Judge Stuart M. Rice, Case 22STCV06100 2022-10-26 Tentative Ruling

Ruling: Motion granted in part. Plaintiff is required to arbitrate her individual claims against Defendants, including her individual PAGA claims. Her class claims are dismissed in accordance with the language of the Arbitration Agreement. The representative PAGA claims are stayed, as is the balance of the action.

Defendants Surgical Neurophysiology, Inc. (SNI) and Vahid Soltani (collectively, “Defendants”) move to compel plaintiff Mana Hamzeh, also known as Ashley Amirhamzeh (“Plaintiff”) to submit her individual claims to arbitration, including her individual PAGA claims, and to dismiss her class claims and representative PAGA claims.

Preliminarily, the Court notes that there was apparently some problem with the electronic filing of Plaintiff’s opposition, as explained by declarations submitted by Plaintiff’s counsel. As a result, the opposition was apparently filed a day late. It does not appear Defendant was in any way prejudiced by the late filing, and the Court sees no reason to make an issue of it. The Court will fully consider Plaintiff’s opposition.

This is a labor and employment action consisting of ten causes of action for labor code violations, brought on behalf of a purported class, five causes of action brought in Plaintiff’s individual capacity, and a cause of action for penalties under the Private Attorney General Act (PAGA).

Plaintiff was hired by SNI on February 1, 2019 as a neuromonitoring specialist. On her first day of work, she was provided with several documents, including a one-page document titled “Surgery Neurophysiology, Inc.’s Arbitration Agreement” (the “Agreement”). The Agreement provides, in pertinent part:

It is the desire of the parties to this Agreement that, all controversies relating to or arising from Employee’s employment with the Company (“Disputes”) will be resolved in an expeditious manner. …

A. The Company and Employee mutually agree that any dispute or controversy arising out of or in any way related to any Disputes shall be resolved exclusively by final and binding arbitration pursuant to the Federal Arbitration Act. Such arbitration shall be held in Orange County, California pursuant to the Model Rules for Arbitration of Employment Disputes of the American Arbitration Association then in effect, which can be found at [hyperlink]. …

B. For purposes of this Agreement, the term “Disputes” means and includes any claim or action arising out of or in any way related to the hire, employment, remuneration, separation or termination of Employee. The potential Disputes which the parties agree to arbitrate, pursuant to this Agreement, include but are not limited to: claims for wages or unlawful discrimination, retaliation or harassment…and Disputes arising out of or relating to the termination of the employment relationship between the parties, whether based on common law or statute, regulation, or ordinance. …

E. Both Company and Employee agree “Disputes” must be brought in Arbitration in a party’s individual capacity, and not as a class member in any purported class proceeding. Should Employee wish to opt out of this Section (E) of the Agreement, Employee must notify Vahid Soltani in writing within seven (7) days of signing this Arbitration Agreement. Once Employee Opts Out of this Section (E), only Employee’s individual claims will be subject to Arbitration and any class proceeding must be filed in state or federal court.

Plaintiff alleges that during the course of her employment she and other putative class members were subjected to employment practices which constituted violations of the Labor Code. Plaintiff also alleges that Defendants discriminated against her in particular because she was a non-sophisticated foreign graduate immigrant who spoke English as a second language, because she became disabled due to a COVID-19 infection, and as retaliation for raising these and other issues with her employment. Plaintiff was terminated at some point between December 10, 2020 and March 24, 2021 (the parties disagree). Plaintiff filed this lawsuit on February 17, 2022.

