Cesar Arriaza vs Birnam Wood Golf Club

Case Number

22CV00215

Case Type

Hearing Date / Time

Mon, 12/04/2023 - 10:00

Nature of Proceedings

Motion to Terminate Stay

Tentative Ruling

Cesar “Tito” Arriaza v. Birnam Wood Golf Club

Case No. 22CV00215

           

Hearing Date: December 4, 2023                                                       

HEARING:              Motion of Plaintiff to Lift Stay

ATTORNEYS:        For Plaintiff Cesar “Tito” Arriaza: Erin Parks

                                    For Defendant Birnam Wood Golf Club: Alexander Chemers, Isabella B. Urrea, Ogletree, Deakins, Nash, Smoak & Stewart, P.C.  

                                   

TENTATIVE RULING:

The motion of plaintiff Cesar “Tito” Arriaza to lift the stay of proceedings is denied.

Background:

On January 19, 2022, plaintiff Cesar “Tito” Arriaza filed a complaint alleging a single cause of action against defendant Birnam Wood Golf Club (Birnam Wood) under Labor Code section 2698 et seq. (the Labor Code Private Attorneys General Act of 2004 or PAGA). Arriaza contends that he began working full time for Birnam Wood in 2008 as an “accounts payable (AP) / Payroll Coordinator.” (Complaint, ¶ 10.) Arriaza was paid by Birnam Wood as a non‐exempt hourly employee until September 1, 2018. (Id., ¶ 25.) On September 1, 2018, Birnam Wood “converted” plaintiff to an exempt employee but did not change Arriaza’s job duties after he was “converted.” (Id., ¶ 28.) Arriaza objected to Birnam Wood’s management that he was misclassified as an exempt employee. (Id., ¶ 35.) Arriaza was terminated on August 17, 2021. (Id., ¶ 56.) Arriaza contends that he was misclassified as exempt by Birnam Wood and that other salaried workers were similarly misclassified. (See id., ¶ 1.) Arriaza brings his PAGA claim on his own behalf and on behalf of other allegedly aggrieved employees who worked for defendant. (Ibid.) The complaint also alleges violations of the Labor Code based on unpaid overtime, failure to provide meal and rest periods, and inaccurate wage statements. (Id. at ¶ 2.)

On March 16, 2022, Birnam Wood filed its answer to the complaint generally denying the allegations thereof and asserting 20 affirmative defenses, including a demand for arbitration.

On April 21, 2022, the court, on the parties’ stipulation, ordered a stay of proceedings until the disposition of Viking River Cruises, Inc. v. Moriana (2022) 596 U.S. __ [142 S.Ct. 1906, 213 L.Ed.2d 178] (Viking River) that was then pending before the United States Supreme Court.

Following the decision of the United States Supreme Court in Viking River on June 15, 2022, Birnam Wood filed its petition (motion) to compel arbitration on July 15, 2022. On August 8, 2022, the court held an initial hearing on the motion to compel arbitration. The court ordered further briefing on the effect, if any, of Adolph v. Uber Technologies, Inc. (2023) 14 Cal.5th 1104 (Adolph), that was then pending before the California Supreme Court. The parties submitted further briefing as requested.

On November 7, 2023, the court heard and granted in part the motion to compel arbitration. The court granted the motion to compel Arriaza to arbitrate his individual PAGA claims, but denied the motion to dismiss the representative PAGA claims. The court concluded: “In light of the California Supreme Court’s review of Adolph regarding the issue of statutory standing under PAGA, the court will further order this case stayed in its entirety pending resolution of all arbitrable claims.” (Minute Order, filed Nov. 7, 2022, at p. 5.)

The California Supreme Court decide Adolph on July 17, 2023.

On October 23, 2023, Arriaza filed this motion to lift the stay as to the representative PAGA claims. The motion is opposed by Birnam Wood.

Analysis:

In his motion to lift the stay, Arriaza argues that a stay of proceedings is not required by Code of Civil Procedure section 1281.4, that Arriaza has standing to pursue the representative PAGA claims, that a stay is not necessary to prevent inconsistent determinations, that the principles of issue preclusion would not affect Arriaza’s ability to pursue the representative PAGA claims, and that further delay in the prosecution of the PAGA claims is contrary to the legislative purpose of PAGA.

Birnam Wood argues that when issues subject to PAGA litigation overlap with arbitration of individual claims, the trial court must order a stay of the PAGA action, citing Adolph and Barrera v. Apple American Group LLC (2023) 95 Cal.App.5th 63 (Barrera). (Opposition, at p. 3.)

Arriaza argues that Birnam Wood misreads Adolph and Barrera and that whether to maintain the stay of trial court proceedings is within the discretion of the court.

