Westmoreland v. Kindercare Education LLC ( 2023 )

Filed 4/24/23
CERTIFIED FOR PUBLICATION
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
FIRST APPELLATE DISTRICT
DIVISION TWO
ROCHELLE WESTMORELAND,
Plaintiff and Respondent,
A164090
v.
KINDERCARE EDUCATION LLC, (San Francisco County
Super. Ct. No. CGC-19-573125)
Defendant and Appellant.
Appellant Kindercare Education LLC (Kindercare) first asked the trial
court to compel arbitration of respondent Rochelle Westmoreland’s claims
under the Labor Code and to stay her claims under the California Private
Attorneys General Act (PAGA) back in 2019. A year later, the trial court
granted the motion, but this court subsequently issued an alternative writ of
mandate denying it. Kindercare unsuccessfully petitioned the California
Supreme Court for review and the United States Supreme Court for
certiorari.
Kindercare now returns to contend that “new law” requires that we
compel Westmoreland to arbitrate at least some part of her case. Kindercare
urges that our sister district’s decision in Western Bagel Co., Inc. v. Superior
Court (2021) 66 Cal.App.5th 649 (Western Bagel), specifically its discussion of
Lamps Plus, Inc. v. Varela (2019) 139 S.Ct. 1407 (Lamps Plus), requires that
we revisit our earlier decision. Kindercare also argues that the United States
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Supreme Court’s decision in Viking River Cruises, Inc. v. Moriana (2022)
142 S.Ct. 1906 (Viking River), a footnote in this court’s decision in Vaughn v.
Tesla, Inc. (2023) 87 Cal.App.5th 208, 218, fn. 5 (Tesla), and the recent
decision in Piplack v. In-N-Out Burgers (2023) 88 Cal.App.5th 1281 (Piplack)
further support its position.
Kindercare appeals from an unappealable order. Simply put, “an order
denying a renewed motion,” including a renewed motion to compel
arbitration, “is not appealable.” (Chango Coffee, Inc. v. Applied Underwriters,
Inc. (2017) 11 Cal.App.5th 1247, 1252 (Chango Coffee); Tate v. Wilburn (2010)
184 Cal.App.4th 150, 160 (Tate).) Realizing the error, Kindercare now asks
us to exercise our discretion to hear the appeal as a petition for writ of
mandate. We will do so in order to reach the merits, given the unusual
circumstances of this case and because “refusing review at this point . . .
would result in a significant waste of time and judicial resources.” (Phillips
v. Sprint PCS (2012) 209 Cal.App.4th 758, 768, 770–771 (Phillips).)
We agree with the trial court that Western Bagel is not “new law” under
Code of Civil Procedure section 1008 that justifies a different decision on
Kindercare’s renewed motion to compel arbitration. We conclude that the
decision not to compel arbitration is mandated by the language and structure
of the arbitration agreement. The result we reach here remains consistent
with Western Bagel and the other cases Kindercare relies upon, including
Lamps Plus. The result is also appropriate in light of recent precedent,
including the Viking River decision.
BACKGROUND
A. Kindercare’s Arbitration Agreement
Westmoreland alleges she was a director for Kindercare from April
2016 until January 2019. When she was hired, Westmoreland electronically
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signed a “Mutual Arbitration Agreement Regarding Wages and Hours.”
Kindercare’s arbitration agreement is governed by the Federal Arbitration
Act (FAA) and requires arbitration of all “covered claims.” “ ‘Covered claims’
are any statutory or common law legal claims alleging the underpayment,
overpayment, or mistimed payment of wages, expenses, loans,
reimbursements, bonuses, commissions, advances, or any element of
compensation, based on claims for overtime, on-the-clock, off-the-clock or
other uncompensated hours worked claims, timing or amount of pay at
separation, deduction or fee disputes, travel time claims, meal or rest period
claims, overpayment claims, claims of failure to reimburse or repay loans or
advances, claims over improper or inaccurate pay statements, claims to fines
or penalties, or any other claimed violation of wage-and-hour practices or
procedures under local, state or federal statutory or common law.” The
agreement expressly excludes “claims alleging discrimination, harassment, or
retaliation. Also excluded . . . are any claims . . . that cannot be required to
be arbitrated as a matter of law.” The arbitration agreement states,
“arbitration is the only litigation forum for resolving covered claims and that
we are both waiving the right to a trial before a judge or jury in federal or
state court in favor of arbitration.”
