1 2 3 6 7 SHAHARA HANSBER, NANG CHAN, CASE NO. 1:21-cv-00022-AWI-CDB and JESUS MORENO, on behalf of 8 themselves, all others similarly situated, and on behalf of the general public, ORDER ON DEFENDANT’S MOTION Plaintiffs, ARBITRATIONS OF PLAINTIFFS 10 SHAHARA HANSBER AND JESUS v. MORENO AND TO STAY CASE 11 ULTA BEAUTY COSMETICS, LLC; and 12 DOES 1-100, (Doc. Nos. 51, 52)
13 Defendants
14 15 16 Plaintiffs Shahara Hansber, Nang Chan, and Jesus Moreno filed this class action lawsuit 17 against Defendant Ulta Beauty Cosmetics, LLC (“UBC”), alleging violations of California’s 18 Private Attorneys General Act (“PAGA”), Labor Code, and Business & Professions Code. Doc. 19 No. 29. Currently before the Court are UBC’s Motions to Compel Individual Arbitrations of 20 Hansber and Moreno and to Stay Proceedings Pending Ruling on Motions and Completion of 21 Arbitrations. Doc. Nos. 51, 52. For the following reasons, the Court will grant in part and deny in 22 part UBC’s Motions. 24 Hansber is a former employee of Exact Staff Inc. (“Exact”), and Moreno is a former 25 employee of Spherion Staffing LLC (“Spherion”). Doc. No. 51 at 12; Doc. No. 52 at 12. Both 26 Hansber and Moreno signed arbitration agreements at the start of their employment to submit all 27 claims and controversies arising from their employment to individual arbitration. Doc. No. 51 at 28 14-15; Doc. No. 52 at 14-15. 1 UBC entered into separate staffing services agreements with Exact and Spherion, pursuant 2 to which Exact and Spherion agreed to recruit, screen, and hire workers who would be assigned to 3 work at Ulta Inc.’s distribution center in Fresno, California (“Fresno DC”). Doc. No. 51 at 13-14; 4 Doc. No. 52 at 13-14. Both Hansber and Moreno were placed on work assignments at the Fresno 5 DC. Doc. No. 51 at 12; Doc. No. 52 at 12. Chan also worked at the Fresno DC, but unlike 6 Hansber and Moreno, Chan applied to, interviewed with, and was hired by UBC without entering 7 into an arbitration agreement. Doc. No. 53 at 8. 8 On November 4, 2020, Hansber, Moreno, and Chan filed a First Amended Class Action 9 Complaint against UBC and Spherion in Kern County Superior Court, alleging violations of 10 California’s Labor Code, PAGA, and Business & Professions Code.1 Doc. No. 1, Ex. 1. On 11 January 5, 2021, Spherion removed the matter to this Court pursuant to the Class Action Fairness 12 Act, 28 U.S.C. § 1332(d). Id. On March 15, 2021, Plaintiffs filed a Second Amended Complaint 13 which dropped Spherion and left UBC as the sole Defendant. Doc. No. 15. On April 18, 2021, 14 UBC filed a motion to dismiss and/or strike the Second Amended Complaint, which the Court 15 granted in part and denied in part. Doc. Nos. 18, 26. On November 2, 2021, Plaintiffs filed the 16 operative Third Amended Complaint, alleging eight cause of action against UBC for (1) failure to 17 pay all straight time wages; (2) failure to pay all overtime wages: (3) failure to provide meal 18 periods; (4) failure to authorize and permit rest periods; (5) knowing and intentional failure to 19 provide accurate itemized wage statements; (6) failure to pay all wages upon termination or 20 separation; (7) unfair competition; and (8) civil penalties under the PAGA. Doc. No. 29. 21 On December 17, 2021, UBC filed a motion to join Exact and Spherion as necessary 22 parties under Fed. R. Civ. P. 19(a), which ultimately was denied. Doc. Nos. 33, 48. On August 23 12, 2022, UBC filed the instant motions to compel individual arbitrations of Hansber and Moreno 24 and to stay all proceedings pending the rulings on the motions and completion of arbitrations. 25 Doc. Nos. 51, 52. 26 1 Before Plaintiffs collectively filed their FAC, Moreno filed a representative action complaint pursuant to the PAGA 27 in Fresno County Superior Court on June 29, 2020, Hansber filed a putative class action complaint in Kern County Superior Court on July 10, 2020, and Chan filed a putative class action complaint in Fresno County Superior Court on 28 August 12, 2020. Doc. No. 55 at 10. After the parties met and conferred regarding the sufficiency of these separate 2 The Federal Arbitration Act (“FAA”) provides that written agreements to arbitrate disputes 3 arising out of transactions involving interstate commerce “shall be valid, irrevocable, and 4 enforceable, save upon such grounds as exist at law or in equity for the revocation of any 5 contract.” 9 U.S.C. § 2; Zoller v. GCA Advisors, LLC, 993 F.3d 1198, 1201 (9th Cir. 2021). 6 Further, the FAA permits a party “aggrieved by the alleged . . . refusal to arbitrate” to petition any 7 federal district court for an order compelling arbitration. 