Judge: Stuart M. Rice, Case: 22STCV24374, Date: 2024-08-06 Tentative Ruling


Case Number: 22STCV24374    Hearing Date: August 6, 2024    Dept: 1

Moving Party:             Plaintiff Bianca Ball

Responding Party:      Defendants CDC Restaurant Group, Inc. and Jeremiah Cillpam

Ruling:                        Petition granted in part.  The Court will correct the Award by striking the portion applying federal law to the question of whether class arbitration is appropriate (pp. 4:27-6:2) and otherwise confirm the award.

 

This is a proposed employment class action.  Plaintiff Bianca Ball (Plaintiff) alleges that she and others were employed by defendants CDC Restaurant Group, Inc. (CDC) and Jeremiah Cillpam (collectively, Defendants), during which employment Defendants committed various violations of labor law. 

 

On July 24, 2023, the Court granted Defendants’ motion to compel arbitration, holding that Plaintiff was required to arbitrate her claims against Defendants but that the arbitrator must decide whether the Agreement permits or requires classwide arbitration under Sandquist v. Lebo Automotive, Inc. (2016) 1 Cal.5th 233, 247 and Muller v. Roy Miller Freight Lines, LLC (2019) 34 Cal.App.5th 1056, 1071. On March 18, 2024, the arbitrator (Hon. Monica Bachner (ret.)) issued a partial award (the Award) holding that the Agreement does not permit or require classwide arbitration, either under California or federal law.  Plaintiff now petitions to correct or vacate the arbitration award.

 

Legal Standards

 

Code of Civil Procedure section 1286.2 provides that a court may vacate an arbitration award where:

 

(1) The award was procured by corruption, fraud or other undue means.

 

(2) There was corruption in any of the arbitrators.

 

(3) The rights of the party were substantially prejudiced by misconduct of a neutral arbitrator.

 

(4) The arbitrators exceeded their powers and the award cannot be corrected without affecting the merits of the decision upon the controversy submitted.

 

(5) The rights of the party were substantially prejudiced by the refusal of the arbitrators to postpone the hearing upon sufficient cause being shown therefor or by the refusal of the arbitrators to hear evidence material to the controversy or by other conduct of the arbitrators contrary to the provisions of this title.

 

(6) An arbitrator making the award either: (A) failed to disclose within the time required for disclosure a ground for disqualification of which the arbitrator was then aware; or (B) was subject to disqualification upon grounds specified in Section 1281.91 but failed upon receipt of timely demand to disqualify himself or herself as required by that provision. However, this subdivision does not apply to arbitration proceedings conducted under a collective bargaining agreement between employers and employees or between their respective representatives.

(Code Civ. Proc. § 1286.2(a).)

 

These are the exclusive grounds for vacating an arbitration award.  (Moncharsh v. Heily & Blase (1992) 3 Cal.4th 1, 27-28 (Moncharsh).)  A court may not vacate an arbitration award simply because “an error of law appears on the face of the award causing substantial injustice.”  (Id. at 28.)  Likewise, “arbitrators do not exceed their powers merely because they assign an erroneous reason for their decision.”  (Ibid., quoting In re Application of O’Malley (1957) 48 Cal.2d 107, 111.) 

 

However, a court may review the legal basis for the arbitrator’s decision where “granting finality to an arbitrator's decision would be inconsistent with the protection of a party's statutory rights.”  (Moncharsh, supra, 3 Cal.4th at 32.) 

 

“Under Code of Civil Procedure section 1286, once a petition to confirm, correct, or vacate is filed, the superior court has only four choices: It may (1) confirm the award, (2) correct the award and confirm it as corrected, (3) vacate the award, or (4) dismiss the proceedings.”  (Sunnyvale Unified School Dist. v. Jacobs (2009) 171 Cal.App.4th 168, 175.) 

 

Discussion

 

Plaintiff contends that Judge Bachner exceeded her authority by deciding that the arbitration could not proceed on a class basis under federal law, and by failing to apply certain California authority concerning class action waivers.  The Court will consider these issues seriatim. 

 

1.      Judge Bachner Exceeded Her Authority in Applying Federal Law to Determine Whether Class Arbitration Is Appropriate

 

In its July 24, 2023 ruling, the Court determined that Plaintiff was required to arbitrate her claims against Defendant, but Defendant had not carried its burden to show that the Federal Arbitration Act (FAA) applied to the Agreement, and that therefore under state law, the arbitrator was required to decide whether the arbitration would proceed on a class basis or not.  (See Sandquist v. Lebo Automotive, Inc. (2016) 1 Cal.5th 233, 247 and Muller v. Roy Miller Freight Lines, LLC (2019) 34 Cal.App.5th 1056, 1071.) 

 

In the March 18, 2024 Award, Judge Bachner determined that “assuming the CAA [California Arbitration Act] applies,” there was no intent by the parties to arbitrate anything other than Plaintiff’s individual claims.  (Petition, Attachment 8(c) [Award], pp. 3-4.)  Alternatively, Judge Bachner determined that “if the Arbitrator is not bound by Judge Rice’s ruling that the FAA does not apply,” Defendant had established that the FAA applied to the Agreement and that therefore federal law forbade class arbitration.  (See Id. at pp. 4-6, citing Lamps Plus, Inc. v. Varela (2019) 139 S.Ct. 1407, 1414.) 

 

As Defendant points out, Judge Bachner’s Award expressly identifies California law as an independent basis for her determination that the Agreement did not contemplate class arbitration.  The Court therefore will not vacate the award.  However, the Court already determined that the FAA did not apply to the Agreement, and therefore did not delegate to Judge Bachner the question of whether the Agreement permitted class arbitration under federal law.  Judge Bachner therefore exceeded her authority in revisiting that issue. 

 

2.      Judge Bachner Did Not Exceed Her Authority by “Eschewing State Law Surrounding Class Waivers”

 

Plaintiff contends that Judge Bachner exceeded her authority by “failing to consider the California Supreme Court’s guidance in Gentry [i.e. Gentry v. Superior Court (2007) 42 Cal.4th 443] on when class waivers are permissible.”  Plaintiff is arguing that Judge Bachner erred by failing to apply certain law, not that she exceeded her authority.  Plaintiff presents no authority providing otherwise, and in fact no authority on arbitration or arbitration awards, but instead simply argues the merits of why Gentry requires class arbitration here.  The Court delegated to the arbitrator the question of whether the arbitration ought to be a class arbitration under California law, and Judge Bachner decided that question.  Plaintiff’s contention that she should have decided it differently is not properly before this Court.  Indeed, the Court observes that Plaintiff expressly argued to Judge Bachner that use of Gentry in her analysis was “inapplicable as the Parties never agreed to a Class Action waiver.”  (See Giamela Decl., Ex. E, pp. 4-5.)  Under the circumstances, it does not appear that granting finality to Judge Bachner’s Award would be inconsistent with any of Plaintiff’s statutory rights.  (See Moncharsh, supra, 3 Cal.4th  at 32.)

 

Conclusion

 

For the foregoing reasons, the petition is granted in part.  The Court will correct the Award by striking the portion of the Award beginning at page 4, line 27 with “Alternatively,” and concluding at page 6, line 2.  Having done so, the Court hereby confirms the award.  Defendant to give notice.