Judge: William D. Claster, Case: JCCP5200, Date: 2022-10-28 Tentative Ruling
Defendant Inter-Con Security System, Inc.'s Notice of Motion and Motion to Compel Arbitration of Plaintiffs' Individual PAGA Claims, Dismiss Representative Claims, and Stay Proceedings ROA 95
Defendant Inter-Con Security Systems, Inc. moves for an order (1) compelling the separate arbitration of the individual portion of the coordinated Plaintiffs’ PAGA claims; (2) dismissing the representative portion of Plaintiffs’ PAGA claims; and (3) staying proceedings pending completion of arbitration. For the reasons set forth below, the Court orders as follows:
Plaintiff Brianna Woodard’s request for judicial notice, which is unopposed by Defendant, is GRANTED.
GROUNDS FOR RULING
The Court notes that Plaintiffs have filed two separate oppositions. The first is filed by Stewart, Barrow, Young, Robinson, and Laliberte. The Court will refer to these plaintiffs as the “Stewart group” after the low-numbered case. The second is filed by Woodard alone.
I. Contents of Agreements
No Plaintiff challenges the existence of the agreement, so the Court finds that an arbitration agreement exists between Defendant and each Plaintiff. There are three versions of the agreement at issue.
A. 2011 Version
Stewart and Barrow executed the 2011 version of the agreement. (Griffiths Decl., ¶¶ 15-16, Exs. 1-2.) It provides: “The Company and I mutually consent to the resolution by arbitration of all claims or controversies (‘claims’), past, present or future, whether or not arising out of my employment (or its termination), that the Company may have against me or that I may have against . . . the Company.” (2011 Agreement, p. 1.)
It delegates certain questions of arbitrability to the arbitrator: “The Arbitrator shall have exclusive authority to resolve any dispute relating to the interpretation, applicability, enforceability or formation of this Agreement, including but not limited to any claim that all or any part of this Agreement is void or voidable.” (2011 Agreement, p. 3.)
It contains a class and representative action waiver that provides, in relevant part: “The Company and I agree that there will be no right or authority for any dispute . . . to be brought, heard or arbitrated as a class or collective action, or in a representative or private attorney general capacity on behalf of a class of persons or the general public. Also neither the Company nor I will have the right to participate in a class, representative or collective action, as a class representative, class member or an opt-in party, act as a private attorney general, or join or consolidate claims with claims of any other person or entity, against me or the Company.” (2011 Agreement, p. 4.)
Finally, it contains a savings clause: “If any provision of this Agreement is adjudged to be void or otherwise unenforceable, in whole or in part, such adjudication shall not affect the validity of the remainder of the Agreement. All other provisions shall remain in full force and effect.” (2011 Agreement, p. 4.)
B. 2013 Version
Young, Woodard and Robinson executed the 2013 version of the agreement. (Griffiths Decl., ¶¶ 17-19, Exs. 3-5.) It provides: “The Company and I mutually consent to the resolution by arbitration of all claims or controversies (‘claims’), past, present or future, whether or not arising out of my employment (or its termination), that the Company may have against me or that I may have against . . . the Company.” (2013 Agreement, p. 1.)
It delegates certain questions of arbitrability to the arbitrator: “The Arbitrator shall have exclusive authority to resolve any dispute relating to the interpretation, applicability, enforceability or formation of this Agreement, including but not limited to any claim that all or any part of this Agreement is void or voidable.” (2013 Agreement, p. 3.)
It contains a class and representative action waiver that provides, in full: “The Company and I agree that there will be no right or authority for any dispute to be brought, heard or arbitrated as a class or collective action, or in a representative or private attorney general capacity on behalf of a class of persons or the general public. Also neither the Company nor I will have the right to participate in a class, representative or collective action, as a class representative, class member or an opt-in party, act as a private attorney general, or join or consolidate claims with claims of any other person or entity, against me or the Company.” (2013 Agreement, p. 4.)