9 U.S.C. § 4; Van Dusen v. United States 8 Dist. Court for the Dist. of Ariz., 654 F.3d 838, 842 (9th Cir. 2011). A district court’s role is 9 “limited to determining (1) whether a valid agreement to arbitrate exists and, if it does, (2) whether 10 the agreement encompasses the dispute at issue.” Revitch v. DIRECTV, LLC, 977 F.3d 713, 716 11 (9th Cir. 2020) (citing Chiron Corp. v. Ortho Diagnostic Sys., Inc., 207 F.3d 1126, 1130 (9th Cir. 12 2000)). If the answer to both questions is ‘yes,’ the district court must enforce the arbitration 13 agreement in accordance with its terms; there is no place for discretion by the district court. 14 Revitch, 977 F.3d at 716. Thus, “courts should order arbitration of a dispute only where the court 15 is satisfied that neither the formation of the parties’ arbitration agreement nor (absent a valid 16 provision specifically committing such disputes to an arbitrator) its enforceability or applicability 17 to the dispute is in issue.” Granite Rock Co. v. International Bhd. Of Teamsters, 561 U.S. 287, 18 299 (2010); Revitch, 977 F.3d at 716. 19 If a court orders the parties to arbitration, the FAA provides for the court to stay the matter 20 pending completion of the arbitration. See 9 U.S.C. § 3; Ziober v. BLB Res., Inc., 839 F.3d 814, 21 817 (9th Cir. 2016). However, when all claims in a complaint are within the scope of an 22 arbitration agreement, the court may dismiss the entire action instead of issuing a stay. 23 Johnmohammadi v. Bloomingdale’s, Inc., 755 F.3d 1072, 1074 (9th Cir. 2014). The party seeking 24 to compel arbitration, has the burden of proving the existence of an agreement to arbitrate by a 25 preponderance of the evidence. Knutson v. Sirius XM Radio Inc., 771 F.3d 559, 565 (9th Cir. 26 2014) (citing Rosenthal v. Great W. Fin. Sec. Corp., 14 Cal. 4th 394, 413 (1996)). 27 // 28 // 2 The parties do not dispute that Hansber and Moreno entered into agreements to arbitrate 3 with Exact and Spherion, respectively. Neither do the parties dispute that the FAA applies to the 4 above agreements or that UBC may enforce them despite being a nonsignatory. However, the 5 parties disagree as to whether UBC waived its right to arbitration, and if not, whether Hansber and 6 Moreno’s representative PAGA claims and all of Chan’s claims should be stayed pending the 7 arbitrations of Hansber and Moreno’s individual claims. The Court will address each issue in turn 8 below. 9 1. Waiver 10 Plaintiffs’ Arguments 11 Plaintiffs argue that UBC waived its right to arbitrate because its actions were inconsistent 12 with the right to arbitrate. Specifically, Plaintiffs claim that because UBC substantially invoked 13 the litigation machinery by removing the matter to this Court, filing several motions, and engaging 14 in discovery, UBC unjustifiably delayed the assertion of its right to arbitrate and, therefore, 15 waived it. Furthermore, Plaintiffs argue that UBC delayed its assertion to arbitrate for tactical 16 reasons and that Plaintiffs would be prejudiced if ordered to arbitrate this late in the case. 17 Defendant’s Arguments 18 UBC argues it did not waive its right to arbitrate Hansber or Moreno’s claims because it 19 repeatedly asserted its right to arbitrate and has not otherwise defended against Plaintiffs’ claims 20 in a manner inconsistent with its right to arbitrate. Additionally, UBC contends that its purported 21 delay in seeking arbitration was justified and did not result in any prejudice to Plaintiffs. 22 Furthermore, UBC argues that policy concerns disfavor waiver of the right to arbitrate and that in 23 any event, it is the role of the arbitrator, and not the Court, to decide any disputes regarding waiver 24 because the parties clearly and unmistakably agreed to arbitrate the issue of waiver. 25 Legal Standard 26 The right to arbitration, like other contractual rights, can be waived. Martin v. Yasuda, 27 829 F.3d 1118, 1124 (9th Cir. 2016); Saint Agnes Med. Ctr. v. PacifiCare of Cal., 31 Cal. 4th 28 1187, 1195 (2003). Under the FAA “[a] party seeking to prove waiver of a right to arbitration 1 must demonstrate: (1) knowledge of an existing right to compel arbitration [and] (2) acts 2 inconsistent with that existing right.” Martin, 829 F.3d at 1124; see also Morgan v. Sundance, 3 Inc., 142 S. Ct. 1708, 1714 (2022) (holding that prejudice is no longer a condition of finding that a 4 party waived its right to compel arbitration). Furthermore, under California law, factors that may 5 be considered to determine whether arbitration has been waived include “(1) whether the party’s 6 actions are inconsistent with the right to arbitrate; (2) whether the litigation machinery has been 7 substantially invoked and the parties were well into preparation of a lawsuit before the party 8 notified the opposing party of an intent to