Opinion
G056407
02-10-2020
ARTURO ARANGO, Plaintiff and Appellant, v. R.J. NOBLE COMPANY et al., Defendants and Respondents.
Shanberg, Stafford & Bartz, Ross E. Shanberg and Aaron A. Bartz for Plaintiff and Appellant. Atkinson, Andelson, Loya, Ruud & Romo, Ronald W. Novotny, Mia A. Lomedico, Osaama Saifi and April L. Szabo for Defendants and Respondents.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Super. Ct. No. 30-2017-00916018) OPINION Appeal from an order of the Superior Court of Orange County, William D. Claster, Judge. Affirmed in part and reversed in part and remanded with directions. Motion to dismiss appeal denied. Shanberg, Stafford & Bartz, Ross E. Shanberg and Aaron A. Bartz for Plaintiff and Appellant. Atkinson, Andelson, Loya, Ruud & Romo, Ronald W. Novotny, Mia A. Lomedico, Osaama Saifi and April L. Szabo for Defendants and Respondents.
* * *
Plaintiff and appellant Arturo Aranago is one of four named plaintiffs in this putative class action for wage and hour and related claims against defendants and respondents R.J. Noble Company (Noble) and Strength Transportation Management, Inc. (Strength; collectively defendants). The plaintiffs are members of a union, which is a party to a collective bargaining agreement with Strength.
Plaintiff appeals from an order compelling him to arbitrate those claims. He argues his claims are exempt from arbitration under the Federal Arbitration Act (9 U.S.C., § 4 et seq.; FAA), and under Labor Code section 229 (all further statutory references are to this code unless otherwise stated) he cannot be compelled to arbitrate wage and hour claims. He also contends the collective bargaining agreement does not provide for arbitration of statutory claims but only applies to interpretation of that agreement. Further, he maintains, the union cannot waive his right to litigate statutory claims and even if it could, there was no clear and explicit waiver of that right, as required. He also asserts the arbitration provision is unconscionable, and the court erroneously compelled him to arbitrate his claims against Noble, which is not a party to the collective bargaining agreement.
We agree plaintiff is exempt from the FAA as a transportation worker, and pursuant to section 229 he may not be compelled to arbitrate most, but not all, of his claims. Three causes of action are arbitrable under the collective bargaining agreement because the union had the authority to agree the statutory claims would be arbitrated and the waiver of a judicial forum was clear and unmistakable. Although there is one unconscionable term in the arbitration provision, on remand it should be severed and the remainder of the arbitration provisions enforced. Additionally, it was proper to order the causes of action to be arbitrated against both defendants. Finally, on remand, pursuant to Code of Civil Procedure section 1281.2, subdivision (c), the court should consider whether it should delay the order to arbitrate the three arbitrable causes of action until the other causes of action have been litigated.
We deny defendants' motion to dismiss the appeal on the grounds the order compelling arbitration is not appealable, concluding it is appealable under the death knell doctrine and also because we have the authority to treat the appeal as a petition for writ of mandate.
FACTS AND PROCEDURAL HISTORY
According to the complaint, Noble is a general engineering contractor, performing, among other things, road grading and paving. Strength, which, according to the complaint is a subsidiary of or company related to and controlled by Noble, is a licensed motor carrier, regulated by the United States Department of Transportation (DOT) and required to comply with various federal statutes and regulations. Its primary business is to provide trucking services to a variety of companies, generally delivering hot asphalt for new construction and repair of roads and interstate highways, such as I-5 and I-15.
Plaintiff was employed by Strength as a truck driver from 2006 to October 2017 delivering asphalt, rock, and other construction materials, which he picked up at defendants' plants and hauled to highways and roads under construction or repair.
Plaintiff states he also worked for Noble in this capacity; Strength claims plaintiff only worked for Strength, not Noble.
During plaintiff's work tenure, there was a collective bargaining agreement (CBA) between Strength and the Industrial Professional and Technical Workers International Union, SIUNA, AFL-CIO (Union). The CBA stated the Union was the "sole Collective Bargaining Agent and Representative of all" "truck drivers employed by [Strength] at its facility located in Corona, California."
There are two essentially identical collective bargaining agreements in the record, one for the period February 2012 through January 2015 and the other for the period February 2015 through January 2018.
Article V of the CBA, Meal Periods, provides: "The parties hereby acknowledge that it is has always been understood and agreed between the parties that any dispute or grievance regarding overtime, meal periods, rest periods or any other subject matter covered by any and all wage orders issued by the State of California[,] including Industrial Wage Order 16-2001, which covers on-site occupations in the construction, mining, drilling and logging industries, has been and will be . . . processed under and in accordance with the dispute and grievance procedure set forth in the collective bargaining agreement between the parties."
Section 1 of Article VII of the CBA, Grievance and Arbitration, states: "Should any controversy, dispute, or disagreement arise during the term of this Agreement, . . . the difference shall be adjusted as follows[:] [¶] (1) The involved employee shall first attempt to resolve the issue(s) with his immediate supervisor or other representative designated by [Strength], within ten (10) days of the occurrence of first knowledge thereof. [¶] (2) If the issue remains unresolved in Paragraph 1 of the above, the Union and [Strength] will meet to resolve the issue within ten (10) days. [¶] (3) If the issues remain unsolved under the provisions of Paragraph 2 above, written notice of the grievances shall be filed with the standing committee within ten (10) days of meeting described in paragraph (2) above. [¶] (4) It is agreed and understood that the two (2) chairmen of the negotiating committee shall comprise the original standing committee. . . . Upon receipt of written notice from either party setting forth the nature of the dispute, the two chairmen of the standing committee . . . shall[,] within a calendar month from receipt of such written notice, attempt to reach a settlement. This committee shall interpret the intent and application of this agreement and any deadlock decision resulting from this standing committee shall be referred to arbitration. [¶] (5) If the matter is deadlock (sic) after receipt of the written notices described in Paragraph 4 above, such dispute shall be referred to [an arbitrator]. The decision of the arbitrator upon the question in dispute shall be final and binding upon the parties hereto; however, the arbitrator shall not have the authority to change, alter, or modify any of the terms or provisions of this Agreement."
