Judge: Mark V. Mooney, Case: 20STCV04836, Date: 2022-10-25 Tentative Ruling


Case Number: 20STCV04836    Hearing Date: October 25, 2022    Dept: 68

Manuel Reyes v. Aerotek, Inc., Case No. 20STCV04836

Tentative Ruling:

Defendant’s Motion to Compel Arbitration

Background

On February 6, 2020, Plaintiff filed this action. The current iteration of Plaintiff’s complaint is a Third Amended Complaint for Damages filed on September 16, 2020. This complaint asserts the following cause of action: 

1.      Private Attorneys General Act

On March 2, 2022, Defendant filed a motion to compel individual arbitration and dismiss representative claims. Plaintiff opposed this motion. On April 1, 2022, this Court held a hearing on the motion and stayed the case in its entirety pending resolution of the U.S. Supreme Court case Viking River Cruises. On July 25, 2022, Defendant filed a notice of new authority regarding the motion to compel individual arbitration and dismiss representative claims, as the Viking River Cruises decision had been released. Plaintiff filed his opposition on August 1, 2022. Defendant replied on August 11, 2022. 

Defendant Dispensing Dynamics International, Inc., joins the motions of Defendant Aerotek, Inc. 

Discussion

            I. Motion to Compel Arbitration

Defendant has moved to compel arbitration as to Plaintiffs’ individual PAGA claims. (Motion at p. 2.) 

The following describes the legal standard on motion to compel arbitration. California law incorporates many of the basic policy objectives contained in the Federal Arbitration Act, including a presumption in favor of arbitrability. (Engalla v. Permanente Medical Group, Inc. (1997) 15 Cal.4th 951, 971-972.) The petitioner bears the burden of proving the existence of a valid arbitration agreement by the 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.) The Court is empowered by Code of Civil Procedure section 1281.2 to compel parties to arbitrate disputes pursuant to an agreement to do so.  

Code of Civil Procedure § 1281.2 states that:

“The court shall order the petitioner and the respondent to arbitrate the controversy if it determines that an agreement to arbitrate the controversy exists, unless it determines that:

(a) The right to compel arbitration has been waived by the petitioner; or

(b) Grounds exist for the revocation of the agreement.             

(c) A party to the arbitration agreement is also a party to a pending court action or special proceeding with a third party, arising out of the same transaction or series of related transactions and there is a possibility of conflicting rulings on a common issue of law or fact. For purposes of this section, a pending court action or special proceeding includes an action or proceeding initiated by the party refusing to arbitrate after the petition to compel arbitration has been filed, but on or before the date of the hearing on the petition. This subdivision shall not be applicable to an agreement to arbitrate disputes as to the professional negligence of a health care provider made pursuant to Section 1295.” (Code Civ. Proc., § 1281.2.) 

The party petitioning to compel arbitration under a written arbitration agreement bears the burden of proving the existence of a valid arbitration agreement by a preponderance of the evidence, and party opposing petition must meet the same evidentiary burden to prove any facts necessary to its defense. The trial court acts as the trier of fact, weighing all the affidavits, declarations, and other documentary evidence. (Code Civ. Proc., § 1281.2; Provencio v. WMA Securities, Inc., 125 Cal.App.4th 1028, 1031.) 

A.    Existence of an Agreement

Under 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 party moving to compel arbitration must establish the existence of a written arbitration agreement between the parties. (Code of Civ. Proc. § 1281.2.) In ruling on a motion to compel arbitration, the court must first determine whether the parties actually agreed to arbitrate the dispute, and general principles of California contract law help guide the court in making this determination. (Mendez v. Mid-Wilshire Health Care Center (2013) 220 Cal.App.4th 534, 541.)

Once petitioners allege that an arbitration agreement exists, the burden shifts to respondents to prove the falsity of the purported agreement, and no evidence or authentication is required to find the arbitration agreement exists. (See Condee v. Longwood Mgt. Corp. (2001) 88 Cal.App.4th 215, 219.) However, if the existence of the agreement is challenged, “petitioner bears the burden of proving [the arbitration agreement’s] existence by a preponderance of the evidence.” (Rosenthal v. Great Western Fin. Securities Corp. (1996) 14 Cal.4th 394, 413. See also Espejo v. Southern California Permanente Medical Group (2016) 246 Cal.App.4th 1047, 1058-1060.) 

