Miliate v. San Diego House of Motorcycles CA4/1 ( 2021 )

Filed 4/5/21 Miliate v. San Diego House of Motorcycles CA4/1
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for
publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication
or ordered published for purposes of rule 8.1115.
COURT OF APPEAL, FOURTH APPELLATE DISTRICT
DIVISION ONE
STATE OF CALIFORNIA
BLAKE MILIATE, D077104
Plaintiff and Respondent,
v. (Super. Ct. No. 37-2018-
00035131-CU-BT-CTL)
SAN DIEGO HOUSE OF
MOTORCYCLES, INC.,
Defendant and Appellant.
APPEAL from a judgment of the Superior Court of San Diego County,
Randa Trapp, Judge. Dismissed.
Severson & Werson, Jan T. Chilton, John B. Sullivan, and Erik Kemp
for Defendant and Appellant.
Kemnitzer, Barron & Krieg, Bryan Kemnitzer, Mark A. Chavez,
Adam J. McNeile, and Kristin Kemnitzer for Plaintiff and Respondent.
Defendant San Diego House of Motorcycles, Inc. (SDHM), a motorcycle
dealership, moved to compel arbitration of a customer’s individual claims and
to stay the court action pending completion of the arbitration. The trial court
granted the motion, sending the plaintiff’s individual claims to arbitration.
The parties subsequently entered a stipulation to stay the court proceedings
pending the outcome of the arbitration. SDHM appealed, arguing the court
erred in applying California law to the dispute.
Although an order granting a motion to compel arbitration is not
appealable (Lacayo v. Catalina Restaurant Group Inc. (2019) 38 Cal.App.5th
244, 253 (Lacayo)), SDHM contends it has standing to appeal because (1) the
trial court denied its motion to compel arbitration by retaining jurisdiction
over claims for public injunctive relief, which SDHM maintains plaintiff
Blake Miliate did not actually seek; (2) SDHM received relief different from
the relief it sought; and (3) the court failed to affirmatively enforce the
arbitration agreement’s class action waiver.
SDHM further contends that the trial court erred by retaining
jurisdiction over the request for public injunctive relief by applying California
law, McGill v. Citibank, N.A. (2017) 2 Cal.5th 945 (McGill), when Utah law
applies under a choice of law provision, that the arbitration clause is not
unenforceable under McGill because the provision does not prevent a plaintiff
from seeking public injunctive relief in every forum, and that the Federal
Arbitration Act (FAA) preempts McGill and requires enforcement of the
arbitration agreement in its entirety.
We conclude that SDHM lacks standing because it has received all the
relief it requested, and we will dismiss the matter. Further, even were we to
conclude that SDHM had standing, we would conclude SDHM’s arguments
lack merit and affirm the order.
BACKGROUND
A. The Motorcycle Purchase
In February 2018, Miliate purchased a Yamaha motorcycle from SDHM
in California. Miliate agreed to pay $14,168.87 for the motorcycle. He paid
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$300 in cash. He financed the remainder through a WebBank-Yamaha credit
card that he obtained through SDHM. The sales slip referenced the credit
card agreement.
Miliate signed a credit application acknowledging that he received and
read WebBank’s Yamaha Credit Card Account Customer Agreement (the
credit card agreement), which contained an arbitration provision. The
arbitration provision was contained in section 36 of the credit card
agreement. Section 36(a) explained that Miliate, WebBank, or “Yamaha
(including its affiliates and dealers)” could “elect arbitration of any Claim,”
and “require that the sole and exclusive forum and remedy for resolution of a
Claim be final and binding arbitration.” It defined a “Claim” to include
“any . . . claim, dispute, or controversy . . . relating to or arising out of
[Miliate’s] application for an origination of this Account, this Agreement, [his]
Account, or the relationship between [him] and us, including (except to the
extent provided otherwise in the last sentence of section (f) below) the
validity or enforceability of this Arbitration Provision, any part thereof, or
the entire Agreement.” (§ 36(a).) It further stated, “The scope of this
Arbitration Provision is to be given the broadest possible interpretation that
is enforceable.” (Ibid.)
Section 36(f) of the credit card agreement contained a class action
waiver barring all class, representative, or collective claims, including claims
brought as a private attorney general on behalf of others: “NO
ARBTIRATION SHALL PROCEED ON A CLASS, REPRESENTATIVE, OR
COLLECTIVE BASIS (INCLUDING AS PRIVATE ATTORNEY GENERAL
ON BEHALF OF OTHERS), EVEN IF THE CLAIM OR CLAIMS THAT ARE
THE SUBJECT OF THE ARBITRATION HAD PREVIOUSLY BEEN
ASSERTED (OR COULD HAVE BEEN ASSERTED) IN A COURT AS
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CLASS, REPRESENTATIVE, OR COLLECTIVE ACTIONS IN A COURT.”
Section 36(f) also prohibited an award in arbitration from determining the
rights, obligations or interests of anyone other than a named party or from
making an award for the benefit of, or against, any named party unless
consented in writing by all parties. It further stated, “[a]ny challenge to the
validity of this section (f) shall be determined exclusively by a court and not
by the administrator or any arbitrator.”
Section 36(g) stated the arbitration provision was governed by the FAA.
Section 36(h) provided: “If any portion of this Arbitration Provision other
than section (f) is deemed invalid or unenforceable, the remaining portions of
this Arbitration Provision shall nevertheless remain valid and in force. If an
arbitration is brought on a class, representative, or collective basis, and the
limitations on such proceedings in section (f) are finally adjudicated pursuant
to the last sentence of section (f) to be unenforceable, then no arbitration
shall be had.” Section 36(h) concluded: “THE PARTIES ACKNOWLEDGE
THAT THEY HAVE A RIGHT TO LITIGATE CLAIMS THROUGH A
COURT BEFORE A JUDGE OR JURY, BUT WILL NOT HAVE THAT
RIGHT IF ANY PARTY ELECTS ARBITRATION PURSUANT TO THIS
ARBITRATION PROVISION. SUBJECT TO SECTION (b),[1] THE
PARTIES HEREBY KNOWINGLY AND VOLUNTARILY WAIVE THEIR
RIGHTS TO LITIGATE SUCH CLAIMS IN A COURT BEFORE A JUDGE
OR JURY UPON ELECTION OF ARBITRATION BY ANY PARTY.”
The credit card agreement also contained a choice of law clause in
section 32, separate from the arbitration provision, which stated, “This
Agreement is governed by applicable federal law and by Utah law. If any
1 Section 36(b) allowed a customer to opt out via mail within 30 days of
applying for an account.
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part of this Agreement is unenforceable, the remaining parts will remain in
effect.”
