Vaughn v. Tesla, Inc. ( 2023 )

Filed 1/4/23
CERTIFIED FOR PUBLICATION
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FIRST APPELLATE DISTRICT
DIVISION FIVE
MARCUS VAUGHN et al.,
Plaintiffs and Respondents,
A164053
v.
TESLA, INC., (Alameda County
Super. Ct. No. RG17882082)
Defendant and Appellant.
Defendant and appellant Tesla, Inc. (Defendant) appeals from the
denial of its motion to compel arbitration of workplace race discrimination
claims asserted by plaintiffs Monica Chatman and Evie Hall (Plaintiffs).
Plaintiffs initially worked for Defendant through staffing agencies before
signing employment letters prepared by Defendant in July 2017. Plaintiffs’
complaint alleged the discrimination occurred before and after the letters
were signed. We determine the trial court properly relied on the language in
an arbitration provision contained in the letters to exclude from arbitration
those claims based on conduct occurring during periods Plaintiffs were
employed by staffing agencies rather than directly by Defendant. We also
conclude the trial court properly declined to mandate arbitration of Plaintiffs’
request for a public injunction. On that issue, we reject Defendant’s two
principal contentions. First, we hold that injunctions sought under the Fair
Employment and Housing Act (FEHA) (Gov. Code, §§ 12900 et seq.) may be
considered “public injunctions.” Second, we rule the Federal Arbitration Act
1
(FAA) (9 U.S.C. § 1 et seq.), as interpreted in Viking River Cruises, Inc. v.
Moriana (2022) ___ U.S. ___ [142 S.Ct. 1906, 213 L.Ed.2d 179] (Viking River),
does not preempt the California rule prohibiting waiver of the right to seek
such injunctions.
BACKGROUND
Defendant, a manufacturer of electric vehicles, operates a factory in
Fremont, California. Through staffing agencies, plaintiff Chatman began
working at Defendant’s Fremont factory in November 2016 and plaintiff Hall
began working there in March 2017. In July 2017 letters, Defendant offered
Hall and Chatman employment at specified wages and with specified
benefits. The letters stated, “If you accept our offer, your first day of
employment will be August 2, 2017.”1
Plaintiffs each electronically signed their offer letters.2 Those offer
letters contain the following arbitration agreement (Arbitration Provision):
“[T]o ensure the rapid and economical resolution of disputes that may arise in
connection with your employment with Tesla, you and Tesla agree that any
and all disputes, claims, or causes of action, in law or equity, arising from or
relating to your employment, or the termination of your employment, will be
resolved, to the fullest extent permitted by law by final, binding and
confidential arbitration . . .” (Italics and bolding omitted.)
In November 2017, plaintiff Marcus Vaughn filed a complaint alleging
he suffered a racially hostile work environment at Defendant’s Fremont
factory. He alleged that he and other Black workers had “suffered severe and
1 Chatman and Hall seek to represent a subclass of workers who
worked for staffing agencies for a portion of the time they worked at
Defendant’s factory. The claims of other named plaintiffs are not at issue on
appeal.
2 Defendant terminated Chatman’s employment in September 2019.
2
pervasive harassment.” Vaughn alleged three causes of action under FEHA.
Although Defendant offered Vaughn direct employment, he never signed the
offer letter, which contained an arbitration agreement. For that reason, the
trial court denied Defendant’s motion to compel arbitration of Vaughn’s
claims, and this Court affirmed in Vaughn v. Tesla, Inc. (May 21, 2019,
A154753) [nonpub. opn.].
In November 2020, Defendant moved to deny class certification and to
strike the class allegations in plaintiff Vaughn’s complaint, arguing among
other things that, because Vaughn was not bound to arbitrate, he could not
adequately represent the interests of workers who had agreed to arbitration.
The trial court directed Vaughn to file an amended complaint “that asserts
subclasses.” In May 2021, plaintiff Vaughn filed a first amended complaint
with proposed subclasses. On the same day, Vaughn moved for leave to file a
second amended complaint adding Chatman and Titus McCaleb as named
plaintiffs. In June 2021, Vaughn sought leave to add Hall as a named
plaintiff. The trial court granted leave to amend. Plaintiffs filed their Second
Amended Complaint (Complaint) in July.3
Among other allegations, the Complaint alleges that Plaintiffs and
other similarly situated Black co-workers were subjected to repeated
instances of racial harassment and discrimination, including regularly being
called racial slurs by co-workers and supervisors. Plaintiffs seek to represent
a class of Black persons who worked in Defendant’s factory at various times
after November 2016. The Complaint asserts causes of action for “Race-
Based Discrimination in Violation of FEHA,” “Race-Based Harassment in
3 The Complaint alleges that Titus McCaleb never signed an
arbitration agreement or became a direct employee of Defendant. He was not
named in the motion to compel arbitration at issue in the present appeal, and
he is not a party to it.
3
Violation of FEHA,” and “Failure to Prevent Race-Based Discrimination and
Harassment in Violation of FEHA.” Plaintiffs are alleged to be part of a
subclass of workers who were employed for portions of time by staffing
agencies and subsequently became direct employees of Defendant. Plaintiffs
seek relief against Defendant based on a “joint” or “dual” employer theory for
periods they were employed by staffing agencies.4
In August 2021, Defendant moved to compel arbitration of Plaintiffs’
claims. Defendant pointed out that “[n]one of Chatman and Hall’s
allegations distinguish between the time they were employed by staffing
companies and the time they were directly employed by Tesla” and argued,
among other things, that the Arbitration Provision mandated arbitration
because all of the claims “related to” Plaintiffs’ employment with Defendant.
Defendant also argued Plaintiffs could not seek a “public injunction” under
FEHA. In opposition, Plaintiffs argued, among other things, that they were
not obligated to arbitrate claims based on conduct before August 2, 2017,
which was the date the offer letter identified as the “first day of employment.”
Plaintiffs also argued they had the right to seek a public injunction in court
because the Arbitration Provision prohibited such an award in arbitration.
4 “In the context of an individual who is employed by a temporary
agency and assigned to work on the premises of the agency’s client, . . . both
the agency and the client are employers” if “the client company had the right
to exercise certain powers of control over the employee,” and “an employee
injured by violations of FEHA” may “look to both employers for redress.”
(Mathieu v. Norrell Corp. (2004) 115 Cal.App.4th 1174, 1183–1184; see also
Jimenez v. U.S. Cont’l Mktg., Inc. (2019) 41 Cal.App.5th 189, 197–98 [“This
general principle—that an individual may be held to have more than one
employer in the temporary-staffing context—has ‘long been recognized . . . for
purposes of applying state and federal antidiscrimination laws.’ ”].)
4
Following a hearing, the trial court granted Defendant’s petition to
compel arbitration in part and denied it in part. Regarding the scope of the
Arbitration Provision, the court concluded, “Applying the plain language of
the contracts, the arbitration clauses require [Plaintiffs] to arbitrate disputes
that arise on or after 8/2/17.” The court also concluded, “any claims based on
alleged wrongs before [8/2/17] are not within the temporal scope of the
agreements.” The trial court also denied the motion to compel arbitration to
the extent that Plaintiffs sought a public injunction.
The present appeal followed, and the trial court stayed any portion of
the case that was not automatically stayed by the filing of the notice of
appeal.
DISCUSSION
I. Legal Background and Standard of Review
“Both the California Arbitration Act (Code Civ. Proc., § 1280 et seq.)
and the FAA . . . recognize ‘ “ ‘arbitration as a speedy and relatively
inexpensive means of dispute resolution’ ” and are intended “ ‘to encourage
persons who wish to avoid delays incident to a civil action to obtain an
adjustment of their differences by a tribunal of their own choosing.’ ”
[Citation.]’ [Citations.] The fundamental policy underlying both acts ‘is to
ensure that arbitration agreements will be enforced in accordance with their
terms.’ ” (Avery v. Integrated Healthcare Holdings, Inc. (2013)
218 Cal.App.4th 50, 59.)
The FAA mandates that “ambiguities about the scope of an arbitration
agreement must be resolved in favor of arbitration.” (Lamps Plus, Inc. v.