On petition of a party to an arbitration agreement alleging the existence of a written agreement to arbitrate a controversy and that a party thereto refuses to arbitrate such 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….¿

“California law reflects a strong public policy in favor of arbitration as a relatively quick and inexpensive method for resolving disputes. To further that policy, section 1281.2 requires a trial court to enforce a written arbitration agreement unless one of three limited exceptions applies. Those statutory exceptions arise where (1) a party waives the right to arbitration; (2) grounds exist for revoking the arbitration agreement; and (3) pending litigation with a third party creates the possibility of conflicting rulings on common factual or legal issues.” (Acquire II, Ltd. v. Colton Real Estate Group¿(2013) 213 Cal.App.4th 959, 967, citations omitted.)¿

“There is no public policy favoring arbitration of disputes which the parties have not agreed to arbitrate.” (Engineers & Architects Assn. v. Community Development Dept.¿(1994) 30 Cal.App.4th 644, 653.) Nevertheless, the strong public policy promoting private arbitration of civil disputes gives rise to a presumption in favor of arbitrability and compels the Court to construe liberally the terms of the arbitration agreement. (Vianna v. Doctors’ Management Co.¿(1994) 27 Cal.App.4th 1186, 1189).¿ ¿¿

“The petitioner bears the burden of proving the existence of a valid arbitration agreement by the preponderance of the evidence, and a party opposing the petition bears the burden of proving by a preponderance of the evidence any fact necessary to its defense. 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.)¿¿

“The party opposing arbitration has the burden of demonstrating that an arbitration clause cannot be interpreted to require arbitration of the dispute. Nonetheless, this policy does not override ordinary principles of contract interpretation. The contractual terms themselves must be carefully examined before the parties to the contract can be ordered to arbitration: Although [t]he law favors contracts for arbitration of disputes between parties, there is no policy compelling persons to accept arbitration of controversies which they have not agreed to arbitrate.” (Rice v. Downs¿(2016) 247 Cal.App.4th 1213, 1223, citations and quotations omitted.)¿¿¿

Defendant contends that Plaintiff was presented with the Agreement on her first day of work, and that she signed the Agreement, asking no questions and voicing no concerns. (Soltani Decl., ¶¶ 2, 4.) Plaintiff, on the other hand, contends that Defendant rushed her to sign the papers, telling her there was “no time” for her to read them and that they had to go right away to see the EEG equipment she would be handling, and that she felt pressured to sign the papers so as not to come across as defiant. (Hamzeh Decl., ¶¶ 4-5.)

Plaintiff contends that there is no valid agreement because the Agreement “contained and referred to inconspicuously detailed provisions on sophisticated legal concepts.” This is not a defense to the existence of a contract. “Mutual assent is determined under an objective standard applied to the outward manifestations or expressions of the parties, i.e., the reasonable meaning of their words and acts, and not their unexpressed intentions or understandings.” (Martinez v. BaronHR, Inc. (2020) 51 Cal.App.5^th 962, 967.) Plaintiff’s signing of the agreement and communicating with Dr. Soltani about the impending position (see Supp. Soltani Decl., Ex. C) objectively indicates the existence of a contract and Plaintiff’s agreement to be bound by it. “Ordinarily, one who accepts or signs an instrument, which on its face is a contract, is deemed to assent to all its terms, and cannot escape liability on the ground that he has not read it.” (Randas v. YMCA of Metropolitan Los Angeles (1993) 17 Cal.App.4^th 158, 163.) “No law requires that parties dealing at arm's length have a duty to explain to each other the terms of a written contract, particularly where…the language of the contract expressly and plainly provides for the arbitration of disputes arising out of the contractual relationship.” (Brookwood v. Bank of America (1996) 45 Cal.App.4^th 1667, 1674.) “Reasonable diligence requires the reading of a contract before signing it. A party cannot use his own lack of diligence to avoid an arbitration agreement.” (Ibid.) Although Plaintiff may have defenses to the enforcement of an otherwise valid agreement (such as unconscionability), Plaintiff has not rebutted Defendant’s showing of a valid agreement. Plaintiff’s claim of a rescission is discussed below.

Unconscionability is a valid defense to a petition to compel arbitration. (Sonic-Calabasas A, Inc. v. Moreno (2013) 57 Cal.4th 1109, 1143 (Sonic-Calabasas A).) State law governs the unconscionability defense. (Doctor’s Assocs., Inc. v. Casarotto (1996) 517 US 681, 687.) The core concern of the unconscionability doctrine is the “absence of meaningful choice on the part of one of the parties together with contract terms which are unreasonably favorable to the other party.” (Sonic-Calabasas A, Inc., 57 Cal.4th at 1145.) The unconscionability doctrine ensures that contracts—particularly contracts of adhesion—do not impose terms that have been variously described as overly harsh, unduly oppressive, so one-sided as to shock the conscience, or unfairly one-sided. (Id.)

