Lacayo v. Catalina Restaurant Group Inc. ( 2019 )

Filed 8/1/19
CERTIFIED FOR PUBLICATION
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FOURTH APPELLATE DISTRICT
DIVISION TWO
YALILA LACAYO,
Plaintiff and Respondent, E069833
v. (Super.Ct.No. CIVDS1713877)
CATALINA RESTAURANT GROUP OPINION
INC. et al.,
Defendants and Appellants.
APPEAL from the Superior Court of San Bernardino County. David Cohn, Judge.
Affirmed in part; dismissed in part.
Ogletree, Deakins, Nash, Smoak & Stewart, Spencer C. Skeen, Jesse C.
Ferrantella and Nikolas T. Djordjevski for Defendants and Appellants.
Payton Employment Law, Chantal McCoy Payton, Marissa L. Simmons;
McNicholas and McNicholas, Patrick McNicholas, David Angeloff and Chantal McCoy
Payton for Plaintiff and Respondent.
1
Defendants and appellants Catalina Restaurant Group, Inc., Carrows Restaurants,
Inc., Carrows Family Restaurants, Inc., Coco’s Bakery Restaurants, Inc. and Coco’s
Restaurants, Inc. (collectively, Catalina Defendants) appeal the partial denial of their
motion to compel arbitration. Plaintiff and respondent Yalila Lacayo (Lacayo) was an
employee of Catalina Defendants. Lacayo filed her plaintiff’s class action complaint on
behalf of herself and others similarly situated (Class Members) against Catalina
Defendants in superior court (Complaint) alleging numerous wage and hour violations
under the Labor Code, and an injunctive relief claim under California’s unfair
competition law (UCL). (Bus. & Prof. Code, § 17200 et seq.) Catalina Defendants
responded by filing a motion to compel arbitration of Lacayo’s individual claims,
including the UCL claim, and dismissal of the class claims (Motion). The trial court
granted the Motion as to Lacayo’s individual claims; refused to dismiss the class claims,
instead letting the arbitrator decide if the class claims were subject to arbitration or a
class action waiver; and denied the Motion as to the UCL claim; and stayed the matter
until after arbitration was completed.
Catalina Defendants on appeal contend the trial court erred by (1) refusing to
enforce the individual arbitration agreement according to its terms; and (2) refusing to
compel arbitration of Lacayo’s UCL claim. In supplemental briefing, both parties
addressed whether Catalina Defendants could appeal the trial court’s order granting
arbitration of individual claims but refusing to dismiss the classwide claims, leaving the
decision for the arbitrator. We find Catalina Defendants cannot appeal the portion of the
Motion that granted arbitration for Lacayo’s individual claims and the refusal to dismiss
2
the class claims. This court need only address the order finding that the UCL claim was
not subject to arbitration.
FACTUAL AND PROCEDURAL HISTORY
A. COMPLAINT
On July 20, 2017, Lacayo filed the Complaint on her own behalf and Class
Members, with the first seven causes of action raising violations of the Labor Code, and
the eighth cause of action raising the UCL claim based on Labor Code violations. The
Labor Code violations included failure to pay overtime wages (Lab. Code, §§ 204, 510,
1194)1; failure to pay minimum wages (§§ 1194, 1197, 1197.1); liquidated damages for
failure to pay minimum wages (§ 1194.2); waiting time penalties (§§ 201-203); failure to
provide meal breaks (§§ 226.2, 512); failure to provide rest breaks (§ 226.7); and failure
to provide wage statements (§ 226).
Lacayo defined the Class Members as those who had worked as assistant
managers employed by Catalina Defendants in California from the date of four years
prior to the filing of the Complaint, or were salaried employees who made less than twice
the minimum wage for full-time employment. Lacayo alleged she worked for Catalina
Defendants in San Bernardino County as an assistant manager from 2009 through August
2015, and again from March 2016 to June 2016, and was subject to their unlawful
policies. She estimated there were at least 400 Class Members who worked in Catalina
Defendants’ bakery restaurants. The claims were appropriately resolved as a class.
1 All further statutory references are to the Labor Code unless otherwise
indicated.
3
Lacayo alleged Catalina Defendants improperly classified her and the above-
described employees as exempt but they did not qualify as exempt employees under the
Labor Code. As a result, Lacayo sought on behalf of herself and the Class Members
unpaid overtime compensation, unpaid minimum wages, unpaid contractual wages,
wages for missed meals and rest periods, waiting time penalties, statutory penalties,
restitution, declaratory and injunctive relief, attorney’s fees and costs, prejudgment
interest, and any other relief.
