Evenskaas v. California Transit, Inc.

Filed 7/15/22
CERTIFIED FOR PUBLICATION
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION SEVEN
DAVID EVENSKAAS, B308354
Plaintiff and Respondent,
(Los Angeles County
v. Super. Ct. No. 20STCV19436)
CALIFORNIA TRANSIT, INC.,
et al.,
Defendants and
Appellants.
APPEAL from an order of the Superior Court of Los
Angeles County, Elihu M. Berle, Judge. Reversed with
directions.
Dunn DeSantis Walt & Kendrick, LLP, Kevin V. DeSantis
and Bradley Lebow for Defendants and Appellants.
Kabateck LLP, Brian S. Kabateck, Anastasia K. Mazzella,
Shant A. Karnikian and Jerusalem F. Beligan; Law Offices of
Eric A. Boyajian, APC, Eric A. Boyajian and Amaras Zagarian for
Plaintiff and Respondent.
INTRODUCTION
The Americans with Disabilities Act of 1990 (ADA)
(42 U.S.C. § 12101 et seq.) requires any public entity that
operates a public transportation system to provide certain
paratransit services to individuals with disabilities. (See id.,§ 12143.)1 Access Incorporated Services (not a party to this
action) is the public entity that administers paratransit services
required by the ADA in Los Angeles County. Access, in turn,
contracts with California Transit, Inc. to provide those
paratransit services in parts of the county.
David Evenskaas worked as a driver for California Transit.
After California Transit terminated his employment, Evenskaas
filed this wage and hour class action against California Transit;
its owner, Timmy Mardirossian; and the company that
administered California Transit’s payroll, Personnel Staffing
Group, LLC (collectively, the California Transit defendants).
Because Evenskaas signed an arbitration agreement, in which he
agreed to arbitrate all claims arising from his employment and
waived his right to seek class-wide relief, the California Transit
defendants filed a motion to compel arbitration.
The trial court denied the motion. The court ruled
California law, rather than the Federal Arbitration Act (FAA)
(9 U.S.C. § 1 et seq.), applied to the agreement because the
agreement did not involve interstate commerce. The court
further ruled that, under the California Supreme Court’s decision
in Gentry v. Superior Court (2007) 42 Cal.4th 443 (Gentry),
1 “Paratransit means comparable transportation service . . .
for individuals with disabilities who are unable to use fixed route
transportation systems.” (49 C.F.R. § 37.3 (2022).)
2
Evenskaas’s waiver of his right to bring class action claims was
unenforceable.
The California Transit defendants appeal, contending the
FAA applies to the arbitration agreement. They are correct.
Because the paratransit services California Transit hired
Evenskaas to provide involve interstate commerce for purposes of
the FAA, the FAA applies to the arbitration agreement and
preempts the Gentry rule that certain class action waivers in
employment arbitration agreements are unenforceable.
Therefore, we reverse.
FACTUAL AND PROCEDURAL BACKGROUND
A. California Transit Provides Federally Mandated
Paratransit Services
Congress enacted the ADA to, among other things, address
“discrimination against individuals with disabilities [that]
persists in such critical areas as . . . public accommodations, . . .
transportation, . . . and access to public services . . . .” (42 U.S.C.
§ 12101(a)(3).) The ADA includes several provisions requiring
public and private entities that provide transportation services to
ensure those services are accessible to persons with disabilities.
(See id., §§ 12141-12165, 12184.) In particular, the “ADA
requires municipalities to provide paratransit and other special
transportation services to individuals whose disabilities do not
permit them to use the regular fixed routes.[2] [Citation.] The
2 “The term ‘fixed route system’ means a system of
providing designated public transportation on which a vehicle is
operated along a prescribed route according to a fixed schedule.”
(42 U.S.C. § 12141(3).)
3
level of this service must be ‘comparable’ to that afforded riders
who are not disabled.” (Abrahams v. MTA Long Island Bus (2d
Cir. 2011) 644 F.3d 110, 112; see 42 U.S.C. § 12143(a).) The
United States Secretary of Transportation, pursuant to the
authority given by Congress under the ADA (see 42 U.S.C. §
12143 (b)), has issued regulations governing paratransit services,
including various requirements paratransit service providers
must meet “[t]o be deemed comparable to fixed route service.”
