Judge: William D. Claster, Case: 21-01233089, Date: 2022-10-14 Tentative Ruling
Defendants Zov's Bistro, Inc., Zov's Bistro II, Inc., Zov's Enterprises, Inc., and Armen Karamardian's Notice of Motion and Motion to Compel Individual Arbitration and Dismiss PAGA Representative Claim ROA 44
Defendants Zov’s Bistro, Inc.; Zov’s Bistro II, Inc.; Zov’s Enterprises, Inc. (collectively “Zov’s” unless their separate identity is relevant); and Armen Karamardian move to compel arbitration of the claims brought by Plaintiffs Carlos Cruz and Natalio Cervantes. For the reasons set forth below, the Court orders as follows:
Defendants’ request for judicial notice of the United States Supreme Court’s opinion in Viking River Cruises, Inc. v. Moriana (2022) 142 S.Ct. 1906 is GRANTED.
Plaintiffs’ objection to the 1st Karamardian Declaration is SUSTAINED. The Court has not considered Karamardian’s characterization of the 2018 Spanish version of the arbitration agreement.
I. Background
Plaintiffs are former employees of the Zov’s restaurant chain. (Compl. ¶ 1.) Karamaridan is president of all three corporate Defendants. (1st Karamardian Decl. ¶ 2.) Zov’s Bistro and Zov’s Bistro II each manage one location in the Zov’s chain. (Id., ¶ 3.) Zov’s Enterprises’ role is unclear, but Karamardian testifies it has no involvement in day-to-day operations of Zov’s Bistro or Zov’s Bistro II. (Id., ¶ 2.) Plaintiffs allege that all Defendants are alter egos of one another, and they form a single enterprise. (Compl. ¶ 9.)
Plaintiffs’ complaint advances three sets of allegations. First, Plaintiffs bring individual wage-and-hour claims on their own behalf. Second, Plaintiffs bring a (potentially representative) UCL claim and a PAGA claim based on the Labor Code violations they claim they suffered. Third, Cruz brings FEHA claims based on alleged sexual orientation discrimination.
Defendants move to compel individual arbitration of Plaintiffs’ claims (including, per Viking River Cruises, the individual portion of their PAGA claims), and to dismiss the representative portion of their PAGA claims.
II. Cervantes’ Agreements
Plaintiffs argue Defendants fail to prove the existence of an agreement to arbitrate Cervantes’ claims. The Court agrees.
A. 2018 Agreements
Cervantes worked for Zov’s Bistro II from 2018 to 2021. (1st Karamardian Decl. ¶ 7.) In connection with the opening papers, Karamardian testifies that Cervantes signed English and Spanish versions of an arbitration agreement on July 13, 2018. (Id., ¶ 10 & Exs. 2 (English), 3 (Spanish).) Cervantes was given an agreement in both languages because he is a native Spanish speaker, and Zov’s practice is to give employees agreements in both English and their native language. (Id., ¶ 10.)
Karamardian admits the documents differ from one another. Specifically, he testifies the English version contains an opt-out clause, while the Spanish version doesn’t. (Ibid.) Based on his own claimed “proficiency with English and Spanish,” he “attest[s] that the agreements are substantially similar.” (Ibid.) The Court disregards this testimony because Karamardian has not laid foundation for his claimed Spanish proficiency. Because Defendants have not included a certified translation of the Spanish agreement, the Court cannot consider its contents, except for Defendants’ admission that it lacks an opt-out clause. (See CRC 3.1110(g).)
Seizing on these issues, Plaintiffs argue Defendants have failed to prove a meeting of the minds regarding the terms of the arbitration agreement. The Court agrees. “Consent is not mutual, unless the parties all agree upon the same thing in the same sense.” (Civil Code § 1580.) Cervantes and Defendants clearly agreed to something in 2018, but what they agreed to is unclear from the record. Cervantes signed two agreements that Defendants concede differ in terms. Absent a certified Spanish translation, the Court cannot compare the documents to determine whether that difference is material to this motion. For example, if the Spanish version defined the arbitrable claims more narrowly than the English version, then the Court might conclude there was no true agreement to arbitrate, or it might enforce the Spanish language version rather than the English version. (Compare Juarez v. Wash Depot Holdings, Inc. (2018) 24 Cal.App.5th 1197 [enforcing Spanish version without severability clause over English version with severability clause].)
In addition to the foregoing, Defendants do not mention the 2018 agreements at all in their reply memorandum, which the Court treats as a concession that Plaintiffs’ arguments are correct. (See Cahill v. San Diego Gas & Electric Co. (2011) 194 Cal.App.4th 939, 956 [“The absence of cogent legal argument or citation to authority allows this court to treat the contention as waived.”].)
As a result, with respect to the 2018 agreements, Defendants have failed to meet their burden to establish the existence of an agreement to arbitrate Cervantes’ claims.
B. 2019 Agreement
In opposition, Plaintiffs note the existence of a third agreement with Cervantes. When they made a statutory request for the contents of Cervantes’ personnel file, Defendants produced the signature page of an apparent arbitration agreement, executed in June 2019. (Hanson Decl., Ex. A.) Defendants’ production did not include the first page of the agreement. (Id., ¶ 2.) The 2019 agreement presumably supersedes the 2018 agreements signed by Cervantes. Plaintiffs reasonably wonder what the first page says. For example, the signature page doesn’t include the scope of arbitrable claims. Are the claims Cervantes brings here excluded from arbitration?
