Quintero v. Apria Healthcare CA2/5 ( 2023 )

Filed 7/5/23 Quintero v. Apria Healthcare CA2/5
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for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.
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION FIVE
ALVARO QUINTERO, B316463
Plaintiff and Respondent, (Los Angeles County
Super. Ct. No.
v. 20STCV42367)
APRIA HEATLHCARE LLC,
Defendant and Appellant.
APPEAL from a judgment of the Superior Court of Los
Angeles County, Carolyn B. Kuhl, Judge. Affirmed.
Jackson Lewis, Nathan W. Austin, Dylan B. Carp, Chad D.
Bernard, and Jeffrey A. Brand for Defendant and Appellant.
The Hathaway Law Firm, Alejandro P. Gutierrez; Palay
Hefelfinger, Daniel J. Palay, and Brian D. Hefelfinger for
Plaintiff and Respondent.
On his own behalf and on behalf of a putative class of
delivery drivers who were allegedly misclassified as independent
contractors, Alvaro Quintero (plaintiff) sued Apria Healthcare
LLC (Apria) alleging violations of various wage and hour laws.
Ten months after plaintiff filed suit, and shortly after the trial
court granted his motion for class certification, Apria moved to
compel arbitration. The trial court denied the motion. We
consider whether, as the trial court found, Apria waived the
prerogative to compel arbitration by taking actions inconsistent
with arbitration that prejudiced plaintiff.
I. BACKGROUND
Apria is a provider of home respiratory services and
equipment. It operates 25 branch offices in California from
which it picks up and delivers medical equipment. Although
Apria employs drivers as members of its work force, it also
contracts with other companies to provide courier services on an
as-needed basis during periods of high-volume deliveries. One
such courier company with whom Apria contracted was Spoke
Logistics LLC (Spoke Logistics).
In December 2018, plaintiff agreed to provide courier
services for Spoke Logistics. Under the terms of their written
transportation services agreement, plaintiff and Spoke Logistics
agreed to submit to binding arbitration any “dispute, claim,
question, or difference arising out of or relating to” the contract or
its breach. The parties’ arbitration agreement was silent on the
issue of class action litigation. Apria was not a party to or
mentioned in the agreement. Although plaintiff signed the
agreement, Spoke Logistics never received a copy of the executed
agreement and plaintiff did not retain a copy either.
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A. Litigation of Plaintiff’s Lawsuit Prior to Apria’s
Motion to Compel Arbitration
Between December 2018 and June 2020, while working for
Spoke Logistics, plaintiff provided courier services for three of
Apria’s California offices.
In November 2020, plaintiff filed a class action complaint
against Apria alleging violation of several Labor Code provisions
and violation of the Unfair Competition Law (Bus. & Prof. Code,
§ 17200 et seq.). A week later, the trial court temporarily stayed
all proceedings until after it held an initial status conference. In
advance of that conference, the court directed the parties to
address several topics in a joint submission, including whether
“arbitration is an issue in this case” and, under the heading
“POTENTIAL EARLY CRUCIAL MOTIONS,” whether either
party was considering a motion to compel arbitration.
Prior to the initial status conference, Apria learned from
Spoke Logistics that there was an arbitration agreement between
the company and each of its couriers. Spoke Logistics further
advised that Apria would need to subpoena plaintiff’s
employment records in order to obtain a copy of the arbitration
agreement.
In the joint submission for the initial status conference,
Apria advised the court that it understood plaintiff was “subject
to an arbitration agreement while employed by his actual
employer.” Apria, however, did not state it intended to file a
motion to compel arbitration; instead, the parties advised the
trial court that they were “unaware” of any arbitration
agreements applicable to Apria. The status conference was held
in February 2021, and the trial court lifted its previously entered
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stay and set a deadline in September by which any class
certification motion would need to be filed.
Following the status conference, plaintiff filed a first
amended complaint adding a cause of action for civil penalties
pursuant to the Private Attorneys General Act (Lab. Code,
§ 2698, et seq.). Apria answered the amended pleading by
generally denying the allegations and asserting 42 separate
affirmative defenses, none of which raised the arbitrability of
plaintiff’s claims.
Plaintiff moved for judgment on the pleadings with respect
to most of Apria’s affirmative defenses. After Apria voluntarily
withdrew 22 defenses, the trial court granted the motion with
respect to eight defenses and ruled that eight others were not
“proper” affirmative defenses. Among the four remaining
defenses was Apria’s second affirmative defense, which asserted
it was not plaintiff’s or the putative class’s employer and, as such,
did not control their wages, hours, or working conditions.