(49 C.F.R. § 37.121(b (2022)); see id., §§ 37.123-37.133; see also
Abrahams, at p. 115.)
According to California Transit, Access is the “public entity
. . . charged with administering a countywide coordinated
paratransit plan on behalf of [Los Angeles County’s] public fixed
route operators. Pursuant to that plan, Access facilitates the
provision of complementary . . . paratransit services to certain
persons with disabilities . . . .” Access, in turn, contracts with
California Transit, which provides “paratransit services for the
West/Central Region of Los Angeles County.”
B. Evenskaas Sues the California Transit Defendants,
Who File a Motion To Compel Arbitration
California Transit employed Evenskaas as a driver for its
paratransit service vehicles from November 2017 to August 2018.
In May 2020 Evenskaas filed a class action against the California
Transit defendants on behalf of himself and other drivers,
asserting various wage and hour claims.
The California Transit defendants filed a motion to compel
Evenskaas to arbitrate his individual claims and to dismiss his
class claims. The defendants submitted an arbitration
agreement Evenskaas signed in November 2017 that “covered all
4
claims, controversies or disputes . . . arising out of employment,
including, but not limited to . . . wages, compensation, benefits,
. . . [and] violation of any federal, state and city or county laws,
statutes, regulations or ordinances . . . .” The agreement
provided:
“Arbitration. The parties mutually agree to submit all
claims, controversies or disputes covered by this Agreement, to
binding arbitration . . . . Both [California Transit] and
[Evenskaas] acknowledge that each is knowingly and voluntarily
waiving any right to pursue such claims in court before a judge or
jury, including bringing or participating in class action claims,
and instead will pursue such claims exclusively through binding
arbitration . . . . Both [California Transit] and [Evenskaas]
acknowledge and agree that only individual claims, and not any
claims on behalf of a group or class, can be subject to arbitration
under this agreement.”
The California Transit defendants contended the FAA
applied to the arbitration agreement. They argued the
agreement involved interstate commerce because California
Transit provided “ADA-compliant paratransit services” and
Evenskaas “perform[ed] trips for passengers with disabilities.”
The defendants also argued the court should dismiss Evenskaas’s
claims for class-wide relief because the FAA preempts the
California Supreme Court’s decision in Gentry, supra, 42 Cal.4th
443 that certain class action waivers in employment arbitration
agreements are unenforceable.
Evenskaas contended the FAA did not apply. He argued
the arbitration agreement did not involve interstate commerce
because California Transit provided paratransit services only in
Los Angeles County and never outside California. Evenskaas
5
also argued the class action waiver was unenforceable under
Gentry. In reply the defendants argued the class action waiver
was enforceable under Gentry even if the FAA did not apply.
They conceded, however, that if the class action waiver was
unenforceable, the entire arbitration agreement was
unenforceable because the waiver was “an inextricable and
material aspect of the” agreement.
C. The Trial Court Denies the Motion
The trial court denied the motion, largely agreeing with
Evenskaas. The court ruled the FAA did not apply to the
arbitration agreement because the California Transit defendants
failed to show that any passengers who used their services were
interstate passengers and therefore only “intrastate activities
were involved.” The court ruled that under Gentry the class
action waiver was unenforceable because a class action would be
more effective than individual claims in “permitting the
[California Transit] employees to enforce their statutory rights.”
(See Gentry, supra, 42 Cal.4th at p. 463.) Finally, in light of the
defendants’ concession the entire arbitration agreement was
unenforceable if the class action waiver was unenforceable, the
court denied the motion to compel arbitration in its entirety. The
California Transit defendants timely appealed.
DISCUSSION
A. Applicable Law and Standard of Review
“The FAA was enacted in 1925 . . . and then reenacted and
codified in 1947 as Title 9 of the United States Code. . . . [I]ts
‘purpose was to reverse the longstanding judicial hostility to
6
arbitration agreements that had existed at English common law
and had been adopted by American courts, and to place
arbitration agreements on the same footing as other contracts.’”
(E.E.O.C. v. Waffle House, Inc. (2002) 534 U.S. 279, 288-289
[122 S.Ct. 754, 151 L.Ed.2d 755]; see Viking River Cruises, Inc. v.
