Joshua Rojas v. Integrated Distribution Systems, Inc.

MOTION TO COMPEL ARBITRATION

 

MOVING PARTY: Defendant Integrated Distribution Systems, Inc. and Dart Entities, Inc.

RESPONDING PARTY(S): Plaintiff Joshua Rojas

STATEMENT OF MATERIAL FACTS AND/OR PROCEEDINGS:

Plaintiff Joshua Rojas, as a former employee of Defendants Integrated Distribution Systems, Inc., and Dart Entities, Inc., brings this representative action on behalf of the State of California and all aggrieved employees under the Private Attorneys General Act.

Defendants now move to compel Plaintiff to arbitrate his individual PAGA claims pursuant to CCP § 1281 et seq. Plaintiff opposed. 

TENTATIVE RULING:

Defendants’ Motion to Compel Arbitration of only Plaintiff’s individual PAGA claims is GRANTED. 

The arbitrator shall decide all other material issues, including the scope of the arbitration agreement and/or the enforceability thereof in terms of “unconscionability,” which are consistent with this ruling.

The remaining PAGA action/claims are stayed pending the results of the above-referenced arbitration. A Status Review/OSC re: Dismissal or Lifting of Stay is set for June 26, 2025 at 8:30 a.m.

Defendants are ordered to give notice, unless waived.

DISCUSSION:

Motion to Compel Arbitration

I. Judicial Notice

Defendants’ Request: Defendants ask the court to take judicial notice of various trial court rulings or records. With certain exceptions, not applicable here, the Rules of Court generally prohibit judicial notice of unpublished opinions. (See Cal. Rules of Court, rule 8.1115(a); see also Hernandez v. Restoration Hardware, Inc. (2018) 4 Cal. 5th 260, 269.)  Trial court opinions are unpublished and have no precedential value.  (Neary v. Regents of Univ. of Calif. (1992) 3 Cal.4th 273, 282.) Therefore, Defendants’ requests for judicial notice are DENIED.

Plaintiff’s Request: Pursuant to Plaintiff’s request, the court takes judicial notice of the existence of the webpages at Exhibits A, B, H, and I, but not of the truth of any matter asserted therein. (Searles Valley Mins. Operations, Inc. v. State Bd. of Equalization (2008) 160 Cal. App. 4th 514, 519 [“although it might be appropriate to take judicial notice of the existence of the websites, the same is not true of their factual content”].)

Plaintiff’s request for judicial notice of Exhibits C through G is DENIED as unnecessary. (See Quelimane Co. v. Stewart Title Guar. Co. (1998) 19 Cal. 4th 26, 46 [declining to take judicial notice where unnecessary to do so].)

II. Objections to Evidence

Defendants have submitted objections to Plaintiff’s evidence.

This court is unaware of any legal authority which requires a court to rule on evidentiary objections on a motion, except as to a motion for summary motion/adjudication (CCP § 437c (q)) or a special motion to strike (CCP § 425.16 (b)(2)); see also, Sweetwater Union High School Dist. v. Gilbane Building Co. (2019) 6 Cal.5th 931, 947-949.)

As such, this court respectfully declines to rule on these objections.  This court is well aware of the rules of evidence, and to how much weight, if any, should be given to any of the proposed evidence.

III. Legal Standard

“Under the FAA, there is a strong policy favoring arbitration. [Citations.] ‘The overarching purpose of the FAA is to ensure the enforcement of arbitration agreements according to their terms ....’ [Citation.] Therefore, ‘[a]rbitration is a matter of consent ....’ [Citations.] [¶] ‘ “Although the FAA preempts any state law that stands as an obstacle to its objective of enforcing arbitration agreements according to their terms, ... we apply general California contract law to determine whether the parties formed a valid agreement to arbitrate their dispute.” ’ [Citations.]” (Barrera v. Apple Am. Grp. LLC (2023) 95 Cal. App. 5th 63, 76.) It is settled that “[u]nder both California and federal law, arbitration is strongly favored and any doubts concerning the scope of arbitrable issues should be resolved in favor of arbitration.” (Balandran v. Labor Ready, Inc. (2004) 124 Cal.App.4th 1522, 1527.)

California also 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.)  

“[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.)

IV. Analysis

A. The FAA Applies

The FAA provides for enforcement of arbitration provisions in any contract “evidencing a transaction involving commerce.” (9 USC § 2.) The term “involving commerce” is functionally equivalent to “affecting commerce” and “signals an intent to exercise Congress’ commerce power to the full.” (Allied-Bruce Terminix Cos., Inc. v. Dobson (1995) 513 US 265, 277.) “The party asserting the FAA bears the burden to show it applies by presenting evidence establishing 

Here, the Mutual Arbitration Agreement states that the parties “expressly agree and stipulate that the Federal Arbitration Act (9 U.S.C. § 1 et seq.) will apply to this Arbitration Agreement.” (Dwyer Decl. ¶ 11, Exh. D, ¶ 8.) 