Section 2 of Article VII of the CBA, Limitation, states: "All claims shall be limited to a maximum of thirty (30) days retroactive from the date the claim is submitted to [Strength] in writing. [¶] Any such grievance, claim or dispute not submitted within such time shall be waived unless both members of the standing committee, for good cause, accept[] such submission, or unless either party has intentionally concealed the facts upon which the grievance, claim or dispute is based."
Section 6 of Article XX of the CBA, Non-Discrimination, provides: "This Agreement prohibits conduct which would violate laws regulating the workplace and conduct by and between the Employer and the Union and/or employees. Issues involving such prohibited conduct, if alleged to be a violation of the agreement and/or applicable law, shall be resolved exclusively under the grievance and arbitration procedures contained in this Article. The laws and regulations encompassed by these grievance and arbitration procedures include but are not limited to the following laws and regulations which are incorporated herein by this reference: [¶] [list of federal and state laws, including the Equal Pay Act, the National Labor Relations Act, the Fair Labor Standards Act, and the California Labor Code, and additional regulations in effect or promulgated by an agency enforcing those statutes and regulations]. [¶] . . . [¶] All other federal or state legislation or administrative regulation currently in effect or subsequently enacted during the term of the Agreement which affects the workplace, [Strength], the Union, and/or employees covered by this Agreement is encompassed by this language and the exclusive dispute resolution mechanisms established in the grievance and arbitration provisions of this Agreement. [¶] [Strength], the Union and the employees represented by the Union understand and agree that by channeling issues under this Agreement and applicable law to the grievance and arbitration process in this Article, they have knowingly and willingly chosen to forego access to court and/or administrative agencies. The grievance and arbitration processes in this Article provide an exclusive remedy to any aggrieved person seeking relief."
The original complaint was filed in April 2017 against Noble by three plaintiffs, none of whom is a party to this appeal. Noble's motion to compel arbitration was granted as to two of the plaintiffs and denied as to the third. The first amended complaint (FAC), where plaintiff became a party, alleges causes of action for failure to pay minimum wages and overtime wages; failure to provide proper meal periods and rest periods; failure to provide itemized wage statements; violation of sections 201 and 202 (prompt payment of wages to terminated employee); 204 (timely payment of wages); 1771 et seq. and 223 (prevailing wage laws); 2802 (employer indemnity for employee work-related expenditures & losses); 2699 (Private Attorney General Act; PAGA); and Business and Professions Code section 17200 (unfair competition based on acts alleged in other causes of action).
The PAGA claim was not asserted by plaintiff, but by the other three plaintiffs, against Noble only.
Defendants subsequently filed a petition to compel arbitration of all claims except the PAGA cause of action, pursuant to the terms of the CBA and under the FAA and the California Arbitration Act (Code Civ. Proc., § 1281.2 et seq.). Plaintiff filed an opposition and defendants filed a reply. After a hearing, the court granted the petition (Order) as to all claims except for the PAGA cause of action (to which plaintiff was not a party) and the section 2802 (indemnity for work-related expenses) cause of action, which it stayed.
The court found the CBA contained a valid arbitration agreement requiring plaintiff to arbitrate disputes as to overtime, meal and rest periods, and any other issue covered by California wage orders after the parties proceeded through the internal grievance process. The court rejected plaintiff's claim the CBA was ambiguous when it referred to arbitration provisions within an article containing no such provisions. Rather, it was reasonable to conclude the provision meant to refer to the entire CBA, not the specific article.
The court also discounted plaintiff's argument the arbitration procedure did not guarantee his right to arbitrate because of the prearbitration procedures, noting such grievance procedures were found in virtually all collective bargaining agreements. The United States Supreme Court has approved such processes and further held if a union fails to protect a member's rights, the employee may sue the union. (14 Penn Plaza LLC v. Pyett (2009) 556 U.S. 247, 271 (Penn Plaza).) Likewise, the fact the CBA prohibits the arbitrator from changing the terms of the CBA did not preclude an arbitrator from relying on an applicable wage order.
The court found the FAA applied to the CBA because defendants' work had a "substantial relationship to interstate commerce." It also found the exemption to arbitration under the FAA for transportation workers did not apply because there was no evidence plaintiff was engaged in moving goods in interstate commerce.
Plaintiff was required to arbitrate his claims against Noble as well as Strength, even though Noble had not signed the CBA, based on the FAC allegations that Noble owned, operated, and/or controlled Strength.
Finally, as to plaintiff's claim the arbitration provisions were unconscionable, based primarily on the 30-day limitations period, the court determined it was not required to decide the issue because defendants had offered to waive it.
APPEALABILITY AND MOTION TO DISMISS
Defendants filed a motion to dismiss the appeal, contending it is not an appealable order. An order compelling arbitration is generally not immediately appealable; review must wait until appeal of the final judgment. (Young v. RemX, Inc. (2016) 2 Cal.App.5th 630, 634; Code Civ. Proc., § 904.1 [only final judgments appealable].) Plaintiff argues the order here is appealable now based on the death knell doctrine, an exception to the general rule.
