Ashael Resendiz v. Canyon Restaurant, Ltd., L.P.

Case Number

24CV00190

Case Type

Hearing Date / Time

Mon, 03/17/2025 - 10:00

Nature of Proceedings

Motion To Stay

Tentative Ruling

Ashael Resendiz v. Canyon Restaurant, Ltd., L.P.               

Case No. 24CV00190

           

Hearing Date: March 17, 2025                                               

HEARING:              Motion To Stay

                                                           

ATTORNEYS:        For Plaintiff Ashael Resendiz: Norman B. Blumenthal, Kyle R. Nordrehaug, Aparajit Bhowmik, Jeffrey S. Herman, Sergio J. Puche, Trevor G. Moran, Blumenthal Nordrehaug Bhowmik De Blouw LLP

                             For Defendants Canyon Restaurant, Ltd., L.P., Reunion Boat Canyon, L.P., Reunion Santa Barbara, LLC, Reunion Dos Lagos, Inc., and Scott McIntosh: Landon R. Schwob, Jacob P. Waschak, Ani Boyadjian, Fisher & Phillips LLP

TENTATIVE RULING:

The motion of defendants for an order to stay proceedings pending appeal is denied.

Background:

On January 16, 2024, plaintiff Ashael Resendiz (Resendiz) filed a complaint alleging one cause of action for civil penalties under Labor Code section 2698 et seq. (the Labor Code Private Attorneys General Act of 2004 or PAGA). In the complaint, Resendiz asserts that she brings the complaint on behalf of the State of California with respect to herself and all employees or individuals who are or previously were employed by or staffed with defendant Canyon Restaurant Ltd., L.P. (Canyon) in California as non-exempt employees from September 27, 2022. (Compl., ¶¶ 1, 7-8 & 36.) Resendiz alleges in the complaint that Canyon failed to properly record and provide meal and rest periods, pay minimum wages, pay overtime and sick time wages, provide reimbursement for required business expenses, timely provide wages when due including upon termination, provide complete and accurate wage statements, and provide suitable seating to the aggrieved employees. (Id. at ¶¶ 11-31 & 38.)

On March 1, 2024, Canyon filed its answer to the complaint, generally denying its allegations and asserting thirty-six affirmative defenses.

On May 31, 2024, Resendiz filed three amendments to the complaint substituting Reunion Boat Canyon, L.P., Reunion Santa Barbara, LLC, Reunion Dos Lagos, Inc. (collectively, the Reunion Defendants), and Scott McIntosh (McIntosh) for, respectively, fictitiously named defendants designated as Does 1 through 4.

On July 17, 2024, Resendiz filed a request for dismissal of the non-representative or individual PAGA claim alleged in the complaint, without prejudice. In the request for dismissal, Resendiz states that she intends to proceed in this action on behalf of aggrieved employees only, and not in any individual capacity. (July 17, 2024, Request at p. 1, ll. 2-5.) The request for dismissal is supported by a declaration of Resendiz’s counsel, Sergio Julian Puche, who declares that Resendiz wishes to proceed with representative claims only under PAGA on behalf of the State of California. (Puche Decl., ¶¶ 4-5.)

On July 24, 2024, the Court entered an order dismissing without prejudice any claim alleged by Resendiz in the complaint in her individual capacity.

On August 7, 2024, Canyon, the Reunion Defendants, and McIntosh (collectively, defendants) filed a motion (the arbitration motion) for an order compelling arbitration and staying this litigation, which was opposed by Resendiz.

