Judge: Peter Wilson, Case: 30-2023-01306778, Date: 2023-06-15 Tentative Ruling
Defendants Shimmick Construction Company, Inc. (Shimmick) and Shimmick Danny’s Joint Venture (Joint Venture) seek to compel arbitration of Plaintiff Jonathan Biskner’s individual claims, dismiss with prejudice the PAGA claims, dismiss without prejudice the class claims, and dismiss without prejudice this action, or alternatively, stay all further judicial proceedings pending resolution of this matter through arbitration. For the reasons, and on the terms, set forth below, the Court GRANTS the Motion.
Plaintiff’s objections to Defendants’ evidence (ROA 47), Nos. 1-4 are OVERRULED.
Defendants Have Met Their Burden of Establishing the CBA Applies. Defendants bear the burden of proving the existence of an arbitration agreement by a preponderance of the evidence. (Rosenthal v. Great Wester Fin. Securities Corp. (1996) 14 Cal. 394, 413; Engalla v. Permanente Medical Group, Inc. (1997) 15 Cal.4th 951, 972.) Defendants have met their burden.
Defendants explain that Joint Venture is a contractor for the Golden Gate Bridge Project in San Francisco and Shimmick is a member of Joint Venture. ROA 16, Trujillo Decl., ¶3. Each are members of United Contractors. ROA 16, Trujillo Decl., ¶¶12; ROA 55, Sella Decl., ¶¶2-3 and Ex. A.
Additionally, Plaintiff was a member of Ironworkers Local Union No. 377 (Local 377) during his employment from June 7, 2021 to August 19, 2022. ROA 16, Trujillo Decl., ¶¶4-10, 14 and Ex. B; ROA 2, Complaint, ¶26.
Thus, Plaintiff’s claims are governed by a collective bargaining agreement, i.e. the Iron Workers Master Labor Agreement dated May 6, 2021, retroactive to July 1, 2020 and effective until December 31, 2024 (CBA) since Plaintiff was a member of Local 377 and Defendants are members of United Contractors, parties to the CBA. ROA 16, Trujillo Decl., ¶¶10-12 and Ex. A.
The CBA Encompasses All of the Claims Alleged by Plaintiff. Section 24(T) of the CBA provides that all violations of the California Labor Code sections identified in Labor Code §§ 2699.5 and 2699(f) as well as any others that would be redressable by PAGA
shall be resolved exclusively through the Grievance-Arbitration procedure contained in this Agreement and shall not be brought in a court of law or before any administrative agency such as the California Labor Commissioner. … All claims or disputes involving alleged violations of the Industrial Welfare Commission Wage Order 16, the California Labor Code, and the Fair Labor Standards Act, and all derivative claims under Cal. Business & Professions Code section 17200, et. seq., as well as for associated penalties, not otherwise covered by the (sic) this Agreement, shall be subject to final and binding arbitration pursuant to Section 28 of this Agreement, … .
ROA 16, Ex. A, §24(T).
Each of the claims alleged in the Complaint are identified in Labor Code § 2699.5.
Additionally, Section 24(T) clearly, unequivocably and unmistakenly waives Plaintiff’s rights to a judicial forum for his claims, including his statutory claims. (Wilson-Davis v. SSP Am., Inc. (2021) 62 Cal. App. 5th 1080, 1093, 277 Cal. Rptr. 3d 258, 267 [a collective bargaining agreement must “contain a clear and unmistakable waiver of the covered employees’ rights to a judicial forum”].) Therefore, Defendants have demonstrated the CBA governs Plaintiff’s claims and that Plaintiff has waived his right to bring his claims in court.
Unconscionability. The party opposing arbitration bears the burden of proving, by a preponderance of the evidence, any fact necessary to its defense. (Engalla v. Permanente Medical Group, Inc. (1997) 15 Cal.4th 951, 971.) Plaintiff argues the CBA is procedurally and substantively unconscionable.
Procedural unconscionability, which focuses on oppression or surprise due to unequal bargaining power, and substantive unconscionability, which focuses on overly harsh or one-sided results, must both be present for a court to refuse to enforce an arbitration agreement.
“‘“But they need not be present in the same degree. “Essentially a sliding scale is invoked which disregards the regularity of the procedural process of the contract formation, that creates the terms, in proportion to the greater harshness or unreasonableness of the substantive terms themselves.” [Citations.] In other words, the more substantively oppressive the contract term, the less evidence of procedural unconscionability is required to come to the conclusion that the term is unenforceable, and vice versa.’” (Sanchez, supra, 61 Cal.4th 899, 910, 190 Cal.Rptr.3d 812, 353 P.3d 741.)