B. MOTION TO COMPEL ARBITRATION
Catalina Defendants filed the Motion on October 6, 2017, in response to the filing
of the Complaint. Catalina Defendants sought an order compelling Lacayo “to arbitrate
her individual claims, dismissing class claims, and staying the action pending completion
of arbitration.” The Motion was brought under the Federal Arbitration Act (FAA) and
California Code of Civil Procedure sections 1281.2 and 1281.4 on the grounds that
Lacayo entered into a valid, binding and enforceable arbitration agreement and a class
action waiver encompassing all claims and disputes related to her employment.
Catalina Defendants provided that Lacayo worked as a salaried manager for them,
and when she started as a manager, she signed a document entitled “Mutual Agreement to
Arbitrate Claims and Class Action Waiver” (Arbitration Agreement). On July 6, 2017,
Lacayo was terminated from her employment after violating company policy. Despite
having signed the Arbitration Agreement, she filed her Complaint in superior court. The
FAA applied because Catalina Defendants engaged in interstate commerce and the
parties agreed the FAA would apply in the Arbitration Agreement.
4
The Arbitration Agreement included a class action waiver, which provided as
follows: “Any claim covered by this Agreement shall be brought and conducted
solely on an individual basis and not in a class, multiple plaintiff or representative
action, or as a named or unnamed member in a class, consolidated, representative
or private attorney general action. Similarly, the arbitrator may not consolidate
more than one party’s claims, and may not otherwise preside over any form of a
class action or representative proceeding. Notwithstanding the foregoing, Employee
is not waiving his or her rights under the National Labor Relations Act, and he or
she will not be retaliated against for concertedly challenging the validity of this
Agreement through class or collective actions.”
The Arbitration Agreement also included a clause, “The Arbitrator, and not any
federal, state, or local court or Company, shall have exclusive authority to resolve any
dispute relating to the interpretation, applicability, enforceability or formation of this
Agreement, including but not limited to any claim that all or any part of this Agreement
is void or voidable.”
The Arbitration Agreement also provided that it would be governed by the FAA
and was to be construed broadly. It included a section entitled “Claims Covered by the
Agreement,” which provided in pertinent part, “The claims covered by this Agreement
include, but are not limited to, claims for wages or other compensation due; claims for
breach of any contract or covenant (express or implied); tort claims; claims for
discrimination (including, but not limited to, race, sex, religion, national origin, age,
marital status, medical condition, or disability) under state or federal law; claims for
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benefits (except where an employee benefit or pension plan specifies that its claims
procedure shall culminate in an arbitration procedure different from this one), and claims
for violation of any federal, state, or other governmental law, statute, regulation, or
ordinance, except claims excluded in the Claims Not Covered section below.” The next
section was entitled “Claims Not Covered by the Agreement.” It consisted of the
following language, “Claims that Employee may have for workers’ compensation,
unemployment compensation benefits, or claims deemed not subject to arbitration under
law are not covered by this Agreement. [¶] Upon a showing of reasonable cause, either
party to this Agreement may petition a court of competent jurisdiction for immediate
injunctive and/or equitable relief for unfair competition and/or the use and/or
unauthorized disclosure or trade secrets or confidential information.”
Catalina Defendants insisted that all of the claims were subject to arbitration under
the Arbitration Agreement. Further, the Arbitration Agreement must be enforced by its
terms. The trial court must dismiss the class claims as Lacayo clearly executed a class
action waiver. Lacayo’s UCL claim was not precluded from arbitration. The Arbitration
Agreement provided that all disputes arising out of Lacayo’s employment were subject to
arbitration.
C. OPPOSITION TO MOTION AND REPLY
Lacayo filed opposition to the Motion. Lacayo rejected that the UCL claim was
subject to arbitration based upon the Arbitration Agreement language, which provided
that claims not covered by the agreement included “immediate injunctive and/or
equitable relief for unfair competition.” Lacayo also alleged she was going to amend the
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Complaint to include a Labor Code Private Attorneys’ General Act of 2004 (PAGA)
claim, which was not subject to arbitration.2 Further, the trial court should conclude that
the class action waiver was unconscionable and the Arbitration Agreement was
procedurally and substantively unconscionable.
