Raymond v. Compucom Systems, Inc. ( 2023 )

1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 FOR THE EASTERN DISTRICT OF CALIFORNIA 10 11 The California Labor and Workforce No. 2:21-cv-02327-KJM-KJN Development Agency, ex re/. William Dean 12 Raymond, et al., ORDER 13 Plaintiffs, 14 v. 15 CompuCom Systems, Inc., 16 Defendant. 17 18 Plaintiff William Dean Raymond brings this employment action under the California 19 | Private Attorneys General Act (PAGA), Cal. Lab. Code. § 2698 et seg., against defendant 20 | CompuCom Systems, Inc. Following this court’s order compelling arbitration of all but the non- 21 | individual PAGA claim, CompuCom moves to dismiss the remaining claim. As explained below, 22 | the court stays the case pending the anticipated decision in Adolph v. Uber Technologies, Inc., 23 | California Supreme Court Case No. $274671. 24 | I. BACKGROUND 25 Plaintiff Raymond originally brought this putative class and PAGA action based on wage 26 | and hour claims against defendant CompuCom in Sacramento County Superior Court. See 27 | Compl., Notice of Removal, ECF No. 1-1. CompuCom removed the case to this court, invoking 28 | Class Action Fairness Act diversity jurisdiction. See Notice of Removal at 2, ECF No. 1. 1 CompuCom then moved to compel arbitration of plaintiffs’ claims and dismiss the class 2 claims. See Mot., ECF No. 7. Plaintiffs opposed, see Opp’n, ECF No. 9, and the parties disputed 3 the existence of an enforceable arbitration agreement given plaintiffs’ position that Raymond had 4 not assented to the agreement, see Reply at 1–2, ECF No. 12. The court held in abeyance the 5 motion to compel pending the resolution of the assent question, see Prior Order (July 27, 2022), 6 ECF No. 20, and ultimately set a one-day bench trial to determine whether Raymond had in fact 7 assented, see Min. Order (Sept. 1, 2022), ECF No. 25. 8 Prior to the bench trial, CompuCom moved for summary judgment on the issue of assent. 9 See Mot. Summ. J., ECF No. 28. In response, plaintiffs admitted “an arbitration agreement was 10 formed between Plaintiff William Dean Raymond, in his individual capacity only,” and 11 CompuCom. Judicial Admission at 3, ECF No. 30. As a result, plaintiffs conceded the court 12 should compel Raymond to arbitrate his individual wage and hour claims and dismiss those 13 claims as well as the putative class claims without prejudice. Id. at 4. CompuCom replied, in 14 large part agreeing with plaintiffs. Reply & Mot. at 1, ECF No. 31. CompuCom simultaneously 15 has moved to dismiss the “remaining non-individual PAGA claim.” Id. 16 The court denied the motion for summary judgment as moot, vacated the bench trial, 17 granted the motion to compel Raymond to arbitrate his wage and hour claims and dismissed those 18 claims without prejudice, and then set a briefing schedule on the motion to dismiss the remaining 19 PAGA claims. See Prior Order (Nov. 30, 2022), ECF No. 32. Plaintiffs oppose the motion to 20 dismiss, Opp’n, ECF No. 33, and CompuCom has replied, Reply, ECF No. 35. The court held 21 oral argument on February 17, 2023. See Hr’g Mins., ECF No. 40. Lisseth Bayona and Brent 22 Robinson appeared for plaintiffs, and Barbara Miller represented defendant. The court submitted 23 the matter and deferred case scheduling. Id. 24 II. THE INDIVIDUAL PAGA CLAIM AND CLASS CLAIMS 25 At the outset, the court notes its prior order could be read as ambiguous regarding the 26 plaintiffs’ individual PAGA and class claims. See generally Prior Order (Nov. 30, 2022). The 27 court discussed this issue with the parties at hearing. The parties stated they understood the prior 28 order to compel arbitration of plaintiffs’ individual PAGA claim and to dismiss the putative class 1 claims, and agreed that result was proper. The court clarifies and confirms its prior order in fact 2 compelled arbitration of plaintiffs’ individual PAGA claim and dismissed without prejudice the 3 putative class claims. See Fed. R. Civ. P. 60(a) (“The court may correct a clerical mistake or a 4 mistake arising from oversight or omission whenever one is found in a judgment, order, or other 5 part of the record. The court may do so on motion or on its own, with or without notice . . . .”). 6 III. THE NON-INDIVIDUAL PAGA CLAIM 7 The only issue remaining for this court to decide is whether the non-individual PAGA 8 claim can proceed. Because California courts have not resolved this state law issue, the court 9 stays the case pending the anticipated California Supreme Court decision in Adolph v. Uber 10 Technologies, as explained below. 11 CompuCom moves to dismiss the non-individual PAGA claim, relying on Viking River 12 Cruises, Inc. v. Moriana, 142 S. Ct. 1906 (2022), and its federal progeny. Reply & Mot. at 2. 13 CompuCom argues plaintiffs lack standing to maintain the non-individual PAGA claim under 14 California law. See id. at 3–4; Reply at 3–5. In response, plaintiffs raise several reasons they say 15 the court should not follow Viking River. See generally Opp’n. Their strongest argument is the 16 court should stay this case until the California Supreme Court resolves whether a plaintiff has 17 statutory standing for a non-individual PAGA claim, which that Court will consider in Adolph v. 18 Uber Technologies. Id. at 5. 