Canela v. Superior Court CA3

Opinion

Filed 8/26/26 Canela v. Superior Court CA3 NOT TO BE PUBLISHED

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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA THIRD APPELLATE DISTRICT

(San Joaquin)

LUIS CANELA, C104351 Petitioner, (Super. Ct. Nos. STK-CV-UOEv . 2023-0000244, STK-CV-UOE-

2023-0002726)

THE SUPERIOR COURT OF SAN JOAQUIN COUNTY, Respondent;

PITNEY BOWES, INC., et al., Real Parties in Interest.

Petitioner Luis Canela seeks writ review of an order compelling him to arbitrate certain claims in two related actions brought against Pitney Bowes, Inc. (Pitney Bowes) and Randstad US, LLC (Randstad). Randstad, a staffing company, hired Canela as a package handler and placed him on a temporary assignment with Pitney Bowes, a global shipping company. Following his termination from employment after two days of work, Canela filed a putative class action against Randstad and Pitney Bowes alleging violations of the Labor Code and Business and Professions Code. He also filed an action for civil penalties under the Private Attorneys General Act of 2004 (PAGA) (Lab. Code,

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§ 2698 et seq.).1 Randstad and Pitney Bowes filed motions to compel arbitration based on an arbitration agreement signed by Canela during the hiring process. The trial court ultimately granted the motions, finding that the Federal Arbitration Act (FAA) (9 U.S.C. § 1 et seq.) did not apply because Canela qualified for a transportation worker exemption, but California law did not operate to render the arbitration agreement unenforceable.

Although the FAA generally requires courts to enforce arbitration agreements, section 1 of the Act explicitly exempts all “contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce.” (9 U.S.C. § 1.) As the trial court properly found, Canela qualifies for that transportation worker exemption. Thus, the FAA does not apply to the arbitration agreement; rather, the California Arbitration Act (CAA) (Code Civ. Proc., § 1280 et seq.) applies. Like the FAA, the CAA favors arbitration agreements; but unlike the FAA, the CAA does not preempt state laws allowing a party to maintain an action in court despite the existence of such an agreement.

Canela petitioned this court for writ review, claiming the trial court erred in granting the motions to compel arbitration because (1) he is exempt from the FAA, and (2) California law renders the arbitration agreement unenforceable (a) in its entirety under section 432.6, (b) by application of section 229 regarding his claims for unpaid wages, and (c) as to his PAGA claims.

We conclude (1) Canela is exempt from the FAA based on the transportation worker exemption, and (2) under California law, (a) section 432.6 does not render the arbitration agreement unenforceable; (b) section 229 allows Canela to bring certain claims for unpaid wages in court notwithstanding the arbitration agreement, and such

1 Undesignated statutory references are to the Labor Code.

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claims must be excluded from the order compelling arbitration, therefore the trial court must determine whether any of Canela’s claims fall within section 229; and (c) the trial court cannot split Canela’s PAGA claims, but it must consider whether to stay the PAGA action pending the arbitration of any arbitrable claims.

We are certainly cognizant of the bigger picture, that Canela seeks to assert a class action and a PAGA action based on wrongs he may have personally experienced, if at all, in connection with two days of work. It is not lost on us that this may be a good example as to why employers favor alternative dispute resolution such as arbitration. But our task in this writ proceeding is not to assess ultimate case merit or value; it is simply to determine whether the arbitration agreement is enforceable under applicable law.

Based on our analysis of the narrow questions presented, we will issue a peremptory writ of mandate directing the trial court to vacate its order compelling arbitration and to reconsider the Randstad’s and Pitney Bowes’ motions to compel arbitration in accordance with this opinion. Specifically, we will direct the trial court to determine whether any of Canela’s claims fall within section 229, and whether to stay Canela’s PAGA action pending the arbitration of any arbitrable claims.

BACKGROUND

Randstad hired Canela as a package handler and placed him on a temporary work assignment with Pitney Bowes. As part of the hiring process, Canela electronically signed an arbitration agreement requiring Canela and Randstad “to use binding arbitration, instead of going to court, for any ‘Covered Claims’ that arise between [them].” Covered claims under the agreement are “any legal claims belonging to [either party] that relate to [Canela’s] recruitment, hire, employment, client assignments and/or termination including, but not limited to, those concerning wages or compensation … .” The agreement states that the FAA would govern the agreement and that any “state or local laws preempted by the FAA shall not apply … .” The

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agreement also includes a waiver of claims brought on behalf of others and provides that covered claims would “only be arbitrated on an individual basis … .” The agreement further states that any Randstad clients to which Canela provided services on assignment, such as Pitney Bowes, “are intended third-party beneficiaries” of the agreement.2 Two days after being placed on assignment with Pitney Bowes, Canela was fired for insubordination. During those two days, Canela worked in a warehouse, where he removed packages from cargo boxes and placed them on a conveyor belt to be processed for delivery. The cargo boxes arrived by large truck. Based on the shipping labels and packaging slips, Canela believed most of the packages inside the cargo boxes came from outside California.

About a year after his termination, Canela filed a putative class action lawsuit against Randstad and Pitney Bowes. The lawsuit asserted causes of action for (1) failure to pay wages for all hours worked, (2) failure to pay overtime wages, (3) meal period violations, (4) failure to timely pay wages, (5) failure to provide complete and accurate wage statements, (6) failure to pay all wages upon termination, and (7) unfair business practices.