Finally, it contains a savings clause: “If any provision of this Agreement is adjudged to be void or otherwise unenforceable, in whole or in part, such adjudication shall not affect the validity of the remainder of the Agreement. All other provisions shall remain in full force and effect.” (2013 Agreement, p. 4.)
C. 2018 Agreement
Laliberte executed the 2018 version of the agreement. (Griffiths Decl., ¶ 20, Ex. 6.) It provides: “Both I and the Company agree that any claim, dispute, and/or controversy I may have against Company (or its owners, directors, officers, managers, employees, or agents), or the Company may have against me, will be submitted to and determined exclusively by binding arbitration . . . .” (2018 Agreement, p. 1.)
The 2018 Agreement lacks a delegation clause like that found in the 2011 and 2013 Agreements.
It contains a specific PAGA waiver that provides: “This Agreement will not be construed to allow or permit claims brought on behalf of any state or government as a private attorney general, including claims under California Private Attorneys General Act of 2004. By signing this Agreement, I am agreeing to waive any substantive or procedural rights I may have to sue on as a private attorney general. No court or arbitrator will have the authority under this Agreement to order claims brought on behalf of any state or government as a private attorney general, including claims under California Private Attorneys General Act of 2004, to proceed in arbitration.” (2018 Agreement, p. 1.)
Finally, it contains a savings clause: “If any term or provision, or portion of this Agreement is declared void or unenforceable, including, but not limited to, my agreement to waive any right I may have to bring a class, collective, and/or representative action, said term or provision shall be severed and the remainder of this Agreement shall be enforceable.” (2018 Agreement, p. 2.)
II. Applicability of FAA
Defendant contends the FAA applies to the arbitration agreements. It puts on evidence that its business involves interstate commerce, and that all the agreements reference the FAA. (Griffiths Decl., ¶¶ 2-3 & Exs. 1-6.) No Plaintiff puts on evidence or argument to the contrary, so the court treats the issue as conceded.
III. Waiver
All Plaintiffs argue that by engaging in litigation conduct, Defendant has waived the right to enforce the arbitration agreements. As Defendant points out in reply, all Plaintiffs except Laliberte must make this argument to the arbitrator, not a court. Their arbitration agreements expressly delegate all questions of enforceability to the arbitrator. The FAA allows the parties to make such a delegation. (Rent-A-Center West, Inc. v. Jackson (2010) 561 U.S. 63, 68-69.) As a result, the Court may only consider Laliberte’s argument on this point, while the other Plaintiffs are free to renew their arguments in arbitration.
The Stewart group’s brief raises a colorable argument for waiver on behalf of Laliberte: Defendant successfully petitioned to coordinate the underlying cases in this matter, and Laliberte’s agreement prevents “the consolidation or joinder of other claims” before the arbitrator. (2018 Agreement, p. 1.) Petitioning for coordination appears inconsistent with this prohibition. But the Stewart group’s own brief recognizes that under the FAA, “waiver is answered by a simple inquiry: did a party ‘knowingly relinquish the right to arbitrate by acting inconsistently with that right?’” (Stewart Opp. at p. 19 [quoting Morgan v. Sundance, Inc. (2022) 142 S.Ct. 1708, 1714].)
Before Viking River Cruises, Inc. v. Moriana (2022) 142 S.Ct. 1906, there was no right to compel arbitration of a PAGA claim. As a result, there was nothing to knowingly relinquish. Defendant’s pre-Viking River Cruises actions cannot be inconsistent with a right that did not exist when they were taken, so Laliberte’s waiver argument fails.
IV. Wholesale PAGA Bar
The Stewart group argues the arbitration agreements include a wholesale bar on PAGA claims, which remains unenforceable even under Viking River Cruises. Again, except for Laliberte, the Stewart group members must make this argument to the arbitrator. They have delegated to the arbitrator all questions of interpretation and applicability of the agreement. Their argument would require the Court to interpret the agreements to determine whether the class and representative action operates as they claim.