19 Although the parties raise many issues, the dispositive question is how Viking River 20 characterizes PAGA. “PAGA authorizes any ‘aggrieved employee’ to initiate an action against a 21 former employer ‘on behalf of himself or herself and other current or former employees’ to obtain 22 civil penalties that previously could have been recovered only by the State in an LWDA 23 enforcement action.” Viking River, 142 S. Ct. at 1914 (quoting Cal. Lab. Code Ann. § 2699(a)). 24 The California Supreme Court described this type of action as representative because the 25 employee-plaintiff is suing as an agent or proxy of the state. Id. (quoting Iskanian v. CLS Transp. 26 L.A., LLC, 59 Cal. 4th 348, 382 (2014)). 27 Viking River addressed whether PAGA, as interpreted by the California Supreme Court in 28 Iskanian, is preempted by the Federal Arbitration Act (FAA), 9 U.S.C. § 1 et seq. Iskanian held 1 employees cannot waive representative PAGA claims. Viking River, 142 S. Ct. at 1916. This 2 rule had two parts. First, parties cannot waive “representative standing to bring PAGA claims in 3 a judicial or arbitral forum.” Id. (emphasis in original). Second, agreements to separately 4 arbitrate or litigate an employee’s own PAGA claim are invalid. Id. 5 In Viking River, the U.S. Supreme Court explained PAGA actions are representative in 6 two ways. First, they are representative because they are brought on behalf of the State; and 7 second, they are representative because they are predicated on labor code violations sustained by 8 other employees. Id. The Court further explained, when Iskanian prohibited waivers of 9 representative standing to bring PAGA claims (the first rule), it referred to the first definition of 10 “representative” as on the State’s behalf. Id. Because the Court was discussing whether the FAA 11 preempts Iskanian’s rule regarding representative PAGA actions, the Court used new 12 terminology: “individual PAGA claims” refers to claims based on code violations suffered by the 13 plaintiff, and “representative or non-individual PAGA claims” refers to claims based on code 14 violations suffered by others. Id. The court then held the first Iskanian rule, that parties cannot 15 waive representative standing, was not preempted. But the second rule, PAGA claims cannot be 16 split in two, was preempted. Id. at 1924. 17 This resolution left one outstanding issue. What should courts do with non-individual 18 claims after the individual claim is separated out and sent to arbitration? California courts had 19 not addressed this issue previously because Iskanian prevented the splitting of a PAGA claim. 20 So, the Court turned to PAGA’s statutory language and interpreted it as requiring an individual 21 claim to maintain standing. 22 Under PAGA’s standing requirement, a plaintiff can maintain non- 23 individual PAGA claims in an action only by virtue of also 24 maintaining an individual claim in that action. See Cal. Lab. Code 25 Ann. §§ 2699(a), (c). When an employee’s own dispute is pared 26 away from a PAGA action, the employee is no different from a 27 member of the general public, and PAGA does not allow such 28 persons to maintain suit. 29 Id. at 1925 (citing Kim v. Reins Int’l Cal., Inc., 9 Cal. 5th 73, 86 (2020)). The Court concluded, 30 without an individual claim, “the correct course is to dismiss [plaintiff’s] remaining claims.” Id. 1 This court agrees with CompuCom that the U.S. Supreme Court’s interpretation of state 2 law in Viking River is binding on the lower federal courts, absent subsequent indication from state 3 courts the interpretation is incorrect. Cf. Kona Enterprises, Inc. v. Est. of Bishop, 229 F.3d 877, 4 884 n.7 (9th Cir. 2000) (stating Ninth Circuit’s interpretation of state law is binding, absent “any 5 subsequent indication from [state courts] that [the] interpretation was incorrect” (quoting Owen v. 6 United States, 713 F.2d 1461, 1464 (9th Cir. 1983)). But that principle does not end the inquiry 7 here. Although Viking River’s preemption decision was reached through an 8-1 vote, only 5 8 justices joined Part IV of the opinion regarding statutory standing for proceeding with a non- 9 individual PAGA claim only. One of those five, Justice Sotomayor, joined the Court’s opinion in 10 full, but wrote a concurrence addressing Part IV. She concluded, “if this Court’s understanding 11 of state law is wrong, California courts, in an appropriate case, will have the last word.” Id. 12 Moreover, Justices Barrett, Kavanaugh and Roberts did not join Part IV, and instead wrote a 13 concurrence noting Part IV is “unnecessary to the result, and much of it addresses disputed state- 14 law questions as well as arguments not pressed or passed upon in this case.” Id. at 1926. Thus, 15 there are only four unqualified votes for the Part IV conclusion, with Justice Sotomayor’s 16 qualified concurrence providing the fifth vote. 17 Shortly after Viking River was decided, the California Supreme Court accepted review in 18 Adolph to consider whether a PAGA plaintiff has statutory standing for a non-individual PAGA 19 claim when an individual PAGA claim has been sent to arbitration. In the aftermath of Viking 20 River, federal district courts have split in their approach. Some have issued stays pending a 21 decision in Adolph, others have dismissed non-individual PAGA claims and one district court 22 declined to follow Viking River because it concluded the decision was contrary to California law. 23 See Dominguez v. Sonesta Int’l Hotels Corp., __ F. Supp. 3d __, 2023 WL 25707, at *7 (N.D. 24 Cal. Jan. 3, 2023) (collecting cases); Shams v. Revature LLC, __ F. Supp. 3d __, 2022 WL 25 3453068, at *3 (N.D. Cal. Aug. 17, 2022) (“Although the Supreme Court suggests that under 26 PAGA, Moriana lost standing to pursue her non-individual PAGA claims, because the California 27 Supreme Court is the final arbiter of California law, this Court applies Kim’s interpretation of 28 PAGA standing to this case.”). 