Opinion
CASE NO. 1:21-cv-00022-AWI-CDB
2022-11-09
Shahara HANSBER, Nang Chan, and Jesus Moreno, on behalf of themselves, all others similarly situated, and on behalf of the general public, Plaintiffs, v. ULTA BEAUTY COSMETICS, LLC; and Does 1-100, Defendants
David Thomas Mara, Matthew Evan Crawford, Mara Law Firm PC, San Diego, CA, Isandra Y. Fernandez, James Ross Hawkins, James Hawkins, APLC, Irvine, CA, Kiley Grombacher, Lirit Ariella King, Bradley/Grombacher, LLP, Westlake Village, CA, Marcus Bradley, Bradley Grombacher, LLP, Westlake, CA, for Plaintiffs. Amy Elaine Beverlin, Matthew C. Kane, Baker & Hostetler LLP, Los Angeles, CA, Sylvia Jihae Kim, Baker & Hostetler LLP, San Francisco, CA, for Defendant Ulta Beauty Cosmetics, LLC. J. Scott Carr, Kabat Chapman & Ozmer LLP, Los Angeles, CA, Nathan D. Chapman, PHV, Pro Hac Vice, Kabat Chapman & Ozmer LLP, Atlanta, GA, for Defendant Spherion Staffing, LLC.
David Thomas Mara, Matthew Evan Crawford, Mara Law Firm PC, San Diego, CA, Isandra Y. Fernandez, James Ross Hawkins, James Hawkins, APLC, Irvine, CA, Kiley Grombacher, Lirit Ariella King, Bradley/Grombacher, LLP, Westlake Village, CA, Marcus Bradley, Bradley Grombacher, LLP, Westlake, CA, for Plaintiffs. Amy Elaine Beverlin, Matthew C. Kane, Baker & Hostetler LLP, Los Angeles, CA, Sylvia Jihae Kim, Baker & Hostetler LLP, San Francisco, CA, for Defendant Ulta Beauty Cosmetics, LLC. J. Scott Carr, Kabat Chapman & Ozmer LLP, Los Angeles, CA, Nathan D. Chapman, PHV, Pro Hac Vice, Kabat Chapman & Ozmer LLP, Atlanta, GA, for Defendant Spherion Staffing, LLC.
ORDER ON DEFENDANT'S MOTION TO COMPEL INDIVIDUAL ARBITRATIONS OF PLAINTIFFS SHAHARA HANSBER AND JESUS MORENO AND TO STAY CASE
Anthony W. Ishii, SENIOR DISTRICT JUDGE
Plaintiffs Shahara Hansber, Nang Chan, and Jesus Moreno filed this class action lawsuit against Defendant Ulta Beauty Cosmetics, LLC ("UBC"), alleging violations of California's Private Attorneys General Act ("PAGA"), Labor Code, and Business & Professions Code. Doc. No. 29. Currently before the Court are UBC's Motions to Compel Individual Arbitrations of Hansber and Moreno and to Stay Proceedings Pending Ruling on Motions and Completion of Arbitrations. Doc. Nos. 51, 52. For the following reasons, the Court will grant in part and deny in part UBC's Motions.
BACKGROUND
Hansber is a former employee of Exact Staff Inc. ("Exact"), and Moreno is a former employee of Spherion Staffing LLC ("Spherion"). Doc. No. 51 at 12; Doc. No. 52 at 12. Both Hansber and Moreno signed arbitration agreements at the start of their employment to submit all claims and controversies arising from their employment to individual arbitration. Doc. No. 51 at 14-15; Doc. No. 52 at 14-15.