“With respect to the moving party’s burden to provide evidence of the existence of an agreement to arbitrate, it is generally sufficient for that party to present a copy of the contract to the court. (See Condee v. Longwood Management Corp. (2001) 88 Cal.App.4th 215, 218); see also Cal. Rules of Court, rule 3.1330 [“A petition to compel arbitration or to stay proceedings pursuant to Code of Civil Procedure sections 1281.2 and 1281.4 must state, in addition to other required allegations, the provisions of the written agreement and the paragraph that provides for arbitration. The provisions must be stated verbatim or a copy must be physically or electronically attached to the petition and incorporated by reference”].) Once such a document is presented to the court, the burden shifts to the party opposing the motion to compel, who may present any challenges to the enforcement of the agreement and evidence in support of those challenges. [Citation]” (Baker v. Italian Maple Holdings, LLC (2017) 13 Cal.App.5th 1152, 1160.) 

Here, Defendant has met its initial burden of showing that an arbitration agreement exists with Plaintiff. (Ramirez Decl., ¶ 10; Ex. B.) The arbitration agreement provided by Defendant contains a signature from Plaintiff.

            Plaintiff does not dispute the existence of the arbitration agreement or that he signed the agreement, or even the enforceability of the agreement. Instead, Plaintiff argues that Defendants have waived their right to compel arbitration by delaying their filing of this motion for two years. (Opposition at pp. 5-6.)

            Based on the foregoing, because Defendant has proven the existence of the arbitration agreement, the Court proceeds to analyze whether the arbitration agreement has been waived.

B.     Waiver of the Agreement

Plaintiff argued in its opposition to Defendant’s original motion to compel arbitration that the arbitration agreements should not be enforced because Defendants have waived their right to compel arbitration. (Opposition at pp. 5-6.) Plaintiff did not include this argument in its later opposition, but the Court will briefly address it.

            The Court must consider the following factors when addressing waiver of an arbitration agreement: “(1) whether the party’s actions are inconsistent with the right to arbitrate; (2) whether the litigation machinery has been substantially invoked and the parties were well into preparation of a lawsuit before the party notified the opposing party of an intent to arbitrate; (3) whether a party either requested arbitration enforcement close to the trial date or delayed for a long period before seeking a stay; (4) whether a defendant seeking arbitration filed a counterclaim without asking for a stay of the proceedings; (5) whether important intervening steps [e.g., taking advantage of judicial discovery procedures not available in arbitration] had taken place; and (6) whether the delay affected, misled, or prejudiced the opposing party.” (Iskanian v. CLS Transportation Los Angeles, LLC (2014) 59 Cal.4th 348, 375 [citation and internal quotation marks omitted].) The California Supreme Court has found that “waivers are not to be lightly inferred and the party seeking to establish a waiver bears a heavy burden of proof,” and that the “fact that the party petitioning for arbitration has participated in litigation, short of a determination on the merits, does not by itself constitute a waiver.” (Id.)

            Here, Defendant filed its motion once the U.S. Supreme Court granted certiorari in Viking River Cruises. (Reply at pp. 3-4.) Prior to this, Defendant argues that it would have been illogical to file the motion because it was not known whether the Federal Arbitration Act preempted Iskanian. (Reply at pp. 3-4.) Defendant contends that it filed the motion to compel arbitration as soon as it was practicable, so its actions were not inconsistent with the right to arbitrate. Defendant also argues that because it engaged in no motions or discovery after certiorari was granted in Viking River Cruises, then the litigation machinery was not substantially invoked. (Reply at p. 5.) Further, Defendant did not wait to request arbitration enforcement close to a trial date, nor did Defendant file a counterclaim against Plaintiff. (Reply at pp. 5-6.)

