Martinez, Elva vs. YBR Enterprises Limited Partnership

Plaintiff does not dispute executing the Agreement.

Authority and Analysis - Agreement to Arbitrate "On petition of a party to an arbitration agreement alleging the existence of a written agreement to arbitrate a controversy and that a party thereto refuses to arbitrate such controversy, the court shall order the petitioner and the respondent to arbitrate the controversy if it determines that an agreement to arbitrate the controversy exists, unless it determines that: (a) The right to compel arbitration has been waived by the petitioner; or (b) Grounds exist for the revocation of the agreement." (Code Civ.

Proc. Sec. 1281.2(a), (b).) (emphasis added.) Absent a challenge by the nonmoving party, this burden is met by simply providing a copy of the arbitration agreement. (Baker v. Italian Maple Holdings, LLC, 13 Cal. App. 5th 1152, 1160 (2017); Cal. Rules of Court, rule 3.1330.) "For purposes of a petition to compel arbitration, it is not necessary to follow the normal procedures of document authentication." (Condee v. Longwood Management Corp. (2001), 88 Cal.App.4th 215, 218; Sprunk v. Prisma LLC (2017) 14 Cal.App.5th 785, 793.)

However, when the opposing party disputes the agreement, then the opposing party must provide evidence to challenge its authenticity. (Gamboa v. Northeast Community Clinic (2021) 72 Cal.App.5th 158, 165.) Under California law, "[t]he burden of persuasion is always on the moving party to prove the existence of an arbitration agreement with the opposing party by a preponderance of the evidence ...." (Gamboa v. Northeast Community Clinic (2021) 72 Cal.App.5th 158, 164-165.)"However, the burden of production may shift in a three-step process." (Id. at 165.) "First, the moving party bears the burden of producing 'prima facie evidence of a written agreement to arbitrate the controversy.' [Citation.]" (Gamboa, supra, 72 Cal.App.5th at p. 165.) "The moving party 'can meet its initial burden by attaching to the [motion or] petition a copy of the arbitration agreement purporting to bear the [opposing party's] signature.' [Citation.]" (Id. .) "For this step, 'it is not necessary to follow the normal procedures of document authentication.' [Citation.]" (Id.)

Here, this burden is met through attachment of Exhibits 1 and 2 as to Plaintiff's electronic signature to the Agreement. As noted above, Plaintiff does not contest the execution of the Agreement. Therefore, the Court finds an agreement to arbitrate.

Facts - Scope of Agreement The Agreement expressly applies to "...any dispute that Company may have against Employee or that Employee may have against: (I) Company; (2) its officers, directors, principals, shareholders, members, owners, employees, or agents; (3) Company's benefit plans or the plan's sponsors, fiduciaries, administrators, affiliates, or agents; and (4) all successors and assigns of any of them..." Further, that "this Agreement also applies, without limitation, to disputes with any entity or individual arising out of or relating to the application for employment, background checks, privacy, employment relationship, or the termination of that relationship (including post-employment defamation or retaliation), trade secrets, unfair competition, compensation, classification, minimum wage, seating, expense reimbursement, overtime, breaks and rest periods, or retaliation, discrimination, or harassment and claims arising under...all other federal or state legal claims (including without limitation torts) arising out of or relating to Employee's employment or the termination of employment"

Authority and Analysis - Scope of Agreement Based on the claims pled in the complaint under the Labor Code and Business and Professions Code, the Court finds the claims at issue here are within the scope of the Agreement.

Facts - FAA Application The Agreement states "This Agreement is governed by the Federal Arbitration Act, 9 U.S.C. Sec. I et seq. and evidences a transaction involving commerce."

Authority and Analysis - FAA Application The party asserting the FAA applies to an agreement has "the burden to demonstrate FAA coverage by declarations and other evidence." (Hoover v. American Income Life Ins.Co. (2012) 206Cal.App.4th 1193, 1207; see Shepard v. Edward Mackay Enterprises, Inc. (2007) 148Cal.App.4th 1092, 1101) "The FAA applies to contracts that involve interstate commerce (9 U.S.C. Sec.Sec. 1, 2), but since arbitration is a matter of contract, the FAA also applies if it is so stated in the agreement." (Davis v. Shiekh Shoes, LLC (2022) 84 Cal.App.5th 956, 963.) Plaintiff does not contest the application of the FAA. Therefore, the Court finds the FAA applies.

