Ocean Cities Pizza v. Superior Court CA1/4 ( 2022 )

Filed 7/29/22 Ocean Cities Pizza v. Superior Court CA1/4
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for
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IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FIRST APPELLATE DISTRICT
DIVISION FOUR
OCEAN CITIES PIZZA, INC., et al.,
Petitioners,
A160891
v.
THE SUPERIOR COURT OF (Contra Costa County
CONTRA COSTA COUNTY, Super. Ct. No. MSC19-02640)
Respondent;
ISMAIL ALAMMARI,
Real Party in Interest.
Ismail Alammari filed a wage-and-hour complaint against Ocean Cities
Pizza, Inc., Home County Pizza, Inc., Hishmeh Enterprises, Inc., and Central
Cities Pizza, Inc. (collectively petitioners), asserting causes of action both on
an individual and on a class basis. Petitioners purport to appeal, pursuant to
Code of Civil Procedure section 1294, subdivision (a) (section 1294(a)), from
an order granting their motion to compel Alammari to submit his individual
claims to arbitration but denying their request to strike his class allegations.
The court held that the parties’ arbitration agreement requires classwide
arbitration of the class claims.
Section 1294(a) authorizes appeals only from orders dismissing or
denying petitions to compel arbitration. The challenged order, however,
granted the petition in part, although denying the request to strike class
1
allegations. As held in Reyes v. Macy’s, Inc. (2011) 202 Cal.App.4th 1119(Reyes), the order is not appealable. Petitioners contend that the Federal
Arbitration Act (FAA) preempts the rule of Reyes, and they request in the
alternative that we treat the purported appeal as a petition for writ relief.
Because classwide arbitration would be unduly costly if ordered erroneously,
we will treat the appeal as a writ petition and, thus, need not resolve the
preemption issue. On the merits, the trial court correctly held that the
agreement unambiguously authorizes class arbitration, so we will deny the
petition, effectively affirming the trial court’s order.
Factual and Procedural History
In 2018, Alammari became an employee of Ocean Cities Pizza and
signed an arbitration agreement that the parties agree is enforceable and
governed by the FAA.1 It states that any dispute the company and employee
cannot resolve informally “shall be resolved and decided through binding
arbitration as set forth in this agreement.” The agreement adds that, with
certain exceptions not relevant here, the parties intend for it to apply to “any
dispute that arises out of the employee’s employment with the company” and
to encompass “all claims that are arbitrable under applicable law.” Further,
the agreement states that it applies to “any claim brought on an individual,
class action, putative class action, collective action, multiple-party,
representative plaintiff and/or private attorney general basis by employee or
on employee’s behalf, that employee may have against the company,”
1 All four petitioners are franchisees of Domino’s Pizza, Inc. While
Alammari worked only for Ocean Cities Pizza, which is the only other party
to the arbitration agreement, he sued all four petitioners and all requested
arbitration. Alammari did not object and the court made its order compelling
arbitration applicable to all four petitioners, while noting that it made “no
finding as to whether the non-signatory Defendants are employers [of
Alammari] or in a joint venture with Ocean Cities Pizza.”
2
including, but not limited to, “any claims related to wages ([with one
irrelevant exception]), reimbursements, penalties, alleged state Labor Code
violations, alleged Wage Order or ‘wage and hour’ violations, discrimination,
retaliation and harassment, whether based on state or federal law, and any
other employment-related claim.”
Alammari worked for Ocean Cities Pizza for approximately a year. In
2019, he filed a class-action complaint against all four petitioners alleging
wage-and-hour violations. His first amended complaint asserts 10 causes of
action. The first nine seek damages and restitution on behalf of Alammari and
a proposed class, for wage-and-hour claims arising out of his and the class’s
employment by petitioners.2
Petitioners jointly moved to compel individual arbitration of all but the
PAGA cause of action, to strike the “class claims,” and to stay proceedings on
the PAGA cause of action pending the arbitration. The court issued an order
finding the arbitration agreement valid and governed by the FAA—as was
undisputed—and holding that the agreement compels arbitration of all but
the PAGA cause of action, on which the court stayed litigation pending the
arbitration.
