Judge Randolph M. Hammock, Case 20STCV39030 2023-01-19 Tentative Ruling

Judge: Randolph M. Hammock, Case: 20STCV39030, Date: 2023-01-19 Tentative Ruling

Pursuant to Defendant’s Request, the court takes judicial notice of the existence of Exhibits 1 through 4. However, because “[t]aking judicial notice of a document is not the same as accepting the truth of its contents,” a court “may not take judicial notice of the truth of the contents of a website.” (LG Chem, Ltd. v. Superior Ct. of San Diego Cnty. (2022) 80 Cal. App. 5th 348, fn. 7.)

The court also takes judicial notice of Defendant’s Exhibit A, the order entered in Nunez v. Capstone Logistics, LLC, No. 22-CV01185 (N.D. Ill. July 11, 2022) and Exhibit B, the order entered in Singh v. West Covina Motor Group LLC, et al., No. 21STCV41713 (Los Angeles Cty. Sup. Ct. July 13, 2022). In doing so, it is noted that trial court opinions are unpublished and have no precedential value. (Neary v. Regents of Univ. of Calif. (1992) 3 Cal.4th 273, 282.) Likewise, “[w]hile unpublished federal district court opinions are citable, they do not constitute binding authority.” (Gong v. City of Rosemead (2014) 226 Cal. App. 4th 363, 375.)

Pursuant to Plaintiff’s request, the court also takes judicial notice of the existence of Exhibit 5. But judicial notice does not “extend to the truthfulness of its contents or the interpretation of statements contained therein,” insofar as “those matters are reasonably disputable.” (Apple Inc. v. Superior Ct. (2017) 18 Cal. App. 5th 222, 241.)

“[T]he petitioner bears the burden of proving the existence of a valid arbitration agreement by the preponderance of the evidence . . . .” (Giuliano v. Inland Empire Personnel, Inc. (2007) 149 Cal.App.4th 1276, 1284). “In determining whether an arbitration agreement applies to a specific dispute, the court may examine only the agreement itself and the complaint filed by the party refusing arbitration [citation]. The court should attempt to give effect to the parties' intentions, in light of the usual and ordinary meaning of the contractual language and the circumstances under which the agreement was made.” (Weeks v. Crow (1980) 113 Cal.App.3d 350, 353). “Doubts as to whether an arbitration clause applies to a particular dispute are to be resolved in favor of sending the parties to arbitration. The court should order them to arbitrate unless it is clear that the arbitration clause cannot be interpreted to cover the dispute.” (California Correctional Peace Officers Ass'n v. State (2006) 142 Cal.App.4th 198, 205).

“[A] party opposing the petition bears the burden of proving by a preponderance of the evidence any fact necessary to its defense. [Citation.] 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.” (Giuliano v. Inland Empire Personnel, Inc. (2007) 149 Cal.App.4th 1276, 1284).

“If a court of competent jurisdiction, whether in this State or not, has ordered arbitration of a controversy which is an issue involved in an action or proceeding pending before a court of this State, the court in which such action or proceeding is pending shall, upon motion of a party to such action or proceeding, stay the action or proceeding until an arbitration is had in accordance with the order to arbitrate or until such earlier time as the court specifies. . . .” (CCP § 1281.4.)

The issues in this motion are (1) whether Defendant waived the right to arbitrate; (2) whether Plaintiff entered into a valid, binding arbitration agreement that covers the PAGA claims here; (3) whether Plaintiff is in a class of workers exempted from the Federal Arbitration Act; (4) whether Plaintiff’s individual PAGA claims may be separated from the representative PAGA claims and compelled to arbitration; and (5) what should happen to the representative PAGA claims if the individual claims are compelled to arbitration. Each is addressed in turn.

