Judge: Peter Wilson, Case: 2021-01212251, Date: 2022-09-08 Tentative Ruling
Defendants The Rados Companies and Steve P. Rados, Inc. (collectively, Defendants) seek an order compelling Plaintiff’s claims to individual binding arbitration, striking the class claims, and dismissing or staying the proceedings.
Evidentiary Objections:
Plaintiff’s objections (ROA 77) to the ROA 56, Rados Declaration and the collective bargaining agreement (CBA) attached as Exhibit A are OVERRULED as to Nos. 1-6 and SUSTAINED as to No. 7.
Relevant Authority. As the parties seeking arbitration, Defendants bear the burden of proving the existence of a valid arbitration agreement by a preponderance of the evidence and the party opposing arbitration bears the burden of proving any defense. (Mendoza v. Trans Valley Transport (2022) 75 Cal.App.5th 748, 764; Mitri v. Arnel Management Co. (2007) 157 Cal.App.4th 1164, 1169 [“Because the existence of the agreement is a statutory prerequisite to granting the petition, the petitioner bears the burden of proving its existence by a preponderance of the evidence” (italics in original)]; Rosenthal v. Great Western Fin. Securities Corp. (1996) 14 Cal.4th 394, 402 [before granting a petition to compel arbitration, a court must determine the factual issue of “the existence or validity of the arbitration agreement”]; 9 U.S.C. §2 [before referring dispute to arbitrator, court determines whether valid arbitration agreement exists].)
There are three steps to the burden of production. The moving party can meet its initial burden by “attaching to the [motion or] petition a copy of the arbitration agreement purporting to bear the [opposing party’s] signature” or by setting forth the agreement’s provisions in the motion.” (Gamboa v. Northeast Community Clinic (2021) 72 Cal.App.5th 158, 165, citing Bannister v. Marinidence Opco, LLC (2021) 64 Cal.App.5th 541, and Condee v. Longwood Management Corp. (2001) 88 Cal.App.4th 215, 219; see also Cal. R. Ct., rule 3.1330 [“The provisions must be stated verbatim or a copy must be physically or electronically attached to the petition and incorporated by reference.”].) At this initial step, it is not necessary to follow the normal procedures of document authentication. (Gamboa v. Northeast Community Clinic, supra, 72 Cal.App.5th at 165.)
If the moving party meets its initial burden and if the opposing party disputes the agreement, then in the second step, the opposing party bears the burden of producing evidence to challenge the authenticity of the agreement. (Gamboa v. Northeast Community Clinic, supra, 72 Cal.App.5th at 165.) The opposing party may meet his burden by testifying under oath or declaring under penalty of perjury “that the party never saw or does not remember seeing the agreement, or that the party never signed or does not remember signing the agreement.” (Id.)
If the opposing party meets his burden, then in the third step, the moving party “must establish with admissible evidence a valid arbitration agreement between the parties. The burden of proving the agreement by a preponderance of the evidence remains with the moving party.” (Id. at 165-166.)
Defendants Established the Existence of a Valid Arbitration Agreement. Defendants have presented the CBA as well as evidence that Plaintiff is subject to the CBA. ROA 56, Rados Decl., ¶¶1, 3-6 ad Exs. A. Section 9 of the CBA sets forth the “Grievance Procedure”, which consists of three steps: (1) the dispute is reported to the Individual Employer and/or Business Agent of the appropriate Local Union who attempts to adjust the grievance or dispute at the job site level; (2) if the grievance or dispute is not resolved, the next step is the permanent Board of Adjustment, which is composed of two members named by the Union, two members named by the Association and an Impartial Arbitrator; and (3) if, at any time, the panel is unable to reach a majority vote, the Arbitrator shall participate and his or her decision “shall be final and binding”. ROA 56, Ex. B. The Grievance Procedure applies to disputes concerning the “meaning, application of, or compliance” with the provisions of the CBA, disputes concerning the “interpretation or application of” the CBA, and “all claims and claims for associated penalties arising under … the California Labor Code, and Wage Order 16…” ROA 56, Ex. B, ¶¶7, 20. Additionally, “such claims may not be brought in a court of law or before any administrative agency such as the California Labor Commissioner”. ROA 56, Ex. B, ¶20. The CBA is modified by the Side Letter Statutory Claims and Memorandum of Understanding attached as Exhibits C and D, respectively, to the Rados Declaration.