B. The Lawsuit
In July 2018, Miliate filed a complaint against SDHM on behalf of
himself and other similarly-situated consumers. In it, he alleged SDHM had
violated and was continuing to violate the Rees-Levering Automobile Sales
Finance Act (Rees-Levering) by failing to provide customers with a single
document containing all the financing terms for the vehicle purchased made
with a conditional sales contract. Miliate alleged SDHM was required to
provide consumers with a “single document contain[ing] statutorily
mandated disclosures relating to the purchase and financing of any motor
vehicle,” and was violating Rees-Levering, the Consumers Legal Remedies
Act (CLRA), and Business and Professions Code section 17200, et seq. (the
Unfair Competition Law, or the UCL) by “failing to provide buyers with a
single document setting forth terms of closed-end financing for retail
installment sales of motorcycles.”
The complaint essentially alleges that SDHM induces customers to
finance motorcycles with a WebBank credit card, which is an open-ended
credit arrangement that increases the customer’s cost substantially over
time. Miliate also alleges that SDHM makes the transaction look like a “cash
transaction,” which is exempt from Rees-Levering, when the financing
arrangement is really a conditional sales contract in which WebBank takes a
security interest in the motorcycle that does not vest in the customer until
after the customer makes all the payments due to WebBank. As a result, the
purchase agreement is governed by Rees-Levering. Miliate alleges that
SDHM’s business practices offend public policy, and that a successful
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outcome of the suit will enforce rights that affect the public interest and will
protect the general public from unlawful and unfair practices.
Among the relief requested, Miliate seeks an injunction prohibiting
SDHM from selling the motor vehicles “without first providing the consumer
with a single document containing all of the agreement of SDHM and the
consumer with respect to the total cost and the terms of payment for the
motor vehicle, including any promissory notes or other evidence of
indebtedness in accordance with Civil Code §2981.9.” It also seeks an
injunction preventing SDHM from selling motor vehicles “without first
providing the consumer with all disclosures mandated by Civil Code §2982 in
a single document.”
In May 2019, SDHM moved to compel arbitration of the claims arising
out of the purchase of the Yamaha motorcycle pursuant to the WebBank-
Yamaha credit card “on an individual, non-class basis, and for the imposition
of a stay of the litigation as between Miliate and SDHM pending completion
of the arbitration.” The corresponding memorandum of points and
authorities sought arbitration “on an individual, non-class basis.” The
motion did not ask the court to compel Miliate’s class allegations and claims
to arbitration or to rule on the enforceability of the class action waiver.
Militate opposed the motion, contending its complaint challenged only
the purchase agreement with SDHM and not the credit card agreement with
WebBank, and SDHM was not a third party beneficiary to the credit card
agreement’s arbitration provision. He also argued California law applied,
and the arbitration agreement violated California law because it waived his
rights to obtain a public injunction in violation of McGill.
Following a hearing in October 2019, the court granted SDHM’s motion
to compel arbitration of the individual claims. The court concluded SDHM
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was an intended third party beneficiary of the credit card agreement. It
followed California’s approach to analyzing conflicts of law and concluded
there was no substantial relationship to Utah law, so California law applied.
It also explained that the predispute waiver of the right to seek public
injunctive relief under the UCL and the CLRA was invalid and unenforceable
under California law, and it concluded California had a greater material
interest in protecting consumers than any interests held by Utah. Applying
California law, the court “invalidate[d] the arbitration clause insofar as it
purports to waive plaintiff’s statutory rights to seek public injunctive relief in
subsection [36](f) pursuant to McGill . . . .” It applied section 32 of the credit
card agreement and left “the remaining provisions of the Arbitration
Agreement . . . unaffected.” It ordered the individual causes of action to
arbitration, and concluded the class claims regarding the purchase of the
Yamaha motorcycle were to remain in court.
Later that month, the parties stipulated that individual claims would
be arbitrated, class claims would remain in court, the claims for public
injunctive relief would remain in court, and all claims not ordered to
arbitration would be stayed pending the outcome of the arbitration.
Pursuant to the stipulation, the court stayed the action pending the
arbitration.
SDHM timely appealed. Recognizing that ordinarily an order granting
a motion to compel arbitration is not appealable (Lacayo, supra, 38
Cal.App.5th at p. 253; Wheeler v. St. Joseph Hospital (1973) 63 Cal.App.3d
345, 353), we requested the parties submit letter briefs explaining why the
order is appealable.
Because SDHM maintained the trial court order effectively denied a
portion of its motion to compel, and orders denying motions to compel are
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appealable (Code Civ. Proc., § 1294, subd. (a); Clifford v. Quest Software Inc.
(2019) 38 Cal.App.5th 745, 749 (Clifford)), we permitted the appeal to
proceed, alerting the parties that appealability could be addressed in the
appellate briefing and could be subject to our further consideration.
DISCUSSION
I
APPEALABILITY
Before a party can appeal an order, that party must be aggrieved.
(Nevada County Office of Education v. Riles (1983) 149 Cal.App.3d 767, 779.)
A party not aggrieved by an order does not have standing to attack it.
(Niles v. City of San Rafael (1974) 42 Cal.App.3d 230, 244.) Additionally, an
issue is moot when the reviewing court cannot provide effectual relief or
affect the matter ultimately in issue. (Finnie v. Town of Tiburon (1988) 199
Cal.App.3d 1, 10.) Appellate courts consider postjudgment occurrences that
cause an appeal to become moot and thus subject to dismissal. (Old Nat’l
Fin. Servs., Inc. v. Seibert (1987) 194 Cal.App.3d 460, 467; Reserve
Insurance Co. v. Pisciotta (1982) 30 Cal.3d 800, 813.)
We begin by asking whether SDHM has standing to appeal the decision
as an aggrieved party and whether any postjudgment events have caused the
appeal to become moot. The original motion to compel arbitration requested
“an order compelling arbitration of plaintiff Blake Miliate’s claims arising out
of the purchase of a Yamaha motorcycle pursuant to a WebBank-Yamaha
credit card on an individual, non-class basis, and for the imposition of a stay
of the litigation as between Miliate and SDHM pending completion of the
arbitration.” The corresponding memorandum of points and authorities
asked the court to compel arbitration “on an individual, non-class basis.”
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It also explained that under the terms of the arbitration provision,
Miliate had agreed that no arbitration would proceed on a class,
representative, or collective basis; thus, SDHM was seeking arbitration on an
individual, non-class basis. SDHM explained that the arbitration clause at
play did not “purport to waive a consumer’s right to seek a public injunction
under the UCL or CLRA in the proper judicial forum,” and the arbitration
clause permitted Miliate to seek a public injunction in court.
The trial court sent Miliate’s individual causes of action to arbitration
and delegated to the arbitrator determination of whether any of the issues
should be arbitrated. The trial court did not issue a stay of the litigation
pending completion of the arbitration. However, the parties subsequently
entered a stipulation to stay court proceedings pending the completion of
arbitration.