2 Canela also electronically signed a separate temporary worker and arbitration agreement with Pitney Bowes. The arbitration portion of the agreement provides, in relevant part, that Canela and Pitney Bowes agreed that all claims arising out of, or related to, Canela’s assignment with Pitney Bowes would be decided through arbitration and not by a judge or jury. The agreement also states that it applied “without limitation, to claims based upon or related to … wages, minimum wage and overtime or other compensation claimed to be owed, breaks and rest periods, seating, termination, tort claims, equitable claims, and all other federal or state legal claims arising out of or relating to [Canela’s] assignment/relationship with Pitney Bowes … .” This agreement also provides that the FAA would apply and includes a waiver of claims brought on behalf of others.

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The gravamen of the lawsuit was an allegation that Canela and similarly situated hourly employees “worked more minutes per shift than [Randstad and Pitney Bowes] credited them with having worked,” resulting in an underpayment of wages. This underpayment allegedly occurred because (1) employees were required to stand in a line and wait to be checked by security before being allowed to clock in for their shift, after clocking out for meal breaks, and after clocking out for the day, and (2) they were also required to watch training videos while off the clock. To the extent that such employees had already worked eight hours in a work day, or 40 hours in a work week, Randstad and Pitney Bowes were alleged to have failed to pay overtime wages for this off-the-clock time. The complaint also alleged that these security checks discouraged employees from taking off-premises meal breaks and impermissibly cut into their required 30-minute duty-free meal breaks. Based on these alleged violations, Canela further alleged that Randstad and Pitney Bowes violated statutes requiring accurate wage statements and timely payment of wages, both during the employment relationship and upon termination.

Based on the same underlying allegations, Canela filed a separate PAGA lawsuit against Randstad and Pitney Bowes, seeking civil penalties on behalf of the State of California, himself, and similarly situated employees. The trial court ordered the two lawsuits related.

Randstad and Pitney Bowes moved to compel arbitration. They argued that the arbitration agreement between Randstad and Canela was valid, enforceable, and governed by the FAA, which required enforcement of the agreement. Because each of Canela’s claims fell within the scope of the agreement, they asked the trial court to compel individual arbitration of the claims, dismiss the class claims from the class action lawsuit, and stay non-individual PAGA claims pending arbitration of Canela’s individual PAGA claims. Pitney Bowes further argued, among other things, that it was entitled to enforce the agreement as a third-party beneficiary.

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Canela opposed the motions. He argued he was exempt from the FAA because he was a transportation worker who was “engaged in foreign or interstate commerce.” (9 U.S.C. § 1.) Because the FAA did not apply, Canela argued, California law applied and two provisions of the Labor Code precluded arbitration of his claims. The first provision is section 432.6, which prohibits an employer from requiring an employee to sign an arbitration agreement with respect to claims arising under the California Fair Employment and Housing Act or the Labor Code. (§ 432.6.) Canela argued this provision made the arbitration agreement unenforceable. The second provision is section 229, which states that actions brought “to enforce [certain Labor Code provisions] for the collection of due and unpaid wages claimed by an individual may be maintained without regard to the existence of any private agreement to arbitrate.” (§ 229.) Canela argued this provision applied to one of his causes of action and precluded arbitration of that claim.

In their reply briefs, Randstad and Pitney Bowes argued that “Canela’s twoday assignment as a warehouse worker with … Pitney Bowes” did not qualify him for the transportation worker exemption. Pitney Bowes also argued that the arbitration agreement was enforceable under California law even if the FAA did not apply.

While the motions were pending in the trial court, the United States Supreme Court decided Bissonnette v. LePage Bakeries Park St., LLC (2024) 601 U.S. 246 [218 L.Ed.2d 204] (Bissonnette), addressing whether a class of workers must be employed in the transportation industry to qualify for the transportation worker exemption. In addition, the Ninth Circuit Court of Appeals decided Ortiz v. Randstad Inhouse Services, LLC (9th Cir. 2024) 95 F.4th 1152 (Ortiz), holding that a warehouse worker similar to Canela qualified for the FAA exemption. The trial court granted a continuance and allowed the parties to file supplemental briefing on the new authorities.

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Among other things, Randstad argued in its supplemental brief that Canela did not qualify for the transportation worker exemption because he did not prove the packages he handled were in the stream of foreign or interstate commerce, or that he was directly or intimately involved in the transportation of the packages. Randstad further argued the “Bissonnette decision abrogated the reasoning in Ortiz to the extent it adopted a ‘limitless’ interpretation of the exemption that the Supreme Court has now cautioned against.” Pitney Bowes similarly argued in its supplemental brief that both Bissonnette and Ortiz supported the granting of the motions to compel arbitration.

In response, Canela argued that Pitney Bowes admitted to being an international logistics company, therefore many of the packages handled by Canela were either coming from, or going to, locations outside of California. Canela analogized his role in the warehouse to that of the warehouse worker in Ortiz and the baggage ramp supervisor in Southwest Airlines Co. v. Saxon (2022) 596 U.S. 450 [213 L.Ed.2d 27] (Saxon), who was also held to qualify for the transportation worker exemption. Canela argued the entirety of the arbitration agreement was unenforceable under section 432.6, including any class action waiver.

