Judge: Yolanda Orozco, Case: 21STCV05909, Date: 2022-09-08 Tentative Ruling

Case Number: 21STCV05909    Hearing Date: September 8, 2022    Dept: 31

MOTION TO COMPEL ARBITRATION GRANTED, IN PART 

Background 

On February 16, 2021, Plaintiff Ignacio Lepe filed an action under the Private Attorney General Act (PAGA) to recover civil penalties both as an individual, the State of California, and other current and former employees of Defendant Bristol Farms and Does 1 through 10. 

The operative First Amended Complaint was filed on May 16, 2022. 

On August 01, 2022, Defendant moved to compel arbitration of Plaintiff’s PAGA action. 

On August 25, 2022, Plaintiff filed Opposition Papers. 

On August 31, 2022, Defendant filed a Reply. 

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 records of any court of record of the United States. (Evid. Code § 452(d)(2).) 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 Bristol Farms request Judicial Notice of the Minute Order entered on July 13, 2022 by the Hon. Daniel S. Murphy in Marlena Gozzi v. Acadia Malibu, Inc., LSAC No. 19STCV39861, attached as Exhibit A. 

The request for Judicial Notice is GRANTED. 

Discussion 

Existence of a Valid Agreement 

Defendant Bristol Farms moves to compel arbitration of Plaintiff’s individual PAGA claims and dismissal of Plaintiff’s non-individual representative PAGA claims pursuant to the United States Supreme Court’s decision in Viking River Cruises, Inc. v. Moriana (2022) 142 S.Ct. 1906 (Viking River).  

Plaintiff does not dispute that on October 1, 2018, Plaintiff signed a one-page arbitration agreement (the “Agreement”) wherein Plaintiff agreed that “final and binding arbitration shall be the exclusive remedy for any dispute between [Plaintiff] and Bristol Farms[.]” (Reichard Decl. Ex. A [Agreement].) Exempt from the agreement are claims for workers’ compensation, unemployment compensation, or other non-arbitrable claims under applicable state or federal law. (Id.) All common-law and statutory claims are subject to arbitration, including unpaid wages. (Id.) 

The Agreement also provides that:

“Any court of competent jurisdiction may enter judgment upon the award . . . by vacating, modifying, or correcting the award on any ground referred to in the Federal Arbitration Act or the California Code of Civil Procedure §§ 1286 et seq.”

(Reichard Decl. Ex. A.) 

However, there is no specific provision stating whether the Agreement is governed by the Federal Arbitration Act (FAA) or the California Arbitration Act (CAA), only that the rules and procedures of the American Arbitration Association (AAA) govern the Agreement. Nevertheless, Defendant represents that because Defendant’s operations involve and affect interstate commerce through the use and sale of food products, the FAA governs the Agreement. (Howard Decl. ¶¶ 4, 5.) Plaintiff does not dispute this assertion. 

Accordingly, Defendant has satisfied its burden of proving the existence of a valid Agreement. Moreover, Plaintiff does not challenge the existence of the agreement or assert that the agreement is unenforceable due to unconscionability. 

Bifurcation of Plaintiff’s PAGA Action 

Plaintiff does not dispute that the Agreement binds his individual PAGA claims to arbitration. However, Plaintiff argues that because the Agreement does not contain any representative action waiver, Plaintiff’s entire PAGA action, including the non-individual representee PAGA claims, should be compelled to arbitration. “The Arbitration Agreement thus provides for representative, non-individual PAGA claims to be arbitrated.” (Opp. at 12:26-27.) 

Plaintiff forgets that in a PAGA action, the real party in interest is the State of California. (Viking River, supra, 142 S.Ct. at 1914 [“As the California courts conceive of it, the State ‘is always the real party in interest in the suit.’”].) Therefore, without the State’s consent, Plaintiff’s representative PAGA claims cannot be compelled into arbitration. 

Accordingly, the Court will enforce the terms of the Agreement by compelling Plaintiff’s individual PAGA claims to arbitration while the representee PAGA claims are STAYED, pending arbitration. 