SDHM ultimately received all the relief it requested. It asked the trial
court to compel arbitration of Miliate’s individual, non-class claims, and the
court ordered “plaintiff’s individual causes of action” to arbitration. SDHM
also requested a stay of litigation pending completion of arbitration, which,
although not granted by the court, was stipulated to post-order. The
stipulation mooted the issue regarding the specific relief that was denied.
Moreover, the relief SDHM requests in its appeal, that we “remand with
directions to enter a new order compelling arbitration of Miliate’s individual
claims and staying court proceedings on any public injunction claim he may
assert until after arbitration is completed,” is the current procedural posture
of the case. Accordingly, there is no requested relief which we can grant that
has not already been provided to SDHM, and the matter must be dismissed.
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A. Miliate’s Request for Public Injunctive Relief
Despite receiving the actual relief requested, SDHM appeals on the
basis that its motion was functionally denied because (1) the court retained
jurisdiction over claims for public injunctive relief when the complaint does
not validly allege such claims; (2) the court granted relief different from the
relief SDHM requested; and (3) the only claims available are individual
claims because Miliate waived class arbitration and agreed arbitration was
the only available venue once compelled by either party.
1. Legal Principles of Public Injunctive Relief
Private injunctive relief “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.” (McGill, supra, 2
Cal.5th at p. 955.) In contrast, public injunctive relief “ ‘by and large’
benefits the general public [citation] and . . . benefits the plaintiff, ‘if at all,’
only ‘incidental[ly]] and/or as ‘a member of the general public’ [citation].”
(Ibid.) Therefore, in contrast to relief that has the primary purpose of
redressing an injury to an individual plaintiff or a group of individuals
similarly situated to the plaintiff (ibid), public injunctive relief seeks to enjoin
practices for public benefit (Broughton v. Cigna Healthplans (1999) 21
Cal.4th 1066, 1079-1080 (Broughton); Cruz v. Pacificare Health Systems, Inc.
(2003) 30 Cal.4th 303, 315-316 (Cruz)). Although the Supreme Court has
described the role of a plaintiff in such situations as a type of private attorney
general (Broughton, at p. 1079), public injunctive relief is brought by private
individuals on their own behalf when they have suffered an injury in fact and
therefore have standing to file a private action (McGill, at p. 959).
Public injunctive relief is a substantive statutory remedy provided for
by the UCL and the CLRA. (McGill, supra, 2 Cal.5th at p. 965.) “[A]n
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injunction under the CLRA against a defendant’s deceptive methods, acts,
and practices ‘generally benefit[s]’ the public ‘directly by the elimination of
deceptive practices’ and ‘will . . . not benefit’ the plaintiff ‘directly’ because the
plaintiff has ‘already been injured, allegedly, by such practices and [is] aware
of them.’ ” (Id. at p. 955, quoting Broughton, supra, 21 Cal.4th at p. 1080,
fn. 5.) Similarly, “an injunction under the UCL or the false advertising law
against deceptive advertising practices ‘is clearly for the benefit of . . . the
general public’; ‘it is designed to prevent further harm to the public at large
rather than to redress or prevent injury to a plaintiff.’ ” (McGill, at p. 955,
quoting Cruz, supra, 30 Cal.4th at pp. 315-316.)
Arbitration is not a suitable forum for public injunctive relief because
its purpose is to “remedy a public wrong,” and there is an “inherent conflict
between arbitration and a statutory injunctive relief remedy designed for the
protection of the general public.” (Broughton, supra, 21 Cal.4th at pp. 1080,
1082, 1083-1084 [explaining advantages a judicial forum has over arbitration
in administering a public injunctive remedy].) Accordingly, public injunctive
relief claims under the UCL and CLRA are not arbitrable. (Id. at p. 1084;
Cruz, supra, 30 Cal.4th at p. 316.) Additionally, an arbitration provision is
invalid and unenforceable under California law to the extent it purports to
waive an individual’s statutory right to seek such a remedy in any forum.
(McGill, supra, 2 Cal.5th at p. 961.)
2. Miliate Seeks Public Injunctive Relief
SDHM’s first argument is that the court retained jurisdiction over
claims for public injunctive relief when the complaint does not validly allege
such claims. SDHM relies on Clifford, supra, 38 Cal.App.5th 745 to argue
that Miliate seeks injunctive relief only for similarly-situated individuals and
not public injunctive relief. In Clifford, an employee filed suit alleging
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various wage and hour claims and seeking injunctive relief. (Id. at p. 747.)
The appellate court noted that the private nature of the UCL claims were
evident from the face of the complaint because Clifford referred to wage and
hour violations directed at him, without alleging the defendant engaged in
similar conduct with other employees or the public at large. (Id. at p. 753.)
And the plaintiff sought an injunction to prohibit further violations of the
Labor Code and unfair business practices, but the only express beneficiary
was the plaintiff. (Ibid.) Additionally, the UCL claim sought to resolve a
dispute over allegedly misclassifying the plaintiff as an exempt employee, so
any public interest or incidental benefit would not have transformed the
claim into a public one. (Clifford, at p. 754.) Accordingly, the court concluded
the UCL claim was subject to arbitration. (Clifford, at p. 755.)
However, Miliate’s complaint is easily distinguished from the one in
Clifford because Miliate does not seek injunctions for which he or other
similarly-situated persons are the primary beneficiaries. Miliate identified
alleged violations of the Rees-Levering Act and explained how the relevant
disclosure violations also violate the CLRA and the UCL. The complaint
alleges SDHM continues to engage in the identified violations, those practices
continue to injure consumers, and an injunction will result in significant
public benefit by protecting all consumers from the identified, unlawful
practices. Miliate specifically seeks an injunction prohibiting SDHM from
selling vehicles in California “without first providing the consumer with a
single document containing all the agreements” required by Civil Code
[section] 2981.9 and “with all disclosures mandated by Civil Code section
2989 in a single document.” Thus, Miliate’s prayer does not limit itself only
to personal relief or remedies only for class members or some other small
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group of similarly-situated individuals. (See Cruz, supra, 30 Cal.4th at
p. 315.)
Because the injunctive relief for which Miliate prays fits the Supreme
Court’s definition of “public injunctive relief” in McGill, as its primary
purpose and effect would be to prohibit “unlawful acts that threaten future
injury to the general public” (McGill, supra, 2 Cal.5th at p. 951), the court did
not deny SDHM’s motion to compel “insofar as [the court] denied SDHM’s
motion to compel arbitration of the purported public injunctive relief claims.”
3. Relief Different Than That Requested
SDHM next argues its motion to compel was denied in part because it
secured a relief different than arbitration for the individual claims, which is
what it requested. SDHM offers Lamps Plus, Inc. v. Varela (2019) ___ U.S.