The death knell doctrine allows immediate appeals from "orders that effectively terminate class claims but permit individual claims to continue." (In re Baycol Cases I & II (2011) 51 Cal.4th 751, 754 (Baycol).) For the death knell doctrine to apply, "(1) the order terminating class claims is the practical equivalent of a final judgment for absent class members; and (2) without the possibility of a group recovery, the plaintiff will lack incentive to pursue claims to final judgment, thus allowing the order terminating class claims to evade review entirely." (Cortez v. Doty Bros. Equipment Co., (2017) 15 Cal.App.5th 1, 8 (Cortez).)
Plaintiff argues both death knell factors have been satisfied. As to the first, he notes he brought the action on behalf of himself and all truck drivers employed within four years of filing of the complaint. Plaintiff points out defendants presented evidence the CBA covered all truck drivers. As a result, he concludes, the Order will eliminate the right of all other putative class members, that is, the named truck drivers, to proceed on a classwide basis because their claims will also be subject to arbitration. As to the second death knell factor, plaintiff argues that, given the amount he is seeking individually is "modest," there is little likelihood he would pursue it absent a class action.
Although neither party discussed this, we note the FAC also alleges a subclass consisting of laborers. The CBA does not apply to laborers; they are covered by a separate collective bargaining agreement. If defendants intended to rely on this in opposition to application of the death knell doctrine, the argument is forfeited for failure to brief. (Potter v. Alliance United Ins. Co. (2019) 37 Cal.App.5th 894, 911.)
Defendants argue the Order did not discuss class claims or other class members and thus could not operate as a final judgment for them. But the effect of the Order is to preclude class claims. "What matter[s is] not the form of the order or judgment but its impact." (Baycol, supra, 51 Cal.4th at p. 757.) Thus, the death knell doctrine makes the order appealable.
Alternatively, even if the death knell doctrine did not apply, we have the authority to treat the appeal as a petition for writ of mandate and choose to do so. (Phillips v. Sprint PCS (2012) 209 Cal.App.4th 758, 767.) As noted, because the truck driver members of the class are covered by the CBA, the Order effectively prohibits them from litigating on a classwide basis and the value of their individual claims are such they may have little incentive to proceed on an individual basis. Thus, it is reasonable to assume the case may never reach final judgment and the issues presented will never be subjected to appellate review. (Id. at p. 768.) In addition, the issues presented are purely legal and have been fully briefed. "Refusing review at this point thus would result in a significant waste of time and judicial resources." (Ibid.) Finally, as discussed below, if we dismissed the appeal, "ultimate reversal of [at least part] of the order would be inevitable, and would follow the substantial expense of completing an arbitration." (Elijahjuan v. Superior Court (2012) 210 Cal.App.4th 15, 20.) Therefore, the motion to dismiss the appeal is denied.
DISCUSSION
1. Standard of Review and General Principles
"We apply de novo review to the trial court's interpretation of an arbitration agreement that does not involve conflicting extrinsic evidence." (Cortez, supra, 15 Cal.App.5th at p. 12.) We review any factual findings using a substantial evidence standard. (Ramos v. Westlake Services LLC (2015) 242 Cal.App.4th 674, 686.)
A party seeking to compel arbitration must prove, by a preponderance of the evidence, the existence of an agreement to arbitrate the claims made against it. (Pinnacle Museum Tower Assn. v. Pinnacle Market Development (US), LLC (2012) 55 Cal.4th 223, 236 (Pinnacle).) In deciding a motion to compel, "the court must determine whether the parties entered into an enforceable agreement to arbitrate that reaches the dispute in question." (California Correctional Peace Officers Assn. v. State of California (2006) 142 Cal.App.4th 198, 204.)
As part of a collective bargaining agreement, a union may "require the employee to arbitrate controversies relating to an interpretation or enforcement of a [collective bargaining agreement]." (Cortez, supra, 15 Cal.App.5th at p. 11; Penn Plaza, supra, 556 U.S at pp. 256-257.) "[W]hen a [collective bargaining agreement] includes an arbitration provision, contractual matters under a [collective bargaining agreement] are presumed arbitrable; that is, arbitration must be granted as long as the [collective bargaining agreement] is reasonably susceptible to an interpretation in favor of arbitration." (Cortez, at pp. 11-12.) 2. FAA Exemption
The court found the FAA applied to the CBA as a "contract evidencing a transaction involving commerce." (9 U.S.C. § 2.) In a supplemental brief, plaintiff argues he is exempt from the FAA because he is a transportation worker.
Defendants' contention we should not consider this issue because it was not raised in the opening brief and therefore is waived has no merit. Defendants made this same argument in their opposition to plaintiff's motion to file the supplemental brief, and in granting the motion we perforce rejected it.
There is an exemption from the FAA for "contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce." (9 U.S.C. § 1 (section 1).) "[A]ny other class of workers" has been interpreted to refer exclusively to transportation workers. (Circuit City Stores, Inc. v. Adams (2001) 532 U.S. 105, 119, 121 (Circuit City); Muller v. Roy Miller Freight Lines, LLC (2019) 34 Cal.App.5th 1056, 1062 (Muller).) Transportation workers have been defined as "workers '"actually engaged in the movement of goods in interstate commerce."'" (Circuit City, at p. 112.) The parties disagree about whether plaintiff is a transportation worker within the meaning of the exemption.
