Narcizo Tovar v. National Distribution Centers, LLC

MOTION TO COMPEL ARBITRATION

 

MOVING PARTY: Defendant National Distribution Centers, LLC

RESPONDING PARTY(S): Plaintiff Narcizo Tovar

STATEMENT OF MATERIAL FACTS AND/OR PROCEEDINGS:

Plaintiff Narcizo Tovar brings this action under PAGA on behalf of himself and other current and former employees of Defendant National Distribution Centers, LLC’s, based on alleged Labor Code violations. 

Defendant now moves to compel Plaintiff to arbitrate the individual PAGA claim. Plaintiff opposed.

TENTATIVE RULING:

Defendant’s Motion to Compel Arbitration of Plaintiff’s individual PAGA claim is GRANTED. 

The action is stayed pending the results of the arbitration. A Status Review/OSC re: Dismissal is set for January 23, 2026 at 8:30 a.m.

Defendant is ordered to give notice.

DISCUSSION:

Motion to Compel Arbitration

1. Legal Standard

“[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.)

2. Analysis

A. The FAA Applies

Defendant moves to compel arbitration of Plaintiff’s individual PAGA claims and stay Plaintiff’s representative claims. As a preliminary matter, Defendant argues the FAA applies here.

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 [that] the contract with the arbitration provision has a substantial relationship to interstate commerce . . . .” (Carbajal v. CWPSC, Inc. (2016) 245 Cal.App.4th 227, 238.)

Here, the arbitration agreement provides that the “Federal Arbitration Act (9 U.S.C. § 1 et seq.) governs this Agreement, which evidences a transaction involving commerce.” (Montesano Decl., Exh. A, ¶ 12). Courts will apply the FAA “if it is so stated in the agreement.” (Davis v. Shiekh Shoes, LLC (2022) 84 Cal. App. 5th 956, 963.) Therefore, the FAA applies here.

B. Existence of Arbitration Agreement 

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 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.)

Defendant submits a declaration from Michelle Montesano, an HRIS Analyst for NFI Management Services, LLC. (Montesano Decl. ¶ 1.) Montesano details Defendant’s employee onboarding process and attests that Plaintiff signed a “Mutual Arbitration Agreement” on March 23, 2021. (Id. ¶ 4, Exh. A.)

Plaintiff does not dispute that he signed an agreement to arbitrate or that the agreement is valid and binding. Therefore, Defendant has established the existence of an agreement to arbitrate by a preponderance of the evidence.

C. Delegation Clause

Defendant argues the parties “clearly and unmistakably” delegated the gateway issue of arbitrability to the arbitrator. Plaintiff has not addressed the delegation issue in its opposition.  [FN 1]

In relevant part, the Agreement provides:

The Arbitrator, and not any federal, state, or local court or agency, shall have exclusive authority to resolve any dispute relating to the interpretation, applicability, enforceability or waiver of this Agreement. However, as stated in the “Class Action Waiver” section below, the preceding sentence does not apply to the “Class Action Waiver”. 

(Montesano Decl., Exh. A, ¶ 2.)

D. Interpretation of Arbitration Agreement 

In the event the delegation clause did not apply, it would be left to the court to determine whether the Arbitration Agreement applies to the PAGA dispute here. As will be discussed, this court would conclude that Plaintiff’s individual claims are subject to arbitration. 

In relevant part, the Arbitration Agreement provides:

Except as this Agreement otherwise provides, Company and I mutually contract and agree to resolve by arbitration all disputes, claims or controversies, past, present or future, including without limitation, claims arising out of or related to my application and selection for employment, employment, and/or the termination of my employment that the Company may have against me or that I may have against [the Company]. 

…

Except as it otherwise provides, this Agreement applies, without limitation, to any claims based upon or related to discrimination, harassment, retaliation, defamation (including claims of postemployment defamation or retaliation), breach of a contract or covenant, fraud, trade secrets, unfair competition, minimum wage, overtime, wages or other compensation, breaks and rest periods, termination, tort claims, equitable claims, and all statutory and common law claims…

(Id. ¶ 2.)

The Arbitration Agreement also contains a section titled “Claims not covered and limitations to how this agreement applies.” (Id. ¶ 3.) As relevant here, the Agreement expressly excludes “representative actions for civil penalties filed under the California Private Attorneys General Act (“PAGA”), which may only be maintained in a court of competent jurisdiction (but to the extent permitted by applicable law, any claim by You on Your own behalf under PAGA to recover Your unpaid wages must be arbitrated and is covered by this Agreement).” (Id., emphasis added.)

Therefore, the Agreement does not apply to “representative actions.” As explained in Viking River, the word “representative” carries two meanings in the PAGA context:

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.)

Here, the Arbitration Agreement’s use of the term “representative” might be ambiguous were it not for the language that immediately follows it. That is, the Agreement states that any claim “by [Plaintiff] on [Plaintiff’s] own behalf under PAGA to recover [his] unpaid wages” remains subject to arbitration. (Montesano Decl., Exh. A, ¶ 3.) 

Logically read together, it means the parties intended that individual claims actually sustained by Plaintiff under PAGA would be arbitrable. And on the other hand, “representative claims”—those claims predicated on code violations sustained by other employees—would not be arbitrable. Therefore, Defendant has established that Plaintiff agreed to arbitrate his individual PAGA claim. 

Accordingly, Defendant’s Motion to Compel Arbitration of Plaintiff’s individual PAGA claim is GRANTED. 

IT IS SO ORDERED.

Dated:   January 23, 2025 ___________________________________