Judge: Yolanda Orozco, Case: 19STCV36784, Date: 2022-08-29 Tentative Ruling
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Case Number: 19STCV36784 Hearing Date: August 29, 2022 Dept: 31
MOTION FOR LIMITED LIFT OF STAY
TO COMPEL INDIVIDUAL ARBITRTION AND
TO DISMISS REPRSENTATIVE PAGA CLAIMS IS DENIED
Background
On October 11, 2019, Plaintiff Consuelo Alonso Alcala filed this instant action against Defendant 99 Cents Only Stores LLC and Does 1 to 50 for violations of the Labor Code under Private Attorneys General Act (PAGA).
A First Amended Complaint (FAC) was filed on December 09, 2019.
Defendant’s demurrer to Plaintiff’s FAC was sustained on June 23, 2020 because another related PAGA action was pending (LASC Case No. BC690901). (Min. 06/23/20.) This case was stayed pending resolution of LASC Case No. BC690901. (Id.)
On August 05, 2022, Defendant moved for a limited lifting of the stay to compel individual arbitration and dismissal of the representative PAGA Claim.
Plaintiff filed opposition papers on August 18, 2022. Defendant filed a Reply on August 22, 2022.
Legal Standard
Parties may be compelled to arbitrate a dispute upon the court finding that: (1) there was a valid agreement to arbitrate between the parties; and (2) said agreement covers the controversy or controversies in the parties’ dispute.¿ (CCP § 1281.2; see also Omar v. Ralphs Grocery Co. (2004)¿118 Cal.App.4th 955, 961.)¿¿ ¿
A party petitioning to compel arbitration has the burden of establishing the existence of a valid agreement to arbitrate and the party opposing the petition has the burden of proving, by a preponderance of the evidence, any fact necessary to its defense. (Banner Entertainment, Inc. v. Superior Court¿(1998) 62 Cal.App.4th 348, 356-57.)¿¿“If a court of competent jurisdiction . . . has ordered arbitration of a controversy which is an issue involved in an action or proceeding pending before a court of this State, the court in which such action or proceeding is pending shall, upon motion of a party to such action or proceeding, stay the action or proceeding until an arbitration is had in accordance with the order to arbitrate or until such earlier time as the court specifies.” (CCP § 1281.4.)¿
Request for Judicial Notice
The court may take judicial notice of “official acts of the legislative, executive, and judicial departments of the United States and of any state of the United States,” “[r]ecords of (1) any court of this state or (2) any court of record of the United States or of any state of the United States,” and “[f]acts and propositions that are not reasonably subject to dispute and are capable of immediate and accurate determination by resort to sources of reasonably indisputable accuracy.” (Evid. Code § 452, subds. (c), (d), and (h).) However, the court may only judicially notice the existence of the record, not that its contents are the truth. (Sosinsky v. Grant (1992) 6 Cal.App.4th 1548, 1565.)
Defendant requests Judicial Notice of the following:
Exhibit A: Plaintiff’s Supplemental Letter Brief, Adolph v. Uber Technologies, Inc., Cal. Supreme Ct. Case No. S274671, dated June 29, 2022.
Exhibit B: Docket in Brinker Restaurant Corp. v. Super. Ct. (2012) 53 Cal.4th 1004, as of August 22, 2022.
Exhibit C: Docket in Adolph v. Uber Technologies, Inc., Cal. Supreme Ct. Case No. S274671, as of August 22, 2022
Supplemental Exhibit A: Docket in Viking River Cruises, Inc. v. Moriana, United States Supreme Court Case No. 20-1573, as of August 23, 2022.
The Court GRANTS Defendant’s request for Judicial Notice.
Evidentiary Objections
Plaintiff filed Evidentiary Objections to the Declaration of Elina Berry.
The following Objections are OVERRULED
· Declaration of Elina Berry, Exhibit A (“Arbitration of Disputes”)
· Declaration of Elina Berry, ¶ 5, lines 23-25.
Discussion
Defendant moves to lift the stay in this action and compel Plaintiff’s individual PAGA claims to arbitration and dismiss her representative PAGA claims pursuant to the United States Supreme Court’s decision in Viking River Cruises, Inc. v. Moriana (2022) 142 S.Ct. 1906.