On October 14, 2024, the Court issued the following ruling as reflected in the Minute Order entered on the same date:

“The parties here do not dispute that there exists a valid, written agreement to arbitrate (the arbitration agreement) that encompasses the individual PAGA claim alleged in the complaint and which Resendiz voluntarily signed on August 8, 2018. (Ramsey Decl., Exh. 1 at ¶ 2; Herman Decl. [same].) Therefore, defendants have met their burden to show the existence of a valid written agreement to arbitrate which encompasses the nonrepresentative or individual PAGA claim alleged in the complaint. (Rosenthal v. Great Western Fin. Securities Corp. (1996) 14 Cal.4th 394, 413 (Rosenthal); Cheng-Canindin v. Renaissance Hotel Associates (1996) 50 Cal.App.4th 676, 683 [“[u]nder both federal and state law, the threshold question presented by a petition to compel arbitration is whether there is an agreement to arbitrate”]; Chiron Corp. v. Ortho Diagnostic Systems, Inc. (9th Cir. 2000) 207 F.3d 1126, 1130 [under the FAA, the court must determine “(1) whether a valid agreement to arbitrate exists and, if it does, (2) whether the agreement encompasses the dispute at issue”].)

In addition, Resendiz offers no factual or legal argument to show that the arbitration agreement is in any respects unconscionable, nor does Resendiz contend that the Reunion Defendants or McIntosh may not, as nonsignatory defendants, enforce the arbitration agreement. (Rosenthal, supra, 14 Cal.4th at p. 413 [party raising a defense to enforcement of arbitration agreement bears the burden to show any facts necessary to the defense]; see also, Thomas v. Westlake (2012) 204 Cal.App.4th 605, 614 [discussion of exception to rule that only signatories may enforce an arbitration agreement]; Victrola 89, LLC v. Jaman Properties 8 LLC (2020) 46 Cal.App.5th 337, 353 [discussion of circumstances under which plaintiff may be compelled to arbitrate claims against a non-signatory defendant].)

In the notice of the present motion, defendants assert as grounds for the motion that Resendiz waived any representative claims under PAGA. Notwithstanding the grounds asserted in the notice, wholly absent from the supporting memorandum is any reasoned argument showing that the nonindividual or representative PAGA claim alleged in the complaint was waived by Resendiz. (See, e.g., Memo at pp. 11-13 [requesting an order staying non-individual or representative PAGA claims].) Moreover, to the extent defendants contend that there exists a wholesale waiver by Resendiz of any representative claims that may be brought under PAGA, any such waiver is invalid. (Adolph v. Uber Technologies, Inc. (2023) 14 Cal.5th 1104, 1114, 1117-1119 (Adolph).)

Furthermore, Resendiz is not required to allege an individual PAGA claim in order to maintain standing to pursue a representative action under PAGA, provided Resendiz alleges he was an employee of defendants against whom one or more of the violations alleged in the complaint was committed. (Adolph, supra, 14 Cal.5th at pp. 1114, 1117-1119; see also Balderas v. Fresh Start Harvesting, Inc. (2024) 101 Cal.App.5th 533, 538-539.) Defendants fail to show why Resendiz has failed to allege that he suffered a Labor Code violation while employed by defendants such that Resendiz lacks standing to bring a representative claim under PAGA.

Though Resendiz does not dispute that there exists a valid and enforceable agreement to arbitrate his individual PAGA claim, Resendiz contends that because he has dismissed the individual, non-representative component of the PAGA claim alleged in the complaint, only the nonindividual components of the PAGA cause of action remain which Resendiz contends cannot be compelled to arbitration. (See Adolph, supra, 14 Cal.5th at pp. 1117-1118 [arbitration agreement purporting to waive nonindividual PAGA claims is unenforceable]; Viking River Cruises, Inc. v. Moriana (2022) 596 U.S. 639, 662.) In response, defendants perplexingly appear to contend that, though Resendiz has voluntarily dismissed the individual claim alleged in the complaint, there remain individual claims alleged under PAGA that Resendiz is required to submit to arbitration pursuant to the arbitration agreement because Resendiz seeks to recover PAGA penalties on behalf of himself.