Varela (2019) __U.S.__ [139 S.Ct. 1407, 1418, 203 L.Ed.2d 636] (Lamps
5
Plus).)5 Nevertheless, “ ‘[t]here is no public policy . . . that favors the
arbitration of disputes the parties did not agree to arbitrate.’ ” (Howard,
supra, 30 Cal.App.5th at p. 663.) That is because “it is a cardinal principle
that arbitration . . . ‘is a matter of consent, not coercion,’ ” and “ ‘ “a party
cannot be required to submit to arbitration any dispute which he has not
agreed so to submit.” ’ ” (Pinnacle Museum Tower Assn. v. Pinnacle Mkt. Dev.
(US), LLC (2012) 55 Cal.4th 223, 236 (Pinnacle Museum).) Thus, the policy
favoring arbitration “ ‘does not override ordinary principles of contract
interpretation’ . . . ‘[T]he terms of the specific arbitration clause under
consideration must reasonably cover the dispute as to which arbitration is
requested.’ ” (Ahern v. Asset Mgmt. Consultants, Inc. (2022) 74 Cal.App.5th
675, 688.)
“Although the FAA preempts any state law that stands as an obstacle
to its objective of enforcing arbitration agreements according to their terms,
. . . we apply general California contract law to determine whether the
parties formed a valid agreement to arbitrate their dispute.” (Avery, supra,
218 Cal.App.4th at pp. 59–60.) “General contract law principles include that
‘[t]he basic goal of contract interpretation is to give effect to the parties’
mutual intent at the time of contracting. [Citations.] ... “The words of a
5 Some appellate decisions have suggested this rule is also required by
California’s “strong public policy in favor of arbitration.” (Howard v.
Goldbloom (2018) 30 Cal.App.5th 659, 663 (Howard); see also Victrola 89,
LLC v. Jaman Properties 8 LLC (2020) 46 Cal.App.5th 337, 355–356.) But in
Sandquist v. Lebo Auto., Inc. (2016) 1 Cal.5th 233, the California Supreme
Court held as a matter of state law that, where, as here, interpretation of an
arbitration agreement drafted by the employer is involved, “it is a ‘well
established rule of construction’ that any ambiguities must be construed
against the drafting employer and in favor of the nondrafting employee.” (Id.
at p. 248.) However, Lamps Plus, supra, 139 S.Ct. 1407, requires a different
rule that we follow.
6
contract are to be understood in their ordinary and popular sense.” ’
[Citation.] Furthermore, ‘ “[t]he whole of a contract is to be taken together,
so as to give effect to every part, if reasonably practicable, each clause
helping to interpret the other.” (Civ. Code, § 1641.)’ ” (Franco v. Greystone
Ridge Condo. (2019) 39 Cal.App.5th 221, 227 (Franco).)
“Where, as here, the evidence is not in conflict, we review the trial
court’s denial of arbitration de novo.” (Pinnacle Museum, supra, 55 Cal.4th
at p. 236.)
II. The Arbitration Provision Only Encompasses Claims Based on Conduct
Following the Commencement of Direct, Contractual Employment
Defendant contends the trial court erred in concluding the Arbitration
Provision does not apply to claims based on conduct preceding the
commencement of direct, contractual employment on August 2, 2017. The
court did not err.
A. Defendant’s Interpretation is Contrary to the Plain Language of
the Arbitration Provision
As noted previously, the Arbitration Provision states, “[T]o ensure the
rapid and economical resolution of disputes that may arise in connection with
your employment with Tesla, you and Tesla agree that any and all disputes,
claims, or causes of action, in law or equity, arising from or relating to your
employment, or the termination of your employment, will be resolved, to the
fullest extent permitted by law by final, binding and confidential
arbitration . . .” (Emphasis omitted.) Defendant’s offer letters clarify the
term “employment,” stating, “If you accept our offer, your first day of
employment will be August 2, 2017.” Thus, it is clear that “employment” as
used throughout the Arbitration Provision and specifically in the phrase
“arising from or relating to your employment” refers to the period of direct,
7
contractual employment, not prior periods during which Plaintiffs were
employed by staffing agencies and assigned to work at Defendant’s factory.6
Under that construction of the Arbitration Provision, the parties agreed to
arbitrate claims arising from or relating to Plaintiffs’ direct employment with
Defendant, not pre-contract claims.7
Although Defendant does not expressly concede the point, it presents
no argument disputing that “employment” in the Arbitration Provision must
be construed to refer to the period of direct employment. Instead, the main
thrust of Defendant’s argument is that Plaintiffs’ “hostile work environment
claims, even if based solely on conduct occurring before August 2, 2017,
related to their employment with Tesla.”
Defendant is correct that the use of the phrase “arising from or relating
to” signifies the Arbitration Provision is a “broad provision.” (Khalatian v.
Prime Time Shuttle, Inc. (2015) 237 Cal.App.4th 651, 659 (Khalatian).)
However, the phrase only acquires meaning by considering what two things
are being related to each other—in this instance Plaintiffs’ claims and their
6 As Plaintiffs point out, Defendant’s offer letters “repeatedly use[] the
word ‘employment’ or ‘employee’ in the exclusive sense of referring only to
Plaintiffs’ future working relationship with” Defendant—for example, in
reference to the applicability of policies and entitlement to benefits. (See
Hom v. Petrou (2021) 67 Cal.App.5th 459, 473 [“[A] word used multiple times
in a contract is generally given the same meaning, unless the contract
indicates otherwise.”].)
7 Defendant observes that Plaintiffs, “based on a ‘joint employer’
theory . . . allege Tesla was their employer before and after they signed” the
offer letters containing the Arbitration Provision. But Defendant fails to
explain why application of the joint employer doctrine would affect the
construction of “employment” in the Arbitration Provision. (See Jimenez v.
U.S. Cont’l Mktg., Inc., supra, 41 Cal.App.5th at p. 199 [describing “the issue
presented” as whether the defendant was the plaintiff’s “employer for the
purposes of FEHA”] (Italics added.).)
8
direct employment with Tesla. (Ramos v. Superior Ct. (2018) 28 Cal.App.5th
1042, 1051 (Ramos) [“While the phrase ‘arising under or related to’ is very
broad, it is necessarily qualified by what follows.”].)
It is well established—including in the very cases Defendant
principally relies upon—that when courts say that an arbitration agreement
including “relating to” is broad, it typically is because it expands the reach of
the agreement to encompass claims rooted in the employment relationship,
even if the claims do not actually arise from the employment contract itself.
As explained in Rice v. Downs (2016) 248 Cal.App.4th 175, at page 186, “ ‘It
has long been the rule in California that a broadly worded arbitration clause
. . . may extend to tort claims that may arise under or from the contractual
relationship. “There is no requirement that the cause of action arising out of
a contractual dispute must be itself contractual. At most, the requirement is
that the dispute must arise out of contract.” ’ ” (See also Khalatian, supra,
237 Cal.App.4th at p. 660 [broad provisions “are consistently interpreted as
applying to extracontractual disputes between the contracting parties”].)
Consistent with the proposition that “relating to” acquires meaning
from the subjects being related, the phrase normally encompasses
extracontractual claims only “so long as they have their roots in the
relationship between the parties which was created by the contract.”
