Judge Teresa A. Beaudet, Case 22STCV13190 2023-01-30 Tentative Ruling

GONZALO MORENO, as an aggrieved employee, and on behalf of all other aggrieved, employees under the Labor Code Private Attorneys’ General Act of 2004, et al.

Plaintiffs,

vs.

UNISOURCE SOLUTIONS, INC., et al.

Defendants.

Case No.:

22STCV13190

Hearing Date:

January 30, 2023

Hearing Time: 10:00 a.m.

[TENTATIVE] ORDER RE:

DEFENDANT UNISOURCE SOLUTIONS, INC.’S MOTION TO COMPEL ARBITRATION

Plaintiff Gonzalo Moreno, as an aggrieved employee, and on behalf of all other aggrieved employees under the Labor Code Private Attorneys’ General Act of 2004 (“Plaintiff”) filed this action against Defendant Unisource Solutions, Inc. (“Defendant”) on April 20, 2022. The Complaint asserts one cause of action for civil penalties under the Private Attorneys General Act of 2004 (“PAGA”).

Defendant now moves for an order (1) compelling arbitration of Plaintiff’s individual PAGA claims, and (2) dismissing the case, including Plaintiff’s non-individual PAGA claims, or in the alternative, staying all further judicial proceedings pending completion of the arbitration. Plaintiff opposes.

The Court grants Defendant’s request for judicial notice. The Court notes that it takes judicial notice only of the existence of the documents attached as Exhibits, A, B, and C to the request for judicial notice, but the Court does not take judicial notice of the truth of any matters asserted therein.

In a motion to compel arbitration, the moving party must prove by a preponderance of evidence the existence of the arbitration agreement and that the dispute is covered by the agreement. The burden then shifts to the resisting party to prove by a preponderance of evidence a ground for denial (e.g., fraud, unconscionability, etc.). (Rosenthal v. Great Western Fin. Securities Corp. (1996) 14 Cal.4th 394, 413-414.)

Generally, on a petition to compel arbitration, the court must grant the petition unless it finds either (1) no written agreement to arbitrate exists; (2) the right to compel arbitration has been waived; (3) grounds exist for revocation of the agreement; or (4) litigation is pending that may render the arbitration unnecessary or create conflicting rulings on common issues. (Code Civ. Proc., § 1281.2; Condee v. Longwood Management Corp. (2001) 88 Cal.App.4th 215, 218-219.)

“California has a strong public policy in favor of arbitration and any doubts regarding the arbitrability of a dispute are resolved in favor of arbitration.” (Coast Plaza Doctors Hospital v. Blue Cross of California (2000) 83 Cal.App.4th 677, 686.) “This strong policy has resulted in the general rule that arbitration should be upheld unless it can be said with assurance that an arbitration clause is not susceptible to an interpretation covering the asserted dispute.” (Ibid. [internal quotations omitted].) This is in accord with the liberal federal policy favoring arbitration agreements under the Federal Arbitration Act (“FAA”), which governs all agreements to arbitrate in contracts “involving interstate commerce.” (9 U.S.C. § 2, et seq.; Higgins v. Superior Court (2006) 140 Cal.App.4th 1238, 1247.)

As an initial matter, Defendant indicates that on January 14, 2022, Plaintiff filed a class action complaint in another action entitled Gonzalo Moreno, an individual and on behalf of all other similarly situated, vs. Unisource Solutions, Inc., a California corporation, et al., Case No. 22STCV01660, which was assigned for all purposes to the Honorable Yvette M. Palazuelos (the “Class Action”). (Defendants RJN, ¶ 1, Ex. A.) On August 25, 2022, Judge Palazuelos issued an order granting in part and denying in part Defendant’s motion to compel arbitration in the Class Action. (Defendants RJN, ¶ 2, Ex. B.)

Defendant argues that here, “Judge Palazuelos’ ruling adjudicated several matters concerning the arbitration agreement and Plaintiff is precluded from relitigating those issues before this Court.” (Mot. at p. 12:12-13.) But Plaintiff did not allege a PAGA claim in the Class Action matter, as Defendant acknowledges. (Oxman Decl., ¶ 2.) Defendant also does not identify any previous issue decided in the Class Action it contends Plaintiff is relitigating herein.

