Judge: Stuart M. Rice, Case: 22STCV36203, Date: 2024-03-07 Tentative Ruling

Case Number: 22STCV36203    Hearing Date: March 7, 2024    Dept: 1

Moving Party:             Defendants King’s Hawaiian Bakery West, Inc. and King’s Hawaiian LLC

Responding Party:      Plaintiff Juan Jorge Gonzalez

Ruling:                        Motion to compel arbitration is granted.

 

This is a wage-and-hour proposed class and Private Attorney General Act (PAGA) action.  Plaintiff Juan Jorge Gonzalez (Plaintiff) alleges that he and others were employed by defendants King’s Hawaiian Bakery West, Inc. and King’s Hawaiian LLC (Defendants), during which employment Defendants committed various violations of labor law.  Defendants move to compel Plaintiff to submit his claims to binding arbitration pursuant to an arbitration agreement Plaintiff purportedly signed.

Legal Standards

Code of Civil Procedure section 1281.2 states, in relevant part:¿ 

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 movant may bear this initial burden “by attaching a copy of the arbitration agreement purportedly bearing the opposing party's signature.” (Iyere v. Wise Auto Group (2023) 87 Cal.App.5th 747, 755 (Iyere); Espejo v. Southern California Permanente Medical Group (2016) 246 Cal.App.4th 1047, 1060.)  “At this step, a movant need not ‘follow the normal procedures of document authentication’ and need only ‘allege the existence of an agreement and support the allegation as provided in [Rules of Court, Rule 3.1330].’”  (Iyere, supra, 87 Cal.App.5th at 755; Condee v. Longwood Management Corp. (2001) 88 Cal.App.4th 215, 219 (Condee).) 

“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.)¿¿¿ 

“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.4th 676, 687; see also Nixon v. AmeriHome Mortgage Company, LLC (2021) 67 Cal.App.5th 934, 946 [“The party seeking to enforce the arbitration agreement also bears the burden of establishing the FAA applies and preempts otherwise governing provisions of state law or the parties’ agreement.”].)

 

Evidentiary Objections

 

Plaintiff’s 2/23/24 Objections to Declarations of Alison Hamer and Gioconda Nunez

 

Plaintiff’s objection #1 is overruled.  Ms. Hamer describes meet-and-confer discussions, not presenting any out-of-court statement for its truth.

 

Plaintiff’s objection #2 is overruled.  Ms. Nunez is the custodian of records of Defendants’ employment files and has foundation to describe the conditions in which Defendants’ employees create business records.  Plaintiff’s business records objection to this assertion in a declaration appears to be an inapplicable copy-paste.

 

Plaintiff’s objection #3 is overruled.  Plaintiff not asking any questions is not an out-of-court statement, it is an objective circumstance witnessed by Ms. Nunez, and not hearsay.

 

Plaintiff’s objection #4 is overruled.  Ms. Nunez is not testifying to any legal conclusion or contention, merely the uncontradicted fact that Plaintiff signed the Agreement (and did not refuse to sign the Agreement).

 

Plaintiff’s objection #5 is sustained in part as to Ms. Nunez’s statement that Plaintiff “indicat[ed] his consent to be bound by [the] terms” of the Agreement.  Ms. Nunez has no foundation to testify to Plaintiff’s state of mind, nor is her opinion of the legal effect of his signature a proper one.  The objection is otherwise overruled.

 

Plaintiff’s objection #6 is overruled.  Ms. Nunez’s recitation of the contents of the Agreement is merely to give context to her assertion that Defendants did not receive an opt-out from Plaintiff.  The Agreement itself is in evidence and not objected to.  The fact that Plaintiff did not opt-out is not an out-of-court statement presented for its truth, it is the absence of such a statement presented for the fact of its non-existence, and not hearsay. 

 

Defendant’s Objections to Declaration of Juan Jorge Gonzalez

 

Defendant’s objections #1-#4 are sustained.  This testimony is not relevant to the issues in this motion.

 

Defendant’s objection #5 (unnumbered) is overruled.  A lack of recollection as to whether a person signed an agreement when it was in fact signed by him may be contradictory but is admissible.   

 

Defendant’s Objections to Declaration of David B. Bibiyan

 

Defendant’s objections #5-#8 are overruled.  The writings are part of the Court’s file and they are relevant to the question of whether Defendant waived the right to arbitrate.