As they litigated Apria’s affirmative defenses, the parties
also met and conferred on the timing of a class certification
motion. While plaintiff desired to bring a motion well in advance
of the deadline set by the court, Apria urged delay as it
“intend[ed] to file cross complaints against third parties” because,
among other things, it was not plaintiff’s or the putative class’s
employer.
Not long thereafter, in May 2021, plaintiff moved for class
certification and, two months later, for summary adjudication or,
in the alternative, judgment on the pleadings with respect to
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Apria’s second affirmative defense. Apria opposed both motions.1
The appellate record indicates the motions and the oppositions
thereto were predicated on significant discovery between the
parties that had taken place, including the depositions of plaintiff
and of Apria’s person most knowledgeable.
On September 14, 2021, the trial court granted plaintiff’s
class certification motion. The court rejected Apria’s argument
that certification would be contrary to the interests of those class
members who agreed to submit their claims to binding
arbitration.
B. Apria Moves to Compel Arbitration
Apria propounded discovery on plaintiff and several third
parties, including Spoke Logistics. Plaintiff was asked to respond
to one set of form interrogatories, a request for the production of
documents, and a deposition notice with an accompanying
request for documents which largely mirrored the request for
production. Although both sets of document demands each
contained 97 separate requests, none of the requests expressly
sought production of plaintiff’s arbitration agreement with Spoke
Logistics and only a small number of the requests might be read
as impliedly calling for the production of the agreement. In its
subpoena to Spoke Logistics, Apria requested the production of
1
Apria filed its opposition to class certification on July 26,
2021, and its opposition to plaintiff’s motion for summary
adjudication on October 26, 2021. The trial court was unable to
make a summary adjudication ruling because further proceedings
were stayed when Apria appealed the denial of a motion to
compel arbitration that we soon discuss in more detail.
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19 different categories of documents, including one that expressly
sought the arbitration agreement with plaintiff and two others
that requested documents provided by Spoke Logistics to plaintiff
or documents signed by plaintiff.
In June 2021, Apria advised plaintiff that although it was
not yet in possession of a copy of an arbitration agreement
plaintiff signed, it had received “verbal confirmation” from Spoke
Logistics that such an agreement existed and that plaintiff was
in possession of a copy of the agreement. In view of this
information, Apria formally demanded plaintiff submit to binding
arbitration. Plaintiff rejected the demand and asserted Apria
had waived its right to compel arbitration through delay—
emphasizing Apria had been told by the trial court four months
earlier at the initial status conference that if it was considering a
motion to compel arbitration it needed to do so “right away.’’
In advance of his deposition, plaintiff produced an unsigned
copy of the arbitration agreement. At his deposition on July 1,
2021, plaintiff confirmed he had signed the agreement when he
began work for Spoke Logistics.
Two weeks later, at an informal discovery conference, the
trial court advised Apria it could bring a motion to compel
arbitration without any additional pre-motion conferences. On
September 21, 2021, one week after the trial court granted
plaintiff’s class certification motion and more than two and a half
months after plaintiff’s deposition, Apria moved to compel
arbitration.2
2
At no time prior to or after filing its motion to compel
arbitration did Apria seek a stay of all other proceedings in the
case or request leave to amend its answer to include an
affirmative defense based on a right to arbitration.
6
Even though it was not a party to the arbitration
agreement, Apria maintained it had a right to compel arbitration
because plaintiff’s claims were “absolutely intertwined” with
plaintiff’s relationship with Spoke Logistics. Apria also
contended that since the parties to the arbitration agreement did
not expressly agree to class arbitration, the recently certified
class claims should be dismissed. In addition, Apria argued it
had not waived its right to compel arbitration because it did not
have knowledge of an enforceable arbitration agreement until
after plaintiff’s deposition and because it had not taken any
actions inconsistent with its right to arbitrate. Without any
elaboration, Apria stated it moved to compel arbitration “as soon
as practicable” after learning plaintiff had signed the arbitration
agreement with Spoke Logistics.