Catalina Defendants filed a reply to the opposition to the Motion. Catalina
Defendants insisted the Arbitration Agreement was neither procedurally nor substantively
unconscionable. Catalina Defendants insisted Lacayo had misread the Arbitration
Agreement as it pertained to arbitration of UCL claims. The Arbitration Agreement did
not preclude arbitration of a UCL claim because it included permissive language.
Catalina Defendants also claimed Lacayo was not entitled to injunctive relief because she
no longer worked for Catalina Defendants. Further, the class action waiver was valid; the
class claims must be dismissed.
D. FIRST HEARING
On November 2, 2017, the Motion was heard by the trial court. The trial court
tentatively ruled it would grant the Motion as to the first seven causes of action and deny
the Motion as to the UCL claim. It was also inclined to stay the proceedings during the
pending arbitration. The trial court applied the FAA. It found the Arbitration Agreement
was clear that arbitration was required for all employment disputes. However, the
Arbitration Agreement exempted all injunctive and equitable relief for claims of unfair
competition. This would include the UCL claim.
2
There is nothing in this record that supports Lacayo ever amended the
Complaint to include a PAGA claim.
7
The trial court believed the class action waiver was valid but that it was up to the
arbitrator to decide “the meaning and scope of the class action waiver” based on the
terms of the Arbitration Agreement. Catalina Defendants disagreed it was something to
be decided by the arbitrator.
The trial court requested additional briefing on whether the UCL claim should be
stayed and whether the meaning of the class action waiver should be decided by the trial
court or left for the arbitrator to decide.
E. SUPPLEMENTAL BRIEFING
Catalina Defendants filed their supplemental brief on November 9, 2017. They
insisted the FAA contained language that the trial court must direct the parties to proceed
to arbitration in accordance with the terms of the agreement. There was no doubt the
class action waiver was valid and the trial court had to order the dismissal of the class
claims. Further, the Arbitration Agreement language “included the availability of class
arbitration as a specific dispute the arbitrator lacked authority to preside over.” The
Arbitration Agreement specifically excluded from the arbitrator’s consideration any class
claims. This case differed from Sandquist v. Lebo Automotive, Inc. (2014) 228
Cal. App. 4th 65, 76 (Sandquist), which found the arbitrator should decide if class
arbitration was available, because it did not contain a similar class action waiver as in the
instant case. The trial court must dismiss the class claims. Further, the UCL claim was
subject to arbitration, but if the trial court disagreed, it should be stayed.
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In response, Lacayo argued the UCL claim should not be stayed pending
arbitration.3
F. SECOND HEARING AND RULING
The trial court initially stated it intended to stay the UCL proceeding because it
was based on the Labor Code violations that were being sent to arbitration. The trial
court also believed the language was clear that the arbitrator was to decide the meaning
of the Arbitration Agreement. It was up to the arbitrator to decide if class arbitration was
appropriate.
Catalina Defendants argued that the language in the Arbitration Agreement
provided the arbitrator would decide any “dispute” about the Agreement; there was no
dispute about the class action waiver. The provision was clear and Lacayo agreed.
Lacayo clarified she did not concede the class action waiver was clear and enforceable.
Catalina Defendants argued Sandquist was not applicable because the agreement in that
case was silent as to class arbitration. In this case, there was a clear class waiver and the
arbitrator had no authority to hear class claims. Catalina Defendants requested a
statement of decision including that the trial court denied Catalina Defendants’ request to
order individual arbitration only. Catalina Defendants asked that the order include that
their relief was denied.
3Plaintiff made an additional argument that any UCL claim that occurred prior to
December 16, 2012, should proceed, but that issue is not pertinent to the issues raised on
appeal.
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In its written order, the trial court recognized that Catalina Defendants sought an
order “(1) compelling Lacayo to arbitrate her individual claims, (2) dismissing the class
claims, and (3) staying the lawsuit pending completion of the arbitration.” The trial court
noted that at a first hearing on the Motion, it had “granted” the Motion as to the first
seven causes of action and denied arbitration of the UCL claim as it fell outside the broad
arbitration agreement. It then asked for supplemental briefing. At the second hearing, it
decided that the UCL claim was appropriately stayed. It took under submission the
question of whether the court or the arbitrator should decide if the Arbitration Agreement
prohibited arbitration on behalf of the class members. The trial court concluded,
“Although the class action waiver appears on its face to be clear and unambiguous, any
arguments about its meaning or enforceability must be directed to the arbitrator, not to
the court, due to the broad delegation of controversies to arbitration.”