UBC entered into separate staffing services agreements with Exact and Spherion, pursuant to which Exact and Spherion agreed to recruit, screen, and hire workers who would be assigned to work at Ulta Inc.'s distribution center in Fresno, California ("Fresno DC"). Doc. No. 51 at 13-14; Doc. No. 52 at 13-14. Both Hansber and Moreno were placed on work assignments at the Fresno DC. Doc. No. 51 at 12; Doc. No. 52 at 12. Chan also worked at the Fresno DC, but unlike Hansber and Moreno, Chan applied to, interviewed with, and was hired by UBC without entering into an arbitration agreement. Doc. No. 53 at 8.
On November 4, 2020, Hansber, Moreno, and Chan filed a First Amended Class Action Complaint against UBC and Spherion in Kern County Superior Court, alleging violations of California's Labor Code, PAGA, and Business & Professions Code. Doc. No. 1, Ex. 1. On January 5, 2021, Spherion removed the matter to this Court pursuant to the Class Action Fairness Act, 28 U.S.C. § 1332(d). Id. On March 15, 2021, Plaintiffs filed a Second Amended Complaint which dropped Spherion and left UBC as the sole Defendant. Doc. No. 15. On April 18, 2021, UBC filed a motion to dismiss and/or strike the Second Amended Complaint, which the Court granted in part and denied in part. Doc. Nos. 18, 26. On November 2, 2021, Plaintiffs filed the operative Third Amended Complaint, alleging eight cause of action against UBC for (1) failure to pay all straight time wages; (2) failure to pay all overtime wages: (3) failure to provide meal periods; (4) failure to authorize and permit rest periods; (5) knowing and intentional failure to provide accurate itemized wage statements; (6) failure to pay all wages upon termination or separation; (7) unfair competition; and (8) civil penalties under the PAGA. Doc. No. 29.
Before Plaintiffs collectively filed their FAC, Moreno filed a representative action complaint pursuant to the PAGA in Fresno County Superior Court on June 29, 2020, Hansber filed a putative class action complaint in Kern County Superior Court on July 10, 2020, and Chan filed a putative class action complaint in Fresno County Superior Court on August 12, 2020. Doc. No. 55 at 10. After the parties met and conferred regarding the sufficiency of these separate complaints, Moreno, Hansber, and Chan agreed to amend their separate complaints and collectively file the FAC. Id.
On December 17, 2021, UBC filed a motion to join Exact and Spherion as necessary parties under Fed. R. Civ. P. 19(a), which ultimately was denied. Doc. Nos. 33, 48. On August 12, 2022, UBC filed the instant motions to compel individual arbitrations of Hansber and Moreno and to stay all proceedings pending the rulings on the motions and completion of arbitrations. Doc. Nos. 51, 52.
LEGAL STANDARD
The Federal Arbitration Act ("FAA") provides that written agreements to arbitrate disputes arising out of transactions involving interstate commerce "shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract." 9 U.S.C. § 2; Zoller v. GCA Advisors, LLC, 993 F.3d 1198, 1201 (9th Cir. 2021). Further, the FAA permits a party "aggrieved by the alleged . . . refusal to arbitrate" to petition any federal district court for an order compelling arbitration. 9 U.S.C. § 4; Van Dusen v. United States Dist. Court for the Dist. of Ariz., 654 F.3d 838, 842 (9th Cir. 2011). A district court's role is "limited to determining (1) whether a valid agreement to arbitrate exists and, if it does, (2) whether the agreement encompasses the dispute at issue." Revitch v. DIRECTV, LLC, 977 F.3d 713, 716 (9th Cir. 2020) (citing Chiron Corp. v. Ortho Diagnostic Sys., Inc., 207 F.3d 1126, 1130 (9th Cir. 2000)). If the answer to both questions is 'yes,' the district court must enforce the arbitration agreement in accordance with its terms; there is no place for discretion by the district court. Revitch, 977 F.3d at 716. Thus, "courts should order arbitration of a dispute only where the court is satisfied that neither the formation of the parties' arbitration agreement nor (absent a valid provision specifically committing such disputes to an arbitrator) its enforceability or applicability to the dispute is in issue." Granite Rock Co. v. International Bhd. of Teamsters, 561 U.S. 287, 299, 130 S.Ct. 2847, 177 L.Ed.2d 567 (2010); Revitch, 977 F.3d at 716.