In this action, Defendant presents evidence that it hired Plaintiff in or about February 2020 as an at-will employee in the position of hourly non-exempt Installer. (Nieto Decl., ¶ 16.) Defendant indicates that as part of the onboarding process, Plaintiff was required to review and electronically acknowledge an Arbitration Agreement. (Nieto Decl., ¶ 22.) Defendant indicates that after Plaintiff securely accessed the onboarding portal by confirming his phone number, he was prompted to review a packet of onboarding documents related to his employment with Defendant. (Nieto Decl., ¶ 22.) Defendant states that Plaintiff electronically acknowledged and agreed to the documents in the packet, including the Arbitration Agreement, on February 21, 2020 at 2:50 p.m., by typing his name in lowercased typeface. (Nieto Decl., ¶ 28, Ex. F.)

The Arbitration Agreement provides, inter alia, that “[t]he Parties to this Agreement mutually agree, except as provided below, to binding arbitration of any and all disputes, claims, or controversies (“Claims”) they may have against each other, including their current and former agents, owners, officers, directors, or employees, which arise out of or are in connection to the employment relationship between Employee and Unisource or the termination of the employment relationship.” (Nieto Decl., ¶ 31, Ex. I, § 1(A).)

The Arbitration Agreement also contains a “Class Action and Representative Action Waiver” which provides as follows:

“It is the intent of the Parties that any dispute covered by this Agreement will be arbitrated on an individual basis, and, unless prohibited by applicable law, the Parties mutually waive their right to bring, maintain, participate in, or receive money from, any class, collective, or representative proceeding. Furthermore, no Claims between Employee and Unisource may be brought in arbitration under this Agreement on behalf of other employees as a class or collective action or other representative proceeding. The arbitrator may not preside over any form of a class, collective, or representative proceeding. Because of the foregoing, Unisource has the right to defeat any attempt by Employee to file or join other employees in a class, collective, representative, or joint action lawsuit or arbitration.

In the event the foregoing waiver to proceed in arbitration on a class, collective, or representative basis is found to be unenforceable or contrary to law, all Claims brought on behalf of other employees as a class, collective, or representative action must be filed in Los Angeles County Superior Court.” (Nieto Decl., ¶ 31, Ex. I, § 5.)

Defendant asserts that Plaintiff’s “individual PAGA claim” is covered under the Arbitration Agreement and must be compelled to arbitration per the provision providing that

the parties “agree, except as provided below, to binding arbitration of any and all disputes, claims, or controversies…they may have against each other…which arise out of or are in connection to the employment relationship between Employee and Unisource or the termination of the employment relationship.” (Nieto Decl., ¶ 31, Ex. I, § 1(A).)

Plaintiff counters that the Arbitration Agreement disclaims any possibility of arbitrating PAGA claims, “individual” or otherwise. Plaintiff notes that the agreement provides (as set forth above) that, “the Parties mutually waive their right to bring, maintain, participate in, or receive money from, any class, collective, or representative proceeding…The arbitrator may not preside over any form of a class, collective, or representative proceeding.” (Nieto Decl., ¶ 31, Ex. I, § 5, emphasis added.) Plaintiff asserts that “[i]n the face of this unambiguously expressed intent to exclude all PAGA claims from arbitration, Defendant cannot establish the existence of any agreement to arbitrate Mr. Moreno’s individual PAGA claims.” (Opp’n at p. 5:19-21, emphasis omitted.)

Defendant notes that in Viking River Cruises, Inc. v. Moriana (2022) 142 S.Ct. 1906, 1916, the United States Supreme Court found that “[i]n the first sense, PAGA actions are ‘representative’ in that they are brought by employees acting as representatives—that is, as agents or proxies—of the State. But PAGA claims are also called ‘representative’ when they are predicated on code violations sustained by other employees. In the first sense, ‘every PAGA action is . . . representative’ and ‘[t]here is no individual component to a PAGA action,” Kim, 9 Cal. 5th, at 87, 459 P. 3d, at 1131 (quoting Iskanian, 59 Cal. 4th, at 387, 327 P. 3d, at 151), because every PAGA claim is asserted in a representative capacity. But when the word ‘representative’ is used in the second way, it makes sense to distinguish ‘individual’ PAGA claims, which are premised on Labor Code violations actually sustained by the plaintiff, from ‘representative’ (or perhaps quasi-representative) PAGA claims arising out of events involving other employees. For purposes of this opinion, we will use ‘individual PAGA claim’ to refer to claims based on code violations suffered by the plaintiff.”

