Harper v. Charter Communications, LLC ( 2022 )

1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 EASTERN DISTRICT OF CALIFORNIA 10 ----oo0oo---- 11 12 LIONEL HARPER, DANIEL SINCLAIR, No. 2:19-cv-00902 WBS DMC HASSAN TURNER, LUIS VAZQUEZ, and 13 PEDRO ABASCAL, individually and on behalf of all others 14 similarly situated and all ORDER RE: MOTION TO COMPEL aggrieved employees, ARBITRATION OF PLAINTIFF 15 HARPER’S PAGA CLAIM AND Plaintiffs, DISMISS REMAINING COUNT TEN 16 CLAIMS v. 17 CHARTER COMMUNICATIONS, LLC, 18 Defendant. 19 20 21 ----oo0oo---- 22 This putative wage-and-hour class action, which has an 23 extensive history before this court, includes claims under 24 California’s Private Attorney General Act (“PAGA”), Cal. Lab. 25 Code §§ 2698 et seq., based on alleged labor code violations by 26 defendant Charter Communications. The court previously ruled on 27 a motion by Charter to compel arbitration of all claims brought 28 by plaintiffs Harper, Turner, Vazquez, and Abascal, except for 1 plaintiff Harper’s PAGA claims, deciding the motion in Charter’s 2 favor. (Docket No. 202.) The court subsequently stayed the 3 action in its entirety, in part because of a case that was then 4 pending before the United States Supreme Court, Viking River 5 Cruises, Inc. v. Moriana, which had the potential to impact the 6 PAGA claims in this action. (Docket Nos. 261, 288.) The Supreme 7 Court has since issued a decision in that case, and the court has 8 partially lifted the stay of this action to consider, among other 9 things, a motion by Charter based on Viking River Cruises. 10 (Docket No. 292.) That motion, through which Charter seeks to 11 compel arbitration of a portion of Harper’s PAGA claims and to 12 dismiss the remainder, is now before the court. (Mot. (Docket 13 No. 293).) 14 I. Legal Background 15 Specifically, Charter seeks to compel Harper to 16 arbitrate his “individual” PAGA claims, as distinct from his 17 “representative” PAGA claims. (See id.) A brief review of PAGA, 18 Viking River Cruises, and California Supreme Court precedent will 19 clarify the significance of these concepts, in part because, as 20 the Supreme Court has explained, PAGA claims are considered 21 “representative” in two distinct senses. 22 “PAGA authorizes any ‘aggrieved employee’ to initiate 23 an action against a former employer ‘on behalf of himself . . . 24 and other current or former employees’ to obtain civil penalties” 25 that otherwise can be “recovered only by the State” in an 26 enforcement action brought by California’s Labor and Workforce 27 Development Agency (LWDA). Viking River Cruises, Inc. v. 28 Moriana, 142 S. Ct. 1906, 1914 (2022) (quoting Cal. Lab. Code 1 Ann. § 2699(a)). “Although the statute’s language suggests that 2 an ‘aggrieved employee’ sues ‘on behalf of himself or herself and 3 other current or former employees,’ California precedent holds 4 that a PAGA suit is a ‘representative action in which the 5 employee plaintiff sues as an agent or proxy’ of the State.” Id. 6 (quoting Cal. Lab. Code Ann. § 2699(a); Iskanian v. CLS Transp. 7 L.A., LLC, 59 Cal. 4th 348 (2014)). That any PAGA claims an 8 aggrieved employee brings are asserted on behalf of the state is 9 the first sense in which PAGA claims are “representative.” See 10 id. at 1916. That the aggrieved employee may, on the state’s 11 behalf, assert those claims based not only on labor code 12 violations he personally suffered, but also on violations “other 13 current or former employees” suffered, is the second sense in 14 which PAGA claims are “representative.” Id. 15 In Iskanian, the California Supreme Court held that 16 waivers of employees’ right to bring “representative” PAGA 17 claims, in the first sense, are barred under California law. See 18 Iskanian, 59 Cal. 4th at 383-84. The Supreme Court termed this 19 “Iskanian’s principal rule.” Viking River Cruises, 142 S. Ct. at 20 1916. Iskanian further held that agreements to “arbitrate or 21 litigate ‘individual PAGA claims for Labor Code violations that 22 an employee [personally] suffered,’” separately and apart from 23 representative PAGA claims in the second sense -- i.e., PAGA 24 claims for labor code violations suffered by other current and 25 former employees -- are invalid. Id. at 1916-17 (quoting 26 Iskanian, 59 Cal. 4th at 383) (other citation omitted).1 The 27 1 In other words, Iskanian held “that PAGA claims cannot 28 be split into arbitrable individual claims and nonarbitrable 1 Supreme Court termed this Iskanian’s “secondary rule.” Id. 2 In Viking River Cruises, the United States Supreme 3 Court overturned Iskanian’s secondary rule, holding that it was 4 preempted by the FAA. See id. at 1923-24. However, the Court 5 upheld Iskanian’s first rule, concluding that the FAA did not 6 preempt California’s bar on waivers of employees’ ability to 7 represent the state in PAGA actions. See id. at 1924-26; People 8 v. Maplebear Inc., 81 Cal. App. 5th 923, 2022 WL 2981169, at *6 9 n.4 (4th Dist. 2022) (recognizing same). Accordingly, under 10 Viking River Cruises, employees may waive the right to bring PAGA 11 claims that are specifically premised on labor code violations 12 they have personally suffered, but “waivers of the right to 13 assert . . . claims [on the state’s behalf] under PAGA” remain 14 invalid. MacClelland v. Cellco P’ship, -- F. Supp. 3d --, 2022 15 WL 2390997, at *9 (N.D. Cal. 2022); see Viking River Cruises, 142 16 S. Ct. at 1923-26; Shams v. Revature LLC, -- F. Supp. 3d --, 2022 17 WL 3453068, at *2 (N.D. Cal. 2022). 18 II. Analysis 19 Based on Viking River Cruises and an arbitration 20 agreement into which Harper and Charter entered, titled the 21 “Solution Channel Agreement,” Charter now seeks to compel 22 Harper’s “individual” PAGA claims -- i.e., only those premised on 23 alleged labor code violations he personally suffered -- to 24 arbitration. (See Mot.) Charter also asks that the court 25 dismiss Harper’s remaining PAGA claims -- i.e., those premised on 26 alleged labor code violations suffered by other employees -- for 27 28 ‘representative’ claims.” Id. at 1916. 1 lack of standing. (See id.); see also Viking River Cruises, 142 2 S. Ct. at 1925 (“[A]s we see it, PAGA provides no mechanism to 3 enable a court to adjudicate non-individual PAGA claims once an 4 individual claim has been committed to a separate proceeding. 5 . . . When an employee’s own dispute is pared away from a PAGA 6 action, the employee is no different from a member of the general 7 public, and PAGA does not allow such persons to maintain suit. 8 As a result, [the employee] lacks statutory standing to continue 9 to maintain [his] non-individual claims in court, and the correct 10 course is to dismiss [his] remaining claims.”). Viking River 11 Cruises referred to this manner of separating PAGA claims into 12 “individual” and “non-individual” claims as “split[ting]” the 13 claims. Id. at 1916. 14 This court has previously enforced the Solution Channel 15 Agreement against Harper as to other claims asserted in this 16 action. (See Docket No. 202; see also Docket No. 288 (denying 17 reconsideration of order compelling arbitration).) In so doing, 18 the court held that the Agreement was not unconscionable. (See 19 Docket No. 202 at 17-20.) Although plaintiffs now reassert the 20 same arguments they previously presented as to why the Agreement 21 is unconscionable, none appear to be new, (see Opp. at 26-42 22 (Docket No. 294)), and the court declines to revisit its previous 23 conclusion. Plaintiffs also reassert arguments the court 24 previously rejected as to why the Agreement does not apply to the 25 claims Charter seeks to arbitrate, (see id. at 23-26; Docket No. 26 202 at 9-12, 14-17), and the court likewise declines to revisit 27 its conclusion as to those arguments. 28 The question thus becomes whether the Solution Channel 1 Agreement provides for the splitting of PAGA claims into 2 “individual” and “non-individual” claims, as discussed in Viking 3 River Cruises, such that the individual PAGA claims may be 4 compelled to arbitration and the non-individual claims dismissed. 