 

Defendant’s objections #9-#11 are sustained.  The description of writings created in anticipation of mediation is barred by the mediation privilege, Evid. Code §§ 1119 and 1126. 

 

Defendant’s objections #12-#13 are overruled.  This testimony is relevant to determining Plaintiff’s claim of prejudice.

 

Defendant’s objection #14 is sustained as to the last sentence, which violates the mediation privilege.  (Evid. Code §§ 1119, 1126.)

 

Plaintiff’s Objections to the Reply Declaration of Gioconda Nunez

 

For the reasons set forth below, the Court has not considered the declaration of Ms. Nunez submitted in reply.  The objections thereto are therefore not material to the disposition of this motion but are preserved.

 

Plaintiff’s Objections to the Reply Declaration of Neil Eddington

 

Plaintiff’s objection #3 is overruled.  Mr. Eddington’s declaration is directed to the waiver issue that Plaintiff himself raised and the Court will exercise its discretion to consider the admissible portions of the declaration.

 

Plaintiff’s objection #4 is overruled.  Mr. Aviles is counsel of record for Plaintiff and his statements in that capacity are authorized admissions not barred by the hearsay rule.

 

Plaintiff’s objection #5 is overruled.  Neither of the circumstances described in Evid. Code § 1521(a) (genuine dispute or unfairness) is present. 

 

Discussion

 

Plaintiff does not dispute that the FAA is applicable to the Agreement, nor that the Agreement encompasses all his claims in this litigation.  Rather, Plaintiff contends that the Agreement was never formed due to lack of mutual assent, that it is unenforceable due to unconscionability, and that Defendants waived their right to arbitrate. The Court will address these contentions in turn.

 

I.                   Existence of an Enforceable Agreement

 

Defendants present a document titled “COMPREHENSIVE AGREEMENT EMPLOYMENT AT-WILL AND ARBITRATION” which apparently bears Plaintiff’s signature.  (See Nunez Decl., Ex. A.)  Plaintiff does not dispute that this is his signature.  Defendants have borne their initial burden.  Iyere, supra, 87 Cal.App.5th at 755.)

 

Plaintiff contends that the Agreement is not enforceable because Plaintiff lacked fluency in English. 

 

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. [Citation.] A party's acceptance of an agreement to arbitrate may be express, as where a party signs the agreement. [Citation.] 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. If he cannot read, he should have it read or explained to him.  [Citation.]

(Caballero v. Premier Care Simi Valley LLC (2021) 69 Cal.App.5th 512, 518 (Caballero), internal quotation marks and brackets omitted.)

 

Plaintiff does not contradict Defendants’ account that he signed the Agreement and asked no questions about it.  (See Nunez Decl., ¶ 4.)  Although Plaintiff was not presented with a Spanish translation, he does not claim he asked for one and was refused, nor that he asked anyone to translate the documents for him.  (See, generally, Gonzalez Decl.)  It is seemingly undisputed that he stated in his hire paperwork that English was one of his “preferred languages,” despite that he also identified Spanish as a preferred language (spelling it “Espanish”) in his employee data form.  (See Bibiyan Decl., Ex. 1.)  Plaintiff apparently was able to complete this form, which is entirely in English, without any difficulty. 

 

“Generally, a party may not avoid enforcement of an arbitration provision because the party has limited proficiency in the English language.”  (Ibid.)  Plaintiff signed the Agreement, manifesting his intent to be bound by it.  It is therefore not unenforceable due to lack of mutual assent.

 

II.                Unconscionability

 

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 to 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

 

“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 is undisputed that the Agreement was a contract of adhesion, which supplies some amount of procedural unconscionability.  (See OTO, supra, 8 Cal.5th at 126.)  Additionally, although a person’s limited comprehension of English may not be sufficient to entirely invalidate an arbitration agreement, it can supply some degree of procedural unconscionability.  (See, e.g., Nunez v. Cycad Management LLC (2022) 77 Cal.App.5th 276, 284 [procedural unconscionability present where employer knew employee was not proficient in English, yet did not explain the arbitration provision in Spanish or provide a translated copy].)  Plaintiff declares that he responded to Ms. Nunez only in Spanish during his onboarding (Gonzalez Decl., ¶ 5), and his misspelling of Spanish as “Espanish” on his employee data form (Bibiyan Decl., Ex. 1) indicates more facility with Spanish than English. This is not as egregious a situation as in Nunez v. Cycad Management LLC, supra, because Plaintiff does understand some English and so indicated to Ms. Nunez (Bibiyan Decl., Ex. 1). Nonetheless, it is somewhat procedurally unconscionable to provide only English-language documents to someone with limited English proficiency.