(Berman v. Dean Witter & Co., Inc. (1975) 44 Cal.App.3d 999, 1003; accord,
Khalatian, supra, 237 Cal.App.4th at p. 660; Howard, supra, 30 Cal.App.5th
at p. 664; Ramos, supra, 28 Cal.App.5th at p. 1052.) For example, Khalatian
held that Labor Code claims were encompassed by the arbitration agreement
in that case, even though the plaintiff did not rely on the compensation
provisions in his employment contract (Khalatian, at p. 660); Ramos held
that statutory employment claims were within the scope of an arbitration
9
agreement because the underlying contract was relevant to the claims in
several respects (Ramos, at p. 1053); and Howard held that a claim the
defendant wrongfully diluted the value of the plaintiff’s shares in the
company was not rooted in the contractual employment relationship
(Howard, at p. 670).
Thus, Defendant is mistaken in suggesting the Arbitration Provision
must be applied to pre-contract disputes in order to give meaning to the
inclusion of the words “relating to” in addition to “arising from.” As noted,
the inclusion of “relating to” typically justifies applying arbitration
agreements to claims that do not arise from the contract. In contrast,
“narrow clauses” stating only “arising from” “ ‘have generally been
interpreted to apply only to disputes regarding the interpretation and
performance of the agreement.’ ” (Howard, supra, 30 Cal.App.5th at p. 664.)
Thus, while courts have given significance to the inclusion of the more
expansive “relating to” language, Defendant cites no authority that relies on
the language to require arbitration of a pre-contract claim—i.e., arbitration of
a claim not rooted in the employment relationship established by the contract
containing an arbitration provision.
Defendant relies on an unpublished federal district court decision in
which the court found an arbitration agreement applied to an action based on
employees’ alleged deletion of material from their computers upon their
termination. (Whole Body Research, LLC v. Digest MD, LLC (C.D. Cal. July
3, 2018, No. LA CV18-01233 JAK (JCx)) 2018 U.S.Dist. Lexis 217107, pp. 8–
9.) In that case, the court concluded the arbitration agreement encompassed
the “post-employment activity” because the former employees were able to
access the computers due to their employment. (Id. at p. 9.) By contrast, in
the present case, Plaintiffs’ contractual “employment” did not even commence
10
until after the conduct upon which the claims at issue are based. While it
was sensible for the Whole Body Research court to conclude the claims there
were “rooted in” the employees’ employment, the same cannot be said in the
present case, given how the offer letters define “employment.”
Defendant also points out that Plaintiffs “worked at the same Tesla
factory, in the same role, with the same coworkers, for the same supervisors,
under the same management” before August 2, 2017, and that Plaintiffs
“allege [Defendant] Tesla engaged in the same unlawful conduct before and
after they signed the arbitration agreement.” But the question in
interpreting the Arbitration Provision is not whether Plaintiffs’ pre- and post-
August claims are factually similar or share evidence in common, but
whether Plaintiffs’ claims based on conduct that did not occur during
Plaintiffs’ direct, contractual “employment” “relate to” the period of
“employment” that followed the contracts. Here, the “alleged wrongs” during
the period of staffing agency employment “exist independently of” the
subsequent “employment relationship” with Defendant. (Howard, supra,
30 Cal.App.5th at p. 670.) Defendant cites no authority that factual
commonalities are sufficient to justify extension of an arbitration agreement
to pre-contractual employment claims absent any indication the parties
understood the agreement would apply in that manner.
In summary, Defendant fails to persuade that the “relating to” phrase
means the Arbitration Provision applies to any past dispute between the
parties, based on events occurring before commencement of the contractual
“employment” relationship. Defendant’s proposed construction of “relating
to” lacks support in the caselaw and would expand the application of the
Arbitration Provision well beyond the reasonable expectations of the parties.
(See Esparza v. Sand & Sea, Inc. (2016) 2 Cal.App.5th 781, 788 [“ ‘An
11
essential element of any contract is the consent of the parties, or mutual
assent.’ . . . ‘Mutual assent is determined under an objective standard applied
to the outward manifestations or expressions of the parties, i.e., the
reasonable meaning of their words and acts . . . .’ ”].) Because Plaintiffs’
claims based on pre-August 2017 conduct are not “root[ed] in the relationship
between the parties which was created by the contract”—because that
relationship did not yet exist—the inclusion of the language “relating to” does
not justify applying the Arbitration Provision to those claims. (Khalatian,
supra, 237 Cal.App.4th at p. 660; Howard, supra, 30 Cal.App.5th at p. 664.)
Finally, our conclusion finds support in the provision’s express
statement of purpose: “[T]o ensure the rapid and economical resolution of
disputes that may arise in connection with your employment with Tesla …”
(Emphasis added.) That forward-looking language suggests the intent of the
Arbitration Provision is to address claims based on incidents occurring
during the period of direct employment. “The use of the present-tense ‘arise,’
rather than the past-tense ‘arose’ or present-perfect ‘have arisen,’ suggests
that the contract governs only disputes that begin—that arise—in the
present or future. The present tense usually does not refer to the past.”
(Russell v. Citigroup, Inc. (6th Cir. 2014) 748 F.3d 677, 679.) Furthermore,
“the auxiliary verb ‘may’ signals a hazard that is yet to come rather than an
incident that has come to pass.” (Id. at p. 680; see also Salgado v. Carrows
Restaurants, Inc. (2019) 33 Cal.App.5th 356, 360–361 (Salgado) [implicitly
acknowledging that “ ‘disputes which may arise’ ” is forward-looking
language].) Although not determinative, we conclude the reference to “may
arise” in the Arbitration Provision’s statement of purpose is further support
for our rejection of Defendant’s interpretation.
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B. The Salgado and Franco Decisions Do Not Support Defendant’s
Interpretation of the Arbitration Provision
The parties each argue that their position is supported by the decisions
in Salgado v. Carrows Restaurants, Inc., supra, 33 Cal.App.5th 356 and
Franco v. Greystone Ridge Condo., supra, 39 Cal.App.5th 221. Those cases
are readily distinguishable.
In Salgado, supra, 33 Cal.App.5th 356, the plaintiff had been a direct
employee at the defendant restaurant for decades, before filing a lawsuit
alleging claims for employment discrimination and violation of civil rights.
(Id. at p. 358.) The following month, she signed an arbitration agreement,
which contained two relevant provisions. (Id. at p. 359.) The first provided,
“ ‘The Company and I agree and acknowledge that we will utilize binding
arbitration as the sole and exclusive means to resolve all disputes which may
arise out of or be related in any way to my application for employment and/or
employment, including but not limited to the termination of my employment
and my compensation.’ ” (Ibid.) The second provided in relevant part, “ ‘Both
the Company and I agree that any claim, dispute, and/or controversy that I
may have against the Company . . . or the Company may have against me,
shall be submitted to and determined exclusively by binding arbitration.’ ”
(Ibid.)
The Salgado court rejected the plaintiff’s contention the arbitration
agreement was not retroactive. As to the first provision, the court
acknowledged the “ ‘may arise’ ” language suggested application to future
claims, but concluded the use of “ ‘or’ ” meant that “ ‘all disputes’ related ‘in
any way’ to employment” were also encompassed by the provision. (Salgado,
supra, 33 Cal.App.5th at pp. 360–361.) As to the second provision, the court
observed that it “unequivocally requires arbitration for ‘any claim’ [the
13
plaintiff] has against [the defendant].” (Id. at p. 361; see also Desert Outdoor
Advert. v. Superior Ct. (2011) 196 Cal.App.4th 866, 877 [language “ ‘any . . .
dispute of any kind whatsoever between us’ ” contains “no temporal
limitation”].)