The prevailing view is that procedural and substantive unconscionability must both be present for a court to exercise its discretion to refuse to enforce a contract or clause under the doctrine of unconscionability. (Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83, 114 (Armendariz).) But they need not be present in the same degree; the more substantively oppressive the contract term, the less evidence of procedural unconscionability is required to conclude that the term is unenforceable, and vice versa. (Id.) However, when there is no other indication of oppression other than the adhesive aspect of an agreement, the degree of procedural unconscionability is low. (Serpa v. California Surety Investigations, Inc. (2013) 215 Cal.App.4th 695, 704.)

“A procedural unconscionability analysis ‘begins with an inquiry into whether the contract is one of adhesion.’ [Citation.] An adhesive contract is standardized, generally on a preprinted form, and offered by the party with superior bargaining power ‘on a take-it-or-leave-it basis.’” (OTO, LLC v. Kho (2019) 8 Cal.5th 111, 126 (OTO).) “Arbitration contracts imposed as a condition of employment are typically adhesive[.] The pertinent question, then, is whether circumstances of the contract's formation created such oppression or surprise that closer scrutiny of its overall fairness is required.” (Ibid.) “Oppression occurs where a contract involves lack of negotiation and meaningful choice, surprise where the allegedly unconscionable provision is hidden within a prolix printed form.” (Ibid.)

Here, it does appear that the Agreement was a contract of adhesion. Plaintiff understood that she was required to sign the Agreement in order to work at SNI (Hamzeh Decl., ¶ 4) and Dr. Soltani himself states that he told her she would be “required to sign such an agreement.” (Supp. Soltani Decl., ¶ 6.)

The parties disagree over the circumstances in which Plaintiff executed the Agreement. Plaintiff states that her native language is Farsi and that her comprehension of English is “not as sophisticated as my Farsi.” (Hamzeh Decl., ¶ 2.) Plaintiff contends that on February 1, 2019, Dr. Soltani handed her a 60-page stack of documents and told her to sign the documents “ASAP in order to be able to give me a job and it was all related to my vaccination and IRS paper work and immigration paper work that I was allowed to work in America.” (Id. at ¶ 4.) Dr. Soltani never mentioned there was an arbitration agreement, nor explained what “arbitration” meant. (Ibid.) He rushed her to sign the papers so that they could examine equipment in an operating room while it was still unoccupied. (Ibid.) Plaintiff avers that she felt pressured and “did not want to come across as a defiant person since I was applying for the position he had available” and so signed the papers without reading them, although she was permitted to take home signed papers. (Id. at ¶ 5.)

Dr. Soltani, on the other hand, states that Plaintiff spoke English “very well,” that she graduated from three schools in the United States, and that she passed an examination which required an assessment of her English skills in a doctor-patient encounter. (Supp. Soltani Decl., ¶ 4.) “At no point” did Plaintiff indicate she had any trouble understanding his English when they worked together, and they primarily communicated in English. (Ibid.) Dr. Soltani first met with Plaintiff on January 11, 2019, after which Plaintiff e-mailed him her immigration and vaccination forms. (Id. at ¶ 5; Ex. E.) On January 15, 2019, Dr. Soltani conducted an orientation with Plaintiff at which he first raised the issue of arbitration, explaining that she would need to sign an arbitration agreement, that it meant disputes would not be handled in court, and used the Farsi word “hakam”[1] to illustrate the point. (Id. at ¶ 6.) Plaintiff did not raise any questions about arbitration or object to signing an arbitration agreement. (Ibid.) At the close of the orientation, she signed an attestation that she had completed the orientation. (Id., Ex. F.)

