Licon v. Wish-I-Ah Skilled Nursing & Wellness Cntr CA5 ( 2016 )


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  • Filed 6/15/16 Licon v. Wish-I-Ah Skilled Nursing & Wellness Cntr CA5
    NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
    California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for
    publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication
    or ordered published for purposes of rule 8.1115.
    IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
    FIFTH APPELLATE DISTRICT
    KATHY LICON et al.,
    F070304
    Plaintiffs and Respondents,
    (Super. Ct. No. 13CECG03983)
    v.
    WISH-I-AH SKILLED NURSING &                                                              OPINION
    WELLNESS CENTRE LLC,
    Defendant and Appellant.
    APPEAL from an order of the Superior Court of Fresno County. Mark W.
    Snauffer, Judge.
    Ballard Rosenberg Golper & Savitt, John B. Golper and Jeffrey P. Fuchsman for
    Defendant and Appellant.
    Sutton Hague Law Corporation, S. Brett Sutton, Jared Hague, Joseph V. Macias
    and Wesley Carlson for Plaintiffs and Respondents.
    -ooOoo-
    Defendant appeals from the denial of its petition to compel arbitration of
    plaintiffs’ claims against it. We conclude the arbitration agreement excluded class and
    collective actions from its scope, so plaintiffs were not required to arbitrate the class
    claims or the private attorney general claims included in their first amended complaint.
    FACTUAL AND PROCEDURAL BACKGROUND
    Plaintiff, Kathy Licon,1 filed an action on behalf of herself and all others similarly
    situated, alleging causes of action for wage and hour violations against her employer.
    Plaintiffs filed a first amended complaint, adding Denise as a named plaintiff and adding
    causes of action alleged by her as a private attorney general, seeking penalties for Labor
    Code violations on behalf of herself and other employees of defendant. Defendant
    responded with a petition to compel arbitration of the disputes. It presented evidence
    plaintiffs had signed various documents agreeing to be bound by defendant’s arbitration
    program or acknowledging receipt of the booklet that described it and contained its
    provisions. Plaintiffs opposed the petition, asserting none of the documents presented by
    defendant constituted an agreement to arbitrate their employment disputes; alternatively,
    if such an agreement existed, the provisions of the arbitration program were
    unconscionable and should not be enforced, and the arbitration agreement excluded or
    did not apply to the class claims or the private attorney general claims.
    The trial court denied the petition, finding the arbitration agreement expressly
    excluded class and collective actions. Further, the agreement submitted by defendant was
    unconscionable, and the unconscionable provisions should not be severed. Defendant
    appeals from the denial of its petition to compel arbitration.
    1       For clarity and convenience, we will refer to plaintiffs by their first names because they
    share a last name. No disrespect is intended.
    We note that, in defendant’s papers here and in the trial court, Kathy is referred to as
    Johnnie. Plaintiffs, in their respondents’ brief, note that Kathy goes by the name Johnnie. There
    is no dispute Kathy signed the documents that bear the signature “Johnnie Licon.”
    2.
    DISCUSSION
    I.     Appealability and Standard of Review
    An order denying a petition to compel arbitration is appealable pursuant to Code
    of Civil Procedure section 1294, subdivision (a).2
    “On petition of a party to an arbitration agreement alleging the existence of a
    written agreement to arbitrate a controversy and that a party thereto refuses to arbitrate
    such controversy, the court shall order the petitioner and the respondent to arbitrate the
    controversy if it determines that an agreement to arbitrate the controversy exists, unless it
    determines that … [g]rounds exist for the revocation of the agreement.” (§ 1281.2.) The
    party seeking arbitration bears the burden of proving by a preponderance of the evidence
    the existence of an arbitration agreement; the party opposing arbitration bears the burden
    of proving by a preponderance of the evidence any defense to enforcement of the
    agreement. (Pinnacle Museum Tower Assn. v. Pinnacle Market Development (US), LLC
    (2012) 
    55 Cal. 4th 223
    , 236 (Pinnacle); Engalla v. Permanente Medical Group, Inc.
