Piran v. Yamaha Motor Corporation USA CA4/3 ( 2024 )

Filed 2/8/24 Piran v. Yamaha Motor Corporation USA CA4/3
NOT TO BE PUBLISHED IN OFFICIAL REPORTS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
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 This opinion has not been certified for publication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
JESSICA PIRAN,
Plaintiff and Respondent, G062198
v. (Super. Ct. No. 30-2022-01255364)
YAMAHA MOTOR CORPORATION, OPINION
U.S.A. et al.,
Defendants and Appellants.
Appeal from an order of the Superior Court of Orange County, Randall J.
Sherman, Judge. Affirmed in part, reversed in part, and remanded with directions.
Gibson, Dunn & Crutcher, Theane Evangelis, Timothy W. Loose, Megan
Cooney and Jordan Johnson for Defendants and Appellants.
Aegis Law Firm, Samuel A. Wong, Jessica L. Campbell and Ali S. Carlsen
for Plaintiff and Respondent.
Defendants Yamaha Motor Corporation, U.S.A. and Yamaha Motor
Finance Corporation, U.S.A. (collectively referred to in the singular as Yamaha) appeal
from an order: (1) denying Yamaha’s motion to compel arbitration of plaintiff Jessica
Piran’s claims under Labor Code Private Attorneys General Act of 2004 (PAGA) (Lab.
Code, § 2698 et seq.), and (2) staying Piran’s PAGA and class claims pending
completion of the arbitration of Piran’s individual claims. Yamaha argues Piran’s
individual PAGA claim must be compelled to arbitration under the parties’ arbitration
agreement and her non-individual PAGA claims must be dismissed for lack of standing.
Yamaha also contends the trial court failed to enforce the arbitration agreement according
to its terms by allowing Piran’s class claims to remain in the case pending completion of
the arbitration.
We affirm in part and reverse in part. We hold Piran’s individual PAGA
claim must be compelled to arbitration in accordance with the arbitration agreement
under Viking River Cruises, Inc. v. Moriana (2022) 596 U.S. ___ [142 S.Ct. 1906, 213
L.Ed.2d 179] (Viking River). We determine the non-individual PAGA claims remain in
the trial court under the arbitration agreement, and the trial court properly stayed them
pending completion of the arbitration. We find Piran maintains PAGA standing to pursue
her non-individual PAGA claims in court under Adolph v. Uber Technologies, Inc.
(2023) 14 Cal.5th 1104 (Adolph). Finally, we conclude Yamaha forfeited any arguments
concerning the trial court’s alleged error in staying the class claims, because Yamaha did
not address how it was prejudiced by the stay.
FACTS
In July 2021, Piran began working for CoWorx Staffing Services
(CoWorx), a business that provides temporary staffing for employers. Piran signed a
mutual arbitration agreement governed by the Federal Arbitration Act (FAA) (9 U.S.C. §
1 et seq.) (Agreement). The Agreement provided the parties “agree all legal disputes and
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claims between them shall be determined exclusively by final and binding arbitration,”
and the parties “voluntarily waive all rights to trial in court before a judge or jury on all
Claims covered by this Agreement.” It also contained a “Third Party Beneficiary”
provision: “The parties expressly agree that [CoWorx’s] clients are third party
beneficiaries of this Agreement and entitled to enforce this Agreement for any Claim
against them.”
The Agreement defined “claims” as “all claims pertaining to or arising out
of Employee’s employment or other relationship with [CoWorx] (including application
for or termination of employment or other relationship or assignment to a [CoWorx]
client).” “[C]laims” also included “any claim arising out of or relating in any way to the
services or work performed for or on behalf of any client of [CoWorx], to the fullest
extent permitted by federal, state or local law,” including claims for “wages, overtime,
benefits, commissions, or other compensation or form of payment, or representation of
such earnings” and claims for “violation of any federal, state, or local law, statute,
regulation, or ordinance.”