arbitrate; (3) whether a party either requested arbitration 9 enforcement close to the trial date or delayed for a long period before seeking a stay; (4) whether a 10 defendant seeking arbitration filed a counterclaim without asking for a stay of the proceedings; (5) 11 whether important intervening steps [e.g., taking advantage of judicial discovery procedures not 12 available in arbitration] had taken place; and (6) whether the delay affected, misled, or prejudiced 13 the opposing party.” Saint Agnes Med. Ctr., 31 Cal. 4th at 1196; see also Cox v. Ocean View 14 Hotel Corp., 533 F.3d 1114, 1124 (9th Cir. 2008). Although “[t]here is no concrete test to 15 determine whether a party has engaged in acts that are inconsistent with its right to arbitrate,” 16 Newirth v. Aegis Senior Cmtys., LLC, 931 F.3d 935, 941 (9th Cir. 2019); Saint Agnes Med. Ctr., 17 31 Cal. 4th at 1195, “a party acts inconsistently with exercising the right to arbitrate when it (1) 18 makes an intentional decision not to move to compel arbitration and (2) actively litigates the 19 merits of a case for a prolonged period of time in order to take advantage of being in court.” 20 Newirth, 931 F.3d at 941. Conversely, “parties do not act inconsistently with a right to compel 21 arbitration when they engage in litigation activities that do not evince a decision to take advantage 22 of the judicial forum.” Id. 23 Because waiver of a contractual right to arbitration is generally disfavored, any party 24 arguing waiver of arbitration “bears a heavy burden of proof.” Martin, 829 F.3d at 1124; Richards 25 v. Ernst & Young, LLP, 744 F.3d 1072, 1074 (9th Cir. 2013); Saint Agnes Med. Ctr., 31 Cal. 4th 26 at 1195. Questions of arbitrability, such as whether a party’s litigation conduct amounts to waiver 27 of arbitration, are for “judicial determination unless the parties clearly and unmistakably provide 28 otherwise.” Martin, 829 F.3d at 1123-24; see also Morgan Stanley & Co., LLC v. Couch, 134 F. 1 Supp. 3d 1215, 1224-25 (E.D. Cal. 2015) (finding that it is presumptively for the Court to decide 2 whether defendant waived arbitration rights). 3 Discussion 4 As an initial matter, the Court finds that it may adjudicate the issue of waiver. The specific 5 issue before the Court is whether UBC waived its right to arbitration through its litigation conduct. 6 Martin, 829 F.3d at 1123-24. UBC’s argument that the parties “clearly and unmistakably” agreed 7 to have the arbitrator decide the issue of waiver is unpersuasive. Although the Ninth Circuit in 8 Brennan v. Opus Bank held that an arbitration agreement’s incorporation of the American 9 Arbitration Association (“AAA”) rules constituted “clear and unmistakable evidence” that the 10 contracting parties agreed to arbitrate arbitrability, Brennan expressly limited its holding to the 11 facts of its case, which involved an arbitration agreement between “sophisticated parties.” 12 Brennan v. Opus Bank, 796 F.3d 1125, 1130-31 (9th Cir. 2015) (“[W]e limit our holding to the 13 facts of the present case, which do involve an arbitration agreement ‘between sophisticated 14 parties.’”); see also Roman v. Jan-Pro Franchising Int’l, Inc., 2022 U.S. Dist. LEXIS 137190, *16 15 (N.D. Cal. Aug. 2, 2022) (distinguishing Brennan on the ground that it does not apply to an 16 employment contract between employer and janitors). Because the claims and evidence before the 17 Court do not indicate that UBC’s arbitration agreements mirror the facts in Brennon, the Court is 18 not convinced that the parties “clearly and unmistakably” agreed to have the arbitrator decide the 19 waiver issue. Therefore, the Court will decide whether UBC waived its right to arbitration 20 through its litigation conduct. Martin, 829 F.3d at 1123-24; Roman, 2022 U.S. Dist. LEXIS 21 137190, at *16. 22 Based on UBC’s litigation conduct, the Court finds that UBC did not waive its right to 23 arbitration. There is no dispute that UBC had knowledge of its right to compel arbitration, but the 24 parties dispute whether UBC’s conduct in this litigation was inconsistent with that right. Plaintiffs 25 argue that the following conduct of UBC demonstrates that it acted in a manner inconsistent with 26 its right to arbitration: rather than immediately moving to compel arbitration, UBC assented to the 27 case’s removal to this Court; UBC filed a motion to dismiss the Second Amended Complaint 28 which was granted in part and denied in part; UBC filed an Answer to the Third Amended 1 Complaint; UBC responded with objections to Plaintiffs’ written discovery requests; UBC filed a 2 motion to join Exact and Spherion as necessary parties which was ultimately denied; UBC did not 3 file a motion to stay the case pending the Supreme Court’s decision in Viking River Cruises, Inc. 4 v. Moriana; and UBC ultimately filed its motion to compel arbitration approximately one year and 5 seven months after the case was removed to this Court. 