Plaintiff objects to the authenticity and relevance of the CBA (ROA 77) but does not dispute the existence of the CBA, that he was aware of the CBA, that he filed a grievance against Defendants in accordance with the CBA, that he is part of a Local 185, or that he is not subject to the CBA. ROA 79, Opp., p. 4. Plaintiff does not present any evidence, including his own declaration, disputing any facts alleged in the Rados Declaration.
The Supplemental Rados Declaration dispels any doubts about the authenticity and application of the CBA and further supports the statements made in the initial Rados Declaration. Specifically, in the Supplemental Declaration, Rados explains he is a principal of Defendants, current Chief Financial officer and custodian of records for Rados’ personnel records and employment records (ROA 83, Supp. Rados Decl., ¶3); that Plaintiff was dispatched to Defendants as a laborer by Local 185, which is the Construction & General Laborers Division of the Northern California District Council of Laborers (id. at ¶¶2-3); that Plaintiff worked on a project for Defendants in Carmichael, California [in Sacramento County] (id. at ¶3 and Ex. E); and that the Northern California District Council of Laborers submitted a grievance on Plaintiff’s behalf. Id. at ¶4 and Ex. F. These facts and evidence are consistent with the initial Rados Declaration.
The CBA Requires Arbitration of Plaintiff’s Individual Claims. The right to arbitration is a matter of contractual consent and depends on whether an agreement to arbitrate exists. (Code Civ. Proc., § 1281.2.) Fundamental to this inquiry is whether the parties have agreed to arbitrate the dispute under consideration. (Cortez v. Doty Bros. Equipment Co. (2017) 15 Cal.App.5th 1, 11 (Cortez).) A party cannot be required to submit to arbitration a dispute he has not agreed to submit. (Pinnacle Museum Tower Assn. v. Pinnacle Market Development (US), LLC (2012) 55 Cal.4th 223, 236.) In determining whether an agreement to arbitrate covers the parties’ dispute, courts apply state contract law while giving due regard to the federal policy favoring arbitration. (Id. at p. 236.)
The contract under consideration here is a CBA. A CBA is an agreement between an employer and a union and may be construed to waive the rights of union members (i.e., employees) even without explicit, individual consent of each member. (Rymel v. Save Mart Supermarkets, Inc. (2018) 30 Cal.App.5th 853, 859.)
In general, “when a CBA includes an arbitration provision, contractual matters under a CBA are presumed arbitrable; that is, arbitration must be granted as long as the CBA is reasonably susceptible to an interpretation in favor of arbitration. [Citation.] [¶] However, the presumption of arbitration in a CBA does not apply to statutory violations. [Citations.]” (Cortez, supra, 15 Cal.App.5th at pp. 11–12.) A waiver of an employee’s right to pursue statutory claims in a judicial forum must be clear and unmistakable. (Wright v. Universal Mar. Serv. Corp. (1998) 525 U.S. 70, 79-81 [any CBA requirement that an employee arbitrate statutory claims must “clear and unmistakable”; thus, general arbitration provision in a CBA relating to contractual disputes that the parties intended to require arbitration of statutory violations or waive the employee's right to pursue statutory remedies in a judicial forum is insufficient]; Penn Plaza LLC v. Pyett (2009) 556 U.S. 247, 258 [the agreement to arbitrate statutory claims must be “explicitly stated” in the CBA]; Vasquez v. Sup. Ct. (2000) 80 Cal.App.4th 430, 434 [to determine if there is an explicit waiver, courts look to the generality of the arbitration clause, explicit incorporation of statutory requirements, and the inclusion of specific statutory provisions; “The test is whether a collective bargaining agreement makes compliance with the statute a contractual commitment subject to the arbitration clause.”].)