The court then turned to the one disputed issue—whether to order
arbitration of the causes of action only on an individual basis or also on a
class basis. It addressed Lamps Plus, Inc. v. Varela (2019) __ U.S. __
2 Specifically, the complaint alleges that petitioners failed (1) to pay
overtime wages, (2) to pay minimum wages (compensatory damages), (3) to
pay minimum wages (liquidated damages), (4) to provide accurate, itemized
wage statements, (5) to pay wages promptly after termination, (6) to provide
uninterrupted meal periods, (7) to provide uninterrupted rest periods, and
(8) to reimburse business expenses, and that (9) this conduct amounted to
unfair business practices in violation of Business and Professions Code
section 17200 et seq. entitling the class to equitable relief.
3
[139 S.Ct. 1407] (Lamps Plus), which held that the FAA preempts any rule of
state contract law that would require a court to construe an ambiguous
arbitration agreement so as to require class arbitration based on policy
considerations rather than the parties’ expressed intent. (139 S.Ct. at
pp. 1417–1418.) The court distinguished Lamps Plus by noting that the
arbitration agreement in that case did not mention class proceedings (id. at
p. 1413), whereas the agreement here specifies that it applies to “ ‘any claim
brought on an individual, class action, putative class action, collective action,
multiple-party, representative plaintiff and/or private attorney general basis
by employee or on employee’s behalf’ ” (italics added by trial court). Noting
further that the agreement did not include a class-action waiver or refer in
any other way to class actions, the court found that the agreement
unambiguously requires class arbitration of class members’ employment-
related claims. The court found support for its ruling in Garner v. Inter-State
Oil Co. (2020) 52 Cal.App.5th 619 (Garner), a post–Lamps Plus opinion in
which the Third Appellate District held that an arbitration agreement with
somewhat similar language expressly required arbitration of class claims.
The court thus ordered both individual and class arbitration of Alammari’s
claims.
Petitioners timely filed a notice of appeal.
DISCUSSION
1. Appealability
The initial question is whether the order is subject to appellate review
at this time.3 Under Reyes, supra, 202 Cal.App.4th 1119, an order
3 As the trial court noted, the agreement might be read to indicate that
an arbitrator should decide whether Alammari can arbitrate his class claims
on a class or only an individual basis. However, both parties asked the court
4
simultaneously granting a petition to compel arbitration and denying a
request to strike class claims is not appealable under section 1294(a). (Id. at
p. 1122.) Reyes was a wage-and-hour class action in which the trial court
made an order very similar to the one at issue here. The employer moved to
compel arbitration of the plaintiff’s individual claims, dismiss her class
allegations, and stay the matter until after arbitration. (Id. at p. 1122.) The
trial court severed the individual claims and sent them to arbitration but
denied the request to strike the class allegations. The court held that the
order was not appealable under section 1294(a) because it did not deny the
motion to compel arbitration, and because neither an order compelling
arbitration nor an order denying a request to strike class allegations is
appealable. (Id. at pp. 1122–1123.)4
The trial court here did not sever and stay the “class claims,”5 as the
court did in Reyes, but ordered those claims to classwide arbitration.
Nonetheless, its ruling is not an order denying a petition to compel
arbitration. In Reyes and here, the court compelled arbitration and refused to
strike class allegations. While petitioners portray the order here as denying
their petition to compel “individual arbitration,” the court in fact ordered that
to determine whether the agreement authorizes classwide arbitration, and
neither party contends that this issue should not be determined by the court.
4 While section 1294(a) by its terms authorizes an appeal from only an
order dismissing or denying a “petition to compel arbitration,” it also applies
to an order denying a motion to compel arbitration filed in an existing action.
(Mercury Ins. Group v. Superior Court (1998) 19 Cal.4th 332, 349.)
5 Petitioners correctly note that “individual claims” and “class claims”
are not distinct causes of action, as a class action is simply a procedural
device for asserting the same cause of action on behalf of additional
claimants. (Citizens of Humanity, LLC v. Ramirez (2021) 63 Cal.App.5th 117,
132.) We nonetheless use the common shorthand of “individual claims” and
“class claims” in lieu of more cumbersome alternatives.