“Pursuant to Code of Civil Procedure section 581, subdivisions (b) and (c), plaintiffs have the right to voluntarily dismiss an entire action, or causes of action within a pleading, before the commencement of trial. A request for a dismissal is usually effective upon filing, and no other action by the clerk or the court is required.” (Law Offices of Andrew L. Ellis v. Yang (2009) 178 Cal.App.4th 869, 876, original italics [also noting that upon the filing of a request to voluntarily dismiss a matter, “the trial court loses jurisdiction to act” except as to awarding costs and statutory attorney’s fees].) Court records detailed above reflect that Resendiz has voluntarily dismissed, without prejudice, any and all individual claims under PAGA alleged in the complaint. Therefore, the only claims remaining in this litigation are the nonindividual or representative claims alleged on behalf of other aggrieved employees under PAGA. For these reasons, ordering Resendiz to arbitrate an individual claim that has been voluntarily dismissed would be futile. (See Glaser, Weil, Fink, Jacobs & Shapiro, LLP v. Goff (2011) 194 Cal.App.4th 423, 444-445 [the law does not require futile acts].) Defendants also fail to address the question of whether or not the Court presently has jurisdiction to order Resendiz to arbitrate a claim that has been voluntarily dismissed. Moreover, defendants do not appear to contend that Resendiz must arbitrate the representative PAGA action.

Furthermore, the Court interprets any language appearing in the complaint or request for dismissal alleging that Resendiz is an aggrieved employee as effectively asserting that the Labor Code violations at issue in this action were also committed against Resendiz. (See, e.g., Kim v. Reins International California, Inc. (2020) 9 Cal.5th 73, 83-84 [discussion of PAGA standing].) In addition, to the extent defendants contend that Resendiz is not an “aggrieved employee” or Resendiz attempts to seek recovery for an individual claim under PAGA, the parties may address these issues at a procedurally appropriate time in a procedurally appropriate manner.

For all reasons discussed above, as the individual component of the PAGA claim alleged in the complaint has been voluntarily dismissed by Resendiz, the Court will deny the motion.

Objections to and request to strike defendants’ evidence:

In support of his opposition to the motion, Resendiz asserts objections to the declaration of Elisabeth Ramsey (Ramsey) submitted by defendants, and requests an order striking the Ramsey declaration. As grounds for the objections and request to strike, Resendiz asserts that exhibit 2 to the Ramsey declaration includes documents that disclose Resendiz’s full social security number and other private contact information which, according to Resendiz, have no evidentiary value and violate California Rules of Court, rule 1.201. (Note: Undesignated rule references shall be to the California Rules of Court unless otherwise indicated.)

Exhibit 2 to the Ramsey declaration submitted in support of the motion includes a form W-4 in which appears Resendiz’s full social security number. Rule 1.201 provides that, “[i]f an individual’s social security number is required in a pleading or other paper filed in the public file, only the last four digits of that number may be used.” (Cal. Rules of Court, rule 1.201(a)(1).) The requirement to use only the last four digits of an individual’s social security number is intended to “protect personal privacy and other legitimate interests ….” (Cal. Rules of Court, rule 1.201(a).) Further, “[t]he responsibility for excluding or redacting identifiers identified in (a) from all documents filed with the court rests solely with the parties and their attorneys.” (Cal. Rules of Court, rule 1.201(b).) Because defendants have failed to redact the social security number appearing in exhibit 2 to the Ramsey declaration, defendants have violated the provisions of rule 1.201(a)(1).

With respect to the request of Resendiz to strike the Ramsey declaration based on defendants’ failure to comply with rule 1.201, the Court finds that there exists an overriding interest in Resendiz’s personal privacy with respect to, and a legitimate interest in preventing the disclosure of, Resendiz’s social security number which, under the express provisions of rule 1.201, overcomes the public’s right to access this information. As defendants have publicly filed the Ramsey declaration without first redacting the social security number appearing in exhibit 2 of that declaration, as required under rule 1.201(a)(1) & (b), and as the Court requires an appropriate record on which to determine the present motion, there exists no less restrictive means to achieve the overriding interest discussed above apart from sealing the Ramsey declaration. Therefore, the Court will order that the Ramsey declaration be filed under seal. Further, the Court will order defendants to, on or before October 21, 2024, file and serve a public version of the Ramsey declaration which redacts the social security number appearing in exhibit 2.