When considering if waiver occurred in the context of arbitration, both state and federal courts consider “(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; [and] (5) ‘whether important intervening steps [e.g., taking advantage of judicial discovery procedures not available in arbitration] had taken place…” [Citations]. (Iskanian, 59 Cal. 4th at 375). Notably, as explained in Davis, supra, under recent authority from the Supreme Court of the United States, the element of prejudice is “no longer required to demonstrate a waiver of one's right to arbitration, and the waiver inquiry should instead focus on the actions of the holder of that right.” (Id. at 795 [citing Morgan v. Sundance, 142 S.Ct. 1708 (2022)].)

In opposition, Plaintiff argues that Defendant “clearly invoked ‘the litigation machinery’ by challenging Plaintiff’s Complaint through meet and confers and a subsequent demurrer and motion to strike, procedures which would not have been available in arbitration. Additionally, Defendant did not assert arbitration as an affirmative defense when it answered the SAC, and manipulated discovery so that it could gain responses from Plaintiff before refusing to respond to Plaintiff’s discovery.” (Opp. 13: 22-26.) Plaintiff also argues that Defendant cannot argue it would have been futile to bring a motion prior to the Supreme Court’s Viking River decision, because Defendant actually did file a motion to compel arbitration before Viking River. [FN 1] Thus, “Defendant could and should have brought a motion to compel arbitration at the inception of this case in October 2020,” but instead waited nearly two years.

Plaintiff relies on the recent authority of Davis v. Shiekh Shoes, LLC (2022) 84 Cal.App.5th 956. There, the Court held an employer waived its right to compel arbitration by waiting 17 months after service of the complaint to move to compel arbitration and taking acts inconsistent with an intent to arbitrate. In affirming the lower court’s finding of waiver, the Court emphasized the defendant’s “lengthy delay in moving to compel arbitration” despite its “number of responses to the lawsuit.” The court continued:

[The defendant] appeared for a case management conference, demanded a trial, gave its own estimate of the time of trial, and represented it would be participating in written discovery, depositions, and expert discovery. Then, after the court scheduled a jury trial, [the defendant] engaged in rounds of discovery. It responded to multiple sets of interrogatories, a request for admissions, and a demand for productions of documents, met and conferred on those responses, and then supplemented them. Although [the defendant] objected to the discovery on a variety of grounds, it never once suggested that discovery should be barred because the case had to be arbitrated.

Thus, “[i]n light of [the defendant’s] nearly one-and-a-half-year delay in moving to compel arbitration, request for trial, active participation in discovery, acquiescence to the trial and discovery schedule, and court appearances, the trial court had ample evidence from which to conclude [the defendant’s] actions were inconsistent with an intent to arbitrate.” (Id. at 799.) [FN 2]

In opposition, Defendant argues it did not waive the right to arbitrate. It contends that a demurrer and motion to strike would have also been available in the arbitration proceeding, that arbitration is not an affirmative defense (and thus, Defendant did not need to list it in its Answer), and that it did not “participate in discovery in any meaningful way.” (Reply 11: 2-3.) Defendant also notes that it “objected to Plaintiff’s written discovery requests on the basis that the action was subject to mandatory arbitration – an objection that supports Capstone’s preservation of its right to compel arbitration.” (Reply 11: 19-21.)

For context, Plaintiff filed his initial Complaint in this case on October 9, 2020, and a First Amended Complaint on January 12, 2021. Defendant filed a demurrer and motion to strike the First Amended Complaint on February 17, 2021. Defendant served a request for production of documents and notice of Plaintiff’s deposition on October 21, 2021. (Long Decl. ¶ 3.) Plaintiff served non-verified responses on November 29, 2021, and then provided a verification on January 10, 2022. (Id. ¶¶ 3, 4.) On February 17, 2022, Plaintiff served special interrogatories and RPD’s on Defendant. (Id. ¶ 6.) Defendant served responses on March 22, 2022. (Id.)

