Talia Keeling vs Victoria's Secret Stores LLC

Case Number

23CV05610

Case Type

Hearing Date / Time

Mon, 04/22/2024 - 10:00

Nature of Proceedings

Motion: Compel re: Individual Arbitration and Stay Representative PAGA Claims; Memorandum of points and authorities in support

Tentative Ruling

Talia Keeling v. Victoria’s Secret Stores, LLC.   

Case No. 23CV05610

Hearing Date: April 22, 2024                                                  

HEARING:              Defendants’ Motion to Compel Individual Arbitration and Stay Representative PAGA Claims

ATTORNEYS:        For Plaintiff Talia Keeling: Piya Mukherjee, Nicholas J. De Blouw

                                    For Defendant Victoria’s Secret Stores, LLC.: Jennifer F. Delarosa, Phillip J. Eskenazi

                                                           

TENTATIVE RULING:

Defendants’ Motion to Compel Individual Arbitration is granted.  The representative PAGA claims are ordered stayed pending the completion of arbitration.

Background:

This action commenced on December 19, 2023, by plaintiff Talia Keeling, on behalf of the State of California, as private attorney general (“plaintiff”), filing her representative action complaint for civil penalties for violation of the Private Attorneys General Act (“PAGA”) pursuant to Labor Code section 2699, et seq. against defendant Victoria’s Secret Stores, LLC. (“defendant”).

As alleged in the complaint:

Plaintiff seeks “to recover PAGA civil penalties for herself, and on behalf of all current and former aggrieved employees that worked for defendant.” (Compl. ¶¶ 1, 7.)

Plaintiff was employed by defendant from February 2022 to May 30, 2023, as a non-exempt employees, paid on an hourly basis, and entitled to legally required meal and rest periods and payment of minimum and overtime wages for all time worked. (Compl. ¶ 6.)

Defendant requires plaintiff and the aggrieved employees to work without paying them for all the time that they are under defendant’s control. (Compl. ¶ 11.) Defendant established a company policy and procedure of rounding the actual time worked and recorded by plaintiff and the aggrieved employees, always to the benefit of defendant. (Ibid.) Defendant requires plaintiff and the aggrieved employees to work “off the clock.” (Ibid.)

Defendant failed to provide plaintiff and the aggrieved employees required meal periods. (Compl. ¶ 14.) Defendant failed to provide plaintiff and the aggrieved employees required rest periods and did not permit them to leave the work premises during rest periods. (Compl. ¶ 15.) Defendant failed to accurately record and pay plaintiff and the aggrieved employees for the actual amount of time the employees worked. (Compl. ¶ 16.)

Defendant failed to pay plaintiff and the aggrieved employees within seven days of the close of the payroll period and underpaid sick pay wages. (Compl. ¶¶ 19, 20.)

Defendant now moves to enforce an arbitration agreement, entered into by the parties, as to plaintiff’s individual PAGA claims. Defendant also moves to stay the representative PAGA claims pending the completion of arbitration.

Plaintiff opposes the motion.

Analysis:

          Request for Judicial Notice

Defendant asks the court to take judicial notice of a Statement of Decision in a San Bernardino County Superior Court case as well as a Court Order in an Alameda County Superior Court Case.

Another trial court’s statements or ruling, in an unrelated case, has no bearing or precedential value as to the present matter. (See Santa Ana Hospital Medical Center v. Belshe (1997) 56 Cal.App.4th 819, 831.)

Exercising its discretion pursuant to Evidence Code section 452, subdivision (d), the court declines to take judicial notice of the requested documents. The court will also disregard the citations to the other trial courts’ statements that are contained in defendants’ moving and reply papers.

            Arbitration

“Under both federal and California state law, arbitration is a matter of contract between the parties.” (Badie v. Bank of America (1998) 67 Cal.App.4th 779, 787.)

“A written agreement to submit to arbitration an existing controversy or a controversy thereafter arising is valid, enforceable and irrevocable, save upon such grounds as exist for the revocation of any contract.” (Code Civ. Proc., § 1281.)

“General principles of contract law determine whether the parties have entered a binding agreement to arbitrate.” (Craig v. Brown & Root, Inc. (2000) 84 Cal.App.4th 416, 420.) “The party seeking arbitration bears the burden of proving the existence of an arbitration agreement, and the party opposing arbitration bears the burden of proving any defense, such as unconscionability.” (Pinnacle Museum Tower Assn. v. Pinnacle Market Development (US), LLC (2012) 55 Cal.4th 223, 236.)

Plaintiff does not dispute that she entered into a valid binding arbitration agreement with defendant. Rather, the sole argument made by plaintiff is that the arbitration language constitutes a wholesale PAGA waiver and is therefore invalid.