To the extent defendants fail to file a public redacted version of the Ramsey declaration in compliance with this ruling, the Court will order defendants’ counsel, Landon R. Schwob, Jacob P. Waschak, and Ani Boyadjian, to appear on November 4, 2024, at 10:00 a.m. in this Department, and to show cause why monetary sanctions not to exceed $1,500 should not be imposed against them for violating the Court’s order. (Code Civ. Proc., § 177.5; Seykora v. Superior Court (1991) 232 Cal.App.3d 1075, 1081.) If necessary, defendants’ counsel shall file and serve a written response to the Court’s order to show cause on or before October 28, 2024. Should defendants comply with the Court’s ruling herein with respect to the filing of a public redacted version of the Ramsey declaration, no appearances at the order to show cause shall be necessary.

The Court’s ruling is without prejudice to the filing of a procedurally and substantively appropriate motion to seal by Resendiz to the extent Resendiz contends that there exist facts sufficient to justify the sealing of any other record or information submitted by defendants in support of the motion. (Cal. Rules of Court, rule 2.551.)

As to the remaining objections asserted by Resendiz, the Court considers only admissible evidence that is relevant to the issues presented in determining the present motion.”

(Oct. 14, 2024, Minute Order.)

Pursuant to the Minute Order, the Court denied the arbitration motion and ordered defendants to, on or before October 21, 2024, file and serve a public redacted version of the declaration of Elisabeth Ramsey filed by defendants on August 7, 2024, in support of the arbitration motion.

On October 15, 2024, defendants filed a redacted version of the declaration of Elisabeth Ramsey in compliance with the Minute Order.

Court records reflect that on November 6, 2024, defendants filed a notice of appeal from the Minute Order. Court records further reflect that on November 18, 2024, defendants filed a notice designating the record on the appeal.

On December 26, 2024, defendants filed the present motion (the stay motion) for an order staying these proceedings pending defendants’ appeal from the Minute Order. The stay motion is opposed by Resendiz.

Analysis:

Generally, and subject to exception, “the perfecting of an appeal stays proceedings in the trial court upon the judgment or order appealed from or upon the matters embraced therein or affected thereby, including enforcement of the judgment or order….” (Code Civ. Proc., § 916.) Relevant here, the perfecting of an appeal from an order denying a petition to compel arbitration “shall not automatically stay any proceedings in the trial court during the pendency of the appeal.” (Code Civ. Proc., § 1294, subd. (a).) (Note: Undesignated code references herein shall be to the Code of Civil Procedure unless otherwise indicated.)

As grounds for the stay motion, defendants assert that the arbitration agreement that was the subject of the arbitration motion is governed by the Federal Arbitration Act (the FAA), codified as chapter 1 of title 9 of the United States Code. Defendants contend that, pursuant to the FAA, a district court must stay proceedings while an appeal taken from an order denying a petition to compel arbitration under section 16(a) of the FAA remains ongoing. (See Coinbase, Inc. v. Bielski (2023) 599 U.S. 736, 741 [“the district court must stay its proceedings while the interlocutory appeal on arbitrability is ongoing”].) Because section 1294 singles out or targets arbitration, and applies what defendants characterize as a rule that is hostile to arbitration and not generally applicable to all contracts, defendants argue, section 1294 is preempted by the FAA.

