Judge Peter Wilson, Case 2022-01292199 2023-08-24 Tentative Ruling

Judge: Peter Wilson, Case: 2022-01292199, Date: 2023-08-24 Tentative Ruling

Defendant SAS Retail Services, LLC (Defendant) filed separate motions to compelling Plaintiffs Epiphany Seaman (ROAs 25, 27, 33, 34, 35) and Courtney Rose (ROAs 29, 31, 39, 40, 41) (collectively, Plaintiffs) to binding arbitration of their individual PAGA claims, and to dismiss or alternatively stay the non-individual PAGA claims. As the Motions, Oppositions (ROA 52 and 54) and Reply briefs (ROA 59 and 61) are substantially similar, this analysis and ruling is applicable to both Motions.

For the reasons below, the Motions are GRANTED, with Plaintiffs individual PAGA claims ordered to arbitration and the non-individual PAGA claims stayed pending arbitration.

The Court GRANTS Defendant’s Requests for Judicial Notice (ROA 25 and 29) in connection with both Motions.

Defendant has satisfied its initial burden of demonstrating that Plaintiffs entered into written arbitration agreements. (Rosenthal v. Great Western Fin. Securities Corp. (1996) 14 Cal.394, 413; Engalla v. Permanente Medical Group, Inc. (1997) 15 Cal.4^th 951, 972.)

Defendant presents a stand-alone four-page document entitled “Arbitration Agreement Acknowledgment”, which Plaintiff Seaman agreed to by electronically checking the box next to “I agree”. ROA 34, Beros Decl., ¶17-20 and Ex. B. The Seaman Arbitration Agreement encompasses “all claims or controversies” between Plaintiffs and Advantage Sales & Marketing LLC, its parents, subsidiaries and affiliated entities, including but not limited to Daymon Worldwide, Inc. including, but not limited to, “all statutory, contractual and/or common law claims including, but not limited to, claims arising under … the California Labor Code; … and other federal, state and local employment laws.” ROA 34, Ex. B, p. SAS000018.

Similarly, Defendant presents a stand-alone three-page document entitled “Arbitration Agreement” to which Plaintiff Rose agreed. ROA 34, Beros Decl., ¶¶16-20 and Exs. A and B. The Rose Arbitration Agreement encompasses “any dispute arising out of or related to your [Plaintiff Rose] employment with the Company [Daymon Worldwide Inc. and any of its subsidiaries, including but not limited to Defendant]” and “applies, without limitation, to disputes with any entity or individual arising out of or related to … the employment relationship or the termination of that relationship, … compensation, classification, minimum wage, seating, expense reimbursement, overtime, break and rest periods, termination, … statute statutes or regulations addressing the same or similar matters and all other federal or state legal claims arising out of or relating to your employment or the termination of employment (including, without limitation, torts and post-employment defamation or retaliation).” ROA 40, Ex. B, §1, pp. 1-2.

Defendant presents evidence that it is a wholly-owned subsidiary of Daymon Worldwide, Inc., which is an affiliated company of Advantage. ROA 34 and 40, Beros Decl., ¶5. As such, Defendant may enforce the respective arbitration agreements against Plaintiffs.

Further, Defendant has met its burden of demonstrating the Federal Arbitration Act (FAA) applies. (Woolls v. Superior Court (2005) 127 Cal.App.4^th 197, 214.) The express language of the Arbitration Agreement requires application of the FAA. ROA 34, Ex. B, p. SAS000018; ROA 40, Ex. B, §1, p. 1.

Plaintiffs do not dispute that that they agreed to the respective Arbitration Agreements or that the FAA applies.

However, Plaintiffs contend the Seaman Arbitration Agreement “constitutes a wholesale waiver of Plaintiff’s ability to bring a PAGA representative action”, which is illegal and therefore, the Motion should be denied. ROA 52, Opp., p. 1. As for the Rose Arbitration Agreement, Plaintiffs contends that it contains a PAGA carve-out that excludes all PAGA claims from the scope of the Rose Arbitration Agreement, and as such, the Motion should be denied. ROA 54, Opp., p. 1.

Alternatively, and at the very least, Plaintiffs argue that the non-individual PAGA claims should be stayed (and not dismissed) pending completion of the individual PAGA claims. ROA 52, Opp., p. 1; ROA 54, Opp., p. 1.

The Court disagrees that the Seaman Arbitration Agreement provides for a wholesale waiver of all PAGA claims. Although the Arbitration Agreement permits only individual claims and prohibits class or collective actions (ROA 34, Ex. B, p. SAS000019), the Arbitration Agreement also expressly states that it does not apply to “[c]laims which under the law (after application of the Federal Arbitration Act preemption principles) cannot be compelled to arbitration.” ROA 34, Ex. B, p. SAS000018. Moreover, the Seaman Arbitration Agreement contains a severability clause: “If any part of this Agreement is found to be void or unenforceable, that part will be severed and eliminated, and the rest of this Agreement will remain in full force, so that the parties’ mutual desire to create a binding agreement to arbitrate will be fulfilled.” Id. at SAS000019.