The Adolph court summarized that case as follows:

“This case concerns a question of standing under [PAGA]. [Citation.] Informed by findings of pervasive underenforcement of many Labor Code provisions and ‘a shortage of government resources to pursue enforcement,’ the Legislature enacted PAGA to create new civil penalties for Labor Code violations and ‘ “to allow aggrieved employees, acting as private attorneys general, to recover [those] penalties.” ’ [Citation.] Specifically, PAGA authorizes ‘an aggrieved employee,’ acting as a proxy or agent of the state Labor and Workforce Development Agency (LWDA), to bring a civil action against an employer ‘on behalf of himself or herself and other current or former employees’ to recover civil penalties for Labor Code violations they have sustained. [Citations.]

“In [Viking River], the United States Supreme Court considered a predispute employment contract with an arbitration provision specifying that ‘in any arbitral proceeding, the parties could not bring any dispute as a class, collective, or representative PAGA action. It also contained a severability clause specifying that if the waiver was found invalid, any class, collective, representative, or PAGA action would presumptively be litigated in court. But under that severability clause, if any “portion” of the waiver remained valid, it would be “enforced in arbitration.” ’ [Citation.] In light of our state law rule prohibiting wholesale waiver of PAGA claims [citation], the high court construed the severability clause to reflect the parties’ agreement to arbitrate any alleged Labor Code violations personally sustained by a PAGA plaintiff—so-called ‘individual’ claims—and held that the Federal Arbitration Act (FAA) (9 U.S.C. § 1 et seq.) compels enforcement of this agreement. [Citation.] In so holding, the high court declared that the FAA ‘preempted’ a separate state law rule that ‘PAGA actions cannot be divided into individual and non-individual claims’ where the parties have agreed to arbitrate individual claims. [Citation.] For consistency, we use the terms ‘individual’ and ‘non-individual’ claims in accordance with the high court’s usage in Viking River.

“The question here is whether an aggrieved employee who has been compelled to arbitrate claims under PAGA that are ‘premised on Labor Code violations actually sustained by’ the plaintiff [citations] maintains statutory standing to pursue ‘PAGA claims arising out of events involving other employees’ [citation] in court. We hold that the answer is yes. To have PAGA standing, a plaintiff must be an ‘aggrieved employee’—that is, (1) ‘someone “who was employed by the alleged violator” ’ and (2) ‘ “against whom one or more of the alleged violations was committed.” ’ [Citation.] Where a plaintiff has brought a PAGA action comprising individual and non-individual claims, an order compelling arbitration of the individual claims does not strip the plaintiff of standing as an aggrieved employee to litigate claims on behalf of other employees under PAGA.” (Adolph, supra, 14 Cal.5th at pp. 1113–1114.)

Birnam Wood argues: “Further, since ‘the FAA “requires piecemeal resolution [of related disputes in different forums] when necessary to give effect to an arbitration agreement,” ’ where an overlapping issue is in dispute in both forums, a stay of the non-individual PAGA claim must remain in place until ‘arbitration has been had in accordance with the agreement.’ Adolph, 14 Cal. 5th 1104, 532 P.3d at 694, citing Moses H. Cone Hospital v. Mercury Constr. Corp. (1983) 460 U.S. 1, 20 and 9 U.S.C. § 3 and Code Civ. Proc., … § 1281.4.” (Opposition, at pp. 3-4.)

The actual quotation from Adolph upon which Birnam Wood makes its argument is:

“Indeed, it is a regular and accepted feature of litigation governed by the FAA that the arbitration of some issues does not sever those issues from the remainder of the lawsuit. The high court has long recognized that the FAA ‘requires piecemeal resolution [of related disputes in different forums] when necessary to give effect to an arbitration agreement.’ (Moses H. Cone Hospital v. Mercury Constr. Corp. (1983) 460 U.S. 1, 20, 103 S.Ct. 927, 74 L.Ed.2d 765.) In Dean Witter Reynolds Inc. v. Byrd (1985) 470 U.S. 213, 217, 105 S.Ct. 1238, 84 L.Ed.2d 158, the high court held that the FAA requires arbitrable claims to be compelled to arbitration ‘even where the result would be the possibly inefficient maintenance of separate proceedings in different forums.’ Viking River reiterated that parties may opt for arbitration procedures that depart from standard liberal rules of claim joinder, ‘[a]nd that is true even if bifurcated proceedings are an inevitable result.’ [Citation.] When an action includes arbitrable and nonarbitrable components, the resulting bifurcated proceedings are not severed from one another; rather, the court may ‘stay the trial of the action until such arbitration has been had in accordance with the terms of the agreement.’ (9 U.S.C. § 3; see Code Civ. Proc., § 1281.4.) In McGill v. Citibank, N.A. (2017) 2 Cal.5th 945, 966, we explained that this principle extends to ‘piecemeal litigation of “arbitrable and inarbitrable remedies derived from the same statutory claim.” ’ (Adolph, supra, 14 Cal.5th at p. 1125.)