In doing so, Defendant included an objection stating that Plaintiff is subject to an arbitration agreement prohibiting Plaintiff’s PAGA claim from proceeding in court. (Id. ¶ 7.) Defendant also represents that “it informed Plaintiff of the applicable arbitration agreements and asked whether Plaintiff would agree to a stay pending the U.S. Supreme Court’s decision in Viking River Cruises,” and “[o]n the same day, Plaintiff objected to Defendant’s discovery responses and declined a stay.” (Id. ¶ 8.) On April 8, 2022, Defendant filed its first motion to compel arbitration, in which it argued that Iskanian was wrongly decided and did not apply to this case. On August 23, 2022, following the decision in Viking River, Defendant filed its Amended motion to compel arbitration.

Here, this court does not find that Defendant has acted inconsistent with an intent to arbitrate. Although Defendant waited nearly two years to compel arbitration, for the majority of that time, Iskanian was controlling, and any attempt to compel arbitration would have been futile by any reasonable measure. However, once the Supreme Court U.S. Supreme Court granted certiorari in Viking River Cruises, Defendant promptly moved to compel arbitration—perhaps as a chance to preserve its right to arbitrate, anticipating a favorable result. Once the Supreme Court released the Viking River decision, Defendant filed an amended motion. In this sense, the instant case is distinguishable from the facts of Davis.

Moreover, aside from filing a single demurrer and motion to strike—filed during the period where attempting arbitration would have been futile—Defendant has done little to “invoke the litigation machinery” in this case. Defendant’s own discovery has been limited, apparently only having served a request for the production of documents. In finding that Defendant has not waived the right to arbitrate, the court emphasizes the well-accepted principle that “any doubts regarding a waiver allegation should be resolved in favor of arbitration.” (St. Agnes Med. Ctr., 31 Cal. 4th at 1195.)

California has a strong public policy in favor of arbitration as an expeditious and cost-effective way of resolving disputes. “Even so, parties can only be compelled to arbitrate when they have agreed to do so.” (Avila v. S. California Specialty Care, Inc. (2018) 20 Cal. App. 5th 835, 843.) “The party seeking to compel arbitration bears the burden of proving the existence of a valid arbitration agreement.” (Id.) An arbitration agreement is a contractual agreement. “General contract law principles include that ‘[t]he basic goal of contract interpretation is to give effect to the parties’ mutual intent at the time of contracting. [Citations.] ... The words of a contract are to be understood in their ordinary and popular sense.” [Citations.] (Garcia v. Expert Staffing W., 73 Cal. App. 5th 408, 412–13.)

Defendant represents that Plaintiff entered into two separate arbitration agreements. Plaintiff signed the first at the outset of his employment in April 2018 (“The 2018 Arbitration Agreement”), and then the second during the course of his employment in 2019 (“The 2019 Arbitration Agreement.”)

Defendant submits the Declaration of its Human Resources Information Systems Manager, Scott Dickinson. Dickinson attests that as part of Plaintiff’s onboarding process, Defendant electronically presented Plaintiff with the 2018 Arbitration Agreement. (Dickinson Decl. ¶ 5.) Within the web-based onboarding system, Plaintiff then “checked a box” indicating that he had read and acknowledged the Agreement. (Id. ¶¶ 16, 20.) Plaintiff authorized his electronic signature, thereby agreeing “that all statements made in this application [were] true and correct to the best of [his] knowledge and belief.” (Dickinson Decl., Exh. B.)

In early 2019, Capstone updated its Arbitration Agreement and Associate Handbook. (Dickinson Decl. ¶ 28.) So that existing employees could agree to the new Agreement, Defendants utilized ADP “Self-Service” platform. (Id. ¶ 30.) The revised policy appeared on the existing employees’ portal for review and acknowledgment. Utilizing a unique username and password, an employee could view and then accept the amended Arbitration Agreement by checking a box acknowledging the employee read it. (Id. ¶ 36.) In this case, Dickinson attests that he “personally reviewed [Plaintiff’s] ADP Self-Service history,” and “can affirm” that Plaintiff acknowledged the 2019 Arbitration Agreement on February 20, 2019. (Dickinson Decl. ¶ 46.) That acknowledgment read: “By clicking Acknowledge Policy, I acknowledge that this serves as the electronic representation of my signature, including legally binding contracts – just as wet ink pen on a paper signature would.” (Id., Ex. E.)