Moriana (2022) ___ U.S. ___, ___ [2022 WL 2135491, p. 6].) The
FAA stands as “a congressional declaration of a liberal federal
policy favoring arbitration agreements, notwithstanding any
state substantive or procedural policies to the contrary.”
(Pinnacle Museum Tower Assn. v. Pinnacle Market Development
(US), LLC (2012) 55 Cal.4th 223, 235; see Epic Systems Corp. v.
Lewis (2018) ___ U.S. ___, ___ [138 S.Ct. 1612, 200 L.Ed.2d 889].)
“Section 2, the primary substantive provision of the FAA,
provides: ‘A written provision in any . . . contract evidencing a
transaction involving commerce to settle by arbitration a
controversy thereafter arising . . . shall be valid, irrevocable, and
enforceable, save upon such grounds as exist at law or in equity
for the revocation of any contract.’” (Cronus Investments, Inc. v.
Concierge Services (2005) 35 Cal.4th 376, 384.) For purposes of
section 2, the “word ‘involving’ is broad and is indeed the
functional equivalent of ‘affecting,’” which “signals Congress’
intent to exercise its Commerce Clause powers to the full.”
(Allied-Bruce Terminix Companies, Inc. v. Dobson (1995) 513 U.S.
265, 273 [115 S.Ct. 834, 130 L.Ed.2d 753]; see Citizens Bank v.
Alafabco, Inc. (2003) 539 U.S. 52, 56 [123 S.Ct. 2037, 156 L.Ed.2d
46] (Citizens Bank).) Therefore, the FAA’s “reach is expansive
and coincides with that of the commerce clause.” (Scott v. Yoho
(2016) 248 Cal.App.4th 392, 400; see Allied-Bruce Terminix
Companies, at p. 274.) “Employment contracts, except for those
covering workers” specifically exempted by the statute, “are
7
covered by the FAA.” (E.E.O.C. v. Waffle House, supra, 534 U.S.
at p. 289.)
The party asserting the FAA applies to an agreement has
“the burden to demonstrate FAA coverage by declarations and
other evidence.” (Hoover v. American Income Life Ins. Co. (2012)
206 Cal.App.4th 1193, 1207; see Shepard v. Edward Mackay
Enterprises, Inc. (2007) 148 Cal.App.4th 1092, 1101; see generally
Bronco Wine Co. v. Jolly (2004) 33 Cal.4th 943, 956 [“The party
who claims that a state statute is preempted by federal law bears
the burden of demonstrating preemption.”].) Normally, “‘[w]hen,
as here, the court’s order denying a motion to compel arbitration
is based on the court’s finding that petitioner failed to carry its
burden of proof, the question for the reviewing court is whether
that finding was erroneous as a matter of law.’ [Citations.]
‘“Specifically, the question becomes whether the appellant’s
evidence was (1) ‘uncontradicted and unimpeached’ and (2) ‘of
such a character and weight as to leave no room for a judicial
determination that it was insufficient to support a finding.’”’”
(Trinity v. Life Insurance Company of North America (2022)
78 Cal.App.5th 1111, 1121; see Fabian v. Renovate America,
Inc. (2019) 42 Cal.App.5th 1062, 1067; Dreyer’s Grand Ice Cream,
Inc. v. County of Kern (2013) 218 Cal.App.4th 828, 837.) Here,
however, the relevant facts were undisputed.3 Therefore, we
3 The only fact in dispute is whether Access receives federal
funding, which the trial court declined to find. The California
Transit defendants ask us to take judicial notice of Access’s
proposed budget for the 2020-2021 fiscal year, which they claim
shows Access receives federal funding. We deny their request as
improper and unnecessary. Even if a government entity’s
proposed budget is an “official act” of the entity (see Evid. Code,
8
review de novo whether the FAA applies to the agreement. (See
Scott v. Yoho, supra, 248 Cal.App.4th at p. 399 [“Where the facts
are undisputed, the question of whether the transaction involves
interstate commerce so as to implicate the [FAA] is a question of
law subject to de novo review.”]; Basura v. U.S. Home Corp.
(2002) 98 Cal.App.4th 1205, 1211 [same].)