6 Upon review, the Court finds that Plaintiffs did not satisfy their “heavy burden of proof” to 7 warrant a finding of waiver. Martin, 829 F.3d at 1124; Saint Agnes Med. Ctr., 31 Cal. 4th at 1195. 8 The record indicates that UBC notified Plaintiffs and the Court since at least April 28, 2021 of its 9 right to arbitration. See Doc. No. 18 at 15-16. UBC’s Answer to the operative Third Amended 10 Complaint also asserts an affirmative defense that Plaintiffs’ claims must be submitted to 11 individual arbitration. Doc. No. 30 at 65, 70-71. UBC thereafter expressly notified Plaintiffs and 12 the Court on December 8, 2021, and several times thereafter, that it intended to move to compel 13 individual arbitrations of Plaintiffs’ claims and the timing thereof. Doc. Nos. 31 at 4-5 and 49 at 14 4-5. UBC also served objections to Plaintiffs’ written discovery requests on the grounds that 15 Plaintiffs were required to individually arbitrate their claims.2 See Doc. No. 58-1, Exs. A, B. 16 Although these statements alone are not enough to defeat a claim of waiver, Martin, 829 F.3d at 17 1125, other acts by UBC further indicate that it did not act inconsistent with its right to arbitration. 18 As UBC notes, UBC did not extensively engage in the discovery process, given that UBC 19 neither propounded any written discovery requests nor conducted any depositions.3 Additionally, 20 UBC’s written objections to Plaintiffs’ discovery requests reflected only a “determination to avoid 21 or frustrate the litigation” rather than a strategic decision to “actively litigate” the case. Newirth, 22 931 F.3d at 941; Chartwell Staffing Servs. v. Atl. Sols. Grp, Inc., 2020 U.S. Dist. LEXIS 24640, 23
24 2 Given that UBC notified Plaintiffs and the Court of its right and intent to compel individual arbitrations of Hansber and Moreno’s claims well before it filed its current motions, several of Plaintiffs’ cases cited in support of their 25 position (Liou v. Organifi, LLC, 2021 U.S. Dist. LEXIS 24681 (S.D. Cal. Feb. 8, 2021), Roberts v. El Cajon Motors, Inc., 200 Cal. App. 4th 832 (2011), Guess?, Inc. v. Superior Court, 79 Cal. App. 4th 553 (2000), Kaneko Ford Design 26 v. Citipark, Inc., 202 Cal. App. 3d 1220 (1988)) are distinguishable on this basis.
27 3 The fact that UBC did not extensively engage in the discovery process makes several of the cases relied upon by Plaintiffs (Augusta v. Keehn & Assocs., 193 Cal. App. 4th 331 (2011), Sobremonte v. Superior Court, 61 Cal. App. 28 4th 980 (1998), Davis v. Continential Airlines, Inc., 59 Cal. App. 4th 205 (1997)) distinguishable. 1 *24-25 (C.D. Cal. Jan. 9, 2020) (concluding that defendants operated defensively in litigation 2 aimed at “‘frustrat[ing] the litigation rather than’ engaging in strategic, active litigation”). UBC’s 3 joinder to Spherion’s removal of the case to this Court also was not an act inconsistent with 4 UBC’s right to arbitrate. See Gonsalves v. Infosys Techs., Ltd., 2010 U.S. Dist. LEXIS 79683, *9 5 n.2 (N.D. Cal. Aug. 5, 2010) (citing Saint Agnes Med. Ctr., 31 Cal. 4th at 1205). Neither was the 6 filing of UBC’s motion to join Spherion and Exact as necessary parties because that motion did 7 not address the merits of Plaintiffs’ claims. Newirth, 931 F.3d at 941-42; Conde v. Open Door 8 Mktg., LLC, 2017 U.S. Dist. LEXIS 185508, *20 (N.D. Cal. Nov. 8, 2017). Although Plaintiffs 9 point to UBC’s motion to dismiss as a motion on the merits, that motion “would have proceeded 10 irrespective of the arbitration motion” because Plaintiff Chan did not sign an arbitration 11 agreement; thus, filing the motion to dismiss was not an act inconsistent with a right to arbitrate 12 because Chan’s claims “could not have been compelled to arbitration in the first place.”4 Conde, 13 2017 U.S. Dist. LEXIS 185508, at *21; see also Cadena v. Am. Honda Motor Co., 2020 U.S. Dist. 14 LEXIS 104165, *13-14 (C.D. Cal. June 10, 2020). 15 Accordingly, because UBC’s actions were not inconsistent with its right to individually 16 arbitrate Hansber and Moreno’s claims, UBC did not waive its right to arbitrate. Given that 17 Plaintiffs do not dispute that Hansber and Moreno signed arbitration agreements encompassing 18 their claims against UBC, nor dispute that UBC may enforce them, the Court grants UBC’s 19 motions to compel individual arbitrations of Hansber and Moreno’s claims. 