Agreement To Arbitrate. Both I and the Company agree to use binding arbitration, instead of going to court, as the sole and exclusive means to resolve any “Covered Claims” that arise or have arisen between me and the Company. I understand and agree that arbitration is the only forum for resolving Covered Claims and that both I and the Company are waiving and relinquishing our respective rights to trial before a judge or jury in federal or state court in favor of arbitration. I understand that my continued employment with the Company is deemed to be acceptance of this Agreement to Arbitrate. [Bold in Original].

Covered Claims. Covered Claims under this Agreement are any claim, dispute, and/or controversy that I may have against the Company, or that the Company may have against me, whether based on tort, contract, statute (including, but not limited to, any claims of discrimination, harassment, retaliation, leave, and/or unpaid wages, whether they be based on Title VII of the Civil Rights Act of 1964, as amended, the Age Discrimination in Employment Act, the Americans with Disabilities Act, the Family Medical Leave Act, the Fair Labor Standards Act, or any other similar federal, state, or local law or regulation which may apply to the parties’ employment relationship), equitable law, or otherwise. Covered Claims include but are not limited to any claim, dispute, and/or controversy that may arise out of or be related in any way to my employment, including but not limited to the termination of my employment and my compensation. Covered Claims also specifically include but are not limited to any claim, dispute, and/or controversy that I may have against, or that may be related in any way to the services I or the Company provides to, the Company’s business partners or customers and their employees.

Excluded Claims. The only exceptions to the requirement of binding arbitration shall be for “Excluded Claims.” Excluded Claims are claims for medical and disability benefits, claims for workers’ compensation, claims for unemployment benefits, claims asking for emergency or temporary injunctive relief in a court of law in accordance with applicable law (however, after the court has issued a ruling concerning the emergency or temporary injunctive relief, the Company and I are required to submit the dispute to arbitration pursuant to this Agreement), or other claims that are not subject to arbitration under current law…

Waiver of Class and Collective Claims. I and the Company agree that Covered Claims will be arbitrated only on an individual basis. All claims subject to this Agreement shall be brought in the individual capacity of myself or the Company, and shall be brought in the county in which the dispute arose (unless the parties mutually agree otherwise). This Agreement shall not be construed to allow or permit the consolidation or joinder of other claims or controversies involving any other employees or parties, or permit such claims or controversies to proceed as a class or collective action. No arbitrator shall have the authority under this Agreement to order any class or collective action. I and the Company agree to waive any substantive or procedural rights that we may have to participate in, bring, or receive monetary or other relief from any action on a class or collective basis against each other.

Because the 2019 Agreement is the most recent Agreement, Defendant relies on that as controlling. [FN 3] Plaintiff does not argue that he did not sign the agreement, or that he did not otherwise agree to arbitrate disputes with his former employer. Accordingly, the court will apply the 2019 Arbitration Agreement.

Plaintiff argues, however, that PAGA claims are “expressly” excluded from the agreement. The only exclusions expressly named “are claims for medical and disability benefits, claims for workers’ compensation, claims for unemployment benefits, claims asking for emergency or temporary injunctive relief in a court of law in accordance with applicable law…or other claims that are not subject to arbitration under current law.” (Id.) Plaintiff argues that because the PAGA claims were not subject to arbitration under the law as it stood at the time the parties entered into the 2019 Agreement, Defendants cannot use it now.

Plaintiff also invokes “the meaningful variation cannon” to argue that the Agreement having used the phrases “controlling law,” applicable law,” and “current law” at different points must denote some difference between them. Plaintiff argues that the former two uses, controlling law” and “applicable law,” “both denote the law that applies to or controls the dispute or issue, which is ordinarily the law at the time of such dispute or issue is presented for adjudication.” (Opp. 11: 24-28 [emphasis in original].) “In contrast,” Plaintiff argues, “the unique use of ‘current law’ must denote an intention to indicate a different meaning, and the only other reasonable interpretation is that “current law” was intended to mean the law that was current at the time of entering into the arbitration agreement.” (Opp. 11: 27-28 [emphasis in original].) Thus, because Iskanian was controlling law in California at the time of the Agreement and until Viking River, Plaintiff contends this court must apply the Iskanian rule. That would mean that an employee could not waive the right to bring a PAGA action, nor could such an action be bifurcated into “individual” and “non-individual” claims.