In ruling on the petition to compel arbitration, the court found the exemption did not apply based on authority a transportation worker or the employer must transport goods across states lines. (Garcia v. Superior Court (2015) 236 Cal.App.4th 1138, 1145; Circuit City, supra, 532 U.S. at p. 112.) While there is no question a truck driver who crosses state lines delivering goods or material is a transportation worker exempt under section 1 (e.g., Muro v. Cornerstone Staffing Solutions, Inc. (2018) 20 Cal.App.5th 784, 790-791; Garrido v. Air Liquide Industrial U.S. LP (2015) 241 Cal.App.4th 833, 840-841), after the trial court's ruling in our case, two appellate court decisions, Nieto v. Fresno Beverage Co., Inc. (2019) 33 Cal.App.5th 274, 281 (Nieto) and Muller, supra, 34 Cal.App.5th 105, held crossing state lines is not a necessary prerequisite for application of section 1.
In Nieto, supra, 33 Cal.App.5th 274 the court disagreed with the argument that a driver who never crosses state lines is not engaged in interstate commerce, calling that claim "overbroad" at least in the context of the facts in that case. (Id. at p. 282.) It pointed to the lack of "any clear or persuasive authority for the proposition that crossing of state lines is a necessary condition" for the section 1 exemption to apply. (Ibid.) Nieto held "a transportation worker does not necessarily have to physically cross state lines in order to engage in the movement of goods in interstate commerce." (Ibid.)
Nieto determined the plaintiff was a driver engaged in interstate commerce, even though he did not cross state lines, based on the following facts: the defendant employer sold beverages that came from other states and countries; the plaintiff drove on interstate highways and roads and was subject to federal statutes and regulations, including those issued by the Department of Transportation; and, as the employer explained, the plaintiff transported the beverages in a "'"practical continuity of movement"'" in interstate commerce. (Nieto, supra, 33 Cal.App.5th at p. 284.)
The court concluded that, based on those facts, although the plaintiff's deliveries were intrastate, they were the last leg of a "continuous journey of the interstate commerce." (Nieto, supra, 33 Cal.App.5th at p. 284.) Therefore, the plaintiff was "engaged in interstate commerce through his participation in the continuation of the movement of interstate goods to their destinations." (Ibid.)
As support for its conclusion Nieto pointed to several federal cases. (Nieto, supra, 33 Cal.App.5th at pp. 282-284.) In Christie v. Loomis Armored US, Inc. (D.Colo. Dec. 9, 2011, No. 10-cv-02011-WJM-KMT) 2011 WL 6152979 the court held, "'Interstate commerce' includes not only goods that travel across state lines but also 'the intrastate transport of goods in the flow of interstate commerce.'" (Id. at p. *3.) The Christie court found the section 1 exemption applied even though the driver did not personally cross state lines because the goods were in the stream of interstate commerce. (Ibid.; accord Diaz v. Michigan Logistics Inc. (E.D.N.Y. 2016) 167 F.Supp.3d 375, 380, fn. 3.)
Nieto also cited Palcko v. Airborne Express, Inc. (3d Cir. 2004) 373 F.3d 588, 590, 593-594, where the court applied the section 1 exemption to a transportation worker who was not a driver but supervised drivers delivering interstate packages. (Nieto, supra, 33 Cal.App.5th at p. 283.)
In the second recent case, Muller, supra, 34 Cal.App.5th 1056, another panel of this court also found the plaintiff driver was exempt under section 1 as a transportation worker even though he personally did not drive across state lines. (Id. at p. 1068.) The defendant employer, a licensed motor carrier that transported freight only within the State of California, was in the transportation business and almost all of the goods transported came from outside the state. (Id. at pp. 1068-1069.) The plaintiff driver "played an integral role in transporting those goods through interstate commerce." (Id. at p. 1069.)
In reaching its conclusion, Muller cited to Lenz v. Yellow Transportation, Inc. (8th Cir. 2005) 431 F.3d 348 (Lenz). Lenz analyzed whether the plaintiff, who worked for a transportation company but was not a driver, was a transportation worker. Lenz relied on eight "non-exclusive" factors it derived from other cases: "first, whether the employee works in the transportation industry; second, whether the employee is directly responsible for transporting the goods in interstate commerce; third, whether the employee handles goods that travel interstate; fourth, whether the employee supervises employees who are themselves transportation workers, such as truck drivers; fifth, whether, like seamen or railroad employees, the employee is within a class of employees for which special arbitration already existed when Congress enacted the FAA; sixth, whether the vehicle itself is vital to the commercial enterprise of the employer; seventh, whether a strike by the employee would disrupt interstate commerce; and eighth, the nexus that exists between the employee's job duties and the vehicle the employee uses in carrying out his duties (i.e., a truck driver whose only job is to deliver goods cannot perform his job without a truck)." (Id. at p. 352.)
Defendants argue plaintiff only satisfied two of these factors, numbers six and eight, while plaintiff contends he satisfied six of the eight, numbers one through three, and six through eight. We agree with the parties the evidence supports the undisputed factors six and eight. The trucks driven by plaintiff are vital to defendants' business (six) and plaintiff, whose only duty was to drive a delivery truck, could not do so without a truck (eight).
Of those factors in dispute, we do not agree plaintiff has satisfied element number two but conclude he has satisfied one, three, six, and seven.