20 2. Stay of Representative PAGA Claims 21 Defendant’s Arguments 22 UBC argues that because Hansber and Moreno agreed to the specific terms of their 23 4 Although Plaintiffs cite several cases (Newirth v. Aegis Senior Cmtys., LLC, 931 F.3d 935 (9th Cir. 2019), Martin v. 24 Yasuda, 829 F.3d 1118 (9th Cir. 2016), Flores v. Adir Int’l, LLC, 788 F. App’x 496 (9th Cir. 2019)) in which motions to compel arbitration were denied in part because those motions were filed after the defendant unsuccessfully 25 attempted to use motions to dismiss claims on the merits, those cases are distinguishable because they do not involve a motion to compel arbitration asserted against a co-plaintiff like Chan who was not bound to an arbitration agreement 26 in the first instance. Martin is also distinguishable because unlike UBC who repeatedly asserted its intent to arbitrate, the Martin defendants expressly “told the district judge and opposing counsel that they were likely ‘better off’ in 27 federal court.” Martin, 829 F.3d at 1126. Newirth is also distinguishable because unlike UBC, the Newirth defendant first filed a motion to compel, subsequently withdrew it, then filed a motion to dismiss which was ultimately denied, 28 engaged in extensive discovery, and thereafter filed another motion to compel arbitration. Newirth, 931 F.3d at 938- 1 respective arbitration agreements, the terms dictate that they arbitrate all their claims against UBC 2 on an individual basis and not in a class or representative capacity. UBC further asserts that if 3 Hansber and Moreno’s individual PAGA claims are sent to arbitration, their remaining 4 representative PAGA claims must be stayed and dismissed for lack of standing pursuant to the 5 Supreme Court’s decision in Viking River Cruises, Inc. v. Moriana, 142 S. Ct. 1906 (2022). 6 Plaintiffs’ Arguments 7 Plaintiffs argue that even if their individual claims are compelled to arbitration, their 8 representative PAGA claims should not be dismissed in court because California case law and 9 PAGA’s statutory language and legislative history demonstrate that Plaintiffs still have standing to 10 litigate those claims. According to Plaintiffs, the Supreme Court in Viking River exceeded its 11 authority when it held that a plaintiff lacked standing to litigate representative PAGA claims when 12 her individual PAGA claims were compelled to arbitration. Furthermore, given that the California 13 Supreme Court is expected to clarify this PAGA standing issue in Adolph v. Uber Technologies, 14 Inc., Plaintiffs request that, if Hansber and Moreno are ordered to arbitrate their individual claims, 15 their representative PAGA claims be stayed until Adolph is decided. 16 Legal Standard 17 PAGA authorizes any “aggrieved employee” to initiate an action against a former 18 employer “on behalf of himself . . . and other current or former employees” to obtain civil 19 penalties that otherwise can be “recovered only by the State” in an enforcement action brought 20 by California’s Labor and Workforce Development Agency (“LWDA”). Viking River Cruises, 21 Inc. v. Moriana, 142 S. Ct. 1906, 1914 (2022) (quoting Cal. Lab. Code Ann. § 2699(a)). PAGA 22 claims are “representative” in two ways: first, PAGA actions are “representative” in the sense that 23 they are brought by employees acting as agents or proxies of the State. Id. at 1916. Second, 24 PAGA actions are “representative” in the sense they are brought by employees acting on behalf of 25 other employees in addition to themselves. Id. 26 The California Supreme Court held in Iskanian that waivers of an employee’s right to 27 bring “representative” PAGA claims in the first sense are barred under California law. See 28 Iskanian v. CLS Transp. L.A., LLC, 59 Cal. 4th 348, 383-84 (2014). The Supreme Court termed 1 this “Iskanian’s principal rule.” Viking River, 142 S. Ct. at 1916. Iskanian further held that 2 agreements to arbitrate or litigate individual PAGA claims for Labor Code violations that an 3 employee personally suffered, separately and apart from “representative” PAGA claims in the 4 second sense, are invalid. Iskanian, 59 Cal. 4th at 383-84. The Supreme Court termed this 5 Iskanian’s “secondary rule.” Viking River, 142 S. Ct. at 1916-17. In Viking River, the United 6 States Supreme Court upheld Iskanian’s “principal rule,” but overturned Iskanian’s “secondary 7 rule” on the ground that it was preempted by the FAA. Viking River, 142 S. Ct. at 1923-26; see 8 also Harper v. Charter Commc’ns, LLC, 2022 U.S. Dist. LEXIS 161321, *4 (E.D. Cal. Sep. 7, 9 2022). Thus, under Viking River, waivers of the right to assert representative PAGA claims on the 10 state’s behalf remain barred, but employees may waive the right to bring PAGA claims that are 11 specifically premised on labor code violations they have personally suffered. See Harper, 2022 12 U.S. Dist. LEXIS 161321, at *4 (citing Viking River Cruises, 142 S. Ct. at 1923-26 and 13 MacClelland v. Cellco P’ship, 2022 WL 2390997, at *9, ___F.Supp.3d___ (N.D. Cal. July 1, 14 2022)). 