In Franco, supra, 39 Cal.App.5th 221, direct employees of the
defendant company were asked to sign an arbitration agreement
encompassing “ ‘[a]ny and all claims . . . relating to any aspect of . . .
employment with Employer (pre-hire through post-termination).’ ” (Id. at
p. 223.) The plaintiff, who had been employed by the defendant company for
years, signed the arbitration agreement days after filing an action alleging
FEHA and other claims. (Id. at pp. 223–225.) The plaintiff opposed the
defendant’s petition for arbitration on the ground that the agreement “failed
to expressly state that claims that had already accrued, including the claims
asserted in plaintiff’s complaint, were subject to arbitration.” (Ibid.) The
court of appeal concluded the arbitration agreement encompassed the
plaintiff’s claims because it was not limited to claims that had yet to accrue
and “the agreement’s reference to claims relating to ‘pre-hire’ matters
expresses an intent to cover all claims, regardless of when they accrued, that
are not otherwise expressly excluded by the arbitration agreement.” (Ibid.;
see also id. at p. 230.)
Clear differences exist between the Arbitration Provision and the
comparable clauses in Salgado and Franco. Most significantly, the plain
language of the Arbitration Provision does not encompass Plaintiffs’ claims
because their direct “employment” with Defendant, as that term is used in
the provision, did not begin until August 2017. In contrast, the plaintiffs in
Salgado and Franco were direct employees long before execution of the
arbitration agreements, so there is no question their claims were rooted in
14
that employment, even though the claims accrued before the arbitration
agreements were signed. Given the ongoing employment relationship, the
key question in those cases was whether the arbitration agreements were
properly “ ‘applied retroactively to transactions which occurred prior to
execution of the arbitration agreement.’ ” (Salgado, supra, 33 Cal.App.5th at
p. 361.) That is not the issue in the present case. Instead, the issue is
whether the Arbitration Provision is properly applied to transactions that
occurred prior to the existence of the contractual employment relationship, a
fundamentally different matter.8
Further, both Salgado and Franco involved language from which the
courts could infer an intent to apply the agreement to all claims between the
parties. In Salgado, the plaintiff agreed to arbitrate “ ‘any claim’ ” she had
8 An unpublished Fourth Circuit decision cited by Plaintiffs makes the
same point. In Newbanks v. Cellular Sales of Knoxville, Inc. (4th Cir. 2013)
548 Fed. Appx. 851, the plaintiffs worked as independent contractors for the
defendant and subsequently entered into employment contracts. (Id. at
p. 852.) The contracts required arbitration of “ ‘[a]ll claims, disputes, or
controversies arising out of, or in relation to this document or Employee’s
employment with [the] Company.’ ” (Ibid.) The Fourth Circuit concluded the
arbitration provision did not apply to disputes based on conduct prior to
execution of the contracts. (Id. at p. 857.) Among other things, the court
observed that, “prior to the execution of the” contracts, “there existed no
employment relationship between [the parties]. We will not read the
arbitration agreements to apply to a relationship, a contractual status, that
simply did not exist.” (Id. at p. 856.) The same reasoning applies in the
present case.
The parties also cite a number of other federal district court and circuit
court decisions, mostly unpublished. None of those cases demonstrate the
trial court erred, and discussion of them is unnecessary to resolution of the
present appeal.
15
against the defendant (Salgado, supra, 33 Cal.App.5th at p. 361),9 and in
Franco, the agreement expressly referred to “ ‘pre-hire’ ” claims (Franco,
supra, 39 Cal.App.5th at pp. 224, 230, 232). The Arbitration Provision in the
current case contains no comparable language; instead, it references only the
period of direct employment and makes a forward-looking reference to
“disputes that may arise.” It encompasses only claims related to the period of
direct, contractual employment, not any dispute between the parties.
The differences between the Franco and Salgado cases and the present
case undermine Defendant’s argument that they support the conclusion that
the Arbitration Provision applies to pre-contract disputes.
C. Defendant Has Not Shown the Trial Court Erred in Temporally
Dividing Plaintiffs’ Claims
Finally, Defendant argues the trial court erred in temporally dividing
Plaintiffs’ claims, sending to arbitration only those based on conduct during
the period of direct, contractual employment. Defendant observes Plaintiffs
“asserted claims covering the entire time they worked at Tesla . . . . They did
not assert separate, sequential hostile work environment claims partitioned
by time period and based on alleged conduct occurring before and after
August 2, 2017.” But it is Defendant who obligated the trial court to
temporally divide Plaintiffs’ claims by moving for arbitration. Defendant
cites no authority the trial court was required in these circumstances to send
9 Although it appears the Salgado court concluded the “ ‘related in any
way’ ” language in the first provision was itself sufficient to require
arbitration (Salgado, supra, 33 Cal.App.5th at pp. 360–361), the broad
language in the second provision supported a broad interpretation of the first
provision. (See Garcia v. Expert Staffing West (2021) 73 Cal.App.5th 408, 414
[same court in subsequent decision emphasizing language in second provision
in explaining Salgado holding].)
16
to arbitration Plaintiffs’ claims based on conduct outside the scope of the
Arbitration Provision.
In support of its argument, Defendant cites cases in which courts of
appeal concluded it was improper for trial courts to split a plaintiff’s Labor
Code Private Attorney General Act of 2004 (PAGA) (Lab. Code, §§ 2698–
2699.8) claim into an individual wage claim and a claim for civil penalties.
(Mejia v. Merchs. Bldg. Maint., LLC (2019) 38 Cal.App.5th 723, 727–728,
disapproved on other grounds by ZB, N.A. v. Superior Court (2019) 8 Cal.5th
175, 196, fn. 8; Zakaryan v. The Men’s Wearhouse, Inc. (2019) 33 Cal.App.5th
659, 676, disapproved on other grounds by ZB, at p. 196, fn. 8.) Those courts
reasoned that splitting the claim in that way was contrary to the public policy
reflected in PAGA (Zakaryan, at p. 676) and “effectively usurps the plaintiff’s
choice to pursue a PAGA action, alone” (Mejia, at p. 743). Nothing in those
decisions suggests a trial court may force a party to arbitrate a claim it did
not agree to arbitrate.10
Defendant does not dispute Plaintiffs allege they were subject to
discrimination during the periods they worked at Defendant’s factory on
assignment by staffing agencies, or that the allegations are sufficient to state
hostile work environment claims based solely on conduct during those same
periods. Under California law, “If a plaintiff’s . . . cause of action includes
both arbitrable and inarbitrable claims, . . . the trial court must sever the
cause of action, order the arbitrable portion to arbitration, and stay the
inarbitrable portion pending the completion of arbitration.” (Clifford v. Quest
Software Inc. (2019) 38 Cal.App.5th 745, 750.)
10We also note it appears the holdings in Mejia and Zakaryan have
been overruled by Viking River, supra, 142 S.Ct. 190 (see Part III.B., post).
17
As the appellant, Defendant has the burden to show error, with
“adequate argument including citations to supporting authorities.” (Yield
Dynamics, Inc. v. TEA Sys. Corp. (2007) 154 Cal.App.4th 547, 557.)
Defendant has failed to cite any authority to this court supporting its
contention that the trial court was without authority to temporally divide
Plaintiffs’ claims for adjudication in separate fora, sending to arbitration only
those claims they agreed to arbitrate.
D. Conclusion
The trial court did not err in granting Defendant’s petition to compel
arbitration only as to Plaintiffs’ claims based on conduct occurring after
August 2, 2017.11
III. The Trial Court Properly Refused to Enforce a Contractual Waiver of
Plaintiffs’ Right to Seek a Public Injunction Under FEHA
Plaintiffs’ Complaint seeks a “public injunction, enjoining Defendant[]
from committing further violations of the FEHA with respect to race
discrimination and harassment against Black and/or African-American
workers, and failure to prevent such.” The prayer for relief adds, “Such relief
at minimum should include implementation of effective policies to prevent
and correct race harassment, implementation of mandatory training
regarding harassment for all of Defendant[’s] managerial and non-
managerial employees, and a public declaration that [Defendant’s] widely-
known racist practices contravene California law and will not continue and
11Defendant suggests there may be practical difficulties in adjudicating
temporally distinct hostile work environment claims. But Defendant fails to
explain how any such difficulty provides a basis to require Plaintiffs to
arbitrate a claim they did not agree to arbitrate. Defendant also argues the
trial court erred in its analysis in several other respects, but Defendant fails
to explain how any of the purported errors are relevant given this court’s de
novo review.
