Judge: Robert B. Broadbelt, Case: 23STCV12724, Date: 2025-01-09 Tentative Ruling

Case Number: 23STCV12724    Hearing Date: January 9, 2025    Dept: 53

Superior Court of California

County of Los Angeles – Central District

Department 53

MOVING PARTIES:              Defendant Barrett Business Services, Inc., joined by defendant Michael Kors (USA), Inc. on December 13, 2024   

RESPONDING PARTY:       Unopposed

Motion to Compel Arbitration

The court considered the moving and joinder papers filed in connection with this motion.  No opposition papers were filed.

DISCUSSION

Defendant Barrett Business Services, Inc. (“Defendant”) moves the court for an order   (1) compelling plaintiff Patricia Hernandez de Adams (“Plaintiff”) to submit her claims to binding arbitration, and (2) staying this action pending completion of arbitration.[1] 

On December 13, 2024, defendant Michael Kors (USA), Inc. (“Joining Defendant”) filed its joinder to Defendant’s motion.

1.     Applicability of the Federal Arbitration Act

As a threshold matter, the court finds that Defendant has not met its burden to show that the Federal Arbitration Act (9 U.S.C. § 1 et seq.) (the “FAA”) governs this motion.  (Evenskaas v. California Transit, Inc. (2022) 81 Cal.App.5th 285, 292 [“The party asserting the FAA applies to an agreement has ‘the burden to demonstrate FAA coverage by declarations and other evidence’”] [internal citation omitted].)

“‘The FAA’s basic coverage provision, section 2, makes the FAA applicable to contracts “evidencing a transaction involving commerce.”  (9 U.S.C. § 2.)  Courts broadly construe section 2 to “provide for the enforcement of arbitration agreements within the full reach of the Commerce Clause.”  [Citation.]  “Accordingly, in most cases, the FAA mandates arbitration when contracts involving interstate commerce contain arbitration provisions.” ’  [Citations.]”  (Mendoza v. Trans Valley Transport (2022) 75 Cal.App.5th 748, 761-762; 9 U.S.C. § 2 [“A written provision in . . . a contract evidencing a transaction involving commerce” to arbitrate a controversy shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for revocation of any contract].)  “The United States Supreme Court has identified ‘three categories of activity that Congress may regulate under its commerce power: (1) “the use of the channels of interstate commerce”; (2) “the instrumentalities of interstate commerce, or persons or things in interstate commerce, . . .”; and (3) “those activities having a substantial relation to interstate commerce, . . . i.e., those activities that substantially affect interstate commerce.” ’  [Citations.]”  (Evenskaas, supra, 81 Cal.App.5th at p. 293.) 

The court acknowledges that Defendant has presented evidence establishing that (1) it “provides staffing services to find and place temporary employees for clients nation-wide[,]” and (2) once hired by Defendant and assigned to a client, its employees may conduct telephone calls, send mail and documents, and are placed on assignment across state lines and throughout the United States.  (Long Decl., ¶ 2.)  However, Defendant did not present evidence showing that Plaintiff was placed with a client outside of the State of California, was engaged in arranging employment with companies outside of the State of California, or conducted work that involving products that were distributed outside of California or meaningfully engaged in interstate commerce.  Moreover, Plaintiff has alleged that Defendant hired her to work at Michael Kors’s distribution center in Whittier, California.  (Compl., ¶ 25.)

Thus, the court finds that Defendant has not shown that the arbitration agreement executed by and between Defendant, on the one hand, and Plaintiff, on the other hand, is a contract “evidencing a transaction involving commerce” and therefore has not met its burden to show that the FAA applies to this motion.[2]  (9 U.S.C. § 2; Carbajal v. CWPSC, Inc. (2016) 245 Cal.App.4th 227, 239 [the FAA did not apply because the defendant “presented nothing about the nature of its business or [the plaintiff’s] work that showed any connection with interstate commerce[,]” and the complaint “show[ed] [the plaintiff] worked for [the defendant] in California serving California customers]; Hoover v. American Income Life Ins. Co. (2012) 206 Cal.App.4th 1193, 1207-1208 [although the defendant was based in Texas and the plaintiff in California, “there was no evidence in the record establishing that the relationship between [the defendant and the plaintiff] had a specific effect or ‘bear[ing] on interstate commerce in a substantial way[,]’” including because the plaintiff did not work in other states or engage in loan activity that affected interstate commerce by engaging with a bank headquartered in another state].) 

The court therefore evaluates Defendant’s motion under the California Arbitration Act.  (Notice of Mot., p. 2:8-9 [moving for relief under the FAA and California Arbitration Act].)