If a court orders the parties to arbitration, the FAA provides for the court to stay the matter pending completion of the arbitration. See 9 U.S.C. § 3; Ziober v. BLB Res., Inc., 839 F.3d 814, 817 (9th Cir. 2016). However, when all claims in a complaint are within the scope of an arbitration agreement, the court may dismiss the entire action instead of issuing a stay. Johnmohammadi v. Bloomingdale's, Inc., 755 F.3d 1072, 1074 (9th Cir. 2014). The party seeking to compel arbitration, has the burden of proving the existence of an agreement to arbitrate by a preponderance of the evidence. Knutson v. Sirius XM Radio Inc., 771 F.3d 559, 565 (9th Cir. 2014) (citing Rosenthal v. Great W. Fin. Sec. Corp., 14 Cal. 4th 394, 413, 58 Cal. Rptr.2d 875, 926 P.2d 1061 (1996)).
DISCUSSION
The parties do not dispute that Hansber and Moreno entered into agreements to arbitrate with Exact and Spherion, respectively. Neither do the parties dispute that the FAA applies to the above agreements or that UBC may enforce them despite being a nonsignatory. However, the parties disagree as to whether UBC waived its right to arbitration, and if not, whether Hansber and Moreno's representative PAGA claims and all of Chan's claims should be stayed pending the arbitrations of Hansber and Moreno's individual claims. The Court will address each issue in turn below.
1. Waiver
Plaintiffs' Arguments
Plaintiffs argue that UBC waived its right to arbitrate because its actions were inconsistent with the right to arbitrate. Specifically, Plaintiffs claim that because UBC substantially invoked the litigation machinery by removing the matter to this Court, filing several motions, and engaging in discovery, UBC unjustifiably delayed the assertion of its right to arbitrate and, therefore, waived it. Furthermore, Plaintiffs argue that UBC delayed its assertion to arbitrate for tactical reasons and that Plaintiffs would be prejudiced if ordered to arbitrate this late in the case.
Defendant's Arguments
UBC argues it did not waive its right to arbitrate Hansber or Moreno's claims because it repeatedly asserted its right to arbitrate and has not otherwise defended against Plaintiffs' claims in a manner inconsistent with its right to arbitrate. Additionally, UBC contends that its purported delay in seeking arbitration was justified and did not result in any prejudice to Plaintiffs. Furthermore, UBC argues that policy concerns disfavor waiver of the right to arbitrate and that in any event, it is the role of the arbitrator, and not the Court, to decide any disputes regarding waiver because the parties clearly and unmistakably agreed to arbitrate the issue of waiver.
Legal Standard
The right to arbitration, like other contractual rights, can be waived. Martin v. Yasuda, 829 F.3d 1118, 1124 (9th Cir. 2016); Saint Agnes Med. Ctr. v. PacifiCare of Cal., 31 Cal. 4th 1187, 1195, 8 Cal.Rptr.3d 517, 82 P.3d 727 (2003). Under the FAA "[a] party seeking to prove waiver of a right to arbitration must demonstrate: (1) knowledge of an existing right to compel arbitration [and] (2) acts inconsistent with that existing right." Martin, 829 F.3d at 1124; see also Morgan v. Sundance, Inc., — U.S. —, 142 S. Ct. 1708, 1714, 212 L.Ed.2d 753 (2022) (holding that prejudice is no longer a condition of finding that a party waived its right to compel arbitration). Furthermore, under California law, factors that may be considered to determine whether arbitration has been waived include "(1) whether the party's actions are inconsistent with the right to arbitrate; (2) whether the litigation machinery has been substantially invoked and the 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." Saint Agnes Med. Ctr., 31 Cal. 4th at 1196, 8 Cal.Rptr.3d 517, 82 P.3d 727; see also Cox v. Ocean View Hotel Corp., 533 F.3d 1114, 1124 (9th Cir. 2008). Although "[t]here is no concrete test to determine whether a party has engaged in acts that are inconsistent with its right to arbitrate," Newirth v. Aegis Senior Cmtys., LLC, 931 F.3d 935, 941 (9th Cir. 2019); Saint Agnes Med. Ctr., 31 Cal. 4th at 1195, 8 Cal. Rptr.3d 517, 82 P.3d 727, "a party acts inconsistently with exercising the right to arbitrate when it (1) makes an intentional decision not to move to compel arbitration and (2) actively litigates the merits of a case for a prolonged period of time in order to take advantage of being in court." Newirth, 931 F.3d at 941. Conversely, "parties do not act inconsistently with a right to compel arbitration when they engage in litigation activities that do not evince a decision to take advantage of the judicial forum." Id.