B. The Agreement Involves Interstate Commerce
The California Transit defendants’ primary argument is
that, because California Transit provides paratransit services
required by federal law and “subject to federal control [and]
regulation,” the arbitration agreement between Evenskaas and
California Transit involves interstate commerce. Evenskaas
argues the trial court correctly ruled the defendants failed to
show the agreement involved interstate commerce because
§§ 452, subd. (c), 459)—a questionable proposition—the
defendants ask us to infer that Access’s proposed budget for 2020-
2021 reflects the actual funding it received several years earlier,
when Evenskaas worked for California Transit. (See Mangini v.
R. J. Reynolds (1994) 7 Cal.4th 1057, 1063 [“the taking of judicial
notice of the official acts of a governmental entity does not in and
of itself require acceptance of the truth of factual matters which
might be deduced therefrom, since in many instances what is
being noticed, and thereby established, is no more than the
existence of such acts and not, without supporting evidence, what
might factually be associated with or flow therefrom’”], overruled
on another other ground in In re Tobacco Cases II (2007)
41 Cal.4th 1257; see Aquila, Inc. v. Superior Court (2007)
148 Cal.App.4th 556, 569.) As we explain, even without evidence
Access receives federal funding, the undisputed evidence shows
the defendants’ activity affects interstate commerce.
9
California Transit provided paratransit services only within Los
Angeles County. The law and the facts support the defendants.
The United States Supreme Court has identified
“three categories of activity that Congress may regulate under
its commerce power: (1) ‘the use of the channels of interstate
commerce’; (2) ‘the instrumentalities of interstate commerce, or
persons or things in interstate commerce, . . .’; and (3) ‘those
activities having a substantial relation to interstate commerce,
. . . i.e., those activities that substantially affect interstate
commerce.’” (Taylor v. United States (2016) 579 U.S. 301, 306
[136 S.Ct. 2074, 195 L.Ed.2d 456]; see Gonzalez v. Raich
(2005) 545 U.S. 1, 16-17 [125 S.Ct. 2195, 162 L.Ed.2d 1].)
“[A]ctivities in [the] third category—those that ‘substantially
affect’ commerce—may be regulated so long as they substantially
affect interstate commerce in the aggregate, even if their
individual impact on interstate commerce is minimal.” (Taylor,
at p. 306; see Gonzalez, at p. 17.) Congress may “regulate purely
local activities,” so long as they “are part of an economic ‘class of
activities’ that have a substantial effect on interstate commerce.”
(Gonzalez, at p. 17; see Taylor at p. 307.) “When Congress
decides that the ‘“total incidence”’ of a practice poses a threat to a
national market, it may regulate the entire class,” and “when a
‘“general regulatory statute bears a substantial relation to
commerce, the de minimis character of individual instances
arising under that statute is of no consequence.”’” (Gonzalez, at
p. 17.)
“Because the [FAA] provides for ‘the enforcement of
arbitration agreements within the full reach of the Commerce
Clause,’ [citation] it is perfectly clear that the FAA encompasses
a wider range of transactions than those actually “in
10
commerce”—that is, ‘within the flow of interstate commerce . . . .’”
(Citizens Bank, supra, 539 U.S at p. 56.) Consistent with
Congress’s power to regulate an entire class of activity, FAA
preemption does not require that an agreement has a specific
effect on interstate commerce. (See id. at p. 57.) The FAA
applies even “‘in individual cases without showing any specific
effect upon interstate commerce’ if in the aggregate the economic
activity in question would represent ‘a general practice . . .
subject to federal control . . . .’” (Ibid; see Shepard v. Edward
Mackay Enterprises, Inc., supra, 148 Cal.App.4th at p. 1098.)
As discussed, California Transit provides paratransit
services that public entities are required to provide under the
ADA and that are subject to federal control. The first section of
the ADA includes congressional findings that “discrimination
against individuals with disabilities persists in such critical areas
as . . . transportation” and that the “continuing existence” of
discrimination in such areas “denies people with disabilities the
opportunity to compete on an equal basis and to pursue those
opportunities for which our free society is justifiably famous, and
costs the United States billions of dollars in unnecessary
expenses resulting from dependency and nonproductivity.”