5 In Viking River Cruises, the Court described the operative 6 arbitration agreement as follows: 7 The agreement contained a “Class Action Waiver” providing that in any arbitral proceeding, the parties 8 could not bring any dispute as a class, collective, or representative PAGA action. It also contained a 9 severability clause specifying that if the waiver was found invalid, any class, collective, representative, 10 or PAGA action would presumptively be litigated in court. But under that severability clause, if any 11 “portion” of the waiver remained valid, it would be “enforced in arbitration.” 12 13 142 S. Ct. at 1916. 14 After holding that “the FAA preempts the rule of 15 Iskanian insofar as [Iskanian] precludes division of PAGA actions 16 into individual and non-individual claims through an agreement to 17 arbitrate,” id. at 1924 -- Iskanian’s secondary rule -- the Court 18 explained the effect of that holding on the applicability of the 19 arbitration agreement’s representative PAGA waiver and 20 severability clause: 21 The agreement between Viking and Moriana purported to waive “representative” PAGA claims. Under Iskanian, 22 this provision was invalid if construed as a wholesale waiver of PAGA claims. And under our holding, that 23 aspect of Iskanian is not preempted by the FAA, so the agreement remains invalid insofar as it is interpreted 24 in that manner. But the severability clause in the agreement provides that if the waiver provision is 25 invalid in some respect, any “portion” of the waiver that remains valid must still be “enforced in 26 arbitration.” Based on this clause, Viking was entitled to enforce the agreement insofar as it 27 mandated arbitration of Moriana’s individual PAGA claim. The lower courts refused to do so based on 28 [Iskanian’s] rule that PAGA actions cannot be divided 1 into individual and non-individual claims. Under our holding, that rule is preempted, so Viking is entitled 2 to compel arbitration of Moriana’s individual claim. 3 Id. at 1924-25. Thus, although the agreement’s waiver of 4 “representative PAGA” claims was ambiguous as to the sense in 5 which the term “representative” was used -- i.e., representative 6 of the state, or representative of other employees -- the 7 severability clause’s provision requiring enforcement of “any 8 ‘portion’ of the waiver that remains valid” required the Court to 9 interpret the “representative PAGA” waiver as using the term 10 “representative” in the second sense. See id. 11 Here, the Solution Channel Agreement includes a similar 12 waiver of representative claims, although it does not reference 13 PAGA by name. The section is titled “Individual Claims 14 Limitation and Representative, Collective, and Class Action 15 Waiver” and provides: 16 You and Charter agree that both parties may only bring claims against the other party in their individual 17 capacity and not as a plaintiff or class member in any purported class or representative proceeding . . . . 18 Additionally, the arbitrator shall not be permitted to order consolidation of claims or a representative, 19 class, or collective, arbitration. 20 (Aff. of John Fries, Ex. B (“Solution Channel Agreement”) § D 21 (Docket No. 293-1).) 22 Like the arbitration agreement in Viking River Cruises, 23 the Solution Channel Agreement also contains a severability 24 clause. That clause provides in part: 25 [I]f any portion or provision of this Agreement (including, without implication of limitation, any 26 portion or provision of any section of this Agreement) is determined to be illegal, invalid, or unenforceable 27 by any court of competent jurisdiction and cannot be modified to be legal, valid or enforceable, the 28 remainder of this Agreement shall not be affected by 1 such determination and shall be valid and enforceable to the fullest extent permitted by law, and said 2 illegal, invalid, or unenforceable portion or provision shall be deemed not to be a part of this 3 Agreement. 