___, 139 S.Ct. 1407 to support this theory. In Lamps Plus, the defendant
sought an order compelling individual arbitration but received an order
compelling classwide arbitration. (Id. at p. 1414.) The U.S. Supreme Court
explained there is a fundamental difference between class and individual
arbitration, and a party cannot be compelled under the FAA to class
arbitration absent a contractual basis for concluding the parties had agreed
to do so. (Id. at p. 1412.) Because the arbitration provision at issue there
was ambiguous regarding classwide arbitration, the court concluded there
was not a sufficient basis to conclude they had agreed to allow it, and the
court reversed the order compelling classwide arbitration. (Ibid.)
The reasoning of Lamps Plus is inapplicable here. There, the Supreme
Court noted the shift from individual to class arbitration created a
fundamental change in the relief. But here, SDHM sought only individual
arbitration, and that is what the court ordered. SDHM did not request the
court rule on the validity of the class action waiver or the class claims. The
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retention of the representative and class claims in court does not change the
fundamental nature of the arbitration.2
This case is more analogous to Reyes v. Macy’s, Inc. (2011) 202
Cal.App.4th 1119 (Reyes). There, the defendant moved to compel arbitration
on an individual basis, to dismiss class allegations, and to stay the civil
action pending completion of arbitration (id. at p. 1122), all the relief SDHM
now claims it sought.3 The court severed the individual claims from the class
allegations and directed them to arbitration, and it stayed the class and
representative claims and retained them until arbitration was complete.
(Ibid.) Although the court did not dismiss the class allegations in Reyes, the
court of appeal nonetheless concluded that Macy’s received all its requested
relief: the individual claims were sent to arbitration, and the remaining
claims were stayed pending the arbitration. (Id. at p. 1124.)
Here, just like in Reyes, the trial court granted the specific relief sought
by compelling the individual claims to arbitration. Also like in Reyes, the
court took no action with respect to the class allegations, which is even more
consistent with the precise relief requested than in Reyes because SDHM did
not request the court to dismiss class allegations. The subsequent stipulation
to stay the court case pending arbitration addressed SDHM’s remaining,
requested relief.
2 The effect of the order was merely that no class claims were sent to
arbitration.
3 SDHM attempts to distinguish itself from Reyes by noting that it did
not ask the court to dismiss class allegations. Although the defendant in
Reyes sought dismissal of class allegations, that is a distinction without a
difference because neither court dismissed the class allegations.
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4. Class Action Waiver
Finally, SDHM contends “the trial court’s refusal to enforce the class
action waiver--as specifically required by the arbitration clause--is a denial in
part of the motion to compel arbitration and appealable for that reason.”
Section 36(f) of the arbitration agreement prohibits an arbitration from
proceeding on a class, representative or collective basis, including as a
private attorney general, even if the claims were asserted in court as a class,
representative, or collective action. But here, SDHM did not seek any class
arbitration; it sought only the arbitration of Miliate’s claims “on an
individual, non-class basis” and did not request the class claims be dismissed
based on the class action waiver clause.
In order to justify its claim that the trial court improperly refused to
enforce the class action waiver, SDHM implies that the court failed to apply
section 36(h) of the arbitration provision. Section 36(h) eliminates the right
to litigate claims through a court if any party elects arbitration, thereby
effectively barring class, collective, or representative claims in any forum
once arbitration is invoked. SDHM’s position is that because it invoked
arbitration, the trial court was obligated to enforce the class action waiver,
even though no class claims were directly implicated by the motion to compel
individual claims to arbitration and SDHM did not ask the court to do so.
As SDHM acknowledges in its reply brief, it did not ask the court to
dismiss any additional claims in connection with its motion to compel. Thus,
the court’s failure to do so cannot function as a denial of the motion to
compel. The motion to compel arbitration did not ask the trial court to draw
any conclusion about the enforceability of the class action waiver, and the
court did not rule on that issue. We likewise draw no conclusion regarding
that issue here.
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Ultimately, SDHM has received all the relief it requested because the
individual claims were sent to arbitration and the remaining claims are
stayed pending the completion of arbitration. Thus, SDHM lacks standing,
and we will dismiss the matter.
II
CHOICE OF LAW
Were we to have concluded SDHM had standing to appeal because the
trial court denied its motion to compel in part, we would nonetheless affirm
the court’s decision on the merits.
“There is no uniform standard of review for evaluating an order
denying a motion to compel arbitration.” (Robertson v. Health Net of
California, Inc. (2005) 132 Cal.App.4th 1419, 1425.) When the court’s order
is based on a decision of law, we employ a de novo standard of review. (Ibid.)
In this case, the court’s order was based on its determination that California
law applied to the arbitration agreement, and the agreement failed to comply
with McGill’s requirement that public injunctive relief remain available in
some forum. Accordingly, we review the superior court’s order de novo. (See
ibid.)
SDHM contends the trial court erred by holding the arbitration clause’s
class action waiver was invalid under McGill, challenging the court’s
determination that California law applies to the transaction between Miliate
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and SDHM instead of Utah law.4 We begin by considering the appropriate
applicable law.
California follows section 187 of the Restatement Second of Conflict of
Laws. (Nedlloyd Lines B.V. v. Superior Court (1992) 3 Cal.4th 459, 464-465
(Nedlloyd).) “Briefly restated, the proper approach under Restatement
section 187, subdivision (2) is for the court first to determine either: (1)
whether the chosen state has a substantial relationship to the parties or their
transaction, or (2) whether there is any other reasonable basis for the parties'
choice of law. If neither of these tests is met, that is the end of the inquiry,
and the court need not enforce the parties' choice of law. If, however, either
test is met, the court must next determine whether the chosen state's law is
contrary to a fundamental policy of California. If there is no such conflict, the
court shall enforce the parties' choice of law. If, however, there is a
fundamental conflict with California law, the court must then determine
whether California has a ‘materially greater interest than the chosen state in
the determination of the particular issue ....’ (Rest., § 187, subd. (2).) If
California has a materially greater interest than the chosen state, the choice
of law shall not be enforced, for the obvious reason that in such circumstance
we will decline to enforce a law contrary to this state's fundamental policy.”
(Id. at p. 466, fns. omitted.)
4 SDHM contends the court erroneously found that the arbitration was
invalid under California law because the choice of law provision was valid.
However, the trial court did not find the arbitration agreement invalid. It
found the arbitration clause invalid only “insofar as it purport[ed] to waive
plaintiff’s statutory rights to seek public injunctive relief in subsection (f)
pursuant to McGill . . . . The remaining provisions of the arbitration
agreement remain[ed] unaffected.”
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A. Substantial Relationship to Utah or Reasonable Basis for Utah Law
SDHM argues Utah has a substantial relationship to the parties and
the transaction because WebBank’s headquarters and bank charter are in
Utah and WebBank is a party to the credit card agreement that contains the
choice of law provision. Miliate contends that SDHM lacks standing to apply
the choice of law provision in the credit card agreement because it is an entity
separate and distinct from WebBank, SDHM is not a signatory to the credit
card agreement, the choice of law provision in the credit card agreement is
separate from the arbitration provision, and nothing in the credit card
agreement indicates an intent for SDHM to be a beneficiary of the choice of
law provision.