Complicating matters, Kindercare’s arbitration agreement includes a
provision described as a “Waiver of Class and Collective Claims.” It states,
“KU and I also agree that covered claims will be arbitrated only on an
individual basis and that both KU and I waive the right to participate in or
receive money or any other relief, to the maximum extent permitted by law,
from any class, collective, or representative proceeding. Any arbitrator
hearing my claim may not: (i) combine more than one individual’s claim or
claims into a single case; (ii) participate in or facilitate production of class-
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wide contact information or notification of others of potential claims; or
(iii) arbitrate any form of a class, collective, or representative proceeding.”
Complicating matters further, a “Savings Clause & Conformity Clause”
in the agreement requires that “[i]f any provision of this agreement is
determined to be unenforceable or in conflict with a mandatory provision of
applicable law, it shall be construed to incorporate any mandatory provision,
and/or the unenforceable or conflicting provision shall be automatically
severed and the remainder of the agreement shall not be affected. Provided,
however, that if the Waiver of Class and Collective Claims is found to be
unenforceable, then this agreement is invalid and any claim brought on a
class, collective, or representative action basis must be filed in a court of
competent jurisdiction, and such court shall be the exclusive forum for such
claims.” Westmoreland refers to the “Savings Clause” as a “poison pill.”
A. Westmoreland’s Claims
Kindercare terminated Westmoreland on January 7, 2019. She filed
suit a few weeks later. The operative first amended complaint asserts causes
of action for (1) violation of Labor Code sections 201 through 203, including
both on an individual and class action basis; and (2) violation of PAGA (Lab.
Code, § 2698 et seq.). Westmoreland alleges that Kindercare violated Labor
Code sections 201 through 203, 212, and 213, because it issued an electronic
paycard (with usage fees and access restrictions) as final payment of wages to
employees who resigned or were terminated, and thus failed to meet the
requirement to pay wages within 72 hours after separation of employment.
B. Kindercare’s Original Motion to Compel Arbitration and the
Alternative Writ of Mandate
Kindercare moved to compel arbitration of Westmoreland’s individual
non-PAGA claims, and to stay her PAGA claim. On January 13, 2020, the
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trial court granted the motion. Two months later, Westmoreland sought a
writ of mandate from this court.
On January 29, 2021, this court issued an alternative writ of mandate
in a succinct order. Citing Securitas Security Services USA, Inc. v. Superior
Court (2015) 234 Cal.App.4th 1109, 1126 (Securitas), the court wrote,
“Although the superior court correctly concluded the PAGA waiver is
unenforceable, it erred by severing the unenforceable PAGA waiver from the
remainder of the Waiver of Class and Collective Claims and the remainder of
the arbitration agreement. The acknowledged ambiguity in the Savings
Clause & Conformity clause should be resolved against Real Party in
Interest, the party that drafted the arbitration agreement.” It concluded:
“the unenforceable PAGA waiver is not severable from the rest of the
agreement and, therefore, renders the entire agreement unenforceable.”
The trial court notified the parties of its intent to comply with the
alternative writ, and complied after soliciting further briefing from the
parties. This court denied Kindercare’s request for rehearing. The California
Supreme Court and then the United States Supreme Court rejected
Kindercare’s subsequent petitions for review and for certiorari.
C. Kindercare’s Renewed Motion to Compel Arbitration
On July 27, 2021, Kindercare filed a “Renewed Motion to Compel
Arbitration of Non-PAGA Claims and Stay PAGA Claims Based on New Law”
with the trial court. Invoking Code of Civil Procedure section 1008,
Kindercare based its motion on “new law” in the form of the Second District’s
July 15, 2021 decision in Western Bagel. Kindercare argued that Western
Bagel required arbitration under similar circumstances and was “more
persuasive” than the alternative writ issued by this court earlier in the case,
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so following Western Bagel rather than continuing to abide by the alternative
writ “should be the easy choice.”
The trial court disagreed and denied Kindercare’s renewed motion.