15 For purposes of PAGA standing, Viking River further held that when plaintiffs maintain 16 representative PAGA claims in the second sense on behalf other employees, those plaintiffs must 17 also maintain an individual PAGA claim in that action. Viking River, 142 S. Ct. at 1925 (citing 18 Cal. Lab. Code Ann. §§2699(a), (c)). This is because “[w]hen an employee’s own dispute is pared 19 away from a PAGA action, the employee is no different from a member of the general public, and 20 PAGA does not allow such persons to maintain suit.” Id. (citing Kim v. Reins Int’l Cal., Inc., 9 21 Cal. 5th 73, 90 (2020)). Accordingly, if a plaintiff’s individual PAGA claims are compelled to 22 arbitration, that plaintiff “lacks statutory standing to continue to maintain her non-individual 23 claims in court, and the correct course is to dismiss her remaining claims.” Id.; see also Johnson 24 v. Lowe’s Home Ctrs., Ltd. Liab. Co., 2022 U.S. Dist. LEXIS 171626, *11 (E.D. Cal. Sep. 21, 25 2022) (“The Supreme Court clearly set forth that non-individual PAGA claims should be 26 dismissed once the individual PAGA claim is compelled to arbitration.”). 27 Discussion 28 The parties do not dispute that Hansber and Moreno signed agreements to submit their 1 individual PAGA claims to arbitration. Neither do the parties dispute the scope or validity of the 2 arbitration agreements’ waivers, under which Hansber and Moreno agreed to waive their rights to 3 assert claims on a class or representative basis. See Doc. No. 51-2 at 6 (“All claims that are 4 covered by this Agreement may only be brought by me or the Company on an individual basis. 5 The Company and I agree to waive any right to make any claims on a representative or class basis 6 to the fullest extent permitted by law.”); Doc. No. 52-3 at 4 (“I also agree that covered claims will 7 only be arbitrated on an individual basis, and that both Spherion and I waive the right to 8 participate in or receive money from any class, collective or representative proceeding.”). Instead, 9 the parties simply disagree as to whether Hansber and Moreno can maintain statutory standing to 10 bring representative PAGA claims on behalf of other employees if their individual PAGA claims 11 are compelled to arbitration. 12 While UBC contends that Viking River directly resolves this issue, Plaintiffs argue that 13 Viking River does not apply because it is at odds with the California Supreme Court’s decision in 14 Kim, which concluded that “[s]ettlement of individual claims does not strip an aggrieved 15 employee of standing, as the state’s authorized representative, to pursue PAGA remedies.” Kim, 9 16 Cal. 5th at 80. Plaintiffs also highlight Justice Sotomayor’s concurrence in Viking River which 17 states “if [the] Court’s understanding of state law is wrong, California courts, in an appropriate 18 case, will have the last word.” Viking River, 142 S. Ct. at 1925 (Sotomayor, S., concurring). 19 Notwithstanding Justice Sotomayor’s concurrence and the California Supreme Court’s 20 decision in Kim, a majority of Justices—including Justice Sotomayor—held that a plaintiff lacks 21 statutory standing to bring a representative PAGA claim without a related individual PAGA claim 22 in that same proceeding. See Viking River, 142 S.Ct. at 1925-26; see also Radcliff v. San Diego 23 Gas & Elec. Co., 2022 U.S. Dist. LEXIS 165054, *8 (S.D. Cal. Sep. 12, 2022). The Supreme 24 Court also explicitly considered Kim when reaching this holding. See Viking River, 142 S.Ct. at 25 1916-17, 1925. Accordingly, in light of Viking River, the Court will apply the Supreme Court’s 26 interpretation of PAGA standing to this matter. Cf. Kona Enterprises, Inc. v. Est. of Bishop, 229 27 F.3d 877, 884 n.7 (9th Cir. 2000) (stating that the Ninth Circuit’s interpretation of state law 28 remains binding within the Ninth Circuit in the absence of any subsequent indication from the 1 state courts that the interpretation is incorrect). Because Hansber and Moreno’s individual PAGA 2 claims are compelled to arbitration, they lack statutory standing to maintain their remaining non- 3 individual PAGA claims in court; therefore, those remaining claims will be dismissed. Viking 4 River, 142 S.Ct. at 1925. 