Plaintiff Has Standing to Assert Non-Individual Representative PAGA Claims 

Defendant asserts that under Viking River, Plaintiff’s non-individual PAGA claims must be dismissed because Plaintiff lacks standing. (See Viking River, supra, 142 S.Ct. at 1925 [“Moriana lacks statutory standing to continue to maintain her non-individual claims in court, and the correct course is to dismiss her remaining claims.”].) 

However, the U.S. Supreme Court is not the final arbiter of California law. (See Beal v. Missouri Pac. R. R. Corp.¿(1941) 312 U.S. 45, 50 [“The state courts are the final arbiters of their meaning and appropriate application, subject only to review by this Court if such construction or application is appropriately challenged on constitutional grounds.”]; see also 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.”].) Accordingly, the California Supreme Court’s interpretation of PAGA standing is controlling. 

In Kim v. Reins International California, Inc.¿(2020) the California Supreme Court found that an employee who settled or dismissed his 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.” (Kim v. Reins International California, Inc.¿(2020) 9 Cal.5th 73, 80.) The California Supreme Court further explained that PAGA standing “has only two requirements . . . The plaintiff must be an aggrieved employee, that is, someone¿‘who was employed by the alleged violator’ and ‘against whom¿one or more of the alleged violations was committed.’” 

(Kim, supra, 9 Cal.5th at 83-84, citing Labor Code § 2699(c).) Moreover, “[n]othing in the legislative history 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.) 

Here, Plaintiff meets the PAGA standing requirement to bring non-individual PAGA claims. The Court is not persuaded by the assertion that Kim is inapplicable here where an individual PAGA claim is severed from a non-individual PAGA claim, because the threshold issue is Plaintiff’s standing to bring a representative PAGA action. Other courts have similarly found. (See  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 rem,ained an “aggrieved employee” with standing to purse penalties on the state’s behalf.]; ¿Johnson v. Maxim Healthcare Services, Inc. (2021) 66 Cal.App.5th 924, 929-930 [finding that even though plaintiff’s individual PAGA claims were time-barred, plaintiff was an “aggrieved employee” with standing to bring a PAGA claim.];¿Shams v. Revature LLC¿(N.D. Cal., Aug. 17, 2022, No. 22-CV-01745-NC) 2022 WL 3453068, at *4 [“Although the Supreme Court suggests that under PAGA, Moriana lost standing to pursue her non-individual PAGA claims, because the California Supreme Court is the final arbiter of California law, this Court applies¿Kim’s interpretation of PAGA standing to this case and denying dismissal of non-individual PAGA claims.”].)

The Court notes that by compelling Plaintiff’s individual PAGA claims to arbitration and staying the action as to the non-individual PAGA claims pending arbitration, the outcome is consistent with Hon. Daniel S. Murphy’s decision in Marlene Gozzi v. Acadia Malibu, Inc., LASC Case No. 19STCV39861. (RJN Ex. A.)

Accordingly, the Court DECLINES to dismiss Plaintiff’s non-individual representative PAGA claims and STAYS the action as to these claims.  

Conclusion 

Defendant Bristol Farms Motion to Compel Arbitration is GRANTED, IN PART. 

Plaintiff’s individual PAGA claims are compelled to arbitration and the representative PAGA claims are STAYED, pending arbitration of Plaintiff’s individual PAGA claims. 

The Court expects the parties to act expeditiously to schedule and complete the arbitration. The Court sets a Status Conference on April 14, 2023, at 9 a.m. at which time the parties are to report of their progress. 

Moving party to give notice.    

The parties are strongly encouraged to attend all scheduled hearings virtually or by audio. Effective July 20, 2020, all matters will be scheduled virtually and/or with audio through the Court’s LACourtConnect technology. The parties are strongly encouraged to use LACourtConnect for all their matters. All masking protocols will be observed at the Courthouse and in the courtrooms.