Assocs. (9th Cir. 2009) 553 F.3d 1277, 1284; see also Engalla v. Permanente Med. Grp., Inc. (1997) 15 Cal.4th 951, 971-972 [“California law incorporates many of the basic policy objectives contained in the Federal Arbitration Act, including a presumption in favor of arbitrability [citation] and a requirement that an arbitration agreement must be enforced on the basis of state law standards that apply to contracts in general”].) “[U]nder 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. Superior Crout (2006) 140 Cal.App.4th 1238, 1247.)
“Code of Civil Procedure section 1281.2 requires a trial court to grant a petition to compel arbitration if the court determines that an agreement to arbitrate the controversy exists.” (Avery v. Integrated Healthcare Holdings, Inc. (2013) 218 Cal.App.4th 50, 59, quotations omitted.) Accordingly, “when presented with a petition to compel arbitration, the court’s first task is to determine whether the parties have in fact agreed to arbitrate the dispute.” (Ibid.) A petition to compel arbitration is in essence a suit in equity to compel specific performance of a contract. (Id. at 71.) As with any other specific performance claim, “a party seeking to enforce an arbitration agreement must show the agreement’s terms are sufficiently definite to enable the court to know what it is to enforce.” (Ibid. [internal citations omitted].) “Only the valid and binding agreement of the parties, including all material terms well-defined and clearly expressed, may be ordered specifically performed.” (Ibid.) An arbitration agreement “must be so interpreted as to give effect to the mutual intention of the parties as it existed at the time of contracting, so far as the same is ascertainable and lawful.” (Civ. Code, § 1636.) The language of the contract governs its interpretation if it is clear and explicit. (Civ. Code, § 1368.) If uncertainty exists, “the language of a contract should be interpreted most strongly against the party who caused the uncertainty to exist.” (Civ. Code, § 1654.)
The party seeking to compel arbitration bears the burden of proving the existence of a valid arbitration agreement by the preponderance of the evidence. (Engalla v. Permanente Medical Group, Inc. (1997) 15 Cal.4th 951, 972.) It would then be plaintiff’s burden, in opposing the motion, to prove by a preponderance of the evidence any fact necessary to her opposition. (See Ibid.) “In these summary proceedings, the trial court sits as a trier of fact, weighing all the affidavits, declarations, and other documentary evidence, as well as oral testimony received at the court’s discretion, to reach a final determination.” (Ibid.)
Analysis
There is no reasonable dispute that there is an arbitration agreement that covers Plaintiff’s claims. On May 14, 2019, Plaintiff entered into the Agreement. (Cintado Decl., ¶ 7, Ex. A.) In the Agreement, Plaintiff expressly agreed to arbitrate “any dispute arising out of or related to [her] employment with Benihana or the termination of [her] employment, regardless of when [her] claims accrue.” The Agreement included a class action waiver:
“This Agreement prevents you from bringing class, collective or private attorney general representative actions. Both Benihana and you agree to bring any dispute in arbitration on an individual basis only, and not on a class, collective, or private attorney general representative action basis on behalf of others. There will be no right or authority for any dispute to be brought, heard or arbitrated as a class, collective, or private attorney general representative action, or as a member in any such class, collective, private attorney representative action, including actions under the California Labor Code Private Attorneys General Action of 2004 (“Class Action Waiver”)
Defendant brings this motion following the recent U.S. Supreme Court decision in Viking River Cruises, Inc. v. Moriana (2022) 142 S.Ct. 1906, which overturned the prior California rule prohibiting the separation of PAGA claims into individual and representative claims for purposes of arbitration. (See Iskanian v. CLS Transportation Los Angeles, LLC (2014) 59 Cal.4th 348, 383-84.) Under the previous rule, an employee’s individual PAGA claims were not arbitrable even if the parties had agreed to arbitrate individual claims. The defendant-employer in Iskanian had attempted to argue that “the arbitration agreement at issue here prohibits only representative claims, not individual PAGA claims for Labor Code violations that an employee suffered.” (Iskanian, supra, 59 Cal.4th at 383.) Rejecting this, the California Supreme Court held that such a separation “frustrates the PAGA's objectives” because “a single-claimant arbitration under the PAGA for individual penalties will not result in the penalties contemplated under the PAGA to punish and deter employer practices that violate the rights of numerous employees under the Labor Code.” (Id. at 384.) Viking River has overruled Iskanian “insofar as it precludes division of PAGA actions into individual and non-individual claims through an agreement to arbitrate.” (Viking River, supra, 142 S.Ct. at 1924.)
Plaintiff’s remaining non-individual claims are not subject to arbitration. Viking River held that a plaintiff loses standing to assert a non-individual PAGA claim once her own individual claims are compelled to arbitration. (Viking River, supra, 142 S.Ct. at 1925.) The Supreme Court directly addressed what “should have been done” with the plaintiff’s non-individual claims:
[A]s we see it, PAGA provides no mechanism to enable a court to adjudicate non-individual PAGA claims once an individual claim has been committed to a separate proceeding. Under PAGA's standing requirement, a plaintiff can maintain non-individual PAGA claims in an action only by virtue of also maintaining an individual claim in that action. See Cal. Lab. Code Ann. §§ 2699(a), (c). When an employee's own dispute is pared away from a PAGA action, the employee is no different from a member of the general public, and PAGA does not allow such persons to maintain suit. [Citation.] As a result, Moriana lacks statutory standing to continue to maintain her non-individual claims in court, and the correct course is to dismiss her remaining claims.
(Id., at 1927.)
The Court further found the “contractual division of PAGA actions into constituent claims unduly circumscribes the freedom of parties to determine the issues subject to arbitration and the rules by which they will arbitrate . . . and does so in a way that violates the fundamental principle that arbitration is a matter of consent.” (Viking River, supra, 142 S.Ct. at p. 1923, internal citations omitted.) According to the U.S. Supreme Court, Iskanian’s rule was improper because it coerced parties to litigate all PAGA claims even where the parties agreed to arbitrate claims arising out of Labor Code violations suffered by a plaintiff. (Id. at 1924.) Plaintiff’s individual PAGA claims would have been indivisible from the representative claims, thus preventing arbitration entirely. Following Viking River, this division is now permitted and the agreement to arbitrate Plaintiff’s individual claims must be enforced.
Defendant insists that Plaintiff must destroy or return the “Confidential Worker List” within thirty days. Defendant cites the Protective Order, which states “(30) days after the settlement or other termination of the Proceeding, the undersigned Parties shall have thirty (30) days to either…(b) agree with counsel for the Designating Party upon appropriate methods and certification of destruction or other disposition of such Confidential Materials…”. (See Protective Order, para. 21, emphasis added.) Defendant asserts that the granting of arbitration and dismissal of her individual claims would result in the termination of the Proceeding. However, the Proceeding will not terminate. Instead, some claims will be dismissed, and the remainder will be stayed pending the outcome of arbitration. Thus, the arbitration is not a “termination of these proceedings” as defined by the Protective Order, such that Plaintiff would be required to destroy or turn over the aggrieved employee list.
Accordingly, Defendant’s motion is GRANTED. Plaintiff’s individual claims are ordered to arbitration. Plaintiff’s remaining non-individual PAGA claims are dismissed due to lack of standing.