 

Defendant provides numerous declarations on reply tailored to Plaintiff’s arguments concerning the English-language Agreement and the conduct of the onboarding meeting.  As set forth below, Plaintiff has shown no substantive unconscionability, so it is unnecessary for the Court to consider Defendant’s reply declarations. Plaintiff has established some procedural unconscionability and the Court now turns to whether any substantive unconscionability is present.

 

b.      Substantive 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.5th at 130.)

 

Plaintiff identifies three areas of purported substantive unconscionability: a lack of mutuality in the contemporaneously-executed Proprietary Information and Inventions Agreement (the Proprietary Agreement), that the Agreement requires the arbitration of sexual harassment and assault claims in violation of 9 U.S.C. § 402, and that the Agreement unlawfully requires a waiver of PAGA claims. 

 

                                                              i.      Proprietary Agreement

 

Plaintiff contends that the Proprietary Agreement permits Defendants to bring claims against Plaintiff in court, while the Arbitration Agreement requires Plaintiff to bring all claims against Defendants in arbitration, in violation of Armendariz.  (See Armendariz, supra, 24 Cal.4th at 117 [“it is unfairly one-sided for an employer with superior bargaining power to impose arbitration on the employee as plaintiff but not to accept such limitations when it seeks to prosecute a claim against the employee[.]”]) 

 

It is appropriate to read an arbitration agreement together with a contemporaneously-executed confidentiality agreement where the agreements represent “separate aspects of a single primary transaction— [the employee’s] hiring” and where “[t]hey both govern [], ultimately, the same issue—how to resolve disputes arising between [the employee] and [the employer] arising from [the employee’s] employment.”  (See Alberto v. Cambrian Homecare (2023) 91 Cal.App.5th 482, 490-491 (Alberto).)

 

The Proprietary Agreement provides, in pertinent part:

 

19.  Applicable Law and Exclusive Forum.  The provisions of this Agreement shall be governed by and construed in accordance with the laws of the State of California without giving effect to the principles of conflict of laws.  The state or federal courts within California shall have exclusive jurisdiction over any litigation arising out of or relating to this Agreement and by executing this Agreement the Company and Employee irrevocably submit to the jurisdiction of these courts.

(Bibiyan Decl., Ex. 2, ¶ 19.)

 

Both the Arbitration Agreement and the Proprietary Agreement were executed the same day, December 20, 2017.  (See Nunez Decl., Ex. A; Bibiyan Decl., Ex. 2.)   Both the Arbitration Agreement and the above-quoted provision articulate wholly different methods on how Defendant and Plaintiff are to resolve disputes on completely unrelated subjects. In addition, the Arbitration Agreement provides:

 

3. This is the entire agreement between the Company and the Employee regarding

dispute resolution, the length of Employee's employment, and the at-will nature of the employment relationship, and this agreement supersedes any and all prior agreements regarding these issues. By issuance of this Agreement, the Company agrees to be bound without signing it.

(Nunez Decl., Ex. A, p. 3.) 

 

The Proprietary Agreement states:

 

18. Integrated Agreement.  This is the entire agreement between the Company and Employee regarding confidentiality of the Company’s Confidential Information and Trade Secrets and supersedes any and all prior agreements regarding these issues.

(Bibiyan Decl., Ex. 2, ¶ 18.)

 

Unlike the two agreements in Alberto, supra, both of which governed dispute resolution, only the Arbitration Agreement here governs dispute resolution.  While the Proprietary Agreement contains additional provisions for injunctive relief, it is, at its core, an agreement “regarding confidentiality of the Company’s Confidential Information and Trade Secrets” and not one regarding dispute resolution.  Even if read together, any unconscionable provisions in the Proprietary Agreement are confined to the context of confidential information and trade secrets (which are not relevant to this action) and the Court can and would sever them. Therefore, this supplies no substantive unconscionability. 