2.     Existence of Agreement to Arbitrate

“On petition of a party to an arbitration agreement alleging the existence of a written agreement to arbitrate a controversy and that a party to the agreement refuses to arbitrate that controversy, the court shall order the petitioner and the respondent to arbitrate the controversy if it determines that an agreement to arbitrate the controversy exists[,]” unless the court finds that the right to compel arbitration has been waived by the petitioner or that grounds exist for rescission of the agreement.¿ (Code Civ. Proc., §¿1281.2.)¿¿¿¿  

“‘ “The party seeking to compel arbitration bears the burden of proving the existence of an arbitration agreement, while the party opposing the petition bears the burden of establishing a defense to the agreement’s enforcement.” ’”¿ (Beco v. Fast Auto Loans (2022) 86 Cal.App.5th 292, 302.)¿ To determine the existence of an arbitration agreement, the court uses “a three-step burden-shifting process.”¿ (Iyere v. Wise Auto Group (2023) 87 Cal.App.5th 747, 755.)¿ “The arbitration proponent must first recite verbatim, or provide a copy of, the alleged agreement.¿ [Citations.]¿ A movant can bear this initial burden ‘by attaching a copy of the arbitration agreement purportedly bearing the opposing party’s signature.’”¿ (Ibid. [internal citations omitted].)¿ “If the movant bears its initial burden, the burden shifts to the party opposing arbitration to identify a factual dispute as to the agreement’s existence . . . .”¿ (Ibid.)¿ If the opposing party meets its burden to “submit sufficient evidence to create a factual dispute” as to the existence of the agreement, the burden shifts back to the arbitration proponent, who retains the ultimate burden of proving its existence by a preponderance of the evidence.¿ (Ibid.; Gamboa v. Northeast Community Clinic (2021) 72 Cal.App.5th 158, 165-166.)¿ 

The court finds that Defendant has met its burden to prove the existence of an arbitration agreement between itself and Plaintiff.  (Beco, supra, 86 Cal.App.5th at p. 302.)

Defendant has submitted a copy of the Arbitration Agreement signed by Plaintiff and an authorized representative of Defendant’s on November 17, 2021.  (Long Decl., Ex. A, Arbitration Agreement [signed version in Spanish] and Ex. B, Arbitration Agreement [in English].)  The Arbitration Agreement states that the parties “agree to arbitrate any disputes, claims, or controversies (‘claims’) that either party may have against each other . . . which arise from the application for employment, the employment relationship between Employee and Employer or the termination thereof.”  (Long Decl., Ex. B, Arbitration Agreement, p. 1.)  The claims that are covered by the Arbitration Agreement specifically include, inter alia, claims under California’s Fair Employment and Housing Act, wage and salary claims, and wrongful discharge claims.  (Ibid.)

Thus, the court finds that Defendant has met its burden to prove that an arbitration agreement exists between Plaintiff and Defendant.  The court further finds that Defendant has shown that the Arbitration Agreement encompasses the claims alleged in Plaintiff’s Complaint, since (1) the Arbitration Agreement applies to claims arising out of the employment relationship between the parties or the termination thereof, including claims under the Fair Employment and Housing Act, wage and hour claims, and wrongful termination causes of action, and (2) Plaintiff has alleged causes of action for retaliation under the Labor Code, discrimination, harassment, retaliation, and failure to prevent harassment, discrimination, or retaliation under the Fair Employment and Housing Act, and failure to provide employment records, all of which arise out of Plaintiff’s employment relationship (and termination thereof) with Defendant and Joining Defendant.  (Long Decl., Ex. B, Arbitration Agreement, p. 1; Compl., ¶¶ 28, 41, 4450-52, 58-61, 70-74, 79-82, 87-89, 94-97.)

Plaintiff did not file an opposition to this motion arguing that she did not sign the Arbitration Agreement or that the Arbitration Agreement is invalid, unconscionable, or unenforceable for any other reason.[3]  Thus, the court finds that Plaintiff has not met her burden (1) to identify a factual dispute as to the Arbitration Agreement’s existence, or (2) to establish a defense to the enforceability of the Arbitration Agreement.  (Iyere, supra, 87 Cal.App.5th at p. 755; Beco, supra, 86 Cal.App.5th at p. 302.)

The court therefore grants Defendant’s motion to compel Plaintiff to submit her claims against Defendant to binding arbitration.