(42 U.S.C. § 12101(a)(3), (8).) That section also states the intent
of Congress “to invoke the sweep of congressional authority,
including the power to enforce the fourteenth amendment and to
regulate commerce, in order to address the major areas of
discrimination faced day-to-day by people with disabilities.” (Id.,
§ 12101(b)(4); see United States. v. Morrison (2000) 529 U.S. 598,
612 [120 S.Ct. 1740, 146 L.Ed.2d 658] [“[w]hile ‘Congress
normally is not required to make formal findings as to the
substantial burdens that an activity has on interstate commerce,’
11
[citation] the existence of such findings may ‘enable [a court] to
evaluate the legislative judgment that the activity in question
substantially affect[s] interstate commerce’”].)
In addition, a report by the House Committee on Energy
and Commerce on the ADA described the ways in which public
transportation services for persons with disabilities impacts their
participation in the national economy. (See United States v.
Lopez (1995) 514 U.S. 549, 562 [115 S.Ct. 1624, 131 L.Ed.2d 626]
[in evaluating the scope of Congress’s commerce power, “we of
course consider legislative findings, and indeed even
congressional committee findings, regarding effect on interstate
commerce”].) As described in the report, one of the primary
purposes of the ADA was “to bring persons with disabilities into
the economic and social mainstream of American life . . . .” (See
H.R. Rept. 101-485, Part 4, 2d Sess., p. 23.) Regarding public
transportation services, the committee report recognized
“[t]ransportation plays a central role in the lives of all
Americans” and “is a veritable lifeline to the economic and social
benefits that our Nation offers its citizens. The absence of
effective access to the transportation network can mean, in turn,
the inability to obtain satisfactory employment” and “to take full
advantage of the services and other opportunities provided by
both the public and private sectors.” (Id. at p. 25.)
The stated findings in the ADA, the findings in the report
of the House Committee on Energy and Commerce, and
Congress’s stated intent to legislate through its commerce power
reflect a determination that the activity regulated by the ADA—
including the provision of paratransit services for persons with
disabilities—is among the “economic ‘class of activities’ that have
a substantial effect on interstate commerce.” (Gonzalez v. Raich,
12
supra, 545 U.S. at p. 17.) Thus, the paratransit services provided
by California Transit and Evenskaas—the same ones mandated
by the ADA—involve interstate commerce. (Gonzalez, supra,
545 U.S. at p. 17; see Preseault v. I.C.C. (1990) 494 U.S. 1, 17
[110 S.Ct. 914, 108 L.Ed.2d 1] [courts “must defer to a
congressional finding that a regulated activity affects interstate
commerce ‘if there is any rational basis for such a finding’”];
Kilroy v. Superior Court (1997) 54 Cal.App.4th 793, 808 [same].)
Indeed, in Citizens Bank, supra, 539 U.S. 52 the United States
Supreme Court stated that Congress’s ability to use the
commerce power to regulate the activity governed by the
arbitration agreement in that case was relevant to, if not
determinative of, whether the FAA applied. (See id. at pp. 53,
57-58 [“[n]o elaborate explanation is needed to make evident the
broad impact of commercial lending on the national economy or
Congress’ power to regulate that activity pursuant to the
Commerce Clause”]; see also Hedges v. Carrigan (2004)
117 Cal.App.4th 578, 586 [FAA applied to a residential purchase
agreement containing an arbitration provision because the buyer
intended to finance the purchase with a loan “subject to the
jurisdiction of the United States Department of Housing and
Urban Development”].)
Other factors show the paratransit services provided by
California Transit involve interstate commerce. First,
transportation is an inherently commercial activity. (See Carter
v. Carter Coal Co. (1936) 298 U.S. 238, 298 [56 S.Ct. 855,
80 L.Ed. 1160] [“[a]s used in the Constitution, the word
‘commerce’ is the equivalent of the phrase ‘intercourse for the
purposes of trade,’ and includes transportation”]; United States v.
Adams (9th Cir. 2003) 343 F.3d 1024, 1028 [activities that “have
13
an economic or commercial character will likely have a nexus to
interstate commerce and, accordingly, would be proper objects of
congressional regulation under the Commerce Clause”].) Even
when providing only local transportation services, California
Transit drivers are almost certain to use highways, one of the
“instrumentalities of interstate commerce” (United States v.
