Lile v. Mr. Wheels CA2/8 ( 2021 )


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  • Filed 6/15/21 Lile v. Mr. Wheels CA2/8
    NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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    has not been certified for publication or ordered published for purposes of rule 8.1115.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 EIGHT
    DAVID LILE,                                                   B303239
    Plaintiff and Respondent,                                (Los Angeles County
    Super. Ct. No. 19STCV30636)
    v.
    MR. WHEELS, INC.,
    Defendant and Appellant.
    APPEAL from an order of the Superior Court of Los
    Angeles County. Richard J. Burdge, Jr., Judge. Reversed and
    remanded.
    Fisher & Phillips, Christopher C. Hoffman, Megan E.
    Walker and Kevonna J. Ahmad for Defendant and Appellant.
    Stevens & McMillan, Daniel P. Stevens, Heather K.
    McMillan and Lizeth Perales for Plaintiff and Respondent.
    **********
    Defendant and appellant Mr. Wheels, Inc., doing business
    as AutoNation Toyota Cerritos, appeals from the order denying
    its motion to compel arbitration of plaintiff and respondent David
    Lile’s individual claims. Plaintiff, defendant’s former employee,
    did not allege any class action, private attorney general or
    representative claims.
    We reverse and remand with directions to the trial court to
    vacate its order and enter a new order granting defendant’s
    motion.
    FACTUAL AND PROCEDURAL BACKGROUND
    Plaintiff worked for defendant from 1980 until his
    termination of employment in October 2018. After his
    termination, plaintiff sued defendant for disability
    discrimination, wrongful termination and various claims alleging
    violations of the Labor Code. Plaintiff did not allege any cause of
    action under the Labor Code Private Attorneys General Act of
    2004 (PAGA; Lab. Code, § 2698 et seq.) or any class or
    representative claims of any kind.
    Defendant filed a motion to compel arbitration. In support
    of its motion, defendant attached a copy of a two-page agreement,
    signed by plaintiff in April 2013, titled “Arbitration Agreement.”
    Under the heading “Waiver of Right to Participate in Class
    Actions,” the agreement states: “Employee understands and
    acknowledges that the terms of this Agreement include a waiver
    of any substantive or procedural rights that Employee may have
    to bring or participate in an action on a class, collective, private
    attorney general, representative or other similar basis. This
    class action waiver does not take away or restrict the right of
    Employee to pursue Employee’s own claims, but only requires
    that any such claims be pursued in Employee’s own individual
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    capacity, rather than on a class, collective, private attorney
    general, representative or similar basis.”
    The agreement also contains a severability provision that
    includes a non-severability clause: “[i]f any portion of this
    Agreement is deemed invalid or unenforceable, it shall not
    invalidate the other provisions of this Agreement; provided
    however, that if the provision prohibiting classwide arbitration is
    deemed invalid or unenforceable, then this entire Arbitration
    Agreement shall be null and void.” (Italics added.)
    In opposing the motion, plaintiff argued the non-
    severability clause includes both class actions and PAGA claims,
    and since a waiver of PAGA claims is unenforceable, the entire
    arbitration agreement is null and void. Further, plaintiff argued
    that to the extent the provision was ambiguous, the ambiguity
    must be construed against defendant as the drafting party. He
    also made an unconscionability argument in the alternative.
    Defendant replied that plaintiff’s individual claims fell
    within the scope of the agreement, the PAGA waiver was
    severable, and plaintiff failed to show any procedural or
    substantive unconscionability, other than the arbitration
    agreement was a contract of adhesion—a fact which did not make
    it per se unenforceable.
    After argument and supplemental briefing, the trial court
    found the agreement was null and void and denied defendant’s
    motion. The court did not reach the unconscionability issue.
    This appeal followed.
    DISCUSSION
    We are asked to decide whether the trial court correctly
    construed the language of the parties’ arbitration agreement.
    Our review of this issue is de novo. (Mendez v. Mid-Wilshire
    3
    Health Care Center (2013) 
    220 Cal.App.4th 534
    , 541 [“where the
    trial court’s denial of a petition to arbitrate presents a pure
    question of law, we review the order de novo”]; Securitas Security
    Services USA, Inc. v. Superior Court (2015) 
    234 Cal.App.4th 1109
    , 1116 (Securitas) [“ ‘in cases where “no conflicting extrinsic
    evidence is introduced to aid the interpretation of an agreement
    to arbitrate, the Court of Appeal reviews de novo a trial court’s
    ruling on a petition to compel arbitration” ’ ”].)
    In resolving a motion to compel arbitration, the “parties’
    contractual intent is paramount . . . . [T]he ‘overarching principle
    [is] that arbitration is a matter of contract’ and ‘courts must
    “rigorously enforce” arbitration agreements according to their
    terms.’ ” (Securitas, supra, 234 Cal.App.4th at p. 1125.)
    The arbitration agreement here clearly provides that any
    claim “arising from, related to, or having any relationship or
    connection whatsoever with Employee’s seeking employment
    with, employment by, termination of employment from, or other
    association with the Company, shall be resolved through
    mandatory, neutral, binding arbitration on an individual basis
    only.” The agreement expressly states that any arbitration
    conducted pursuant to the agreement shall be governed by the
    Federal Arbitration Act (FAA; 
    9 U.S.C. § 1
     et seq.).
    There is no dispute that all of plaintiff’s claims were
    individual claims arising from his employment and termination
    by defendant—claims that fall squarely within the scope of the
    arbitration agreement. At no point did plaintiff seek to amend
    his pleading to include a claim under PAGA or any type of class
    or other representative claim.
    Nevertheless, plaintiff argued, and the trial court agreed,
    that because PAGA waivers are unenforceable, the entire
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    arbitration agreement here was null and void because it
    contained a PAGA waiver—despite the fact plaintiff has not
    alleged any PAGA claim, and defendant has never sought to
    enforce a PAGA waiver.
    More than a year after the parties entered into the
    arbitration agreement, our Supreme Court issued its decision in
    Iskanian v. CLS Transportation Los Angeles (2014) 
    59 Cal.4th 348
     in which it concluded that “an arbitration agreement
    requiring an employee as a condition of employment to give up
    the right to bring representative PAGA actions in any forum is
    contrary to public policy” and further, that “the FAA does not
    preempt a state law that prohibits waiver of PAGA
    representative actions in an employment contract.” (Id. at p. 360;
    see also Correia v. NB Baker Electric, Inc. (2019) 
    32 Cal.App.5th 602
    , 622 [“Without the state’s consent, a predispute agreement
    between an employee and an employer cannot be the basis for
    compelling arbitration of a representative PAGA claim because
    the state is the owner of the claim and the real party in
    interest, and the state was not a party to the arbitration
    agreement.”].
    Plaintiff’s chief argument is the trial court correctly
    construed the severability provision (including the non-
    severability clause that renders the entire arbitration agreement
    null and void if the class action waiver is deemed unenforceable)
    to include class, collective, private attorney general, and any
    other representative action. Therefore, since PAGA waivers are
    unenforceable, the non-severability clause renders the entire
    arbitration agreement null and void. Defendant argues the non-
    severability clause does not include the PAGA waiver.
    We think it is fair to interpret the severability provision to
    prohibit severability of PAGA claims. But we do not need to
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    decide whether the severability provision is ambiguous and
    should be construed against defendant. That issue is entirely
    academic in this case for the simple reason plaintiff did not bring
    a class, collective, private attorney general, or other such
    representative action, thus there was no basis for triggering the
    non-severability clause. Defendant’s motion to compel
    arbitration did not seek to enforce either a waiver of a class
    action or a waiver of a PAGA claim. The provisions in the
    arbitration agreement concerning the waiver of class or
    representative actions and the non-severability clause are
    surplusage in this case. Defendant’s motion sought to compel
    arbitration of plaintiff’s individual claims, all of which were
    plainly covered by the arbitration agreement.
    The cases cited by plaintiff where arbitration has been
    denied due to a PAGA waiver are distinguishable as all of them
    were brought by plaintiffs asserting a PAGA claim. (See, e.g.,
    Kec v. Superior Court of Orange County (2020) 
    51 Cal.App.5th 972
    ; Juarez v. Wash Depot Holdings, Inc. (2018) 
    24 Cal.App.5th 1197
    ; Franco v. Arakelian Enterprises, Inc. (2015)
    
