Turner v. Corinthian Internat. Parking Services CA4/3 ( 2021 )

Filed 9/29/21 Turner v. Corinthian Internat. Parking Services CA4/3
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 This opinion has not been certified for publication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
FOURTH APPELLATE DISTRICT
DIVISION THREE
CORINTHIAN INTERNATIONAL
WAGE AND HOUR CASES
G060405
ADRIAN TURNER,
Plaintiff and Respondent, (JCCP No. 4886)
v.
OPINION
CORINTHIAN INTERNATIONAL
PARKING SERVICES INC. et al.,
Defendants and Appellants.
Appeal from an order of the Superior Court of Santa Clara County, Thomas
E. Kuhnle, Judge. Affirmed.
Berliner Cohen, Susan E. Bishop, and Thomas P. Murphy for Defendant
and Appellant.
Schneider Wallace Cottrell Konecky, Carolyn H. Cottrell, David C.
Leimbach, Sean L. Litteral; Lawyers for Justice and Edwin Aiwazian for Plaintiff and
Respondent.
Defendant Corinthian International Parking Services, Inc. appeals from
denial of its motion to compel arbitration of coordinated wage-and-hour claims brought
by its employees. The trial court denied defendant’s motion because it found the
arbitration agreement unconscionable and because defendant failed to identify the class
members who were parties to arbitration agreements. We conclude the trial court erred in
finding the agreements unconscionable. However, we affirm because defendant failed to
establish the existence of an arbitration agreement as to any particular class member or
identifiable group of class members.
FACTUAL AND PROCEDURAL HISTORY
Plaintiff Adrian Turner is a former employee of defendant. Plaintiff sued
defendant as the named plaintiff in a putative class action alleging various Labor Code
violations in 2015. In 2016, defendant offered its employees, on a voluntary basis, an
arbitration agreement containing a class action waiver. Some of its employees evidently
signed the agreement, while some did not. After 2016, defendant required all new
employees to sign an arbitration agreement containing a class action waiver.
In 2019, after extensive litigation, including removal to federal court,
remand back to state court, and various discovery motions, plaintiff moved for class
certification. In opposing the motion, defendant asserted the existence of arbitration
agreements with class action waivers. However, defendant offered no evidence of the
arbitration agreements, and the trial court certified the class.
Shortly after the certification order was issued, defendant moved to compel
arbitration and enforce the class action waivers. Defendant included with its motion the
declaration of defendant’s owner, authenticating unsigned examples of the arbitration
agreements. The declaration also stated that “many” of defendant’s employees had
signed the agreements. Defendant’s motion more specifically sought an order to “limit
the Class Period for those employees who signed Arbitration Agreements . . . to claims
that arose prior to the signing of binding Arbitration Agreements,” and to require “all
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class members who have signed arbitration agreements [to] submit their claims as set
forth in the Mediation and Arbitration Agreement and Class Action Waiver.”
Defendant’s motion did not identify either any class member who had signed an
arbitration agreement, or the number of employees who had signed. It did not propose
the terms on which a subclass of employees subject to the agreement could be defined.
The arbitration agreement offered to defendant’s then-current employees in
2016 required submission of “any controversy or claim arising out of or relating to [the
employee’s] employment relationship with [defendant] or the termination of that
relationship,” to arbitration. The agreement also states it covered “i. Any dispute
concerning the arbitrability of any controversy or claim arising between [the employee]
and [defendant], or any of its management team; and [¶] ii. Any claim that could be
asserted in any court, and for which [the employee] has an alleged cause of action,
including without limitation, claims for breach of any contract or covenant (express or
implied); tort claims; claims for harassment, discrimination (including, but not limited to,
those based on sex, pregnancy, race, national or ethnic origin, age, religion, creed, marital
status, sexual orientation, mental or physical disability or medical condition or any other
characteristics protected by applicable statute); retaliation claims, claims for wrongful
discharge; claims for failure to provide mandatory leaves of absence or reasonable
accommodations, including but not limited to, violations of the Family and Medical
Leave Act (FMLA); unfair competition, wage and hour violations, violations of
confidentiality or breaches of trade secrets; and/or claims for violation of any federal,
state, local or other law, statute, regulation or ordinance, and whether based on statute or
common law or in equity; and [¶] iii. All claims whether made against [defendant], any of
its subsidiary or affiliated entities or its individual officers, directors, owners or managers
(in an official or personal capacity).” The agreement also contained a class action
waiver. The agreement required of defendant’s new hires was substantively identical.
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The trial court denied defendant’s motion. The trial court concluded the
motion was defective because it was directed at only part of the class and not at any
identifiable subclass or class member: “The Court cannot grant a motion to compel
arbitration where not all class members are parties to a purported arbitration agreement.