According to defendants, Strength is a "licensed motor carrier" providing "commercial motor vehicle transportation services to different customers for compensation," regulated by the DOT and subject to a variety of federal statutes and regulations. Its "primary business" is to deliver asphalt to new construction and repair of interstate highways and roads, including I-5 and I-15. Plaintiff "regularly delivered" asphalt to those projects.
Further, defendants "regularly purchases" materials and supplies from other states. These include asphalt oil and additives and a special rubber to manufacture asphalt. They use the products to manufacture asphalt used in the highway construction. They also purchase various machines used in their construction work from out of state manufacturers. In addition, they bought an asphalt plant from a Tennessee company to be installed in Corona. Further, the "vast majority" of Strength's trucks are manufactured by and purchased from companies outside of California.
Defendants argue they are not in the transportation industry but in the construction business. But their own allegations belie this claim as to Strength. Defendants also contend plaintiff's assertion Strength is a "construction trucking company" "is fatal" to a section 1 exemption. We disagree. Muro v. Cornerstone Staffing Solutions, Inc. (2018) 20 Cal.App.5th 784 concluded nothing in Circuit City, supra, 532 U.S. 105 required "that workers who are actually engaged in transporting goods in foreign or interstate commerce [must] also prove that their employer is involved in the 'transportation industry.'" (Muro, at p. 791, italics deleted.) Thus, factor number one is satisfied.
Factor three is also satisfied. Plaintiff drove trucks purchased from out-of-state manufacturers on interstate highways to construction projects on interstate highways. The asphalt he transported was manufactured by defendants using materials from out-of-state suppliers. Thus, plaintiff is handling "goods that travel interstate." (Lenz, supra, 431 F.3d at p. 351.) We are not persuaded by defendants' claim the out-of-state source of the materials comprising the asphalt plaintiff delivered is irrelevant. Further, that is not the only fact on which we are relying.
Finally, factor seven, whether a strike by plaintiff and other Strength drivers would disrupt interstate commerce, is satisfied. A strike would interrupt work on interstate highways and thus disrupt traffic on those highways interfering with the movement of goods in interstate commerce. We are not persuaded by defendants' undeveloped claim this is "not the kind of disruption envisioned by a work stoppage affecting the channels of interstate commerce to which this factor was designed to apply."
In addition, the Lenz factors are not mandatory and there is no requirement all or even a certain number of them must be satisfied. Rather, "there is no agreed-upon bright-line rule on who falls within the section 1 exemption." (Muller, supra, 34 Cal.App.5th at p. 1064.) Consequently, the totality of the evidence supports a finding plaintiff is a transportation worker.
Our conclusion the evidence supports a finding plaintiff is a transportation worker does not conflict with what defendants argue must be a "narrow interpretation" of section 1. (E.g., Circuit City, supra, 532 U.S. at pp. 114, 115, 118-119; Muller, supra, 34 Cal.App.5th at p. 1062.)
Therefore, because plaintiff is exempt under section 1, the FAA does not apply to arbitration in this case. 3. Section 229 Application
Pursuant to section 229, an action to enforce statutes to collect "due and unpaid wages claimed by an individual may be maintained without regard to the existence of any private agreement to arbitrate." When the FAA applies, it preempts this section. (Performance Team Freight Systems, Inc. v. Aleman (2015) 241 Cal.App.4th 1233, 1240.) Because plaintiff is exempt from the FAA, section 229 is not preempted and he may not be compelled to arbitrate his unpaid wages causes of action.
Under Hoover v. American Income Life Ins. Co. (2012) 206 Cal.App.4th 1193, 1206 (Hoover), those causes of action are the first for failure to pay minimum wages; the second for failure to pay overtime wages; the sixth for failure to promptly pay wages to a terminated employee (§§ 201 & 202); the ninth for failure to timely pay wages (§ 204); and the tenth for violation of prevailing wage laws (§§ 223 & 1771 et seq.). The third and fourth causes of action for failure to provide proper meal and rest periods and the fifth cause of action for failure to provide itemized wage statements are not considered wage claims for purposes of section 229 and thus may be arbitrated. (Lane v. Francis Capital Management LLC (2014) 224 Cal.App.4th 676, 684.) "[S]ection 229 does not apply to all statutory wage and hour claims." (Id. at p. 686.)
Contrary to defendants' claim, however, this does not mean they are subject to the FAA because plaintiff is exempt under section 1.
The seventh cause of action for unfair competition in violation of Business and Professions Code section 17200 is based on the alleged violations in the other causes of action. Plaintiff cannot be compelled to arbitrate that cause of action to the extent it encompasses nonarbitrable claims, i.e., the first, second, sixth, ninth, and tenth causes of action. (Cortez, supra, 15 Cal.App.5th at p. 15.)
As a result of the section 1 exemption and the application of section 229, we need to determine if the causes of action for failure to provide meal and rest periods and itemized wage statements and that portion of the unfair competition cause of action based on those claims are subject to arbitration under the CBA. Plaintiff makes several arguments in support of his position they are not, which we now address. 4. Waiver of Statutory Claims in Collective Bargaining Agreements
a. Prospective Waiver of Statutory Claims
Plaintiff contends the Union had no right to prospectively waive his right to litigate claims based on statutory rights in court. We reject this contention because the authorities on which he relies are not persuasive.
Plaintiff points to Zavala v. Scott Brothers Dairy, Inc. (2006) 143 Cal.App.4th 585 (Zavala), which states "regardless of whether the [collective bargaining agreement] includes a broad arbitration provision, that clause is not binding on plaintiffs because the Union could not waive plaintiffs' right to bring statutory labor rights claims in court and because such claims did not arise under the [collective bargaining agreement]." (Id. at p. 592.) The court based this statement, in part, on the rule a union cannot waive the substantive statutory rights to rest periods and itemized wage statements, concluding those rights could be vindicated in a judicial forum. (Id. at p. 594.)