The trial court held that Western Bagel did not reflect an intervening change
in the law for purposes of Code of Civil Procedure section 1008. The new
decision had not overturned Securitas, which the Court of Appeal cited in its
alternative writ. The trial court also distinguished the facts in Western Bagel
from the facts here. To the extent Kindercare argued that Western Bagel had
“created a split of California appellate authority,” the trial court found this
case more similar to Securitas than Western Bagel.
Kindercare appealed the denial of its renewed motion.
D. Request for Further Briefing
While the appeal was pending, the United States Supreme Court
issued its much-anticipated decision in Viking River. We asked the parties to
brief the impact of Viking River on the case, if any. Westmoreland addresses
the decision in her responsive brief and Kindercare discusses Viking River’s
implications in its reply brief.
DISCUSSION
I. Appealability
Unfortunately for Kindercare, “an order denying a renewed motion,”
including a renewed motion to compel arbitration, “is not appealable.”
(Chango Coffee, supra, 11 Cal.App.5th at p. 1252; Tate, supra, 184
Cal.App.4th at p. 160.) Kindercare suggests that Westmoreland has
conceded that “the denial of the renewed motion to compel arbitration is an
immediately appealable order.” Notwithstanding Westmoreland’s silence in
her responsive brief, we police our own jurisdiction regardless of whether the
parties aid in that effort. (People v. Clark (2021) 67 Cal.App.5th 248, 254–
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255 [“ ‘[T]he right to an appeal is entirely statutory; unless specified by
statute no judgment or order is appealable.’ [Citation.] Because an
appealable judgment or order is essential to appellate jurisdiction, the
appellate court must consider the question of appealability sua sponte, and
dismiss the appeal if the judgment or order is found to be nonappealable”],
quoting Garau v. Torrance Unified School Dist. (2006) 137 Cal.App.4th 192,
198, and citing Harrington-Wisely v State of California (2007) 156
Cal.App.4th 1488, 1494, Olson v. Cory (1983) 35 Cal.3d 390, 398.) Neither
party brought Chango Coffee or Tate to our attention.
Kindercare incorrectly argues that we have “jurisdiction over this
appeal because orders denying motions to compel arbitration are subject to
immediate appeal.” While California law permits an immediate appeal of “an
order dismissing or denying a petition to compel arbitration” (Code Civ. Proc.,
§ 1294, subd. (a)), Kindercare is appealing an order under section 1008 of the
Code of Civil Procedure that denies a “renewed” motion. The decision in
Esparza v. Sand & Sea, Inc. (2016) 2 Cal.App.5th 781, 787, cited by
Kindercare, concerns an order denying a motion to compel arbitration in the
first instance, not a renewed motion.
During oral argument, Kindercare suggested that we ought not follow
Chango Coffee or Tate because they were poorly reasoned. We disagree. Both
decisions identify at least three compelling reasons why a renewed motion is
not an appealable order. The rule exists “ ‘to eliminate the possibilities that
(1) a nonappealable order or judgment would be made appealable, (2) a party
would have two appeals from the same decision, and (3) a party would obtain
an unwarranted extension of time to appeal.’ ” (Chango Coffee, supra, 11
Cal.App.5th at p. 1252, quoting Tate, supra, 184 Cal.App.4th at p. 160.)
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Code of Civil Procedure section 1008, subdivision (b) governs renewed
motions and motions for reconsideration. It provides: “A party who
originally made an application for an order which was refused in whole or
part, or granted conditionally or on terms, may make a subsequent
application for the same order upon new or different facts, circumstances, or
law, in which case it shall be shown by affidavit what application was made
before, when and to what judge, what order or decisions were made, and
what new or different facts, circumstances, or law are claimed to be shown.”
Analyzing the statute, Chango Coffee and Tate also explain that “ ‘the
possibility that a party may obtain an unwarranted extension of time to
appeal’ ” is particularly acute “ ‘with respect to a renewed motion under
section 1008, subdivision (b), in light of the fact that such a motion may be
brought at any time[.]’ ” (Chango Coffee, supra, 11 Cal.App.5th at p. 1253,
quoting Tate, supra, 184 Cal.App.4th at p. 160.)