As there is no subclass of employees who signed the Agreements to which the motion
can be directed, the motion cannot be granted as filed.” The trial court also found the
agreement unconscionable because it was a contract of adhesion, and was unilateral—
only requiring arbitration of the employees’ claims against defendant. Defendant timely
appealed.
DISCUSSION
Defendant argues the arbitration agreements are not unconscionable
because they have only a low degree of procedural unconscionability, and because the
trial court’s finding of substantive unconscionability was predicated on a
misinterpretation of the agreements. Defendant also contends the trial court could and
should have granted its motion to compel arbitration and amended the definition of the
plaintiff class to exclude employees who had signed the agreements, remedying the
problem created by the fact that the motion only targeted an unidentified group of class
members.
Plaintiff, as he did in the trial court, asserts the agreements are
unconscionable and that defendant failed to show an agreement to arbitrate with any class
member. Plaintiff also contends we should find in the first instance that defendant
waived its right to arbitrate and failed to comply with a condition precedent for
arbitration.
“‘There is no uniform standard of review for evaluating an order denying a
motion to compel arbitration. [Citation.] If the court’s order is based on a decision of
fact, then we adopt a substantial evidence standard. [Citations.] Alternatively, if the
court’s denial rests solely on a decision of law, then a de novo standard of review is
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employed. [Citations.]’” (Carlson v. Home Team Pest Defense, Inc. (2015)
239 Cal.App.4th 619, 630.)
1. Unconscionability
“‘“[U]nconscionability has both a procedural and a substantive element, the
former focusing on oppression or surprise due to unequal bargaining power, the latter on
overly harsh or one-sided results.”’” (Sanchez v. Valencia Holding Co., LLC (2015)
61 Cal.4th 899, 910.) While defendant argues any procedural unconscionability was only
“minimal” or “modest,” defendant’s arguments are primarily focused on substantive
unconscionability, and more specifically the trial court’s interpretation of the arbitration
agreements as requiring arbitration of only employee claims. Where there is no
conflicting extrinsic evidence, “‘“the validity of an arbitration clause, including whether
it is subject to revocation as unconscionable, is a question of law subject to de novo
review.”’” (Fisher v. MoneyGram Internat., Inc. (2021) 66 Cal.App.5th 1084, 1094.)
The question turns on whether the arbitration agreements should be
interpreted to cover only the employees’ claims against defendant or could also include
the defendant’s claims against employees. One-sided arbitration agreements are typically
unconscionable in the employment context. (Armendariz v. Foundation Health
Psychcare Services, Inc. (2000) 24 Cal.4th 83, 117-118; Carmona v. Lincoln Millennium
Car Wash, Inc. (2014) 226 Cal.App.4th 74, 85-86.) The trial court, relying on the list of
claims covered by the agreements, concluded they only covered employee claims against
defendant.
Defendant argues this reading is incorrect. Instead, defendant contends, the
controlling language is the provision calling for arbitration of “any controversy or claim
arising out of or relating to [the employee’s] employment relationship with [defendant] or
the termination of that relationship,” and the list of covered claims should be deemed a
non-exclusive list of examples. Defendant cites Baltazar v. Forever 21, Inc. (2016)
62 Cal.4th 1237, in which the Supreme Court found a similar provision not to be
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unconscionable. However, that agreement contained language stating it covered claims
that “include but are not limited to” a list of examples. (Baltazar, supra, 62 Cal.4th at
p. 1241.) The agreements in this case do not contain this “include but are not limited to”
language; they also contain conflicting language concerning the scope of the agreement.
This conflicting language renders the agreements ambiguous.
United States Supreme Court precedent applying the Federal Arbitration
Act requires us to resolve ambiguities in an arbitration agreement in favor of arbitrability.
(Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc. (1985) 473 U.S. 614, 626.)
This rule controls over the rule of interpretation against the drafter, and regardless of
potentially conflicting California law. (Lamps Plus, Inc. v. Varela (2019) 139 S.Ct. 1407,
1418-1419.) As applied to the agreements in this case, resolving the ambiguity in favor
of arbitrability means treating the list of covered claims as nonexclusive examples and
relying instead on the broad initial definition of covered claims, which would include
defendant’s claims against employees. That interpretation makes the agreements bilateral
and not unconscionable.
2. Application to the Entire Class
The trial court denied defendant’s motion in part because the motion failed
to address all class members or an identifiable subclass. Plaintiff also argues we should
affirm because defendant failed to prove the existence of an arbitration agreement
between defendant and any particular class member.
In the context of a motion to compel arbitration, “‘“‘the trial court’s first
task is to determine whether the parties have in fact agreed to arbitrate the dispute.’”’”