Dr. Soltani also claims that at the February 1, 2019 meeting, he provided her only 10 pages of documents, including the Agreement, as well as a seven-page Employment Agreement, a one-page meal break waiver, and a one-page on-duty meal period agreement. (Soltani Supp. Decl., ¶ 8.) The meeting lasted 2-3 hours, during which he went over all the documents with her, specifically raising the arbitration agreement. (Id. at ¶ 9.) Dr. Soltani denies that he pressured her or rushed her to visit the operating room, as “she was a new employee and was not able to observe a surgery until she had the proper clearance (which she didn’t receive until a few days later).” (Ibid.) Dr. Soltani also denies that Plaintiff said she needed to take the papers home, but had she asked to he would have let her. (Ibid.)

The parties’ accounts are in complete apposition. That said, for the sake of argument, the Court will credit Plaintiff’s evidence, whereby she would establish at least some level of procedural unconscionability.

Substantive unconscionability focuses on the actual terms of the agreement and evaluates whether they create an overly harsh or one-sided result. (Armendariz, supra, 24 Cal.4th at 114.) Where provisions of the arbitration contract are unconscionable, courts may sever or restrict the operation of those provisions. (Id. at 124.) Where the “central purpose of the contract is tainted with illegality,” then severance is not appropriate and the contract should be voided. (Ibid.) Where “multiple defects indicate a systematic effort to impose arbitration on an employee not simply as an alternative to litigation, but as an inferior forum that works to the employer's advantage [,]” voiding the contract rather than severing the unconscionable provisions is appropriate. (Ibid.) “Although procedural unconscionability alone does not invalidate a contract, its existence requires courts to closely scrutinize the substantive terms ‘to ensure they are not manifestly unfair or one-sided.’” (OTO, supra, 8 Cal.5^th at 130.)

Plaintiff identifies two provisions she contends are substantively unconscionable: 1) the requirement to arbitrate all claims, including claims which might otherwise be heard in Labor Department or Department of Fair Employment and Housing (DFEH) proceedings; and 2) the class-action waiver in Section E of the agreement.

As stated in the Armendariz case, Fair Employment and Housing Act (FEHA) claims may be arbitrated so long as the arbitration meets certain minimum requirements permitting the employee to vindicate their statutory rights. (Armendariz, supra, 24 Cal.4^th at 90.) Those requirements are 1) a neutral arbitrator; 2) more than minimal discovery; 3) a written award; 4) the availability of all relief that would be otherwise available in court; and 5) no requirement for the employee to pay unreasonable costs or expenses as a condition of access to arbitration. (Id. at 102.)

Plaintiff does not offer any argument on the Armendariz factors. As the party opposing arbitration, Plaintiff has the burden to establish all aspects of the defense. (Giuliano v. Inland Empire Personnel, Inc., supra, 149 Cal.App.4th at 1284.)¿ The Agreement appears to fulfill the Armendariz factors, and Plaintiff has not carried her burden to establish otherwise.

Plaintiff contends that the class action waiver contained in section (E) of the agreement is unconscionable. Class action waivers are permissible both in arbitration agreements subject to the FAA (see AT&T Mobility LLC v. Concepcion (2011) 563 U.S. 333) and the CAA (Gentry v. Superior Court (2007) 42 Cal.4^th 443, 463; see also Muro v. Cornerstone Staffing Solutions, Inc. (2018) 20 Cal.App.5^th 784, 803 [Gentry analysis remains appropriate where FAA is not applicable]). Plaintiff has offered no argument why Concepcion is not applicable, or alternatively, why the waiver is invalid under Gentry. Plaintiff’s argument that the waiver is unconscionable because of the opt-out provision does not follow, and indeed, many courts have upheld class action waivers which bind the employee from execution, without any opportunity to opt out. Plaintiff’s citation to Schoshinski v. City of Los Angeles (2017) 9 Cal.App.5^th 780, does not provide otherwise. Plaintiff’s contention that the waiver is unilateral, while true, is not on its own sufficient to invalidate the agreement; indeed, all such waivers are likely unilateral, as employers are unlikely to need to join class or collective actions against their employees. Plaintiff has not carried her burden to show that this waiver is unconscionable.