The court referred to Sandquist, in which the California Supreme Court addressed
an existing split between California and federal law as to who—the arbitrator or the
court—should decide whether an arbitration agreement permits class arbitrations. In
Sandquist, the California Supreme Court found that the issue was determined by the party
agreement; if the parties agreed the arbitrator decided then that provision controlled.
Sandquist did not involve a class action waiver provision.
The trial court found, “Like the three arbitration agreements at issue in Sandquist,
the arbitration agreement in this case is broad. It requires arbitration of ‘all claims’
whether or not arising out of the employment relationship, with specified exceptions.
Nothing in the arbitration agreement specifically delegates the determination of
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enforceability of the class action waiver to the court, as the agreement does with respect
to certain types of claims. The relative strength or weakness of plaintiff’s claim that the
class action waiver does not mean what it appears to mean, or that it is unenforceable for
one reason or another, does not exempt it from the broad delegation of decision to the
arbitrator. The Sandquist opinion does not limit its application to uncertain or doubtful
cases.” It concluded that Lacayo could request class arbitration and “[t]he arbitrator will
decide whether class arbitration is or is not allowed.” It found that it was “premature to
dismiss the class claims at this time.”
DISCUSSION
A. APPEALABILITY
We must first decide if Catalina Defendants can appeal the trial court’s order
granting the Motion to compel individual arbitration but leaving the issue of classwide
arbitration to the arbitrator for the first seven Labor Code claims. Catalina Defendants
insist they can appeal the trial court’s order relying upon Lamps Plus, Inc. v. Varela
(2019) ___ U.S. ___ [139 S. Ct. 1407, 1412] (Lamps Plus), which they claim found that
an order compelling arbitration of a putative class action is a denial of a motion to compel
individual arbitration and is appealable.
Here, the Motion requested an order compelling Lacayo to arbitrate her individual
claims and dismiss the class claims. The trial court granted the order inasmuch as it
ordered arbitration of Lacayo’s individual claims. It did not grant the Motion to dismiss
the class claims, but rather left it up to the arbitrator to decide if there was the possibility
of class arbitration based on the language of the Arbitration Agreement. The trial court
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also found that, based on the language of the Arbitration Agreement, the UCL claim was
not subject to arbitration. Only the partial denial of the Motion on the UCL claim is
appealable.
Code of Civil Procedure section 1294 provides “An aggrieved party may appeal
from: [¶] (a) An order dismissing or denying a petition to compel arbitration.” “In
contrast, orders compelling arbitration are considered interlocutory and are not
appealable. [Citation.] ‘The rationale behind the rule making an order compelling
arbitration nonappealable is that inasmuch as the order does not resolve all of the issues
in controversy, to permit an appeal would delay and defeat the purposes of the arbitration
statute.’ ” (Zembsch v. Superior Court (2006) 146 Cal. App. 4th 153, 160; see also Nelsen
v. Legacy Partners Residential, Inc. (2012) 207 Cal. App. 4th 1115, 1121 [“Orders
granting motions to compel arbitration are generally not immediately appealable”])
In Reyes v. Macys, Inc. (2011) 202 Cal. App. 4th 1119, the employer sought an
order from the trial court compelling the employee to arbitrate her individual claims and
to dismiss her class claims. (Id. at p. 1122.) The court issued an order that the individual
claims were to proceed to arbitration. The class claims and an additional PAGA claim
were stayed and would remain in the trial court. (Id. at p. 1122.) Employer appealed the
order. The appellate court dismissed the appeal. (Id. at p. 1124.) First, it found that the
partial grant of the employer’s motion to compel arbitration of the individual claims was
not appealable pursuant to Code of Civil Procedure section 1294. (Reyes, at p. 1122.)
Second, the court rejected that the employer requested in the lower court that the class
claims be arbitrated and that such request was denied. Instead, the employer sought to
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dismiss the claims, which the trial court refused, and stayed the proceedings pending
arbitration. There was no basis to appeal on the motion to compel arbitration because it
was granted. Further, the request to dismiss the class claims was not appealable because
a motion to dismiss was an interlocutory order. A motion to dismiss was not an
appealable order listed in Code of Civil Procedure section 904.1. (Reyes, at p. 1123.)