In a reply declaration, Karamardian explains that only the signature page of Cervantes’s 2019 agreement was saved in his personnel file. (2nd Karamardian Decl., ¶ 3.) Exhibit 2 to his agreement is what Karamardian testifies was the form of arbitration agreement used from May 1, 2019 through December 2019. He also testifies that Cervantes was given this version of the agreement only in English because Cervantes was fluent in English. (Id., ¶ 4.) This appears contrary to Zov’s stated policy (per 1st Karamardian Decl., ¶ 10) of offering arbitration agreements in an employee’s native language.
In any event, if Exhibit 2 to the 2nd Karamardian Declaration is supposed to be the form of agreement that Cervantes signed in 2019, the documents differ on their face. Specifically, the document signed by Cervantes has a footer reading “Employee Acknowledgement and Agreement 5/1/19.” (Hanson Decl., Ex. A [emphasis added].) The purported form document has a footer reading “Employee Acknowledgment and Agreement 5/1/2019.” (2nd Karamardian Decl., Ex. 2 [emphasis added].) Perhaps the missing text from Cervantes’s agreement is the same as the form. But this form isn’t what Cervantes signed.
As a result, with respect to the 2019 agreement, Defendants have failed to meet their burden to establish the existence of an agreement to arbitrate Cervantes’ claims. Because Defendants have failed to prove the existence of any agreement to arbitrate Cervantes’ claims, the motion is denied with respect to Cervantes.
III. Cruz’s Agreement
In opposition, Plaintiffs do not contest the existence of Cruz’s agreement, nor do they claim it is unconscionable. With the exception of the PAGA claim (discussed below), Plaintiffs do not contend Cruz’s claims are outside the scope of the arbitration agreement. The Court therefore treats these issues as conceded.
Plaintiffs note that Cruz’s agreement identifies only Zov’s Bistro, not Zov’s Bistro II, as “the Company.” (1st Karamardian Decl., Ex. 1, at § 1.) They argue that while Karamardian (as an officer of the Company, see id., at § 2) can move to compel arbitration, neither Zov’s Bistro II nor Zov’s Enterprises can. As Defendants note in reply, all Defendants are alleged to be alter egos of each other. (Compl. ¶ 9.) While neither side discusses it, published authority holds alleged alter egos may enforce arbitration agreements. (See Rowe v. Exline (2007) 153 Cal.App.4th 1276 [“By suing Exline and Trahan for breach of the Agreement on the ground that they are Initiatek’s alter egos . . . Exline and Trahan are ‘entitled to the benefit of the arbitration provisions.’”].) Accordingly, all Defendants may enforce the arbitration agreement against Cruz.
Plaintiffs next argue the agreement excludes PAGA claims from arbitration. Cruz’s agreement was entered into in 2017. It excludes “claims that are not subject to arbitration under current law.” (1st Karamardian Decl., Ex. 1, at § 2.) Plaintiffs argue that because PAGA claims weren’t arbitrable in 2017, they aren’t arbitrable now, regardless of what Viking River Cruises says. The Court disagrees. As Defendants point out in reply, “In general, judicial decisions apply retroactively. [Citations.] This rule applies to decisions interpreting statutes, for a judicial construction of a statute is an authoritative statement of what the statute meant before as well as after the decision of the case giving rise to that construction.” (Ferra v. Loews Hollywood Hotel, LLC (2021) 11 Cal.5th 858, 878 [internal quotation omitted].) Viking River Cruises’ interpretation of the FAA is an authoritative statement of what the FAA has always meant. Cruz’s PAGA claim may therefore be split into individual and representative portions, with the individual portion sent to arbitration.
IV. Further Proceedings
Cruz’s arbitration agreement provides that arbitration “shall be . . . in conformity with the procedures of the California Arbitration Act.” Plaintiffs ask the Court to refuse to enforce the arbitration agreement under CCP § 1281.2(c), which allows a Court to refuse to enforce an arbitration agreement when “[a] party to the arbitration agreement is also a party to a pending court action or special proceeding with a third party, arising out of the same transaction or series of related transactions and there is a possibility of conflicting rulings on a common issue of law or fact.”
For the reasons set forth above, Cervantes’s claims are properly in court, not before an arbitrator. Cruz is therefore (1) a party to an arbitration agreement; (2) also a party to a pending court action with Cervantes, a third party; (3) arising out of the same transaction or series of related transactions (alleged wage-and-hour violations at Zov’s during overlapping time periods); (4) with a possibility of conflicting rulings on common issues if his arbitration and the court case proceed simultaneously. For example, the Court and the arbitrator could reach opposite conclusions on alter ego liability. They could also reach opposite conclusions on whether Cruz suffered the Labor Code violations complained of (since the Court would decide that question insofar as Cruz is an aggrieved employee for purposes of Cervantes’s PAGA claim).
Defendants do not mention this issue on reply, so in addition to the foregoing findings, the Court treats it as conceded.
Thus, while the Court grants the motion to compel arbitration as to Cruz, it will stay enforcement of the arbitration agreement insofar as Cruz’s claims overlap with Cervantes’ claims that remain in this Court. This means Cruz will not be ordered to arbitrate his individual wage-and-hour claims, his UCL claim, or his PAGA claim at this time. However, the Court will not stay enforcement of the arbitration agreement with respect to Cruz’s FEHA claims. Those claims are ordered to arbitration.