18
will not be tolerated.” The trial court denied Defendant’s motion to compel as
to Plaintiffs’ request for a public injunction. On appeal, Defendant contends
the trial court erred because FEHA “does not authorize plaintiffs to obtain
‘public injunctions.’ ” Defendant also argues that, under the reasoning of the
recent Viking River decision, the FAA preempts California’s rule against
contractual waivers of the right to seek a public injunction. We reject
Defendant’s contentions.
A. Plaintiffs May Seek a Public Injunction Under FEHA
In McGill v. Citibank, N.A. (2017) 2 Cal.5th 945 (McGill), at page 955,
the California Supreme Court discussed the distinction “between private
injunctive relief—i.e., relief that primarily ‘resolve[s] a private dispute’
between the parties [citation] and ‘rectif[ies] individual wrongs’ [citation],
and that benefits the public, if at all, only incidentally—and public injunctive
relief—i.e., relief that ‘by and large’ benefits the general public [citation] and
that benefits the plaintiff, ‘if at all,’ only ‘incidental[ly]’ and/or as ‘a member
of the general public.’ ” McGill discussed the court’s prior decisions
establishing that “public injunctive relief under the [Unfair Competition Law
(UCL)], the [Consumer Legal Remedies Act (CLRA)], and the false
advertising law is relief that has ‘the primary purpose and effect of’
prohibiting unlawful acts that threaten future injury to the general public.”
(McGill, at p. 955, citing Cruz v. PacifiCare Health Systems, Inc. (2003)
30 Cal.4th 303 (Cruz) and Broughton v. Cigna Healthplans (1999) 21 Cal.4th
1066 (Broughton).) In McGill, the court concluded that an arbitration
agreement waiving a statutory right to seek a public injunction “in any
forum” is invalid as “contrary to California public policy” because it “would
seriously compromise the public purposes the statute[ was] intended to
serve.” (Id. at pp. 952, 961.) The court further held that the FAA “does not
19
preempt this rule of California law or require enforcement of the waiver
provision.” (Ibid.)12 In the present case, the trial court extended McGill’s
analysis to FEHA, after concluding FEHA “serves a public purpose.”
The Arbitration Provision in the present case provides that “Any claim,
dispute, or cause of action must be brought in a party’s individual capacity,
and not as a plaintiff or class member in any purported class or
representative proceeding.” It also provides that “The arbitrator shall not
have the authority to . . . award relief to a group or class of employees in one
arbitration proceeding.” Plaintiffs argued in their brief on appeal that the
Arbitration Provision “purports to prevent Plaintiffs from seeking a public
injunction in any forum.” Defendant did not dispute that assertion in its
reply brief. Nevertheless, for the first time at oral argument, Defendant
appeared to argue the provision does not prohibit issuance of a public
injunction in arbitration because McGill stated that an action seeking such
relief “does not constitute the ‘pursu[it]’ of ‘representative claims or relief on
behalf of others’ ” within the meaning of the ballot proposition at issue in that
case. (McGill, supra, 2 Cal.5th at pp. 959–960.) That argument has been
forfeited. (People v. Thompson (2010) 49 Cal.4th 79, 110, fn. 13.) In any
event, the argument is misplaced. Plaintiffs did not argue the Arbitration
Provision prohibits public injunctive relief in arbitration under the
provision’s language prohibiting “representative” claims. Instead, Plaintiffs
highlighted the prohibition on “relief to a group or class of employees.”
Defendant did not dispute at oral argument that a public injunction would
constitute such prohibited relief. (See Blair v. Rent-A-Ctr., Inc. (9th Cir.
12In Part III.B., post, we address Defendant’s contention that the
Viking River decision requires us to conclude McGill’s no-waiver rule is
preempted.
20
2019) 928 F.3d 819, 831 [concluding that an analogous provision “precludes
the arbitrator from awarding public injunctive relief”].) Accordingly, because
the Arbitration Provision provides for resolution of all covered disputes in
arbitration, but prohibits an arbitrator from granting non-individual relief,
the provision does waive Plaintiffs’ right to seek a public injunction “in any
forum.” (McGill, at p. 956, italics omitted; Blair, at p. 831.)
Turning to the validity of the Arbitration Provision, Defendant does not
dispute that, under McGill, an arbitration agreement that precludes a
plaintiff from pursuing public injunctive relief in any forum is invalid and
unenforceable as a matter of state law (but see Part III.B., post). Instead,
Defendant argues Plaintiffs’ claims are not for public injunctive relief because
under FEHA only an “aggrieved” person with an interest “ ‘ “ ‘over and above
the interest held in common with the public at large’ ” ’ ” has standing to file
an action. (Dep’t of Fair Emp. & Hous. v. M&N Fin. Corp. (2021)
69 Cal.App.5th 434, 443; see also Gov. Code, § 12965.) However, just because
a member of the general public could not assert the FEHA claims in the
Complaint does not mean that Plaintiffs cannot seek relief that has “ ‘the
primary purpose and effect of’ prohibiting unlawful acts that threaten future
injury to the general public.” (McGill, supra, 2 Cal.5th at p. 955.) Indeed,
McGill expressly rejected the argument Defendant makes on appeal. There,
the court concluded that amendments to the UCL and false advertising law
requiring that a plaintiff have “ ‘suffered injury in fact’ ” did not “preclude a
private individual . . . [with] standing to file a private action—from
requesting public injunctive relief in connection with that action.” (McGill, at
pp. 958–959.)
Defendant also argues the statutes at issue in McGill, Broughton, and
Cruz—the false advertising law, the UCL, and the CLRA—are
21
distinguishable from FEHA.13 Defendant points out the false advertising law
is “explicitly a statutory protection for the ‘public in this state’ (Bus. &
Prof. Code[,] § 17500, italics added.)” It also cites Broughton for the
proposition that the CLRA’s purpose “is not to resolve a private dispute but to
remedy a public wrong.” (Broughton, supra, 21 Cal.4th at p. 1080.) In
contrast, Defendant argues, FEHA “protects individual employees or persons
seeking employment, not the general public.”14
Defendant does not dispute that injunctive relief is available in a
FEHA action. Although the false advertising law, the UCL, and the CLRA
contain provisions expressly authorizing injunctions (McGill, supra, 2 Cal.5th
at pp. 954–955), the California Supreme Court has held injunctive relief is
also available under FEHA. (Aguilar v. Avis Rent A Car Sys., Inc. (1999)
21 Cal.4th 121, 131–132; see also id. at p. 132 [“courts can, and often do,
issue injunctions prohibiting the recurrence or continuation of employment
discrimination”].) As Defendant apparently recognizes, the determinative
issue is whether the injunctive relief sought “has the primary purpose and
effect of prohibiting unlawful acts that threaten future injury to the general
public” (McGill, at p. 951; see also Broughton, supra, 21 Cal.4th at p. 1081;
Cruz, supra, 30 Cal.4th at pp. 315–316), not whether the statutory
authorization of injunctive relief is express or implied.
13 Technically, this argument has been forfeited because Defendant
made it for the first time in its reply brief. (Proctor v. Vishay Intertechnology,
Inc. (2013) 213 Cal.App.4th 1258, 1273–1274 (Proctor).) However, because
Plaintiffs anticipated the argument in their brief, we exercise our discretion
to address it. (People v. Oneal (2021) 64 Cal.App.5th 581.)
14 That Plaintiffs seek a monetary recovery in addition to injunctive
relief does not preclude a determination that they seek a public injunction.