Chango Coffee also looked to the legislative history of section 1008. The
court observed that, in 2011, approximately one year after the Tate decision,
the Legislature added subdivision (g) to section 1008 but did not make any
amendments that altered the rule expressed in Tate. (Chango Coffee, supra,
11 Cal.App.5th at p. 1253.) The court explained that, as a general rule of
statutory interpretation, “ ‘The Legislature is presumed to have knowledge of
existing judicial decisions when it enacts and amends legislation. When the
Legislature amends a statute that has been the subject of judicial
construction, changing it only in part, the presumption is that the Legislature
intended to leave the law unchanged in the aspects not amended.’ ” (Ibid.,
quoting Flannery v. California Highway Patrol (1998) 61 Cal.App.4th 629,
642–643.) Consequently, the court reasoned that “the Legislature’s decision
not to address the appealability of orders denying renewed motions under
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section 1008, subdivision (b) suggests the Legislature intended the Tate
court’s construction to control.” (Chango Coffee, at p. 1253.)
Comments from the legislative history of the 2011 amendment further
support the rule. In its analysis, the Senate Judiciary Committee observed
that “ ‘Section 1008’s purpose is “ ‘to conserve judicial resources by
constraining litigants who would endlessly bring the same motions over and
over, or move for reconsideration of every adverse order and then appeal the
denial of the motion to reconsider.’ ” ’ ” (Chango Coffee, supra, 11
Cal.App.5th at p. 1253, quoting Sen. Com. on Judiciary, Analysis of Assem.
Bill No. 1067 (2011–2012 Reg. Sess.) as amended Apr. 25, 2011, p. 4.)
II. Review as Writ of Mandate
During oral argument, Kindercare asked that we treat its appeal as a
writ of mandate. We will exercise our discretion to do so. (Phillips, supra,
209 Cal.App.4th at p. 768.) Case law has rapidly proliferated in an effort to
clarify the interplay between PAGA and the FAA. But not every case
concerning PAGA and arbitration is “new law” for purposes of Code of Civil
Procedure section 1008, subdivision (b), which is why the trial court’s
decision-making in this context is not subject to immediate appeal. It is
appropriate to review Kindercare’s appeal as a writ of mandate in order to
clarify the impact of recent case law on the poison pill language in
Kindercare’s arbitration agreement. (See Phillips, at p. 768.)
III. The Trial Court’s Ruling Was Consistent with Recent
Developments in the Law
“The trial court’s decision to grant reconsideration of a prior order and
to permit renewal of an earlier motion is reviewed for an abuse of discretion.”
(Phillips, supra, 209 Cal.App.4th at p. 769, citing Glade v. Glade (1995) 38
Cal.App.4th 1441, 1457.) We conclude that the trial court did not abuse its
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discretion here, as its decision denying Kindercare’s renewed motion to
compel arbitration was consistent with the new case law cited by both sides.
A. Western Bagel
Before the trial court, Kindercare relied heavily on Western Bagel as
supplying grounds to renew its motion to compel arbitration. Western Bagel
reversed a trial court order compelling non-binding arbitration of various
wage and hour claims. (Western Bagel, supra, 66 Cal.App.5th at pp. 658–
659.) The plaintiff was “a Spanish-speaker who can read and write only basic
English.” (Id. at p. 654.) The “severability clause in the Spanish version of
the arbitration agreement [the plaintiff] signed indicates the parties agreed
to nonbinding arbitration, whereas the severability clause in the original
English version of that document suggests the parties consented to binding
arbitration.” (Ibid.) The defendant employer, Western Bagel, blamed the
different language on a typographical error by a “third party translator when
it prepared the Spanish” version. (Id. at p. 657.) The trial court addressed
the ambiguity by construing it against Western Bagel as the drafter, using
the California law doctrine of contract interpretation called “contra
proferentem.” (Id. at p. 663.)
The Court of Appeal reversed, explaining it would apply “the FAA’s
default rule,” as described in Lamps Plus, by resolving “any alleged
ambiguity as to whether the arbitration would be binding in favor of the form
of arbitration contemplated by the FAA—binding arbitration.” (Western
Bagel, at p. 666.) The Western Bagel decision echoed Lamps Plus, finding,
“ ‘[n]either silence nor ambiguity provides a sufficient basis for concluding
that parties to an arbitration agreement agreed to undermine the central
benefits of arbitration itself.’ ” (Western Bagel, at p. 666, quoting Lamps
Plus, supra, 139 S.Ct. at p. 1417.)
