Moving Party: Defendant AGVA, LLC

Responding Party: Plaintiff Marquita N. Wooldridge 

Ruling: Motion to compel arbitration denied.

This is a Private Attorney General Act (PAGA) action which is related to a wage-and-hour proposed class action (Wooldridge v. AGVA, LLC, Case No. 23STCV07309, the Related Case).  Plaintiff Marquita N. Wooldridge (Plaintiff) alleges that she and others were employed by defendant AGVA, LLC (Defendant), during which employment Defendant committed various violations of labor law.  

On December 8, 2023, the Court granted Defendant’s motion to compel arbitration in the Related Case.  Defendant now moves to compel Plaintiff to submit her claims in this action to binding arbitration pursuant to the Agreement.

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.”].)

Discussion

As Plaintiff points out, the Agreement contains the following carve-out: 

4. Claims Not Covered.

(a) Claims not covered by this Agreement are claims for workers’ compensation, unemployment compensation benefits, Excluded Claims (defined in Section 5 below), or any other claims that, as a matter of law, the Parties cannot agree to arbitrate. …

(b) Claims not covered also include claims by Company or Employee seeking temporary or preliminary injunctive relief pending outcome of the arbitration.

(c) Claims not covered also include claims under the California Labor Code Private Attorneys General Act of 2014.

(Martin Decl., Ex. 1, sub-Ex. B, emphasis added.)

This language could not be more simply stated and leaves no room for any other reasonable interpretation.  The Agreement contains a complete carve-out for PAGA claims, and as this is a PAGA action, the Agreement has no application whatsoever.  

Defendant’s arguments to the contrary are not convincing.  It is of no relevance that the preceding “Covered Claims” section includes “all claims under the California Labor Code[.]” (See Martin Decl., Ex. 1, sub-Ex. B, ¶ 3.)  The carve-out in paragraph 4(c) expressly states that PAGA claims, unlike the rest of the Labor Code claims, are not covered.  To interpret the Covered Claims section as overriding the express carve-outs would defeat the express language of the Agreement.  

The fact that the carve-out in paragraph 4(c) does not say “any” or “all,” unlike the inclusive language in the Covered Claims section, is immaterial.  None of the carve-outs use “any” or “all,” yet all of them clearly mean what they say: that no claims falling within those descriptors are covered by the agreement to arbitrate.   The words “any” and “all” are not necessary to determine the meaning of the carve-out for PAGA claims provision. 

Defendant’s invocation of paragraph 4(a) and subsequent argument are completely irrelevant.  Paragraphs 4(a), 4(b), and 4(c) are separate carve-outs, which may overlap, but must nonetheless each be given effect.  To say that the express carve-out for PAGA is ineffective because PAGA claims do not fall within a separate carve-out for claims which cannot be arbitrated under the law (because individual PAGA claims are arbitrable under Viking River and Adolph) is fallacious.  

Defendant’s arguments for compelling arbitration of claims which are expressly excluded from the Agreement are totally meritless.  The Court will therefore deny the motion.

Conclusion

For the foregoing reasons, the motion is denied. This case will be stayed pending conclusion of the related case which was earlier sent to arbitration on the individual claims. A status conference with a joint report due 5 court days in advance of the hearing is set for January 15, 2025.  Plaintiff to give notice.