Because waiver of a contractual right to arbitration is generally disfavored, any party arguing waiver of arbitration "bears a heavy burden of proof." Martin, 829 F.3d at 1124; Richards v. Ernst & Young, LLP, 744 F.3d 1072, 1074 (9th Cir. 2013); Saint Agnes Med. Ctr., 31 Cal. 4th at 1195, 8 Cal.Rptr.3d 517, 82 P.3d 727. Questions of arbitrability, such as whether a party's litigation conduct amounts to waiver of arbitration, are for "judicial determination unless the parties clearly and unmistakably provide otherwise." Martin, 829 F.3d at 1123-24; see also Morgan Stanley & Co., LLC v. Couch, 134 F. Supp. 3d 1215, 1224-25 (E.D. Cal. 2015) (finding that it is presumptively for the Court to decide whether defendant waived arbitration rights).
Discussion
As an initial matter, the Court finds that it may adjudicate the issue of waiver. The specific issue before the Court is whether UBC waived its right to arbitration through its litigation conduct. Martin, 829 F.3d at 1123-24. UBC's argument that the parties "clearly and unmistakably" agreed to have the arbitrator decide the issue of waiver is unpersuasive. Although the Ninth Circuit in Brennan v. Opus Bank held that an arbitration agreement's incorporation of the American Arbitration Association ("AAA") rules constituted "clear and unmistakable evidence" that the contracting parties agreed to arbitrate arbitrability, Brennan expressly limited its holding to the facts of its case, which involved an arbitration agreement between "sophisticated parties." Brennan v. Opus Bank, 796 F.3d 1125, 1130-31 (9th Cir. 2015) ("[W]e limit our holding to the facts of the present case, which do involve an arbitration agreement 'between sophisticated parties.' "); see also Roman v. Jan-Pro Franchising Int'l, Inc., 2022 WL 3052542, *6, 2022 U.S. Dist. LEXIS 137190, *16 (N.D. Cal. Aug. 2, 2022) (distinguishing Brennan on the ground that it does not apply to an employment contract between employer and janitors). Because the claims and evidence before the Court do not indicate that UBC's arbitration agreements mirror the facts in Brennan, the Court is not convinced that the parties "clearly and unmistakably" agreed to have the arbitrator decide the waiver issue. Therefore, the Court will decide whether UBC waived its right to arbitration through its litigation conduct. Martin, 829 F.3d at 1123-24; Roman, 2022 WL 3052542, at *6, 2022 U.S. Dist. LEXIS 137190, at *16.
Based on UBC's litigation conduct, the Court finds that UBC did not waive its right to arbitration. There is no dispute that UBC had knowledge of its right to compel arbitration, but the parties dispute whether UBC's conduct in this litigation was inconsistent with that right. Plaintiffs argue that the following conduct of UBC demonstrates that it acted in a manner inconsistent with its right to arbitration: rather than immediately moving to compel arbitration, UBC assented to the case's removal to this Court; UBC filed a motion to dismiss the Second Amended Complaint which was granted in part and denied in part; UBC filed an Answer to the Third Amended Complaint; UBC responded with objections to Plaintiffs' written discovery requests; UBC filed a motion to join Exact and Spherion as necessary parties which was ultimately denied; UBC did not file a motion to stay the case pending the Supreme Court's decision in Viking River Cruises, Inc. v. Moriana; and UBC ultimately filed its motion to compel arbitration approximately one year and seven months after the case was removed to this Court.