After Randstad and Pitney Bowes filed supplemental reply briefs, the trial court stayed the matter pending a decision from the United States Supreme Court on a petition for writ of certiorari in the Ortiz case, which was ultimately denied. (Randstad Inhouse Services, LLC v. Ortiz (2024) 145 S.Ct. 165 (Mem) [220 L.Ed.2d 25].) The trial court then scheduled oral argument on the motions to compel arbitration and allowed the parties to submit additional supplemental briefing.3

3 In its additional supplemental brief, Pitney Bowes stated it had learned that the warehouse where Canela worked was not operated by Pitney Bowes, but rather a former subsidiary of Pitney Bowes that had since filed for bankruptcy. The statement was

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After hearing oral argument, the trial court granted the motions to compel arbitration. It first concluded that a valid arbitration agreement existed. Then, applying the “two-step analysis adopted from the United States Supreme Court decision in Saxon,” it determined the FAA did not apply because Canela qualified for the transportation worker exemption. With respect to the first step of the analysis, the trial court stated that Canela “belongs to a class of worker comprised of temporary employees working in the Stockton warehouse … that remove packages from [cargo] boxes and place them on the appropriate conveyor belt.” Turning to the second step of the analysis, the trial court noted that Canela “only worked two days at the Stockton warehouse” and that “the parties presented scant evidence of the details surrounding the work [Canela] actually performed.” Nevertheless, based on undisputed evidence that Pitney Bowes is a global logistics company, and on Canela’s declaration that he saw packaging slips and shipping labels indicating that some of the packages were coming from outside of California, the trial court concluded that, “similar to Ortiz, … [Canela] ‘handled [goods] as they went through the process of entering, temporarily occupying, and subsequently leaving the warehouse—a necessary step in their ongoing interstate journey to their final destination.’ [Citation.]”

As to the application of California law, the trial court concluded section 432.6 did not apply. It noted that the Ninth Circuit Court of Appeals had held in Chamber of Commerce of the United States v. Bonta (9th Cir. 2023) 62 F.4th 473 (Bonta) that section 432.6 was preempted by the FAA. In addition, the trial court focused on language in the arbitration agreement stating that any state law preempted by the FAA would not apply to their agreement. The trial court acknowledged caselaw indicating that

supported by a declaration and amended discovery responses filed in the two cases. In its ruling on the motions to compel arbitration, the trial court questioned whether Canela had sued the wrong party, but did not decide the matter. The issue is not before us in this writ proceeding.

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section 229 rendered an arbitration agreement ineffective as to claims for unpaid wages, but the trial court found otherwise in this case based on the permissive word “may” in section 229. Turning to enforceability of the class claim waiver, the trial court concluded that Canela conceded the point by failing to make a showing that the waiver should not be enforced. Finally, the trial court concluded that Canela’s individual PAGA claims were also subject to the arbitration agreement and his non-individual PAGA claims had to be stayed pending arbitration of his individual PAGA claims.

Canela filed a petition for writ of mandate and/or prohibition challenging the trial court’s ruling. This court issued an order to show cause.4 STANDARD OF REVIEW

“Under Code of Civil Procedure section 1281.2, a party to an arbitration agreement may petition the trial court to order the parties to the agreement to arbitrate a dispute.” (Lane v. Francis Capital Management LLC (2014) 224 Cal.App.4th 676, 683 (Lane).) “The trial court may resolve motions to compel arbitration in summary proceedings, in which ‘[t]he petitioner bears the burden of proving the existence of a

4 The issuance of the order to show cause reflected a determination by this court that Canela satisfied the prerequisites for writ review. (Herzog v. Superior Court (2024) 101 Cal.App.5th 1280, 1292, fn. 5.) Nevertheless, Randstad and Pitney Bowes argued in their returns that writ review is not warranted. An order compelling arbitration is interlocutory and not appealable because it does not resolve the issues in controversy. Allowing an appeal would defeat the purpose of the arbitration statute, and hence writ review of orders directing parties to arbitrate is available only in unusual circumstances. (Zembsch v. Superior Court (2006) 146 Cal.App.4th 153, 160.) Such circumstances exist if the matters ordered to arbitration fall outside the scope of the arbitration agreement, or if the arbitration would be unduly time consuming or expensive. (Herzog, at p. 1292, fn. 5.) Here, requiring Canela to arbitrate claims that are not subject to arbitration would amount to a waste of time and money. (See Atlas Plastering, Inc. v. Superior Court (1977) 72 Cal.App.3d 63, 68 [“the expense to the parties in participating in and seeking review of the arbitration is apparent”].) Writ review is appropriate here. (See, e.g., Pagarigan v. Superior Court (2002) 102 Cal.App.4th 1121, 1124 [granting petition for writ of mandate where appellate court agreed state law was not preempted by the FAA].)

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valid arbitration agreement by the preponderance of the evidence, and a party opposing the petition bears the burden of proving by a preponderance of the evidence any fact necessary to its defense. [Citation.] In these summary proceedings, the trial court sits as a trier of fact, weighing all the affidavits, declarations, and other documentary evidence, as well as oral testimony received at the court’s discretion, to reach a final determination. [Citation.]’ [Citation.] ‘We will uphold the trial court’s resolution of disputed facts if supported by substantial evidence. [Citation.] Where, however, there is no disputed extrinsic evidence considered by the trial court, we will review its arbitrability decision de novo.’ [Citations.]” (Ibid.)

The dispositive issues raised in this writ proceeding are whether Canela is exempt from the FAA and whether various provisions of California law, properly interpreted, required the trial court to deny the motions to compel arbitration. Because “FAA applicability is a question of law, we review the trial court’s determination [of that legal question] de novo.” (Betancourt v. Transportation Brokerage Specialists, Inc. (2021) 62 Cal.App.5th 552, 559; see Garrido v. Air Liquide Industrial U.S. LP (2015) 241 Cal.App.4th 833, 839 (Garrido).) We also review questions of statutory interpretation de novo. (Fair Education Santa Barbara v. Santa Barbara Unified School Dist. (2021) 72 Cal.App.5th 884, 894.)