(Performance Team Freight Systems, Inc. v. Aleman (2015) 241 Cal.App.4th 1233, 1246-1247.)
Procedural Unconscionability. In OTO, L.L.C. v. Kho (2019) 8 Cal.5th 111, the California Supreme Court explained that the procedural unconscionability analysis begins with an inquiry into whether the contract is one of adhesion. (Id. at 126.) “An adhesive contract is standardized, generally on a preprinted form, and offered by the party with superior bargaining power on a take-it-or-leave-it basis. (Baltazar v. Forever 21, Inc. (2016) 62 Cal.4th 1237, 1245.) Arbitration contracts imposed as a condition of employment are typically adhesive (Armendariz v. Foundational Health Psychcare Services, Inc. (2000) 24 Cal.4th 83, 114-115; Serpa v. California Surety Investigations, Inc. (2013) 215 Cal.App.4th 695, 704.)
It is undisputed that the union has authority to negotiate the CBA on an employee’s behalf and agree to arbitration of labor disputes. (Cortez v. Doty Bros. Equip. Co. (2017) 15 Cal. App. 5th 1, 11–12, 222 Cal. Rptr. 3d 649, 657, as modified (Sept. 6, 2017); 14 Penn Plaza LLC v. Pyett (2009) 556 U.S. 247, 256-257, [173 L.Ed.2d 398, 129 S.Ct. 1456].) As Defendants point out, Plaintiff has not and cannot show that there is procedural unconscionability since the CBA was negotiated by the employees’ union, a sophisticated party. (See Valle v. DTZ Gov’t Servs., Inc., (C.D. Cal. June 8, 2017) No. CV 17-02175-GW (SKx), 2017 WL 11702568, at *10-13 (rejecting plaintiff’s argument that a CBA’s arbitration agreement was procedurally unconscionable because she was required to be a member of the union and thus had no choice but to be bound by the CBA and arbitration provision).)
Plaintiff reliance on Zullo v. Superior Court (2011) 197 Cal.App.4th 477 and Martinez v. Master Protection Corp. (2004) 118 Cal.App.4th 107 to support his argument that the CBA was procedurally unconscionable because every union member was bound by its terms is misplaced. Neither Zullo nor Martinez involved unions and a CBA negotiated by the union on behalf of the employees.
The Court finds Plaintiff has not met its burden of demonstrating procedural unconscionability.
Substantive Unconscionability. In assessing substantive unconscionability, the “paramount consideration” is mutuality of the obligation to arbitrate. (Nyulassy v. Lockheed Martin Corp. (2004) 120 Cal. App. 4th 1267, 1287.) “[I]t is unfairly one-sided for an employer with superior bargaining power to impose arbitration on the employee as plaintiff but not to accept such limitations when it seeks to prosecute a claim against the employee, without at least some reasonable justification for such one-sidedness based on ‘business realities.’” (Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83, 117; Ingle v. Circuit City Stores, Inc. (9th Cir. 2003) 328 F.3d 1165, 1174 [applying Calif. law, unilateral agreement presumed substantively unconscionable]; Baltazar v. Forever 21, Inc. (2016) 62 Cal.4th 1237, 1248-1249, 200 CR3d 7, 14-15 [agreement listing only employee claims as examples of types arbitrable not unfairly one-sided if it requires arbitration of all employment related claims].)
Here, Plaintiff argues the CBA fails to comply with four of the minimum requirements set forth in Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83 (Armendariz). In particular, Plaintiff contends that (1) Section 28 of the CBA fails to provide for neutral arbitrators and (3) is silent on the right to discovery, (3) a written decision that permits judicial review and (4) the right to all of the types of relief that would otherwise be available in court. ROA 45, Opp., p. 6. Plaintiff also argues that the CBA shortens the statute of limitations period on his claims and improperly waives his right to bring a representative action under PAGA. None of Plaintiff’s arguments are persuasive.
Section 28 creates a Boards of Adjustment comprised of two representatives selected by the Union and two representatives selected by the Employers. “Members of a Board of Adjustment shall be affiliated neither with the Local Union or the individual employer involved in the specific grievance hearing.” ROA 16, Ex. B, § 28, p. 58. If the Board cannot agree on an issue within 15 days from the time the dispute is referred to it, the members “shall choose a fifth member who shall have no business or financial connection with either party within 3 days.” Id. Given the makeup of the Board, there is no reason to find that it is not neutral.
Plaintiff is correct that the CBA is silent on the issue of discovery, but not as to a written award. Section 28 of the CBA provides: “Copies of decisions of the Boards shall be mailed to the individual employer involved in this dispute, the appropriate Association, the California Ironworker Employers Council and the Union.” Thus, the CBA does contemplate a written decision by the Board.