Paragraph 9 of the Agreement, entitled “Class and Collective Action
Waiver,” stated: “The arbitrator is prohibited from consolidating the claims of others into
one proceeding, to the maximum extent permitted by law. This means an arbitrator shall
hear only individual claims and is prohibited from fashioning a proceeding as a class,
collective, representative, joint, or group action or awarding relief to a group of claimants
or employees in one proceeding, to the maximum extent permitted by law. Any question
or dispute concerning the scope or validity of this paragraph shall be decided by a court
of competent jurisdiction and not the arbitrator. Should a court determine that this
prohibition on class, collective, representative, joint, or group actions is invalid for any
reason, the parties hereby waive any right to arbitration of the class, collective,
representative, joint, or group action at issue and instead agree and stipulate that such
claims will be heard only by a judge and not an arbitrator or jury, to the maximum extent
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permitted by law. Additionally, the parties agree that if a party brings an action that
includes both claims subject to arbitration under this Agreement and claims that by law
are not subject to arbitration, all claims that by law are not subject to arbitration shall be
stayed until the claims subject to arbitration are fully arbitrated. The parties further agree
that in such a situation, the arbitrator’s decision on the claims subject to arbitration,
including any determinations as to disputed factual or legal issues, shall be dispositive
and entitled to full force and effect in any separate lawsuit on claims that by law are not
subject to arbitration.”
Paragraph 12 of the Agreement, entitled “California Employees,” was
specific to PAGA claims, stating: “This provision applies to California employees only.
If any claim is made under [PAGA] and the representative action waiver stated above is
deemed inapplicable or unenforceable with respect to the PAGA claim(s), the parties
agree that any PAGA claim(s) will be bifurcated from all remaining claims and that all
remaining claims will continue to be subject to mandatory and binding arbitration under
this Agreement. Additionally, the parties agree that all claims subject to arbitration must
be adjudicated or otherwise resolved in arbitration before any PAGA claim(s) may be
adjudicated.”
Soon after Piran signed the Agreement, CoWorx placed Piran to work at
Yamaha. Piran worked at Yamaha until November 2021.
PROCEDURAL HISTORY
In April 2022, Piran filed a putative class action complaint against Yamaha,
alleging eight causes of action for violating the Labor Code and Industrial Welfare
Commission wage orders: (1) failure to pay minimum wages; (2) failure to pay overtime
wages; (3) failure to provide meal periods; (4) failure to permit rest breaks; (5) failure to
provide accurate itemized wage statements; (6) failure to pay wages timely during
employment; (7) failure to pay all wages due upon separation of employment; and
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(8) violation of Business and Professions Code section 17200 et seq. Yamaha responded
with a motion to compel all claims to individual arbitration under the Agreement and to
stay the case pending completion of the arbitration.
Piran amended her complaint by adding a PAGA cause of action. In
response, Yamaha filed an amended motion seeking to: (1) compel “all of [Piran’s]
claims in the . . . lawsuit to individual arbitration as required by the [Agreement]”;
(2) dismiss Piran’s “representative [PAGA] claims”; and (3) stay the case pending
completion of the arbitration. Yamaha argued the Agreement contained a valid class and
representative action waiver forcing Piran to arbitrate her claims on an individual basis;
therefore, the trial court should compel Piran’s claims to arbitration on an individual
basis. Additionally, Yamaha asserted Viking River required arbitrating Piran’s individual
PAGA claim and dismissing her non-individual PAGA claims. It argued the trial court
should stay the court proceedings until Piran’s “individual claims are resolved in
arbitration.”
In a tentative ruling, the trial court granted the motion in part and denied it
in part. The trial court ordered the individual claims in Piran’s first eight causes of action
to arbitration under the Agreement. But it determined the Agreement did “not authorize
class arbitration” and stayed Piran’s class claims pending completion of the arbitration. It
also concluded Piran’s PAGA claims were not subject to arbitration, citing Iskanian v.
CLS Transportation Los Angeles, LLC (2014) 59 Cal.4th 348 (Iskanian), and stayed the
PAGA claims pending completion of the arbitration.
After the hearing on the motion, the trial court confirmed its tentative ruling
as its final order. Yamaha timely appealed.
During the pendency of this appeal, the California Supreme Court decided
Adolph, supra, 14 Cal.5th 1104. We invited the parties to submit supplemental briefing
regarding the effect of Adolph on this matter to which both parties filed responsive
supplemental briefs.