5
the claims be arbitrated on both an individual and class basis. It did not deny
the request to compel arbitration; it simply sent more of the case to
arbitration than petitioners requested.
Petitioners argue in the alternative that the FAA as construed in
Lamps Plus, supra, 139 S.Ct. 1407, preempts the rule of Reyes. Extending its
prior decisions in AT&T Mobility LLC v. Concepcion (2011) 563 U.S. 333,
Stolt-Nielsen S.A. v. AnimalFeeds International Corp. (2010) 559 U.S. 662and Epic Systems Corp. v. Lewis (2018) 584 U.S. __ [138 S.Ct. 1612], the high
court in Lamps Plus held that the FAA preempts any rule of state contract
law that compels class arbitration not based on unambiguous language in an
arbitration agreement authorizing such arbitration. (139 S.Ct. at p. 1418.)6 In
Lamps Plus, a federal district court in California construed an arbitration
agreement that was arguably ambiguous as to whether it authorized
classwide arbitration. (Id. at p. 1413.) Applying the common law rule that
6 Lamps Plus, supra, 139 S.Ct. 1407 also involved an appealability
dispute but, contrary to petitioners’ contention, its analysis of FAA provisions
conferring federal appellate jurisdiction is irrelevant here. The employer in
Lamps Plus moved to compel individual arbitration and dismiss class claims
but the trial court, as here, ordered class arbitration. (Id. at p. 1413.) While
the employee in Lamps Plus disputed the order’s appealability by arguing,
like Alammari, that only orders denying petitions to compel arbitration are
appealable, the high court never reached that contention. It was “beside the
point,” the court held, as the employer grounded appellate jurisdiction on
another subsection of the FAA authorizing an appeal from “ ‘a final decision
with respect to an arbitration that is subject to this title.’ ” (Id. at pp. 1413–
1414, quoting 9 U.S.C. § 16(a)(3).) The trial court’s decision had been “final”
because it ordered all claims to arbitration and dismissed the action. (139
S.Ct. at p. 1414.) Here, the most closely analogous provision of the California
Arbitration Act (Code Civ. Proc., § 1294, subd. (d)) authorizes an appeal from
“[a] judgment entered pursuant to this title.” Petitioners do not rely on that
provision, as the trial court did not enter a judgment. The appealability
analysis in Lamps Plus thus does not affect Alammari’s contention that
orders granting motions to compel arbitration are not appealable.
6
contracts are construed against their drafters, the court construed the
ambiguous agreement to authorize classwide arbitration, and the Ninth
Circuit affirmed. Reversing, the Supreme Court accepted the lower courts’
interpretation of California law, under which the agreement was deemed
ambiguous, but held that the FAA preempts the state law rule that contracts
are construed against the drafter. (Id. at pp. 1415, 1417–1418.)
Petitioners argue that the appealability rule of Reyes is similarly
preempted by the FAA. We doubt that the preemptive sweep of the FAA,
even as construed in Lamps Plus, extends beyond rules of state contract law
to encompass a state procedural rule on appealability. However, we need not
resolve petitioners’ preemption argument because we agree that in any event
the circumstances warrant immediate writ review.
Purported appeals from orders compelling arbitration have been
treated as writ petitions “(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.” (Zembsch v. Superior
Court (2006) 146 Cal.App.4th 153, 160.) The first rationale does not apply
here because the class claims are not “clearly outside the scope of the
arbitration agreement.” But writ review is proper because, if wrongly
ordered, “the arbitration would appear to be unduly time consuming or
expensive.” Several courts have found writ review of orders compelling
arbitration appropriate because, if the order was improper, “ ‘the expense to
the parties in participating in and seeking review of the arbitration is
apparent.’ ” (Id. at p. 160, quoting Atlas Plastering, Inc. v. Superior Court
(1977) 72 Cal.App.3d 63, 68; accord, e.g., Ramos v. Superior Court (2018)
28 Cal.App.5th 1042, 1050; Medeiros v. Superior Court (2007)
146 Cal.App.4th 1008, 1014, fn. 7.) Although in this case the parties agree
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that an arbitration should occur, disagreeing only about its scope, arbitrating
the causes of action on a classwide basis will consume considerably more time
and expense than arbitrating them on only an individual basis. Indeed, the
potential waste of resources may be more extensive here because classwide
arbitration will require the parties to devote large quantities of time and
resources to litigating issues relevant solely to the class format, effort that
would be useless if it were ultimately determined that the class claims should
have been dismissed.
