Motion to Strike Class Allegations, Compel Arbitration, and Stay Litigation
Angelica Espiritu Resendiz, et al. v. Rio Farms, LLC
Defendant’s Motion to Strike Class Allegations, Compel Arbitration, and Stay Litigation
Hearing Date: August 7, 2026
The motion filed by Defendant Rio Farms, LLC (“Defendant”) to compel arbitration, strike class allegations, and stay this action is DENIED. Defendant has not met its burden to establish the existence of an applicable arbitration agreement or class action waiver covering the data‐breach claims alleged in the operative First Amended Complaint of Plaintiffs Angelica Espiritu Resendiz and Luis Ortega (collectively, “Plaintiffs”). In light of the Court’s ruling, the Case Management Conference (“CMC”) following the motion hearing is MAINTAINED.
Background.
In their FAC, Plaintiffs bring a class action alleging that Defendant, their former employer, failed to reasonably secure employees’ personally identifiable information (“PII”), including names and Social Security numbers, resulting in a massive cyberattack. [FAC at ¶ 1.] The cyberattack was allegedly discovered on December 4, 2024. [Id. at ¶ 2.] Plaintiffs allege Defendant waited over a year to notify victims on December 29, 2025. [Id. at ¶ 3.] Defendant then left victims in the dark about what data was stolen, and failed to disclose the extent of the disclosure and remedial measures. [Id. at ¶ 33.] Plaintiffs define the class as: “All individuals within the State of California whose Private Information was exposed to unauthorized third parties as a result of the data breach purportedly discovered by Defendant on or before December 4, 2024.” [Id. at ¶ 19.]
Legal Standard.
When a party files a motion claiming a written arbitration agreement exists and asserts that another party refuses to arbitrate, the court is required to order arbitration if it finds such an agreement. [Pinnacle Museum Tower Assn. v. Pinnacle Market Development (US), LLC (2012) 55 Cal.4th 223, 236.] However, this is not necessary if the court determines that (1) the moving party has waived their right to compel arbitration, or (2) there are valid reasons to revoke the agreement. [Ibid.] The party requesting arbitration must prove that the agreement exists, while the opposing party bears the burden of proving defenses, such as unconscionability. [Ibid.]
California laws establish a “summary proceeding” to resolve motions to compel arbitration. [Kader v. So. Cal. Medical Center, Inc. (2024) 99 Cal.App.5th 214, 220-221
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declarations, other documentary evidence, and oral testimony at its discretion to make a final decision. [Ibid.]
Discussion.
A. Motion to Compel Arbitration.
1. Existence and Scope of the Arbitration Agreement.
It is undisputed that each Plaintiff signed an Arbitration Agreement during their period of employment with Defendant. [Lopez Decl. at ¶¶ 1-13 and Exhs. A and B.] The sole question is whether those agreements encompass Plaintiffs’ data‐breach claims.
A “party is not obligated to arbitrate unless [they have] expressly agreed to do so by entering into a valid and enforceable written contract with the party who seeks arbitration.” [Grey v. American Management Services (2012) 204 Cal.App.4th 803, 808.] “The burden is on the party seeking arbitration to show notice and assent.” [Jackson v. Amazon.com, Inc. (9th Cir. 2023) 65 F.4th 1093, 1100.] To determine whether a dispute must be arbitrated, the court must first examine the arbitration clause. [Id. at 1101.]
Next, the court examines the factual allegations in the complaint to determine if a dispute falls within the scope of an arbitration clause. [Ibid.] The pivotal question is whether the suit has a direct connection to the employment, and claims will fall outside the scope of the contract if the employee could still sue the defendant, even if the employee had never been employed by the defendant, assuming all other conditions were met. [United States ex rel. Welch v. My Left Foot Children’s Therapy, LLC (9th Cir. 2017) 871 F.3d 791, 799.]
Furthermore, arbitration agreements covering all claims “arising out of” and/or “related to” employment do not cover all disputes related to the employer, since that is not the language of the contract. [Ibid.]