Guest (1966) 383 U.S. 745, 757 [86 S.Ct. 1170, 16 L.Ed.2d 239]),
as well as vehicles that have at some point traveled across state
lines. Courts considering arbitration agreements between local
transportation or delivery companies and their drivers have
recognized the agreements involve interstate commerce under the
FAA. (See Khalatian v. Prime Time Shuttle, Inc. (2015)
237 Cal.App.4th 651, 658 [because a company that provided
shuttle services to airports and harbors was “‘clearly’ . . . involved
in interstate commerce,” the FAA applied to an arbitration
agreement between the company and a driver, even though “the
driver only drove shuttles within California”]; Rogers v. Lyft
(N.D. Cal. 2020) 452 F.Supp.3d 904, 916 [rideshare drivers’ work
“predominantly entails intrastate trips, an activity that
undoubtedly affects interstate commerce”]; Simeon v. Domino’s
Pizza LLC (E.D.N.Y., Feb. 6, 2019, 17 CV 5550) 2019 WL
7882143, at p. 3 [FAA applied to an arbitration agreement
between a pizza delivery driver and his employer because “meal
delivery services unquestionably ‘affect’ and ‘involve’ commerce
and commercial activity”]; Magana v. DoorDash, Inc. (N.D. Cal.
2018) 343 F.Supp.3d 891, 900 [that local delivery drivers
“facilitate the transportation of goods that originated across state
14
lines” is “almost certainly . . . enough under the United States
Constitution’s Commerce Clause”].)4
Second, although the California Transit defendants
provided limited evidence of where their drivers picked up and
dropped off the majority of their passengers, there was at least
some evidence their paratransit services facilitated economic
activity by passengers. For example, Beatriz Gonzalez, a
supervisor and Access Training Manager for California Transit,
provided uncontradicted testimony that “[m]any of the trips
requested by Access passengers are to and from medical facilities
4 Section 1 of the FAA exempts from the statute “contracts of
employment of seamen, railroad employees, or any other class of
workers engaged in foreign or interstate commerce.” As the
United States Supreme Court explained in Circuit City Stores,
Inc. v. Adams (2001) 532 U.S. 105 [121 S.Ct. 1302, 149 L.Ed.2d
234], “the specific phrase ‘engaged in commerce’ [is] understood
to have a more limited reach” than the phrase “‘involving
commerce.’” (Id. at p. 115; see Mendoza v. Trans Valley
Transport (2022) 75 Cal.App.5th 748, 762 [“The catchall phrase
‘any other class of workers engaged in foreign or interstate
commerce’ in section 1 does not refer to all workers involved in
foreign or interstate commerce, but rather only to ‘transportation
workers,’ which means ‘those workers “‘actually engaged in the
movement of goods in interstate commerce.’”’”].) The courts in
Rogers v. Lyft, supra, 452 F.Supp.3d 904 and Magana v.
DoorDash, Inc., supra, 343 F.Supp.3d 891 held that local
rideshare drivers and delivery drivers, respectively, were not
“engaged in interstate commerce” for purposes of section 1, even
though their activities more broadly involved and affected
interstate commerce. (Rogers, at pp. 915-916; Magana, at
pp. 899-900.) Evenskaas did not argue in the trial court, and
does not argue on appeal, he is a transportation worker engaged
in interstate commerce for purposes of section 1.
15
and doctors offices,” places where further economic activity
occurs. At the very least, her testimony confirmed Congress’s
determination that public transportation services for persons
with disabilities facilitates further economic activity that
substantially affects interstate commerce. (See Preseault v.
I.C.C., supra, 494 U.S. at p. 17.)
Evenskaas cites several cases holding the FAA did not
apply, including cases involving arbitration agreements between
employers and employees. (See Carbajal v. CWPSC, Inc. (2016)
245 Cal.App.4th 227, 239 [FAA did not apply to an arbitration
agreement between a local painting company and its employee];
Lane v. Francis Capital Management LLC (2014)
224 Cal.App.4th 676, 688 [FAA did not apply to an arbitration
agreement between an investment firm and its employee];
Hoover v. American Income Life Ins. Co., supra, 206 Cal.App.4th
at pp. 1207-1208 [FAA did not apply to an arbitration agreement
between an employee and a company that sold life insurance
policies in the employee’s state of residence]; Woolls v. Superior
Court (2005) 127 Cal.App.4th 197, 200 [FAA did not apply to an
arbitration agreement between a homeowner and a contractor].)