DISCUSSION

I

Canela contends he is exempt from the FAA. We agree. “The FAA provides generally that arbitration agreements are ‘valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.’ ” (Bissonnette, supra, 601 U.S. at p. 250, quoting 9 U.S.C. § 2.) Enacted in 1925, “the FAA was a response to hostility of American courts to the enforcement of arbitration agreements, a judicial disposition inherited from then-longstanding English

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practice.” (Circuit City Stores, Inc. v. Adams (2001) 532 U.S. 105, 111 [149 L.Ed.2d 234].) In order to override the historic refusal of courts to enforce arbitration agreements, “the FAA compels judicial enforcement of a wide range of written arbitration agreements.” (Ibid.)

As relevant here, the FAA’s coverage provision applies to any arbitration agreement involving commerce. (9 U.S.C. § 2) There is no dispute that the arbitration agreement in this case involves commerce within the meaning of the FAA’s coverage provision. The question is whether Canela falls within the FAA’s exemption provision, which states that “nothing herein contained shall apply to contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce.” (9 U.S.C. § 1, italics added.) Unlike the coverage provision’s expansive reach, encompassing any arbitration agreement “involving” commerce, the United States Supreme Court has interpreted the exemption provision, exempting classes of workers “engaged in” commerce, in a more limited manner. That phrase “is ‘controlled and defined by reference to’ the specific categories ‘seamen’ and ‘railroad employees’ that precede it. [Citation.]” (Bissonnette, supra, 601 U.S. at p. 252.) Because “the ‘linkage’ between ‘seamen’ and ‘railroad employees’ is that they are both transportation workers,” the residual clause’s class of workers must be “limited in the same way.” (Id. at p. 253.)

In Saxon, the United States Supreme Court considered whether a ramp supervisor (Saxon) working for Southwest Airlines at an airport qualified for the exemption. The court applied a two-part test to the inquiry. The court first defined the relevant class of workers to which Saxon belonged and then determined whether that class of workers was engaged in foreign or interstate commerce. (Saxon, supra, 596 U.S. at p. 455.) Rejecting Saxon’s argument that qualification for the exemption turned on whether Southwest was engaged in commerce on an “industrywide” level, the court explained that “[t]he word ‘workers’ directs the interpreter’s attention to ‘the performance of work[,]’ ” such that the

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class of workers to which Saxon belongs must be “based on what she does at Southwest, not what Southwest does generally.” (Id. at p. 456, italics omitted.) Saxon’s work frequently required her to load and unload baggage, airmail, and commercial cargo on and off airplanes that travel across the country. (Id. at p. 453.) She therefore belonged to a class of workers who physically loaded and unloaded cargo on and off airplanes on a frequent basis. (Id. at p. 456.) The court explained that Saxon’s class of airplane cargo loaders was engaged in foreign or interstate commerce within the meaning of the exemption because “airline employees who physically load and unload cargo on and off planes traveling in interstate commerce are, as a practical matter, part of the interstate transportation of goods.” (Id. at p. 457.) Clarifying the requirement, the court stated that “any such worker must at least play a direct and ‘necessary role in the free flow of goods’ across borders” and “must be actively ‘engaged in transportation’ of those goods across borders via the channels of foreign or interstate commerce.” (Id. at p. 458; see Flowers Foods, Inc. v. Brock (2026) 608 U.S. __, __ [146 S.Ct. 1358, 1365] [reaffirming Saxon’s holding that “the phrase ‘engaged in’ interstate commerce … denotes a ‘direct,’ ‘necessary,’ and ‘activ[e]’ role in moving goods across borders”].)

In Ortiz, the Ninth Circuit Court of Appeals applied the Saxon framework to determine whether a temporary warehouse worker (Ortiz) qualified for the exemption. (Ortiz, supra, 95 F.4th at pp. 1157-1162.) Ortiz was hired by Randstad and placed with a logistics company (GXO) that operated a warehouse and also distribution facilities for Adidas products. (Id. at p. 1157.) When packages arrived at the warehouse, Ortiz transported them to storage racks to be organized. He also transported packages from the racks to the picking section and helped pickers and outflow workers obtain the packages and prepare them to be shipped to their final destination. (Id. at p. 1158.) He did not unload or load the trucks. (Id. at p. 1161.) Nevertheless, the appellate court concluded Ortiz was a member of a class of workers who “ ‘play[ed] a direct and “necessary role in the free flow of goods” across borders’ and ‘actively “engaged in transportation” ’ of

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such goods.” (Ibid.) Analogizing Ortiz’s role in the warehouse to that of Saxon at the airport, the court explained: “Both Ortiz and Saxon fulfilled an admittedly small but nevertheless ‘direct and necessary’ role in the interstate commerce of goods: Saxon ensured that baggage would reach its final destination by taking it on and off planes, while Ortiz ensured that goods would reach their final destination by processing and storing them while they awaited further interstate transport. [¶] Both were also ‘actively engaged’ and ‘intimately involved with’ transportation: Saxon handled goods as they journeyed from terminal to plane, plane to plane, or plane to terminal, while Ortiz handled them as they went through the process of entering, temporarily occupying, and subsequently leaving the warehouse—a necessary step in their ongoing interstate journey to their final destination. [Citation.] Both were actively engaged in the interstate commerce of goods. If Saxon is an exempt transportation worker, Ortiz is, too.” (Id. at p. 1162.)