5 The Court is also disinclined to stay the above statutory standing issue pending the 6 California Supreme Court’s decision in Adolph v. Uber Technologies, Inc., Cal. S. Ct. Docket No. 7 G059860. “The District Court has broad discretion to stay proceedings as an incident to its power 8 to control its own docket.” D’Lil v. Riverboat Delta King, Inc., 59 F. Supp. 3d 1001, 1020 (E.D. 9 Cal. 2014) (citing Clinton v. Jones, 520 U.S. 681, 706 (1997)). When determining whether to 10 grant a stay, the court must weigh the competing interests, including “the possible damage which 11 may result from the granting of a stay, the hardship or inequity which a party may suffer in being 12 required to go forward, and the orderly course of justice measured in terms of the simplifying or 13 complicating of issues, proof, and questions of law which could be expected to result from a stay.” 14 Id. (citing CMAX, Inc. v. Hall, 300 F.2d 265, 268 (9th Cir. 1962)). Here, despite Plaintiffs’ 15 contention that the California Supreme Court is expected to clarify the PAGA standing issue in 16 Adolph, the Supreme Court’s decision in Viking River is on point in this matter, and this Court has 17 no assurances of when Adolph will be decided. The Court “declines to issue an indefinite stay of 18 months, or possibly years, on the possibility that the California Supreme Court’s interpretation of 19 statutory standing will differ from the interpretation articulated in [Viking River].” Radcliff, 2022 20 U.S. Dist. LEXIS 165054, at *10-11; see also Dependable Highway Exp., Inc. v. Navigators Ins. 21 Co., 498 F.3d 1059, 1066 (9th Cir. 2007) (“Generally, stays should not be indefinite in nature.”). 22 Therefore, the Court will apply Viking River and dismiss Hansber and Moreno’s non-individual 23 PAGA claims. 24 3. Stay of Chan’s Claims 25 Defendant’s Arguments 26 UBC argues that all proceedings in this litigation, including Chan’s claims against UBC, 27 should be stayed until the arbitrations of Hansber and Moreno’s individual claims are complete. 28 According to UBC, all three Plaintiffs assert identical claims against UBC involving common 1 questions of fact and law. Therefore, even if Chan is a nonsignatory to any arbitration agreement, 2 Hansber or Moreno’s arbitrations will likely resolve significant factual and legal questions at issue 3 in Chan’s claims. Moreover, UBC claims that a discretionary stay by the Court is also warranted 4 because a stay would not prejudice Chan but would prejudice UBC, and because a stay would best 5 serve the orderly course of justice. 6 Plaintiffs’ Arguments 7 Plaintiffs argue that the litigation of Chan’s claims against UBC should not be stayed 8 pending the competition of Hansber and Moreno’s individual arbitrations. According to Plaintiffs, 9 the Court must rely on its inherent discretionary power to control its proceedings in determining 10 whether to stay Chan’s claims. Plaintiffs assert that such a discretionary stay is not appropriate 11 here because UBC faces no risk of irreparable injury absent a stay, the issues to be decided in 12 Hansber and Moreno’s arbitrations will not impact Chan’s case, and Chan would be substantially 13 prejudiced if the stay is granted. 14 Legal Standard 15 Where a suit presents issues referable to arbitration under a written agreement the court 16 “shall on application of one of the parties stay the trial of the action until such arbitration has been 17 had in accordance with the terms of the agreement.” 9 U.S.C. § 3; Int’l All. of Theatrical Stage 18 Emple. v. Insync Show Prods., Inc., 801 F.3d 1033, 1039 (9th Cir. 2015). Although it may be 19 advisable to stay litigation among nonarbitrating parties pending the outcome of the arbitration, 20 that decision is one left to the district court as a matter of its discretion to control its docket. 21 Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 20 n.23 (1983); Portland GE 22 v. Liberty Mut. Ins. Co., 862 F.3d 981, 986 (9th Cir. 2017); see also Congdon v. Uber Techs., 226 23 F. Supp. 3d 983, 990 (N.D. Cal. 2016). A “district court’s inherent, discretionary power to control 24 its proceedings should promote economy of time and effort for itself, for counsel, and for 25 litigants.” Congdon, 226 F. Supp. 3d at 990. “Where a stay is proposed, the court should weigh 26 the competing interests that will be affected, including: the possible damage which may result 27 from granting the stay, the hardship or inequity which a party may suffer in being required to go 28 forward, and ‘the orderly course of justice measured in terms of the simplifying or complicating of 1 issues, proof, and questions of law which could be expected to result from a stay.’” Id. (citing 2 CMAX, Inc. v. Hall, 300 F.2d 265, 268 (9th Cir. 1962)). 