Johnson v. Lowe's Home Centers, LLC ( 2022 )

1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 EASTERN DISTRICT OF CALIFORNIA 10 11 MARIA JOHNSON, an individual, for No. 2:21-cv-00087-TLN-JDP herself and on behalf of others similarly 12 situated, and as a private attorney general, 13 Plaintiff, ORDER 14 v. 15 LOWE’S HOME CENTERS, LLC, a North Carolina limited liability company, 16 Defendant. 17 18 19 This matter is before the Court on Defendant Lowe’s Home Centers, LLC’s (“Defendant”) 20 Motion to Dismiss (ECF No. 14) and Motion to Compel Arbitration (ECF No. 26). Plaintiff 21 Maria Johnson (“Plaintiff”) opposed both motions. (ECF Nos. 18, 27.) Defendant filed replies. 22 (ECF Nos. 20, 29.) For the reasons set forth below, the Court GRANTS Defendant’s motion to 23 compel arbitration and DENIES Defendant’s motion to dismiss as moot. 24 /// 25 /// 26 /// 27 /// 28 /// 1 I. FACTUAL AND PROCEDURAL BACKGROUND 2 Plaintiff, Defendant’s former employee, filed the operative First Amended Complaint 3 (“FAC”) on February 2, 2021. (ECF No. 9.) Plaintiff alleges a claim under the Private Attorneys 4 General Act of 2004 (“PAGA”), in which she seeks civil penalties based on alleged California 5 Labor Code violations Defendant committed against Plaintiff and other aggrieved employees. 6 (Id. at 2, 5.) Defendant filed a motion to dismiss for failure to state a claim on March 2, 2021. 7 (ECF No. 14.) After the Supreme Court’s recent decision in Viking River Cruises, Inc. v. 8 Moriana, 142 S. Ct. 1906 (2022) (“Viking River”), Defendant filed a motion to compel arbitration 9 of Plaintiff’s individual PAGA claim and dismiss Plaintiff’s non-individual PAGA claims.1 (ECF 10 No. 26.) Because the Court intends to grant Defendant’s motion to compel arbitration in its 11 entirety, the Court need not and does not address Defendant’s original motion to dismiss. 12 II. STANDARD OF LAW 13 The parties do not dispute that the Federal Arbitration Act (“FAA”) governs Defendant’s 14 motion to compel arbitration. 9 U.S.C. §§ 1–16. In deciding whether to compel arbitration, a 15 district court determines two gateway issues: (1) whether a valid agreement to arbitrate exists; 16 and, if it does, (2) whether the agreement encompasses the dispute at issue. Lifescan, Inc. v. 17 Premier Diabetic Servs., Inc., 363 F.3d 1010, 1012 (9th Cir. 2004). “To evaluate the validity of 18 an arbitration agreement, federal courts ‘should apply ordinary state-law principles that govern 19 the formation of contracts.’” Ingle v. Circuit City Stores, Inc., 328 F.3d 1165, 1170 (9th Cir. 20 2003) (citation omitted). If the court is “satisfied that the making of the arbitration agreement or 21 the failure to comply with the agreement is not in issue, the court shall make an order directing 22 the parties to proceed to arbitration in accordance with the terms of the agreement.” 9 U.S.C. § 4. 23 If a court “determines that an arbitration clause is enforceable, it has the discretion to either stay 24 the case pending arbitration, or to dismiss the case if all of the alleged claims are subject to 25 1 Defendant indicates it did not previously move to compel arbitration of the individual 26 PAGA claim because case law prior to Viking River precluded such a motion. (ECF No. 26 at 9 27 (citing ECF No. 7 at 16 n.5.)) Plaintiff does not dispute the timeliness of Defendant’s arguments. (See ECF No. 27.) The Court concludes Defendant’s motion is timely because it raises arguments 28 that were futile prior to Viking River. 1 arbitration.” Hoekman v. Tamko Bldg. Prod., Inc., No. 2:14-cv-01581-TLN-KJN, 2015 WL 2 9591471, at *2 (E.D. Cal. Aug. 26, 2015) (citation omitted). 