As discussed above, construing the evidence arguendo in favor of Plaintiff, Plaintiff has established at most some procedural unconscionability, but no substantive unconscionability. She has therefore not carried her burden to establish the unconscionability defense, and the Court will not invalidate the Agreement on that ground.

Plaintiff first makes reference to her purported cancellation of the Agreement when discussing the existence of the Agreement itself; that is, whether she in fact agreed to the Agreement at all. However, “[m]utual assent is determined under an objective standard applied to the outward manifestations or expressions of the parties, i.e., the reasonable meaning of their words and acts, and not their unexpressed intentions or understandings.” (Martinez v. BaronHR, Inc. (2020) 51 Cal.App.5^th 962, 967.) Plaintiff’s signing the Agreement, and then later delivering a letter purporting to cancel it, reasonably indicates the existence of a contract.

Plaintiff contends that after the February 1, 2019 meeting, she asked an attorney about arbitration in the context of employment and was told to opt out of the entire agreement ASAP. (Hamzeh Decl., ¶ 5.) On February 6, 2019, Plaintiff claims she presented Dr. Soltani with a letter she had prepared in Farsi and English stating that she wanted to cancel the Agreement. (Id., ¶ 6.) Specifically, the Farsi portion of the letter read:

On Friday when I signed the forms, I requested you to give me a copy so I can take home

to read them. I asked a lawyer who advised that I cancel the arbitration agreement in its

entirety. I should not have signed it before reading it but because you were in rush to

show me the hospital, I was rushed and signed without reading. I am ashamed. Please cancel the entire Arbitration Agreement. I hope I can yet start my job without this

Upon being presented with the letter, Dr. Soltani smiled and said “Don’t worry. It is an agreement my lawyer forces me to give my employees to sign. Hopefully, we never have to worry about any kind of claims against me.” (Hamzeh Decl., ¶ 7.) Dr. Soltani refused to give Plaintiff anything in writing acknowledging his cancellation of the agreement. (Ibid.) He told her to come to work on February 11, 2019, which Plaintiff understood to be him agreeing to her cancellation. (Ibid.)

Defendants deny this ever happened. Specifically, Dr. Soltani denies that Plaintiff presented him with the purported cancellation letter or told him she wanted to cancel the Agreement, and states he has never seen the letter before. (Supp. Soltani Decl., ¶¶ 3, 10.) Dr. Soltani states that Plaintiff spoke English very well, citing their text correspondence with Plaintiff in English which he attaches to his declaration. (Id., ¶ 4, Ex. C.) Dr. Soltani also denies that he told Plaintiff on February 6, 2019 to start work on February 11; rather, on February 7, 2019 Plaintiff requested that later start date in order to assist her mother with a legal matter. (Id., ¶ 11; Ex. F.)

As the party opposing the motion, Plaintiff has the burden to prove all facts necessary to her opposition by a preponderance of evidence. (Giuliano v. Inland Empire Personnel, Inc., supra, 149 Cal.App.4th at 1284.)¿¿ The Court must then sit as a trier of fact to determine the motion.

Although the parties’ factual contentions are completely at odds, they are not equally substantiated. Plaintiff contends that Dr. Soltani flatly refused to give her anything in writing to confirm that she had cancelled the Agreement. However, her text communications with Dr. Soltani that day (to which she has not objected) make no reference to her cancellation either. (See Supp. Soltani Decl., Ex. F, p. 21 [Feb. 6, 2019 text messages].) Considering that the letter itself was intended to serve as a record of her cancellation of the Agreement, it would have been a simple matter for Plaintiff to have sent a text, or made some other contemporaneous record of the occurrence, even if Dr. Soltani refused to cooperate. Plaintiff presents none.

Additionally, Plaintiff claims that at the time she presented Dr. Soltani with the cancellation, he told her to report to work on February 11, which she took as an assent to her cancellation. However, according to their text communications, it was Plaintiff who requested that start date so she could assist her mother in a deposition, rather than Dr. Soltani proposing it to her. (Supp. Soltani Decl., Ex. C, p. 22. [Feb. 7, 2019 text messages].)