This case is not materially distinguishable from Ortiz. Cargo boxes containing individual packages arrived at the warehouse by large truck. Canela unloaded the boxes and placed the packages on a conveyor belt to be processed for delivery. Based on shipping labels and packaging slips, Canela believed that most of the packages inside the cargo boxes came from outside California. The trial court accepted this to be true and also noted undisputed evidence that Pitney Bowes is a global logistics company, supporting a conclusion that the packages Canela placed on the conveyor belt were moving through interstate commerce. It appears Canela did less than Ortiz, who physically moved the goods to racks and then to the picking section, where he also assisted the pickers and the outflow workers. Canela simply unloaded the cargo boxes and placed the packages on a conveyor belt. But both Canela and Ortiz “fulfilled an admittedly small but nevertheless ‘direct and necessary’ role in the interstate commerce of goods.” (Ortiz, supra, 95 F.4th at p. 1162.) Just as “Ortiz ensured that goods would reach their final destination by processing and storing them while they awaited further

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interstate transport,” Canela did the same by unloading the packages from the cargo boxes and placing them on the conveyor belt where others would process them for ultimate delivery. (Ibid.) Ortiz and Canela were “ ‘actively engaged’ and ‘intimately involved with’ ” the transportation of goods because both “handled them as they went through the process of entering, temporarily occupying, and subsequently leaving the warehouse—a necessary step in their ongoing interstate journey to their final destination.” (Ibid.)

Pitney Bowes argues the trial court improperly relied on its business operations, rather than Canela’s actual duties, in concluding that he qualified for the exemption. According to Pitney Bowes, “[t]he nature of [its] general business operations as a global logistics company has nothing to do with whether Canela played a direct and necessary role in the flow of goods across borders.” We disagree. Saxon eschewed the notion that qualification for the exemption should be decided “on an industrywide basis” (Saxon, supra, 596 U.S. at p. 461), but that does not mean the company’s operations were irrelevant to the analysis. The Saxon court did not ignore the fact that Southwest transported people and goods across state lines. It simply explained that the fact that the airline did so did not automatically make “virtually all employees of major transportation providers” transportation workers within the meaning of the exemption. (Ibid.) Similarly, not all Pitney Bowes employees are automatically exempt from the FAA simply because the company is a global logistics company. However, it is a company that moves goods across state lines. Part of the ongoing movement of the goods is “the process of entering, temporarily occupying, and subsequently leaving the warehouse.” (Ortiz, supra, 95 F.4th at p. 1162.) As in Ortiz, Canela had a small but direct and necessary role in that portion of the process. He therefore qualifies for the exemption.

A recent California appellate decision, Doss v. Tesla, Inc. (2026) 121 Cal.App.5th 81, bolsters our conclusion that Canela qualifies for the exemption. There, the court held that Doss, a “yard hostler” employed by Tesla to move trailers containing auto parts

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around Tesla’s factory grounds, belonged to a class of workers who are engaged in interstate commerce for purposes of the exemption. (Id. at p. 93.) The auto parts in the trailers “were shipped to Tesla’s factory in the stream of interstate commerce.” (Id. at p. 90.) Concluding that Doss “played a direct and necessary role in the completion of interstate commercial transactions,” the court explained: “A worker is ‘ “no doubt” ’ engaged in interstate commerce when ‘ “unloading” … cargo from a vehicle carrying goods in interstate transit’ [quoting Saxon, supra, 596 U.S. at pp. 458-459], and while the record here does not indicate that Doss physically unloaded the trailers, he performed preparatory work necessary to that end by moving the trailers from the part of the factory grounds where they were temporarily parked to the warehouse where they could be safely and efficiently unloaded. True, these purely intrastate (and admittedly ‘intrafactory’) activities came at the logistical end of the auto parts’ journey. Importantly, however, there was still a direct ‘nexus to interstate commerce’ [quoting Saxon, at pp. 462–463] because the goods were still packed in the very same trailers that had traveled interstate, and the yard hostlers’ handling of these trailers for subsequent removal of their contents was essential to completion of the interstate delivery.” (Doss, at p. 93, fn. omitted.) If, as Doss held, “the necessary preparatory work of Tesla’s yard hostlers” facilitated the unloading of goods received in interstate commerce and thereby amounted to “activity within the flow of interstate commerce for purposes of section 1,” then Canela’s unloading of packages from cargo boxes and placing them on a conveyor belt where others would process them for ultimate delivery “likewise fits the bill.” (Ibid.)

Two federal district court decisions also support our conclusion. (Mitchell v.

Lineage Logistics Services LLC (E.D. Cal. 2025) 769 F.Supp.3d 1132, 1142-1143 (Mitchell); Nair v. Medline Industries, Inc. (E.D. Cal. 2023, No. 2:22-cv-00331-DAD- JDP) 2023 WL 2636464.) We find them to be persuasive. (See Ram’s Gate Winery, LLC v. Roche (2015) 235 Cal.App.4th 1071, 1080 (Ram’s Gate Winery); Futrell v. Payday California, Inc. (2010) 190 Cal.App.4th 1419, 1432, fn. 6 (Futrell).)

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Whereas the federal district court authorities relied on by Pitney Bowes are inapposite. In Saks v. DSV Air & Sea, Inc. (C.D. Cal. 2025) __ F.Supp.3d __ [2025 WL 2995150], the court concluded the exemption did not apply where the plaintiff worked a desk job for a global logistics company, monitoring the shipment of goods on a computer. In Montes v. Capstone Logistics, LLC (E.D. Cal. 2025) __ F.Supp.3d __ [2025 WL 2505561], the court concluded the exemption did not apply where the plaintiff performed clerical duties in a logistics company’s warehouse. And in Anaya v. Tesla Motors, Inc. (N.D. Cal. 2024, Case No. 24-cv-04206-VC) 2024 WL 4198463, the court concluded the exemption did not apply where the plaintiff, who brought products between a warehouse and the factory floor, produced “no evidence that [his] work played a role in the transportation of goods across borders.” (Id. at p. 1.) None of those decisions involved the physical movement of goods through a warehouse while they were in the process of being shipped in interstate commerce.