 

 

                                                            ii.      Requirement to Arbitrate Sexual Harassment and Assault Claims

 

Plaintiff contends that the Agreement is unenforceable because it “illegally requires the employee to arbitrate sexual harassment and assault claims in violation of federal law[,]” specifically 9 U.S.C. § 402.  9 U.S.C. § 402 which provides, in pertinent part:

 

(a)In General

 

Notwithstanding any other provision of this title, at the election of the person alleging conduct constituting a sexual harassment dispute or sexual assault dispute, or the named representative of a class or in a collective action alleging such conduct, no predispute arbitration agreement or predispute joint-action waiver shall be valid or enforceable with respect to a case which is filed under Federal, Tribal, or State law and relates to the sexual assault dispute or the sexual harassment dispute.

 

This statute does not support Plaintiff’s argument.  It does not provide that it is illegal for a sexual assault dispute or sexual harassment dispute to be arbitrated.  Rather, it provides that where a person alleges conduct constituting such a dispute, they may choose to void the agreement.  (See 9 U.S.C. § 402(a).)  Plaintiff is not alleging a sexual harassment dispute or a sexual assault dispute.  This section therefore has no applicability here whatsoever, and supplies no substantive unconscionability.

 

                                                          iii.      PAGA Waiver

 

The Agreement provides the following waiver (the Class Action Waiver):

 

(f) Except where prohibited by federal law, covered claims must be brought on

an individual basis only. No arbitrator has authority to resolve multi-plaintiff, class, collective or representative action claims under this Agreement. Any disputes concerning the validity of this multi-plaintiff, class, collective and representative action waiver will be decided by a court of competent jurisdiction, not by the arbitrator. In the event a court determines that this waiver is unenforceable with respect to any claim or portion of a claim, this waiver shall not apply to that claim or portion of the claim, which may then only proceed in court as the exclusive forum. […]

(Nunez Decl., Ex. A, ¶ 2(f).)

 

The Agreement also states:

 

(a) … Not covered by this Agreement are: claims arising under the National Labor Relations Act which are brought before the National Labor Relations Board; claims for medical and disability benefits under the California Workers' Compensation Act; Employment Development Department claims; claims under employee pension, welfare benefit or stock option plans if those plans provide a dispute resolution procedure; and claims which are not subject to mandatory binding pre-dispute arbitration pursuant to federal law. To the extent federal law prohibits enforcement of the representative action waiver (discussed in subparagraph (f) below), also not covered by this Agreement are: representative claims under California's Private Attorneys General Act of 2004, California Labor Code§§ 2698, et seq. and representative claims for public injunctive relief under California Business and Professions Code § 17203.

(Nunez Decl., Ex. A, ¶ 2(a), emphasis added.)

 

As Plaintiff points out, no federal law prohibits waivers of PAGA claims; rather, that prohibition arises from California law.  (See Adolph v. Uber Technologies, Inc. (2023) 14 Cal.5th 1104, 1117 (Adolph) [“a predispute categorical waiver of the right to bring a PAGA action is unenforceable”], citing Iskanian v. CLS Transportation Los Angeles, LLC (2014) 59 Cal.4th 348, 382-383 (Iskanian).) 

 

The Agreement provides that “any claim, dispute, and/or controversy…arising from, related to, or having any relationship or connection whatsoever with Employee’s…employment by, or other association with the Company, shall be submitted to and determined exclusively by binding arbitration[.]” (Nunez Decl., Ex. A, ¶ 2(a).)  Because the Class Action Waiver provides that claims may be brought in arbitration only on an individual basis, and the Agreement’s arbitrability provisions provide that all claims must be arbitrated, the Class Action Waiver is effectively a waiver of PAGA claims (or at least, non-individual PAGA claims).  “[W]here, as here, an employment agreement compels the waiver of representative claims under the PAGA, it is contrary to public policy and unenforceable as a matter of state law.”  (Iskanian, supra, 59 Cal.4th at 384; see also Adolph, supra, 14 Cal.5th at 1117-1118.) 