Upon review, the Court finds that Plaintiffs did not satisfy their "heavy burden of proof" to warrant a finding of waiver. Martin, 829 F.3d at 1124; Saint Agnes Med. Ctr., 31 Cal. 4th at 1195, 8 Cal.Rptr.3d 517, 82 P.3d 727. The record indicates that UBC notified Plaintiffs and the Court since at least April 28, 2021 of its right to arbitration. See Doc. No. 18 at 15-16. UBC's Answer to the operative Third Amended Complaint also asserts an affirmative defense that Plaintiffs' claims must be submitted to individual arbitration. Doc. No. 30 at 65, 70-71. UBC thereafter expressly notified Plaintiffs and the Court on December 8, 2021, and several times thereafter, that it intended to move to compel individual arbitrations of Plaintiffs' claims and the timing thereof. Doc. Nos. 31 at 4-5 and 49 at 4-5. UBC also served objections to Plaintiffs' written discovery requests on the grounds that Plaintiffs were required to individually arbitrate their claims. See Doc. No. 58-1, Exs. A, B. Although these statements alone are not enough to defeat a claim of waiver, Martin, 829 F.3d at 1125, other acts by UBC further indicate that it did not act inconsistent with its right to arbitration.
Given that UBC notified Plaintiffs and the Court of its right and intent to compel individual arbitrations of Hansber and Moreno's claims well before it filed its current motions, several of Plaintiffs' cases cited in support of their position (Liou v. Organifi, LLC, 2020 WL 4559184, 2021 U.S. Dist. LEXIS 24681 (S.D. Cal. Feb. 8, 2021), Roberts v. El Cajon Motors, Inc., 200 Cal. App. 4th 832, 133 Cal. Rptr.3d 350 (2011), Guess?, Inc. v. Superior Court, 79 Cal. App. 4th 553, 94 Cal.Rptr.2d 201 (2000), Kaneko Ford Design v. Citipark, Inc., 202 Cal. App. 3d 1220, 249 Cal.Rptr. 544 (1988)) are distinguishable on this basis.
As UBC notes, UBC did not extensively engage in the discovery process, given that UBC neither propounded any written discovery requests nor conducted any depositions. Additionally, UBC's written objections to Plaintiffs' discovery requests reflected only a "determination to avoid or frustrate the litigation" rather than a strategic decision to "actively litigate" the case. Newirth, 931 F.3d at 941; Chartwell Staffing Servs. v. Atl. Sols. Grp., Inc., 2020 WL 620294, *9, 2020 U.S. Dist. LEXIS 24640, *24-25 (C.D. Cal. Jan. 9, 2020) (concluding that defendants operated defensively in litigation aimed at " 'frustrat[ing] the litigation rather than' engaging in strategic, active litigation"). UBC's joinder to Spherion's removal of the case to this Court also was not an act inconsistent with UBC's right to arbitrate. See Gonsalves v. Infosys Techs., Ltd., 2010 WL 3118861, *3 n.2, 2010 U.S. Dist. LEXIS 79683, *9 n.2 (N.D. Cal. Aug. 5, 2010) (citing Saint Agnes Med. Ctr., 31 Cal. 4th at 1205, 8 Cal.Rptr.3d 517, 82 P.3d 727). Neither was the filing of UBC's motion to join Spherion and Exact as necessary parties because that motion did not address the merits of Plaintiffs' claims. Newirth, 931 F.3d at 941-42; Conde v. Open Door Mktg., LLC, 2017 WL 5172271, *5-6, 2017U.S. Dist. LEXIS 185508, *20 (N.D. Cal. Nov. 8, 2017). Although Plaintiffs point to UBC's motion to dismiss as a motion on the merits, that motion "would have proceeded irrespective of the arbitration motion" because Plaintiff Chan did not sign an arbitration agreement; thus, filing the motion to dismiss was not an act inconsistent with a right to arbitrate because Chan's claims "could not have been compelled to arbitration in the first place." Conde, 2017 WL 5172271, *6, 2017 U.S. Dist. LEXIS 185508, at *21; see also Cadena v. Am. Honda Motor Co., 2020 WL 3107797, 2020 U.S. Dist. LEXIS 104165, *13-14 (C.D. Cal. June 10, 2020).