We remain persuaded by the reasoning set forth in Ortiz. As the trial court correctly concluded, Canela qualifies for the exemption.

II

Canela further contends the arbitration agreement is unenforceable under California law. Having concluded that the FAA does not apply to the arbitration agreement because of the transportation worker exemption, we must apply the CAA and other applicable provisions of California law. (Mendoza v. Trans Valley Transport (2022) 75 Cal.App.5th 748, 763 (Mendoza); Garrido, supra, 241 Cal.App.4th at p. 841.)

“ ‘California law strongly favors arbitration. Through the comprehensive provisions of the [CAA], “the Legislature has expressed a ‘strong public policy in favor of arbitration as a speedy and relatively inexpensive means of dispute resolution.’ ” ’ ” (Mendoza, supra, 75 Cal.App.5th at p. 763.) Like the FAA, the CAA makes written arbitration agreements “valid, enforceable and irrevocable, save upon such grounds as

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exist for the revocation of any contract.” (Code Civ. Proc., § 1281.) However, unlike the FAA, which preempts conflicting state law, where only the CAA applies, an action may be maintained in court notwithstanding an arbitration agreement if a specific statute so provides. (Garrido, supra, 241 Cal.App.4th at p. 845.)

A

Canela argues the arbitration agreement is unenforceable in its entirety under section 432.6. In relevant part, section 432.6, subdivision (a) prohibits an employer from requiring an applicant to waive any right, forum, or procedure for the redress of a violation of the Labor Code. Subdivision (f) states that section 432.6 does not invalidate a written arbitration agreement otherwise enforceable under the FAA. (§ 432.6, subd. (f).) But as we have explained, in this case the FAA does not apply to the arbitration agreement because of the transportation worker exemption. The parties may not “contract around the FAA’s transportation worker exemption” by declaring that the FAA applies to their agreement. (Rittmann v. Amazon.com, Inc. (9th Cir. 2020) 971 F.3d 904, 919 (Rittmann); see Romero v. Watkins & Shepard Trucking, Inc. (9th Cir. 2021) 9 F.4th 1097, 1101 (Romero).) Nevertheless, section 432.6 does not render the arbitration agreement unenforceable. On this point, although the decision in Bonta, supra, 62 F.4th 473, is distinguishable, it offers helpful background.

Section 432.6 was enacted as part of Assembly Bill No. 51 (2019-2020 Reg. Sess.)

(Assembly Bill 51), which also added section 12953 to the Government Code. That section makes it an unlawful business practice for an employer to violate section 432.6. (Gov. Code, § 12953.) Because section 432.6 is contained in article 3 of the Labor Code, section 433 makes violation of section 432.6 a misdemeanor. (§ 433.) Setting forth the history and purpose of Assembly Bill 51, the court in Bonta explained that the California Legislature, mindful of federal preemption, sought to “craft legislation that would prevent employers from requiring employees to enter into arbitration agreements as a condition of

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employment, while avoiding conflict with the FAA.” (Bonta, supra, 62 F.4th at p. 478.) The Legislature attempted to do so in 2015 by passing a bill that “banned employers from requiring arbitration agreements as a condition of employment and rendered unenforceable any contract including such a requirement.” (Ibid.) That bill was vetoed by Governor Jerry Brown on the ground that the law would likely be struck down as violating the FAA. (Id. at p. 479.) Three years later, the Legislature passed another bill that “prohibited an employer from requiring an employee to waive a judicial forum as a condition of employment,” which was vetoed for the same reason. (Ibid.) Assembly Bill 51 followed and was signed into law by Governor Gavin Newsom. As noted, an employer who violates section 432.6 “has committed a misdemeanor.” (Id. at p. 480.) However, because the Legislature sought to avoid federal preemption, the law does not make the resulting agreement unenforceable, which “resulted in the oddity that an employer subject to criminal prosecution for requiring an employee to enter into an arbitration agreement could nevertheless enforce that agreement once it was executed.” (Ibid.) After reviewing the legislative history, the court in Bonta noted that the Legislature “was persuaded by the legal theory that the FAA did not preempt a state rule that inhibits the formation of an arbitration agreement, but does not render such an agreement unenforceable once executed.” (Ibid.) The court ultimately disagreed with that legal theory, concluding the FAA did preempt Assembly Bill 51 because “state rules that burden the formation of arbitration agreements stand as an obstacle to the FAA.” (Id. at p. 484.)

Here, Bonta is distinguishable because, as we have explained, the FAA does not apply to the arbitration agreement on these facts. It therefore cannot operate to preempt section 432.6. On the other hand, nothing in section 432.6 makes the arbitration agreement unenforceable. Indeed, the Legislature intentionally chose not to include such a provision. Two recent federal district court decisions, applying the CAA to an arbitration agreement that was exempt from the FAA, have concluded that section 432.6

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does not render such an agreement unenforceable. (See, e.g., Kittrell v. USA Debusk LLC (N.D. Cal. 2025, Case No. 25-cv-02432-MMC) 2025 WL 3049883, pp. 4-5; Bahamonde v. Amazon.com Services, LLC (N.D. Cal. 2025, Case No. 25-cv-03499-JSC) 2025 WL 2021801, p. 6.) Although those decisions are not binding, we find them persuasive. (See Ram’s Gate Winery, supra, 235 Cal.App.4th at p. 1080; Futrell, supra, 190 Cal.App.4th at p. 1432, fn. 6.)

