Colores v. Ray Moles Farms, Inc. ( 2023 )

1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 EASTERN DISTRICT OF CALIFORNIA 10 11 FILEMON COLORES, as an individual Case No. 1:21cv-00101-JLT-BAM and on behalf of all others similarly (Consolidated with 1:21-cv-00467-JLT-BAM) 12 situated, ORDER CONTINUING STAY 13 Plaintiff, (Docs. 65, 66,) 14 v. 15 RAY MOLES FARMS, INC., a California Corporation; and DOES 1 through 100, 16 Defendant. 17 18 RAY MOLES FARMS, INC., a California Corporation, 19 Cross-Complainant, 20 v. 21 FILEMON COLORES, as an individual on 22 behalf of all others similarly situated, 23 Cross-Defendants. 24 25 Filemon Colores brings claims on behalf of himself and similarly situated individuals 26 alleging that Ray Moles Farms, Inc. (“Ray Moles”) engaged in several violations of the 27 California Labor Code and Business and Professions Code. (Doc. 1 at 12–29). On March 31, 28 2023, this Court compelled certain of the claims in this case to arbitration, dismissed those 1 claims without prejudice, and stayed the remaining claims not compelled to arbitration (the 2 “non-individual” claims arising under California’s Private Attorneys General Act (PAGA) Cal. 3 Lab. Code, § 2698 et seq.), as well as all pending motions regarding the non-arbitrable claims, 4 pending the California Supreme Court’s decision in Adolph v. Uber Technologies, Inc., No. 5 G059860, 2022 WL 1073583 (Cal. Ct. App., Apr. 11, 2022), review granted (Cal. July 20, 6 2022). On July 17, 2023, the California Supreme Court issued its ruling: Adolph v. Uber Techs., 7 Inc., 14 Cal. 5th 1103 (2023). 8 The parties filed status reports addressing the impact of Adolph on these proceedings. 9 (Docs. 65, 66.) For the reasons set forth below, the Court will leave the stay in place, without 10 prejudice to the filing before the assigned magistrate judge of a formal motion to lift the stay to 11 allow discovery to proceed. 12 DISCUSSION 13 The Court incorporates by reference the general background on this case and on the 14 Federal Arbitration Act provided in its previous order. (Doc. 65.) 15 Plaintiff’s eighth cause of action sets forth claims under PAGA. In its March 2023 order, 16 this Court surveyed the pre-Adolph caselaw as follows: 17 [] Viking River [Cruises v. Moriana], explained that PAGA actions are “representative” in two ways: (1) “in that they are brought by 18 employees acting as representatives—that is, as agents or proxies—of the State”; and that (2) “they are predicated on code 19 violations sustained by other employees.” 142 S. Ct. [1923,] 1916 [(2022)]. The Court further explained that “when the word 20 ‘representative’ is used in the second way, it makes sense to distinguish ‘individual’ PAGA claims, which are premised on 21 Labor Code violations actually sustained by the plaintiff, from ‘representative’ (or perhaps quasi-representative) PAGA claims 22 arising out of events involving other employees.” Id. Prior to Viking River, the California Supreme Court in Iskanian v. 23 CLS Transp. L.A., LLC, 59 Cal. 4th 348, 383–84 (2014), mandated that “categorical waivers of PAGA standing are contrary to state 24 policy and that PAGA claims cannot be split into arbitrable individual claims and nonarbitrable ‘representative’ claims.” 25 Viking River, 142 S. Ct. at 1916. Viking River overturned the latter half of this rule on the grounds that Iskanian’s holding was 26 preempted by the FAA “insofar as it precludes division of PAGA actions into individual and non-individual claims through an 27 agreement to arbitrate.” Viking River, 142 S. Ct. at 1923–26. However, Viking River left intact Iskanian’s holding that wholesale 28 1 waivers of PAGA claims are invalid because they would impermissibly include waiver of a plaintiff’s ability to bring 2 agent/proxy representative claims. Viking River, 142 S. Ct. at 1924–25. “Thus, under Viking River, waivers of the right to assert 3 representative PAGA claims on the state’s behalf remain barred, but employees may waive the right to bring PAGA claims that are 4 specifically premised on labor code violations they have personally suffered.” Hansber, 2022 WL 16836627, at *6 (E.D. Cal. Nov. 9, 5 2022) (citing Viking River, 142 S. Ct. at 1923–26). 6 (Doc. 64 at 9-10.) The Court examined the Agreement at issue in this case and found that it only 7 sought to waive/prohibit Plaintiff from bringing PAGA claims predicated on code violations 8 sustained by other employees. (Id. at 10.) In other words, the Agreement did not seek to prohibit 9 Plaintiff from bringing agent/proxy claims on behalf of the State and therefore was not an 10 impermissible “wholesale waiver.” (Id. at 11.) As a result, the PAGA claim could be split into 11 “individual” and “non-individual” or “representative” PAGA claims. (Id.) Pursuant to the 12 Agreement, the “individual” PAGA claims were ordered to arbitration. (Id.) Recognizing that 13 Viking River called for dismissal of the remaining “representative” PAGA claims for lack of 14 standing once the “individual” claims were sent to arbitration, this Court stayed resolution of the 15 representative PAGA claims because Justice Sotomayor’s concurrence in Viking River 16 acknowledged that the question of statutory standing to pursue PAGA representative claims 17 ultimately was subject to clarification under state law, Viking River, 142 S. Ct. at 1925, and the 18 very issue was then pending before the California Supreme Court in Adolph. 19 Adolph ultimately did clarify the issue of standing, holding that “[w]here a plaintiff has 20 brought a PAGA action comprising individual and non-individual claims, an order compelling 21 arbitration of the individual claims does not strip the plaintiff of standing as an aggrieved 22 employee to litigate claims on behalf of other employees under PAGA.” 14 Cal. 5th at 1123. The 23 California Supreme Court explained: 24 As [prior California Supreme Court cases] make clear, a worker becomes an “aggrieved employee” with standing to litigate claims 25 on behalf of fellow employees upon sustaining a Labor Code violation committed by his or her employer. Standing under PAGA 26 is not affected by enforcement of an agreement to adjudicate a plaintiff’s individual claim in another forum. Arbitrating a PAGA 27 plaintiff's individual claim does not nullify the fact of the violation or extinguish the plaintiff's status as an aggrieved employee. . . 