Here, Catalina Defendants requested Lacayo be required to submit her individual
wage and hour claims to arbitration based on the terms of the Arbitration Agreement; the
trial court agreed. Lacayo had raised additional class claims and the Motion specifically
requested that they be dismissed and that they not be subject to arbitration. The trial
court refused to dismiss the class claims and left the issue to the arbitrator to decide if the
class claims could be arbitrated. These orders, as in Reyes, are not appealable.
Catalina Defendants rely on Mitchell v. American Fair Credit Association (2002)
99 Cal. App. 4th 1345, to support their claim that the partial denial of the Motion is an
appealable order. They insist that the trial court refused to compel Lacayo’s injunctive
relief claim; denied their request to compel individual arbitration and denied their request
for dismissal of the class claims. However, in Mitchell, the appellate court in the
published portion of the opinion only reviewed “the trial court’s partial denial of the
motion to compel arbitration.” (Id. at p. 1350.) Mitchell does not support Catalina
Defendants’ claim here that the orders granting the Motion and denying the motion to
dismiss are appealable orders.
In supplemental briefing, Catalina Defendants rely on Lamps Plus to support their
claim that the trial court’s order here is appealable. In Lamps Plus, a hacker
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impersonated a company official and tricked an employee into disclosing personal
information about 1,300 other employees. Varela, a Lamps Plus employee, filed an
action in the Federal District Court against Lamps Plus to bring “state and federal claims
on behalf of a putative class of employees whose tax information had been
compromised.” Varela and the other employees had signed employment agreements,
which included arbitration agreements. (Lamps Plus, supra, ___ U.S. ___ [139 S.Ct.at
pp. *1412-1413].) Lamps Plus moved to compel individual arbitration. The district court
granted the motion to compel arbitration but rather than ordering individual arbitration, it
granted arbitration on a classwide basis. (Id. at p. *1413.) The Ninth Circuit found the
arbitration agreement was ambiguous as to whether the parties had agreed to a class
arbitration waiver, but construed the agreement against Lamps Plus, the drafter of the
agreement, approving the classwide arbitration. (Id. at pp. *1413-1415.)
The United States Supreme Court first addressed appealability based on the
argument by Varela that Lamps Plus had requested arbitration and that order was granted.
The court rejected that conclusion finding, “Lamps Plus did not secure the relief it
requested. It sought an order compelling individual arbitration. What it got was an order
rejecting that relief and instead compelling arbitration on a classwide basis. We have
explained . . . that shifting from individual to class arbitration is a ‘fundamental’ change,
[citation], that ‘sacrifices the principal advantage of arbitration’ and ‘greatly increases
risks to defendants,’[citation]. Lamps Plus’s interest in avoiding those consequences
gives it the ‘necessary personal stake in the appeal’ required by our precedent.” (Lamps
Plus, supra, ___ U.S. ___ [139 S.Ct. at p. *1414], fn omitted.)
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On the merits, the United States Supreme Court concluded that courts should not
imply class arbitration of claims unless the arbitration agreement clearly provided for
such classwide arbitration. Further, the United States Supreme Court rejected that the
doctrine of contra proferentum, construing the agreement against the drafter, should
apply to arbitration agreements. It specifically concluded, “[c]ourts may not infer from
an ambiguous agreement that parties have consented to arbitrate on a classwide basis.”
(Lamps Plus, supra, ___ [139 S.Ct. at p. 1419.])
Lamps Plus is distinguishable as the procedural posture of this case is distinct.
Lamps Plus made a motion to compel individual arbitration of claims. The request for
individual arbitration was denied and classwide arbitration was ordered by the district
court and approved by the Ninth Circuit. Here, the trial court never ordered classwide
arbitration but rather left that decision to the arbitrator based on the plain language of the
Arbitration Agreement. Further, in Lamps Plus, the Ninth Circuit, based on the
agreement being ambiguous as to whether the parties agreed to a class arbitration waiver,
affirmed the order of classwide arbitration. That decision was rejected by the United
States Supreme Court. Here, the trial court merely reviewed the employment contract
and found, based on the plain language, that all decisions regarding the interpretation of
the employment contract must be made by the arbitrator. There was no decision by the
trial court in this case akin to that made in Lamps Plus.