Canela points to section 432.6, subdivision (f), arguing that because the section does not invalidate an agreement “otherwise enforceable” under the FAA, the Legislature must have intended it to invalidate “an arbitration agreement where the FAA does not apply,” such as the agreement in this case. However, to say that section 432.6 does not invalidate agreements where the FAA applies is not the same thing as saying that it invalidates agreements where the FAA does not apply. Section 432.6 does not state the latter, and we decline to interpret such legislative silence in the manner Canela suggests.

B

In addition, Canela contends section 229 renders the arbitration agreement unenforceable as to his claims for unpaid wages.

Section 229 provides, in relevant part, that “[a]ctions to enforce the provisions of this article for the collection of due and unpaid wages claimed by an individual may be maintained without regard to the existence of any private agreement to arbitrate.” This provision “is found in article 1 of division 2, part I, chapter 1 of the Labor Code, encompassing sections 200 through 244. Thus, if a cause of action seeks to collect due and unpaid wages pursuant to sections 200 through 244, that action can be maintained in court, despite an agreement to arbitrate.” (Lane, supra, 224 Cal.App.4th at p. 684.) In other words, section 229 “authorizes lawsuits for unpaid wages even if the parties agreed to arbitrate these claims,” thereby rendering an arbitration agreement ineffective with

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respect to such claims. (Muller v. Roy Miller Freight Lines, LLC (2019) 34 Cal.App.5th 1056, 1070.)

Contrary to Lane and Muller, the trial court concluded that the use of the word “may” rather than “must” or “shall” indicated that section 229 does not bar the arbitration of Canela’s claims for unpaid wages. We conclude, however, that the permissive language in section 229 applies to the plaintiff. Here, because the action falls within the scope of section 229, Canela “may” maintain the action in court “without regard to the existence of any private agreement to arbitrate.” (§ 229.) Section 229 does not require Canela to do so, but it allows him to do so notwithstanding the arbitration agreement. To conclude otherwise would require this court to read “without regard to the existence of any private agreement to arbitrate” out of the statute. (§ 229.) This we may not do. (Ruoff v. Harbor Creek Community Assn. (1992) 10 Cal.App.4th 1624, 1629.)

Acknowledging the holding in Muller, the trial court found Bravo v. RADC Enterprises, Inc. (2019) 33 Cal.App.5th 920 to be more on point and persuasive. In Bravo, despite finding that the FAA applied to the parties’ arbitration agreement, the trial court did not compel arbitration of wage claims covered by section 229 because the agreement contained a choice of law provision that stated: “ ‘This Agreement shall be governed by and shall be interpreted in accordance with the laws of the State of California.’ ” (Bravo, at p. 922.) The appellate court acknowledged that section 229 “directs courts to disregard agreements to arbitrate wage claims,” but concluded “the choice of law provision did not mean the parties wanted to oust arbitration [of such claims] from their arbitration agreement.” (Bravo, at p. 922.) Rather than relying on the apparent applicability of the FAA in that case, the appellate court interpreted the choice of law provision to be consistent with the overarching objective of the agreement to “arbitrate ‘any and all disputes’ arising from Bravo’s employment, ‘including any claims brought by the Employee related to wages’ under the [California] Labor Code.” (Ibid.) According to the court, the choice of law provision had to be read to exclude from “ ‘the

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laws of the State of California’ ” any special rules limiting arbitration, such as section 229. (Bravo, at p. 923.)

Bravo is distinguishable. Unlike in Bravo, where the FAA apparently applied, Canela is exempt from the FAA and therefore California law applies to the agreement, including section 229. And although the arbitration agreement in this case also has a choice of law provision that attempts to apply the FAA to the agreement, the parties may not “contract around the FAA’s transportation worker exemption” by declaring that the FAA applies. (Rittmann, supra, 971 F.3d at p. 919; see Romero, supra, 9 F.4th at p. 1101.) Thus, although the arbitration agreement attempted to make all of Canela’s claims subject to arbitration, including wage claims, under Lane and Muller, the trial court was nevertheless required to determine whether any of Canela’s claims fall within the scope of section 229. If they do, arbitration cannot be compelled as to them regardless of the existence of the arbitration agreement.

Randstad and Pitney Bowes argue that none of Canela’s causes of action seek wages under sections 200 through 244. Canela counters that his class action complaint seeks unpaid wages under sections 201 and 202. Canela is referring to his sixth cause of action, which is brought under sections 201, 202, and 203. Section 201 provides for the immediate payment of wages upon discharge. (§ 201, subd. (a).) Section 202 requires an employer to pay such wages within 72 hours if an employee quits his or her employment, or immediately if the employee has given 72-hour notice. (§ 202, subd. (a).) Section 203 provides for a penalty where an employer willfully fails to pay such wages in accordance with sections 201 and 202, and several other sections. (§ 203, subd. (a).) Randstad acknowledges that federal district courts have concluded that claims brought under these sections must be excluded from arbitration under section 229 (see, e.g., Mitchell, supra, 769 F.Supp.3d at pp. 1143-1144), but argues that all other claims must be sent to arbitration. Pitney Bowes argues that sections 201 through 203 do not authorize an action to collect unpaid wages, but only waiting time penalties, which are not wages.

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Canela and Pitney Bowes cite Naranjo v. Spectrum Security Services, Inc. (2022) 13 Cal.5th 93 and Kirby v. Immoos Fire Protection, Inc. (2012) 53 Cal.4th 1244 in support of their respective positions. Rather than deciding these specific arguments, we will direct the trial court to do so. The trial court must determine whether any of Canela’s claims fall within the scope of section 229, and it may not compel arbitration as to any such claim.

C

Canela further contends that California law prohibits enforcement of the arbitration agreement with respect to his PAGA claims.