Considering these inconsistencies, the Court finds that Plaintiff has not carried her burden to establish, by preponderance, the fact of the cancellation, and therefore Plaintiff’s defense that she rescinded the Agreement pursuant to Civil Code § 1689. For the same reasons, Plaintiff has not established that she opted out of the class action waiver.

Plaintiff contends that “dropping a stack of papers amounting to at least 60 pages on the lap

of a soon-to-be employee, who is desperate for a job, expecting her to sign some documents purportedly as a condition of beginning employment soon after, without disclosing that one of the documents was an arbitration agreement impacting Plaintiff’s rights” is against public policy. As discussed above, the circumstances of the execution of the Agreement are disputed, with Plaintiff claiming she was given 60 pages of documents and Defendants claiming it was only 10, Plaintiff claiming she was rushed to sign and given no explanation and Defendants denying this. There is also no support in Plaintiff’s declaration for counsel’s contention that she was “desperate for a job.” But even if the Court were to credit Plaintiff’s account, Plaintiff has not substantiated a public policy defense to the contract.

“The power of the courts to declare a contract void for being in contravention of sound public policy is a very delicate and undefined power, and, like the power to declare a statute unconstitutional, should be exercised only in cases free from doubt.” (Jensen v. Traders & General Ins. Co. (1959) 52 Cal.2d 786, 794; see also City of Santa Barbara v. Superior Court (2007) 41 Cal.4^th 747, 777 fn. 53.) “Freedom of contract is an important principle, and courts should not blithely apply public policy reasons to void contract provisions.” (VL Systems, Inc. v. Unisen, Inc. (2007) 152 Cal.App.4^th 708, 713.) Where a party has signed a contract, it is the policy of California to presume they have read it and assented to its terms. (Randas v. YMCA of Metropolitan Los Angeles, supra, 17 Cal.App.4^th at 163.) It is likewise the policy of California that parties at arm’s length need not explain to each other the terms of a written contract, but rather must exercise reasonable diligence in familiarizing themselves with its terms. (Brookwood v. Bank of America, supra, 45 Cal.App.4^th at 1674.) To find the contract against public policy under these circumstances, which speak to unconscionability but on which (as discussed above) the Court has not found unconscionability, would make an end-run around the ordinary contractual analysis performed every day by the courts of this state.

For the foregoing reasons, the Court is inclined to enforce the Agreement, which includes a waiver of class claims. Because Plaintiff has not established that she opted out of the class waiver, nor established a defense to the enforcement of the waiver, the Court will enforce it and dismiss her class claims.

In order to determine the disposition of the PAGA claims, the Court must address whether the FAA applies. “A party seeking to enforce an arbitration agreement has the burden of showing FAA preemption.” (Lane v. Francis Capital Management, LLC (2014) 224 Cal.App.4^th 676, 687; see also Nixon v. AmeriHome Mortgage Company, LLC.) Viking River holds that in cases subject to the FAA, an arbitration agreement may compel the arbitration of “individual PAGA claims” belonging to the plaintiff; that is, claims for Labor Code violations the plaintiff themselves suffered. (Viking River, supra, 142 S.Ct. at 1924-1925.) State law which provides that a PAGA action “cannot be divided into individual and non-individual claims” is preempted. (Id. at 1925.)

Where the FAA does not apply, however, courts may apply California law. (See, e.g., Garrido v. Air Liquide Industrial U.S. LP (2015) 241 Cal.App.4^th 833, 845.) Under California law, PAGA claims are non-arbitrable. (See Contreras v. Superior Court of Los Angeles County (2021) 61 Cal.App.5^th 461, 472.) This is because California law recognizes that PAGA claims are really claims by the State of California, which are brought by the nominal plaintiff as a proxy. (Correia v. NB Baker Electric, Inc. (2019) 32 Cal.App.5^th 602, 621-622.) Because the State, the real party in interest with respect to PAGA claims, is not a party to an arbitration agreement and has not agreed to submit the claims to arbitration, a plaintiff’s agreement to arbitrate cannot be enforced as to PAGA claims without the State’s consent. (Ibid.) Viking River held that the FAA preempts California law prohibiting the splitting of “individual” and “representative” components of PAGA claims (see Viking River, supra, 142 S.Ct. at 1924), but that preemption does not apply where it has not been established.