Therefore, the FAA applies. (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.”].) 

Plaintiff apparently does not dispute that the FAA would generally apply here. Instead, Plaintiff argues that he meets the FAA exemption as a transportation worker. The FAA, at section 1, 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].)  Whether an employee fits within the § 1 exemption is an “antecedent” question for the court notwithstanding an otherwise valid delegation provision. (See New Prime Inc. v. Oliveira (2019) 586 U.S. 105, 111-112.)

The United States Supreme Court’s 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 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 analogizes this case to Ortiz v. Randstad Inhouse Servs., LLC (9th Cir. 2024) 95 F.4th 1152. There, the Ninth Circuit addressed application of the section 1 exemption to a warehouse worker. Ortiz did “exclusively warehouse work: transporting packages to and from storage racks, helping other employees in obtaining packages so they could be shipped, and assisting the Outflow Department to prepare packages for their subsequent shipment.” (Id. at 1161.) The plaintiff “was not involved in unloading shipping containers upon their arrival or loading them into trucks when they left the warehouse.” (Id.) 

The Ninth Circuit held that like the airport workers in Saxon, Ortiz “handled Adidas products near the very heart of their supply chain. In each case, the relevant goods were still moving in interstate commerce when the employee interacted with them, and each employee played a necessary part in facilitating their continued movement.” (Id. at 1162.) Ortiz “handled them as they went through the process of entering, temporarily occupying, and subsequently leaving the warehouse—a necessary step in their ongoing interstate journey to their final destination.” (Id.)

Plaintiff argues that he meets the exemption based on his job duties and Ortiz—even contending he used the same “PIT Equipment” as the plaintiff in Ortiz. Plaintiff submitted a declaration from his counsel, Karen L. Wallace. (See Wallace Decl., generally.) Wallace attests that Defendant IDS dba Dart Entities “provides supply chain management, including order fulfillment services, throughout the United States,” and “according to” its website, is “a leader in third-party logistics and supply chain management…[and] maintains an extended network for warehousing and distribution solutions.” (Wallace Decl. ¶ 3.) 

Plaintiff has also submitted a declaration, in which he states he worked at Defendants’ “warehouse in Dixon, California, from approximately September 2022 through October 2023.” (See Notice of Errata, Exh. J, Rojas Decl. ¶ 2.) Plaintiff continues that his job title was “Forklift Operator,” with his “primary duties” being “loading and unloading trucks that transported products from different states and moving those products around the warehouse in preparation for further shipment or delivery.” (Id. ¶ 3.) He continues that he was “responsible for transporting items to the correct sections of the warehouse, as well as pulling orders to be delivered to customers.” (Id. ¶ 4.)

In reply,  [FN 1]  Defendants submit a declaration from Brandon McCornell, a “Quality Manager” who was Plaintiff’s manager. (McCornell Decl. ¶¶ 2, 3.) McCornell attests that while Plaintiff was “initially hired as a Forklift Driver in or about September 2022, within the first month of employment he volunteered to be part of the Recoup team and remained on that team until his employment ended with IDS or about October 2023.” (Id. ¶ 4.) As part of the Recoup team, Plaintiff drove a forklift only “20% of the time.” (Id.) His duties mainly “consisted of repackaging boxes and goods that have been damaged,” which “would be loaded/unloaded from trucks by forklift drivers other than Plaintiff and placed in a central area for items to go to the Recoup department.” (Id. ¶ 5.) While Plaintiff “may have on some occasions loaded items processed through recoup onto trucks,” McCornell attest, “he would not have had any reason to know the location of where those goods came from or where they were going to.” (Id.) McCornell concludes by stating that Defendant “does not itself supply goods to be stored at the warehouse [where Plaintiff worked] or to be shipped to other states.” (Id. ¶ 6.) 

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—at least as a portion of his duties. (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.)  First, Plaintiff has not demonstrated that his employment involved substantial loading and unloading from trucks. Although he states his “primary duties were loading and unloading trucks,” he later concedes that he “also worked as Lead in the warehouse’s box repair department for a few months.” (Rojas Decl. ¶ 5 [emphasis added].) This is somewhat consistent with Defendant’s contention that Plaintiff worked the vast majority of his employment on repairs, and only “20% of the time he drove a forklift.” (McCornell Decl. ¶ 4.) 

There is also no firm evidence, beyond Plaintiff’s speculation, that the trucks Plaintiff loaded and unloaded had come from or were going out of state. 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), or the warehouse worker in Ortiz who “play[ed] a direct and ‘necessary role in the free flow of goods’ across borders.” (Ortiz, supra, 95 F.4th at 1161.)

Under Plaintiff’s interpretation and evidence, nearly any employee who at times unloads goods in a warehouse would be exempt from the FAA.  Such an exemption would nearly swallow the statute. 