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According to Kindercare, “Western Bagel qualified as new law that
supported a different outcome on the arbitration question, as it recognized
that the United States Supreme Court”—in Lamps Plus—“effectively
overruled the [Securitas] case on which the denial of Kindercare’s initial
arbitration motion was based.” The Lamps Plus decision, however, was not
“new law” on Kindercare’s renewed motion to compel arbitration for purposes
of Code of Civil Procedure section 1008. The trial court cited Lamps Plus in
its decision on Kindercare’s original motion to compel arbitration. The Court
of Appeal was aware of Lamps Plus during the earlier litigation on
Westmoreland’s petition for writ of mandate in 2020, though it did not
discuss that decision (or other relevant legal authorities, including Securitas)
in the alternative writ of mandate. We agree with the trial court that
Western Bagel was not adequate to support Kindercare’s renewed motion.
B. Lamps Plus
As it was when Kindercare opposed Westmoreland’s original petition
for writ of mandate, the core of Kindercare’s argument continues to be that
Lamps Plus effectively reversed the Securitas decision, which this court cited
in connection with its alternative writ. The reference to Securitas in the
alternative writ is not a reason to depart from the trial court’s holding on
Kindercare’s renewed motion. An alternative writ is customarily succinct; it
is an order, similar to an order to show cause. It is not a precedential
decision and often does not discuss the merits in detail, as was true here.
Nevertheless, Kindercare has repeatedly cited Lamps Plus to ask this court,
the California Supreme Court, the United States Supreme Court, the trial
court (again), and this court (again) to find that the Securitas decision has
been overruled and to therefore grant Kindercare’s motion.
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Since we did not previously explain why the alternative writ was
consistent with Lamps Plus, and Kindercare continues to rely on the decision,
we will do so here. Lamps Plus concerns orders granting class arbitration.
In 2010, the United States Supreme Court held that an arbitration
agreement that is silent concerning class arbitration does not operate to
compel arbitration of class claims. (Stolt-Nielsen S.A. v. AnimalFeeds Int’l
Corp. (2010) 559 U.S. 662, 684 (Stolt-Nielsen).) In 2019, Lamps Plus
extended that rule to encompass situations in which the arbitration
agreement was ambiguous concerning the possibility of class arbitration, and
not just silent on the topic. (Lamps Plus, supra, 139 S.Ct. at p. 1415.) A
former employee sued employer Lamps Plus following a data breach for
compromising employee tax information. (Id. at p. 1413.) Portions of Lamps
Plus’s arbitration agreement with its former employees “seemed to
contemplate ‘purely binary claims,’ ” while the plaintiff argued “other phrases
were capacious enough to include class arbitration, such as one stating that
‘arbitration shall be in lieu of any and all lawsuits or other civil legal
proceedings relating to my employment.’ ” (Ibid.) The Ninth Circuit
construed these ambiguities against Lamps Plus, as the drafter of the
arbitration agreement, and found the agreement compelled class arbitration.
(Ibid.) The United States Supreme Court deferred to the Ninth Circuit’s
finding that the agreement was ambiguous. (Id. at p. 1415.)
Ultimately, Lamps Plus held that the FAA “requires more than
ambiguity to ensure that the parties actually agreed to arbitrate on a
classwide basis.” (Lamps Plus, supra, 139 S.Ct. at p. 1415.) It observed that
the consent of the parties is of central importance. The majority opinion
explains, “ ‘[T]he first principle that underscores all of our arbitration
decisions’ is that ‘[a]rbitration is strictly a matter of consent.’ ” (Ibid.,
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quoting Granite Rock Co. v. Int’l Brotherhood of Teamsters (2010) 561 U.S.
287, 299.) “Whatever they settle on, the task for courts and arbitrators at
bottom remains the same: ‘to give effect to the intent of the parties.’ ”
(Lamps Plus, at p. 1416, quoting Stolt-Nielsen, supra, 559 U.S. at p. 684.)