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DISCUSSION
I.
STANDARD OF REVIEW
“‘“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
employed. [Citations.]” [Citation.] Interpreting a written document to determine
whether it is an enforceable arbitration agreement is a question of law subject to de novo
review when the parties do not offer conflicting extrinsic evidence regarding the
document’s meaning.’ [Citation.]
“Here, because the parties offered no extrinsic evidence, we review the
court’s order denying the motion to compel arbitration under the de novo standard of
review.” (Franco v. Greystone Ridge Condominium (2019) 39 Cal.App.5th 221, 227
(Franco).)
II.
PAGA CLAIMS
A. PAGA
PAGA was enacted in 2004 to address two problems: underenforcement of
the Labor Code and “a shortage of government resources to pursue enforcement.”
(Iskanian, supra, 59 Cal.4th at pp. 378–379.) The Legislature found it was “‘in the
public interest to allow aggrieved employees, acting as private attorneys general, to
recover civil penalties for Labor Code violations, with the understanding that labor law
enforcement agencies were to retain primacy over private enforcement efforts.’” (Id. at
p. 379.)
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“By its terms, PAGA authorizes any ‘aggrieved employee’ to initiate an
action against a former employer ‘on behalf of himself or herself and other current or
former employees’ to obtain civil penalties that previously could have been recovered
only by the State in [a Labor and Workforce Development Agency] enforcement action.”
(Viking River, supra, 596 U.S. at p. ___ [142 S.Ct. at p. 1914], quoting Lab. Code, §
2699, subd. (a).) “‘Of the civil penalties recovered, 75 percent goes to the Labor and
Workforce Development Agency, leaving the remaining 25 percent for the “aggrieved
employees.” (Lab. Code, § 2699, subd. (i).)’” (Iskanian, supra, 59 Cal.4th at p. 380.)
“A PAGA claim for civil penalties ‘“‘is fundamentally a law enforcement
action.’”’ [Citation.] ‘The “government entity on whose behalf the plaintiff files suit is
. . . the real party in interest.”’ [Citation.] PAGA’s default civil penalties are thus
calculated ‘“to punish the employer” for wrongdoing’ [citation] and ‘“to deter
violations”’ [citation] rather than ‘compensate employees for actual losses incurred’
[citation]. . . . ‘Because an aggrieved employee’s action under [PAGA] functions as a
substitute for an action brought by the government itself, a judgment in that action binds
all those, including nonparty aggrieved employees, who would be bound by a judgment
in an action brought by the government.’” (Adolph, supra, 14 Cal.5th at p. 1117.)
B. PAGA Waivers and Splitting PAGA Claims: Iskanian and Viking River
In Iskanian, the California Supreme Court found “an arbitration agreement
requiring an employee as a condition of employment to give up the right to bring
representative PAGA actions in any forum is contrary to public policy.” (Iskanian,
supra, 59 Cal.4th at p. 360.) The court held the FAA does not preempt this state’s rule
against PAGA waivers. (Ibid.) It also barred splitting PAGA claims into individual
(Labor Code violations suffered by a plaintiff) and representative (Labor Code violations
suffered by others) components, thereby prohibiting employers from seeking to arbitrate
individual PAGA claims. (Id. at pp. 383–384.) “After Iskanian, it was settled law in
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California that PAGA claims could not be compelled to arbitration, in whole or in part.”
(Piplack v. In-N-Out Burgers (2023) 88 Cal.App.5th 1281, 1287 (Piplack).)
But the United States Supreme Court granted certiorari in Viking River to
determine whether the FAA preempted Iskanian’s rule against PAGA waivers. (Viking
River, supra, 596 U.S. at p. ___ [142 S.Ct. at p. 1913].) In Viking River, the court
explained how in PAGA claims “representative” is used “in two distinct ways.” (Id. at p.