    234 Cal.App.4th 947
    ; Securitas, supra, 
    234 Cal.App.4th 1109
    .)
    Plaintiff has not cited any case in which a court denied
    arbitration because of a PAGA waiver where only individual
    claims were raised by the plaintiff, nor have we found any.
    Moreover, there is nothing in the record to support a
    conclusion the arbitration agreement was unenforceable due to
    unconscionability. (AT&T Mobility LLC v. Concepcion (2011)
    
    563 U.S. 333
    , 339 (Concepcion) [section 2 of the FAA allows
    arbitration agreements to be “invalidated by ‘generally applicable
    contract defenses, such as fraud, duress, or unconscionability’ ”];
    see also Code Civ. Proc., § 1281 [“A written agreement to submit
    to arbitration an existing controversy or a controversy thereafter
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    arising is valid, enforceable and irrevocable, save upon such
    grounds as exist for the revocation of any contract.”].)
    “ ‘[U]nconscionability has both a “procedural” and a
    “substantive” element,’ the former focusing on ‘ “oppression” ’ or
    ‘ “surprise” ’ due to unequal bargaining power, the latter on
    ‘ “overly harsh” ’ or ‘ “one-sided” ’ results. [Citation.] ‘The
    prevailing view is that [procedural and substantive
    unconscionability] must both be present in order for a court to
    exercise its discretion to refuse to enforce a contract or clause
    under the doctrine of unconscionability.’ [Citation.] But they
    need not be present in the same degree.” (Armendariz v.
    Foundation Health Psychcare Services, Inc. (2000) 
    24 Cal.4th 83
    ,
    114, abrogated in part as stated in Concepcion, 
    supra,
     
    563 U.S. 333
    .)
    Plaintiff argues only that the agreement was a contract of
    adhesion and that it was substantively unconscionable because of
    the class action waiver which allows defendant to choose the
    forum. The fact plaintiff was required to sign the agreement as a
    condition of his continued employment with defendant is minimal
    procedural unconscionability. (Gilmer v. Interstate/Johnson
    Lane Corp. (1991) 
    500 U.S. 20
    , 33 [“Mere inequality in bargaining
    power, however, is not a sufficient reason to hold that arbitration
    agreements are never enforceable in the employment context.”].)
    As for the class action waiver, defendant has not sought to
    enforce that provision and, as we already explained, it is not even
    at issue since plaintiff has not raised any class or PAGA claims.
    Plaintiff has not demonstrated unconscionability.
    DISPOSITION
    The order denying defendant’s motion to compel arbitration
    is reversed and the case remanded to the superior court with
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    directions to vacate its order and enter a new order granting
    defendant’s motion.
    Defendant shall recover its costs of appeal.
    GRIMES, Acting P. J.
    WE CONCUR:
    STRATTON, J.
    OHTA, J.*
    *     Judge of the Los Angeles Superior Court, assigned by the
    Chief Justice pursuant to article VI, section 6 of the California
    Constitution.
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