3.     Michael Kors’s Joinder to Motion to Compel Arbitration

Joining Defendant has joined Defendant’s motion to compel arbitration, requesting that the court further order Plaintiff to submit her claims against Joining Defendant to binding arbitration.  (Joinder, p. 3:6-9 [Joining Defendant “moves separately to enforce its right to arbitration Plaintiff’s claims against Michael Kors, as a client of [Defendant], or alternatively, as a third party beneficiary of the arbitration agreement Plaintiff signed, and/or under the doctrine of equitable estoppel”].)

First, as set forth above, the court has concluded that Defendant has met its burden to prove that an agreement to arbitrate this action exists between Defendant, on the one hand, and Plaintiff, on the other hand.

Second, the court finds that Joining Defendant has met its burden to show that it may enforce the Arbitration Agreement against Plaintiff as a nonsignatory.

“Because arbitration is a matter of contract, the basic rule is that one must be a party to an arbitration agreement to be bound by it or invoke it—with limited exceptions.”  (Soltero v. Precise Distribution, Inc. (2024) 102 Cal.App.5th 887, 892-893.)  The “[t]hird-party beneficiary theory is [an] exception to the usual rule that only a party to an arbitration agreement may enforce it.”  (Id. at p. 898.)  “To invoke the third-party beneficiary exception, the nonsignatory ‘“ha[s] to show that the arbitration clause . . . was made expressly for [its] benefit.”’”  (Ibid. [internal citations omitted] [emphasis in original].)  Courts consider the following three factors to determine whether a party is a third-party beneficiary of an agreement: “(1) whether the third party would in fact benefit from the contract, but also (2) whether a motivating purpose of the contracting parties was to provide a benefit to the third party, and (3) whether permitting a third party to bring its own breach of contract action against a contracting party is consistent with the objectives of the contract and the reasonable expectations of the contracting parties.”  (Goonewardene v. ADP, LLC (2019) 6 Cal.5th 817, 830.)

As noted by Joining Defendant, the Arbitration Agreement states that it was “made by and between employee signed below (‘Employee’) [i.e., Plaintiff] and Barret Business Services Inc. [i.e., Defendant] and its clients (collectively, ‘Employer’ or ‘Company’), (collectively, the ‘Parties’).  (Long Decl., Ex. B, Arbitration Agreement, p. 1 [emphasis added].)  Joining Defendant is Defendant’s client.  (Long Decl., ¶¶ 6 [“Plaintiff initially applied for employment with [Defendant] to be staffed at [Defendant’s] client, [Joining Defendant]”], 9 [“Plaintiff’s assignment with [Defendant’s] client, [Joining Defendant], ended on July 23, 2022].)  

Thus, the court finds, based on the language of the Arbitration Agreement naming the class of persons to which Joining Defendant belongs (i.e., Defendant’s clients) as a party thereto, that (1) Joining Defendant would, in fact, benefit from the Arbitration Agreement since it is entitled to compel arbitration thereunder, (2) a motivating purpose of Plaintiff and Defendant in executing the Arbitration Agreement was to provide such a benefit to Joining Defendant, and    (3) permitting Joining Defendant to compel Plaintiff to submit her claims to arbitration is consistent with the objectives of the Arbitration Agreement.  (Goonewardene, supra, 6 Cal.5th at p. 830; Soltero, supra, 102 Cal.App.5th at p. 898.)

Third, the court finds that Plaintiff has not met her burden (1) to identify a factual dispute as to the authenticity of the Arbitration Agreement, (2) to show that the Arbitration Agreement is invalid or unenforceable, and (3) to show that the third-party beneficiary exception does not apply, since Plaintiff did not file an opposition to Defendant’s motion or Joining Defendant’s joinder to the motion.

Thus, the court grants Joining Defendant’s joinder to Defendant’s motion to compel arbitration.

ORDER

The court grants (1) defendant Barrett Business Services, Inc.’s motion to compel arbitration, and (2) defendant Michael Kors (USA), Inc.’s joinder to motion to compel arbitration.

            The court orders (1) plaintiff Patricia Hernandez de Adams and defendants Barrett Business Services, Inc. and Michael Kors (USA) Inc. to arbitrate the claims alleged in plaintiff Patricia Hernandez de Adams’s Complaint, and (2) this action is stayed until arbitration is completed.

            The court sets an Order to Show Cause re completion of arbitration for hearing on August 5, 2025, at 8:30 a.m., in Department 53.

            The court orders defendants Barrett Business Services, Inc. and Michael Kors (USA) Inc. to give notice of this ruling.

IT IS SO ORDERED.

DATED:  January 9, 2025

_____________________________

Robert B. Broadbelt III

Judge of the Superior Court