Plaintiff opposed the motion to compel arbitration. Among
other things, plaintiff argued Apria waived its right to arbitration
by failing to act in a timely manner despite knowing of an
arbitration agreement since the case’s outset. Plaintiff argued he
was prejudiced by Apria’s delay, as his attorneys had expended
considerable time and resources on matters that would not have
been necessary if the action had been timely ordered to
arbitration.3
In reply, Apria sought to justify the “short” two-and-a-half-
month period between when plaintiff admitted he signed an
arbitration agreement and when it filed its motion to compel
3
One of plaintiff’s lead attorneys declared that he alone
spent 139 hours in connection with the motions for judgment on
the pleadings, class certification, and summary adjudication; the
fees for his work on those motions exceeded $111,000.
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arbitration as necessary. Apria explained it “wanted to ensure it
had a viable motion” because counsel for plaintiff had threatened
to seek sanctions if a motion to compel arbitration was filed.
Apria also argued plaintiff was partially responsible for the delay
by failing to produce the arbitration agreement voluntarily in the
wake of Apria’s disclosure at the time of the initial status
conference of a potential arbitration agreement between plaintiff
and Spoke Logistics.
C. The Trial Court Finds Apria Waived Its Right to
Compel Arbitration
In October 2021, the trial court held a hearing on the
motion to compel arbitration. At the court’s suggestion, the
parties focused their arguments on the issue of waiver.
As it had in its moving and reply papers, Apria argued it
did not waive its prerogative to compel arbitration because it
lacked conclusive knowledge of the arbitration agreement until
after plaintiff’s deposition and it used the following two and a
half months to perform “a lot” of research and analysis. Plaintiff
focused his argument on Apria’s twin failures to act diligently:
first, instead of promptly seeking discovery about the arbitration
agreement from plaintiff and nonparty Spoke Logistics as soon as
the temporary stay at the beginning of the case was lifted, Apria
waited four months to do so; and second, instead of seeking leave
to bring an immediate motion to compel following plaintiff’s
deposition and a stay of all other pending matters, such as the
class certification motion, Apria waited almost three more
months and until after the motion for class certification was
decided before filing its motion.
8
The trial court took the issue under submission and
subsequently issued a ruling denying the motion to compel
arbitration. The court found that through its actions and
inactions, Apria waived its right to compel arbitration. In
reaching this conclusion, the trial court specifically relied on:
Apria’s failure to assert an affirmative defense based on the
arbitration agreement; Apria’s failure to promptly request the
arbitration agreement in discovery from either plaintiff or Spoke
Logistics; Apria’s election to propound broad merits-related
discovery from plaintiff and Spoke Logistics; Apria’s decision to
litigate the merits of certain issues, including affirmative
defenses and class certification, instead of seeking a stay until
after an arbitration demand could be adjudicated; and Apria’s
decision to wait nearly three months from plaintiff’s deposition to
file its motion to compel. The court found that Apria’s decision to
delay its motion to compel arbitration until after the court
certified the class “strongly suggests [Apria] intended to utilize
this forum to prevail on important merits determinations without
having to resort to arbitration.” In other words, the court found
“‘there is good reason to suspect that [Apria] made a strategic
decision to delay its motion to compel arbitration to give itself
an[ ] opportunity to win the case by defeating the class.’” The
trial court further found plaintiff was prejudiced by Apria’s
actions and inaction because he was denied the advantages of
arbitration as an expedient, efficient, and cost-effective method of
resolving disputes and potentially incurred more than $100,000
in attorney fees that could have been saved had Apria moved to
compel arbitration earlier.
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II. DISCUSSION
As we first summarize and then explain, the trial court was
correct: on this record, Apria waived its prerogative to compel
arbitration by acting in a manner inconsistent with arbitration—
to plaintiff’s detriment. Despite knowing of the arbitration
agreement’s existence from the case’s earliest days and knowing
that a copy of it could only be obtained through discovery, Apria
elected not to include arbitration as an affirmative defense in its
answer or promptly propound discovery seeking a copy of the
agreement. Then, even after obtaining a copy of the agreement
and an admission that plaintiff signed it, Apria delayed further:
it waited months to bring a motion to compel arbitration—until
after the court’s adverse class certification ruling—despite being
given permission by the court to bring an immediate motion. It is
also obvious on this record that Apria’s knowing delays
prejudiced plaintiff: but for Apria’s delay, plaintiff would not have
brought three substantive and expensive motions.
Code of Civil Procedure section 1281.2 provides that, upon
petition by a party to an arbitration agreement, a court shall
order arbitration “if it determines that an agreement to arbitrate
the controversy exists,” unless it determines that “(a) [t]he right
to compel arbitration has been waived by the petitioner . . . .”