Defendants further contend that if their appeal is successful and Resendiz is required to submit her claim to arbitration, any time expended by defendants to litigate in court will be repeated in arbitration, and that defendants would be denied a right to more streamlined and cost-effective procedures. Defendants further assert that, to the extent an arbitrator finds that Resendiz is not an aggrieved employee, Resendiz’s representative claim would be precluded. For these reasons, defendants argue, they will be prejudiced if these proceedings are not stayed during the pendency of defendants’ appeal.

In the Minute Order, the Court determined that there exist no claims alleged by Resendiz in the complaint which must be submitted to arbitration pursuant to the arbitration agreement at issue in the arbitration motion. “[T]he FAA does not require parties to arbitrate when they have not agreed to do so, [citation], nor does it prevent parties who do agree to arbitrate from excluding certain claims from the scope of their arbitration agreement…[citation].” (Volt Information Sciences, Inc. v. Board of Trustees of Leland Stanford Junior University (1989) 489 U.S. 468, 478 (Volt).) Considering the Court’s ruling on the arbitration motion, defendants have failed to explain why the FAA, or federal law interpreting its provisions, governs the Court’s determination of the stay motion. Resendiz presently disputes whether the FAA governs the parties’ arbitration agreement, and the Court did not reach this issue in the Minute Order as further detailed above.

In addition, though the FAA “preempts any state rule that discriminates on its face against arbitration” (Kindred Nursing Centers Ltd. Partnership v. Clark (2017) 581 U.S. 246, 247), “a state rule is not preempted merely because it is specific to arbitration.” (Keeton v. Tesla, Inc. (2024) 103 Cal.App.5th 26, 34-35.) The FAA pre-empts only those laws “which ‘require a judicial forum for the resolution of claims which the contracting parties agreed to resolve by arbitration.’ [Citations.].” (Volt, supra, 489 U.S. at p. 478.)

The provisions of section 1294, subdivision (a), operate only to the extent a trial court enters an order denying a motion to compel arbitration, and an appeal from that order is perfected. Under these circumstances, section 1294 does not disfavor  or interfere with the enforcement of valid or enforceable arbitration agreements, prevent arbitrations from proceeding “in the manner provided for” in an underlying arbitration agreement, or prohibit or discriminate against claims which must be submitted to arbitration. (9 U.S.C. § 4; see also AT&T Mobility LLC v. Concepcion (2011) 563 U.S. 333.) Further, the statute does not on its face require a judicial forum for the resolution of otherwise arbitrable claims. (Volt, supra, 489 U.S. at pp. 478-479.)

Further, “[t]here is no federal policy favoring arbitration under a certain set of procedural rules[,]” and the United States Supreme Court has “never decided whether the FAA’s more procedural provisions … also apply in state courts.” (Volt, supra, 489 U.S. at p. 469; Badgerow v. Walters (2022) 596 U.S. 1, 8, fn. 2.) Subdivision (a) of section 1294 is a procedural rule under which a trial court is given the discretion to determine whether the underlying proceedings should continue or be stayed pending an appeal. For these reasons, defendants have failed to show that section 1294 is pre-empted by the FAA. (Shepard v. Edward Mackay Enterprises, Inc. (2007) 148 Cal.App.4th 1092, 1101 [“[t]he party claiming a state law is preempted by federal legislation has the burden of demonstrating preemption”].)

Moreover, “the purpose of the automatic stay provision of section 916, subdivision (a) ‘is to protect the appellate court’s jurisdiction by preserving the status quo until the appeal is decided. The [automatic stay] prevents the trial court from rendering an appeal futile by altering the appealed judgment or order by conducting other proceedings that may affect it.’ [Citation.]” (Varian Medical Systems, Inc. v. Delfino (2005) 35 Cal.4th 180, 189.) Defendants’ arguments arise from a presumption that the Court of Appeal will reverse the Minute Order. Even if defendants’ appeal is successful, by expressly exempting the perfecting of defendants’ appeal from the automatic stay imposed under section 916, subdivision (a), the Legislature has indicated that the underlying proceedings may continue notwithstanding their impact on the effectiveness of the appeal. (See Elsea v. Saberi (1992) 4 Cal.App.4th 625, 629.) For these reasons, the concerns raised by defendants in the stay motion are, by themselves, insufficient to warrant a stay of these proceedings.