___ [142 S.Ct. at p. 1916].) “In the first sense, PAGA actions are ‘representative’ in that
they are brought by employees acting as representatives—that is, as agents or proxies—
of the State.” (Ibid.) Accordingly, “‘“every PAGA action is . . . representative”’ and
‘[t]here is no individual component to a PAGA action,’ [citation] because every PAGA
claim is asserted in a representative capacity.” (Ibid.) In the second sense, PAGA
actions are “‘representative’ when they are predicated on code violations sustained by
other employees.” (Ibid.)
Viking River then explained Iskanian’s holding: “Iskanian’s principal rule
prohibits waivers of ‘representative’ PAGA claims in the first sense. That is, it prevents
parties from waiving representative standing to bring PAGA claims in a judicial or
arbitral forum. But Iskanian also adopted a secondary rule that invalidates agreements to
separately arbitrate or litigate ‘individual PAGA claims for Labor Code violations that an
employee suffered,’ on the theory that resolving victim-specific claims in separate
arbitrations does not serve the deterrent purpose of PAGA.” (Viking River, supra, 596
U.S. at p. ___ [142 S.Ct. at pp. 1916–1917].)
Viking River held the FAA does not preempt Iskanian’s principal rule
barring predispute wholesale waivers of PAGA claims. (Viking River, supra, 596 U.S. at
p. ___ [142 S.Ct. at pp. 1924–1925].) “In so doing, [Viking River] noted, among other
things: ‘[T]he FAA does not require courts to enforce contractual waivers of substantive
rights and remedies. The FAA’s mandate is to enforce “arbitration agreements.”
[Citation.] And as we have described it, an arbitration agreement is “a specialized kind
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of forum-selection clause that posits not only the situs of suit but also the procedure to be
used in resolving the dispute.” [Citations.] An arbitration agreement thus does not alter
or abridge substantive rights; it merely changes how those rights will be processed. And
so we have said that “‘[b]y agreeing to arbitrate a statutory claim, a party does not forgo
the substantive rights afforded by the statute; it only submits to their resolution in an
arbitral . . . forum.’”’ [Citation.] Thus, the court held ‘wholesale waiver[s] of PAGA
claims’ remain invalid under Iskanian.” (Gregg v. Uber Technologies, Inc. (2023) 89
Cal.App.5th 786, 796 (Gregg).)
But Viking River concluded the FAA preempts Iskanian’s secondary rule
prohibiting splitting “PAGA actions into individual and non-individual claims through an
agreement to arbitrate.” (Viking River, supra, 596 U.S. at p. ___ [142 S.Ct. at p. 1924].)
“This prohibition on contractual division of PAGA actions into constituent claims unduly
circumscribes the freedom of parties to determine ‘the issues subject to arbitration’ and
‘the rules by which they will arbitrate,’ [citation] and does so in a way that violates the
fundamental principle that ‘arbitration is a matter of consent.’” (Id. at p. ___ [142 S.Ct.
at p. 1923.) “Consequently, under Viking River, employers may enforce an agreement
mandating arbitration of a plaintiff’s individual PAGA claim, even if the agreement does
not require arbitration of the plaintiff’s nonindividual claims.” (Gregg, supra, 89
Cal.App.5th at p. 796.)
Viking River also did not disturb another Iskanian rule: “Iskanian held
unenforceable an agreement that, while providing for arbitration of alleged Labor Code
violations sustained by the plaintiff employee (what Viking River called individual
claims), compels waiver of claims on behalf of other employees (i.e., non-individual
claims). [Citations.] . . . ‘[W]hether or not an individual claim is permissible under the
PAGA, a prohibition of representative [i.e., non-individual] claims frustrates the PAGA’s
objectives.’ (Iskanian, at p. 384; see ibid. [‘[W]here . . . an employment agreement
compels the waiver of representative claims under the PAGA, it is contrary to public
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policy and unenforceable as a matter of state law.’].)” (Adolph, supra, 14 Cal.5th at pp.
1117–1118, citing Viking River, supra, 596 U.S. at p. ___ [142 S.Ct. at p. 1925].)