Defendant asserts that the “Representative Action Waiver” in the Arbitration Agreement here should be read as seeking to limit PAGA claims “when they are predicated on [Labor] [C]ode violations sustained by other employees.” (Viking River Cruises, Inc. v. Moriana, supra, 142 S.Ct. at p. 1916.)

Plaintiff asserts that his “so-called ‘individual’ PAGA claims did not even exist until the Supreme Court permitted indivisible PAGA claims to be split into individual and non-individual components in Viking River, and thus there is no way he could have had any ‘reasonable expectation … at the time of contract[]’ that such claims would be subject to arbitration.” (Opp’n at p. 6:17-21.) Plaintiff cites to Kashmiri v. Regents of University of California (2007) 156 Cal.App.4th 809, 831-832, where the Court of Appeal noted that “[i]n interpreting the contract, we must give effect to the mutual intention of the parties as it existed at the time the contract was executed. Where contract language is clear and explicit and does not lead to absurd results, we normally determine intent from the written terms alone. Those terms are to be understood in their ordinary and popular sense, unless used by the parties in a technical sense, or unless a special meaning is given to them by usage. If the terms of a promise are in any respect ambiguous or uncertain, it must be interpreted in the sense in which the promisor believed, at the time of making it, that the promisee understood it. Thus, we look to the reasonable expectation of the parties at the time of contract.” (Internal quotations and citations omitted.)

Defendant counters that “the fact that individual PAGA claims did not exist prior to Viking River did not preclude the U.S. Supreme Court from compelling Moriana’s individual PAGA claims to arbitration and dismissing her non-individual claims.” (Reply at p. 9:3-5.) Defendant also asserts that Plaintiff cannot point to a section or clause in the Arbitration Agreement which prohibits his individual PAGA claims from being heard and resolved in arbitration, and that to the contrary, the agreement provides that the parties agree to arbitrate “any and all disputes, claims, or controversies…they may have against each other…which arise out of or are in connection to the employment relationship between Employee and Unisource or the termination of the employment relationship.” (Nieto Decl., ¶ 31, Ex. I, § 1(A).) The Arbitration Agreement also provides that claims covered under the agreement include, “wage disputes,” and that “[i]t is the intent of the Parties that any dispute covered by this Agreement will be arbitrated on an individual basis, and, unless prohibited by applicable law, the Parties mutually waive their right to bring, maintain, participate in, or receive money from, any class, collective, or representative proceeding.” (Nieto Decl., ¶ 31, Ex. I, §§ 1(A); 5, emphasis added.) Defendant notes that “[a] heavy presumption weighs the scales in favor of arbitrability; an order directing arbitration should be granted unless it may be said with positive assurance that the arbitration clause is not susceptible of an interpretation that covers the asserted dispute. Doubts should be resolved in favor of coverage.” (Cione v. Foresters Equity Servs. (1997) 58 Cal.App.4th 625, 642 [internal quotations omitted].) The Court does not find that the Arbitration Agreement here is not susceptible to an interpretation that Plaintiff’s individual PAGA claims are covered by the subject arbitration provision.

Based on the foregoing, the Court finds that Defendant has shown that Plaintiff’s individual PAGA claims are covered by the Arbitration Agreement. (Nieto Decl., ¶ 31, Ex. I.)