Thus, contrary to Birnam Wood’s highly selective and somewhat misleading partial quotation, Adolph holds that a court may stay the trial of the action pending disposition of the arbitration, but does not hold that a trial court must do so.

The Barrera court summarized that case as follows:

“Plaintiffs Mario Barrera and Francisco Varguez sued defendants—a nationwide restaurant chain—to recover civil penalties under [PAGA] for various Labor Code violations suffered by them and by other employees. Defendants moved to compel arbitration. The trial court denied the motion and defendants appealed. [¶] Based on [Viking River] and the [FAA], we conclude the parties’ agreements require arbitration of plaintiffs’ PAGA claims that seek to recover civil penalties for Labor Code violations committed against plaintiffs. On an issue of California law that the California Supreme Court has recently resolved, we conclude plaintiffs’ PAGA claims that seek to recover civil penalties for Labor Code violations committed against employees other than plaintiffs may be pursued by plaintiffs in the trial court.” (Barrera, supra, 95 Cal.App.5th at p. 70, fn. omitted.)

With respect to a stay, the Barrera court stated: “In their reply brief, defendants agree that the non-individual PAGA claims should be stayed, but argue the stay should be imposed until the arbitration of the individual claims is completed. As support, defendants cite both the FAA and the California Arbitration Act, which provide that where a court orders arbitration on an issue in any proceeding before the court, the court upon application or motion ‘shall’ stay proceedings pending completion of the arbitration. [Citations.] Defendants additionally cite to California case law holding that when ‘issues subject to litigation under ... PAGA might overlap those that are the subject to arbitration of ... individual claims, the trial court must order an appropriate stay of trial court proceedings.’ (Franco v. Arakelian Enterprises, Inc. (2015) 234 Cal.App.4th 947, 966.)

“Here, the trial court denied defendants’ stay request, which was based on different reasons than the ones they now raise. Specifically, defendants requested a stay until then pending Viking River was decided, but the trial court denied the request because it declined to speculate on when and how Viking River would be decided. Because the court did not have an opportunity to rule on the stay request based on the reasons now raised by defendants, we remand the matter for the trial court to determine whether a stay of plaintiffs’ non-individual PAGA claims would be appropriate under the circumstances. (Cf. [Seifu v. Lyft, Inc. (2023) 89 Cal.App.5th 1129, 1143] [because trial court did not have the opportunity to rule on the defendant’s stay request, matter was remanded to allow court to determine in the first instance whether a stay of the plaintiff’s non-individual claims was warranted]; [Nickson v. Shemran, Inc. (2023) 90 Cal.App.5th 121, 135] [‘We leave management of the superior court litigation during the pendency of arbitration to the trial court’s sound discretion’].)” (Barrera, supra, 95 Cal.App.5th at p. 95.)

Barrera cited Franco only to identify the argument made by one party, not as a statement of the applicable law. Indeed, as quoted above, the next paragraph clearly holds that a stay is discretionary and not mandatory (which would otherwise leave nothing for the Barrera trial court to decide on remand). This is consistent with the California Supreme Court’s statement in Adolph, decided after Franco and quoted above, that the trial court “may” stay the court proceedings rather than “must” stay the trial court proceedings.

This court thus determines that it has discretion to determine whether to stay, or as here, whether to maintain a stay of court proceedings pending disposition of the arbitration.

In exercising its discretion, the court will deny the motion to lift the stay at this time. While recognizing that a stay is not legally required, that there are reasons why it may be productive to litigate the PAGA claims now, and that proceeding with the PAGA claims may generally be consistent with the legislative purposes behind PAGA, the court finds that countervailing factors more strongly favor maintenance of the stay.

Neither Arriaza nor Birnam Wood present any evidence in support of or in opposition to the motion, each relying entirely upon argument and unsupported assertions as to the procedural posture of the arbitration. Nevertheless, both parties assert that arbitration proceedings have been progressing and that arbitration is now set for hearing between late February and early March 2024. (Reply, at p. 5; Opposition, at pp. 2-3.) Arriaza argues that these dates may be continued because of discovery disputes in the arbitration. There is no evidence before the court to show that, even if there is a continuance, the arbitration will not proceed to hearing in a relatively short period of time. It does not appear that continuing the stay will involve significant further delay before the merits of the arbitration are decided.

Additionally, even if the arbitration is delayed because of discovery disputes, the arbitration is a mechanism by which legal issues, including discovery, can be addressed and resolved in the limited context of Arriaza’s individual claims. The resolution of such issues may not be binding on this court, but such resolution has the profoundly useful function of informing the parties of how a neutral party views such issues. Such information should help to streamline and guide further litigation in this court, and may also promote settlement. Considering the relative progress of the arbitration and the already existing stay in this court action, the court finds that maintaining the stay pending disposition of the arbitration or further order of the court to be in the best interests of justice and judicial economy.