C. The Parties’ Agreement
1. The Individual PAGA Claim is Compelled to Arbitration
We begin our analysis by determining whether the Agreement compels
arbitration of Piran’s individual PAGA claim under Viking River. The Agreement
defines “claims” as “any claim arising out of or relating in any way to the services or
work performed for or on behalf of” Yamaha, including claims for “wages, overtime,
benefits, commissions, or other compensation or form of payment, or representation of
such earnings” and claims for “violation of any federal, state, or local law, statute,
regulation, or ordinance.” Piran’s individual PAGA claim falls within that definition. It
rests on Yamaha’s alleged violations of the Labor Code and Industrial Welfare
Commission wage orders, including the failure to pay wages, to provide meal and rest
periods, to give accurate itemized wage statements, and to maintain accurate and
complete wage records. (See, e.g., Gregg, supra, 89 Cal.App.5th at p. 800 [compelling
an individual PAGA claim to arbitration where the arbitration agreement covered
“‘disputes arising out of or related to [Gregg’s] relationship with [Uber], including
termination of the relationship’”].) Therefore, under Viking River, Piran’s individual
PAGA claim must be compelled to arbitration.
2. The Non-Individual PAGA Claims Remain in Court
Next, we consider whether paragraph 9 of the Agreement, entitled “Class
and Collective Action Waiver,” is enforceable as to the non-individual PAGA claims.
Piran asserts paragraph 9 precludes her from bringing her PAGA claims in any forum and
is therefore an invalid waiver. Yamaha argues paragraph 9 is enforceable because it does
not include a wholesale waiver of Piran’s right to bring non-individual PAGA claims in
any forum. We agree with Yamaha.
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“General contract law principles include that ‘[t]he basic goal of contract
interpretation is to give effect to the parties’ mutual intent at the time of contracting.
[Citations.] . . . “The words of a contract are to be understood in their ordinary and
popular sense.”’ [Citation.] Furthermore, ‘“[t]he whole of a contract is to be taken
together, so as to give effect to every part, if reasonably practicable, each clause helping
to interpret the other.” (Civ. Code, § 1641.)’ [Citation.]
“‘The “‘“‘“. . . policy favoring arbitration cannot displace the necessity for
a voluntary agreement to arbitrate.”’ [Citation.] ‘Although “[t]he law favors contracts for
arbitration of disputes between parties” [citation], “‘there is no policy compelling persons
to accept arbitration of controversies which they have not agreed to arbitrate . . . .’”
[Citations.]’” [Citation.] “Absent a clear agreement to submit disputes to arbitration,
courts will not infer that the right to a jury trial has been waived.”’”’” (Franco, supra, 39
Cal.App.5th at p. 227.)
Although paragraph 9 is called “Class and Collective Action Waiver,”
nowhere in this provision do the parties agree to waive a right to bring a representative
action in any forum. Paragraph 9 focuses on what can and cannot happen in arbitration.
It states in relevant part, “The arbitrator is prohibited from consolidating the claims of
others into one proceeding, to the maximum extent permitted by law. This means an
arbitrator shall hear only individual claims and is prohibited from fashioning a
proceeding as a class, collective, representative, joint, or group action or awarding relief
to a group of claimants or employees in one proceeding, to the maximum extent
permitted by law.”
Understood in its ordinary and popular sense, paragraph 9 provides an
arbitrator, during arbitration, can consider only individual claims; the arbitrator cannot
hear representative actions, which include, under Viking River, non-individual PAGA
claims. (See Civ. Code, § 1644 [“The words of a contract are to be understood in their
ordinary and popular sense”].) This provision is consistent with long-standing principles
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that “[p]arties may generally shape [arbitration] agreements to their liking by specifying
with whom they will arbitrate, the issues subject to arbitration, the rules by which they
will arbitrate, and the arbitrators who will resolve their disputes.” (Lamps Plus, Inc. v.
Varela (2019) 587 U.S. ___, ___ [139 S.Ct. 1407, 1416].)
Piran argues paragraph 9 is an invalid waiver, because the word
“representative” in the waiver includes the entire PAGA claim (both individual and non-
individual components) and under paragraph 9 Piran is precluded from bringing her
individual and non-individual PAGA claims in any forum. Piran contends that, because
the waiver is invalid, the Agreement’s PAGA provision in paragraph 12 is triggered.