In sum, this Court finds, by a preponderance of the evidence based upon the totality of the evidence in the current record before this Court, that Plaintiff has not shown that he meets the FAA exemption under section 1.   Alternatively, the evidence preponderates that he does not.

Accordingly, this court will consider and apply the FAA, where necessary. 

B. Existence of Agreement to Arbitrate 

Defendant has the initial burden of producing “prima facie evidence of a written agreement to arbitrate the controversy.” (Gamboa v. Ne. Cmty. Clinic (2021) 72 Cal. App. 5th 158, 165.) “[I]t is not necessary to follow the normal procedures of document authentication.” (Condee v. Longwood Mgmt. Corp. (2001) 88 Cal. App. 4th 215, 218.)

Defendants submit a declaration from Melinda Dwyer, who serves as Vice President of Human Resources and formerly Director of Human Resources. (Dwyer Decl. ¶ 2.) Dwyer attests to Defendants’ use of the “Paycom” platform for employee onboarding. (Id. ¶¶ 3-10.) Based on Dwyer’s review of Plaintiff’s profile, Plaintiff securely electronically signed the Agreement to Arbitrate on September 21, 2022. (Id. ¶ 11, Exh. D.)

In opposition, Plaintiff does not dispute that he signed the arbitration agreement. Therefore, Defendants have established the existence of an arbitration agreement by a preponderance of the evidence.

C. Application of the Delegation Clause

In the first sense, PAGA actions are ‘representative’ in that they are brought by employees acting as representatives—that is, as agents or proxies—of the State. But PAGA claims are also called ‘representative’ when they are predicated on code violations sustained by other employees. In the first sense, ‘every PAGA action is ... representative’ and ‘[t]here is no individual component to a PAGA action,’ Kim, 9 Cal.5th at 87, 259 Cal.Rptr.3d 769, 259 Cal.Rptr.3d, 459 P.3d at 1131 (quoting Iskanian, 59 Cal.4th at 387, 173 Cal.Rptr.3d 289, 327 P.3d at 151), because every PAGA claim is asserted in a representative capacity. But when the word ‘representative’ is used in the second way, it makes sense to distinguish ‘individual’ PAGA claims, which are premised on Labor Code violations actually sustained by the plaintiff, from ‘representative’ (or perhaps quasi-representative) PAGA claims arising out of events involving other employees. 

(Viking River Cruises, Inc. v. Moriana (2022) 596 U.S. 639, 648–49.)

With this in mind, it is for the arbitrator to determine whether the agreement is referring to “representative actions” in the PAGA sense generally, or rather, “representative” in the sense of only nonindividual claims. (See e.g. Mondragon, supra, 101 Cal. App. 5th at 507-511 [undergoing this analysis].)  [FN 2]   Ultimately, if the arbitrator determines “representative” was used in the latter sense, then Plaintiff’s individual representative claims should remain in arbitration. (See Viking River Cruises, Inc. v. Moriana (2022) 596 U.S. 639, 640 [holding that the FAA preempts the rule of Iskanian insofar as it precludes division of PAGA actions into individual and non-individual claims through an agreement to arbitrate].)

Accordingly, Defendants’ Motion to Compel Arbitration of Plaintiff’s individual PAGA claims is GRANTED. 

The arbitrator shall decide all other material issues, including the scope of the arbitration agreement and/or the enforceability thereof in terms of “unconscionability,” which are consistent with this ruling.

IT IS SO ORDERED.

Dated:   June 26, 2024 ___________________________________

FN 1- “The general rule of motion practice…is that new evidence is not permitted with reply papers . . . . ‘[T]he inclusion of additional evidentiary matter with the reply should only be allowed in the exceptional case’ and if permitted, the other party should be given the opportunity to respond. (Jay v. Mahaffey (2013) 218 Cal.App.4th 1522, 1538-1539, quoting Plenger v. Alza Corp. (1992) 11 Cal.App.4th 349, 362, fn. 8.) However, it is permissible to submit reply declarations that “fill[] gaps in the evidence created by the [plaintiff’s] opposition.” (Jay, supra, 218 Cal. App. 4th at 1538. Here, because the evidence presented in reply mostly “fill the gaps” in evidence raised in Plaintiff’s opposition, the court exercises its discretion to consider it. Plaintiff will be afforded the opportunity at the hearing to respond to the evidence, as may be necessary.

FN 2- In Mondragon, the Court of Appeal addressed this question only after “[h]aving concluded the trial court,” and not the arbitrator, “properly decided the issue whether Mondragon agreed to arbitrate his individual PAGA claims.” (Mondragon, supra, 101 Cal. App. 5th at 507.) In other words, the analysis is two-fold: (1) the court must determine who decides the scope of the carve-out, and (2) if it is the court, the actual scope. In this case, however, because this court finds that the arbitrator must decide the scope of the PAGA carve-out, it is for the arbitrator to determine if the carve-out requires arbitration of the individual claims.