I. Existence of a Valid Arbitration Agreement with Plaintiff
Defendant asserts that when Plaintiff entered employment with 99 Cents Only, Plaintiff entered into a binding arbitration agreement that also required her to arbitrate her individual PAGA claims and expressly waived the right to pursue a representative action. Defendant asserts that on or from around August 12, 2019, Defendant required every new employee to sign an arbitration agreement entitled “Arbitration of Disputes” (the “Agreement). (Barry Decl. ¶ 4-5, Ex. A [“Agreement”].)
The Agreement covers all claims arising out of Plaintiff’s employment with Defendant:
“The arbitration requirement applies to all claims, including without limitation federal, state and local statutory, constitutional, contractual and/or common law claims, arising from or in connection with Employee’s employment with the Company or termination therefrom including, but not limited to, claims arising under Title VII of the Civil Rights Act of 1964; the Age Discrimination in Employment Act; the Equal Pay Act of 1963; the Fair Labor Standards Act; the Americans with Disabilities Act; for employees of the Company’s or it affiliates’ California facilities, the California Fair Employment and Housing Act, the California Labor Code, California Industrial Welfare Commission Wage Orders; California Business and Professions Code section 17200 et seq.[.]”
(Agreement, at p. 1.)
Defendants assert that the Agreement requires arbitration of any claims arising out of Plaintiff’s employment and expressly prohibits representative actions:
“By entering into this Agreement, the Company and the undersigned Employee are waiving the right to a jury trial for all employment-related disputes and waiving the right to pursue, or participate in, any class or other form of representative action concerning all employment-related disputes. [¶] The Company and the undersigned Employee hereby agree that any dispute with any party . . . that may arise from or in connection with Employee’s employment with the Company . . . must be submitted for resolution by mandatory, binding arbitration. . . . [¶] Notwithstanding any other provision of this Agreement, any arbitration under this Agreement must and will take place on an individual basis only. Class arbitration and class actions are not agreed to or permitted under this Agreement. Employee and the Company agree that, by entering into this Agreement, Employee and the Company each are waiving the right to participate in a class, collective or representative action for all employment-related disputes. As such, neither party may initiate a proposed class, collective or representative action . . . (e.g., as a[] class member or aggrieved employee).”
(Agreement, at p. 1.)
Furthermore, the agreement expressly provides that the Federal Arbitration Act (FAA) will govern the interpretation and enforcement of the Agreement:
“The Federal Arbitration Act., 9 U.S.C. § 1 et seq., shall govern the interpretation and enforcement of this Agreement.”
(Agreement, at p. 1.)
The Agreement also contains a severability clause:
“It is the intent of the parties that a court of competent jurisdiction (not an arbitrator) determine the enforceability of this paragraph to the extent there is a challenge to its enforceability. In the event that a portion of this provision, i.e., the prohibition on the right to participate in a representative action, is deemed invalid, the remainder of the provision and Agreement will remain enforceable.”
(Agreement, at p. 1.)
Defendant also asserts that the Agreement provides for a neutral arbitrator selected by both parties from either the American Arbitration Association Labor and Employment Panel, Judicial Arbitration and Mediation Services, Inc. (JAMS); or the Alternative Dispute Resolution Services (ADR), and if the parties cannot agree to an arbitrator, one will be appointed under Code of Civil Procedure Section 1281.6. (Agreement, at p. 1.) The Agreement also provides for adequate discovery as set for in Code of Civil Procedure Section 1283.05. (Id.)
a. Wholesale Prohibition on PAGA Claims is Unenforceable
Defendant wrongfully interprets Viking as a total abrogation of Iskanian v. CLS Transportation Los Angeles, LLC (2014) 59 Cal.4th 348, permitting a wholesale prohibition of claims under PAGA. This was not the holding in Viking; rather, the U.S. Supreme Court held:
“We hold 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 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.’”
(Viking, supra, 142 S.Ct. at 1924-1925.)
Under Viking, that portion of the Iskanian case holding that any waivers that prohibit bringing a PAGA action remains valid because they are against public policy if they function as wholesale wavier of PAGA. (See Iskanian, supra, 59 Ca.5th at 382-383.) The U.S. Supreme Court found that Moriana’s waiver of her “representative ” PAGA claims was invalid because if the waiver were enforced it would function as a full-scale prohibition of PAGA claims. (Viking, supra, 142 S.Ct. at 1924-1925.) For this reason, the portion of Moriana’s arbitration agreement purporting to waive her “representative” PAGA claims was severed from the arbitration agreement, thus allowing her individual claims to continue in arbitration. (Id.)