These cases have little applicability here: None of them involved
an arbitration agreement between an employer and an employee
hired to provide commercial services required by federal law
enacted by Congress under its commerce power. Moreover, in
Carbajal, Lane, and Woolls the party arguing the FAA applied
did not present evidence of the party’s business that would show
a connection to interstate commerce. (See Carbajal, at p. 239
[painting company “presented nothing about the nature of its
business or [the employee’s] work that showed any connection
with interstate commerce”]; Lane, at p. 688 [investment firm
16
“produced no declaration about the nature of its business or the
scope of [the employee’s] employment”]; Woolls, at p. 214
[contractor “did not make any evidentiary showing in furtherance
of his assertion [the] transaction involve[d] interstate
commerce”].)5 In contrast, the California Transit defendants
presented undisputed evidence that California Transit provides
paratransit services mandated by the ADA, that Evenskaas was
hired to and did provide those services, and that the paratransit
services facilitated further commercial activity by the passengers
who used the services.
5 In Hoover v. American Income Life Ins. Co., supra,
206 Cal.App.4th 1193 the employee was a California resident
who worked for a company based in Texas that sold life insurance
policies in California. The court held the FAA did not apply
because “there was no evidence in the record establishing that
the relationship between [the employee] and [the employer] had a
specific effect or ‘bear[ing] on interstate commerce in a
substantial way.’” The court’s reasoning in Hoover was
questionable. Ordinarily, commercial transactions, including
insurance transactions, between residents of different states
constitute interstate commerce. (See United States v. South
Eastern Underwriters Assn. (1944) 322 U.S. 533, 553 [“No
commercial enterprise of any kind which conducts its activities
across state lines has been held to be wholly beyond the
regulatory power of Congress under the Commerce Clause. We
cannot make an exception of the business of insurance.”].) The
court in Hoover also failed to consider whether the employee’s
activity—selling insurance for an out-of-state company— “in the
aggregate . . . represent[ed] ‘a general practice . . . subject to
federal control . . . .’” (Citizens Bank, supra, 539 U.S. at p. 57.)
17
C. The Class Action Waiver Is Enforceable
As discussed, the trial court ruled that under the California
Supreme Court’s decision in Gentry, supra, 42 Cal.4th 443 the
class action waiver was unenforceable. The California Transit
defendants argue the FAA preempts the Gentry rule governing
when class action waivers in employment arbitration agreements
are unenforceable. They are correct again. In Iskanian v. CLS
Transportation Los Angeles, LLC (2014) 59 Cal.4th 348 the
California Supreme Court ruled that, in light of the United
States Supreme Court’s decision in AT&T v. Concepcion (2011)
563 U.S. 333 [131 S.Ct. 174, 179 L.Ed.2d 742],6 “the FAA
preempts the Gentry rule.” (Iskanian, at pp. 361, 366; see Viking
River Cruises, Inc. v. Moriana, supra, ___ U.S. at p. ___ [p. 7]
[“‘a party may not be compelled under the FAA to submit to class
arbitration unless there is a contractual basis for concluding that
the party agreed to do so’”].) Evenskaas does not dispute the FAA
preempts the Gentry rule, nor does he argue the arbitration
agreement or his class action waiver is otherwise unenforceable.
6 In AT&T v. Concepcion the United States Supreme Court
held the FAA preempted the California Supreme Court’s decision
in Discover Bank v. Superior Court (2005) 36 Cal.4th 148 that
certain class action waivers in consumer contracts of adhesion
were unenforceable. (AT&T v. Concepcion, supra, 563 U.S. at
p. 344.) The United States Supreme Court stated that
“[r]equiring the availability of classwide arbitration interferes
with fundamental attributes of arbitration and thus creates a
scheme inconsistent with the FAA.” (Ibid.)
18
DISPOSITION
The order denying the California Transit defendants’
motion to compel arbitration is reversed. The trial court is
directed to enter a new order granting the motion and dismissing
Evenskaas’s class claims. The California Transit defendants’
request for judicial notice is denied. The California Transit
defendants are to recover their costs on appeal.
SEGAL, J.
We concur:
PERLUSS, P. J.
FEUER, J.
19