    (1997) 
    15 Cal. 4th 951
    , 972.)
    “There is no uniform standard of review for evaluating an order denying a motion
    to compel arbitration.” (Robertson v. Health Net of California, Inc. (2005) 
    132 Cal. App. 4th 1419
    , 1425.) When the facts are undisputed, the existence and
    enforceability of an agreement to arbitrate are questions of law subject to de novo review.
    (Sparks v. Vista Del Mar Child & Family Services (2012) 
    207 Cal. App. 4th 1511
    , 1519
    (Sparks); Dotson v. Amgen, Inc. (2010) 
    181 Cal. App. 4th 975
    , 979.) When the evidence
    is conflicting, we accept the trial court’s resolution of factual issues if it is supported by
    substantial evidence. (Nyulassy v. Lockheed Martin Corp. (2004) 
    120 Cal. App. 4th 1267
    ,
    2       All further statutory references are to the Code of Civil Procedure unless otherwise
    indicated.
    3.
    1277 (Nyulassy).) Plaintiffs presented no conflicting evidence; therefore, our review of
    the existence and validity of the arbitration agreement is de novo.
    II.    Agreement to Arbitrate
    The trial court impliedly found both Kathy and Denise entered into an arbitration
    agreement with defendant. The undisputed facts support that finding.
    In Cruise v. Kroger Co. (2015) 
    233 Cal. App. 4th 390
    (Cruise), the plaintiff signed
    an application for employment with the defendant, in which she stated she understood
    and agreed that the defendant’s binding arbitration policy was incorporated by reference
    into the application and that the policy applied to any employment related disputes
    between the parties. (Id. at pp. 392–393.) In the application, the plaintiff also
    acknowledged receipt of a copy of the policy. There was evidence, however, that the
    arbitration policy was not provided to the plaintiff at the time she applied for
    employment. (Id. at p. 393.)
    After her employment was terminated, the plaintiff sued the defendants, and the
    defendants moved to compel arbitration. 
    (Cruise, supra
    , 233 Cal.App.4th at p. 394.)
    They presented the signed employment application and a four-page arbitration policy
    they contended was the policy referred to in the application. The trial court denied the
    motion, concluding the four-page document submitted consisted of pages from the
    employee handbook; the document was undated and there was no evidence it existed in
    2007 when the plaintiff applied for employment. There also was no evidence the
    document was ever given to the plaintiff, and the plaintiff denied ever receiving the
    employee handbook. (Id. at p. 395.)
    On appeal the court found the undisputed evidence of the language of the
    employment application established an agreement to arbitrate employment disputes.
    
    (Cruise, supra
    , 233 Cal.App.4th at p. 396.) The defendants’ inability to establish the
    contents of the arbitration policy in effect in 2007 did not relieve the plaintiff of the
    obligation to arbitrate. Its only impact was that the defendants failed to demonstrate the
    4.
    parties agreed to arbitrate by procedures different from those set out in the California
    Arbitration Act (§ 1280 et seq.; CAA). (Cruise, at p. 399.) “The language of the
    arbitration clause in the instant employment application, standing alone, was sufficient to
    establish the existence of an agreement by the parties to arbitrate employment-related
    disputes. While the parties’ agreement to arbitrate is enforceable, the employer’s
    inability to establish the contents of its Arbitration Policy precludes the employer from
    enforcing the provisions of said policy. Instead, the arbitration proceeding is to be
    conducted in accordance with the procedures set forth in the CAA as well as applicable
    case law.” (Id. at p. 400.)
    In Craig v. Brown & Root, Inc. (2000) 
    84 Cal. App. 4th 416
    (Craig), several years
    after the plaintiff’s employment began, her employer established a four-step dispute
    resolution program to resolve all employee disputes. (Id. at pp. 418–419.) Twice the
    employer mailed to the plaintiff’s home address a brochure explaining the program and
    emphasizing it would apply to her and to any future legal disputes she had with the
    company relating to her employment. (Id. at pp. 419, 420.) When the company
    terminated the plaintiff’s employment, she sued. The company moved to compel
    arbitration. (Id. at pp. 419–420.) The plaintiff denied receiving the mailed brochures and
    asserted she had not agreed to arbitrate her claims. (Id. at p. 420.) The trial court granted
    the motion to compel arbitration and the appellate court affirmed.