Facts - Class Action Waiver Here, the Agreement states: "Employee and the Company agree to bring any dispute in arbitration on an individual basis only, and not on a class, collective or private attorney general representative action basis. Accordingly, (a) There will be no right or-authority for any dispute to be brought, heard or arbitrated as a class action ("Class Action Waiver"). The Class Action Waiver shall be severable from this Agreement in any case in which (1) the dispute is filed as a class action and (2) there is a final judicial determination that the Class Action Waiver is invalid, unenforceable, unconscionable, void or voidable.

In such instances, the class action must be litigated in a civil court of competent jurisdiction. (b) There will be no right or authority for any dispute to be brought, heard or arbitrated as a collective action ("Collective Action Waiver"). The Collective Action Waiver shall be severable from this Agreement in any case in which (1) the dispute is filed as a collective action and (2) there is a final judicial determination that the Collective Action Waiver is invalid, unenforceable, unconscionable, void or voidable.

In such instances, the collective action must be litigated in a civil court of competent jurisdiction."

Authority and Analysis - Class Action Waiver As the FAA applies, the class action waiver is enforceable. (Viking River Cruises v. Moriana (2022) 596 U.S. 639, 651 ["'a party may not be compelled under the FAA to submit to class arbitration unless there is a contractual basis for concluding that the party agreed to do so'"]; AT&T Mobility LLC v. Concepcion (2011) 563 U.S. 333, 352 [holding class action waivers are enforceable under FAA and California rule to contrary preempted].) Additionally, Plaintiff does not contest the dismissal of the class claims.

Facts - Private Attorney General Waiver Here, the Agreement states: "Employee and the Company agree to bring any dispute in arbitration on an individual basis only, and not on a class, collective or private attorney general representative action basis. Accordingly... (c) There will be no right or authority for any dispute to be brought, heard or arbitrated as a private attorney general representative action ("Private Attorney General Waiver"). The Private Attorney General Waiver does not apply to any claim Employee brings on Employee's own behalf and not on behalf of others for recovery of Employee's unpaid wages.

The Private Attorney General Waiver shall be severable from this Agreement in any case in which (1) the dispute is filed as a private attorney general representative action and (2) there is a final judicial determination that the Private Attorney General Action Waiver is invalid unenforceable, unconscionable, void or voidable. In such instances, the private attorney general representative action must be litigated in a civil court of competent jurisdiction."

Authority and Analysis - Private Attorney General Waiver To start, the Court notes "[t]here is no individual component to a PAGA action because '"every PAGA action . . . is a representative action on behalf of the state."' [Citation.]" (Kim v. Reins International California, Inc. (2020) 9 Cal.5th 73, 87.) The term "individual" refers to those claims brought by a plaintiff as a representative of the State and which seek to recover civil penalties under PAGA for Labor Code violations experienced by the plaintiff. (See Galarsa v.

Dolgen California, LLC (2023) 88 Cal.App.5th 639, 648 [referring to these claims as "Type A" claims].) The term "non-individual" refers to those claims brought by a plaintiff as a representative of the State and which seek to recover civil penalties under PAGA for Labor Code violations experienced by employees other than the plaintiff. (Galarsa, at 649 [referring to these claims as "Type O" claims].) As such, the Court will utilize this terminology for clarity.

In Viking River, the United States Supreme Court held that, under an agreement permitting such, a PAGA cause of action may be divided into individual, Type A and representative or non-individual Type O claims and that the individual claims may be ordered to arbitration: "PAGA authorizes any 'aggrieved employee' to initiate an action against a former employer 'on behalf of himself or herself and other current and former employees' to obtain civil penalties that previously could have been recovered only by the State in an [Labor Workforce and Development Agency] enforcement action." (Viking River Cruises, Inc. v. Moriana (2022) 596 U.S. 639, 645.) The "individual PAGA claim" (Type A) is the claim for the violations suffered by the aggrieved employee and the "representative PAGA claim" (Type O) is the PAGA claim arising out of events involving other employees. (Id. at 648.)

