Nares v. Penny Newman Grain Co.

(34)

Tentative Ruling

Re: Nares v. Penny Newman Grain Co. Superior Court Case No. 24CECG00430

Hearing Date: September 10, 2026 (Dept. 502)

Motion: (1) by Defendant for Reconsideration (2) On Remittitur: by Defendant to Compel Arbitration

Tentative Ruling:

To deny Defendant’s motion for reconsideration of the court’s August 20, 2024 order.

To grant Defendant’s motion to compel arbitration in part and deny in part. To compel arbitration of plaintiff Ivan Vazquez’s individual PAGA claim stated in the eighth cause of action. To deny the motion to compel arbitration of the other claims, as well as the eighth cause of action to the extent that it states a representative claim under PAGA. To stay the court action as to the remaining claims until the arbitration has been resolved.

Explanation:

Motion for Reconsideration

Defendant Penny Newman Grain Co. moves pursuant to Code of Civil Procedure section 1008, subdivision (c) for reconsideration of the court’s August 20, 2024 order denying defendant’s motion to compel arbitration with respect to plaintiff Ivan Vasquez. Defendant argues new case law supports finding Vasquez is not a transportation worker subject to exemption from the Federal Arbitration Act and should be compelled to arbitrate his individual claims.

Under Code of Civil Procedure section 1008, subdivision (c), the court on its own motion may reconsider a prior order entered where it determines there has been a change of law warranting the change. (Code Civ. Proc. § 1008, subd. (c); State of California v. Superior Court (Flynn) (2016) 4 Cal.App.5th 94, 100.) Thus, even if the moving party has not complied with the procedural requirements of section 1008, the court still retains the inherent power to reconsider its own orders sua sponte, provided that it has given the parties notice, an opportunity to respond, and a hearing on the court’s motion. (Le Francois v. Goel (2005) 35 Cal.4th 1094, 1104-1109.)

Defendant clarifies in its reply that its intention is to move for reconsideration based on a change in law, a motion pursuant to Code of Civil Procedure section 1008, subdivision (b). As it appears plaintiffs’ opposition addresses the merits of defendant’s

arguments with respect to the application of the two new cases1 to defendant’s motion to compel arbitration the court will proceed.

Vela v. Harbor Rail Services of California, Inc.

Defendant argues the decision in Vela v. Harbor Rail Services of California, Inc. (2026) 120 Cal.App.5th 353 (Vela) redefines the scope of employees who are alleged to be transportation workers under Section 1 of the FAA using a two-step framework. However, this framework applied to the railcar repairman in Vela is the framework set forth in Southwest Airlines Co. v. Saxon (2022) 596 U.S. 450, 455-456 (Saxon). Thus, there is no “new law” or “change in law” articulated within Vela, merely an application of the analysis from Saxon that was applied to Vasquez in this court’s ruling on the motion to compel arbitration.

Flowers Foods, Inc. v. Brock

Defendant additionally argues that the recent United States Supreme Court decision in Flowers Foods, Inc. v. Brock (2026) 608 U.S. 380 (Flowers) creates a new framework for evaluating the transportation worker exemption for “last mile drivers.” There is no evidence or assertion that Vasquez was a last mile driver. Defendant asserts the decision in Flowers would have a court look at the contracts between the employer, supplier, and customer to determine whether there is a continuous interstate journey under Section 1 of the FAA. No citation to the opinion is provided for this holding.

The Court ruled in Flowers that a worker who transports goods on an intrastate leg of an interstate journey can qualify for the Section 1 transportation worker exemption from the FAA. (Flowers, supra, 608 U.S. 380, __ [146 S.Ct. 1358, 1363].) The Court reaffirmed its holding in Saxon that the phrase “engaged in” interstate commerce “denotes a ‘direct,’ ‘necessary,’ and ‘activ[e]’ role in moving goods across borders.” (Id. at p. 1365, citing Saxon, supra, 596 U.S. at p. 458.) The Flowers ruling does not appear to have any bearing on whether Vasquez, who is not a last mile driver, can be considered a transportation worker consistent with the Court’s ruling in Saxon.

New Facts

Defendant’s arguments with respect to the Vela and Flowers cases being new law are heavily driven by the introduction of new facts regarding the tasks performed by Vasquez. This information is equally relevant to analysis within the framework presented by Saxon and relied upon by this court in its August 20, 2024 ruling. The new facts also appear to have been available to defendant when making its motion to compel arbitration. There is no explanation of why these facts were not presented or available earlier for the court’s consideration with respect to whether Vasquez’s job duties constitute a direct and necessary role in the free flow of goods across borders.

“A party seeking reconsideration also must provide a satisfactory explanation for the failure to produce the evidence at an earlier time.” (New York Times Co. v. Superior Court (2005) 135 Cal.App.4th 206, 212.) “The burden under section 1008 is comparable

1 Defendant’s requests for judicial notice nos. 1 and 2 are granted.

to that of a party seeking a new trial on the ground of newly discovered evidence: the information must be such that the moving party could not, with reasonable diligence, have discovered or produced it” at the original hearing. (Id. at pp. 212–213.) To the extent defendant’s motion can also be interpreted as one premised on new facts, the motion is denied.

Neither Flowers nor Vela present new law through which the court must analyze whether Vasquez is a transportation worker exempt from the FAA. Accordingly, the motion for reconsideration is denied.

On Remittitur: Motion to Compel Arbitration

Pursuant to California Code of Civil Procedure section 1281.2, “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. (c) A party to the arbitration agreement is also a party to a pending court action or special proceeding with a third party, arising out of the same transaction or series of related transactions and there is a possibility of conflicting rulings on a common issue of law or fact.” (Cal.

Civ. Proc. Code § 1281.2, paragraph breaks omitted.)

“[W]hen a petition to compel arbitration is filed and accompanied by prima facie evidence of a written agreement to arbitrate the controversy, the court itself must determine whether the agreement exists and, if any defense to its enforcement is raised, whether it is enforceable. Because the existence of the agreement is a statutory prerequisite to granting the petition, the petitioner bears the burden of proving its existence by a preponderance of the evidence. If the party opposing the petition raises a defense to enforcement - either fraud in the execution voiding the agreement, or a statutory defense of waiver or revocation (see § 1281.2, subds. (a), (b)) - that party bears the burden of producing evidence of, and proving by a preponderance of the evidence, any fact necessary to the defense.” (Rosenthal v.

Great Western Fin. Securities Corp. (1996)14 Cal. 4th 394, 413.) Thus, in ruling on a motion to compel arbitration, the court must first determine whether the parties actually agreed to arbitrate the dispute, and general principles of California contract law guide the court in making this determination. (Mendez v. Mid-Wilshire Health Care Center (2013) 220 Cal.App.4th 534.)

Here, defendant presents evidence that plaintiff Ivan Vasquez signed an agreement to “resolve all claims, disputes or controversies arising out of or relating to [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 9

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.2 As a result,

2 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 10

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 9-9-26. (Judge’s initials) (Date)

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. 11