Lamps Plus then described the “ ‘crucial differences’ ” between
individual and class arbitration, namely that class arbitration lacks the same
benefits related to costs, efficiency, and speed. (Lamps Plus, supra, 139 S.Ct.
at p. 1416, quoting Stolt-Nielsen, supra, 559 U.S. at p. 687.) Lamps Plus
decided: “Like silence, ambiguity does not provide a sufficient basis to
conclude that parties to an arbitration agreement agreed to ‘sacrifice[ ] the
principal advantage of arbitration.’ ” (Lamps Plus, at p. 1416, quoting AT&T
Mobility LLC v. Concepcion (2011) 563 U.S. 333, 348 (Concepcion).)
In reaching this decision, Lamps Plus criticized the use of “California’s
rule that ambiguity in a contract should be construed against the drafter, a
doctrine known as contra proferentem. The rule applies ‘only as a last resort’
when the meaning of a provision remains ambiguous after exhausting the
ordinary methods of interpretation.” (Lamps Plus, supra, 139 S.Ct. at
p. 1417.) “At that point, contra proferentem resolves the ambiguity against
the drafter based on public policy factors, primarily equitable considerations
about the parties’ relative bargaining strength.” (Ibid.) Lamps Plus
explained that it was inappropriate to use “state contract principles” that do
“ ‘not help to determine the meaning the two parties gave to the words, or
even the meaning that a reasonable person would have given to the language
used,’ ” to mandate class arbitration. (Id. at p. 1418.) “Such an approach is
flatly inconsistent with ‘the foundational FAA principle that arbitration is a
matter of consent.’ ” (Ibid., quoting Stolt-Nielsen, supra, 559 U.S. at p. 684.)
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The Lamps Plus decision does not suggest that the United States
Supreme Court was overruling cases like Securitas, which was cited by
Westmoreland in support of its earlier writ petition and by the court in its
alternative writ. Instead, Lamps Plus teaches that the “general contra
proferentem rule cannot be applied to impose class arbitration in the absence
of the parties’ consent.” (Lamps Plus, supra, 139 S.Ct. at p. 1418.)
The Securitas decision, however, was different. There, the court had
evidence of the parties’ consent in the unambiguous language of the poison
pill provision in the arbitration agreement there. (Securitas, supra, 234
Cal.App.4th at p. 1126.) While it viewed the construction of this poison pill
provision as “clear,” the court in Securitas explained, “to the extent the
dispute resolution agreement’s language is uncertain on the point and one
can glean a different outcome from the language, our conclusion would
nevertheless stand under the principle that ‘a court should construe
ambiguous language against the interest of the party that drafted it.’ ” (Ibid.)
In other words, the use of contra proferentem in Securitas was dicta—an
alternative rationale for a decision the court made based on the “clear”
construction of the arbitration agreement in that case.
C. Application of Lamps Plus
We join other California courts in following Lamps Plus. (See Tesla,
supra, 87 Cal.App.5th at p. 218, fn. 5 [explaining Lamps Plus requires a rule
regarding construction of ambiguities in arbitration agreement “that we
follow”].) Specifically, we seek to give effect to the intent of the parties
expressed in the language and structure of the Kindercare arbitration
agreement itself. (Lamps Plus, supra, 139 S.Ct. at p. 1415, citing Stolt-
Nielsen, supra, 559 U.S. at p. 684.)
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We see nothing in the Kindercare arbitration agreement that would
require us to apply contra proferentem or any other “default rule based on
public policy considerations” that is divorced from the intent of the parties.
(See Lamps Plus, supra, 139 S.Ct. at p. 1417.) We instead rely on the parties’
intent, expressed through the language and structure of the agreement.
Here, the “Savings Clause & Conformity Clause” states that the arbitration
agreement is “invalid” if the “Waiver of Class and Collective Claims” is “found
to be unenforceable.” This is an unambiguous expression of the parties’
intent to avoid parallel litigation before an arbitrator and before a court.