 

However, the unconscionability here may be cured by severing the inclusion of PAGA claims in the Class Action Waiver, which may be achieved by striking language as follows:

 

(f) Except where prohibited by federal law, covered claims must be brought on an individual basis only. No arbitrator has authority to resolve multi-plaintiff, class, collective or representative action claims under this Agreement. Any disputes concerning the validity of this multi-plaintiff, class, collective and representative action waiver will be decided by a court of competent jurisdiction, not by the arbitrator. In the event a court determines that this waiver is unenforceable with respect to any claim or portion of a claim, this waiver shall not apply to that claim or portion of the claim, which may then only proceed in court as the exclusive forum. This subparagraph (f) of this Agreement is not a mandatory condition of employment. Employee may opt out by mailing via U.S. Mail, Return Receipt Requested, written notice of the intent to opt out within 30 calendar days of signing this Agreement to: Human Resources Department. If the Company receives written notice of the intent to opt out of subparagraph (f) within the 30 calendar day period, the Parties shall be bound by all parts of this Agreement except subparagraph (f). If the Company does not receive written notice of the intent to opt out of subparagraph (f) within the 30 calendar-day period, the Parties shall be bound by this Agreement in its entirety. Employee will not be subject to retaliation for exercising the right to assert claims or opt out of subparagraph (f).

 

The Court will strike that language.

 

c.       Unconscionability Summary

 

Plaintiff has established at best some procedural unconscionability, but with severance, no substantive unconscionability. The Agreement is therefore not void for unconscionability.

 

III.             Waiver

 

While “... no single test delineates the nature of the conduct of a party that will constitute such a waiver,” our Supreme Court has “found a waiver of the right to demand arbitration in a variety of contexts, ranging from situations in which the party seeking to compel arbitration has previously taken steps inconsistent with an intent to invoke arbitration [citations] to instances in which the petitioning party has unreasonably delayed in undertaking the procedure. [Citations.] The decisions likewise hold that the 'bad faith' or 'wilful misconduct' of a party may constitute a waiver and thus justify a refusal to compel arbitration. [Citation.]” 
(Sobremonte v. Superior Court (1998) 61 Cal.App.4th 980, 992 (Sobremonte).) 

 

In determining waiver, a court can consider (1) whether the party's actions are inconsistent with the right to arbitrate; (2) whether the litigation machinery has been “substantially invoked” and whether the parties were “well into preparation of a lawsuit” before the party notified the opposing party of an intent to arbitrate; (3) whether a party either requested arbitration enforcement close to the trial date or delayed for a long period before seeking a stay; (4) whether a defendant seeking arbitration filed a counterclaim without asking for a stay of the proceedings; (5) whether important intervening steps, such as taking advantage of judicial discovery procedures not available in arbitration, had taken place; and (6) whether the delay affected, misled, or prejudiced the opposing party.  (Ibid.)  Where the FAA applies, there is no requirement of prejudice and thus that factor does not apply.  (Davis v. Shiekh Shoes, LLC (2022) 84 Cal.App.5th 956, 966, citing Morgan v. Sundance, Inc. (2022) 142 S.Ct. 1708, 1714 [“the usual federal rule of waiver does not include a prejudice requirement.”])

 

Plaintiff contends that Defendant has waived the right to arbitrate by taking an “inconsistent approach to litigation,” adopting a “permissive posture[,]” as a result of which “Plaintiff prepared and served voluminous informal discovery requests for class information among other documents and information directly—and purely—relevant to Plaintiff’s class and representative claims.”  As set forth above, it appears all this discovery was conducted in preparation for mediation, and evidence thereof is barred by the mediation privilege.  Even if it were not, the only conduct of Defendant that Plaintiff identifies is failing to file its motion sooner.  “Because merely participating in litigation, by itself, does not result in a waiver, courts will not find prejudice where the party opposing arbitration shows only that it incurred court costs and legal expenses.”  (St. Agnes Medical Center v. PacifiCare of California (2003) 31 Cal.4th 1187, 1203.)  “Prejudice typically is found only where the petitioning party's conduct has substantially undermined this important public policy or substantially impaired the other side's ability to take advantage of the benefits and efficiencies of arbitration.”  (Id. at 1204.)  Plaintiff identifies no such conduct. 