The at-issue Arbitration Agreements apply to disputes “arising out of or relating to” Plaintiffs’ employment, including specified employment‐related tort, contract, and statutory claims. [Exhs. A-B to Lopez Decl. at 1.] They do not reference cybersecurity, data storage, data protection, or any post‐employment obligations concerning PII. [Ibid.]
Defendant argues that Plaintiffs’ PII was collected for employment purposes and, therefore, their data breach claims fall within the arbitration clause. However, merely obtaining PII through an employment relationship does not, by itself, turn a data breach—such as alleged security failures and delayed notification—into an employment‐related dispute. [See Welch, 871 F.3d at 799.] In other words, the data breach issue is unrelated to employment because anyone affected by the cybersecurity incident can sue Defendant, regardless of employment status. The fact that Defendant acquired the PII in the course of employment is incidental and does not, by itself, bring the data breach claims within the scope of the Arbitration Agreement.
The Ninth Circuit’s reasoning in Jackson, 65 F.4th 1093, is particularly persuasive. There, claims alleging privacy violations unrelated to the terms or performance of the employment contract did not fall within an employment‐related arbitration clause—even where the plaintiff’s connection to the monitored activity arose from employment. [Id. at 1101-1102.] Similarly, the South Carolina Court of Appeals in Davis v. ISCO Industries, Inc. (S.C. Ct. App.
2021) 434 S.C. 488, 498-499, and the federal court in Wagner v. Andy Frain Services, Inc. (N.D. Ill., July 2, 2026, No. 25 CV 5252) 2026 WL 1906995, at *5, both concluded that data‐breach claims do not “arise out of” or “relate to” employment despite the employer’s role in obtaining the data.
Here, Plaintiffs’ claims do not depend on any terms of employment or the employment‐related obligations enumerated in the Arbitration Agreements. Rather, the claims concern alleged failures in data protection and breach‐notification duties owed to any person whose data Defendant held—irrespective of whether that person was ever an employee. The employment relationship is incidental, not foundational, to the asserted causes of action.
Because Defendant has not shown that Plaintiffs’ claims fall within the scope of the Arbitration Agreements, Defendant has failed to satisfy its initial burden. The motion to compel arbitration is therefore DENIED.
2. Waiver and Defenses.
Because Defendant has failed to establish the applicability of any arbitration agreement, the Court need not reach issues of waiver or defenses.
B. Motion to Strike the Class Claims.
A motion to strike may be granted only where the challenged matter is “irrelevant, false, or improper” on the face of the pleading. [Code Civ. Proc. §§ 436-437.] Defendant argues that Plaintiffs’ class allegations must be struck due to the class action waivers contained in the Arbitration Agreements. However, those waivers expressly apply only to “wages, hours, or other terms or conditions of employment.” [Exhs. A-B to Lopez Decl. at 1.] As discussed above, the Arbitration Agreements do not apply to Plaintiffs’ data‐breach claims, which are not employment‐related.
Indeed, the class action waiver is even narrower than the arbitration clause: “Employees are expressly precluded from filing any joint, class, representative, or collective claims addressing their wages, hours, or other terms or conditions of their employment against the employer in any forum, whether arbitral or judicial.” [Ibid.] Because the waivers do not apply to the claims in the FAC, the motion to strike class allegations is DENIED.
C. Stay Request.
A stay may issue only where the Court has ordered arbitration of a controversy involved in the action. [Code Civ. Proc. § 1281.4.] As the motion to compel arbitration is denied, the request for a stay is likewise DENIED.
Conclusion.
Defendant’s motion to compel arbitration, strike class allegations, and stay this action is DENIED in full. Defendant has failed to demonstrate that the arbitration agreements or class action waivers encompass Plaintiffs’ data‐breach claims. The CMC following the motion hearing is MAINTAINED. Plaintiffs shall prepare the Proposed Order consistent with this Tentative Ruling.
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