Plaintiff is correct in her argument that pursuant to Viking River Cruises, Inc. v. Moriana (2022) 596 U.S. 639 (Viking River), as well as other cases, the provision would be invalid “if construed as a wholesale waiver of PAGA claims.” (Id. at p. 662.) Defendant does not dispute that the statement of the law is correct. Rather, defendant argues that the arbitration agreement does not constitute a wholesale waiver of plaintiff’s PAGA claims and remains valid as it pertains to plaintiff’s individual claims.

Both plaintiff and defendant are aware of the relevant cases pertaining to arbitration of PAGA claims. However, plaintiff’s interpretation of those cases, as applied to the present matter, is incorrect.

“In Iskanian [v. CLS Transportation Los Angeles, LLC (2014) 59 Cal.4th 349], the California Supreme Court held that an “ ‘arbitration agreement requiring an employee as a condition of employment to give up the right to bring representative PAGA actions in any forum is contrary to public policy’ ” because such an agreement seeks to exempt employers from responsibility for their legal violations and violates the statutory rule that “ ‘ “a law established for a public reason cannot be contravened by a private agreement.” ’ ” [Citation.] The court emphasized that public policy prohibits such agreements “ ‘whether or not an individual claim is permissible under the PAGA’ ” because “ ‘ “a single-claimant arbitration under the PAGA for individual penalties will not result in the penalties contemplated under the PAGA to punish and deter employer practices that violate the rights of numerous employees under the Labor Code.” ’ ” [Citation.]” (DeMarinis v. Heritage Bank of Commerce (2023) 98 Cal.App.5th 776, 783 (DeMarinis).)

“Iskanian further held its rule was not preempted by the FAA because a PAGA action is not a private dispute, but “ ‘a dispute between an employer and the state [LWDA].’ ” [Citation.] As such, a prohibition against PAGA waivers “ ‘does not interfere with the FAA’s goal of promoting arbitration as a forum for private dispute resolution.’ ” [Citation.]” (DeMarinis, supra, 98 Cal.App.5th at p. 783.)

“In Viking River, the United States Supreme Court held the FAA preempts the rule of Iskanian ‘insofar as it precludes division of PAGA actions into individual and non-individual claims through an agreement to arbitrate.’ (Viking River, supra, 596 U.S. at p. [662].) Central to the court’s holding was its view of the distinction between ‘individual’ and ‘non-individual’ facets of a ‘representative’ PAGA action, which merits a detailed discussion.” (DeMarinis, supra, 98 Cal.App.5th at p. 784.)

“As the Viking River court explained, PAGA ‘tends to use the word “representative” in two distinct ways . . . . [¶] In the first sense, PAGA actions are “representative” in that they are brought by employees acting as representatives—that is, agents or proxies—of the State.’ (Viking River, 596 U.S. at p. [648].) In this sense ‘ “ ‘every PAGA action is . . . representative’ ” and “[t]here is no individual component to a PAGA action.” ’ (Viking River, at p. [648].)” (DeMarinis, supra, 98 Cal.App.5th at p. 784.)

“But PAGA also ‘contain[s] what is effectively a rule of claim joinder’ that allows aggrieved employees to ‘ “seek any civil penalties the state can, including penalties for violations involving employees other than the PAGA litigant herself.” ’ (Viking River, supra, 596 U.S. at pp. [646–647].) Viking River distinguished such ‘non-individual’ PAGA claims arising out of events involving other employees from ‘ “individual” ’ PAGA claims premised on Labor Code violations actually sustained by the plaintiff. (Viking River, at pp. [647–649].)” (DeMarinis, supra, 98 Cal.App.5th at p. 784.)

“Based on this distinction, Viking River held the FAA does not preempt Iskanian’s ‘principal’ rule prohibiting waivers of ‘representative’ PAGA claims ‘in the first sense’ (that every PAGA action is representative) because a PAGA action, which involves a single principal—the LWDA—is structurally different from class actions and therefore does ‘not present the problems of notice, due process, and adequacy of representation that render class arbitration inconsistent with arbitration’s traditionally individualized form.’ (Viking River, supra, 569 U.S. at pp. [647–650, 655–656].)” (DeMarinis, supra, 98 Cal.App.5th at p. 784.)

“However, Viking River found [that the FAA preempts] Iskanian’s secondary rule prohibiting parties from contracting around PAGA’s claim joinder mechanism because the rule interfered with the employer’s ability to enforce arbitration as to [an employee’s] individual PAGA claim. (Viking River, supra, 596 U.S. at [pp. 659–660].) As the court explained, ‘state law cannot condition the enforceability of an arbitration agreement on the availability of a procedural mechanism that would permit a party to expand the scope of the arbitration by introducing claims that the parties did not jointly agree to arbitrate.’ (Id. at [p. 660].) ‘The effect of Iskanian’s rule mandating this mechanism is to coerce parties into withholding PAGA claims from arbitration. . . . This result is incompatible with the FAA.’ (Viking River, at [pp. 661–662].)” (DeMarinis, supra, 98 Cal.App.5th at pp. 784–785.)