Although “no single test delineates the nature of the conduct that
will constitute a waiver of arbitration,” our Supreme Court has
identified various factors that are “relevant and properly
considered in assessing waiver claims.” (St. Agnes Medical
Center v. PacifiCare of California (2003) 31 Cal.4th 1187, 1195-
1196 (St. Agnes).) Those factors are: “‘“(1) whether the party’s
actions are inconsistent with the right to arbitrate; (2) whether
‘the litigation machinery has been substantially invoked’ and the
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parties ‘were well into preparation of a lawsuit’ before the party
notified the opposing party of an intent to arbitrate; (3) whether a
party either requested arbitration enforcement close to the trial
date or delayed for a long period before seeking a stay; (4)
whether a defendant seeking arbitration filed a counterclaim
without asking for a stay of the proceedings; (5) ‘whether
important intervening steps [e.g., taking advantage of judicial
discovery procedures not available in arbitration] had taken
place’; and (6) whether the delay ‘affected, misled, or prejudiced’
the opposing party.”’ [Citations.]” (Id. at 1196; accord, Iskanian
v. CLS Transportation Los Angeles, LLC (2014) 59 Cal.4th 348,
375 (Iskanian).) “No one of these factors predominates and each
case must be examined in context.” (Lewis v. Fletcher Jones
Motor Cars, Inc. (2012) 205 Cal.App.4th 436, 444 (Lewis).)
On appeal, the question of whether a party has waived the
right to compel arbitration is generally a question of fact calling
for substantial evidence review. (St. Agnes, supra, 31 Cal.4th at
1196; accord, Garcia v. Haralambos Beverage Co. (2021) 59
Cal.App.5th 534, 541-542.) “‘When, however, the facts are
undisputed and only one inference may reasonably be drawn, the
issue is one of law and the reviewing court is not bound by the
trial court’s ruling.’ [Citation.]” (St. Agnes, supra, at 1196; see
also id. at 1206 [same].) “[W]aivers are not to be lightly inferred
and the party seeking to establish a waiver bears a heavy burden
of proof.” (Id. at 1195.)
Here, nearly all of the pertinent St. Agnes factors point
toward waiver, particularly those that require consideration of
actions by Apria that are inconsistent with its right to arbitrate
and any resulting prejudice to plaintiff.
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From the initial status conference to the day Apria filed its
motion to compel arbitration, more than seven months elapsed.
Under established case law, this period of delay was more than
sufficient to find Apria’s conduct unreasonable and hence a
waiver of its right to arbitrate. (See, e.g., Lewis, supra, 205
Cal.App.4th at 446 [the defendant waived its right to arbitrate by
waiting nearly five months]; Augusta v. Keehn & Associates
(2011) 193 Cal.App.4th 331, 338 [waiver found due to a six and
one-half month delay between the filing of the lawsuit and the
motion to compel arbitration]; Adolph v. Coastal Auto Sales, Inc.
(2010) 184 Cal.App.4th 1443, 1451 [waiver due to a delay of six
months between the filing of the lawsuit and the demand for
arbitration]; Guess?, Inc. v. Superior Court (2000) 79 Cal.App.4th
553, 555, 557-558 (Guess?) [waiver finding affirmed when less
than four months elapsed between the filing of the lawsuit and
defendant’s motion to compel arbitration].)
Gloster v. Sonic Automotive, Inc. (2014) 226 CalApp.4th 438
(Gloster), and Khalatian v. Prime Time Shuttle, Inc. (2015) 237
Cal.App.4th 651 (Khalatian), cases upon which Apria relies, are
not to the contrary. The defendants in those cases did not
attempt to secure a litigation advantage before bringing a motion
to compel arbitration. (Gloster, supra, at 449 [delay alone was
insufficient to find wavier because it was not “unreasonable” for
the defendants, who “consistently asserted their intention to
arbitrate,” to defer a petition to compel while merely awaiting the
results of another defendant’s demurrer, since a dismissal of that
other defendant would simplify the case]; Khalatian, supra, at
662-663 [reversing denial of motion to compel arbitration because
no depositions were taken by defendants, no discovery motions
were filed, defendants’ demurrer and motion to strike were not
12
adjudicated but taken off calendar, and “there was no evidence
that defendants stretched out the litigation process”].)
In addition, despite learning of a potential agreement to
arbitrate in the weeks immediately following the filing of
plaintiff’s initial complaint, Apria never asserted arbitration as
an affirmative defense in its answer to plaintiff’s amended
pleading. Even after obtaining a copy of the agreement and
confirmation that plaintiff had signed it, Apria never sought
leave to add arbitration as an affirmative defense. (Guess?,
supra, 79 Cal.App.4th at 557-558 [“At a minimum, the failure to
plead arbitration as an affirmative defense is an act inconsistent
with the later assertion of a right to arbitrate”].)
