Judge: Randy Rhodes, Case: 22STCV33128, Date: 2023-03-07 Tentative Ruling
Case Number: 22STCV33128 Hearing Date: March 7, 2023 Dept: F51
Dept. F-51
Date: 3/7/23
Case #22STCV33128
MOTION TO COMPEL ARBITRATION
Motion filed on 12/13/22.
MOVING PARTY: Defendant Lakeside Medical
Organization, a Medical Group, Inc. (“Defendant”)
RESPONDING PARTY: Plaintiff Miriam Lopez
(“Plaintiff”)
NOTICE: ok
RELIEF REQUESTED: An order: (1) compelling arbitration
of Plaintiff’s Private Attorney General Act (“PAGA”) claim on an individualized
basis; and (2) dismissing the representative PAGA claims on behalf of other
allegedly aggrieved employees.
TENTATIVE RULING: The motion is: (1) moot as to
Plaintiff’s individual PAGA claims; and (2) deferred as to Plaintiff’s remaining
representative claims pending the outcome of Adolph v. Uber Technologies,
Case No. S27467.
BACKGROUND
Plaintiff, a former employee of
Defendant, brings this Private Attorney General Act (“PAGA”) action in a
representative capacity on behalf of the State of California and other
aggrieved employees, alleging against Defendant various Labor Code violations.
On 10/10/22, Plaintiff filed her representative
action against Defendant, alleging the following causes of action for Violation
of California Labor Code § 2698, et seq.: (1) Recovery of Unpaid Wages and
Overtime; (2) Failure to Provide Meal Periods; (3) Failure to Provide Rest
Periods; (4) Failure to Provide Accurate Itemized Wage Statements; (5) Failure
to Reimburse for Necessary Expenditures; and (6) Failure to Pay Wages Due Upon
Termination of Employment.
On 12/13/22, Defendant filed the
instant motion to compel arbitration. On 2/22/23, Plaintiff filed her
opposition. On 2/28/23, Defendant filed its reply.
ANALYSIS
A.
Legal Standard
Under both the Federal Arbitration
Act and California law, arbitration agreements are valid, irrevocable, and enforceable,
except on such grounds that exist at law or equity for voiding a contract. (Winter
v. Window Fashions Professions, Inc. (2008) 166 Cal.App.4th 943, 947.)
The party moving to compel
arbitration must establish the existence of a written arbitration agreement
between the parties. (Code of Civ. Proc. § 1281.2.) This is usually done by
presenting a copy of the signed, written agreement to the court. “A petition to
compel arbitration or to stay proceedings pursuant to Code of Civil Procedure
sections 1281.2 and 1281.4 must state, in addition to other required
allegations, the provisions of the written agreement and the paragraph that
provides for arbitration. The provisions must be stated verbatim or a copy must
be physically or electronically attached to the petition and incorporated by
reference.” (Cal. Rules of Court, rule 3.1330.)
The moving party must also
establish the other party’s refusal to arbitrate the controversy. (Code of Civ.
Proc. § 1281.2.) The filing of a lawsuit against the moving party for a
controversy clearly within the scope of the arbitration agreement affirmatively
establishes the other party’s refusal to arbitrate the controversy. (Hyundai
Amco America, Inc. v. S3H, Inc. (2014) 232 Cal.App.4th 572, 577.)
Here, Defendant has attached a copy
of the subject arbitration agreement to the declaration of Teresa Sanchez Lugo,
a Senior Human Resources Manager for Regal Medical Group, Inc., who provides
human resources services to Defendant’s employees. The parties entered into the
agreement, upon Plaintiff’s employment with Defendant in July 2018. The
arbitration agreement reads, in pertinent part:
“Except as expressly
set forth in the section entitled "Claims Not Covered by this
Agreement," all disputes, claims, complaints, or controversies
("Claims") that Employee now has or in the future may have against
HPN Provider Network and/or any of its parents, subsidiaries, affiliates,
current and former officers, directors, employees, attorneys and/or agents
and/or its parents, subsidiaries and affiliates' current and former officers,
directors, employees, attorneys and/or agents, or that the Company now has or
in the future may have against Employee, including but not limited to,
claims in tort or contract, claims for discrimination, harassment, and/or
retaliation, claims for overtime, wages, compensation, penalties or
restitution, claims under the California Fair Employment and Housing Act,
Title VII of the Civil Rights Act of 1964, as amended, the Americans with
Disabilities Act of 1990, the California Labor Code, the Age Discrimination in
Employment Act of 1967, the Family and Medical Leave Act, and the California
Family Rights Act, and any other claim under any federal, state, or local
statute, constitution, regulation, rule, ordinance, or common law, arising
out of and/or directly or indirectly relating to Employee's application for
employment with the Company, Employee's recruitment, Employee's employment
with the Company, any terms and conditions of Employee's employment with
the Company, and/or the termination of Employee's employment from the
Company (collectively "Covered Claims"), are subject to
arbitration pursuant to the terms of this Agreement and will be resolved by
arbitration and NOT by a court or jury. The parties hereby forever waive and
give up the right to have a judge or jury decide any Covered Claims.” (Ex. 1 to
Lugo Decl., p. 2 [emphasis added].)
The subject arbitration agreement
also contains provisions entitled Class Action Waiver and Severability.