(McGill, supra, 2 Cal.5th at p. 957, fn. 1; see also Cruz, supra, 30 Cal.4th at
p. 320; Broughton, supra, 21 Cal.4th at p. 1084.)
22
We reject Defendant’s argument that requests for injunctive relief
under the statues addressed in McGill may have “ ‘the primary purpose and
effect of’ prohibiting unlawful acts that threaten future injury to the general
public” (McGill, supra, 2 Cal.5th at p. 955) but an injunction sought under
FEHA may not. California Government Code section 12920 articulates the
public purposes of FEHA in unambiguous language, stating, “It is hereby
declared as the public policy of this state that it is necessary to protect and
safeguard the right and opportunity of all persons to seek, obtain, and hold
employment without discrimination or abridgment on account of race [and
other protected characteristics]. [¶] It is recognized that the practice of
denying employment opportunity and discriminating in the terms of
employment for these reasons foments domestic strife and unrest, deprives
the state of the fullest utilization of its capacities for development and
advancement, and substantially and adversely affects the interests of
employees, employers, and the public in general.”
Citing that provision, the California Supreme Court stated, in the
context of a sex discrimination claim, “The public policy against sex
discrimination and sexual harassment in employment . . . is plainly one that
‘inures to the benefit of the public at large rather than to a particular
employer or employee.’ [Citation.] No extensive discussion is needed to
establish the fundamental public interest in a workplace free from the
pernicious influence of sexism. So long as it exists, we are all demeaned.”
(Rojo v. Kliger (1990) 52 Cal.3d 65, 90 (Rojo).) Similarly, in the context of an
age discrimination claim, the Court stated, “there can be little doubt that the
FEHA’s express policy condemning employment discrimination against older
workers is one that benefits the public at large. . . . [T]he pernicious effects of
age discrimination in employment are not confined to the employees who are
23
its immediate targets. . . . [T]he practice of age discrimination, like other
invidious forms of discrimination, ‘foments domestic strife and unrest’ in the
workplace (Gov. Code, § 12920), making for a more stressful and ultimately
less productive work environment.” (Stevenson v. Superior Ct. (1997)
16 Cal.4th 880, 895 (Stevenson).)
The reasoning of those cases is fully applicable to discrimination on the
basis of race. (Carmichael v. Alfano Temp. Pers. (1991) 233 Cal.App.3d 1126,
1132 [extending Rojo and stating, “In our view the public has a fundamental
interest in a workplace free from the equally pernicious influence of racism.
Racism, like sexism, demeans all of us.”]; see also Flannery v. Prentice (2001)
26 Cal.4th 572, 584 [“ ‘[t]he policy that promotes the right to seek and hold
employment free of prejudice is fundamental’ ”]; Armendariz v. Found.
Health Psychcare Servs., Inc. (2000) 24 Cal.4th 83, 100 [“There is no question
that the statutory rights established by the FEHA are ‘for a public
reason.’ ”].)
Defendant fails to articulate any persuasive reason why injunctions
sought under the false advertising law, the UCL, and the CLRA may be
viewed as primarily benefitting the public but an injunction sought under
FEHA may not.15 Defendant asserts that a public injunction is available only
as to acts “that are directed to the entire public,” but it cites no authority
supporting that view. Defendant’s approach to the issue is inconsistent with
15 Plaintiffs also point out that FEHA claims can be enforced through
the UCL, which Defendant does not dispute provides for public injunctive
relief. (See Alch v. Superior Ct. (2004) 122 Cal.App.4th 339, 401 [“age
discrimination in violation of FEHA is an unlawful employment practice that
may be enjoined under the UCL”].) Because we conclude Plaintiffs may seek
a public injunction under FEHA, we need not address the relevance of the
possibility that they could have sought a public injunction under the UCL
based on the same underlying allegations.
24
that taken by the court of appeal in Maldonado v. Fast Auto Loans, Inc.
(2021) 60 Cal.App.5th 710, which rejected a contention that “the McGill Rule
. . . only applies to plaintiffs seeking to enjoin false or misleading advertising
on behalf of the general public.” (Maldonado, at p. 721.) The court
emphasized that the CLRA was to be “ ‘ “liberally construed” ’ ” to accomplish
its purposes. (Ibid.) The court also rejected the proposition that an
injunction would not benefit the public because only a small proportion of the
public would be exposed to the defendant’s unfair business practice, noting,
“although ‘not all members of the public will become customers of [the
defendant]’ this ‘does not negate the fact that public injunctive relief will
nevertheless offer benefits to the general public.’ The requested injunction
cannot be deemed private simply because [the defendant] could not possibly
advertise to, or enter into agreements with, every person in California. . . . It
is enough that the requested relief has the purpose and effect of protecting
the public from [the defendant]’s ongoing harm.” (Id. at p. 722; see also Mejia
v. DACM Inc. (2020) 54 Cal.App.5th 691, 703–704; cf. Clifford v. Quest
Software Inc., supra, 38 Cal.App.5th at p. 753 [“The only express beneficiary
of [the plaintiff]’s requested injunctive relief is [the plaintiff], and the only
potential beneficiaries are [the defendant]’s current employees, not the public
at large.”]; Capriole v. Uber Techs., Inc. (9th Cir. 2021) 7 F.4th 854, 870
[request to “ ‘enjoin [the defendant] from misclassifying its drivers as
independent contractors, thus entitling them to the protections of
Massachusetts wage laws, including paid sick leave’—is overwhelmingly
directed at [the P]laintiffs and other rideshare drivers”].)16
16 A Ninth Circuit decision, Hodges v. Comcast Cable Communs., LLC
(9th Cir. 2021) 21 F.4th 535, declined to follow Maldonado and Mejia.
(Hodges, at pp. 544–545.) We are not bound by that decision (People v. Uribe
25
The same reasoning applies in the present case. Government Code
section 12993, subdivision (a), states FEHA “shall be construed liberally for
the accomplishment of the purposes of this part.” (See also Richards v.
CH2M Hill, Inc. (2001) 26 Cal.4th 798, 819.) The Complaint alleges
Defendant “was the fifth-most valuable company in America in 2021, and one
of Alameda County’s biggest employers.” An injunction against further
employment discrimination by Defendant would inure to the benefit of not
only current Tesla employees, but to the benefit of their families and their
communities, as well as to the benefit of future Tesla applicants and
employees. Furthermore, as the California Supreme Court recognized in
Stevenson, FEHA is premised on the Legislature’s finding that invidious
discrimination harms the public at large, including individuals lacking any
direct connection to the workplace involved. (Stevenson, supra, 16 Cal.4th at
p. 895.)
Because Plaintiffs’ request for a public injunction “has ‘the primary
purpose and effect of’ prohibiting unlawful acts that threaten future injury to
the general public” (McGill, supra, 2 Cal.5th at p. 955), the trial court
properly denied Defendant’s motion to compel arbitration as to that claim.17
(2011) 199 Cal.App.4th 836, 875), and we believe the analysis of the dissent is
more consistent with McGill (Hodges, at pp. 549–554 (dis. opn. of Berzon, J.)).
We also observe that Defendant makes no effort to defend the reasoning of
the Hodges majority. Additionally, at issue in Hodges was a claim regarding
a cable company’s “privacy and data-collection practices.” (Id. at p. 538.) The
present case involves the prevention of discrimination, and the Legislature
and the California Supreme Court have clearly stated that accomplishment of
that goal is for the benefit of the public in general and not just the employees
and applicants affected by the discrimination.
17 Defendant argues for the first time in its reply brief that Plaintiffs
really seek private relief, not a public injunction. The argument has been
forfeited. (Proctor, supra, 213 Cal.App.4th at pp. 1273–1274.) In any event,
26
B. The FAA Does Not Preempt California’s No-Waiver Rule
The FAA “stands as ‘a congressional declaration of a liberal federal
policy favoring arbitration agreements, notwithstanding any state
substantive or procedural policies to the contrary.’ ” (Pinnacle Museum,
supra, 55 Cal.4th at p. 235; see also Cronus Invs., Inc. v. Concierge Servs.