“Before PAGA’s enactment, tools for enforcing the Labor Code were limited.

Some statutes allowed employees to sue their employers for damages resulting from Labor Code violations such as unpaid wages. [Citations.] Other Labor Code violations were punishable only as criminal misdemeanors, which local prosecutors tended not to prioritize. [Citation.] Additionally, several statutes provided civil penalties for Labor Code violations, but only state labor law enforcement agencies could bring an action for civil penalties and those agencies lacked sufficient enforcement resources. [Citations.] [¶] To address these shortcomings, the Legislature enacted PAGA to create new civil penalties for various Labor Code violations and ‘ “to allow aggrieved employees, acting as private attorneys general, to recover [those] penalties.” ’ [Citation.] An employee who brings a PAGA action to recover civil penalties acts ‘ “as the proxy or agent” ’ of the state. [Citations.] ‘PAGA is designed primarily to benefit the general public, not the party bringing the action.’ [Citation.]” (Adolph v. Uber Technologies, Inc. (2023) 14 Cal.5th 1104, 1116 (Adolph).) “ ‘Of the civil penalties recovered, 75 percent goes to the Labor and Workforce Development Agency, leaving the remaining 25 percent for the “aggrieved employees.” ’ ” (Iskanian v. CLS Transportation Los Angeles, LLC

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(2014) 59 Cal.4th 348, 380 (Iskanian), overruled on another point in Quach v. California Commerce Club, Inc. (2024) 16 Cal.5th 562, 574, 583.)

In Iskanian, the California Supreme Court “held that a predispute categorical waiver of the right to bring a PAGA action is unenforceable.” (Adolph, supra, 14 Cal.5th at p. 1117.) That decision also held unenforceable agreements that provide for arbitration of individual PAGA claims while requiring waiver of representative PAGA claims. (Id. at pp. 1117-1118.) Those rules are not preempted by the FAA. (Ibid.) A third rule arising from the Iskanian decision is preempted by the FAA. That rule is “that employers may not require employees to ‘split’ PAGA actions in a manner that puts individual and non-individual components of a PAGA claim into bifurcated proceedings.” (Id. at p. 1118.)

In Viking River Cruises, Inc. v. Moriana (2022) 596 U.S. 639 [213 L.Ed.2d 179], the United States Supreme Court “held that ‘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.’ [Citation.] ‘The “principal purpose” of the FAA is to “ensur[e] that private arbitration agreements are enforced according to their terms.” ’ [Citation.] The high court explained that an anti-splitting rule ‘unduly circumscribes the freedom of parties to determine “the issues subject to arbitration” and “the rules by which they will arbitrate,” [citation], and does so in a way that violates the fundamental principle that “arbitration is a matter of consent.” ’ [Citation.] Requiring parties to adjudicate a PAGA action entirely in one proceeding, the high court said, ‘compels parties to either go along with an arbitration in which the range of issues under consideration is determined by coercion rather than consent, or else forgo arbitration altogether. Either way, the parties are coerced into giving up a right they enjoy under the FAA.’ [Citation.] Thus, Viking River requires enforcement of agreements to arbitrate a PAGA plaintiff’s individual claims if the agreement is covered by the FAA.” (Adolph, supra, 14 Cal.5th at pp. 1118-1119, italics added.)

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The agreement in this case is not covered by the FAA. Nevertheless, the trial court ordered Canela to arbitrate his individual PAGA claims and stayed his non- individual PAGA claims pending arbitration. Canela asserts the split of individual and non-individual PAGA claims violates Iskanian. Randstad argues the issue is not properly before us because Canela did not raise it in the trial court. Canela counters that he raised the issue at oral argument. In any event, Pitney Bowes acknowledges that if the FAA does not apply to the agreement, as we have held, the PAGA action must be stayed pending arbitration of arbitrable claims; and Randstad acknowledges that if the PAGA action cannot be split into individual and non-individual claims, the PAGA action must be stayed pending arbitration of arbitrable claims. However, because those issues were not briefed in the trial court, we will direct the trial court to consider whether to stay the entire PAGA action pending arbitration of any arbitrable claims. (See Code Civ. Proc., § 1281.4 [where arbitration of a controversy is ordered and that controversy raises an issue that overlaps with a pending action, the pending action must be stayed during the arbitration]; Franco v. Arakelian Enterprises, Inc. (2015) 234 Cal.App.4th 947, 965-966 [where the issues subject to litigation under PAGA might overlap those that are subject to arbitration, the trial court must order an appropriate stay of trial court proceedings]; but see Leenay v. Superior Court (2022) 81 Cal.App.5th 553, 570 [the trial court erred in granting a motion to stay a PAGA action where the plaintiffs were not among the arbitration claimants and the state, on whose behalf the PAGA action was brought, was not ordered to arbitrate any claims].) What the trial court cannot do is split the PAGA action, as that would be contrary to Iskanian.

DISPOSITION

The petition for writ of mandate is granted. Let a peremptory writ of mandate issue directing the superior court to vacate its order compelling arbitration and to reconsider Randstad’s and Pitney Bowes’ motions to compel arbitration in accordance with this opinion. Specifically, the trial court is directed to determine whether any of

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Canela’s claims fall within section 229, and determine whether to stay Canela’s PAGA claims pending the arbitration of any arbitrable claims.

/S/ MAURO, J.

We concur:

/S/ ROBIE, Acting P. J.

/S/ WISEMAN, J.*

* Retired Associate Justice of the Court of Appeal, Fifth Appellate District, assigned by the Chief Justice pursuant to article VI, section 6 of the California Constitution.