Pursuant to paragraph 12, if paragraph 9 is deemed unenforceable as to the PAGA claims,
“any PAGA claim(s) will be bifurcated from all remaining claims and . . . all remaining
claims will continue to be subject to mandatory and binding arbitration under this
Agreement.”
Piran’s interpretation of “representative” may have been true under
Iskanian, which prohibited splitting PAGA claims. But Viking River changed the rule.
Under Viking River, a PAGA claim contains two components: an individual claim and
representative (i.e., non-individual) claims. (Piplack, supra, 88 Cal.App.5th at p. 1288.)
Since paragraph 9 is valid for the reasons discussed above, we need not consider the
Agreement’s PAGA provision in paragraph 12 and Piran’s arguments regarding such
therefore fail.
Additionally, we note paragraph 9 of the Agreement is distinguishable from
the typical invalid PAGA waiver, in which parties agree they will not bring any
representative actions in any forum. For example, in Galarsa v. Dolgen California, LLC
(2023) 88 Cal.App.5th 639, 645, the waiver stated, “You and [the company] may not
assert any class action, collective action, or representative action claims in any arbitration
pursuant to the Agreement or in any other forum.” (Boldface omitted.) The court held
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the waiver was invalid under Iskanian and Viking River because it required the employee
to relinquish the right to bring non-individual PAGA claims. (Id. at pp. 649–650.)
Similarly, in Gregg, the waiver stated, “You and [Uber] agree not to bring a
representative action on behalf of others under [PAGA] in any court or in arbitration.”
(Gregg, supra, 89 Cal.App.5th at p. 793.) The waiver also provided, “[F]or any claim
brought on a private attorney general basis . . . both you and [Uber] agree that any such
dispute shall be resolved in arbitration on an individual basis only.” (Ibid.) The court
explained, under these provisions, the employee had to “forgo his statutory right to seek
civil penalties for Labor Code violations committed against other employees, whether in
court or in arbitration.” (Id. at p. 797.) Because Viking River upheld Iskanian’s rule
prohibiting waivers of representative standing to bring PAGA actions, the waiver in
Gregg was invalid. (Ibid.)
In this case, paragraph 9 is valid and enforceable. It is not a wholesale
waiver of representative actions, including non-individual PAGA claims, in any forum.
Although Piran may be barred from bringing her non-individual PAGA claims to
arbitration, these claims remain in the trial court. As Yamaha recognizes, nothing in the
arbitration agreement precludes Piran from pursuing her non-individual PAGA claims in
court.
3. The Trial Court Properly Stayed the Non-Individual PAGA Claims
Paragraph 9 of the Agreement requires staying the non-individual PAGA
claims pending completion of the arbitration. It provides, “[T]he parties agree that if a
party brings an action that includes both claims subject to arbitration under this
Agreement and claims that by law are not subject to arbitration, all claims that by law are
not subject to arbitration shall be stayed until the claims subject to arbitration are fully
arbitrated.” This provision is consistent with statutory law. (See 9 U.S.C. § 3 [“upon any
issue referable to arbitration,” the court “shall on application of one of the parties stay the
trial of the action until such arbitration has been had in accordance with the terms of the
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agreement”]; Code Civ. Proc., § 1281.4 [upon “order[ing] arbitration of a controversy
which is an issue involved in an action,” the court shall “stay the action”].) The trial
court did not err in staying the non-individual PAGA claims pending completion of the
arbitration of Piran’s individual claims.
III.
STANDING TO LITIGATE NON-INDIVIDUAL PAGA CLAIMS
Yamaha argues, once Piran’s individual PAGA claim is compelled to
arbitration, she loses standing to litigate her non-individual PAGA claims in court, and
the trial court should dismiss Piran’s non-individual PAGA claims. We disagree because
the California Supreme Court rejected this argument in its recent decision in Adolph.