But the court went on to state there was nothing in the collective bargaining agreement evidencing an agreement to arbitrate statutory claims, noting those rights could be arbitrated had the parties agreed. (Zavala, supra, 143 Cal.App.4th at p. 596.) Thus, Zavala is inconsistent, at best.
Plaintiff also cites Hoover, supra, 206 Cal.App.4th 1193, which stated a collective bargaining agreement "cannot waive the right to sue under applicable federal or state statutes because these statutory rights 'devolve on petitioners as individual workers, not as members of a collective organization.'" (Id. at p. 1206.)
Both Zavala and Hoover relied on Barrentine v. Arkansas-Best Freight System (1981) 450 U.S. 728 (Barrentine), which held employees could file suit in federal court for statutory wage claims under the Fair Labor Standards Act (29 U.S.C. § 201 et seq.; FLSA) even though they had already been the subject of a collective bargaining agreement's mandatory grievance procedure. (Barrentine, at p. 728.) Barrentine held rights under the FLSA were "independent of the collective-bargaining process," and belonged to employees as individuals, not as union members. (Id. at p. 745.) It was Congress's intent employees could bring minimum wage claims in court, not in arbitration. (Ibid.)
But more than 25 years after Barrentine, the Supreme Court decided Penn Plaza, supra, 556 U.S. 247, where union members filed suit in federal court for violation of the Age Discrimination in Employment Act (29 U.S.C. § 621 et seq.; ADEA). The court ruled there was no prohibition against a union agreeing to include an arbitration provision in a collective bargaining agreement. (Penn Plaza, at p. 257.) That ruling included an agreement to arbitrate statutory antidiscrimination claims as long as the agreement was "'explicitly stated.'" (Id. at p. 258.) The court distinguished what it described as the "narrow" holding in Barrentine that judicial resolution of the claim after a prior arbitration was not barred, because in Barrentine there was no agreement to arbitrate the claim at issue. (Penn Plaza, at pp. 263-264.)
Recognizing certain statutory rights could not be waived by a union, it distinguished between a waiver of the substantive right and an arbitration of the statutory claim. (Penn Plaza, supra, 566 U.S. at p. 265.) "'"By 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, rather than a judicial, forum."'" (Id. at p. 266.) This undercuts the reasoning in Zavala that a party could not be forced to arbitrate nonwaivable statutory rights. In sum, Penn Plaza held "a collective-bargaining agreement that clearly and unmistakably requires union members to arbitrate ADEA claims is enforceable as a matter of federal law." (Id. at p. 274.)
Likewise, Cortez, supra, 15 Cal.App.5th 1 held a union could waive the right to try a statutory violation in court by agreeing to arbitration as long as the waiver was "'"clear and unmistakable.'"" (Id. at p. 12.) It also rejected the argument Penn Plaza's holding should be limited to antidiscrimination violations and should not extend to claims under the Labor Code, stating there was no basis for "such a cramped interpretation." (Cortez, at p. 12, fn. 1.) Rather, "the necessary implication" of Penn Plaza's holding "is that a clear and explicit agreement to arbitration wage and hour claims would be enforceable." (Cortez, at p. 12, fn. 1)
b. Clear and Unmistakable Waiver of Statutory Claims in CBA
"[T]he presumption of arbitration in a [collective bargaining agreement] does not apply to statutory violations." (Cortez, supra, 15 Cal.App.5th at p. 12.) Rather, waiver of a judicial forum for statutory claims must be clear and explicit. (Ibid.) "To be clear and unmistakable, a waiver . . . must be specific, and mention either the statutory protection being waived or, at a minimum, the statute itself." (Choate v. Celite Corp. (2013) 215 Cal.App.4th 1460, 1467.)
Plaintiff argues there was no such clear and unmistakable waiver. He claims Article VII, section 1 does not cover statutory claims but is limited to interpreting "the intent and application of this agreement."
But Article VII, section 1 is not the only part of the CBA dealing with arbitration. Article XX, section 6 does as well. It prohibits conduct violating workplace laws and expressly incorporates, among other statutes, the California Labor Code. It further states "[i]ssues involving such prohibited conduct, if alleged to be a violation of the [CBA] and/or applicable law, shall be resolved exclusively under the grievance and arbitration procedures contained in this Article." (Italics added.)
Plaintiff points out there are no grievance or arbitration procedures in Article XX, thus negating any clear and unmistakable waiver. The trial court ruled the term "Article" as referenced above meant to state "Agreement," thus encompassing the grievance or arbitration procedures in Article VII, section 1.
Plaintiff argues this was error. He claims Article XX uses the term "Article" three times relating to grievance and arbitration procedures, including references to specified statutes, including the Labor Code. Article XX refers to "Agreement" in connection with grievance and arbitration procedures when it discusses disputes concerning other legislation or regulations. Based on that, plaintiff determines there are "two separate and independent grievance or arbitration procedures," with disputes about specified statutes decided pursuant to the Article XX procedure and unenumerated statues and regulations decided under the Article VII, section 1 procedures. From this plaintiff concludes that, because there no arbitration procedures set out in Article XX, adjudication of Labor Code violations are not subject to arbitration. We disagree.