This court disagrees on both points. First, the Agreement is broad, covering “any claim, dispute, and/or controversy that I may have against the Company, or that the Company may have against me, whether based on tort, contract, statute…equitable law, or otherwise.” (Id.) It also covers “any claim, dispute, and/or controversy that may arise out of or be related in any way to my employment, including but not limited to the termination of my employment and my compensation.” (Id.) Although the Agreement does not expressly mention PAGA claims, there is nothing to suggest such claims are not encompassed by the broad language.

Second, Plaintiff cites no authority for the position that “current law” means that law existing only at the time the parties entered into the Agreement, as opposed to the law at the time of enforcement. Plaintiff’s reliance on the “meaningful variation cannon” is unconvincing. Indeed, had the use of “current law” been replaced with “controlling law” or “applicable law”—phrases Plaintiff insists containing different meanings—Plaintiff would have the same argument he does now. In any case, there would exist a question of which law applies—that in existence at the time of signing the agreement, or that existing at the time of enforcement.

It should be noted that “arbitration agreements should be liberally interpreted, and arbitration should be ordered unless the agreement clearly does not apply to the dispute in question.” (See Vianna v. Doctors’ Management Co. (1994) 27 Cal.App.4th 1186, 1189.) This court cannot find that the agreement “clearly” does not apply to the dispute. Rather, there is the reasonable interpretation that current law should denote law as it exists today. Accordingly, where applicable, this court will apply Viking River.

The Agreement here expressly states that it is governed by the FAA. (See Davis v. Shiekh Shoes, LLC (2022) 84 Cal. App. 5th 956, 963 [finding the FAA applies “if it is so stated in the agreement.”].) However, Plaintiff invokes § 1 of the FAA, which exempts from the statute’s reach “contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce.” (9 U.S.C. § 1 [emphasis added].) Plaintiff contends that he falls into the “class of workers engaged in foreign or interstate commerce,” and thus, the FAA does not apply to him. (Id.) The parties appear to agree, however, that if the FAA does not apply, then neither does the Supreme Court’s ruling in Viking River Cruises. Thus, this is a critical threshold issue.

As discussed by the parties, the recent United States Supreme Court decision in Southwest Airlines Co. v. Saxon, 142 S.Ct. 1783 (2022), is instructive. Saxon, a ramp supervisor for Southwest Airlines, agreed to arbitrate her wage disputes individually. She brought a putative class action against Southwest under the Fair Labor Standards Act, and Southwest sought to enforce its arbitration agreement. Plaintiff invoked section 1 of the FAA in defense. Accordingly, the issue was whether a Southwest Airlines “ramp supervisor” who at times “load[ed] and unload[ed] baggage, airmail, and commercial cargo on and off airplanes” fell into the “class of workers engaged in foreign or interstate commerce.” (Sw. Airlines Co. v. Saxon, 142 S. Ct. 1783, 1787 (2022). The Court addressed the issue in two steps, first addressing what constitutes a “class of workers,” and then what it means to “engage in foreign or interstate commerce.”

First, the Court explained that a person is a “member of a ‘class of workers’ based on what she does at [the employer], not what [the employer] does generally.” (Sw. Airlines Co. v. Saxon, 142 S. Ct. 1783, 1788 (2022).) Thus, the Court found that Saxon “belongs to a class of workers who physically load and unload cargo on and off airplanes on a frequent basis.” (Id. at 1788-89.)