In fact, Lamps Plus recognized that parties may contract to leave these gateway
decisions to arbitrators. It stated, “[W]e presume that parties have not authorized
arbitrators to resolve certain ‘gateway’ questions, such as ‘whether the parties have a
15
valid arbitration agreement at all or whether a concededly binding arbitration clause
applies to a certain type of controversy.’ [Citation.] Although parties are free to
authorize arbitrators to resolve such questions, we will not conclude that they have done
so based on ‘silence or ambiguity’ in their agreement, because ‘doing so might too often
force unwilling parties to arbitrate a matter they reasonably would have thought a judge,
not an arbitrator, would decide.’ (Lamps Plus, supra, ___ U.S. ___ [139 S.Ct. at p.
*1416-1417].) In this case, the parties agreed to allow the arbitrator to interpret the
language of the Arbitration Agreement and the trial court ordered that the decision on
classwide arbitration be made by the arbitrator. Such interlocutory order leaving the
decision on classwide arbitration to the arbitrator is not appealable.
Catalina Defendants request that this court consider the appeal a petition for writ
of mandate and order the superior court to vacate its order. We decline to consider this
appeal a petition for writ of mandate. “[W]rit review of orders directing parties to
arbitrate is available only in ‘unusual circumstances’ or in ‘exceptional situations.’ ”
(Zembsch v. Superior Court, supra, 146 Cal.App.4th at p. 160.) “California courts have
held that writ review of orders compelling arbitration is proper in at least two
circumstances: (1) if the matters ordered arbitrated fall clearly outside the scope of the
arbitration agreement or (2) if the arbitration would appear to be unduly time consuming
or expensive.” (Ibid.)
Here, the trial court ordered that the arbitrator decide if the class claims were
subject to arbitration under the Arbitration Agreement. The parties specifically provided
that the arbitrator would decide any interpretation of the Arbitration Agreement and it is
16
conceivable the arbitrator will dismiss the claims. We decline to treat the appeal as a
petition for writ of mandate.
Catalina Defendants rely on Truly Nolen of America v. Superior Court (2012) 208
Cal. App. 4th 487 (Truly Nolen), to support their claim that this court should construe the
appeal as a petition for writ of mandate. In Truly Nolen, employees filed a class action
complaint against Truly Nolen of America alleging violations of California’s wage and
hour laws. (Id. at p. 494.) Truly Nolen filed a motion to compel arbitration under the
arbitration agreement signed by the employees and sought arbitration on an individual
basis rather than classwide arbitration. (Ibid.) They argued that they could not be
compelled to classwide arbitration because the arbitration agreements did not contain a
provision authorizing class arbitration. (Id. at p. 437.) The trial court ordered classwide
arbitration and Truly Nolen filed a petition for writ of mandate seeking to reverse the trial
court’s order on classwide arbitration. (Id. at p. 497.) The appellate court granted the
petition for writ of mandate ordering the superior court to vacate its decision and to hold
a hearing interpreting the arbitration agreement as to whether the arbitration agreement
implied a classwide arbitration waiver. In Truly Nolen, the plaintiffs argued for the first
time on appeal that the arbitrator was to decide all issues involving class arbitration.
However, since plaintiffs did not raise the issue in the lower court, the appellate court
found the argument was forfeited. (Id. at p. 515.)
Here, Catalina defendants filed an appeal, not a petition for writ of mandate.
Moreover, the trial court did not order classwide arbitration in this case. That decision
17
was left to the arbitrator and we will not issue a petition for writ of mandate to the trial
court to make a decision on the classwide arbitration.
Catalina Defendants have not provided this court with authority to support that we
have jurisdiction to review the trial court’s order as to the first seven causes of action. As
such we dismiss the appeal as to the first seven causes of action. The only appealable
issue before this court is the denial of arbitration of the UCL claim, which we address,
post.4
B. MERITS
Here, the only reviewable claim is the denial of the Motion as to the UCL claim,
which Catalina Defendants argue on appeal should have been found to be subject to
arbitration. Catalina Defendants claim the Arbitration Agreement was broadly worded to
include “all claims” and it also subjected any claims arising under any state statute to
arbitration.
“The ‘principal purpose’ of the FAA is to ‘ensur[e] that private arbitration
agreements are enforced according to their terms.’ ” (AT&T Mobility LLC. v.