    “General principles of contract law determine whether the parties have entered a
    binding agreement to arbitrate. [Citation.] This means that a party’s acceptance of an
    agreement to arbitrate may be express [citations] or implied-in-fact where … the
    employee’s continued employment constitutes her acceptance of an agreement proposed
    by her employer.” 
    (Craig, supra
    , 84 Cal.App.4th at p. 420.) The court concluded
    substantial evidence supported the trial court’s resolution of the conflicting evidence in
    the company’s favor: “there [was] substantial evidence (1) that the memorandum and
    brochure were received by Craig in 1993 and again in 1994; (2) that she continued to
    5.
    work for Brown & Root until 1997; and (3) that she thereby agreed to be bound by the
    terms of the Dispute Resolution Program, including its provision for binding arbitration.”
    (Id. at p. 422.)
    A.      Denise
    Denise signed a single-page document entitled “Employment Dispute Resolution
    Program Agreement.” The first paragraph of the agreement, enclosed by a box, stated
    that defendant’s employment dispute resolution (EDR) program provides a four-step
    process for resolving employment problems, which ensures a fair resolution to disputes
    and is often faster and less expensive. It stated: “If you wish to be considered for
    employment, you must read and sign the following agreement binding you to use the
    EDR Program to resolve disputes. An EDR Program booklet describing the program in
    detail is available where you obtained the Applicant Packet.” The second paragraph
    provides that “both the Company and I agree to resolve all claims, controversies or
    disputes relating to my application for employment, my employment and/or the
    termination of my employment with the Company exclusively through the Company’s
    Employment Dispute Resolution Program.” The third paragraph recognizes the last step
    in the process is final and binding arbitration before a neutral arbitrator, and
    acknowledges agreement that “the Company and I are bound to use the EDR Program as
    the only means of resolving employment related disputes and to forego any right either
    may have to a jury trial.” The final two paragraphs of the agreement state: “I understand
    that the EDR Program affects my legal rights. I also understand that I may obtain a copy
    of the EDR Program booklet and seek legal advice before signing this Agreement. [¶] I
    certify that I have read this Agreement, I have had an opportunity to ask questions
    regarding its content, I understand this Agreement, I believe it to be fair, and I voluntarily
    enter into this Agreement.” Denise did not dispute she signed this agreement; it is dated
    October 17, 2009.
    6.
    Denise also did not dispute that she signed a one-page document entitled
    “Employment Dispute Resolution Program Acknowledgment,” which bears her signature
    and is dated November 4, 2009, the first day of her employment. This document
    acknowledges that Denise received a copy of the EDR Program booklet. It also states: “I
    realize it is my responsibility to familiarize myself with its contents.”
    Like the language in the employment application in Cruise, the EDR program
    agreement Denise signed constituted an agreement to arbitrate. Plaintiffs argue Denise
    was not bound to arbitrate because she did not receive the EDR program booklet until
    after she signed the EDR program agreement. But the EDR program agreement, standing
    alone, was sufficient to bind Denise to arbitrate her employment disputes with defendant,
    even if it did not establish the rules by which the arbitration would be governed.
    Plaintiffs do not dispute that, after she signed the EDR program agreement, Denise
    acknowledged receiving a copy of the EDR program booklet. This booklet bears the date
    March 1, 2007, and defendant’s supporting declaration states it was still being given to
    new employees in 2011. The booklet explains the four-step dispute resolution process in
    detail, makes the rules of the American Arbitration Association (AAA) applicable to
    arbitration, and describes various rules that apply to the arbitration proceeding. It ends
    with an EDR program acknowledgement that is identical to the one signed by Denise.
