Flournoy v. CJS Solutions Group, LLC CA3

Filed 5/23/22 Flournoy v. CJS Solutions Group, LLC CA3
NOT TO BE PUBLISHED
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 This opinion has not been certified for publication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
THIRD APPELLATE DISTRICT
(El Dorado)
----
OTTIST FLOURNOY, C092075
Plaintiff and Appellant, (Super. Ct. No. PC20180406)
v.
CJS SOLUTIONS GROUP, LLC,
Defendant and Appellant.
Plaintiff Ottist Flournoy filed a putative class action against his former employer,
defendant CJS Solutions Group, LLC, doing business as The HCI Group (HCI), alleging
numerous wage and hour claims. While the lawsuit was pending, HCI offered plaintiff a
new position of employment, which plaintiff accepted. As part of the hiring process,
plaintiff signed an arbitration agreement, which purported to refer all past, present, and
future individual claims to arbitration, and waived his right to have any dispute heard or
arbitrated on a class basis.
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HCI then filed a motion to compel arbitration of plaintiff’s individual claims and
to strike his class claims pursuant to the class action waiver. The trial court granted
HCI’s petition to compel plaintiff’s individual claims to arbitration but found the class
action waiver was unenforceable and thus declined to strike the class action claims. HCI
appeals from the trial court’s order denying its request to strike plaintiff’s class action
claims. Plaintiff cross-appeals, challenging the balance of the trial court’s ruling
compelling his individual claims to arbitration.
We ordered supplemental briefing on the question of whether HCI could appeal
that portion of the trial court’s ruling declining to strike the class claims. We now
conclude that no part of the trial court’s ruling is appealable, and we accordingly dismiss
both the appeal and cross-appeal.
FACTUAL AND PROCEDURAL BACKGROUND
A. Factual history
HCI hired plaintiff in October 2017. On August 9, 2018, plaintiff filed this
putative class action against HCI, alleging seven wage and hour claims. In December
2018, HCI offered plaintiff another position, which was conditioned upon, among other
things, plaintiff’s assent to the Company’s mutual arbitration agreement (the arbitration
agreement).
The arbitration agreement stated that all past, present, and future claims and
controversies between the parties arising out of plaintiff’s employment or termination
must be resolved by arbitration. It also contained a delegation clause, granting the
arbitrator exclusive authority to resolve any dispute relating to the interpretation,
applicability, enforceability, or formation of the arbitration agreement.
However, the delegation clause expressly did not apply to the “Class Action and
Collective Action Waivers” in the arbitration agreement (the class action waiver), which
purported to waive the parties’ rights for “any dispute to be brought, heard, decided, or
arbitrated as a class action” and gave the arbitrator “no authority to hear or preside over
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any such claim.” The class action waiver was severable “in any case in which (1) the
dispute is filed as a class action and (2) there is a final judicial determination that the
Class Action Waiver is invalid, unenforceable, unconscionable, void or voidable. In such
case, the class action must be litigated in a civil court of competent jurisdiction—not in
arbitration.”
Plaintiff signed the arbitration agreement.
B. Trial court proceedings
Here, plaintiff seeks relief on behalf of himself and a class defined as “all non-
exempt employees employed by or formerly employed by [HCI].” As noted, HCI moved
to compel arbitration of plaintiff’s individual claims and to strike his class claims
pursuant to the class action waiver. Plaintiff opposed the motion and separately filed a
motion to invalidate the arbitration agreement. The trial court found that the agreement’s
delegation clause authorized only the arbitrator to determine whether the agreement was
enforceable regarding plaintiff’s individual claims, and accordingly granted HCI’s
motion to compel arbitration of plaintiff’s individual claims for that purpose.
However, as the delegation clause did not apply to the class action waiver, the trial
court assessed its validity and enforceability, found it unenforceable, and declined to
strike the class claims, ordering that the parties litigate them in civil court. As a result,
plaintiff’s class claims remained subject to resolution in the trial court, while his
individual claims were referred to arbitration. For the reasons stated in the ruling on the
motion to compel arbitration, the motion to invalidate the arbitration agreement was
granted in part and denied in part.
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DISCUSSION
I
Appealability
A. HCI’s appeal
The first issue we resolve is whether the trial court’s ruling for which HCI seeks
appellate review is an interlocutory or final order. In its supplemental brief on this
question, HCI argues that Code of Civil Procedure section 12941 authorizes its appeal
because the trial court’s refusal to enforce the class action waiver and strike the class
claims was the “functional equivalent” of an order denying a petition to compel
arbitration. Plaintiff counters that HCI’s appeal is not authorized because HCI did not
move to compel arbitration of the class claims, and thus the trial court did not deny or
dismiss a petition to compel arbitration. We agree with plaintiff.