“Class Action
Waiver
To the maximum extent
permitted by applicable then current law, the parties agree that:
·
Arbitration on an individual basis
pursuant to this Agreement shall be the exclusive remedy for any Covered
Claims. To the maximum extent permitted by law, no Covered Claims may be
initiated or maintained on a class action, collective action, or representative
action basis either in court or arbitration. The parties knowingly waive
any rights to participate as a class or collective representative or as a member
of any class, collective or representative action, and, to the maximum extent
permitted by then current law, will not be entitled to and will decline to
accept any recovery from a class, collective or representative action, in any
forum, concerning any dispute that could be asserted as a Covered Claim
pursuant to this Agreement. …
·
If, for any reason, the class action,
collective action, or representative action waiver is held unenforceable or
invalid in whole or in part, then a court of competent jurisdiction, not an
arbitrator, will decide the claim as to which the waiver was held unenforceable
or invalid and all other Covered Claims will remain subject to arbitration. …
Severability
Except as provided below, if any court of competent jurisdiction
or arbitrator finds any part or provision of this Agreement void, voidable, or
otherwise unenforceable, such a finding will not affect the validity of the
remainder of the Agreement, and all other parts and provisions remain in full
force and effect. If, however, the class action, collective action, or
representative action waiver is found to be void, voidable, or otherwise
unenforceable, then the claims found to be able to proceed on a class action,
collective action, or representative action basis, as applicable, shall proceed
in court and not in arbitration.” (Ibid. [emphasis added].)
Here, the parties do
not dispute that the proffered agreement exists a valid, enforceable
arbitration agreement between them. The parties’ core disagreement is whether
the U.S. Supreme Court’s holding Viking River v. Moriana (2022) 142
S.Ct. 1906, applies to the instant case, thus requiring Plaintiff to submit her
individual PAGA claims to arbitration and dismissing her representative claims.
B.
Arbitrability of PAGA Claims
The parties disagree as to whether
the U.S. Supreme Court’s holding Viking River v. Moriana (2022) 142
S.Ct. 1906, applies to the instant case, thus requiring Plaintiff to submit her
individual PAGA claims to arbitration and dismissing her representative claims.
Defendant argues that Plaintiff’s
individual claim should be severed and submitted to arbitration. Under the
previous rule set forth in Iskanian v. CLS Transportation Los Angeles, LLC
(2014) 59 Cal.4th 348, 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.” (59 Cal.4th at
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 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, 142 S.Ct. at 1923.) 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 1924.)
The U.S. Supreme Court then
partially abrogated the rule in Iskanian. Specifically, the Court held
that the Federal Arbitration Act preempts a prohibition on PAGA claims from
being divided into “individual” and “non-individual” claims and compelling the
individual claims to arbitration. (Id. at 1925.) Additionally, if an
agreement contains a severability clause, then the employer is “entitled to
enforce the agreement insofar as it mandate[s] arbitration of [the employee’s]
individual PAGA claim.” (Ibid.)
Here, the parties have agreed to
arbitrate their individual employment disputes. Under the previous rule 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.
Additionally, the Agreement contains a valid severability provision, which
allows these claims to be severed. (Ex. 1 to Lugo Decl., (“If
… the … representative action waiver is found to be void, voidable, or
otherwise unenforceable, then the claims found to be able to proceed on a …
representative action basis … shall proceed in court and not in arbitration.”).)
Accordingly, Plaintiff’s individual PAGA claim is subject to arbitration
pursuant to the arbitration agreement entered into between the parties.
Here, on 9/21/22, prior to filing
the instant action, Plaintiff filed a demand for arbitration against Defendant
with JAMS for (1) discrimination based on religious beliefs; (2) retaliation
based on religious beliefs; (3) failure to reimburse for necessary business
expenditures; (4) failure to provide compliant meal and rest periods or premium
compensation in lieu thereof; (5) failure to provide accurate, itemized wage
statements; (6) failure to pay all wages at the time of termination; (7)
wrongful termination in violation of public policy; and (8) failure to pay
Plaintiff for all hours worked. (Ex. 1 to Decl. of Ted Gehring.) Defendant
asserts that Plaintiff intended this arbitration action to assert her
individual PAGA claims. (Def.’s Reply, p. 5, fn. 2.)
As such, Plaintiff argues that Viking River
is inapplicable here because she “does not seek any relief on her own
behalf, she seeks it solely in her capacity as a Private Attorney General.” (Pl.’s
Opp., 3:14–15.) Plaintiff argues that because the contractual language makes no
distinction between individual and representative PAGA claims, the arbitration
provision is invalid as a wholesale PAGA waiver. (Id. at 5:13–15.) However,
given the severability provisions in the agreement, the Court finds that this
language does not restrict arbitration of Plaintiff’s individual PAGA
claims, but rather merely the representative ones.
As it appears that Plaintiff has
already submitted her individual PAGA claims to arbitration, her representative
claims are not arbitrable under the agreement. Defendant’s motion is therefore
moot to the extent it seeks Plaintiff to submit her individual PAGA claims to
arbitration. The sole remaining issue is whether Plaintiff has the requisite
standing to bring the instant action on a representative basis.
C.
Standing/Dismissal of Remaining Claims
If the Court has ordered
arbitration, the action or proceeding shall be stayed. (Code Civ. Proc. §
1281.4.) Here, however, Defendant argues that Plaintiff’s remaining
representative PAGA claims should be dismissed. Plaintiff argues in opposition
that “accepting Defendant's argument that its arbitration agreement contemplates
PAGA claims would be contrary to the legislature's intent in passing PAGA.” (Pl.’s
Opp. 9:6–8.)
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, 142
S.Ct. at 1925.) However, as Plaintiff notes, the Supreme Court also recognized
that this is ultimately an issue of state law. The California Supreme Court is
set to decide the issue in Adolph v. Uber Technologies, Case No. S27467.
The California Supreme Court granted review on 7/20/22, and on 8/1/22, 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.
CONCLUSION
The motion is: (1) moot as to Plaintiff’s individual PAGA
claims; and (2) deferred as to Plaintiff’s remaining representative claims
pending the outcome of Adolph v. Uber Technologies, Case No. S27467.