4 (Id. § Q.) It goes on to provide: 5 The only exception to this severability provision is, should the dispute involve a representative, 6 collective or class action claim, and the representative, collective, and class action waiver 7 (Section D) is found to be invalid or unenforceable for any reason, then this Agreement (except for the 8 parties’ agreement to waive a jury trial) shall be null and void with respect to such representative, 9 collective, and/or class claim only, and the dispute will not be arbitrable with respect to such claim(s). 10 11 (Id.) 12 The Solution Channel Agreement’s waiver of 13 representative actions, like the “representative PAGA” action 14 waiver in the arbitration agreement in Viking River Cruises, is 15 ambiguous as to the meaning of “representative” as it applies to 16 PAGA actions. (See Solution Channel Agreement § D.) Thus, under 17 Viking River Cruises and Iskanian, “this provision [is] invalid 18 if construed as a wholesale waiver of PAGA claims,” and the 19 Agreement “remains invalid insofar as it is interpreted in that 20 manner.” Viking River Cruises, 142 S. Ct. at 1924-25. Because 21 basic principles of contract interpretation require the court to 22 construe ambiguities against the drafter of the contract, 23 Sandquist v. Lebo Auto., Inc., 1 Cal. 5th 233, 248 (2016) 24 (quoting Pac. Lumber Co. v. Indus. Accident Comm., 22 Cal. 2d 25 410, 422 (1943)), including in the context of an arbitration 26 agreement, id. (citing Victoria v. Super. Ct., 40 Cal. 3d 734, 27 739 (1985)), the court interprets the waiver’s prohibition on 28 “representative” actions as including a waiver of employees’ 1 right to bring a PAGA action on behalf of the state. 2 The waiver provision is therefore invalid under 3 Iskanian unless its prohibition on representative PAGA actions 4 (in the first sense of the term) can be severed under the 5 Agreement’s severability clause, as was the case in Viking River 6 Cruises. Like the severability clause in that case, which 7 required that “if any ‘portion’ of the waiver remained valid,” 8 that portion “would be ‘enforced in arbitration,’” Viking River 9 Cruises, 142 S. Ct. at 1916, here the Agreement’s severability 10 clause provides that “if any portion or provision of this 11 Agreement” is determined to be invalid and “cannot be modified to 12 be legal, valid or enforceable,” that portion shall be severed 13 and the remainder of the Agreement enforced, (Solution Channel 14 Agreement § Q). Unlike the clause in Viking River Cruises, 15 however, the Agreement’s severability clause specifically exempts 16 the “representative . . . action waiver” from severance, such 17 that the Agreement “shall be null and void with respect to such 18 representative . . . claim only, and the dispute will not be 19 arbitrable with respect to such claim(s).” (Id.) 20 Because the court has concluded that the Agreement’s 21 representative action waiver is unenforceable as to PAGA claims 22 as a matter of law, under the Agreement’s severability clause, 23 the Agreement is “null and void with respect to” such claims. 24 Accordingly, the court concludes that the Solution Channel 25 Agreement does not bar any portion of Harper’s PAGA claims or 26 require arbitration thereof. The instant motion will therefore 27 be denied. 28 IT IS THEREFORE ORDERED that defendant Charter eI IE II III EE EIEIO eee 1 Communications’ motion to compel arbitration of plaintiff 2 Harper’s PAGA claims and to dismiss Count Ten of the operative 3 complaint (Docket No. 293) be, and the same hereby is, DENIED. 4 Dated: September 7, 2022 rb them. hd. bE—~ 5 WILLIAM B. SHUBB UNITED STATES DISTRICT JUDGE 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 2 Defendant’s motion for leave to file a surreply (Docket 29 No. 285) is GRANTED. Defendant’s surreply in response to 26 Sinclair’s Reply in Support of Class Certification shall be filed within 48 hours of the date of this Order. Plaintiff’s request 27 for judicial notice (Docket No. 295) is denied, as consideration of the documents for which plaintiff seeks notice is unnecessary 28 | to the court’s resolution of the instant motion. 10