 

This Court should note the Court of Appeal’s statement in Garcia v. Haralambos Beverage Co. (2021) 59 Cal.App.5th 534 (Garcia), albeit in a footnote, that “engaging in mediation on a classwide basis is inconsistent with the right to arbitrate individual claims.”  (Id. at 544, fn. 5, citing Bower, supra, 232 Cal.App.4th at 1045.)  However, Garcia did not turn on the fact of a classwide mediation, and the defendant had engaged in other conduct as well.  (Garcia, supra, 59 Cal.App.5th at 539 [defendant produced over 2000 documents and negotiated a Belaire-West notice before changing course and moving to compel arbitration.])  As noted above, conduct inconsistent with the right to arbitrate is merely one factor among several. 

 

The case of Gloster v. Sonic Automotive, Inc. (2014) 226 Cal.App.4th 438 (Gloster) is instructive.  There, the defendants consistently asserted an intent to compel arbitration, but did not make a motion until a year or so into the litigation.  (Id. at 442-443.)  The Trial Court held that the defendants had waived the right to compel arbitration, but the Court of Appeal reversed, observing that the defendants “consistently asserted their intention to arbitrate” and that “[t]hroughout the period of delay, there was no question the Melody defendants wanted to arbitrate; the only question was when they would get around to enforcing their right.”  (Id. at 449.)  “Answering a complaint and participating in litigation, on their own, do not waive the right to arbitrate.”  (Ibid.) 

 

Here, Defendant did not participate in litigation.  Rather, it participated in a mediation in an attempt to reach a classwide settlement at the outset.  While this is conduct inconsistent with an intent to enforce the right to arbitrate individual claims (Garcia, supra, 59 Cal.App.5th at 544, fn. 5), there is no evidence of any of the other factors (that is, substantial invocation of the “litigation machinery,” proximity of the trial date, a counterclaim by the moving party without a request for stay, or “important intervening steps” such as judicial discovery proceedings). Defendant’s counsel informed Plaintiff’s counsel of the existence of the arbitration agreement at the outset of the litigation, making it a “question of when [Defendant] would get around to enforcing [its] right” to compel arbitration.  (See Gloster, supra, 226 Cal.App.4th at 449.)     Taking into consideration all the factors bearing upon waiver, the Court finds that Defendants did not waive the right to compel arbitration. 

 

 

IV.             Disposition of Class Claims

 

Plaintiff does not dispute that if the Agreement is enforceable, the Class Action Waiver forecloses him from pursuing this case as a class action.  Because the Agreement is enforceable, the Class Action Waiver renders the class allegations in his First Amended Complaint (FAC) irrelevant.  The Court therefore strikes the following, as set forth in Defendant’s notice of motion:

 

1. “This is a Class Action, pursuant to Code of Civil Procedure section 382 against KING’S HAWAIIAN BAKERY WEST, INC. (“KING’S WEST”); KING’S HAWAIIAN LLC (“KING’S); and any of their respective subsidiaries or affiliated companies within the State of California (with DOES 1 through 100, as further defined below, “Defendants”) on behalf of Plaintiff and all other current and former non-exempt California employees employed by or formerly employed by Defendants (“Class Members”). (FAC 2:7-12.)

2. “and Class Members” (FAC 4:27.)

3. “, and because Defendants employee Class Members in Los Angeles County.” (FAC 4:27-28.)

4. “and Class Members, or some of them,” (FAC 6:7-8.)

5. “and Class Members” (FAC 6:9.)

6. “and Class Members” (FAC 6:14.)

7. “and Class Members, or some of them” (FAC 6:17.)

8. “and Class Members” (FAC 6:20-21.)

9. “and Class Members, or some of them,” (FAC 6:24-25.)

10. “and Class Members, or some of them,” (FAC 7:3-4.)

11. “and Class Members, or some of them,” (FAC 7:9.)

12. “and Class Members, or some of them,” (FAC 7:14.)

13. “Class Members, or some of them” (FAC 7:23.)

14. “and on behalf of Class Members” (FAC 8:1.)

15. “and on behalf of Class Members” (FAC 8:8.)

16. “CLASS ACTION ALLEGATIONS” (FAC 9:3.)

17. Paragraph 32 in its entirety.

18. Paragraph 33 in its entirety.

19. Paragraph 34 in its entirety.

20. Paragraph 35 in its entirety.

21. Paragraph 36 in its entirety.

22. Paragraph 37 in its entirety.

23. Paragraph 38 in its entirety.

24. Paragraph 39 in its entirety.

25. Paragraph 40 in its entirety.

26. Paragraph 41 in its entirety.

27. “and Class Members” (FAC 11:27.)