Westmoreland’s operative complaint includes four analytically distinct
claims: (1) Westmoreland’s individual claims under Labor Code sections 201
through 203 (and perhaps sections 212 and 213, though the first amended
complaint articulates those potential violations only in its recitation of the
elements of a putative class action and not in the cause of action itself);
(2) Westmoreland’s class claims under Labor Code sections 201 through 203
(and perhaps sections 212 and 213); (3) Westmoreland’s “individual” claim
under PAGA, addressing her own injury; and (4) Westmoreland’s
“representative” claims under PAGA, addressing injuries to other aggrieved
employees. In the absence of the poison pill provision, Kindercare could have
compelled arbitration of Westmoreland’s non-PAGA claims on behalf of
herself alone, as we describe below in connection with our discussion of the
recent Viking River decision. Kindercare could also have compelled
Westmoreland to waive class claims against it, under the rule described in
Concepcion. The dilemma for Kindercare, however, is that the provision in
the “Waiver of Class and Collective Claims” also bars Westmoreland from
arbitrating or litigating in court the fourth category of claims described
above. That puts the waiver clause “in conflict with a mandatory provision of
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applicable law,” as described in part III.D, post. The agreement’s poison pill
provision prevents this outcome because it provides that, in this scenario, the
“agreement is invalid and any claim brought on a class, collective, or
representative action basis must be filed in a court of competent jurisdiction,
and such court shall be the exclusive forum for such claims.”
In its order on the original motion to compel, the trial court had found
the waiver provision was ambiguous. Specifically, it believed the poison pill
did not specify “whether the entire waiver or any portion of the waiver must
be deemed unenforceable to render” the agreement invalid. The trial court
reasoned that the poison pill provision in Securitas was more certain because
it had included language saying that it “ ‘shall not be severable from this
[a]greement . . . .’ ” (Securitas, supra, 234 Cal.App.4th at p. 1125.)
We disagree and depart from the trial court’s reasoning on the question
of ambiguity in the waiver provision of the agreement. This court did not
discuss the trial court’s finding of ambiguity in the alternative writ. The
alternative writ simply cited Securitas and noted that the “acknowledged
ambiguity”—found by the trial court and acknowledged by Kindercare, but
disputed by Westmoreland—could be addressed by construing the agreement
against Kindercare as the drafter.
We conclude that the trial court identified an ambiguity that did not
exist. When the parties signed the Kindercare arbitration agreement in
2016, it is difficult to imagine under what circumstances the “entire waiver”
could possibly be found unenforceable. By 2011, approximately five years
before Westmoreland joined Kindercare, Concepcion had already overruled
the old California rule in Discover Bank, confirming that waivers of class
action claims were enforceable and not unconscionable. (Concepcion, supra,
563 U.S. at p. 352; see also DIRECTV, Inc v. Imburgia (2015) 577 U.S. 47,
16
58–59.) California courts were following the rule and enforcing such waivers.
(See, e.g., Phillips, supra, 209 Cal.App.4th at p. 769.) By 2016, the most
significant open question concerning the enforceability of a “waiver of
representative claims” concerned claims under PAGA—particularly the
viability of California’s rule set out in Iskanian v. CLS Transportation Los
Angeles, LLC (2014) 59 Cal.4th 348, 383 (Iskanian), that PAGA claims could
not be subject to mandatory arbitration and could not be waived.
The poison pill provision in the “Savings Clause & Conformity Clause”
of Kindercare’s arbitration agreement was therefore unambiguous. So long
as the waiver of PAGA claims is unenforceable, then the agreement “is
invalid and any claim brought on a class, collective, or representative action
basis must be filed in a court of competent jurisdiction, and such court shall
be the exclusive forum for such claims.” Dueling presumptions regarding
construction of arbitration agreements—the principle of contra proferentem,
discussed in dicta in Securitas, versus the presumption that parties would
favor binding rather than non-binding arbitration, as in Lamps Plus—need
not and do not come into play here.
D. Viking River
While the parties were briefing this appeal, the United States Supreme
Court resolved the open question of whether a PAGA claim can be waived.
Under Iskanian, supra, 59 Cal.4th at page 383, “an employee’s right to bring
a PAGA action is unwaivable.” 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. [Citation.]