California courts have held that a substantial relationship to a chosen
state exists when parties to the contract are domiciled in the state.
(Hambrecht & Quist Venture Partners et al. v. American Medical
International, Inc. (1995) 38 Cal.App.4th 1532, 1546 (Hambrecht).)
Additionally, if one of the parties to the contract resides in the foreign state,
that gives the parties “a reasonable ground for choosing that state’s laws.”
(ABF Capital Corp. v. Berglass (2005) 130 Cal.App.4th 825, 834-835 (ABF
Capital Corp.).) “The same principle should apply when the intended third
party beneficiary of the contract resides in the chosen state.” (Id. at p. 835.)
Here, WebBank is domiciled in Utah, which establishes a substantial
relationship between the parties to the credit card agreement that contains
the choice of law provision and Utah (Hambrecht, supra, 38 Cal.App.4th at
p. 1546) and also provides a reasonable ground for choosing Utah law (ABF
Capital Corp., supra, 130 Cal.App.4th at pp. 834-835). But WebBank is not a
party to the lawsuit. And SDHM, an intended third party beneficiary of the
18
contract, does not reside in the chosen state. (Ibid.) Aside from its
designation as a third party beneficiary, SDHM has no connection to Utah.
The trial court concluded that because WebBank was not a party in the
action, Utah had no substantial relationship with the parties to the action,
and it noted the choice of law inquiry could end there. Division Three of the
Fourth Appellate District reached a different conclusion under an identical
provision in Mejia v. DACM Inc. (2020) 54 Cal.App.5th 691, 700 (Mejia),
explaining that the presence of WebBank’s headquarters and bank charter
was sufficient to demonstrate a “substantial relationship” between a party or
the transaction.
Assuming SDHM’s status as a third party beneficiary of the credit card
agreement establishes either a substantial relationship to Utah or
demonstrates a reasonable basis for applying Utah law, Miliate successfully
demonstrates that Utah law is contrary to a fundamental policy of California,
and California has a “ ‘materially greater interest than the chosen state in
the determination of the particular issue’ ” involved here. (Nedlloyd, supra, 3
Cal.4th at p. 466; Restatement Second Conflict of Laws, § 187.) Thus, as we
explain, the choice of Utah law should not be enforced.
B. California’s Fundamental Policies
SDHM contends that Utah law is not contrary to any fundamental
policy of California because both states favor arbitration, and the differences
in substantive law between California and Utah were not properly before the
court. SDHM also contends “Miliate cannot show that application of Utah
law would deny him the right to pursue adequate relief” because Utah’s
consumer protection laws “broadly prohibit[ ] unfair and deceptive acts in
consumer transactions” and “provide[ ] aggrieved consumers various
remedies, including damages, restitution, and equitable relief . . . . Thus,
19
applying Utah law and dismissing plaintiffs’ UCL and CLRA claims would
not violate any fundamental policy of California . . . .”
Miliate argues application of Utah law would strip him of substantive
protections offered by California, including those provided by the Rees-
Levering Act, which was designed to protect purchasers of motor vehicles
against excessive charges through full disclosure of all items of cost, a
protection which is not waivable. Miliate also points to similar, fundamental
policy protections afforded by the CLRA and the UCL, statutes inapplicable
under Utah law.
While we tend to agree that the Rees-Levering Act, the CLRA, and the
UCL enforce fundamental California policies protecting consumers and may
provide protection unavailable under Utah law, we need not reach a
conclusion on this point because, as Miliate notes, “California law provides
heightened protections against unconscionable contracts” and here “applying
Utah law would . . . preclud[e] Miliate from contending as he did below that
the arbitration agreement runs afoul of [McGill],” case law expressing a
fundamental California policy.
The California Supreme Court’s decision in McGill expresses the state’s
fundamental policy against enforcing a contractual waiver of the right to seek
a public injunction in any fora. (McGill, supra, 2 Cal.5th at p. 961.)
Accordingly, applying Utah law would conflict with California’s fundamental
interest in protecting Miliate’s right to seek public injunctive relief from
SDHM’s allegedly illegal practices.
SDHM contends the public policy underpinning McGill is inapplicable
because Miliate did not actually seek public injunctive relief and also argues
the arbitration agreement does not waive the right to seek public injunctive
relief in all fora. Having detailed ante that Miliate sought public injunctive
20
relief, we consider next whether the arbitration provision bars public
injunctions in all fora, in contravention of California law, and we conclude it
does.
1. The Arbitration Provision Bars Public Injunctions in Every
Forum
SDHM contends McGill does not apply because the arbitration clause
does not preclude public injunctions in every forum. More specifically, SDHM
argues that despite the arbitration clause’s language that it applies to “any
Claim,” it does not apply to public injunction claims because those are not
expressly barred in the arbitration provision and the arbitration provision
should be given “the broadest possible interpretation that is enforceable.”
SDHM explains this means the arbitration clause implicitly excludes
disputes that cannot be arbitrated lawfully.
In construing a contract, we attempt to give effect to the parties’
intentions in light of the usual and ordinary meaning of the contractual
language, and we consider the contract as a whole, giving effect to each part
if reasonably practicable. (Rice v. Downs (2016) 248 Cal.App.4th 175, 186.)
“[B]ecause of our public policy in favor of arbitration as a speedy and
relatively inexpensive means of dispute resolution,” we “will interpret that
[arbitration] provision, if reasonable, in a manner that renders it
lawful . . . rather than void.” (Pearson Dental Supplies, Inc. v. Superior Court
(2010) 48 Cal.4th 665, 682 (Pearson Dental).)
The plain language of the contract excludes public injunctive relief.
Section 36(a) of the arbitration provision allows either party to assert final
and binding arbitration as the “sole and exclusive forum and remedy for
resolution of a Claim,” unless the purchaser opts out as provided in
section 36(b). Section 36(h) of the credit card agreement explains that parties
lose the right to litigate claims through a court if either party elects
21
arbitration, and they “waive their rights to litigate such claims in a court
before a judge or jury upon election of arbitration by any party.” Section 36(f)
of the agreement prohibits arbitration from proceeding on a class,
representative, or collective basis. Thus, once SDHM moved to compel
arbitration under section 36(a) of the agreement, arbitration became the only
available forum to remedy the claims under section 36(h) of the agreement.