Contrary to Defendants’ arguments, Plaintiff alleges statutory violations not contractual claims. All of Plaintiff’s claims in the operative First Amended Complaint are based on violations of the Labor Code. Plaintiff alleges failure to pay overtime wages under Labor Code §§ 510, 1194 and 1199 as well as applicable Wage Orders (FAC, ¶¶38, 42), failure to pay minimum wages under Labor Code §§ 1197, 1199 and applicable Wage Orders (FAC, ¶¶45, 46), failure to provide meal periods under Labor Code §§ 512, 226.7 and applicable Wage Orders (FAC, ¶¶51, 53, 55), failure to provide rest periods under Labor Code §§ 226.7 and the applicable Wage Order (FAC, ¶¶61, 63, 65), failure to pay all wages due upon termination under Labor Code §§ 201, 202, 203 and applicable Wage Orders (FAC, ¶¶67, 68, 71), failure to provide accurate wage statements under Labor Code § 226 and applicable Wage Orders (FAC, ¶75), failure to timely pay wages during employment under Labor Code §204 and applicable Wage Orders (FAC, ¶¶83, 84), indemnification of business expenses under Labor Code § 2802 and applicable Wage Orders (FAC, ¶90), unfair competition under Bus. & Prof. Code §§ 17200 et seq. based on the forgoing violations of the Labor Code (FAC, ¶97), and PAGA (FAC, ¶¶102-130).
Thus, presumption for arbitration does not apply. Plaintiff will only be compelled to arbitrate if the waiver is clear and unmistakable.
In Cortez, the CBAs provided: “The parties to this Agreement recognize Industrial Wage Order 16-2001 covering On Site Construction, Mining, Drilling, and Logging Industries. Any dispute or grievance arising from this Wage Order shall be processed under and in accordance with Article V, Procedure for Settlement of Grievances and disputes of this agreement.” (Cortez, supra, 15 Cal. App. 5th at 6.)
Although the Labor Code was not expressly mentioned in the CBA, the Cortez court found the agreement to arbitrate claims “arising under” Wage Order 16 was “clear and unmistakable”, and recognized the reality that an employee may enforce the protections of the Wage Order only by bringing a claim under the Labor Code. (Cortez, supra, 16 Cal.App.5th at 14.) As such, the Cortez court found that plaintiff’s claims for overtime pay, meal and rest break violations, and violation of reporting and record keeping arise under Wage Order 16 and are within the CBA’s provisions compelling arbitration. (Id. at 15.)
Here, the CBA, as modified, expressly subjects “all claims and claims for associated penalties arising under the … California Labor Code, and Wage Order 16” to the Grievance Procedure in Section 9 and prohibits such claims from being brought in a court of law or administrative proceeding. See ROA 56, Exs. A and B, §9.20, Ex. C [Side Letter]; and Ex. D [MOU]. This is even broader than the language in the CBA in Cortez. Unlike in Cortez, the CBA, as modified, in this case expressly incorporates the California Labor Code and Wage Order 16. Therefore, the agreement to arbitrate these claims is just as “clear and mistakable” as in Cortez.
The Court GRANTS the Motion to Compel arbitration in accordance with Grievance Procedure in the CBA.
The Class Claims Should Be Stricken. “Absent language in the arbitration provision itself or extrinsic evidence establishing the parties’ agreement to arbitrate classwide claims, only individual claims may be arbitrated.” (Cortez, supra, 15 Cal.App.5th at 15.)
There is no specific language in the CBA that permits arbitration of class claims and Plaintiff has not pointed to any such language. The Court GRANTS the Motion to strike the class claims.
Labor Code § 2699.6 Does Not Presently Bar Plaintiff’s PAGA Claims. Labor Code § 2699.6 is “an exception to the rule prohibiting contractual waivers of PAGA suits” that applies to the construction industry if certain requirements are met. (Oswald v. Murray Plumbing and Heating Corporation (Sept. 2, 2022) WL 2008088, at *2; Cal. Labor Code § 2699.6(a).)
Among other things, Labor Code § 2699.6 requires the CBA to provide a “regular hourly pay rate of not less than 30 percent more than the state minimum wage rate” and prohibit “all of the violations of this code that would be redressable pursuant to this part, and provides for a grievance and binding arbitration procedure to redress those violations”. But the CBA without more does not satisfy all these requirements, as it is unclear whether employees “receive a regular hourly pay rate of not less than 30 percent more than the state minimum wage rate” because the actual rates after 2018 are not provided for the CBA. See ROA 56, Ex. A, Supplement No. 1 Laborers Wage Rates.
Accordingly, Plaintiff’s PAGA claims are not presently barred.
Based on the foregoing, the PAGA claims are STAYED pending completion of the grievance procedure in the CBA. (Code Civ. Proc. § 1281.4)
The September 8, 2022 status conference is continued to March 24, 2023 at 9:00 a.m., and the parties are Ordered to file a joint status report not later than March 17, 2023.
Defendants are ordered to give notice.