The Court then addressed whether this “class” (e.g., workers who physically load and unload cargo on and off airplanes) was “engaged in foreign or interstate commerce.” (Id. at 1789.) The court held it “plain that airline employees who physically load and unload cargo on and off planes traveling in interstate commerce are, as a practical matter, part of the interstate transportation of goods.” (Id. at 1789.) In so holding, the Court rejected the Southwest’s argument that the workers must “physically accompany freight across state or international boundaries.” (Id. at 1789.) Instead, someone who “physically load[ed] cargo directly on and off an airplane headed out of State” was “engaged in foreign or interstate commerce.” (Id.; but see Gulf Oil Corp. v. Copp Paving Co., 419 U.S. 186 (1974) [held that a firm making intrastate sales of asphalt was not “engaged in [interstate] commerce” merely because the asphalt was later used to make interstate highways]; United States v. American Building Maintenance Industries, 422 U.S. 271 (1975) [held that “simply supplying localized [janitorial] services to a corporation engaged in interstate commerce does not satisfy the ‘in commerce’ requirement”].)

Plaintiff argues that “as in Southwest Airlines, [he] falls squarely within a class of workers that directly handled products in the stream of interstate commerce.” (Opp. 8: 25-26.) As a “Lumper,” Plaintiff’s “primary duty was to unload” restaurant goods “from trucks onto a dock outside of the Modesto warehouse.” (Devine Decl. ¶¶ 3, 4.) Plaintiff “unloaded these products by driving and operating a forklift and/or by using a pallet jack,” and “[o]nce the products were unloaded, [he] separated and organized them and placed them onto pallets.” (Id.) Once on the pallets, he moved these pallets into the warehouse, “where they were stored for later shipment.” (Id.) He did this “multiple times per day, nearly every working day.” (Id.) Plaintiff contends that “some of these products originated in Florida, Michigan, Illinois, and other states,” and “[o]n a weekly basis, [he] would unload a truckload of products that were labeled as having originated in Asia.” (Id. ¶ 4.)

Defendant argues that “Plaintiff has not demonstrated that any central part of his job involved loading and/or unloading cargo from vehicles crossing state borders.” (Reply 3: 15-17.) First, Plaintiff has not shown “that he frequently performed relevant work,” and second, has not shown that “he played a ‘direct and ‘necessary role in the free flow of goods’ across borders’ or was ‘actively ‘engaged in transportation’ of those goods across borders via the channels of foreign or interstate commerce.” (Reply 4: 15-17 [citing Southwest Airlines, 142 S. Ct. at 1789].)

Further, Defendant contends its records reflect that during Plaintiff’s employment, he worked for a total of 1,971.39 hours. (Olson Decl. ¶ 14.) But Plaintiff spent only 69.75 total hours—or “3.54% of his time”—on “Production” work. (Id.) Therefore, he spent “the remaining 1,901.64 hours on task categories that do not involve unloading products from trucks.” (Id.)

Here, consistent with the description of his job duties, Plaintiff “belongs to a class of workers who physically load and unload cargo on and off” trucks. (Sw. Airlines Co., supra, 142 S. Ct. at 1788-89.) It must then be determined whether within this class, Plaintiff “engaged in foreign or interstate commerce.” (Id. at 1789.)

Unlike the ramp loader in Southwest, this court cannot find that Plaintiff is “intimately involved” with interstate commerce. (Id. at 1790.) Plaintiff has not established that the trucks come from out of state—only that they at times contained goods from out of state. As Defendant notes, Plaintiff at most suggests that “some of the products he touched, at some unspecified point in time, had entered the state from somewhere else.” (Reply. 5: 8-10.) Thus, Plaintiff’s work lacks the nexus recognized in Southwest Airlines of an employee who “physically load[ed] cargo directly on and off an airplane headed out of State.” (Sw. Airlines Co., supra, 142 S. Ct. at 1789.) Finally, under Plaintiff’s interpretation, nearly any employee who unloads goods in a warehouse would be exempt from the FAA. Such an exemption would nearly swallow the statute.