Defendants, who seek to enforce the Agreement, have the burden to establish FAA preemption. Although Defendants contend that Plaintiff has conceded the issue by failing to address it in her opposition, Plaintiff has no burden. Neither Defendants’ motion nor their reply contains any argument in support of applying the FAA. By its own terms, the FAA applies only to a “contract evidencing a transaction involving commerce.” (9 U.S.C. § 2.) A contract evidences a transaction involving commerce if it “in fact” involves interstate commerce, “even if the parties did not contemplate an interstate commerce connection.” (Allied-Bruce Terminix Companies, Inc. v. Dobson (1995) 513 U.S. 265, 281.) The language of the FAA “reflects that Congress intended the law’s coverage to extend to the full reach of its commerce clause power.” (Nieto v. Fresno Beverage Co., Inc. (2019) 33 Cal.App.5^th 274, 279.)

Although they have made no substantive argument in favor of applying the FAA, they have submitted the Agreement itself, which provides that “Disputes shall be resolved exclusively by final and binding arbitration pursuant to the Federal Arbitration Act.” (See Soltani Decl., Ex. A, ¶ A.) Even in the absence of evidence of interstate commerce, a party may “voluntarily elect to have the FAA govern enforcement of the Agreement[.]” (Victrola 89, LLC v. Jaman Properties 8 LLC (2020) 46 Cal.App.5^th 337, 355.) In agreeing to resolve disputes through arbitration “pursuant to the Federal Arbitration Act [,]” Plaintiff and Defendants agreed to apply the FAA to the Agreement. The Court will therefore apply the FAA, rather than California law.

Viking River holds that in cases subject to the FAA, an arbitration agreement may compel the arbitration of “individual PAGA claims” belonging to the plaintiff; that is, claims for Labor Code violations the plaintiff themselves suffered. (Viking River, supra, 142 S.Ct. at 1924-1925.) State law which provides that a PAGA action “cannot be divided into individual and non-individual claims” is preempted. (Id. at 1925.)

Ordinarily, “an employee’s right to bring a PAGA action is unwaivable[,]” and an employment agreement which purports to “eliminate…altogether” the choice to bring a PAGA action is unenforceable as against public policy. (Iskanian v. CLS Transportation Los Angeles, LLC (2014) 59 Cal.4^th 348, 383 (Iskanian).) Viking River does not disturb this holding but does provide that where an arbitration agreement purports to waive all PAGA claims, individual PAGA claims may nonetheless be sent to arbitration where a “severability clause in the agreement provides that if the waiver provision is invalid in some respect, any ‘portion’ of the waiver that remains valid must still be ‘enforced in arbitration.’” (Viking River, supra, 142 S.Ct. at 1924-1925.)

Here, the Agreement provides that Plaintiff will arbitrate any “Dispute” she has with Defendants, including “any claim or action arising out of or in any way related to the hire, employment, remuneration, separation or termination of Employee.” (Soltani Decl., Ex. A, ¶ B.) Plaintiff’s individual PAGA claims, that is, the violations of the Labor Code which Plaintiff herself suffered, are “Disputes” within the meaning of the Agreement. The Court will therefore order them to arbitration.