(2005) 35 Cal.4th 376, 384.) “To ensure that arbitration agreements are
enforced according to their terms, ‘the FAA pre-empts state laws which
“require a judicial forum for the resolution of claims which the contracting
parties agreed to resolve by arbitration.” ’ ” (Pinnacle Museum, at p. 235.)
In McGill, supra, 2 Cal.5th 945, the California Supreme Court
concluded “that the FAA does not require enforcement of a provision in a
predispute arbitration agreement that, in violation of generally applicable
California contract law, waives the right to seek in any forum public
injunctive relief under the UCL, the CLRA, or the false advertising law.”
(McGill, at p. 963.) The court reasoned, “The contract defense at issue here—
‘a law established for a public reason cannot be contravened by a private
agreement’ (Civ. Code, § 3513)—is a generally applicable contract defense,
i.e., it is a ground under California law for revoking any contract. [Citation.]
It is not a defense that applies only to arbitration or that derives its meaning
from the fact that an agreement to arbitrate is at issue. . . . The FAA does
not require enforcement of such a provision, in derogation of this generally
applicable contract defense, merely because the provision has been inserted
into an arbitration agreement.” (McGill, at p. 962; see also Morgan v.
Sundance, Inc. (2022) __U.S.__ [142 S.Ct. 1708, 1713, 212 L.Ed.2d 753] [“The
we have explained how the injunction sought by Plaintiffs would have the
primary effect of benefitting the public rather than primarily the individual
Plaintiffs or class members. (See McGill, supra, 2 Cal.5th at pp. 956-957
[explaining why relief sought in complaint was public injunctive relief].)
27
policy is to make ‘arbitration agreements as enforceable as other contracts,
but not more so.’ ”].) The McGill court further observed that its conclusion
was “consistent with the high court’s statement that, ‘[b]y agreeing to
arbitrate a statutory claim, a party does not forgo the substantive rights
afforded by the statute; it only submits to their resolution in an arbitral,
rather than a judicial, forum.’ ” (McGill, at p. 962, quoting Mitsubishi Motors
Corp. v. Soler Chrysler-Plymouth (1985) 473 U.S. 614, 628.)
Although McGill specifically addressed the UCL, the CLRA, and the
false advertising law, Defendant does not suggest its reasoning is less than
fully applicable to a claim for a public injunction under FEHA (though
Defendant does dispute that such relief is available, as addressed in
Part III.A., ante). Instead, Defendant argues the United States Supreme
Court’s recent decision in Viking River, supra, 142 S.Ct. 1906, requires us to
conclude McGill’s no-waiver rule is preempted by the FAA. We disagree.
1. The Viking River Decision
The Viking River decision, issued in June 2022, did not purport to
abrogate McGill in whole or in part, or even cite McGill or use the phrase
“public injunction.” Instead, Viking River overruled a different California
Supreme Court decision, Iskanian v. CLS Transp. Los Angeles, LLC (2014)
59 Cal.4th 348 (Iskanian), which involved PAGA claims. PAGA “authorizes
an employee to bring an action for civil penalties on behalf of the state
against his or her employer for Labor Code violations committed against the
employee and fellow employees, with most of the proceeds of that litigation
going to the state.” (Iskanian, at p. 360.) In Iskanian, the court held that an
agreement that waives representative claims under PAGA is “contrary to
public policy and unenforceable as a matter of state law.” (Iskanian, at
p. 384.) Iskanian also concluded the FAA did not preempt state law in that
28
respect, because the “FAA’s goal of promoting arbitration as a means of
private dispute resolution does not preclude our Legislature from deputizing
employees to prosecute Labor Code violations on the state’s behalf.”
(Iskanian, at p. 360.)
In Viking River, the United States Supreme Court characterized
Iskanian as adopting two rules: The “principal rule prohibits waivers of
‘representative’ PAGA claims . . . That is, it prevents parties from waiving
representative standing to bring PAGA claims in a judicial or arbitral forum.
But Iskanian also adopted a secondary rule that invalidates agreements to
separately arbitrate or litigate ‘individual PAGA claims for Labor Code
violations that an employee suffered,’ on the theory that resolving victim-
specific claims in separate arbitrations does not serve the deterrent purpose
of PAGA.” (Viking River, supra, 142 S.Ct. at pp. 1916–1917.) Viking River
held the FAA did not preempt Iskanian to the extent the decision prohibited
waiver of an employee’s right to pursue a “representative” PAGA claim on
behalf of the state. (Viking River, at pp. 1924–1925.) That is because “the
FAA does not require courts to enforce contractual waivers of substantive
rights and remedies.” (Viking River, at p. 1919.)
On the other hand, Viking River held Iskanian was preempted to the
extent it “invalidates agreements to arbitrate only ‘individual PAGA claims
for Labor Code violations that an employee suffered.’ ” (Viking River, supra,
142 S.Ct. at p. 1923.) Viking River stated the “conflict between PAGA’s
procedural structure and the FAA . . . derives from the statute’s built-in
mechanism of claim joinder,” which permits broad joinder of the claims of
other employees to the claim of the individual plaintiff. (Viking River, at
pp. 1923–1924.) Viking River explained, “A state rule imposing an expansive
rule of joinder in the arbitral context would defeat the ability of parties to
29
control which claims are subject to arbitration. Such a rule would permit
parties to superadd new claims to the proceeding, regardless of whether the
agreement between them committed those claims to arbitration. Requiring
arbitration procedures to include a joinder rule of that kind 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.” (Viking River, at p. 1924.)
Viking River continued, “When made compulsory by way of Iskanian,
the joinder rule internal to PAGA functions in exactly this way. Under that
rule, parties cannot agree to restrict the scope of an arbitration to disputes
arising out of a particular ‘ “ ‘transaction’ ” ’ or ‘ “common nucleus of facts.” ’
[Citation.] If the parties agree to arbitrate ‘individual’ PAGA claims based on
personally sustained violations, Iskanian allows the aggrieved employee to
abrogate that agreement after the fact and demand either judicial
proceedings or an arbitral proceeding that exceeds the scope jointly intended
by the parties. The only way for parties to agree to arbitrate one of an
employee’s PAGA claims is to also ‘agree’ to arbitrate all other PAGA claims
in the same arbitral proceeding.” (Viking River, supra, 142 S.Ct. at p. 1924.)
For those reasons, Viking River held “the FAA preempts the rule of
Iskanian insofar as it precludes division of PAGA actions into individual and
non-individual claims through an agreement to arbitrate.” (Viking River,
supra, 142 S.Ct. at p. 1924; see also Lewis v. Simplified Lab. Staffing Sols.,
Inc. (Dec. 5, 2022, B312871) __Cal.App.5th__ [2022 WL 17414203, pp. 4-5]
[summarizing Viking River holding].) The court then noted that the
arbitration agreement at issue in the case contained a “severability clause”
specifying that “any ‘portion’ of the waiver that remained valid would be
30
‘enforced in arbitration.’ ” (Viking River, at p. 1911.) The court relied on that
clause in concluding the defendant was entitled to compel arbitration of the
plaintiff’s individual claim, even though the arbitration agreement was
invalid as to the representative claim. (Id. at p. 1925.)