Because there could be no arbitration of any class, representative, or
collective claims under section 36(f), only individual claims could be
arbitrated. Further, because arbitration became the sole forum, it excluded
the court from hearing class, representative, or collective claims because
those rights had been waived under section 36(h).5
Additionally, a private individual has an unwaivable, statutory right to
file a private action and request public injunctive relief on his own behalf
seeking a remedy to enjoin conduct that is injurious to the public, including
public injunctive relief under the CLRA and the UCL. (McGill, supra, 2
Cal.5th at pp. 959-960.) The arbitration agreement prevents an individual
from exercising this unwaivable, statutory right in court because
section 36(h) of the agreement provides that a party loses the right to litigate
claims through a court if any party elects arbitration. Thus, it does not
matter if the request for public injunctive relief is treated as a representative
claim or an individual one; the result would be the same under the terms of
the arbitration provision: it is barred.
SDHM argues these provisions merely prevent the arbitrator from
hearing claims unsuitable for arbitration and maintains that claims not
5 We view the court’s retention of class claims as a product of SDHM’s
limited request to arbitrate only individual claims, not a determination that
Miliate necessarily will be permitted to pursue those claims.
22
suitable for arbitration are simply excluded from the arbitration agreement.
But because arbitration becomes the only available forum once it is invoked,
the arbitration provision effectively excludes class, representative, or
collective actions as well as individual claims for public injunctive relief from
being litigated at all. This violates fundamental California policy regarding
public injunctions because its effect is to prevent Miliate from seeking a
public injunction in all fora. (McGill, supra, 2 Cal.5th at pp. 961.) Thus,
applying Utah law would conflict with California’s fundamental interest in
protecting Miliate’s right to seek public injunctive relief from SDHM’s
allegedly illegal practices.
By invalidating the arbitration clause only “insofar as it purport[ed] to
waive plaintiff’s statutory rights to seek public injunctive relief,” the trial
court here applied section 32 of the credit card agreement, which stated that
if “any part of [the] agreement [were] unenforceable, the remaining parts
[would] remain in effect.” In so doing, the court interpreted the arbitration in
a manner to render it lawful rather than void. (Pearson Dental, supra, 48
Cal.4th at p. 682.)
In sum, fundamental California policy makes waiving statutory rights
to public injunctive relief unenforceable. (McGill, supra, 2 Cal.5th at p. 961.)
To the extent the arbitration agreement prohibited Miliate from seeking such
23
relief in court by asserting arbitration, the court properly found it
unenforceable.6
2. Material Interest
We likewise conclude that California has a materially greater interest
than Utah in the determination of the particular issue involved in this case.
(Nedlloyd, supra, 3 Cal.4th at p. 465.) “[T]he state whose interests would be
‘more impaired’ if its law were not applied” is the one with a materially
greater interest. (Washington Mutual Bank v. Superior Court (2001) 24
Cal.4th 906, 920.)
SDHM argues that Utah has a “compelling interest in regulating banks
chartered within its borders.” It maintains that this interest extends to
regulating and interpreting its banks’ interstate credit card agreements, and
it contends that Miliate seeks a ruling that would invalidate the WebBank-
Yamaha credit card program in California and impair the bank’s interests
even though the bank is not a party to the case. However, SDHM’s focus on
the consequences to WebBank are misplaced. The complaint does not
challenge the terms of the credit card agreement with WebBank. Instead,
the complaint focuses on SDHM’s practices, and SDHM is a California
corporation, domiciled in California, and doing business in California. The
6 We are not persuaded by SDHM’s argument that the parties are
presumed to know and have in mind all applicable California laws when
entering into an agreement governed by Utah law, thereby excluding public
injunction from the meaning of “claims.” While we may be able to reasonably
read the purchase agreement for the Yamaha motorcycle to incorporate such
public policy limitations because it was entered into in California by two
parties domiciled in California, it contains no choice of law provision, and it
explains how California law applies to contract cancellation options, there
would be no reason for parties to an agreement governed by Utah law to
consider California law limitations.
24
complaint seeks to evaluate, penalize and correct SDHM’s alleged illegal
practices; the complaint does not implicate Utah’s regulation interests at all.
The particular issue involved in this case is the enforceability of an
arbitration provision that bars Miliate from pursing public injunctive relief.
Neither party supplies us a legal citation regarding whether Utah recognizes
public injunctive relief. However, our colleagues in the Fourth Appellate
District, Division Three relied on representations from the parties to an
identical arbitration provision when they concluded “Utah law does not afford
the same protection to the right to seek a public injunction” that California
does (Mejia, supra, 54 Cal.App.5th at p. 701), and SDHM does not point to
any public injunctive relief available under Utah law. We are convinced
California has a greater material interest than Utah does in the application
of its laws to the parties’ dispute and that California’s interests would be
more seriously impaired if its policy were subordinated to the policy of Utah.
To enforce the arbitration provision in its entirety would mean
permitting an out-of-state business to limit unwaivable statutory protections
for California citizens regarding agreements for the purchase and sale of
products entered into between California parties. California courts are not
bound to enforce a contractual conflict of law provision which would be
25
contrary to the state’s fundamental policy.7 Accordingly, the trial court
properly concluded California law applies.
3. FAA Preemption
Finally, SDHM argues the FAA preempts McGill. Footnote 8 of
SDHM’s opening brief acknowledges that we are bound by McGill and states
that it raises the preemption point “to preserve it for appellate review by the
California or United States Supreme Courts.”
DISPOSITION
The matter is dismissed. Parties to bear their own costs on appeal.
HUFFMAN, Acting P. J.
I CONCUR:
HALLER, J.
7 In Mejia, the court applied the “poison pill” provision of section 36(h) of
the arbitration agreement, which stated that “ ‘[i]f an arbitration [were]
brought on a class, representative, or collective basis, and the limitations on
such proceedings in section (f) are finally adjudicated pursuant to the last
sentence of section (f) to be unenforceable, then no arbitration shall be had.’ ”
(Id. at pp. 704-705.) The defendant in Mejia invoked arbitration on all
claims, and the court concluded that the arbitration provision’s limitation on
public injunctive relief was unenforceable under McGill, so no arbitration
could be compelled. (Ibid.) We reach a different conclusion here not because
we interpret the poison pill provision differently, but because here SDHM
invoked arbitration only for individual claims and not “on a class,
representative, or collective basis.” Thus, the poison pill provision did not
apply.
26
Aaron, J., Concurring in the result.
I concur in the majority’s conclusions that Miliate’s complaint does
allege claims for public injunctive relief, that California law, not Utah law,
governs the underlying dispute in this case and that, to the extent the
arbitration agreement prohibits Miliate from seeking public injunctive relief,
the agreement is unenforceable under McGill v. Citibank, N.A. (2017)
2 Cal.5th 945 (McGill). I also agree with the majority that San Diego House
of Motorcycle’s (SDHM) appeal of the trial court’s ruling on SDHM’s motion
to compel arbitration should be dismissed. SDHM acknowledges that if
California law, and not Utah law applies, and if Miliate did seek a public
injunction, the claims for public injunctive relief are not arbitrable under the
authority of McGill. Under those circumstances, SDHM asserts that the
arbitration provision “does not bar Miliate from seeking a public injunction in
court.” Because the trial court retained the claims for public injunctive relief
and has not issued a ruling as to the fate of the class claims, and the court
otherwise granted SDHM’s motion to compel arbitration, there are presently
no issues that are ripe for appeal. While I disagree with the majority’s
assertion that SDHM “received all the relief it requested” (Maj. Opn. ante,
p. 2) in its motion to compel arbitration, I do agree with the majority’s
implicit conclusion that the enforceability of the class action waiver is not
properly before this court in this appeal and that SDHM’s appeal should be
therefore be dismissed.