3 III. ANALYSIS 4 Defendant argues Viking River confirms that Plaintiff’s individual PAGA claim must be 5 compelled to arbitration and her remaining non-individual PAGA claims must be dismissed for 6 lack of statutory standing. (ECF No. 26 at 8.) In opposition, Plaintiff “does not dispute that she 7 entered into arbitration agreements during her employment.” (ECF No. 27 at 4.) However, 8 Plaintiff argues: (1) the agreements include unenforceable “wholesale waivers” of PAGA claims; 9 (2) the agreements’ severability provisions require litigation of PAGA claims; and (3) if the Court 10 compels arbitration of the individual PAGA claim, the remaining non-individual PAGA claims 11 should not be dismissed. (Id.) The Court will first address Plaintiff’s individual PAGA claim and 12 then the remaining non-individual PAGA claims. 13 A. Individual PAGA Claim 14 The issue in Viking River was whether the FAA “preempts a rule of California law that 15 invalidates contractual waivers of the right to assert representative claims under” PAGA. 16 142 S. Ct. at 1913. The employee in Viking River executed an agreement to arbitrate any dispute 17 arising out of her employment. Id. at 1916. “The agreement contained a ‘Class Action Waiver’ 18 providing that in any arbitral proceeding, the parties could not bring any dispute as a class, 19 collective, or representative PAGA action,” and “[i]t also contained a severability clause 20 specifying that if the waiver was found invalid, any class, collective, representative, or PAGA 21 action would presumptively be litigated in court.” Id. Pursuant to the severability clause, “if any 22 ‘portion’ of the waiver remained valid, it would be ‘enforced in arbitration.’” Id. 23 After leaving her position, the employee filed suit in California court. Id. The employee 24 alleged an individual PAGA claim based on Viking River’s alleged failure to pay her final wages 25 within 72 hours, as well as PAGA claims based on Labor Code violations sustained by other 26 Viking River employees. Id. Viking River moved to compel arbitration of the individual PAGA 27 claim and to dismiss the other PAGA claims. Id. The trial court denied the motion based on the 28 rule from Iskanian v. CLS Trans. L.A., LLC, 59 Cal. 4th 348 (2014), that “categorical waivers of 1 PAGA standing are contrary to state policy and that PAGA claims cannot be split into arbitrable 2 individual claims and nonarbitrable ‘representative’ claims.” Viking River, 142 S. Ct. at 1916. 3 The Supreme Court reversed, holding “the FAA preempts the rule of Iskanian insofar as it 4 precludes division of PAGA actions into individual and non-individual claims through an 5 agreement to arbitrate.” Id. at 1924. The Court stated that under the agreement at issue, Viking 6 River and the employee “purported to waive ‘representative’ PAGA claims.” Id. The Court 7 noted that “[u]nder Iskanian, this provision was invalid if construed as a wholesale waiver of 8 PAGA claims” as “that aspect of Iskanian is not preempted by the FAA.” Id. at 1924–25. 9 However, the Court explained that “the severability clause in the agreement provides that if the 10 waiver provision is invalid in some respect, any ‘portion’ of the waiver that remains valid must 11 still be ‘enforced in arbitration.’” Id. at 1925. The Court concluded that based on the severability 12 clause, “Viking [River] was entitled to enforce the agreement insofar as it mandated arbitration of 13 [the employee’s] individual PAGA claim.” Id. The Court then dismissed the employee’s non- 14 individual PAGA claims for lack of statutory standing, stating, “When an employee’s own 15 dispute is pared away from a PAGA action, the employee is no different from a member of the 16 general public, and PAGA does not allow such persons to maintain suit.” Id. 17 In the instant case, the “Representative Action Waiver” provision reads as follows: 18 To the extent permissible by law, there shall be no right or authority for any dispute to be arbitrated as a representative action or as a 19 private attorney general action, including but not limited to claims brought pursuant to the Private Attorney General Act of 2004, Cal. 20 Lab. Code § 2698, et seq. (“Representative Action Waiver”). THIS MEANS THAT YOU MAY NOT SEEK RELIEF ON BEHALF OF 21 ANY OTHER PARTIES IN ARBITRATION, INCLUDING BUT NOT LIMITED TO SIMILARLY AGGRIEVED EMPLOYEES. 