In Viking River, the Supreme Court reasoned that once a plaintiff’s individual PAGA claims were sent to arbitration, the plaintiff loses standing to assert representative PAGA claims. (Viking River, supra, 142 S.Ct. at 1925.) However, California law conveys PAGA standing on any person defined as an “aggrieved employee.” (Lab. Code § 2699(a).) An “aggrieved employee” is “any person who was employed by the alleged violator and against whom one or more of the alleged violations was committed.” (Lab. Code § 2699(c).) A plaintiff may have standing as an “aggrieved employee” even where they have no right to monetary recovery or any unredressed injury at all, and even where they have settled all “individual claims” of any kind or those claims are substantively barred. (Kim v. Reins International California, Inc. (2020) 9 Cal.5^th 73, 82, 90-91 (Kim); see also Zuniga v. Alexandria Care Center, LLC (2021) 67 Cal.App.5^th 871, 883 [plaintiff retained standing as an aggrieved employee despite settlement of her individual claims]; Johnson v. Maxim Healthcare Services, Inc. (2021) 66 Cal.App.5^th 924, 930 [fact that plaintiff’s non-PAGA claims were time-barred “[did] not nullify the alleged Labor Code violations nor strip Johnson of her standing to pursue PAGA remedies.”)

Nothing in the legislative history suggests the Legislature intended to make PAGA standing dependent on the existence of an unredressed injury, or the maintenance of a separate, unresolved claim. Such a condition would have severely curtailed PAGA's availability to police Labor Code violations because, as noted, many provisions do not create private rights of action or require an allegation of quantifiable injury. Instead, true to PAGA's remedial purpose, the Legislature conferred fairly broad standing on all plaintiffs who were employed by the violator and subjected to at least one alleged violation. (Kim, supra, 9 Cal.5^th at 90-91.)

To dismiss Plaintiff’s representative PAGA claims would create the incongruous possibility that she prevails on her individual claims in arbitration (establishing that she was “employed by the alleged violator” and “one or more of the alleged violations was committed” against her) only to find that the representative PAGA claims which that finding would qualify her to prosecute have been dismissed. This is not a result that can be squared with the broad concept of standing articulated in Kim, Zuniga, and Johnson, cited above.

While the Supreme Court must “decide questions of state law when necessary for the disposition of a case brought to it for decision, although the highest court of the state had not answered them,” its decisions do not “finally settle the questions of state law involved[.]” (Meredith v. City of Winter Haven (1943) 320 U.S. 228, 237-238.) The question of standing for representative PAGA claims considering Viking River has left us with some uncertainty, which California Appellate tribunals have yet to address. (See Viking River, supra, 142 S.Ct. at 1925 (conc. opn. of Sotomayor, J.) [“Of course, if this Court's understanding of state law is wrong, California courts, in an appropriate case, will have the last word.”].) This hotly contested issue is likely to be resolved in the near future, as the California Supreme Court has recently granted review in the case of Adolph v. Uber Technologies, Inc. (Apr. 11, 2022, G059860), review granted July 20, 2022, S274671.)

‘[L]aw in the sense in which courts speak of it today does not exist without some definite authority behind it. The common law so far as it is enforced in a State, whether called common law or not, is not the common law generally but the law of that State existing by the authority of that State without regard to what it may have been in England or anywhere else.’

‘The authority and only authority is the State, and if that be so, the voice adopted by the State as its own (whether it be of its Legislature or of its Supreme Court) should utter the last word.’ (Erie R. Co. v. Tompkins (1938) 304 U.S. 64, 79, quoting Black & White Taxicab & Transfer Co. v. Brown & Yellow Taxicab & Transfer Co. (1928) 276 U.S. 518, 533-534, 535 (diss. opn. of Holmes, J.))

The Court will therefore not dismiss Plaintiff’s representative PAGA claims, but instead will stay them pending the outcome of arbitration.

For the foregoing reasons, the motion to compel arbitration is granted in part. Plaintiff is required to arbitrate all of her individual claims against Defendant, including her individual PAGA claims. Her class claims are dismissed. Her representative PAGA claims are stayed, as is the remainder of this action, pending the outcome of arbitration. A future date will be set at the hearing.

[1] “[¿]akam, An umpire, arbitrator, mediator[.]” (Steingass, A Comprehensive Persian-English dictionary, including the Arabic words and phrases to be met with in Persian literature. (1892) <https://dsal.uchicago.edu/cgi-bin/app/steingass_query.py?qs=hakam&matchtype=default> (as of September 30, 2022).)