28. “and Class Members” (FAC 12:13.)

29. “and Class Members” (FAC 12:18.)

30. “and Class Members” (FAC 12:19.)

31. “and Class Members” (FAC 12:24.)

32. “and Class Members” (FAC 13:5.)

33. “and Class Members” (FAC 13:9.)

34. “and Class Members” (FAC 13:13-14.)

35. “and Class Members” (FAC 13:15.)

36. “and Class Members” (FAC 13:19.)

37. “and Class Members” (FAC 13:26.)

38. ““and Class Members” (FAC 14:11.)

39. “and Class Members” (FAC 14:16.)

40. “and Class Members” (FAC 14:20.)

41. “and Class Members” (FAC 14:23.)

42. “and Class Members” (FAC 15:5.)

43. “and Class Members” (FAC 15:19.)

44. “Moreover, at times, Defendants failed to provide one(1) additional hour of pay at the Class Member’s regular rate of compensation on the occasions that Class Members were not authorized or permitted to take compliant rest periods.” (FAC 15:21-23.)

45. “and Class Members” (FAC 15:24.)

46. “and Class Members” (FAC 16:1.)

47. “and Class Members” (FAC 16:4.)

48. “and Class Members” (FAC 16:12.)

49. “and Class Members” (FAC 16:15.)

50. “Discharged Class Members were entitled to payment of all wages earned and unpaid prior to discharge immediately upon termination. Class Members who resigned were entitled to payment of all wages earned and unpaid prior to resignation within 72 hours after giving notice of resignation or, if they gave 72 hours previous notice, they were entitled to payment of all wages earned and unpaid at the time of resignation.” (FAC 16:17-21.)

51. “and Class Members” (FAC 16:24-25.)

52. “and Class Members” (FAC 16:27-28.)

53. “and Class Members” (FAC 17:6.)

54. “and Class Members” (FAC 17:9.)

55. “and Class Members” (FAC 17:13.)

56. “and Class Members” (FAC 17:19.)

57. “and Class Members” (FAC 17:21.)

58. “and Class Members” (FAC 18:1.)

59. “and Class Members” (FAC 18:6.)

60. “and Class Members” (FAC 18:8.)

61. “and Class Members” (FAC 18:10.)

62. “and Class Members” (FAC18:11.)

63. “and Class Members” (FAC 18:17.)

64. “and Class Members” (FAC18:22.)

65. “and Class Members” (FAC 19:1.)

66. “and Class Members” (FAC 19:7)

67. “and Class Members” (FAC 19:13.)

68. “and Class Members” (FAC 19:14.)

69. “and Class Members” (FAC 19:18.)

70. “and Class Members” (FAC 20:10.)

71. “and Class Members” (FAC 20:13.)

72. “and Class Members” (FAC 20:15.)

73. “and Class Members” (FAC 20:27-28.)

74. “and Class Members” (FAC 21:1-2.)

75. “and Class Members” (FAC 21:7.)

76. “and Class Members” (FAC 27:13.)

77. “A. An order certifying this case as a Class Action;” (FAC 27:15.)

78. “An Order appointing Plaintiff as Class representative and appointing Plaintiff’s counsel as class counsel;” (FAC 27:16-17.)

 

V.                Disposition of PAGA Claims

 

Viking River Cruises, Inc. v. Moriana (2022) 142 S.Ct. 1906 “requires enforcement of agreements to arbitrate a PAGA plaintiff's individual claims if the agreement is covered by the FAA.”  (Adolph v. Uber Technologies, Inc. (2023) 14 Cal.5th 1104, 1119.)  While the individual claims are being arbitrated, the Court is empowered to stay the non-individual claims.  (Id. at 1123-1124; see also Code Civ. Proc. § 128(a)(3) [“Every court shall have the power…[t]o provide for the orderly conduct of proceedings before it, or its officers.”])  This Court will do so, as otherwise the arbitration might result in a finding that Plaintiff is not aggrieved and has no standing.  This would waste court resources to no avail. 

 

Conclusion

 

For the foregoing reasons, the motion is granted.  Plaintiff is required to arbitrate his individual claims with Defendant pursuant to the Agreement, including his individual PAGA claims.  His class allegations are stricken as specifically detailed above.  His non-individual PAGA claims remain stayed in this Court.  Defendant to give notice.