22 THE ARBITRATOR’S AUTHORITY TO RESOLVE ANY DISPUTE AND TO MAKE WRITTEN AWARDS WILL BE 23 LIMITED TO YOUR INDIVIDUAL CLAIMS. 24 (ECF No. 7-2 at 16–17, 22–23.) 25 Plaintiff argues the waiver constitutes an unenforceable “wholesale waiver” of PAGA 26 claims. (ECF No. 27 at 8.) The Court in Viking River explained that PAGA actions are 27 “representative” in two ways: (1) “PAGA actions are ‘representative’ in that they are brought by 28 employees acting as representatives — that is, as agents or proxies — of the State”; and (2) 1 “PAGA claims are also called ‘representative’ when they are predicated on code violations 2 sustained by other employees.” 142 S. Ct. at 1916. The Court further explained, “when the word 3 ‘representative’ is used in the second way, it makes sense to distinguish ‘individual’ PAGA 4 claims, which are premised on Labor Code violations actually sustained by the plaintiff, from 5 ‘representative’ (or perhaps quasi-representative) PAGA claims arising out of events involving 6 other employees.” Id. The Court stated, “Iskanian’s principal rule prohibits waivers of 7 ‘representative’ PAGA claims in the first sense. That is, it prevents parties from waiving 8 representative standing to bring PAGA claims in a judicial or arbitral forum.” Id. The Court 9 found that Iskanian’s principal rule “is not preempted by the FAA” and thus provisions that 10 constitute “wholesale waivers of PAGA claims” under that rule are invalid. Id. at 1924–25. 11 The Court concludes the waiver at issue in the instant case does not run afoul of 12 Iskanian’s principal rule because it is not a “wholesale waiver” that prevents Plaintiff from 13 bringing a PAGA action on behalf of the State for violations she suffered as an individual. The 14 “Representative Action Waiver” clarifies that it “means the employee may not seek relief on 15 behalf of any other parties in arbitration, including but not limited to similar aggrieved 16 employees.” (ECF No. 7-2 at 16–17, 22–23.) It also explains “the arbitrator’s authority to 17 resolve any dispute will be limited to [the employee’s] individual claims.” (Id.) Accordingly, the 18 waiver seeks to limit PAGA claims within the second meaning of “representative” — “when they 19 are predicated on code violations sustained by other employees.” Viking River, 142 S. Ct. at 20 1916; see Shams v. Revature LLC, No. 22-CV-01745-NC, 2022 WL 3453068, at *2 (N.D. Cal. 21 Aug. 17, 2022) (“[T]he context of where ‘private attorney general’ appears makes clear that the 22 waiver applies to non-individual representative actions, not [the employee’s] individual PAGA 23 claims on behalf of the State.”). 24 Even if the Court construed the provision as a wholesale waiver of PAGA claims, the 25 severability provision in the instant case mirrors the severability provision in Viking River. The 26 severability provision in Viking River stated, “if the waiver was found invalid, such a dispute 27 would presumptively be litigated in court” and “any ‘portion’ of the waiver that remained valid 28 would be ‘enforced in arbitration.’” 142 S. Ct. at 1911. The Court found that, based on this 1 language, Viking River was “entitled to enforce the agreement insofar as it mandated arbitration 2 of [the employee’s] individual PAGA claim.” 142 S. Ct. at 1925. The severability clause in the 3 instant case states in relevant part: 4 [I]f a court of competent jurisdiction finds the . . . Representative Action Waiver unenforceable for any reason, then the unenforceable 5 waiver provision shall be severable from this Agreement, and any claims covered by any deemed unenforceable waiver provision may 6 only be litigated in a court of competent jurisdiction, but the remainder of the agreement shall be binding and enforceable. 