The fact that UBC did not extensively engage in the discovery process makes several of the cases relied upon by Plaintiffs (Augusta v. Keehn & Assocs., 193 Cal. App. 4th 331, 123 Cal.Rptr.3d 595 (2011), Sobremonte v. Superior Court, 61 Cal. App. 4th 980, 72 Cal.Rptr.2d 43 (1998), Davis v. Continental Airlines, Inc., 59 Cal. App. 4th 205, 69 Cal. Rptr.2d 79 (1997)) distinguishable.
Although Plaintiffs cite several cases (Newirth v. Aegis Senior Cmtys., LLC, 931 F.3d 935 (9th Cir. 2019), Martin v. Yasuda, 829 F.3d 1118 (9th Cir. 2016), Flores v. Adir Int'l, LLC, 788 F. App'x 496 (9th Cir. 2019)) in which motions to compel arbitration were denied in part because those motions were filed after the defendant unsuccessfully attempted to use motions to dismiss claims on the merits, those cases are distinguishable because they do not involve a motion to compel arbitration asserted against a co-plaintiff like Chan who was not bound to an arbitration agreement in the first instance. Martin is also distinguishable because unlike UBC who repeatedly asserted its intent to arbitrate, the Martin defendants expressly "told the district judge and opposing counsel that they were likely 'better off' in federal court." Martin, 829 F.3d at 1126. Newirth is also distinguishable because unlike UBC, the Newirth defendant first filed a motion to compel, subsequently withdrew it, then filed a motion to dismiss which was ultimately denied, engaged in extensive discovery, and thereafter filed another motion to compel arbitration. Newirth, 931 F.3d at 938-39.
Accordingly, because UBC's actions were not inconsistent with its right to individually arbitrate Hansber and Moreno's claims, UBC did not waive its right to arbitrate. Given that Plaintiffs do not dispute that Hansber and Moreno signed arbitration agreements encompassing their claims against UBC, nor dispute that UBC may enforce them, the Court grants UBC's motions to compel individual arbitrations of Hansber and Moreno's claims.
2. Stay of Representative PAGA Claims
Defendant's Arguments
UBC argues that because Hansber and Moreno agreed to the specific terms of their respective arbitration agreements, the terms dictate that they arbitrate all their claims against UBC on an individual basis and not in a class or representative capacity. UBC further asserts that if Hansber and Moreno's individual PAGA claims are sent to arbitration, their remaining representative PAGA claims must be stayed and dismissed for lack of standing pursuant to the Supreme Court's decision in Viking River Cruises, Inc. v. Moriana, — U.S. —, 142 S. Ct. 1906, 213 L.Ed.2d 179 (2022).
Plaintiffs' Arguments
Plaintiffs argue that even if their individual claims are compelled to arbitration, their representative PAGA claims should not be dismissed in court because California case law and PAGA's statutory language and legislative history demonstrate that Plaintiffs still have standing to litigate those claims. According to Plaintiffs, the Supreme Court in Viking River exceeded its authority when it held that a plaintiff lacked standing to litigate representative PAGA claims when her individual PAGA claims were compelled to arbitration. Furthermore, given that the California Supreme Court is expected to clarify this PAGA standing issue in Adolph v. Uber Technologies, Inc., 2022 WL 1073583 (Cal. App. 4th Dist. Apr. 11, 2022), Plaintiffs request that, if Hansber and Moreno are ordered to arbitrate their individual claims, their representative PAGA claims be stayed until Adolph is decided.