“Of significant note, the arbitration agreement in Viking River 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.” ’ (Viking River, supra, 596 U.S. at p. [647].) The court interpreted this clause as permitting the employer to enforce arbitration of just the individual PAGA claim.[4] (Viking River, at [pp. 649–650].)” (DeMarinis, supra, 98 Cal.App.5th at p. 785.)

The arbitration agreement at issue provides, in relevant part:

“In exchange for the offer of employment extended to YOU, and/or YOUR continued employment with Employer and its successors or assigns, along with the mutual promises in this Agreement, YOU and Employer agree that, except as explicitly provided herein, any dispute between YOU and Employer (including agents of Employer, Employer’s successors and assigns, and Employer’s subsidiaries or related companies) that arises, or has arisen, out of YOUR employment or the termination of YOUR employment shall be settled by binding arbitration. THIS AGREEMENT MEANS THAT, EXCEPT AS EXPLICITLY PROVIDED HEREIN, THERE WILL BE NO COURT OR JURY TRIAL OF DISPUTES BETWEEN YOU AND EMPLOYER WHICH ARISE, OR HAVE ARISEN, OUT OF YOUR EMPLOYMENT OR THE TERMINATION OF YOUR EMPLOYMENT. THIS AGREEMENT CONTAINS DIRECTIONS IF YOU WISH TO OPT OUT OF THE AGREEMENT. PLEASE CAREFULLY READ ALL PARTS OF THIS AGREEMENT.” (Oimas Dec., Exh. C.)

“This Agreement is intended to be broad and to cover, to the extent permitted by law, all disputes between YOU and Employer that arise, or have arisen, out of your employment or termination of employment . . . “ (Ibid.)

“REPRESENTATIVE ACTION WAIVER. To the extent permissible by law, there shall be no right or authority for any dispute to be arbitrated as a representative action or as a private attorney general action, including but not limited to claims brought pursuant to the Private Attorney General Act of 2004, Cal. Lab. Code § 2698, et seq. (“Representative Action Waiver”). THIS MEANS THAT, TO THE EXTENT CONSISTENT WITH APPLICABLE LAW, YOU MAY NOT SEEK RELIEF ON BEHALF OF ANY OTHER PARTIES IN ARBITRATION, INCLUDING BUT NOT LIMITED TO SIMILARLY AGGRIEVED EMPLOYEES. THE ARBITRATOR’S AUTHORITY TO RESOLVE ANY DISPUTE AND TO MAKE WRITTEN AWARDS WILL BE LIMITED TO YOUR INDIVIDUAL CLAIMS.” (Ibid.)

“The obligation to arbitrate claims under this Agreement may be enforced in any court of competent jurisdiction, pursuant to the Federal Arbitration Act, 9 U.S.C. §§ 1-16. YOU and Employer acknowledge and agree that the FAA shall govern the interpretation and enforcement of this Agreement, and all proceedings pursuant to this Agreement.” (Ibid.)

“If any part of this Agreement is found to be unenforceable by a court of competent jurisdiction, the court shall reform the Agreement to the extent necessary to cure the unenforceable part(s), and YOU and Employer will arbitrate the dispute(s) without reference to or reliance upon the unenforceable part(s). However, if a court of competent jurisdiction finds the Class Action Waiver and/or Representative Action Waiver unenforceable for any reason, then the unenforceable waiver provision shall be severable from this Agreement, and any claims covered by any deemed unenforceable waiver provision may only be litigated in a court of competent jurisdiction, but the remainder of the agreement shall be binding and enforceable.” (Ibid.)

As worded, the language of the challenged provision does not operate as a wholesale waiver of PAGA claims. It provides that plaintiff “may not seek relief on behalf of any other parties in arbitration and that the arbitration will be limited to plaintiff’s individual claims.” Because the language in the agreement is under the heading of “Representative Action Waiver,” reading the section as a whole, the agreement only prevents arbitration of plaintiff’s representative PAGA claims. Nowhere in the agreement is plaintiff precluded from bringing a representative PAGA claim outside of arbitration. The relevant sections clearly indicate that plaintiff’s individual claims are subject to arbitration.

To the extent that there exists any ambiguity at all regarding the scope of the waiver, as in Viking River, the arbitration agreement here contains a severability clause which would allow defendant to compel plaintiff to arbitrate her individual PAGA claims.

“Thus, Viking River requires enforcement of agreements to arbitrate a PAGA plaintiff’s individual claims if the agreement is covered by the FAA.” (Adolph v. Uber Technologies, Inc. (2023) 14 Cal.5th 1104, 1119.)

By its express wording, the FAA governs the subject arbitration agreement, individual PAGA claims are covered by the arbitration agreement, and plaintiff will be ordered to arbitrate those claims.

Pursuant to Code of Civil Procedure section 1281.4, the representative PAGA claims will be stayed pending completion of the arbitration of plaintiff’s individual PAGA claims.