The CBA’s silence on these issues does not amount to a limitation. Rather, silence means that these requirements are necessarily implied and incorporated into the agreement as a matter of law. (See Armendariz, 24 Cal.4th at 106, citation omitted [“when parties agree to arbitrate statutory claims, they also implicitly agree, absent express language to the contrary, to such procedures as are necessary to vindicate that claim.”].) Armendariz also held that a silent agreement must be interpreted to provide findings and conclusions on which the arbitration award is based. (Id. at 107.) Consequently, the CBA’s silence on these issues may be interpreted as affording the rights available under California law and Armendariz. (See also, Ortolani v. Freedom Mortg. Corp. (C.D. Cal. Nov. 16, 2017) 2017 WL 10518040, at *7 (court interpreted agreement’s silence to afford plaintiff rights to adequate discovery and written award under California law and Armendariz); Slattery v. Killer Shrimp, Inc. (C.D. Cal. Oct. 1, 2015) 2015 WL 12781049 (finding the discovery and written decision requirement satisfied where the arbitration agreement was silent on both issues); Gray v. Petrossian, Inc., No. CV 17-6870 PSG (PJWx), 2017 U.S. Dist. LEXIS 222374, at *12-13 (C.D. Cal. Nov. 20, 2017) (implying discovery rights consistent with Armendariz when the agreement was silent on discovery).
Further, the CBA permits an arbitrator to “make an award of any and all remedies otherwise available under the California Labor Code, except for an award of penalties that would be payable to the Labor and Workforce Development Agency.” ROA 16, Ex. A, § 24(T).
Accordingly, the CBA does satisfy Armendariz.
Regarding the 15-day notice requirement (“[n]o proceeding hereunder based on any dispute, complaint or grievance herein provided for, shall be recognized unless called to the attention of the individual employer or the Local Union involved in writing within fifteen (15) days after the alleged violation is committed”), the Court agrees that this provision improperly shortens the otherwise applicable limitations periods , and orders this provision severed for purposes of the arbitration. ROA 16, Ex. A, §32 [“Should any part of or any provision herein contained be rendered or declared invalid by reason of any existing or subsequently enacted legislation, or by any decree of a court of competent jurisdiction, the remaining provisions of this Agreement shall, nevertheless, remain in full force and effect, unless the parts so held invalid are wholly inseparable from the remaining portions of this Agreement”].
Finally, as explained in Oswald v. Murray Plumbing and Heating Corporation (2022) 82 Cal.App.5th 938, review denied (Dec. 14, 2022) (Oswald), Labor Code § 2699.6 is an exception to the general rule prohibiting contractual waivers of PAGA suits that applies to the construction industry if certain requirements are met. (Id. at 943.) Plaintiff argues that the CBA improperly waives PAGA claims because the CBA does not provide a binding arbitration procedure to redress Labor Code violations as required under Labor Code § 2699.6(a)(1). ROA 43, Opp., pp. 7-8. But as shown above, the CBA does provide a binding arbitration procedure. ROA 16, Ex. A, §§24(T) and (28).
Plaintiff presents no other arguments or evidence showing that Labor Code § 2699.6(a) has not been satisfied.
As such, the CBA properly waives the PAGA claims.
As Plaintiff has not demonstrated procedural unconscionability and the substantively unconscionable provision can be severed from the Arbitration Agreement, Plaintiff has not met its burden of establishing a defense to the enforcement of the Arbitration Agreement.
The Class Claims and PAGA Claims Should Be Dismissed. Section 24(T) clearly and unambiguously requires Plaintiff to bring his claims on an individual basis and waives class claims. Accordingly, the class claims are dismissed without prejudice.
Here, and as discussed, Labor Code § 2699.6(a)(1)-(3) applies. See ROA 16, Trujillo Decl., ¶¶13, 16 and Ex. A, §§1, 2, 3, 6, 7, 8, 9, 11, 24, 25, 28 and Ex. B. Thus, Plaintiff is barred from bringing a PAGA claim. (Oswald, supra, 82 Cal. App. 5th at 941, 946–47 (“The parties’ CBA clearly waives PAGA and satisfies the requirements of section 2699.6, as a matter of law. Their dispute is exempt from PAGA.”))
The PAGA claims are dismissed with prejudice, and all of Plaintiff’s individual clams are ordered to arbitration.
The Court orders that this matter is STAYED pending completion of the arbitration. (Code Civ. Proc. §
1281.4.)
A status conference is scheduled for December 8, 2023 at 9:00 a.m., and the parties are ordered to file a joint status report not later than December 1, 2023.
Defendants are ordered to give notice.