3 Discussion 4 Upon review, the Court finds that a stay of Chan’s claims is not warranted. Proceeding 5 with the litigation as to Chan’s claims would not result in a waste of judicial resources. Congdon, 6 226 F. Supp. 3d at 991. If the Court stays the entire litigation and allows Hansber and Moreno’s 7 individual arbitrations to first proceed to completion, it is unclear what preclusive effect the 8 arbitrations would have on Chan’s claims. See Gile v. Dolgen Cal., 2022 U.S. Dist. LEXIS 9 39631, *5 (C.D. Cal. Jan. 14, 2022); see also Global Live Events — In Liquidation v. Ja-Tail 10 Enters., LLC, 2014 U.S. Dist. LEXIS 63963, *7-*10 (C.D. Cal. May 8, 2014) (collecting cases 11 discussing the uncertain preclusive effects of arbitration on litigation). Such a result would, in any 12 event, frustrate the intent of the employment contracts between UBC and Chan, as well as other 13 direct hires Chan seeks to represent, in choosing not to arbitrate their claims in the first place. 14 Congdon, 226 F. Supp. 3d at 991. Furthermore, the Court is not persuaded that proceeding with 15 the litigation as to Chan’s claims would in some way negatively impact or undermine the parallel 16 arbitration proceedings, or would in some way prejudice UBC. As other courts have 17 acknowledged, the potential for inconsistent results in this forum is insufficient to overcome such 18 interests. See Global Live Events, 2014 U.S. Dist. LEXIS 63963, at *8-*11 (collecting cases) 19 (“Some inconsistency is therefore an inevitable result of the piecemeal litigation required by the 20 FAA.”); see also Congdon, 226 F. Supp. 3d at 991 (citing Moses H. Cone, 460 U.S. at 20). 21 Although there are some overlapping factual issues common to both the arbitrations and this 22 litigation, there are also discrete issues that UBC itself acknowledges; that is, Hansber and 23 Moreno’s claims against UBC, and UBC’s specific affirmative defenses thereto, are predicated on 24 a joint employer theory of liability, which does not apply to Chan or the direct hires he seeks to 25 represent.5 The Court is reluctant to accept UBC’s argument that the parties intended 26
27 5 With respect to UBC’s evidentiary objections to specific portions of the Declaration of Nang Chan (Doc. No. 53-1), the distinct circumstances surrounding Chan’s claims, as compared to the claims of Hansber and Moreno, are relevant 28 as to whether the entire case should be stayed pending the arbitrations of Hansber and Moreno. The Court is also eee eee II IEE IIE IDE EERIE IIE OS ESE III eee
1 individualized adjudication of Hansber and Moreno’s claims, and in the same breath, argue that 2 actions should be impacted by parallel litigation. Congdon, 226 F. Supp. 3d at 991. 3 | Accordingly, the Court will exercise its discretion by denying UBC’s motion to stay the litigation 4 | of Chan’s claims pending the competition of Hansber and Moreno’s arbitrations.° 6 | Accordingly, IT IS HEREBY ORDERED that: 7 1. Defendant’s motions to compel individual arbitrations of Hansber and Moreno (Doc. Nos. 8 51, 52) are GRANTED; 9 2. Defendant’s motion to dismiss Hansber and Moreno’s non-individual PAGA claims for 10 lack of statutory standing (Doc. Nos. 51, 52) is GRANTED; 11 3. Defendant’s evidentiary objections to portions of Declaration of Nang Chan (Doc. No. 59) 12 are OVERRULED. 13 4. Defendant’s motion to stay all remaining proceedings in this case pending the completion 14 of Hansber and Moreno’s individual arbitrations (Doc. Nos. 51, 52) is DENIED. 15 5. Hansber and Moreno are ordered to arbitration with UBC forthwith in accordance with 16 their respective arbitration agreements. 17 18 IT IS SO ORDERED. 2p 19 | Dated: _November 9, 2022 _ —<= phlei —SENIOR DISTRICT JUDGE 20 21 22 working for UBC. Fuchs v. State Farm Gen. Ins. Co., 2016 U.S. Dist. LEXIS 195658, at *10 (C.D. Cal. Nov. 14, 73 2016). Accordingly, the Court will overrule UBC’s evidentiary objections. While the parties appear to agree that the FAA applies to this action, UBC asserts that courts in California routinely 24 | cite to both the FAA and California Arbitration Act (“CAA”) § 1281.4 when deciding whether to stay an action pending completion of court-ordered arbitration. Assuming without deciding that the CAA applies to this matter, the 25 | Court is not persuaded that CAA § 1281.4 requires a stay of Chan’s claims. “Section 1281.4 does not authorize the court to stay a plaintiff’s action on the basis of a pending arbitration to which the plaintiff is not a party.” Leenay v. 26 | Superior Court, 81 Cal. App. 5th 553, 559 (2022). The case UBC primarily cites for authority, Heritage Provider Network, Inc. v. Superior Court, 158 Cal. App. 4th 1146 (2008), did not hold that an arbitration proceeding may be 97 to “stay an action brought by a plaintiff who is not a party to the arbitration.” Leenay, 81 Cal. App. 5th at 571 (referring to and distinguishing Heritage Provider Network). Indeed, Heritage Provider Network did not “even 28 consider[] that proposition, so [it is] not authority for it. Id. Therefore, in light of Leenay, CAA § 1281.4 does not require a stay of Chan’s claims. 1&