Therefore, we shall treat petitioners’ appeal as a petition for a writ of
mandate to direct the trial court to strike the class allegations.
2. The merits
Turning to the merits, the parties dispute no facts, so we review
de novo the trial court’s interpretation of their agreement. (Nguyen v. Applied
Medical Resources Corp. (2016) 4 Cal.App.5th 232, 258.)
As noted above, the fifth paragraph of the arbitration agreement states,
“This arbitration agreement applies to any claim brought on an individual,
class action, putative class action, collective action, multiple-party,
representative plaintiff and/or private attorney general basis by employee or
on employee’s behalf, that employee may have against the company.” The
agreement includes no class action waiver and never again refers to class
action claims. It thus states without qualification that an employee may
assert a “claim brought on a[] . . . class action . . . basis . . . against the
company” and that such a claim will be arbitrated. As the trial court held,
this language unambiguously authorizes classwide employment-related
claims and requires that they be resolved by arbitration. While petitioners
point to passages in the first four paragraphs of the agreement referring to
“employee” in the singular, those passages do not qualify the dispositive
8
language of the fifth paragraph stating that the agreement applies to “any
claim brought on an individual, class action, putative class action [or other]
basis . . . .”
The trial court found support for its conclusion in Garner, supra,
52 Cal.App.5th 619, an opinion issued after Lamps Plus, supra, 139 S.Ct.
1407, which held that a similar agreement expressly required classwide
arbitration. The wording of the agreement in Garner was, if anything, less
clear than the language in the present agreement. One sentence read, “[Y]ou
and [employer] agree that any and all claims arising out of or related to your
employment that could be filed in a court of law, including but not limited to,
claims of unlawful harassment or discrimination, wrongful demotion,
defamation, wrongful discharge, breach of contract, invasion of privacy, or
class action shall be submitted to final and binding arbitration, and not to any
other forum.” (Garner, supra, at p. 623, italics added.) Another provided, “This
arbitration agreement is a waiver of all rights to a civil jury trial or
participation in a civil class action lawsuit for claims arising out of your
employment.” (Ibid., boldface and capitalization omitted.) The trial court in
Garner granted the employer’s motion to compel arbitration on solely an
individual basis, ruling that the latter sentence waived plaintiff’s right to
pursue class claims. (Id. at p. 622.) The Third Appellate District reversed,
holding that the reference to “claims of . . . class action” indicated that claims
asserted on a class basis were among those that must be submitted to
arbitration, and that the second sentence waived only the right to participate
in a “civil class action lawsuit,” not a class arbitration. (Id. at pp. 623–624.)
The court distinguished Lamps Plus, in which the agreement at issue was
ambiguous. (Id. at p. 624.)
9
Petitioners attempt to distinguish Garner, supra, 52 Cal.App.5th 619by contending it “did not address, much less decide, . . . whether the
arbitration agreement there also permitted the class arbitration of those
[class action] claims once arbitration commenced.” They argue that the FAA
permits a court to construe an agreement to authorize arbitration on a class
basis only if the agreement uses the words “classwide arbitration,” “class
arbitration,” or the like, and that whether an agreement applies to claims
brought “on a . . . class action . . . basis” is different from whether such a
claim may be arbitrated on a class basis. They contend that the agreement
here authorizes plaintiff to assert a claim on a purported “class action basis”
but not to have the claim arbitrated on a classwide basis. Petitioners cite no
authority to support such a strained distinction, which certainly finds no
support in Garner. The court there did not merely hold that the agreement
“applied to” claims brought as a class action while leaving open whether they
would be arbitrated on a class basis. The court stated that “the trial court
granted [employer]’s petition to compel arbitration of individual claims only,
effectively denying [employee] the ability to pursue class action claims” (id. at
p. 621); it addressed the employee’s contention that the arbitration
agreement “gives him the right to pursue his class claims in arbitration”
(ibid.); and it held that “the arbitration agreement requires arbitration of
[employee]’s class claims” and it would “modify the trial court’s order to
require arbitration of both individual and class claims.” (Ibid.)