It is undisputed that pursuant to Iskanian v. CLS Transportation Los Angeles, LLC (2014) 59 Cal.4^th 348 and confirmed in Viking River Cruises, Inc. v. Moriana (2022) 143 S.Ct. 1906 (Viking River), PAGA waivers are invalid insofar as the agreement attempts to waive the non-individual PAGA claims. (142 S. Ct. at 1923-1926.) However, plaintiffs may be required to arbitrate their individual PAGA claims, i.e. claims for Labor Code violations actually suffered by the plaintiff, provided that the individual PAGA claims can be severed from the PAGA waiver as set forth in Viking River. (Id. at 1923-1924. See also, Piplack v. In-N-Out Burgers (2023) 88 Cal.App.5^th 1281, review filed (Apr. 17, 2023.)

As noted, the Seaman Arbitration Agreement expressly excludes from arbitration claims that cannot be compelled to arbitration, and contains a severability provision. As under the law the non-individual PAGA claims cannot be waived, and as necessary the severability provision may also be used to exclude the representative/non-individual PAGA claims from the PAGA waiver, Plaintiff Seaman is ordered to arbitrate her individual PAGA claims.

The class and collective action waiver in the Rose Arbitration Agreement excludes PAGA “representative actions” and provides:

Private attorney general representative actions under the California Labor Code are not arbitrable, not within the scope of this Agreement and may be maintained in a court of law. However, this Agreement affects your ability to participate in class, collective or representative actions. Both the Company and you agree to bring any dispute in arbitration on an individual basis only, and not on a class or collective basis on behalf of others. There will be no right or authority for any dispute to be brought, heard or arbitrated as a class or collective action, or as a member in any such class or collective proceeding any other provision of this Agreement or the JAMS Rules, disputes in court or arbitration regarding the validity, enforceability or breach of the Class Action Waiver may be resolved only by the court and not by an arbitrator. In any case in which (1) the dispute is filed as a class or collective action and (2) there is a final judicial determination that all or part of the Class Action Waiver is unenforceable, the class and/or collective action to that extent must be litigated in a civil court of competent jurisdiction, but the portion of the Class Action Waiver that is enforceable shall be enforced in arbitration. You will not be retaliated against, disciplined or threatened with discipline as a result of your filing of or participation in a class or collective action in any forum. However, the Company may lawfully seek enforcement of this Agreement and the Class Action Waiver under the Federal Arbitration Act and seek dismissal of such class or collective actions or claims. The Class Action Waiver shall be severable in any case in which the dispute is filed as an individual action and severance is necessary to ensure that the individual action proceeds in arbitration.

ROA 40, Ex. B, §2, p. 3.

Although Plaintiff is correct that all PAGA claims are representative, as explained by the Fourth District Court of Appeals, Division 3 in Piplack v. In-N-Out Burgers, supra, after Viking River, the meaning of the phrase “private attorney general action” is “properly understood as a combination of two claims: an ‘individual’ claim, arising from the Labor Code violations suffered by the plaintiff or plaintiffs themselves, and a ‘representative’ claim, arising from violations suffered by employees. By virtue of FAA preemption, these claims are severable from one another, and the ‘individual’ claim is arbitrable, ... and only the ‘representative’ claim is a true qui tam, or ‘private attorney general,’ action.” (89 Cal.App.4^th at 1288-1289.) Thus, the Piplack court concluded that a PAGA waiver in an arbitration agreement that provided “[t]here will be no right or authority for any dispute to be brought, heard or arbitrated as a private attorney general action” and contained a severability clause meant that the individual PAGA claims could be severed and ordered to arbitration while the representative PAGA claims remained in court. (Ibid.)

Consistent with Viking River and Piplack, the phrase “Private attorney general representative actions” and the severability clause in the Rose Arbitration Agreement must be understood to exclude only the representative non-individual claims from arbitration while requiring the individual PAGA claims to be arbitrated. ROA 40, Ex. B, §2, p. 3 [“this Agreement affects your ability to participate in class, collective or representative actions” and “the portion of the Class Action waiver that is enforceable shall be enforced in arbitration”]. Consequently, Plaintiff Rose is also ordered to arbitrate her individual PAGA claims.

Pursuant to Adolph v. Uber Technologies, Inc. (2023) 14 Cal.5^th 1104, 310 Cal.Rptr.3d 667, 681, 9 U.S.C §3 and Code Civil Procedure §1281.4, the representative non-individual claims must be litigated in court, and as such, this matter is STAYED pending completion of the arbitrations.

An arbitration review hearing is scheduled for February 23, 2024 at 9:00 a.m., and the parties are ordered to file a joint status report not later than February 16, 2024.

The status conference is off calendar.

Defendant is ordered to give notice.