7 8 (ECF No. 7-2 at 17, 23.) 9 Plaintiff argues the crucial difference is that the severability provision in Viking River 10 stated “any ‘portion’ of the waiver that remained valid would be ‘enforced in arbitration,’” while 11 the provision in the instant case states “any claims covered by any deemed unenforceable waiver 12 provision may only be litigated in a court of competent jurisdiction.” (ECF No. 27 at 10–11.) 13 The Court finds the severability provision in the instant case is similar enough to the provision in 14 Viking River to warrant the same result. The severability provision ends by stating, “the 15 remainder of the agreement shall be binding and enforceable.” (ECF No. 7-2 at 17, 23.) The 16 agreements provide that Plaintiff agreed that “any controversy between [Plaintiff] and 17 [Defendant] . . . arising out of [Plaintiff’s] employment . . . shall be settled by binding 18 arbitration.” (ECF No. 7-2 at 16–17, 22–23.) The agreements further provide Plaintiff may bring 19 claims “solely on an individual basis” and “the arbitrator’s authority to resolve any dispute and to 20 make written awards will be limited to [the employee’s] individual claims.” (Id.) As such, the 21 Court concludes that, like in Viking River, Defendant is entitled to enforce the agreements to the 22 extent they mandate arbitration of Plaintiff’s individual PAGA claim. 23 Absent any further argument to the contrary, the Court finds the arbitration agreements are 24 valid and Plaintiff’s dispute falls within the scope of those agreements. Lifescan, Inc., 363 F.3d at 25 1012. Therefore, the Court GRANTS Defendant’s motion to compel Plaintiff’s individual PAGA 26 claim to arbitration. 27 /// 28 /// 1 B. Non-Individual PAGA Claims 2 As to the remaining non-individual PAGA claims, the Supreme Court in Viking River 3 | dismissed such claims for lack of statutory standing. 142 S. Ct. at 1925. Defendant requests that 4 | this Court follow Viking River and do the same in this case. (ECF No. 29 at 10.) In opposition, 5 | Plaintiff argues the Supreme Court’s dismissal of non-individual PAGA claims in Viking River 6 | was based on a mistaken view of California law. (ECF No. 27 at 11.) 7 Absent intervening California authority, the Court declines to question the Supreme 8 | Court’s interpretation on this issue. See Radcliff v. San Diego Gas & Elec. Co., No. 20-cv-1555- 9 | H-MSB, 2022 WL 4229305, at *4 (S.D. Cal. Sept. 12, 2022) (“The Court is disinclined to 10 | substitute its own interpretation of California state law in place of an interpretation set forth so 11 | recently by the Supreme Court.”); but see Shams, 2022 WL 3453068, at *3 (finding that the 12 | Supreme Court misinterpreted California state law and declining to dismiss the plaintiff's non- 13 |} individual PAGA claims). The Supreme Court clearly set forth that non-individual PAGA claims 14 | should be dismissed once the individual PAGA claim is compelled to arbitration. Viking River, 15 142S. Ct. at 1925 (“Moriana lacks statutory standing to continue to maintain her non-individual 16 | claims in court, and the correct course is to dismiss her remaining claims.”). Therefore, the Court 17 | GRANTS Defendant’s motion to dismiss Plaintiff's non-individual PAGA claims. 18 IV. CONCLUSION 19 For the foregoing reasons, the Court GRANTS Defendant’s Motion to Compel 20 | Arbitration. (ECF No. 26.) Accordingly, the Court COMPELS Plaintiffs individual PAGA 21 | claim to arbitration and DISMISSES Plaintiff's non-individual PAGA claims. Defendant’s 22 | Motion to Dismiss is DENIED as moot. (ECF No. 14.) As there are no remaining claims before 23 | the Court, the Clerk of Court is directed to close the case. 24 IT IS SO ORDERED. NN /) 25 | DATED: September 21, 2022 “ \ ] 7 jf Lr 26 — AN oo Troy L. Nunley . \ United States District Judge 28