            Defendant also argues that no intervening steps, such as discovery, have taken place since certiorari in Viking River Cruises (Reply at p. 6), and that prior to that, merely participating in litigation and discovery without prejudice to the opposing party does not compel a finding of waiver. (Sobremonte v. Superior Court (1998) 61 Cal.App.4th 980, 995.) Finally, Defendant contends that any purported delay has not prejudiced the Plaintiff. (Reply at pp. 7-8.)

            The Court finds Defendant’s reasoning compelling. Plaintiff failed to meet his heavy burden demonstrating that Defendant waived arbitration; therefore, Defendant’s behavior did not constitute a waiver.

                        C.  Conclusion

Accordingly, Plaintiff’s arguments that Defendants have waived their right to arbitration are unpersuasive. Therefore, Defendants’ motion to compel arbitration as to Plaintiff’s individual PAGA claims is granted.

            II. Motion to Dismiss Plaintiff’s Complaints

            Defendants have requested that the Court dismiss Plaintiff’s representative PAGA claims based on the recent U.S. Supreme Court (SCOTUS) ruling in Viking River Cruises, Inc. v. Moriana. Plaintiff, in opposition, has asked the Court to find that he retains his standing for representative PAGA claims and that the action on the representative claims should be stayed pending the resolution of Plaintiff’s individual claims.

               A. Representative PAGA Claims

            Defendants’ request to dismiss Plaintiff’s representative PAGA claims is based on the Supreme Court’s ruling in Viking River Cruises, Inc. v. Moriana. In that case, SCOTUS found that “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.” (Viking River Cruises, Inc. v. Moriana (2022) 142 S.Ct. 1906, 1925.) Defendant maintains that because Plaintiff’s individual matters have been pared away as separate arbitration proceedings, then he can no longer maintain his causes of action for representative PAGA claims.

            Defendant asserts that this comes down to a matter of preemption. (Reply at p. 4.) Because the state statute, PAGA, conflicts with the FAA, then SCOTUS has the final say on what happens. (See Perry v. Thomas (1987) 482 U.S. 483, 492-493.) While this is typically true, in J. Sotomayor’s concurrence to the majority opinion, she observes that SCOTUS came to its conclusion based on its understanding of California law and guidance from California state courts. (Viking River Cruises, supra, 142 S.Ct. at 1925.) She further reasons that California courts, in an appropriate case, could have the last word, or the California legislature could modify the statutory standing under PAGA within state and federal constitutional limits. (Id. at 1925-1926.)

            The question of whether or not an individual whose individual PAGA claims have been arbitrated to conclusion may continue to assert  representative PAGA claims is a question of state law standing.  Standing for an employee to bring an claim under PAGA representing the state is created by statute.  Hence, the Court deems it appropriate to await the California Supreme Court’s ruling that may determine the standing of an employee whose claims have already been adjudicated in a different forum.  (See Giviiloglou v. Prime Healthcare Management, Inc. (2022) 83 Cal.App.5th 595 where the court held that an employee who had lost its labor claims in arbitration was nevertheless entitled to pursue her PAGA claims as an “aggrieved employee” in her Superior Court litigation.) 

               B. Plaintiff’s Request for a Stay 

Plaintiff has requested that this Court issue a stay on the matter of his representative PAGA claims pending the resolution of Plaintiff’s individual PAGA claims. (Aug. 1 Opposition at p. 10.) Currently, some courts are staying decisions on representative PAGA claims until the California Supreme Court’s decision in Adolph v. Uber Technologies, S274671. Dismissing Plaintiff’s representative PAGA claims prior to a decision in Adolph may lead to unnecessary litigation. 

Accordingly, this Court defers its decision on a dismissal of Plaintiff’s representative PAGA claims until resolution of Plaintiff’s individual PAGA claims or until the California Supreme Court’s decision in Adolph, whichever comes first.

Conclusion

Defendants’ motion to compel arbitration as to the individual PAGA claims is GRANTED.

The case is STAYED pending arbitration of those matters. (Code Civ. Proc. §§ 1281.4, 1292.6.)

The Court defers its decision on Defendants’ motion to dismiss Plaintiff’s representative PAGA claims until resolution of Plaintiff’s individual PAGA claims or until the California Supreme Court’s decision in Adolph, whichever comes first.