In this case, the Agreement can only be interpreted as a wholesale waiver of Plaintiff’s right to bring a representative PAGA action and is therefore invalid. Under Viking, the purported waiver language must be severed from the Agreement. Under Viking and the Agreement’s severability clause, Plaintiff’s individual PAGA claims may be compelled into arbitration, while the representative PAGA waiver is severed from the Agreement. The remainding portions of the Agreement remain valid.
b. Plaintiff’s Electronic Signature is Valid
Plaintiff asserts that she does not recall signing the Agreement nor checking a box signifying that she electronically entered into the Agreement. (Alcala Decl. ¶¶ 4, 5.) Plaintiff also asserts that her electronic signature has not been authenticated. In other words, Defendant has failed to show that the check mark on the box stating “I accept and acknowledge the company policy above” was the “act of the” Plaintiff by a “showing of the efficacy of any security procedure applied to determine the person to which the electronic record or electronic signature was attributable.” (Civ. Code § 1633.9(a).)
Defendants submitted a supplemental declaration from Elina Berry, the Employee Relations Manager for 99 Cents Only, who attests to Defendant’s secure onboarding system and document execution process. (Berry Decl. ¶ 2, Berry Supp. Decl. ¶¶ 4-15.) Berry’s supplemental declaration confirms that Plaintiff logged into Defendant’s secure onboarding system using a unique code and password to review the Agreement and confirm that she reviewed and agreed to it when she checked the box.
Case law supports the finding that Plaintiff agreed to the terms of the Agreement when she checked the box. By checking or clicking a box indicating agreement near a link to the contract’s terms (a so-called “clickwrap” agreement), a person generally manifests her consent to agree to those terms. (See, e.g., Lee v. Ticketmaster L.L.C. (9th Cir. 2020) 817 Fed.Appx. 393, 394 [a “clickwrap agreement” requires “users to click a separate box indicating that they agree to its Terms”]; In re Holl (9th Cir. 2019) 925 F.3d 1076, 1084 [“there is no question Holl affirmatively assented to the UPS My Choice Service Terms. He checked a box acknowledging as much.”].)
For the reasons stated, Defendant has proven the existence of a valid Agreement requiring Plaintiff to arbitrate her individual claims against Defendant.
II. Plaintiff remains an Aggrieved Employee who has the Standing to Pursue Representative PAGA Claims under California Law
In Viking, the United States Supreme Court reasoned:
“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. See Cal. Lab. Code Ann. §§ 2699(a), (c). When an employee’s own dispute is pared away from a PAGA action, the employee is no different from a member of the general public, and PAGA does not allow such persons to maintain suit. [Citation.] 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.”
(Viking, supra, 142 S.Ct. at 1925.)
For this reason, Defendant urges that Plaintiff’s representative PAGA claims be dismissed.
However, the U.S. Supreme Court’s reasoning that a plaintiff whose individual claims are ordered to arbitration lacks standing to maintain non-individual PAGA claims in court is not supported by California law. The U.S. Supreme lacks the authority to make a binding interpretation of issues under California law. (See Wisconsin v. Mitchell (1993) 508 U.S. 476, 483 [“There is no doubt that we are bound by a state court's construction of a state statute.”].) In Viking, the U.S. Supreme Court recognized that “PAGA's standing requirement was meant to be a departure from the ‘general public’ ... standing originally allowed’ under other California statutes.” (Viking, supra, 142 S.Ct. at 1925 [citation omitted.].)
To bring suit under PAGA, a private plaintiff must be an “aggrieved employee,” which is defined as “any person who was employed by the alleged violator and against whom one or more of the alleged violations was committed.” (Lab. Code § 2699(a), (c).) In Kim v. Reins International California, Inc. (2020) 9 Cal.5th 73, the California Supreme Court found that an employee who has settled or dismissed her individual claims for labor code violations remained an “aggrieved employee” with standing to bring a PAGA claim:
“Settlement of individual claims does not strip an aggrieved employee of
standing, as the state's authorized representative, to pursue PAGA remedies.”
(Id. at 80.)