Furthermore, even if Apria had timely sought discovery of
the arbitration agreement and promptly asserted arbitration as
an affirmative defense, substantial evidence of wavier remains.
When Apria elected to oppose plaintiff’s class certification motion
on the merits before filing its motion to compel arbitration, it
acted in a manner that was patently inconsistent with its right to
arbitrate.
Plaintiff filed its class certification motion on June 4, 2021.
Several weeks later and before its opposition to class certification
was due, Apria received an unsigned copy of the arbitration
agreement and plaintiff’s confirmation at his deposition that he
had signed the agreement. Instead of asking the trial court in
the immediate wake of plaintiff’s July 1 deposition to take the
class certification motion off calendar until after a motion to
compel arbitration could be brought and heard, Apria elected on
July 26 to oppose class certification on the merits, and then
elected further to wait for a ruling on the class certification
motion before moving to compel arbitration. Only after that
13
ruling went against Apria did the company finally seek to compel
arbitration. Similarly deliberate decisions by other class action
defendants to delay bringing a motion to compel arbitration in
order to secure a litigation advantage have been found to
constitute a waiver of the right to arbitrate. (Sprunk v. Prisma
LLC (2017) 14 Cal.App.5th 785, 799 [waiver where the defendant
made a “strategic decision” to delay moving to compel arbitration
until after a ruling on class certification because “[s]uch a
strategic use of the judicial forum is inconsistent with an
arbitration right”]; Oregel v. PacPizza, LLC (2015) 237
Cal.App.4th 342, 358-359 [waiver finding where defendant’s
motion to compel arbitration was not filed until after it appeared
plaintiff’s class certification motion would be granted]; Bower v.
Inter-Con Security Systems, Inc. (2014) 232 Cal.App.4th 1035,
1049 [“[o]ne can infer that [defendant] chose to conduct discovery,
delay arbitration, and seek a class-wide settlement [before
plaintiff sought to expand the class] because it saw an advantage
in pursuing that course of action in the judicial forum”].)
The prejudice to plaintiff additionally supports the trial
court’s finding of waiver. Where there has been “substantial
expense and delay . . . caused by the unreasonable or unjustified
conduct of the party seeking arbitration” courts will find
prejudice. (Iskanian, supra, 59 Cal.4th at 377.) As mentioned
already, Apria unreasonably delayed discovery of the arbitration
agreement and then unjustifiably delayed in bringing its motion
to compel arbitration until after its opposition to class
certification had been defeated. It is undisputed that plaintiff
and its counsel incurred significant and avoidable expenses as a
result of these decisions. In addition to the costs of bringing and
litigating the class certification motion, plaintiff also successfully
14
litigated a motion for judgment on Apria’s affirmative defenses
and prepared and brought a motion for summary adjudication.
That is prejudice. (Bower, supra, 232 Cal.App.4th at 1047
[“[Plaintiff] incurred expenses attributable to [defendant’s]
discovery and its decision to pursue classwide resolution of the
dispute. As a result of [defendant’s] actions, [plaintiff] devoted
time and energy to activities that had no bearing on an
arbitration of [plaintiff’s] individual claims”]; see also id. at 1046
[“‘[e]specially in class actions, the combination of ongoing
litigation and discovery with delay in seeking arbitration can
result in prejudice’”].) The prejudice is also compounded by the
lost opportunity costs had arbitration been sought quickly. (See,
e.g., Iskanian, supra, at 377 [“‘[A] petitioning party’s conduct in
stretching out the litigation process itself may cause prejudice by
depriving the other party of the advantages of arbitration as an
“expedient, efficient and cost-effective method to resolve
disputes”’”; accord, Guess?, supra, 79 Cal.App.4th at 558
[“Through [defendant’s] delay—which it has not even tried to
explain—[plaintiff] has lost whatever efficiencies that would
otherwise have been available to it through arbitration”]; Bower,
supra, at 1046 [“[defendant’s] actions substantially impaired
[plaintiff’s] ability to obtain the cost savings and other benefits
associated with arbitration”].)
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DISPOSITION
The judgment is affirmed. Plaintiff shall recover his costs
on appeal.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
BAKER, J.
We concur:
RUBIN, P. J.
MOOR, J.
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