In Viking River, the court determined that, when an individual PAGA claim
is compelled to arbitration, a plaintiff’s remaining non-individual PAGA claims must be
dismissed in court for lack of statutory standing. (Viking River, supra, 596 U.S. at p. ___
[142 S.Ct. at p. 1925].) It reasoned: “PAGA provides no mechanism to enable a court to
adjudicate nonindividual PAGA claims once an individual claim has been committed to a
separate proceeding. Under PAGA’s standing requirement, a plaintiff can maintain non-
individual PAGA claims in an action only by virtue of also maintaining an individual
claim in that action. [Citation.] When an employee’s own dispute is pared away from a
PAGA action, the employee is no different from a member of the general public, and
PAGA does not allow such persons to maintain suit.” (Ibid.)
But “[b]ecause ‘[t]he highest court of each State . . . remains “the final
arbiter of what is state law”’ [citation], [California courts] are not bound by the high
court’s interpretation of California law.” (Adolph, supra, 14 Cal.5th at p. 1119, citing
Viking River, supra, 596 U.S. at p. ___ [142 S.Ct. at p. 1925] (conc. opn. of Sotomayor,
J.) [“Of course, if this Court’s understanding of state law is wrong, California courts, in
an appropriate case, will have the last word”].) The California Supreme Court considered
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this issue of standing in Adolph, 14 Cal.5th at page 1114. It concluded, “[W]here a
plaintiff has filed a PAGA action comprised of individual and non-individual claims, an
order compelling arbitration of individual claims does not strip the plaintiff of standing to
litigate non-individual claims in court.” (Id. at p. 1123.)
Adolph explained a plaintiff must be an “‘aggrieved employee’” under
Labor Code section 2699, subdivision (c), to have PAGA standing. That is, “[t]he
plaintiff must allege that he or she is (1) ‘someone “who was employed by the alleged
violator”’ and (2) someone ‘“against whom one or more of the alleged violations was
committed.”’” (Adolph, supra, 14 Cal.5th at p. 1120.) “[A] worker becomes an
‘aggrieved employee’ with standing to litigate claims on behalf of fellow employees upon
sustaining a Labor Code violation committed by his or her employer. [Citations.]
Standing under PAGA is not affected by enforcement of an agreement to adjudicate a
plaintiff’s individual claim in another forum. Arbitrating a PAGA plaintiff’s individual
claim does not nullify the fact of the violation or extinguish the plaintiff’s status as an
aggrieved employee.” (Id. at p. 1121.)
Adolph also rejected the argument “that bifurcating individual and non-
individual components of a PAGA claim into arbitration and court proceedings has the
effect of severing the two components into separate and distinct actions.” (Adolph,
supra, 14 Cal.5th at p. 1124.) It expounded:
“Nothing in PAGA or any other relevant statute suggests that arbitrating
individual claims effects a severance. When a case includes arbitrable and nonarbitrable
issues, the issues may be adjudicated in different forums while remaining part of the
same action. Code of Civil Procedure section 1281.4 states that upon ‘order[ing]
arbitration of a controversy which is an issue involved in an action,’ the court should
‘stay the action.’ It further provides that ‘[i]f the issue which is the controversy subject to
arbitration is severable, the stay may be with respect to that issue only.’ Section 1281.4
does not contemplate that the compelled arbitration of an issue in controversy in the
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action is a separate action. The statute makes clear that the cause remains one action,
parts of which may be stayed pending completion of the arbitration. [Citation.]
“Indeed, it is a regular and accepted feature of litigation governed by the
FAA that the arbitration of some issues does not sever those issues from the remainder of
the lawsuit. The high court has long recognized that the FAA ‘requires piecemeal
resolution [of related disputes in different forums] when necessary to give effect to an
arbitration agreement.’ [Citation.] In Dean Witter Reynolds Inc. v. Byrd (1985) 470 U.S.
213, 217, the high court held that the FAA requires arbitrable claims to be compelled to
arbitration ‘even where the result would be the possibly inefficient maintenance of
separate proceedings in different forums.’ Viking River reiterated that parties may opt for
arbitration procedures that depart from standard liberal rules of claim joinder, ‘[a]nd that
is true even if bifurcated proceedings are an inevitable result.’ [Citation.] When an
action includes arbitrable and nonarbitrable components, the resulting bifurcated
proceedings are not severed from one another; rather, the court may ‘stay the trial of the
action until such arbitration has been had in accordance with the terms of the agreement.’