    The undisputed evidence indicates Denise signed the EDR program agreement in
    which she agreed to resolve all disputes with her employer through its dispute resolution
    program, the fourth step of which was binding arbitration. Thus, she was bound to
    submit all employment related disputes to binding arbitration. Subsequently, she
    received a copy of the 2007 EDR program booklet, explaining the program and the four-
    step process of dispute resolution. After receipt of the booklet, she continued her
    employment with defendant for more than three years. As in Craig, she was given notice
    of the terms of the EDR program through the booklet, she continued to work for
    defendant, and she thereby impliedly agreed to be bound by the terms of the EDR
    7.
    program, including binding arbitration pursuant to the rules set out in the 2007 EDR
    program booklet. Thus, the undisputed evidence indicates Denise agreed, expressly and
    impliedly, to binding arbitration of her employment related disputes with defendant.
    B.     Kathy
    The undisputed evidence shows Kathy began working for defendant in 1979. She
    signed an EDR program acknowledgement dated May 27, 2009. By this document, she
    acknowledged receipt of a copy of the 2007 EDR program booklet and her responsibility
    to familiarize herself with its contents. Although the signed acknowledgement does not
    contain information about the arbitration program or an express agreement to arbitrate
    disputes, and therefore is not itself an enforceable express agreement to arbitrate, it is
    evidence that defendant provided Kathy with notice of the program and its terms. The
    program booklet notified defendant’s employees that “[y]our decision to apply, accept
    employment or to continue employment with the Company constitutes your agreement to
    be bound by the EDR Program.” It stated the company also agreed to be bound by the
    program, and this mutual agreement meant both parties were “bound to use the EDR
    Program as the only means of resolving employment related disputes.” After
    acknowledging receipt of the booklet, Kathy remained employed with defendant for more
    than two years. Thus, as in Craig, Kathy was given notice of the EDR program and its
    terms, she continued to work for defendant thereafter, and she impliedly agreed to be
    bound by the terms of the EDR program as reflected in the booklet.
    The undisputed evidence establishes an agreement to arbitrate between defendant
    and both plaintiffs. All of the claims alleged by Kathy and Denise in their first amended
    complaint allegedly arose on or after December 31, 2009. Thus, they arose after both
    plaintiffs signed the documents which establish their express or implied agreement to
    binding arbitration of all employment disputes with defendant.
    8.
    III.   Exclusion of Class or Collective Actions
    The 2007 EDR program book contained the following provision: “This mutual
    agreement to arbitrate claims means that both you and the Company are bound to use the
    EDR Program as the only means of resolving employment related disputes and to forego
    any right to a jury trial on issues covered by the EDR Program.… This Program covers
    only claims by individuals and does not cover class or collective actions.” (Italics
    added.) Applying a plain meaning interpretation, plaintiffs contend the words “covers”
    and “does not cover” mean class and collective actions are outside the scope of the
    arbitration agreement, and therefore those claims may be brought in a court action.
    Defendant contends the language “This Program covers only claims by individuals and
    does not cover class or collective actions” constitutes a class action waiver; thus, the
    arbitration agreement requires employees to arbitrate all their claims against defendant,
    but the class action waiver requires them to do so on an individual, non-class basis. The
    trial court agreed with plaintiffs, interpreting the same sentence to mean “that class and
    collective claims are not covered by the arbitration clause.” Accordingly, the claims
    were not required to be arbitrated and there was nothing to prevent plaintiffs from
    pursuing their class or collective claims in a court action.
    General rules of contract interpretation apply. The fundamental goal of
    contractual interpretation is to give effect to the mutual intention of the parties as it
    existed at the time of contracting. (Bank of the West v. Superior Court (1992) 
    2 Cal. 4th 1254
    , 1264; Civ. Code, § 1636.) “Such intent is to be inferred, if possible, solely from
    the written provisions of the contract. [Citation.] The ‘clear and explicit’ meaning of
    these provisions, interpreted in their ‘ordinary and popular sense,’ unless ‘used by the
    parties in a technical sense or a special meaning is given to them by usage’ [citation],
    controls judicial interpretation.” (AIU Ins. Co. v. Superior Court (1990) 
    51 Cal. 3d 807
    ,
    821–822.) The ordinary sense of a word may be found in its dictionary definition.