As to Laliberte, his agreement contains an unambiguous total waiver of the right to bring any PAGA action. In fact, Laliberte’s waiver appears broader than the waiver in Viking River Cruises. The United States Supreme Court held that a waiver, which was limited to “representative” PAGA claims, was “invalid if construed as a wholesale waiver of PAGA claims.” (Viking River Cruises, supra, 142 S.Ct. at p. 1925.) But in Viking River Cruises, the agreement had a savings clause providing that “if the waiver provision is invalid in some respect, any ‘portion’ of the waiver that remains valid must still be ‘enforced in arbitration.’” (Ibid.) Based on this clause, and based on the FAA, the claim could be split into individual and representative portions, with the individual portion sent to arbitration and the representative portion otherwise disposed of.
The savings clause in Laliberte’s agreement tracks the language in Viking River Cruises. It provides that if any “portion” of the agreement is unenforceable, it “shall be severed and the remainder of this Agreement shall be enforceable.” (2018 Agreement, p. 2.) This allows the Court, following Viking River Cruises, to sever the PAGA waiver only to the extent it purports to waive PAGA claims wholesale, and to order the individual portion of Laliberte’s PAGA claim to arbitration.
V. Remaining Proceedings
Following Viking River Cruises, the individual portions of Plaintiffs’ PAGA claims are ordered to separate arbitrations. Under both the Federal Arbitration Act and the California Arbitration Act, this case must be stayed until the completion of the arbitrations. (9 U.S.C. § 3; CCP § 1281.4.)
Defendant also asks the Court to dismiss the representative portion of Plaintiffs’ PAGA claims. This request follows the conclusion of Viking River Cruises, where the majority explained that under its view of California law, plaintiffs ordered to arbitrate their individual PAGA claims lose standing to prosecute representative PAGA claims: “But as we see it, PAGA provides no mechanism to enable a court to adjudicate non-individual PAGA claims once an individual claim has been committed to a separate proceeding. Under PAGA’s standing requirement, a plaintiff can maintain non-individual PAGA claims in an action only by virtue of also maintaining an individual claim in that action.” (Viking River Cruises, supra, 142 S.Ct. at p. 1925.)
But “construction of a state statute by a federal court does not preclude a state court from later rejecting the federal court’s conclusion.” (16 Cal.Jur.3d (2022) Courts, § 324.) As two concurrences in Viking River Cruises pointed out, the majority may well be incorrect about PAGA standing. Justice Sotomayor wrote: “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, supra, 142 S.Ct. at p. 1926 [conc. opn. of Sotomayor, J.].) And three justices noted the majority’s conclusion “addresses disputed state-law questions” and “is unnecessary to the result.” (Ibid. [conc. opn. of Barrett, J.].)
In fact, the California Supreme Court recently granted review in Adolph v. Uber Technologies, S274671, to answer this exact question. Per an order dated August 1, 2022, “The issue to be briefed and argued is limited to the following: Whether an aggrieved employee who has been compelled to arbitrate claims under the Private Attorneys General Act (PAGA) that are ‘premised on Labor Code violations actually sustained by’ the aggrieved employee [citation] maintains statutory standing to pursue ‘PAGA claims arising out of events involving other employees’ [citation] in court or in any other forum the parties agree is suitable.”
Were the Court to dismiss the representative PAGA claims only for Adolph to reach a different conclusion than Viking River Cruises, both judicial economy and the parties’ resources would be taxed by attempts to unwind the dismissal. Furthermore, the arbitrator may decide that Plaintiffs haven’t suffered any of the Labor Code violations complained of, meaning Plaintiffs lack PAGA standing regardless of what happens in Adolph. For these reasons, the proper course is to deny the request to dismiss the claims without prejudice to that request being renewed upon conclusion of the arbitrations.