Next, Defendant asserts that under Viking River, the Court must dismiss Plaintiff’s non-individual, representative PAGA claims. The Viking River Court found that “the FAA preempts the rule of Iskanian insofar as it precludes division of PAGA actions into individual and non-individual claims through an agreement to arbitrate. This holding compels reversal in this case. The agreement between Viking and Moriana purported to waive ‘representative’ PAGA claims. Under Iskanian, this provision was invalid if construed as a wholesale waiver of PAGA claims. And under our holding, that aspect of Iskanian is not preempted by the FAA, so the agreement remains invalid insofar as it is interpreted in that manner. But the 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.’ Based on this clause, Viking was entitled to enforce the agreement insofar as it mandated arbitration of Moriana’s individual PAGA claim. The lower courts refused to do so based on the rule that PAGA actions cannot be divided into individual and non-individual claims. Under our holding, that rule is preempted, so Viking is entitled to compel arbitration of Moriana’s individual claim.” (Viking River Cruises, Inc. v. Moriana (2022) 142 S.Ct. 1906, 1924-1925.) The Viking River Cruises Court further held that “[a]s we see it, PAGA provides no mechanism to enable a court to adjudicate nonindividual PAGA claims once an individual claim has been committed to a separate proceeding...As a result, Moriana lacks statutory standing to continue to maintain her non-individual claims in court, and the correct course is to dismiss her remaining claims.” (Id. at p. 1925.)

Plaintiff notes that the concurring opinion by Justice Sotomayor in Viking River Cruises provides, “[t]he Court concludes that the FAA poses no bar to the adjudication of respondent Angie Moriana’s non-individual PAGA claims, but that PAGA itself provides no mechanism to enable a court to adjudicate non-individual PAGA claims once an individual claim has been committed to a separate proceeding…Thus, the Court reasons, based on available guidance from California courts, that Moriana lacks statutory standing under PAGA to litigate her non-individual claims separately in state court. Of course, if this Court’s understanding of state law is wrong, California courts, in an appropriate case, will have the last word.” (Viking River Cruises, Inc. v. Moriana, supra, 142 S.Ct. at p. 1925 [internal quotations and citations omitted].)

Plaintiff asserts that Justice Sotomayor’s observation reflects that state courts are not bound by the same standing rules as those in federal court. Plaintiff cites to Kim v. Reins International California, Inc. (2020) 9 Cal.5th 73, 80, where the California Supreme Court considered whether “employees lose standing to pursue a claim under the Labor Code Private Attorneys General Act of 2004 (PAGA; Lab. Code, § 2698 et seq.) if they settle and dismiss their individual claims for Labor Code violations.” The Kim Court concluded that “the answer is no. Settlement of individual claims does not strip an aggrieved employee of standing, as the state’s authorized representative, to pursue PAGA remedies.” (Ibid.) Plaintiff asserts that there is no basis for dismissal of the non-individual PAGA claims asserted here.

Based on the foregoing, it appears that Viking River requires the Court here to dismiss Plaintiff’s remaining non-individual PAGA claims against Defendant.

Lastly, Plaintiff requests that the Court delay any ruling as to the non-individual PAGA claims in this action until the California Supreme Court rules in the pending case of Adolph v. Uber Technologies, Inc. (No. S274671). On June 16, 2022, the California Supreme Court filed an Order indicating, inter alia, that “[t]he request of Uber Technologies for permission to file a supplemental brief in light of Viking River Cruises, Inc. v. Moriana, Supreme Court Case No. 20-1573 is hereby granted. (Adolph v. Uber Technologies, Inc. (June 16, 2022, No. S274671) ___Cal.5th___ [2022 Cal. LEXIS 4262, at *1].) But as Defendant notes, “[a]ny speculation as to how the California Supreme Court might rule in Adolph has no bearing on the instant motion. Under current law, the Court must order Plaintiff’s individual PAGA claim to arbitration and dismiss his non-individual PAGA claim due to lack of standing…” (Reply at p. 11, fn. 10.)

For the foregoing reasons, Defendant’s motion to compel arbitration is granted as to Plaintiff’s individual PAGA claims. The entire action is stayed pending completion of arbitration of Plaintiff’s arbitrable claims against Defendant. Defendant’s motion to dismiss Plaintiff’s non-individual PAGA claims is granted.

The Court sets an arbitration completion status conference on January 30, 2024, at 10:00 a.m. in Dept. 50. The parties are ordered to file a joint report regarding the status of the arbitration five court days prior to the status conference, with a courtesy copy delivered directly to Department 50.

[1]The Court notes that Plaintiff’s evidentiary objections do not include an Objection No. 4.

Superior Court of California

County of Los Angeles

Department 50