Relying on the Supreme Court’s recent holding in Viking River Cruises, Defendant argues that Plaintiff’s individual claim should sent to arbitration. Under the previous rule set forth in Iskanian, 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 p. 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 p. 384.)

However, the U.S. Supreme Court overturned this restriction, holding that “Iskanian’s prohibition on 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 the Plaintiff. (Id. at p. 1924.)

Here, the parties have agreed to arbitrate their employment disputes, including PAGA claims. Under the old rule set forth in Iskanian, Plaintiff’s individual PAGA claims would have been indivisible from the representative claims, thus precluding arbitration of the individual claims. However, under Viking River, this division is now permitted, and the agreement to arbitrate Plaintiff’s individual claims must be enforced.

The point emphasized in Viking River is that when parties agree to arbitrate disputes arising from Labor Code violations individually sustained by an employee, they must be held to that agreement, notwithstanding the resulting division of the PAGA claims. Similarly, the parties here are bound by their agreement to arbitrate claims arising from Labor Code violations sustained by Plaintiff in the course of his employment, even if it means separating those claims from the claims based on violations suffered by other employees.

The remaining issue is what should happen to Plaintiff’s remaining non-individual claims, which are not subject to arbitration. The Viking River Court 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 p. 1925.) The Supreme Court directly addressed what “should have been done” with the plaintiff’s non-individual claims. The Court stated:

[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. See¿Kim [v. Reins Int’l. California, Inc.] 9 Cal.5th [73,] 90, 259 Cal.Rptr.3d 769, 259 Cal.Rptr.3d, 459 P.3d at 1133¿(“PAGA's standing requirement was meant to be a departure from the ‘general public’ ... standing originally allowed” under other California statutes). 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. Viking River Cruises, 142 S.Ct. 1906, Slip Opn. at 21.

However, the Supreme Court also recognized that this is ultimately an issue of state law. Understandably, the California Supreme Court is set to decide the issue in Adolph v. Uber Technologies, Case No. S27467. The Supreme Court granted review on July 20, 2022, and on August 1, 2022, set the issue to be briefed as: “Whether an aggrieved employee who has been compelled to arbitrate claims under the Private Attorneys General Act (PAGA) that are ‘premised on Labor Code violations actually sustained by’ the aggrieved employee…maintains statutory standing to pursue ‘PAGA claims arising out of events involving other employees’ in court or in any other forum the parties agree is arbitrable.”

Accordingly, this Court will defer its ruling only as to the issue of dismissal of the remaining representative claim pending the California Supreme Court’s decision in Adolph. But as discussed above, Plaintiff’s individual claim is compelled to arbitration.

Randolph M. Hammock
Judge of the Superior Court

FN 1 - Indeed, Plaintiff filed a motion to compel arbitration on April 8, 2022—before the decision in Viking River—in which it challenged Iskanian. It then filed an Amended motion after the Viking River decision.

FN 2 - It should be noted that because the “inferences to be drawn from the essential facts [were] conflicting,” the Davis Court reviewed the trial court’s decision under the “substantial evidence” standard of review—not de novo review. Thus, in giving deference to the trial court’s decision, the court repeatedly noted that the record supported the trial court’s finding. Presumably, however, had the trial court came to the opposite conclusion (e.g. that no waiver had occurred), it is possible the reviewing court could conclude that the evidence supported even that finding.

FN 3 - For present purposes, the material portions of both the 2018 and 2019 Arbitration Agreements are substantially the same. Thus, the result would be no different if Defendant instead relied on the 2018 Agreement.

Any party may submit on the tentative ruling by contacting the courtroom via email at Smcdept49@lacourt.org by no later than 4:00 p.m. the day before the hearing. All interested parties must be copied on the email. It should be noted that if you submit on a tentative ruling the court will still conduct a hearing if any party appears. By submitting on the tentative you have, in essence, waived your right to be present at the hearing, and you should be aware that the court may not adopt the tentative, and may issue an order which modifies the tentative ruling in whole or in part.