Nares v. Penny Newman Grain Co.

Here, defendant presents evidence that plaintiff Ivan Vasquez signed an agreement to “resolve all claims, disputes or controversies arising out of or relating to 4 [Vasquez’s] employment and/or the cessation of employment exclusively by final and binding arbitration to the extent permitted by law.” (Hamamjian Decl., Ex. C, “Agreement to Arbitrate Employment Disputes.”

Plaintiff does not deny the existence of the agreement but argues it is not enforceable with respect to the wage and hour class action claims and PAGA claim of the First Amended Complaint. The arbitration agreement does not include an explicit waiver of the employee’s ability to bring a claim on a representative basis but does state the employee and employer agree to arbitrate their disputes by binding arbitration to the extent permitted by law. As such, defendant is moving to dismiss the class claims and compel plaintiff to arbitrate his causes of action on an individual basis.

Plaintiff argues that defendant has waived its ability to compel arbitration pursuant to CAA because it has primarily argued arbitration should be compelled pursuant to the FAA. Given the court was directed specifically to determine whether the CAA compels arbitration of plaintiff’s claims the argument is not persuasive.

Plaintiff next argues under Gentry v. Superior Court (2007) 42 Cal.4th 443, the class claims should not be dismissed in favor of individual arbitration. Gentry requires a party opposing the enforcement of a class waiver to make a factual showing for the trial court to consider: (1) “the modest size of the potential individual recovery”; (2) “the potential for retaliation against members of the class”; (3) “the fact that absent members of the class may be ill informed about their rights”; and (4) “other real world obstacles to the vindication of class members' rights ... through individual arbitration.” (Id. at pp. 453, 463.)

Where, as here, the FAA is not applicable the Gentry analysis is the appropriate test to determine whether a class waiver is enforceable. (Muro v. Cornerstone Staffing Solutions, Inc. (2018) 20 Cal.App.5th 785, 792 (Muro).) Although there is no explicit class action waiver, the language requiring arbitration of claims between the employee and employer can be interpreted as not permitting class arbitration and subject to the Gentry analysis. (Nelsen v. Legacy Partners Residential, Inc. (2012) 207 Cal.App.4th 1115, 1127, 1131.)

Plaintiff has presented evidence to support invalidating the implicit waiver of class claims pursuant to Gentry. Plaintiff’s maximum recovery is approximately $12,997.36 (Lam Decl., ¶ 3, Ex. 1, Vazquez Decl., ¶¶ 2, 4-5.) This figure is consistent with other amounts found to be modest. (Muro, supra, 20 Cal.App.5th, at p. 793.) Plaintiff attests to being afraid of retaliation for initiating a lawsuit while still employed with defendant. (Vazquez Decl., ¶ 5.) Similar attestations as to the parties own concerns of retaliation have been determined to be sufficient to establish this element. (Muro, supra, at p. 794.) Plaintiff attests to his own lack of understanding of his rights under the law, which has been found sufficient to infer the putative class members may not have been informed of their rights. (Vazquez Decl., ¶ 3; Muro, supra, at pp. 794-795.)

As for the final element, plaintiff argues multiple, individual arbitrations are inefficient in wage and hour actions, which is why wage and hour actions are particularly well-suited for resolution on a class-wide basis. (Gentry, supra., 42 Cal.4th a p. 459.) The court finds class proceedings as to the class claims of the First Amended Complaint, specifically causes of action 1 through 7 and 9, are the more effective way to allow the putative class of employees to enforce their rights. The court finds such an outcome is also consistent with the arbitration agreement language limiting arbitration to all disputes to the extent permitted by law.1

As a result, the court intends to deny the motion to compel plaintiff to arbitrate causes of action nos. 1 through 7 and 9 and to deny the request to dismiss the class claims.

The First Amended Complaint also includes a PAGA cause of action. To the extent the agreement can implicitly be understood to waive a representative claim, the California Supreme Court has found that waivers of PAGA representative actions in employee arbitration agreements are unenforceable. (Iskanian v. CLS Transportation Los Angeles, LLC (2014) 59 Cal.4th 348, 383-384, abrogated on other grounds in Viking River Cruises, Inc. v. Moriana (2022) 596 U.S. 639.) However, the arbitration of the plaintiff’s individual PAGA claim is allowed under California law and is consistent with the call of the arbitration agreement to arbitrate disputes to the extent permitted by law. (Id. at p. 662.) As such, the court intends to grant the motion to compel arbitration of plaintiff Vazquez’s individual PAGA claim.

Pursuant to California Rules of Court, rule 3.1312(a), and Code of Civil Procedure section 1019.5, subdivision (a), no further written order is necessary. The minute order adopting this tentative ruling will serve as the order of the court and service by the clerk will constitute notice of the order.

Tentative Ruling

Issued By: lmg on 6-3-26. (Judge’s initials) (Date)

1 Plaintiff additionally raised Labor Code section 229 as a defense to the arbitration of plaintiff’s causes of action raising claims for unpaid wages and related derivative claims in the opposition to defendant’s initial motion to compel arbitration. Under Labor Code section 229, “Actions to enforce the provisions of this article for the collection of due and unpaid wages claimed by an individual may be maintained without regard to the existence of any private agreement to arbitrate.” (Lab. Code, § 229.) Although not discussed in the response brief filed for this hearing, section 229 would also support finding causes of action nos. 1 through 5 for unpaid wages, and the derivative claims in causes of action 6 and 9, not subject to arbitration pursuant to the agreement’s limitation to claims permitted by law. 6