A party’s right to appeal in civil actions is statutory. (Hernandez v. Restoration
Hardware, Inc. (2018) 4 Cal.5th 260, 267.) Section 1294, subdivision (a) provides that
an aggrieved party may appeal from “[a]n order dismissing or denying a petition to
compel arbitration.” Here, HCI did not move to compel plaintiff’s class claims to
arbitration. Rather, its notice of motion asked the trial court for an order “compelling
arbitration of [plaintiff’s] individual claims, striking his class allegations, and dismissing
the proceedings.” The trial court declined to strike the class claims and granted the
petition to compel arbitration of the individual claims. HCI appealed only the portion of
the ruling declining to strike the class claims. Because the trial court did not dismiss or
deny a petition to compel arbitration, section 1294 does not authorize HCI’s appeal.
The First District Court of Appeal, Division Three, considered this issue in Reyes
v. Macy’s, Inc. (2011) 202 Cal.App.4th 1119, 1122-1123.) In Reyes, the defendant
1 Undesignated statutory references are to the Code of Civil Procedure.
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moved to compel the plaintiff’s individual claims to arbitration and dismiss the plaintiff’s
class claims under the terms of the arbitration agreement. (Reyes, supra, at p. 1122.) The
trial court ordered the individual claims to arbitration but stayed the class claims without
yet determining whether dismissal was proper, and the defendant appealed. (Id. at pp.
1122-1123.) The appellate court concluded that the trial court’s order staying the class
claims was not an appealable order because “[n]either literally nor functionally did [the
defendant] request the trial court to compel the arbitration of these claims, nor did the
court refuse to do so.” (Id. at p. 1122.) It further explained that “[e]ven if the present
order is construed as a denial of the motion to dismiss, the order is interlocutory and is
not yet subject to appeal. [S]ection 904.1 provides the general list of appealable orders
and judgments. The denial of a motion to dismiss is not among them.” (Reyes, at p.
1123.)
Here, as in Reyes, HCI did not request arbitration of the class claims, hence the
trial court did not decline to compel arbitration of the class claims. Thus, its order
declining to strike the class claims is not appealable. (See also Lacayo v. Catalina
Restaurant Group Inc. (2019) 38 Cal.App.5th 244, 254 [trial court’s order denying
request to dismiss class claims and permitting arbitrator to decide whether to arbitrate
class claims was not appealable].)
HCI nonetheless urges us to find that the trial court’s order was the functional
equivalent of an order denying a petition to compel arbitration, and thus appealable under
section 1294 because, by declining to strike the class claims, the trial court refused to
enforce the class action waiver in the agreement. However, the authority cited by HCI is
inapposite. In those cases, the appellate courts found orders appealable after the trial
court denied a motion to compel arbitration without prejudice (Sanders v. Kinko’s Inc.
(2002) 99 Cal.App.4th 1106, 1109-1110), denied a motion to compel arbitration in part
(Mitchell v. American Fair Credit Assn. (2002) 99 Cal.App.4th 1345, 1350), and granted
a motion to stay arbitration. (Henry v. Alcove Investment, Inc. (1991) 233 Cal.App.3d 94,
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98-100.) Thus, in all three cases, the trial court either stayed arbitration (in effect,
temporarily denying arbitration) or denied petitions to compel arbitration. Consequently,
those cases clearly fall within the language of section 1294. As explained above, this
case does not fall within section 1294. We therefore conclude that the challenged order is
unappealable and HCI’s appeal is properly dismissed.
B. Plaintiff’s cross-appeal
Plaintiff’s cross-appeal is likewise subject to dismissal. Plaintiff seeks to
challenge on appeal the trial court’s partial denial of his motion to invalidate the
arbitration agreement. While conceding that the challenged ruling effectively granted
HCI’s motion to compel arbitration of his individual claims—which is not an appealable
order (Ashburn v. AIG Financial Advisors, Inc. (2015) 234 Cal.App.4th 79, 94; see
§ 1294)—plaintiff nonetheless urges us to grant discretionary review by writ of mandate.
We find no basis to do so, particularly in light of our dismissal of HCI’s appeal.
“[W]rit review of orders directing parties to arbitrate is available only in ‘unusual
circumstances’ or in ‘exceptional situations.’ [Citations.] [¶] Nevertheless, California
courts have held that writ review of orders compelling arbitration is proper in at least two
circumstances: (1) if the matters ordered arbitrated fall clearly outside the scope of the
arbitration agreement or (2) if the arbitration would appear to be unduly time consuming
or expensive.” (Zembsch v. Superior Court (2006) 146 Cal.App.4th 153, 160.)
Neither rationale is present here. The trial court ordered plaintiff’s individual
claims to arbitration for the arbitrator to address the threshold issue of the agreement’s
enforceability and validity. If the arbitrator concludes the agreement is enforceable, there
appears to be little dispute that plaintiff’s individual claims would fall within the terms of
the agreement. Further, the arbitrator’s consideration of the agreement’s enforceability is
a discrete issue that is neither unduly time consuming nor costly to resolve. We
accordingly conclude this is not an unusual case or exceptional circumstance warranting
writ review. Plaintiff’s cross-appeal is also dismissed.
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DISPOSITION
We dismiss both HCI’s appeal and plaintiff’s cross-appeal. Each party shall bear
its own costs on appeal. (Cal. Rules of Court, rule 8.278(a)(5).)
KRAUSE , J.
We concur:
MAURO , Acting P. J.
HOCH , J.
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