The California Supreme Court further explained:
“Nothing in the legislative history [of the PAGA statute] suggests the Legislature intended to make PAGA standing dependent on the existence of an unredressed injury, or the maintenance of a separate, unresolved claim.”
(Id. at 90-91.)
Defendant argues that Kim is unavailing because it does not address whether a plaintiff who has resolved her individual right to PAGA penalties may recover representative PAGA penalties on behalf of other employees. The Court disagrees because the threshold question is whether Plaintiff has standing to continue the representative PAGA claim and recover penalties on behalf of the state and other aggrieved employees. Under Kim, Plaintiff has standing as an “aggrieved employee” under Labor Code Section 2699(a) even if Plaintiff has settled and thereby resolve her individual claim. (See also Zuniga v. Alexandria Care Center, LLC (2021) 67 Cal.App.5th 871, 883 [holding that even though plaintiff’s individual claims were settled after arbitration was ordered, plaintiff remained an “aggrieved employee” with standing to purse penalties on the state’s behalf.];
To find that Plaintiff lacks standing to bring a representative PAGA claim would be contrary to the legislative intent and purpose of PAGA.
“Employers could potentially avoid paying any penalties to the state simply by settling with the individual employees. And these individual settlements would not be subject to the safeguards of PAGA settlements, which require notice to the LWDA and court oversight.”
(Kim, supra, 9 Cal.5th at 88.)
Accordingly, the Court applies the reasoning and holding in Kim’s to conclude that Plaintiff’s representative PAGA claims are not subject to dismissal under Viking.
III. Res Judicata Concerns
Defendant argues that once Plaintiff has litigated her individual PAGA claims against 99 Cents only, res judicata bars her from pursuing a “second” (representative) PAGA claim against Defendant.
In Kim, res judicata concerns were not applicable because “Kim's settlement specifically excluded the pending PAGA claim.” (Kim, supra, 9 Cal.5th at 91-92 [Noting that “Where a settlement agreement expressly excludes certain claims, the resulting dismissal does not preclude further litigation on the excluded claim.”].) Here, there has been no settlement of Plaintiff’s claims so Defendant’s res judicata claim is not ripe. Furthermore, the provision requiring Plaintiff to arbitrate her representative PAGA claims has been severed from the Agreement by this Court, as the Supreme Court did in Viking. (Viking, supra, 142 S.Ct. at 1924-1925.)
Moreover, res judicata does not apply to “claims within the same lawsuit[.]” (Kim, supra, 9 Cal.5th at 91 [italics original].) There is no evidence here that Plaintiff’s arbitrated claims once resolved will be relitigated in these court proceedings, nor would this be permitted. (See id. at 92.) As stated in Kim, “[defendant] cites no authority, and we are aware of none, holding that the resolution of some claims can bar the litigation of other claims that were asserted in the same lawsuit.” (Id. [italics original].)
To the extent that the previously pending action, McGuire v. 99 Cents Only Stores LLC, LASC No. BC690901, may have a preclusive effect on this Action, this action continues to be stayed pending the resolution of McGuire action.
Previously, in staying this action, this Court found that
“Because the McGuire action includes all current and former nonexempt employees of Defendant beginning on January 19, 2017 and ending at the time the action settles or proceeds to final judgment, the McGuire action would necessarily include any alleged violations of the California Labor Code by any aggrieved employees that the instant action seeks to adjudicate.”
(Min. Or. 06/23/20.)
Therefore, the McGuire action continues to have exclusive concurrent jurisdiction and the risk of conflicting results and duplicative discovery, motion practice, and litigation continues to exist, such that this action should continue to be stayed.
For this reason, Plaintiff’s request for a stay pending resolution of Adolph v. Uber Techs., Inc., No. G059860, 2022 WL 1073583 (Cal. Ct. App. Apr. 11, 2022), review granted by the California Supreme Court on July 20, 2022, is MOOT.
Conclusion
For all the reasons stated, the Court DENIES Defendant 99 Cents Only Store’s LLC’s Motion to Lift Stay for a Limited Purpose to Compel Individual Arbitration. Defendant may be able file its arbitration motion on the Plaintiff's claim at such time as the McGuire case is resolved. Court DENIES the Motion to Dismiss Plaintiff’s representative PAGA claims, without prejudice.
Moving party to give notice.
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