As to defendants’ contention that they will be unable to recover their litigation costs and fees if this matter were allowed to continue during the pendency of the appeal, “a court ordinarily has inherent power, in its discretion, to stay proceedings when such a stay will accommodate the ends of justice.” (People v. Bell (1984) 159 Cal.App.3d 323, 329.) Defendants fail to explain why they would not also incur nonrecoverable costs and fees to arbitrate the claim alleged by Resendiz, including to the extent discovery is permitted under the parties’ arbitration agreement or with respect to the issue of whether Resendiz is an aggrieved employee under PAGA. Though defendants contend that they will be vindicated in arbitration, defendants also fail to explain why they could not be similarly vindicated if the proceedings were allowed to continue.

For all reasons further discussed above, defendants have failed to show that they will suffer prejudice if this matter were allowed to proceed, or incur any unique or special hardship which is qualitatively different from any hardship that would be incurred by other defendants who appeal from orders denying a motion to compel arbitration. (Kaiser v. Hancock (1914) 25 Cal.App. 323, 328 [absent a showing of any “special circumstances of hardship to defendant”, trial court did not abuse its discretion in refusing a stay pending appeal].)

Further, if the Court were to grant the motion and order these proceedings stayed during the pendency of defendants’ appeal, there exists a risk of increased prejudice to Resendiz resulting from an actual or potential loss of evidence and availability of witnesses. (Bains v. Moores (2009) 172 Cal.App.4th 445, 484 (Bains); St. Paul Fire and Marine Insurance Company v. AmerisourceBergen Corporation (2022) 80 Cal.App.5th 1, 13-14.) A denial of defendants’ request for a stay of these proceedings would also promote the public interest served by PAGA, which is “to advance the state’s public policy of affording employees workplaces free of Labor Code violations, notwithstanding the inability of state agencies to monitor every employer or industry.” (Williams v. Superior Court (2017) 3 Cal.5th 531, 546; Arias v. Superior Court (2009) 46 Cal.4th 969, 986 [noting that actions under PAGA are intended to protect the public]; see also Bains, supra, 172 Cal.App.4th at p. 484 [denial of stay promoted the public’s interest].)

The Court also considers that, in amending section 1294 to prohibit civil proceedings from automatically being stayed and to give courts discretion to stay or continue those proceedings during the pendency of an appeal, the Legislature noted that a postponement of proceedings “poses significant difficulties for … employees, due to the inherent power dynamic between them and the opposing .. employers” who “will have greater resources than individual employees or consumers, and therefore greater capacity to handle a delayed resolution of the dispute.” (Assem. Com. on Judiciary, Analysis of Sen. Bill 365 (2023-2024 Regular Session) as amended May 18, 2023, p. 1.) To prevent employers from “using a common delay tactic” against employees, and considering that employers could, under existing law, “pause” an employee’s case by “by simply filing an appeal of a trial court’s denial of a motion to compel arbitration”, the Legislature amended the statute to provide the court with discretion to allow the employee’s case to move forward “rather than waiting for years while the appeal is heard.” (Id. at p. 5; see also Reed v. Superior Court (2001) 92 Cal.App.4th 448, 455-456 [general discussion].)

Considering the legislative intent in amending section 1294, subdivision (a), a stay of these proceedings would give rise to the type of harm the Legislature specifically intended to prevent in amending section 1294, as further discussed above. Under the totality of the circumstances present here, and for all reasons further discussed above, the Court finds that the ends and interests of justice would be best accommodated by allowing this proceeding to continue during the pendency of defendants’ appeal from the Minute Order. Therefore, and in the interests of promoting judicial efficiency, the Court will exercise its discretion to deny the stay motion.