We interpret the CBA de novo. (Reilly v. Inquest Technology, Inc. (2013) 218 Cal.App.4th 536, 554.) We must determine the mutual and objective intent of the parties at the time the agreement was made. (Civ. Code, § 1636; Reilly, at p. 554.) To do so we rely first on the language of the contract, giving the words their usual and ordinary meaning. (Civ. Code, §§ 1638, 1639, 1644; Reilly, at p. 555.) Each part of the contract must be interpreted with reference to the entire agreement (Reilly, at p. 555) and "[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.]" (Flores v. Nature's Best Distribution, LLC (2016) 7 Cal.App.5th 1, 9). "Construction cannot lead to unfair or absurd results but must be reasonable and fair. [Citation.]" (California National Bank v. Woodbridge Plaza LLC (2008) 164 Cal.App.4th 137, 143.) Further, we must interpret the CBA to give effect to every word and not render any to be surplusage. (Queen Villas Homeowners Assn. v. TCB Property Management (2007) 149 Cal.App.4th 1, 9.)
Plaintiff's suggested interpretation is not reasonable and leads to an absurd result, improperly rendering the grievance and arbitration provision of Article XX surplusage. Plainly, there are not two different arbitration procedures in the CBA, there is only one. It gives the arbitrator the authority to interpret the provisions of the CBA, including the specific statutes incorporated into the CBA. The incorporation of specific statutes into the CBA and designation of the grievance and arbitration process in Article XX thus gives the arbitrator the right to decide disputes arising under the delineated statutes and the concomitant right to interpret those statutes.
Consistent with our de novo interpretation, the trial court relied on Cortez, supra, 15 Cal.App.5th 1, which involved an arbitration provision "substantially similar" to the provision in the CBA. Plaintiff's attempts to distinguish Cortez are not persuasive. Cortez affirmed arbitration of claims arising under a wage order, which was incorporated into the collective bargaining agreement. (Id. at pp. 13, 14.) It also held a claim for waiting time penalties was not arbitrable because it was not covered by the wage order and because the Labor Code was not incorporated into the collective bargaining agreement. (Cortez, at p. 15.) In our case, however, the Labor Code was expressly incorporated into the CBA.
In addition, the fact plaintiff has not conceded there was a clear and unmistakable waiver of a trial, as occurred in Cortez, is not controlling. The CBA contains such a waiver; plaintiff's concession is not necessary.
Finally, plaintiff's unsubstantiated claim we should not follow Cortez because it is "flawed" and has no merit is not well-taken. Martinez v. J. Fletcher Creamer & Son, Inc. (C.D.Cal. Aug. 13, 2010, No. CV 10-0968 PSG) 2010 WL 3359372, on which plaintiff relies, is inapt. There the collective bargaining agreement did not refer to relevant statutes, whereas here the CBA incorporates them. "'[W]e respect stare decisis . . . , which serves the important goals of stability in the law and predictability of decision. Thus, we ordinarily follow the decisions of other districts without good reason to disagree.'" (The MEGA Life & Health Ins. Co. v. Superior Court, supra, 172 Cal.App.4th at p. 1529.) We see no reason to disregard Cortez in this case.
Contrary to defendants' argument, we are not required to follow Cortez as precedent because opinions from other courts of appeal do not bind us. (The MEGA Life & Health Ins. Co. v. Superior Court (2009) 172 Cal.App.4th 1522, 1529.)
In any event, a federal district court case does not bind us. (Haynes v. EMC Mortgage Corp. (2012) 205 Cal.App.4th 329, 335.)
In sum, the waiver of judicial determination of Labor Code claims was clear and unmistakable, notwithstanding the use of "Article" when "Agreement" was the intended word. 5. Unconscionability
The parties dispute whether an unconscionability analysis applies to collective bargaining agreements. We need not decide this issue because we conclude, with one exception, the arbitration and grievance process in the CBA was not unconscionable. Although the 30-day limitation period is unconscionable, as discussed below it should be severed.
Unconscionability is a question of law, which we review de novo. (Thompson v. Toll Dublin, LLC (2008) 165 Cal.App.4th 1360, 1369.) There are two facets of unconscionability, procedural and substantive, and both must be proven. (Pinnacle, supra, 55 Cal.4th at p. 246.) "The procedural element addresses the circumstances of contract negotiation and formation, focusing on oppression or surprise due to unequal bargaining power. [Citations.] Substantive unconscionability pertains to the fairness of an agreement's actual terms and to assessments of whether they are overly harsh or one-sided. [Citations.] A contract term is not substantively unconscionable when it merely gives one side a greater benefit; rather, the term must be 'so one-sided as to "shock the conscience."' [Citation.]" (Ibid.)
In support of his claim the CBA is substantively unconscionable, plaintiff points to the 30-day limitation period, a "complicated grievance process" giving defendants a "'free peek'" at plaintiff's case before arbitration, and a provision to shift costs. As to the latter two claims, aside from citing two cases to support each, plaintiff makes no reasoned legal argument as to why they are substantively unconscionable. (Cal. Rules of Court, rule 8.204(a)(1)(B).) We are not required to develop plaintiff's arguments for him. (United Grand Corp. v. Malibu Hillbillies, LLC (2019) 36 Cal.App.5th 142, 154.) Thus these claims are forfeited. (Ewald v. Nationstar Mortgage, LLC (2017) 13 Cal.App.5th 947, 948.)
The 30-day period to bring a claim shortens the statutory period to bring the claims for failure to provide meal and rest periods and itemized wage statements. The 30-day period is substantively unconscionable because it severely and improperly curtails the time in which plaintiff may bring his statutory claims. (Martinez v. Master Protection Corp. (2004) 118 Cal.App.4th 107, 117-118.)