Petitioners cite several opinions holding that particular arbitration
agreements did not authorize classwide arbitration. (Cortez v. Doty Bros.
Equipment Co. (2017) 15 Cal.App.5th 1; Nelsen v. Legacy Partners Residential
Inc. (2012) 207 Cal.App.4th 1115; Kinecta Alternative Financial Solutions,
Inc. v. Superior Court (2012) 205 Cal.App.4th 506, disapproved in other part
10
by Sandquist v. Lebo Automotive, Inc. (2016) 1 Cal.5th 233, 260, fn. 9.) But in
none of those cases did the arbitration agreement mention claims brought on
a “class action” basis or “on employee’s behalf,” like the agreement here. The
agreements in those cases failed to mention “class claims” or anything
involving a “class.”
The same is true of the federal opinions petitioners cite (see, e.g.,
Shivkov v. Artex Risk Solutions, Inc. (9th Cir. 2020) 974 F.3d 1051, 1057–
1058; Catamaran Corp. v. Towncrest Pharmacy (8th Cir. 2020) 946 F.3d
1020, 1022; Opalinski v. Robert Half International Inc. (3d Cir. 2017)
677 Fed.Appx. 738, 739–740; Reed Elsevier, Inc. ex rel. LexisNexis Div. v.
Crockett (6th Cir. 2013) 734 F.3d 594, 599)—including Lamps Plus. There is
no indication that the arbitration agreement that the lower federal courts in
Lamps Plus found “ambiguous” ever referred to “class claims” or claims on a
“class action basis,” or even used the word “class.” (Lamps Plus, supra,
139 S.Ct. at p. 1413.) The Supreme Court did not quote the agreement
extensively but said that the lower federal courts had concluded that it was
ambiguous with regard to classwide arbitration merely because it used
phrases “capacious enough to include class arbitration, such as one stating
that ‘arbitration shall be in lieu of any and all lawsuits or other civil legal
proceedings relating to my employment.’ ” (Ibid.) The Ninth Circuit opinion
and district court order quote the agreement more extensively and do not
quote any passage using the word “class.” (Varela v. Lamps Plus, Inc.
(9th Cir. 2017) 701 Fed.Appx. 670, 672–673; Varela v. Lamps Plus, Inc.
(C.D. Cal. Dec. 27, 2016, No. ED CV 16-577 DMG (KSx)) 2016 U.S.Dist. Lexis
188771.) In sum, neither Lamps Plus nor the other federal opinions
petitioners cite addressed agreements explicitly referring to class claims, as
do the agreements here and in Garner.
11
Moreover, the arbitration agreement in the present case refers not only
to claims brought on a “class action basis” but to “to any claim brought . . . by
employee or on employee’s behalf, that employee may have against the
company” (italics added). Resolving claims brought by one employee on
another “employee’s behalf” can occur only in classwide proceedings. This
additional language, not found in the Lamps Plus agreement or in the
agreements in the other cases cited by petitioners, makes still clearer that
the present agreement explicitly contemplates classwide arbitration. On
petitioners’ view, the arbitration agreement can never apply to a claim
brought “on employee’s behalf,” for each employee can arbitrate claims only
on his or her own behalf—a reading that would make the reference to claims
brought “on employee’s behalf” surplusage.
Thus, we conclude that plaintiff’s arbitration agreement
unambiguously authorizes the arbitration of plaintiff’s claims on a classwide
basis, as the trial court held.
DISPOSITION
The purported appeal is construed as a petition for a writ of mandate
and the petition is denied. Alammari shall recover his costs of the
proceedings in this court.
POLLAK, P. J.
WE CONCUR:
STREETER, J.
BROWN, J.
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