[Citation.] That is because ‘the FAA does not require courts to enforce
contractual waivers of substantive rights and remedies.’ ” (Tesla, supra, 87
Cal.App.5th at p. 234.) “On the other hand, Viking River held Iskanian was
17
preempted to the extent it ‘invalidates agreements to arbitrate only
“individual PAGA claims for Labor Code violations that an employee
suffered.” ’ ” (Ibid., quoting Viking River, supra, 142 S.Ct. at p. 1923.) It
further 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.’ ” (Tesla, at p. 235, quoting Viking River, at
p. 1924, and citing Lewis v. Simplified Labor Staffing Solutions, Inc. (2022)
85 Cal.App.5th 983, 993–996.)
In Viking River, the arbitration agreement included a “ ‘severability
clause’ specifying that ‘any “portion” of the waiver that remained valid would
be “enforced in arbitration.” ’ [Citation.] 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.” (Tesla, supra, 87 Cal.App.5th at p. 235, quoting
Viking River, supra, 142 S.Ct. at p. 1925.)
Had Kindercare simply included a waiver of representative claims in
its arbitration agreement, and not included the poison pill at the end of the
agreement, the result here could have been substantially similar to that in
Viking River. The case also would have been similar to other recent appellate
decisions following Viking River, including Tesla, Piplack, and Galarsa v.
Dolgen California, LLC (2023) 88 Cal.App.5th 639. The arbitration
agreements in those cases did not have a poison pill provision like the one in
Kindercare’s agreement here, and so PAGA claims could be divided: the
“individual” PAGA claim sent to arbitration and the “representative” PAGA
claim pursued in court. (Tesla, supra, 87 Cal.App.5th at pp. 225–226;
Piplack, supra, 88 Cal.App.5th at p. 1293; Galarsa, at pp. 654–655.)
18
Ironically, the language and structure of Kindercare’s arbitration
agreement necessitates a result similar to the “claim joinder” rule in PAGA
that Viking River deemed problematic when imposed by state law. (Viking
River, supra, 142 S.Ct. at pp. 1923–1924.) The poison pill effectively prevents
us from sending Westmoreland’s “individual” claims under PAGA
(representing the State of California but pursuing “individual” remedies
based on the plaintiff’s status as a former employee) to arbitration, while
allowing litigation in court of her “representative” claims under PAGA, which
involve the rights of other “aggrieved employees.” (See Lab. Code, § 2699,
subds. (a), (c).)
The arbitration agreement in this case sought to address the
uncertainty in the law in 2016 concerning the waiver of representative claims
under PAGA by using the poison pill provision to prevent litigation on
parallel tracks if it ever became clear that even one of Westmoreland’s
potential class or representative claims could not be waived and would have
to be pursued in court. The provision is unambiguous and “presents an all-
or-nothing proposition.” (Securitas, supra, 234 Cal.App.4th at p. 1126.) The
provision leaves no room for Kindercare to choose to bifurcate
Westmoreland’s claims between arbitration and court; it instead invalidates
the agreement.
In sum, having exercised our discretion to hear Kindercare’s appeal as
a writ of mandate, we conclude that the arbitration agreement is invalid by
operation of the unambiguous “Savings Clause and Conformity Clause.” As a
consequence of Kindercare’s drafting decisions, and absent further
stipulation between the parties, the arbitration agreement is “invalid” and so
Kindercare must litigate all of Westmoreland’s claims in court.
19
DISPOSITION
The October 27, 2021 order denying Kindercare’s renewed motion to
compel arbitration is affirmed. Westmoreland is entitled to her costs on
appeal.
20
_________________________
Markman, J.*
We concur:
_________________________
Stewart, P.J.
_________________________
Richman, J.
Westmoreland v. Kindercare Education LLC (A164090)
* Judge of the Alameda Superior Court, assigned by the Chief Justice
pursuant to article VI, section 6 of the California Constitution.
21
Trial Court: San Francisco County Superior Court
Trial Judge: Hon. Andrew Y.S. Cheng
Attorneys for Appellant: Sheppard, Mullin, Richter & Hampton
Thomas R. Kaufman
Paul Berkowitz
Attorneys for Respondent: Diversity Law Group, P.C.
Larry W. Lee
Mai Tulyathan
Polaris Law Group
William L. Marder
22