Legal Standard
PAGA authorizes any "aggrieved employee" to initiate an action against a former employer "on behalf of himself . . . and other current or former employees" to obtain civil penalties that otherwise can be "recovered only by the State" in an enforcement action brought by California's Labor and Workforce Development Agency ("LWDA"). Viking River Cruises, Inc. v. Moriana, — U.S. —, 142 S. Ct. 1906, 1914, 213 L.Ed.2d 179 (2022) (quoting Cal. Lab. Code Ann. § 2699(a)). PAGA claims are "representative" in two ways: first, PAGA actions are "representative" in the sense that they are brought by employees acting as agents or proxies of the State. Id. at 1916. Second, PAGA actions are "representative" in the sense they are brought by employees acting on behalf of other employees in addition to themselves. Id.
The California Supreme Court held in Iskanian that waivers of an employee's right to bring "representative" PAGA claims in the first sense are barred under California law. See Iskanian v. CLS Transp. L.A., LLC, 59 Cal. 4th 348, 383-84, 173 Cal.Rptr.3d 289, 327 P.3d 129 (2014). The Supreme Court termed this "Iskanian's principal rule." Viking River, 142 S. Ct. at 1916. Iskanian further held that agreements to arbitrate or litigate individual PAGA claims for Labor Code violations that an employee personally suffered, separately and apart from "representative" PAGA claims in the second sense, are invalid. Iskanian, 59 Cal. 4th at 383-84, 173 Cal.Rptr.3d 289, 327 P.3d 129. The Supreme Court termed this Iskanian's "secondary rule." Viking River, 142 S. Ct. at 1916-17. In Viking River, the United States Supreme Court upheld Iskanian's "principal rule," but overturned Iskanian's "secondary rule" on the ground that it was preempted by the FAA. Viking River, 142 S. Ct. at 1923-26; see also Harper v. Char ter Commc'ns, LLC, 626 F.Supp.3d 1148, 1151-52, 2022 U.S. Dist. LEXIS 161321, *4 (E.D. Cal. Sep. 7, 2022). Thus, under Viking River, waivers of the right to assert representative PAGA claims on the state's behalf remain barred, but employees may waive the right to bring PAGA claims that are specifically premised on labor code violations they have personally suffered. See Harper, 626 F.Supp.3d at 1151, 2022 U.S. Dist. LEXIS 161321, at *4 (citing Viking River Cruises, 142 S. Ct. at 1923-26 and MacClelland v. Cellco P'ship, 609 F.Supp.3d 1024, 1037-39 (N.D. Cal. July 1, 2022)).
For purposes of PAGA standing, Viking River further held that when plaintiffs maintain representative PAGA claims in the second sense on behalf other employees, those plaintiffs must also maintain an individual PAGA claim in that action. Viking River, 142 S. Ct. at 1925 (citing Cal. Lab. Code Ann. §§ 2699(a), (c)). This is because "[w]hen an employee's own dispute is pared away from a PAGA action, the employee is no different from a member of the general public, and PAGA does not allow such persons to maintain suit." Id. (citing Kim v. Reins Int'l Cal., Inc., 9 Cal. 5th 73, 90, 259 Cal.Rptr.3d 769, 459 P.3d 1123 (2020)). Accordingly, if a plaintiff's individual PAGA claims are compelled to arbitration, that plaintiff "lacks statutory standing to continue to maintain her non-individual claims in court, and the correct course is to dismiss her remaining claims." Id.; see also Johnson v. Lowe's Home Ctrs., Ltd. Liab. Co., 630 F.Supp.3d 1352, 1358, 2022 U.S. Dist. LEXIS 171626, *11 (E.D. Cal. Sep. 21, 2022) ("The Supreme Court clearly set forth that non-individual PAGA claims should be dismissed once the individual PAGA claim is compelled to arbitration.").