The Viking River decision "left undisturbed" and "intact" both of the rules from Iskanian v. CLS Transportation Los Angeles, LLC (2014) 59 Cal.4th 348 that (1) prohibited categorical waivers of the right to bring a PAGA action in any forum and (2) prohibited waivers of PAGA claims on behalf of other employees, i.e., non-individual or representative claims. (Adolph v. Uber Technologies, Inc. (2023) 14 Cal.5th 1104,1117-1118.) However, the United States Supreme Court held that the third rule, which prohibited the "'division of PAGA actions into individual and non-individual claims through an agreement to arbitrate'" was preempted by the FAA. (Id. at 1118.)

Specifically, the Viking River Court stated: "The agreement between Viking and Moriana purported to waive 'representative PAGA claims. Under Iskanian, this provision was invalid if construed as a wholesale waiver of 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 that remains valid must still be 'enforced in arbitration.'

Based on this clause, Viking was entitled to enforce the agreement insofar as it mandated arbitration of Moriana's individual PAGA claim." (Id. at 1924-1925.)

As summarized by the California Supreme Court in Adolph, an agreement that is covered by the FAA may require arbitration of "alleged Labor Code violations personally sustained by a PAGA plaintiff -- so-called 'individual' claims." (Adolph, supra, 14 Cal.5th at 1114, 1119.) "'[W]hen an appropriate arbitration agreement exists'" and "a plaintiff has filed a PAGA action comprised of individual and non-individual claims," the trial court must "'bifurcate and order [the] individual PAGA claim[] to arbitration.'" (Id. at 1126, 1123.)

In this circumstance, the "order compelling arbitration of [the] individual claim[] does not strip the plaintiff of standing to litigate non-individual claims [i.e., claims on behalf of other employees] in court." (Id. at 1123) Instead, "'the individual PAGA claim[] in arbitration remain[s] part of the same lawsuit as the representative claims remaining in court.'" (Id. at 1126.) The plaintiff would thus be "'pursuing a single PAGA action "on behalf of [himself or herself] and other current or former employees," albeit across two fora.' [Citation.]" (Id.)

Mondragon In Mondragon v. Sunrun Inc. (2024) 101 Cal. App. 5th 592, the carve out provision excluded claims brought "as a representative of the state of California as a private attorney general under" the Private Attorney General Act of 2004 (PAGA; Lab. Code, Sec. 2698 et seq.)" and the trial court denied the motion to compel Plaintiff's causes of action under PAGA to arbitration. (Id. at 599-601.) The Mondragon court concluded that "There is no other language in the arbitration agreement suggesting the parties intended to treat PAGA claims seeking penalties for violations regarding Mondragon (i.e., individual PAGA claims) separately from PAGA claims seeking penalties for violations regarding other employees (i.e., non-individual PAGA claims).

The PAGA carve-out is not reasonably susceptible to the interpretation..." that it applies only to Type A "individual" claims. (Id. at 613.) The Mondragon court noted that Viking River's analysis did not change this result and instead supports it: "If anything, Viking River confirms Mondragon's interpretation that the carve-out applies to both individual and non-individual claims...Here, the language of the PAGA carve-out more closely tracks the language describing representative claims in the first sense--claims brought "as a representative of the state of California."

Therefore, under Viking River, the carve-out included (and the agreement to arbitrate excluded) "every PAGA claim." (Viking River, at p. 648.)" (Id. at 614-615.)

Application to the Present Case Here, the Agreement first states that the parties agree to arbitrate claims "on an individual basis only and not on a class, collective or private attorney general representative action basis." Unlike in the agreement Mondragon, which lacked any reference to any "individual" language, the Court notes the presence of the term "on an individual basis" here. Further, the Agreement here states, under subsection (c) of the waiver states "The Private Attorney General Waiver does not apply to any claim Employee brings on Employee's own behalf and not on behalf of others for recovery of Employee's unpaid wages."