I write separately because I believe that, in stating that SDHM did not
ask the trial court to rule on the enforceability of the class action waiver and
that SDHM requested only that the court order arbitration “of Miliate’s
individual claims,” the majority misstates the relief that SDHM requested in
its motion to compel arbitration and that its discussion is, as a result,
1
unnecessarily confusing in certain respects. It appears that the lack of
clarity is attributable at least in part to apparent inconsistencies in the trial
court’s order, which I will attempt to clarify.
Miliate’s complaint, labeled “Class Action,” pleads causes of action
under 1) the Rees-Levering Automobile Sales Finance Act, Civil Code section
2981 et seq. (first cause of action); 2) the Consumers Legal Remedies Act
(CLRA), Civil Code section 1750 et seq. (second cause of action); and
3) Business and Professions Code section 17200 et seq., (UCL) (third cause of
action). In his first cause of action, Miliate alleges that he and the members
of the class have been damaged in an amount to be proven at trial and
requests injunctive relief, attorney fees and costs. In his second cause of
action, Miliate requests injunctive relief only. In his third cause of action,
Miliate requests declaratory and injunctive relief, and restitution.
The WebBank Yamaha Credit Card Account Customer Agreement
(Agreement) contains an arbitration provision (Account Agreement section
36). Within the arbitration provision is a class action waiver that provides in
relevant part, “NO ARBITRATION SHALL PROCEED ON A CLASS,
REPRESENTATIVE, OR COLLECTIVE BASIS (INCLUDING AS PRIVATE
ATTORNEY GENERAL ON BEHALF OF OTHERS) . . . .” (Account
Agreement, section 36(f)). The majority asserts that, in SDHM’s motion to
compel arbitration, “SDHM did not request the court rule on the validity of
the class action waiver or the class claims.” (Maj. Opn. ante, p. 13.)
According to the majority, “SDHM’s position is that because it invoked
arbitration, the trial court was obligated to enforce the class action waiver,
even though no class claims were directly implicated by the motion to compel
individual claims to arbitration and SDHM did not ask the court to do so.”
(Maj. Opn. ante, p. 15, italics added.) The majority is thus of the view that
2
SDHM never asked the trial court to enforce the class action waiver
contained in the account agreement, but rather, requested only that the court
order arbitration of Miliate’s individual claims.
SDHM’s motion to compel arbitration is not, in my view, ambiguous
with respect to the relief requested. Contrary to the majority’s repeated
assertion that SDHM moved to compel arbitration “of [Miliate’s] individual
claims” only, (Maj. Opn. ante, pp. 1, 15, italics added) the notice of motion
and motion clearly indicate that SDHM moved to compel arbitration of all of
Miliate’s claims on an individual, nonclass basis. In its notice of motion,
SDHM states that it will move the court “for an order compelling arbitration
of plaintiff Blake Miliate’s claims arising out of the purchase of a Yamaha
motorcycle pursuant to a WebBank-Yamaha credit card on an individual,
non-class basis.” (Italics added.) In its motion, SDHM requested that the
trial court compel arbitration “of its dispute with . . . Blake Miliate” “on an
individual, non-class basis,” arguing that the arbitration provision was
sufficiently broad to cover all of the claims in Miliate’s complaint. In a
section titled, “The Court Should Compel Arbitration On An Individual, Non-
Class Basis,” the motion expressly notes that Miliate agreed to arbitrate “all
claims” as set forth in the Agreement, and that he further agreed that “ ‘NO
ARBITRATION SHALL PROCEED ON A CLASS, REPRESENTATIVE, OR
COLLECTIVE BASIS.’ ” It thus seems clear that, in moving to compel
arbitration of Miliate’s entire “dispute” with SDHM, while noting the class,
representative and collective action waiver contained in section (f) of the
arbitration provision, asserting that the arbitration provision covered all of
Miliate’s claims and, asking the court to compel arbitration of Miliate’s
claims “on an individual, non-class basis,” SDHM was arguing that all of
Miliate’s claims were subject to arbitration and that he was barred by the
3
class action waiver from pursuing any claims on a class basis. SDHM’s
request that the court compel arbitration of Miliate’s claims “on an
individual, non-class basis,” was essentially the same as asking the court to
compel arbitration and also to enforce the class action waiver.
Miliate clearly understood SDHM’s motion to compel arbitration to be a
request to compel arbitration of all of the claims in his complaint on an
individual basis, and at least implicitly, to enforce the class action waiver. In
his opposition to the motion to compel arbitration, Miliate asserted that
SDHM has asked the court “to order Plaintiff to litigate all of his claims in
arbitration.” (Italics omitted.) None of Miliate’s claims were pled as
individual claims. Rather, Miliate’s entire complaint was pled as a putative
class action.
It appears that the trial court also understood SDHM’s motion to
compel arbitration to be a request to rule on the enforceability of the class
action waiver, which, as noted, is contained within the arbitration provision,
and to order that all of Miliate’s claims be arbitrated. The trial court noted in
its ruling that “[t]he Agreement . . . provides at subsection [36](f) that no
arbitration shall proceed as a class representative or collective basis” and
that any challenge to the validity of subsection (f) “shall be determined
exclusively by the court.” After finding that California law governs the
account agreement and that under McGill, “[a]ny waiver in a predispute
arbitration agreement of the right to seek public injunctive relief under the
UCL and CLRA is invalid and unenforceable under California law,” the court
states, “Applying California law, the court will invalidate the arbitration
clause insofar as it purports to waive plaintiff’s statutory rights to seek public
injunctive relief in subsection (f) pursuant to McGill . . . . The remaining
provisions of the Arbitration Agreement remain unaffected.” (Italics added.)
4
Thus, the trial court ruled that the arbitration provision was unenforceable
only to the extent that it would prohibit Miliate from seeking public
injunctive relief.
While the trial court’s order states that SDHM’s motion to compel
arbitration is “GRANTED,” the court found that the requests for public
injunctive relief were not arbitrable. The order states, “Finally, because
plaintiff has statutory claims and is seeking restitution as well as public
injunctive relief, the court will order the arbitrable portions to arbitration.