Finally, the Viking River decision concluded the representative claim
had to be dismissed because the plaintiff no longer had standing to assert the
claim. (Viking River, supra, 142 S.Ct. at p. 1925.) The court reasoned,
“PAGA provides no mechanism to enable a court to adjudicate nonindividual
PAGA claims once an individual claim has been committed to a separate
proceeding. Under PAGA’s standing requirement, a plaintiff can maintain
non-individual PAGA claims in an action only by virtue of also maintaining
an individual claim in that action. [Citation.] When an employee’s own
dispute is pared away from a PAGA action, the employee is no different from
a member of the general public, and PAGA does not allow such persons to
maintain suit. [Citation.] As a result, [the plaintiff] lacks statutory standing
to continue to maintain her non-individual claims in court, and the correct
course is to dismiss her remaining claims.” (Viking River, at p. 1925.)18
18Regarding this final point, Justice Sotomayor observed in a
concurrence that, “if this Court’s understanding of state law is wrong,
California courts, in an appropriate case, will have the last word.
Alternatively, if this Court’s understanding is right, the California
Legislature is free to modify the scope of statutory standing under PAGA
within state and federal constitutional limits.” (Viking River, supra,
142 S.Ct. at pp. 1925–1926 (conc. opn. of Sotomayor, J.).) The issue is
presently pending before the California Supreme Court in Adolph v. Uber
Technologies, Inc., review granted July 20, 2022, S274671.
31
2. The Reasoning of Viking River Does Not Apply to Plaintiffs’
Request for a Public Injunction
Defendant argues that, under Viking River, any claim for a public
injunction under FEHA “would necessarily be distinct from the individual
claim.” It further argues that, under the reasoning of Viking River, the trial
court “must enforce the agreement to arbitrate the individual claim, and
must then evaluate what remains of any representative claim after
subtracting the individual component. If what remains is not actionable,
then [the trial court] must dismiss the purported representative claim.”19 We
disagree that Viking River requires that approach to Plaintiffs’ public
injunction claim.
As explained above, the “conflict” between PAGA and the FAA “derives
from the statute’s built-in mechanism of claim joinder,” which permits joinder
of the claims of a multitude of other employees to the individual plaintiff’s
claims. (Viking River, supra, 142 S.Ct. at pp. 1923–1924.) A public
injunction claim presents no such possibility. Whether adjudicated in a
judicial forum or arbitration, a request for a public injunction is based on the
evidence presented in support of the plaintiff’s claims and does not require
adjudication of the claims of other parties. (See McGill, supra, 2 Cal.5th at p.
957 & fn. 1 [analyzing complaint’s prayer for relief and distinguishing
between requests for public injunctive relief and requests for damages, all
based on same general allegations].) In other words, a claim for public
19 Defendant further argues that, “[a]fter the [trial court] commits
[P]laintiffs’ individual claims to arbitration, [P]laintiffs are indistinguishable
from the general public with respect to any remaining representative claim
and thus lack standing to assert it.” We need not and do not consider
whether Defendant’s assertion regarding how the standing rules would apply
in that circumstance is correct, given that we conclude Viking River is
distinguishable. (See fn. 18, ante.)
32
injunctive relief does not allow a plaintiff “to unite a massive number of
claims in a single-package suit.” (Viking River, at p. 1924.) Accordingly,
McGill’s rule prohibiting waiver of the public injunction remedy does not
require the parties to engage in arbitration “that exceeds the scope jointly
intended by the parties,” and it does not “unduly circumscribe[] the freedom
of parties to determine ‘the issues subject to arbitration’ and ‘the rules by
which they will arbitrate’ . . . in a way that violates the fundamental
principle that ‘arbitration is a matter of consent.’ ” (Viking River, at pp.
1923–1924.)
Further, while a PAGA claim can be divided into an “ ‘individual’ ”
portion involving “claims based on code violations suffered by the plaintiff,”
and a “ ‘representative’ ” portion “arising out of events involving other
employees” (Viking River, supra, 142 S.Ct. at p. 1916), the same is not true of
a claim for public injunctive relief. A public injunction is sought by an
aggrieved person in an action filed “on his or her own behalf, not ‘on behalf of
the general public,’ ” even though the “ ‘the primary purpose and effect of’ ”
the relief is “ ‘to prohibit and enjoin conduct that is injurious to the general
public.’ ” (McGill, supra, 2 Cal.5th at p. 959; see also id. at pp. 959–960
[stating that a request for a public injunction “does not constitute the
‘pursu[it]’ of ‘representative claims or relief on behalf of others’ ” within
meaning of a ballot proposition].) A public injunction is a unitary remedy
that cannot be divided into “individual” and “representative” components.
In contrasting an action seeking a public injunction with a class action,
McGill emphasized that a public injunction is a “substantive statutory
remedy” rather than a “ ‘procedural device.’ ” (McGill, supra, 2 Cal.5th at
p. 965.) Like a class action, PAGA is procedural. PAGA “does not create
property rights or any other substantive rights. . . . It is simply a procedural
33
statute allowing an aggrieved employee to recover civil penalties . . . that
otherwise would be sought by state labor law enforcement agencies.”
(Amalgamated Transit Union, Loc. 1756, AFL-CIO v. Superior Ct. (2009)
46 Cal.4th 993, 1003; see also Viking River, supra, 142 S.Ct. at p. 1919
[quoting that language in Amalgamated Transit].) Tellingly, in
characterizing the problem with PAGA, Viking River emphasized that its
“procedural structure” “[r]equir[es] arbitration procedures to include [an
expansive] joinder rule.” (Viking River, at pp. 1923–1924, italics added.)
Preemption of a rule prohibiting waiver of the right to seek a public
injunction would directly contradict the proposition that “the FAA does not
require courts to enforce contractual waivers of substantive rights and
remedies.” (Viking River, supra, 142 S.Ct. at p. 1919.) That is the principle
underlying McGill’s conclusion “that the FAA does not require enforcement of
a provision in a predispute arbitration agreement that, in violation of
generally applicable California contract law, waives the right to seek in any
forum public injunctive relief. . .” (McGill, supra, 2 Cal.5th at p. 963.) Viking
River does not require a different result. (See also MacClelland v. Cellco
P’ship (N.D.Cal., July 1, 2022, No. 21-cv-08592-EMC) ___ F.Supp.3d ___
[2022 WL 2390997, p. 9] [rejecting preemption argument with respect to
claim for public injunctive relief and stating, “Viking River focused on a
procedural mechanism particular to” PAGA].)20
20 Defendant cites no portion of the record showing the Arbitration
Provision contains a severability clause, providing an independent reason for
affirming the trial court’s ruling regarding the public injunction claim. As
noted previously, the existence of such a clause was necessary to Viking
River’s conclusion that the valid portion of the arbitration agreement in that
case, relating to the individual PAGA claim, was enforceable. (Viking River,
supra, 142 S.Ct. at pp. 1911, 1925.) In the present case, even if it were
34
DISPOSITION
The trial court’s order is affirmed. Costs on appeal are awarded to
Plaintiffs.
SIMONS, Acting P.J.
We concur.
BURNS, J.
WISEMAN, J.*
(A164053)
possible to divide a request for a public injunction into individual and
representative components, and even if Defendant were correct that Viking
River’s reasoning with respect to PAGA also applies to a public injunction
claim, the Arbitration Provision would still be invalid as to the
“representative” component. Under Viking River, without a severability
clause, the provision would be unenforceable as to the entirety of the claim.
* 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.
35
Vaughn et al. v. Tesla, Inc. (A164053)
Trial Judge: Hon. Evelio M. Grillo
Trial Court: Alameda County Superior Court
Attorneys:
Holland & Knight LLP, Sara A. Begley, Christina T. Tellado;
Reed Smith LLP, Raymond A. Cardozo, Tyree P. Jones, Brian A.
Sutherland for Defendant and Appellant.
Bryan Schwartz Law, Bryan Schwartz; California Civil Rights
Law Group, Larry Organ; Altshuler Berzon LLP, Michael Rubin,
Corinne Johnson, Jonathan Rosenthal for Plaintiffs and Respondents.
36