(9 U.S.C. § 3; see Code Civ. Proc., § 1281.4.) In McGill v Citibank, N.A. (2017) 2
Cal.5th 945, 966, we explained that this principle extends to ‘piecemeal litigation of
“arbitrable and inarbitrable remedies derived from the same statutory claim.”’” (Adolph,
supra, 14 Cal.5th at pp. 1124–1125.)
Here, in her complaint, Piran alleged several Labor Code and Industrial
Welfare Commission wage order violations while working for Yamaha. Her allegations
that she suffered Labor Code violations by Yamaha “suffice to confer standing to bring a
PAGA action.” (Adolph, supra, 14 Cal.5th at p. 1121.) Therefore, she maintains her
standing to pursue her non-individual PAGA claims in court, notwithstanding her
individual PAGA claim being compelled to arbitration.
Yamaha argues the FAA preempts Adolph’s holding that “[w]hen an action
includes arbitrable and nonarbitrable components, the resulting bifurcated proceedings
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are not severed from one another.” (Adolph, supra, 14 Cal.5th at p. 1125.) It contends
this holding “revives the compulsory claim-joinder rule” that Viking River held the FAA
preempted. But, as Yahama acknowledges, we are bound by Adolph’s holding, because
the California Supreme Court considered this federal question and rejected it in Adolph.
(See Olson v. Lyft (2020) 56 Cal.App.5th 862, 870 [“‘On federal questions, intermediate
appellate courts in California must follow the decisions of the California Supreme Court,
unless the United States Supreme Court has decided the same question differently’”];
Auto Equity Sales, Inc. v. Superior Court (1962) 57 Cal.2d 450, 455–456.)
IV.
CLASS CLAIMS: YAMAHA HAS NOT SHOWN PREJUDICE
The parties did not dispute the validity of paragraph 9’s class action
“waiver” in the trial court. Therefore, that issue is not before us on appeal. (See Kern
County Dept. of Child Support Services v. Camacho (2012) 209 Cal.App.4th 1028, 1038
[“It is axiomatic that arguments not raised in the trial court are forfeited on appeal”].)
However, Yamaha asks us to correct the trial court’s purported error in staying the class
claims pending completion of the arbitration. We decline to address Yamaha’s
arguments because Yamaha has not articulated how any alleged error by the trial court
was prejudicial.
A trial court has broad discretion to control the “conduct of proceedings
before it.” (Code Civ. Proc., § 128, subd. (a)(3); Little v. Pullman (2013) 219
Cal.App.4th 558, 570 [“It is beyond dispute that the court may control its processes so as
to most efficiently and effectively safeguard judicial economy and administer substantial
justice”].) “‘[A]n abuse of discretion results in reversible error only if it is prejudicial.’”
(Conservatorship of Farrant (2021) 67 Cal.App.5th 370, 378; see also Cal. Const., art.
VI, § 13; Code Civ. Proc., § 475.) “Prejudice is not presumed. [Citation.] Rather,
appellant has the burden of affirmatively demonstrating prejudice.” (Christ v. Schwartz
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(2016) 2 Cal.App.5th 440, 455.) We consider prejudice “when and only when the
appellant has fulfilled his duty to tender a proper prejudice argument” by “spelling out in
his brief exactly how the error caused a miscarriage of justice.” (Paterno v. State of
California (1999) 74 Cal.App.4th 68, 106.) As Yamaha failed to present any arguments
regarding prejudice, Yamaha has not met its burden on appeal.
DISPOSITION
The trial court’s order is affirmed in part and reversed in part. The trial
court’s order denying Yamaha’s motion to compel arbitration as to Piran’s individual
PAGA claim is reversed, and the matter is remanded to the trial court to enter an order
compelling Piran to arbitrate her individual PAGA claim. In all other respects, the order
is affirmed.
In the interests of justice, the parties shall bear their own costs on appeal.
(Cal. Rules of Court, rule 8.278(a)(5).)
MOTOIKE, ACTING P. J.
WE CONCUR:
DELANEY, J.
GOODING, J.
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