(Lacayo v. Catalina Restaurant Group Inc. (2019) 38 Cal.App.5th 244, 257.) If such an
agreement is established, “‘“the party opposing arbitration must prove by a
preponderance of the evidence any defense to the petition.”’” (Ibid.)
The basic problem defendant’s motion created for the trial court is best
understood by examining defendant’s proposed order submitted with the motion, as well
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as the unsigned exemplar agreements defendant provided to the court. The proposed
order would not have ordered any particular person or claim to arbitration. Instead, it
would have altered the class period for certain unnamed class members “who signed
Arbitration Agreements” and required those unnamed class members and others (also left
unnamed) to submit their claims to arbitration. The only evidence of the identity of these
class members is the statement in defendant’s owner’s declaration that “many”
employees had signed.
In other words, defendant’s motion failed to identify the person or persons
with whom defendant claimed to have agreed to arbitrate, and thus failed to prove the
existence of any particular agreement to arbitrate. This failure would have prevented the
trial court from entering a definite order and could also have prevented plaintiff from
presenting potential defenses to the motion specific to individual class members or
groups of class members. It also would have left the trial court uncertain about which, if
any, claims remained in court to be litigated, and whether the trial court could move
forward with the case in tandem with whatever arbitration or arbitrations resulted from its
order. Without knowing who or what it was compelling to arbitration, the trial court had
little choice but to deny the motion.
Defendant argues the procedural posture of the case as a class action cannot
render their arbitration agreements unenforceable. We need not reach this contention.
The problem with defendant’s motion is not specific to the class action context. If, for
example, defendant had been sued by several of its employees in an ordinary civil case,
not a class action, and had filed a similar motion, without identifying which of the
plaintiffs were signatories to the arbitration agreements, such a motion would properly be
denied for exactly the same reasons.
Defendant also urges that the trial court could have granted defendant’s
motion, amended the class definition to exclude employees who had signed an arbitration
agreement as a new hire, and created a subclass of employees who signed an arbitration
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agreement while already employed with defendant. However, defendant’s motion was a
motion to compel arbitration, not a motion to decertify or modify the class; the motion
neither requested this relief, nor provided a record on which the court could have granted
it. Defendant cites no authority for the proposition that the trial court was required to
create such a subclass sua sponte and without any evidentiary basis. Moreover, to the
extent defendant contends its motion should be deemed to request modification or
decertification of the class, such motions are reviewed for abuse of discretion. (Kight v.
CashCall, Inc. (2014) 231 Cal.App.4th 112, 125-126.) Decertification or modification of
the class is typically appropriate only upon a showing of “‘new law or newly discovered
evidence showing changed circumstances.’” (Id. at p. 125.) Defendant made no such
showing, and we can therefore find no abuse of discretion in the trial court’s failure to
modify the class.
Finally, defendant argues the combination of the trial court’s rulings on
decertification and the motion to compel arbitration made it impossible for defendant to
enforce its arbitration agreements and class action waivers. The result it complains of,
however, is the product of its own litigation strategy. Three years passed between
defendant’s creation of these arbitration agreements and plaintiff’s class certification
motion. Defendant was the party with knowledge of the agreements, and the evidence of
those who had signed. Nonetheless, defendant offered no evidence of the existence of the
agreements in response to the class certification motion, choosing instead only to argue
their existence in a single paragraph in its opposition memorandum of points and
authorities. In the absence of evidence of the agreements, the trial court had neither the
obligation nor the ability to alter the class definition to reflect the agreements. The
defects identified above in defendant’s subsequent motion to compel arbitration were of
the same nature. Defendant had the ability to identify the class members who had signed
the arbitration agreements, and provide evidence of their assent, but failed to do so.
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3. Waiver
In addition to the issues discussed above, plaintiff suggests we should
affirm the trial court’s ruling by finding, in the first instance on appeal, that defendant
waived its right to arbitrate by proceeding in court for years without asserting its right to
arbitration in its answer.
The trial court made no finding as to waiver, having not reached the issue
based on its other findings. When the trial court expressly declines to find waiver, we
may not infer a finding of waiver on appeal. (Wagner Construction Co. v. Pacific
Mechanical Corp. (2007) 41 Cal.4th 19, 31.) Instead, we leave it to the trial court to
make the initial factual determination on this question, should defendant file a renewed
motion to compel arbitration.
DISPOSITION
The order is affirmed. Plaintiff shall recover costs on appeal.
*
ZELON, J.
WE CONCUR:
O’LEARY, P. J.
BEDSWORTH, J.
*
Retired Associate Justice of the Court of Appeal, Second Appellate District, assigned by
the Chief Justice pursuant to article VI, section 6 of the California Constitution.
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