28 1 Id. at 1121. Critically, the California Supreme Court specifically addressed the interplay between 2 any pending arbitration and the standing issue: 3 [Defendant] contends that unless Adolph’s non-individual claims are dismissed, his PAGA action will run afoul of Viking River 4 because he will be permitted to relitigate whether he is an aggrieved employee in court to establish standing even if he has 5 agreed to resolve that issue in arbitration as part of his individual PAGA claim. 6 In response, Adolph explains that his PAGA action could proceed 7 in the following manner if he were ordered to arbitrate his individual PAGA claim: First, the trial court may exercise its 8 discretion to stay the non-individual claims pending the outcome of the arbitration pursuant to section 1281.4 of the Code of Civil 9 Procedure. Following the arbitrator's decision, any party may petition the court to confirm or vacate the arbitration award under 10 section 1285 of the Code of Civil Procedure. If the arbitrator determines that Adolph is an aggrieved employee in the process of 11 adjudicating his individual PAGA claim, that determination, if confirmed and reduced to a final judgment (Code Civ. Proc., § 12 1287.4), would be binding on the court, and Adolph would continue to have standing to litigate his nonindividual claims. If 13 the arbitrator determines that Adolph is not an aggrieved employee and the court confirms that determination and reduces it to a final 14 judgment, the court would give effect to that finding, and Adolph could no longer prosecute his non-individual claims due to lack of 15 standing. (See Rocha v. U-Haul Co. of California (2023) 88 Cal. App. 5th 65, 76–82.) 16 14 Cal. 5th at 1123–24 (emphasis added). In sum, Adolph specifically indicated that the question 17 of whether an employee would “continue to have standing” to litigate his representative PAGA 18 claims could be determined in arbitration and that determination would be binding on the Court 19 hearing the representative PAGA claims. Id. Even more importantly, Adolph acknowledged that 20 failure to allow the arbitrator to determine in the first instance whether a plaintiff is an 21 “aggrieved employee” might run afoul of Viking River. Id. 22 Plaintiff’s status report ignores this latter part of Adolph’s holding,1 and instead insists 23 that none of the remaining claims are impacted by Adolph, asks the Court to rule on the pending 24 motions pertaining to those claims, and requests a scheduling conference at the Court’s “earliest 25 convenience” so that discovery may proceed. (Doc. 66 at 2–4.) Plaintiff expresses concern that 26 because this case was originally filed in state court nearly three years ago, there is a potential for 27 28 1 The 2023 California appellate decisions cited by Plaintiff (Doc. 66 at 3) all predate Adolph. 1 “spoliation of evidence as aggrieved employee contact information is quickly becoming outdated 2 and the risk of loss or destruction of relevant documents and information is increasing.” (Id. at 3 4.) 4 In response, Defendant calls for the stay to continue, pointing out that (1) it remains 5 unclear at this point whether Adolph will be appealed to the Supreme Court, as the deadline for 6 filing a petition for a writ of certiorari does not expire until mid-October 2023; and (2) even if 7 Adolph is not appealed, this case should be stayed pending the outcome of the arbitration process 8 for the reasons explained in Adolph itself. The Court finds Defendant’s position persuasive under 9 the circumstances. If Adolph is appealed, this matter would essentially return to the procedural 10 status prevailing at the time the Court entered its previous stay order. In other words, though 11 Viking River calls for dismissal of Plaintiff’s representative PAGA class action, the Adolph 12 appeal to the Supreme Court may alter that landscape in ways that cannot be predicted in 13 advance, warranting a stay until the U.S. Supreme Court declines certiorari or rules. If, on the 14 other hand, Adolph is not appealed, the proper course of action, as the Adolph decision itself 15 indicated, will be to stay this matter until the arbitration concludes, at which time the parties can 16 return to this Court to address any res judicata impact of the arbitrator’s decision. Either way, the 17 case will not proceed on the merits at this time. 18 CONCLUSION 19 Accordingly, the Court will continue to STAY Colores’s representative PAGA claims— 20 and all unresolved motions related to those claims—pending further legal developments. The 21 parties are directed to file a brief joint status report within 21 days of any material developments 22 (e.g., resolution of the arbitration and/or resolution of any appeal in Adolph), or every 90 days, 23 starting 90 days from the date of this order, whichever is sooner. 24 Considering the ruling above, the Court declines to address Plaintiff’s request to lift the 25 stay for purposes of allowing discovery to proceed. Plaintiff’s request on that subject is generic, 26 fails to acknowledge the full import of Adolph and therefore fails to address fully the relative 27 burdens and benefits of lifting the stay to allow discovery—even limited discovery—to proceed. 28 Should Plaintiff continue to believe it is appropriate to lift the stay for the purpose of conducting 1 | discovery, Plaintiff may notice a motion to that effect before the assigned magistrate judge. The 2 || undersigned expresses no opinion on the merit of any such motion. 3 4 IT IS SO ORDERED. 5 Dated: _ September 25, 2023 Cerin | Tower TED STATES DISTRICT JUDGE 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28