    (Stamm Theatres, Inc. v. Hartford Casualty Ins. Co. (2001) 
    93 Cal. App. 4th 531
    , 539.)
    9.
    “Cover,” as used in this context, is defined as “to have width or scope enough to
    include or embrace” or “to comprise, include, or embrace in an effective scope of
    treatment or operation.” (Webster’s 3d New Internat. Dict. (1993) p. 524.) In short, to
    “cover” means to include within its scope. It follows that the phrase “does not cover”
    means excludes from its scope. Thus, the plain meaning of the provision that “[t]his
    Program covers only claims by individuals and does not cover class or collective actions”
    is that class and collective claims are excluded from the scope of the EDR program and
    its arbitration procedures. Further, the provision that the parties agreed “to use the EDR
    Program as the only means of resolving employment related disputes and to forego any
    right to a jury trial on issues covered by the EDR Program” indicates the parties did not
    intend to use the EDR program or to forego their right to a jury trial on matters not
    covered by the EDR program, such as class and collective claims. Accordingly, by
    agreeing to be bound by the provisions set out in the EDR book, plaintiffs did not agree
    to either bring class claims in arbitration or waive their right to bring class and collective
    claims in court.
    This interpretation of the term “covered” is consistent with the use of that term in
    the paragraphs of the EDR book under the heading “Covered Disputes.” Those
    paragraphs provide:
    “Disputes covered under the EDR Program pertain to claims such as
    discipline, discrimination, fair treatment, harassment, termination and other
    legally protected rights.
    “Disputes not covered under the EDR Program relate to workers’
    compensation…, unemployment benefits, health, welfare and retirement
    benefits and claims by the Company for injunctive relief to protect trade
    secrets and confidential information.
    “You retain the right to pursue employment disputes before federal
    or state administrative agencies. Nothing in the EDR Program prevents you
    from filing a claim with a federal or state administrative agency or from
    cooperating in a federal or state agency investigation.”
    10.
    Again, the term “not covered” is used to mean the claims are excluded from the
    obligation to resolve them through the EDR program and its arbitration procedures. The
    disputes “not covered” include claims required to be adjudicated administratively and
    claims for injunctive relief the employer presumably reserved for litigation in court. The
    exclusion of these claims from the coverage of the arbitration agreement, like the
    exclusion of class claims, does not mean the employee waives the right to bring them in
    any forum.
    Defendant suggests other language in the EDR program booklet demonstrates an
    intent to arbitrate all claims on an individual, nonclass basis: language that the EDR
    program applied to all disputes “concerning legally protected rights,” and “all claims,
    controversies or disputes” between the parties, as well as language referring to the
    employee and the employee’s claims in terms of “I,” “me,” “my,” and “you” (such as:
    “differences may arise between the Company and me,” “both the Company and I agree,”
    and “an attorney may represent you”), which defendant contends contemplate only
    individual claims. Defendant’s argument seems to be that, because plaintiffs agreed to
    arbitrate all of their claims against defendant except class claims, they agreed to arbitrate
    all of their claims on an individual basis and thereby waived their right to bring class
    claims in any forum. When considered along with the provisions discussed above,
    however, the cited language is consistent with the interpretation excluding class claims
    from the scope of the arbitration agreement. All claims, controversies, or disputes must
    be arbitrated, except those not covered by the EDR program. Those not covered,
    including class claims, would be litigated in another forum. As a result, only individual
    claims would be arbitrated.
    When the parties’ construction of contractual language is conflicting, extrinsic
    evidence is admissible to interpret the language of the agreement, as long as the evidence
    is not used to give the agreement a meaning to which it is not reasonably susceptible.