1 After careful consideration of the parties’ briefing and oral arguments, and the many other 2 district court decisions on this issue, this court is persuaded the best course in this case is to stay 3 the non-individual PAGA claim pending a decision in Adolph. Because so much ink has been 4 spilled on this issue, the court declines to spill more of its own, finding particularly persuasive the 5 decision of a sister court in Martinez-Gonzalez v. Elkhorn Packing Co., LLC, __ F. Supp. 3d __, 6 2022 WL 10585178, at *12 (N.D. Cal. 2022), which stayed that action pending a decision in 7 Adolph while noting Justice Sotomayor’s Viking River concurrence counsels in favor of a stay. 8 Moreover, CompuCom conceded at hearing that dismissal would be without prejudice; given that 9 plaintiffs would presumably proceed with their non-individual PAGA claim after Adolph if 10 permitted by the California Supreme Court’s decision, a stay will achieve judicial efficiencies. 11 A stay also is supported by recent California state court cases. For example, two 12 California Court of Appeal decisions have cast doubt on the status of state law after Viking River. 13 See, e.g., Mills v. Facility Sols. Grp., Inc., 84 Cal. App. 5th 1035, 1064 (2022) (describing Viking 14 River’s Part IV conclusion about non-individual claims as “dicta”); Lewis v. Simplified Labor 15 Staffing Sols., Inc., 85 Cal. App. 5th 983, 1000 (2022) (holding arbitrator must decide whether 16 arbitration agreement calls for arbitrating non-individual claims). 17 Lastly, the court finds a stay will not be indefinite. CompuCom argued in its briefs and at 18 oral argument that a stay here would have no end point. See Reply at 5. As the court in 19 Dominguez explained, the California Supreme Court has accepted review in Adolph and briefing 20 has been completed, so it is substantially likely the California Supreme Court will issue a decision 21 in that case relatively soon, even if not for several months. 2023 WL 25707, at *8 n.2. The stay 22 is thus not indefinite “simply because the exact timing of the event upon which [the] stay is 23 conditioned is unknown.” Id. 24 At hearing, CompuCom raised several counterarguments about indefiniteness. It posited a 25 stay would be indefinite because Adolph would likely reach the U.S. Supreme Court, but not for 26 some time. It also claimed subsequent litigation, as yet unidentified, inevitably would test 27 whether non-individual PAGA claims under section 2699 are reconcilable with the FAA, 28 requiring further stays of this case. The court finds these arguments unpersuasive for a few 1 reasons. First, the court intends to lift the stay here when the California Supreme Court issues its 2 decision in Adolph and so need not engage CompuCom’s slippery slope argument about how the 3 stay will continue for years to come. Second, while Justice Sotomayor’s concurrence suggests 4 she anticipates state courts could resolve whether a non-individual PAGA claim can proceed on 5 its own, and she was the critical fifth vote for Part IV of Viking River, the court declines to read 6 the tea leaves with respect to any prospective Supreme Court decision revisiting the question. 7 Lastly, Viking River has held Iskanian’s second rule, that representative PAGA claims cannot be 8 waived, is not preempted by the FAA, and CompuCom has not argued plaintiffs assented to 9 arbitration of the representative PAGA claim. On this record, even if there is future federal 10 litigation over non-individual PAGA claims, CompuCom has not shown such litigation is likely 11 to warrant future stays here. In any event, the court declines to speculate or render a decision that 12 is essentially advisory. 13 In sum, the court enters a stay until the California Supreme Court issues its decision in 14 Adolph. 15 IV. CONCLUSION 16 The court stays the proceedings in this case, including with respect to CompuCom’s 17 motion to dismiss the non-individual PAGA claim. The parties are directed to a file a Joint Status 18 Report every ninety days about the status of Adolph. In addition, the parties must notify the court 19 when Adolph has been decided within 14 days of the decision. At that time, the parties must file a 20 Further Joint Status Report regarding whether further briefing of the motion to dismiss is needed. 21 The Pretrial Scheduling Conference will be set for thirty days after the motion to dismiss is 22 resolved, if any claims remain at that time. 23 This order stays ECF No. 31. 24 IT IS SO ORDERED. 25 DATED: March 9, 2023.