Concepcion (2011) 563 U.S. 333, 344.) “Code of Civil Procedure section 1281.2
requires a trial court to grant a petition to compel arbitration ‘if [the court] determines
that an agreement to arbitrate the controversy exists.’ [Citation.] Accordingly, ‘ “when
presented with a petition to compel arbitration the trial court’s first task is to determine
whether the parties have in fact agreed to arbitrate the dispute. [¶] . . .” [Citation.]’
4 Catalina Defendants’ motion for judicial notice filed September 5, 2018, is
denied.
18
[Citations.] ‘A party seeking to compel arbitration has the burden of proving the
existence of a valid agreement to arbitrate. [Citations.] Once that burden is satisfied, the
party opposing arbitration must prove by a preponderance of the evidence any defense to
the petition.’ ” (Avery v. Integrated Healthcare Holdings, Inc. (2013) 218 Cal. App. 4th
50, 59.)
“ ‘Arbitration is . . . a matter of contract, and the parties may freely delineate the
area of its application. The court’s role . . . must be strictly limited to a determination of
whether the party resisting arbitration agreed to arbitrate. A heavy presumption weighs
the scales in favor of arbitrability; an order directing arbitration should be granted “unless
it may be said with positive assurance that the arbitration [provision] is not susceptible of
an interpretation that covers the asserted dispute.” ’ ” (Gravillis v. Coldwell Banker
Residential Brokerage Co. (2006) 143 Cal. App. 4th 761, 771; see also Avery v. Integrated
Healthcare Holdings, Inc., supra, 218 Cal.App.4th at p. 59.) “The policy in favor of
arbitration does not apply when the contract cannot be interpreted in favor of arbitration.
There is no policy in favor of arbitrating a dispute the parties did not agree to arbitrate.”
(Balandran v. Labor Ready, Inc. (2004) 124 Cal. App. 4th 1522, 1528; see also Bono v.
David (2007) 147 Cal. App. 4th 1055, 1063 [“[T]he contractual terms themselves must be
carefully examined before the parties to the contract can be ordered to arbitration,” and
“[t]here is no public policy favoring arbitration of disputes which the parties have not
agreed to arbitrate”].)
19
Our standard of review when there is no factual dispute as to the language of the
agreement is de novo. (Bono v. David, supra, 147 Cal.App.4th at p. 1061-1062.)5
Here, there was a specific exemption agreed to by the parties in the Arbitration
Agreement for unfair competition claims. The Arbitration Agreement provided that
“Upon a showing of reasonable cause, either party to this Agreement may petition a court
of competent jurisdiction for immediate injunctive relief and/or other equitable relief for
unfair competition and/or the use and/or unauthorized disclosure or trade secrets or
confidential information.” This appeared under the heading “Claims Not Covered by the
Agreement.” As such, based on the terms of the contract, it is clear here, as found by the
trial court, that the parties intended to exempt the UCL claim from arbitration.
Catalina Defendants rely on Ferguson v. Corinthian Colleges, Inc. (9th Cir. 2013)
733 F.3d 928. In Ferguson, college students brought a class action against their college
seeking, among other relief, injunctive relief under California’s unfair competition law.
(Id. at p. 930.) The Ninth Circuit concluded that such an action could be subject to
arbitration and that, based on the language of the arbitration agreement, the parties agreed
to arbitration of the issue. (Id. at pp. 937-938.) That language included that all claims
must be submitted to the arbitrator instead of a court. (Id. at p. 938.) However, there is
no indication in Ferguson that there was a similar provision as here, which specifically
exempted unfair competition claims. Ferguson is not applicable to the instant case.
5 Catalina Defendants do not claim that the issue of whether the UCL claim is
subject to arbitration is an issue that must be decided by the arbitrator—like the import of
the class action waiver—and we will not make such argument for them.
20
Moreover, we reject the claim of Catalina Defendants that somehow the parties
agreed they would interpret the Arbitration Agreement in conjunction with the California
Arbitration Act. In fact, the Arbitration Agreement itself stated it would be subject to the
FAA. Based on the foregoing, we cannot conclude the order to deny the Motion as to the
UCL claim was erroneously entered.
DISPOSITION
We dismiss the appeal as to causes of action one through seven and affirm the
order on the eighth cause of action. Costs of the appeal are awarded to Lacayo as the
prevailing party.
CERTIFIED FOR PUBLICATION
MILLER
Acting P. J.
We concur:
FIELDS
J.
MENETREZ
J.
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