    (Morey v. Vannucci (1998) 
    64 Cal. App. 4th 904
    , 912.) When the extrinsic evidence is not
    11.
    conflicting, resolution of the ambiguity is a question of law, subject to independent
    review. (Winet v. Price (1992) 
    4 Cal. App. 4th 1159
    , 1166.) The extrinsic evidence
    considered in this case was not in conflict.
    The extrinsic evidence considered by the trial court consisted of the historical
    development of the law addressing the enforceability of class action waivers in arbitration
    agreements, the place of the 2007 EDR program in that chronology and the subsequent
    arbitration agreement defendant implemented after the law changed (defendant’s
    Alternative Dispute Resolution Policy (ADRP) and the employee agreement to be bound
    by it). Defendant challenges consideration of the ADRP agreement to interpret the 2007
    EDR program language.3 Defendant asserts consideration of the subsequent agreement is
    contrary to Evidence Code section 1151. That statute, however, makes evidence of
    subsequent remedial measures “inadmissible to prove negligence or culpable conduct.”
    (Evid. Code, § 1151.) The ADRP agreement was not used here as evidence of negligence
    or culpable conduct, but to interpret the meaning of contractual language. Thus,
    defendant’s challenge is without merit.
    Defendant also asserts the revised arbitration agreement does not shed any light on
    what the 2007 EDR program was intended to cover. In the context of the historical
    development of the law, however, it does.
    Discover Bank v. Superior Court (2005) 
    36 Cal. 4th 148
    , addressed the validity of
    a class arbitration waiver. The agreement between the bank and its credit cardholders
    provided that, if either party elected to resolve a dispute between them by arbitration,
    neither party would have the right to litigate the claim in court or have a jury trial on the
    claim; additionally, neither party was allowed to consolidate claims by or against other
    cardholders or to arbitrate any claim as a representative or member of a class or in a
    3     We note it was defendant who placed in evidence its ADRP, an unsigned employee
    agreement to be bound by the ADRP, and its 2013 employee handbook, which refers to the
    ADRP.
    12.
    private attorney general capacity. (Id. at pp. 153–154.) The court concluded that, at least
    in some circumstances involving small consumer claims, “the law in California is that
    class action waivers in consumer contracts of adhesion are unenforceable, whether the
    consumer is being asked to waive the right to class action litigation or the right to
    classwide arbitration.” (Id. at p. 153.) The court based its conclusion on a determination
    that, under the circumstances there, the class arbitration waiver was unconscionable. (Id.
    at pp. 158–163.)
    After Discover Bank, parties drafting arbitration agreements had to be concerned
    with the possibility a court would invalidate a class action or class arbitration waiver. If
    the court invalidated such a waiver in a contract with an otherwise valid arbitration
    agreement requiring that the parties arbitrate all disputes between them, the drafting party
    faced the prospect of being required to arbitrate disputes on a class basis. If the drafting
    party deemed that to be a less desirable result than litigating class claims in court,4 then a
    provision like the one in defendant’s EDR program booklet carved out class claims and
    excluded them from arbitration, allowing them to be litigated in court.
    Subsequently, in AT&T Mobility LLC v. Concepcion (2011) 
    563 U.S. 333
    (Concepcion), the United States Supreme Court determined the Discover Bank rule was
    preempted by the Federal Arbitration Act (9 U.S.C. § 1 et seq.; FAA). 
    (Concepcion, supra
    , at p. 352.) It concluded the principal purpose of the FAA was to ensure private
    arbitration agreements are enforced according to their terms, and “class arbitration, to the
    extent it is manufactured by Discover Bank rather than consensual, is inconsistent with
    the FAA.” (Id. at p. 344.) Following Concepcion, the California Supreme Court held
    that the FAA also preempted a California case that held class action waivers in
    4       A court action would apply formal rules of evidence, provide for a jury trial, and allow
    appeal on the merits after judgment, all of which might be more important to a defendant when a
    large class claim is in issue, rather than a relatively small individual claim.