This language, in part, appears to also suggest an intent to split the claims. However, Plaintiff notes that PAGA claims seek penalties, not unpaid wages, on behalf of both the plaintiff and the aggrieved employees. As such, the attempted carve out "The Private Attorney General Waiver does not apply to any claim Employee brings on Employee's own behalf and not on behalf of others for recovery of Employee's unpaid wages" is ineffective to preclude a finding of wholesale waiver. This term carves out nothing from a PAGA claim which does not seek recovery of wages.

Rather, the Agreement contains an impermissible wholesale waiver: "There will be no right or authority for any dispute to be brought, heard or arbitrated as a private attorney general representative action ("Private Attorney General Waiver")" because this language attempts to waive PAGA claims in any forum. Therefore, the Court does not find Plaintiff's PAGA claims, Type A or Type O, to be arbitrable under the language of the Agreement. Plaintiff's PAGA claims shall remain in this Court.

Stay Defendant seeks to stay Plaintiff's PAGA claims pending arbitration of the now individual (former class) claims under the Labor Code and Business and Professions Code. The Court agrees there appears to be a split of authority as to the preclusive effect, if any, that arbitration of Plaintiff's individual Labor Code and Business and Professions Code claims has on the PAGA claims that remain before this Court. In Gavriiloglou v. Prime Healthcare Mgmt., Inc. (2023) 83 Cal. App. 5th 595, the court held that an arbitrator's decision that there were no Labor Code violations against the plaintiff cannot deprive that plaintiff of standing as an aggrieved employee to bring a PAGA action based on the same Labor Code violations. (Id. at 603.)

However, the court in Rocha v. U-Haul Co. of California (2023) 88 Cal.App.5th 65 reached a different conclusion that Gavriiloglou, holding that an "arbitrator's finding that the [plaintiffs] did not suffer a [Labor Code] section 1102.5 violation as alleged in the operative complaint precludes them from qualifying as 'aggrieved employees' based on that same alleged violation." (Id. at 76.)

The Court notes that the present situation, where Plaintiff's individual (former class) Labor Code claims are sent to arbitration and Plaintiff's PAGA claims, Type A and Type O, remain before this Court, differs from that in Adolph, where the California Supreme Court noted: "First, the trial court may exercise its discretion to stay the non-individual claims pending the outcome of the arbitration pursuant to section 1281.4 of the Code of Civil Procedure. Following the arbitrator's decision, any party may petition the court to confirm or vacate the arbitration award under section 1285 of the Code of Civil Procedure.

If the arbitrator determines that [the plaintiff] is an aggrieved employee in the process of adjudicating his individual PAGA claim, that determination, if confirmed and reduced to a final judgment (Code Civ. Proc., Sec. 1287.4), would be binding on the court, and [the plaintiff] would continue to have standing to litigate his nonindividual claims. If the arbitrator determines that [the plaintiff] is not an aggrieved employee and the court confirms that determination and reduces it to a final judgment, the court would give effect to that finding, and [the plaintiff] could no longer prosecute his non-individual claims due to lack of standing." (Adolph, supra, 14 Cal.5th 1104, 1123-1124, citing Rocha, supra, 88 Cal.App.5th 65, 76-82.)

However, the Court's understanding is that, under the reasoning employed by Adolph, an arbitrator's hypothetical finding that Plaintiff did not suffer any violations under the Labor Code would have a preclusive effect on both Plaintiff's Type A PAGA claim and Type O PAGA claim. As such, the Court, stays the PAGA claims pending arbitration.

If no one requests oral argument, under Code of Civil Procedure section 1019.5(a) and California Rules of Court, rule 3.1312(a), no further written order is necessary. The minute order adopting this tentative ruling will become the order of the court and service by the clerk will constitute notice of the order. Court reporters are usually not available for law and motion matters in the civil division. The parties and counsel must provide their own reporter if they want a transcript of the proceedings. Re: Zuniga Espinoza, Wendy vs. Black Bear Diner - Visalia L.P.