(Clifford v. Quest Software, Inc. (2019) 38 Cal.App.5th 745, 750 [(Clifford),
italics added.])” In Clifford, the trial court denied in its entirety a motion to
compel arbitration of a UCL claim, “citing without discussion our Supreme
Court’s decision in Cruz [v. PacifiCare Health Systems, Inc. (2003) 30 Cal.4th
303].” (Clifford, supra, at p. 749.) The Clifford court reversed, explaining
that in Cruz, the Supreme Court held that “UCL claims for restitution ‘are
fully arbitrable’ [citation], but UCL claims for public injunctive relief cannot
be arbitrated.” (Id. at p. 750.) The Clifford court explained, “If a plaintiff’s
UCL cause of action includes both arbitrable and inarbitrable claims, such as
a request for restitution and a request for public injunctive relief, 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.” (Ibid., citing McGill, supra, 2 Cal.5th at p. 966.)
There is a lack of clarity as to the procedural posture of the case, as a
result of certain language that the trial court employed in its order. In its
order, the court states, “MOTION TO COMPEL ARBITRATION by
defendant House of Motorcycles, Inc. dba North County’s House of
Motorcycles is GRANTED.” The court goes on to state, “[P]laintiff’s
individual causes of action will be sent to arbitration and if the arbitrator
5
determines those issues should be arbitrated, the arbitration will concern
only the purchase of the Yamaha motorcycle. . . . Plaintiff’s class claims
regarding the purchase of the Yamaha motorcycle remain in court . . . .”
(Italics added.) The trial court’s references to Miliate’s “individual causes of
action” and his “class claims” in this context is perplexing. In stating in its
order that the court would invalidate the arbitration clause insofar as the
arbitration provision purported to waive Miliate’s statutory rights to seek
public injunctive relief, and at the same time expressly referencing the class
action waiver provision contained in the arbitration provision in the process
of making its ruling, and severing Miliate’s statutory claims to send the
“arbitrable portions to arbitration,” the court essentially ruled that it would
enforce the arbitration provision—which includes the class action waiver,
except as to the claims for public injunctive relief.
The fact that the trial court retained Miliate’s claims for public
injunctive relief does not mean that the court was not enforcing the class
action waiver. Claims for public injunctive relief are not considered to be
class, representative or collective claims under California law. Rather, public
injunctive relief is a “substantive statutory remedy that the Legislature,
through the UCL, the CLRA, and the false advertising law, has made
available to those . . . who meet the statutory standing requirements for filing
a private action.” (McGill, supra, 2 Cal.5th at p. 965.) Thus, as in Clifford,
claims for public injunctive relief may be brought by an individual plaintiff
such as Miliate. “[A] private individual who has ‘suffered injury in fact and
has lost money or property as a result of’ a violation of the UCL . . . and who
therefore has standing to file a private action” is not precluded “from
requesting public injunctive relief in connection with that action. A person
who meets these requirements is ‘fil[ing]’ the ‘lawsuit[ ]’ or ‘action[ ]’ on his or
6
her own behalf, not ‘on behalf of the general public.’ . . . This remains true
even if the person seeks, as one of the requested remedies, injunctive relief
‘the primary purpose and effect of’ which is to ‘prohibit and enjoin conduct
that is injurious to the general public.’ ” (McGill, supra, 2 Cal.5th at p. 959,
quoting in part Broughton v. Cigna Healthplans (1999) 21 Cal.4th 1066,
1077.) The trial court presumably retained the claims for public injunctive
relief under the authority of Clifford and Cruz not because they are class
claims, but because they are inarbitrable under McGill.
The trial court’s intent in stating that Miliate’s “class claims” would
remain in court is unclear. Given the court’s statement in its order that it
would invalidate the arbitration provision only insofar as it prohibited
Miliate from bringing claims for public injunctive relief, and the fact that
class action waiver is part of the arbitration provision, the court’s statement
that the “class claims” would remain in court would appear to indicate only
that the court has not yet dismissed those claims, not that those claims would
be litigated in court in the future.
In any event, the propriety of the trial court’s treatment of class claims
that SDHM did not seek to have arbitrated does not appear to be properly
before this court in this appeal. In Reyes v. Macy’s, Inc. (2011)
202 Cal.App.4th 1119, a defendant sought review of a trial court’s order
granting arbitration of a plaintiff’s individual claims on the ground that the
court had refused to compel arbitration of the plaintiff’s representative claims.
(Id. at p. 1122.) The Reyes court concluded that it lacked appellate
jurisdiction to consider such an appeal, reasoning:
“An order denying or dismissing a motion to compel
arbitration . . . is an appealable order. [Citations.]
[Defendant’s] attempts to justify the present appeal by
arguing that by refusing to compel plaintiff to arbitrate her
class claims and the claim for penalties under [the Private
7
Attorneys General Act (PAGA)], the trial court partially
denied the motion to compel arbitration, rendering the
order appealable. We do not agree. Neither literally nor
functionally did [defendant] request the trial court to
compel the arbitration of these claims, nor did the court
refuse to do so. [Defendant] moved the trial court ‘to
dismiss [plaintiff’s] class allegations set forth in her second
amended complaint.’ [Defendant’s] contention is not that
the representative claims should be arbitrated, but that
they should be dismissed. The trial court stayed the class
and PAGA claims; it has not yet determined whether some
or all of these claims should eventually be dismissed or may
warrant judicial relief. Even if the present order is
construed as a denial of the motion to dismiss, the order is
interlocutory and is not yet subject to appeal. Code of Civil
Procedure section 904.1 provides the general list of
appealable orders and judgments. The denial of a motion
to dismiss is not among them. This section codifies the
common law ‘one final judgment rule’ and prohibits the
review of such interlocutory rulings until final resolution of
the case. [Citation.]” (Id. at pp. 1122–1123; accord
Lacayo v. Catalina Restaurant Group Inc. (2019) 38
Cal.App.5th 244, 254.)
Similarly, in this case, it would appear that this court lacks appellate
jurisdiction to consider the trial court’s treatment of class claims in an appeal
from an order denying a petition to compel arbitration, since it is undisputed
that SDHM never sought to have such claims arbitrated. However, because
the majority states—erroneously, in my view—that “SDHM did not request
the court rule on the validity of the class action waiver or the class claims,”
(Maj. Opn. ante, at p. 13, italics added), I believe it important to explain my
view of the relief that SDHM sought in the trial court and the scope of the
trial court’s ruling.
I agree with the majority that SDHM’s appeal of the trial court’s order
is not properly before this court and I further agree with the majority’s
8
analysis and conclusions with respect to the substantive issues raised in the
appeal. However, I concur in the result because I am convinced that,
contrary to the majority’s assertions, SDHM clearly did ask the trial court to
enforce the class action waiver in requesting that the court compel
arbitration of all of Miliate’s claims “on an individual, non-class basis,” and in
fact, that the court effectively agreed to do so.
AARON, J.
9