    13.
    employment arbitration agreements were invalid under certain circumstances. (Iskanian
    v. CLS Transportation Los Angeles (2014) 
    59 Cal. 4th 348
    , 361, 366 (Iskanian).)
    The effect of the Concepcion decision generally was to make class action or class
    arbitration waivers enforceable, in the absence of rules of general contract law that would
    invalidate them. In the wake of the Concepcion decision, defendant replaced its EDR
    program book with its ADRP and an employee agreement to be bound by that policy. 5
    At the time of defendant’s motion to compel arbitration, both the ADRP and the ADRP
    agreement provided: “I understand and agree this ADR Program prohibits me from
    joining or participating in a class action or representative action, acting as a private
    attorney general or representative of others, or otherwise consolidating a covered claim
    with the claims of others.” Thus, the current language clearly prohibits employees from
    bringing or participating in class and representative actions, rather than carving class
    claims out as matters not covered by the arbitration agreement.
    The contrast between the 2007 EDR program provisions and the subsequent
    ADRP agreement provisions, in the context of the development of the law governing
    validity of class action waivers, supports the interpretation of the 2007 provisions as
    excluding class actions from the arbitration requirement, rather than waiving the right to
    pursue class claims in any forum. Accordingly, we conclude the trial court correctly
    interpreted the language of the 2007 EDR program booklet as excluding plaintiffs’ class
    claims from the scope of the arbitration agreement.
    IV.    Private Attorneys General Act Claims
    In the first amended complaint, Denise alleged claims under the Labor Code
    Private Attorneys General Act of 2004 (Lab. Code, § 2698 et seq.; PAGA). The PAGA
    “authorizes an employee to bring an action for civil penalties on behalf of the state
    against his or her employer for Labor Code violations committed against the employee
    5      There was no evidence either plaintiff signed an ADRP agreement.
    14.
    and fellow employees, with most of the proceeds of that litigation going to the state.”
    
    (Iskanian, supra
    , 59 Cal.4th at p. 360.) Like plaintiffs’ class action claims, Denise’s
    PAGA allegations present collective claims, brought on behalf of herself “and other
    current or former employees” (Lab. Code, § 2699, subd. (a)), that are excluded from the
    parties’ arbitration agreement by the provision that “[t]his Program … does not cover
    class or collective actions.”
    Additionally, in Iskanian, the court concluded an employee’s right to bring a
    PAGA action is unwaivable. 
    (Iskanian, supra
    , 59 Cal.4th at p. 383.) It further concluded
    the FAA “does not preclude our Legislature from deputizing employees to prosecute
    Labor Code violations on the state’s behalf. Therefore, the FAA does not preempt a state
    law that prohibits waiver of PAGA representative actions in an employment contract.”
    (Id. at p. 360.)
    Defendant contends that, to the extent Iskanian invalidates waivers of PAGA
    claims in arbitration agreements, it violates the FAA’s preemption of state laws that
    outright prohibit arbitration of a particular type of claim, as was explained in Concepcion.
    (See 
    Concepcion, supra
    , 563 U.S. at p. 334.) We are bound by the decisions of the
    California Supreme Court and must follow Iskanian. (Auto Equity Sales, Inc. v. Superior
    Court (1962) 
    57 Cal. 2d 450
    , 455.)
    The EDR program agreement excluded class and collective actions from its scope,
    so Denise was not obligated to arbitrate her PAGA claims. Additionally, Denise’s right
    to bring a PAGA action against her employer was unwaivable, according to Iskanian.
    For both these reasons, we conclude Denise cannot be compelled to arbitrate her PAGA
    claims against defendant.
    15.
    DISPOSITION
    The order denying defendant’s motion to compel arbitration is affirmed. Plaintiffs
    are entitled to their costs on appeal.
    _____________________
    HILL, P.J.
    WE CONCUR:
    _____________________
    KANE, J.
    _____________________
    FRANSON, J.
    16.
    

Document Info

Docket Number: F070304

Filed Date: 6/15/2016

Precedential Status: Non-Precedential

Modified Date: 4/18/2021