The limitations periods for those claims are three years for failure to provide meal and rest periods (Code Civ. Proc., § 338; Murphy v. Kenneth Cold Productions, Inc. (2007) 40 Cal.4th 1094, 1102, 1114) and one year for failure to provide the wage statement (Naranjo v. Spectrum Security Services, Inc. (2019) 40 Cal.App.5th 444, 468).
The trial court determined it was not necessary to resolve the question of whether the 30-day limitation period was unconscionable because defendants had stated their willingness to waive it. Plaintiff argues this was ineffective to modify the CBA. But defendants' willingness to waive the provision is not determinative.
Where an arbitration agreement contains an unconscionable provision that is collateral to the main purpose of the agreement and which can be severed without affecting the remainder of the agreement, "'the strong legislative and judicial preference is to sever the offending term and enforce the balance of the agreement.'" (Dotson v. Amgen, Inc. (2010) 181 Cal.App.4th 975, 986.) The 30-day limitation period may be easily severed without affecting the balance of the arbitration provisions and the interests of justice would be served because the remainder of the CBA would be preserved.
Plaintiff also argued that, based on the 30-day limitation period, arbitration would waive his substantive claims. Because the provision will be severed, this argument is moot.
Without the 30-day limitation period, the CBA is not substantively unconscionable. Therefore, it matters not whether it is procedurally unconscionable (Stirlen v. Supercuts, Inc. (1997) 51 Cal.App.4th 1519, 1533) and we need not and do not analyze that element. 6. Arbitration With Noble
Despite the fact Noble did not sign the CBA, the court found plaintiff must arbitrate its claims against Noble as well as Strength. Generally, a non-party to an arbitration agreement may not enforce it. (Garcia v. Pexco, LLC (2017) 11 Cal.App.5th 782, 785 (Garcia).) However, a defendant may invoke an arbitration agreement "'when a plaintiff alleges [that] defendant acted as an agent of a party to an arbitration agreement.'" (Id. at p. 788.)
Such is the case here. The FAC alleges defendants were plaintiff's joint employers in a joint enterprise and plaintiff performed work for both defendants to their mutual benefit. It further alleges both defendants decided plaintiff's wages. In addition, the FAC alleges defendants were "an integrated enterprise" with centralized, common management and ownership and interrelated operations. The FAC also alleges agency and alter ego relationships between the defendants. These allegations fall within the Garcia criteria. Additionally, as in Garcia, plaintiff's claims against defendants were identical and without differentiation between them. (Garcia, supra, 11 Cal.App.5th at p. 788.)
That the plaintiff in Garcia agreed he was bound by the arbitration agreement does not make the case inapt. As we have determined, the CBA does bind plaintiff to arbitrate his claims for failure to provide meal and rest period and an itemized wage statement, regardless of plaintiff's belief on the matter. Because we are relying on the agency exception, we have no need to decide if the equitable estoppel exception applies. 7. Code of Civil Procedure Section 1281.2
Code of Civil Procedure section 1281.2, subdivision (d) provides: "If the court determines that there are other issues between the petitioner and the respondent which are not subject to arbitration and which are the subject of a pending action . . . between the petitioner and the respondent and that a determination of such issues may make the arbitration unnecessary, the court may delay its order to arbitrate until the determination of such other issues or until such earlier time as the court specifies."
Of the nine causes of action brought by plaintiff, we have determined six are exempt from arbitration under section 229 and three are subject to arbitration. Thus, on remand the court should consider whether litigation of the six exempt causes of action may make arbitration of the remaining three unnecessary and if it should delay the order to arbitrate until the exempt claims have been litigated. (RN Solution, Inc. v. Catholic Healthcare West (2008) 165 Cal.App.4th 1511, 1521 [court may delay arbitration of arbitrable claims if adjudication of nonarbitrable claims may make arbitration unnecessary].)
Plaintiff also raises a different argument, based on Code of Civil Procedure section 1281.2, subdivision (c), which applies when a party to an arbitration is also party to an action with a third party arising out of the same or a related transaction and there is a possibility of conflicting actions. In that situation, Code of Civil Procedure section 1281.2, subdivision (d) gives the court discretion to refuse or stay arbitration, join issues, or stay the court action.
Plaintiff points out the court denied defendants' motion to compel arbitration of claims of another plaintiff in the action, Oswaldo Navarro. He argues issues decided in Navarro's litigation may lead to rulings conflicting with those in plaintiff's arbitration. But plaintiff fails to develop this argument and explain why the issues are comparable and could lead to conflicting rulings. Thus it is forfeited. (Ewald v. Nationstar Mortgage, LLC, supra, 13 Cal.App.5th at p. 948.)
DISPOSITION
The motion to dismiss the appeal is denied. The Order is reversed as to the first, second, sixth, ninth, and tenth causes of action and also as to the seventh cause of action (unfair competition) as it relates to those five causes of action. The Order is affirmed as to the third, fourth, and fifth causes of action and also the seventh cause of action as it relates to those three causes of action. On remand the court shall order the 30-day limitation period in the CBA severed. On remand the court shall also consider whether, under Code of Civil Procedure section 1281.2, subdivision (d), it should delay the Order to arbitrate the third, fourth, and fifth cause of action, and related portions of the seventh cause of action, until the other causes of action have been litigated. The parties shall bear their own respective costs on appeal.
THOMPSON, J. WE CONCUR: BEDSWORTH, ACTING P. J. GOETHALS, J.