Discussion
The parties do not dispute that Hansber and Moreno signed agreements to submit their individual PAGA claims to arbitration. Neither do the parties dispute the scope or validity of the arbitration agreements' waivers, under which Hansber and Moreno agreed to waive their rights to assert claims on a class or representative basis. See Doc. No. 51-2 at 6 ("All claims that are covered by this Agreement may only be brought by me or the Company on an individual basis. The Company and I agree to waive any right to make any claims on a representative or class basis to the fullest extent permitted by law."); Doc. No. 52-3 at 4 ("I also agree that covered claims will only be arbitrated on an individual basis, and that both Spherion and I waive the right to participate in or receive money from any class, collective or representative proceeding."). Instead, the parties simply disagree as to whether Hansber and Moreno can maintain statutory standing to bring representative PAGA claims on behalf of other employees if their individual PAGA claims are compelled to arbitration.
While UBC contends that Viking River directly resolves this issue, Plaintiffs argue that Viking River does not apply because it is at odds with the California Supreme Court's decision in Kim, which concluded that "[s]ettlement of individual claims does not strip an aggrieved employee of standing, as the state's authorized representative, to pursue PAGA remedies." Kim, 9 Cal. 5th at 80. Plaintiffs also highlight Justice Sotomayor's concurrence in Viking River which states "if [the] Court's understanding of state law is wrong, California courts, in an appropriate case, will have the last word." Viking River, 142 S. Ct. at 1925 (Sotomayor, S., concurring).
Notwithstanding Justice Sotomayor's concurrence and the California Supreme Court's decision in Kim, a majority of Justices—including Justice Sotomayor—held that a plaintiff lacks statutory standing to bring a representative PAGA claim without a related individual PAGA claim in that same proceeding. See Viking River, 142 S.Ct. at 1925-26; see also Radcliff v. San Diego Gas & Elec. Co., 627 F.Supp.3d 1166, 1168-69, 2022 U.S. Dist. LEXIS 165054, *8 (S.D. Cal. Sep. 12, 2022). The Supreme Court also explicitly considered Kim when reaching this holding. See Viking River, 142 S.Ct. at 1916-17, 1925. Accordingly, in light of Viking River, the Court will apply the Supreme Court's interpretation of PAGA standing to this matter. Cf. Kona Enterprises, Inc. v. Est. of Bishop, 229 F.3d 877, 884 n.7 (9th Cir. 2000) (stating that the Ninth Circuit's interpretation of state law remains binding within the Ninth Circuit in the absence of any subsequent indication from the state courts that the interpretation is incorrect). Because Hansber and Moreno's individual PAGA claims are compelled to arbitration, they lack statutory standing to maintain their remaining non-individual PAGA claims in court; therefore, those remaining claims will be dismissed. Viking River, 142 S.Ct. at 1925.
The Court is also disinclined to stay the above statutory standing issue pending the California Supreme Court's decision in Adolph v. Uber Technologies, Inc., Cal. S. Ct. Docket No. G059860. "The District Court has broad discretion to stay proceedings as an incident to its power to control its own docket." D'Lil v. Riverboat Delta King, Inc., 59 F. Supp. 3d 1001, 1020 (E.D. Cal. 2014) (citing Clinton v. Jones, 520 U.S. 681, 706, 117 S.Ct. 1636, 137 L.Ed.2d 945 (1997)). When determining whether to grant a stay, the court must weigh the competing interests, including "the possible damage which may result from the granting of a stay, the hardship or inequity which a party may suffer in being required to go forward, and the orderly course of justice measured in terms of the simplifying or complicating of issues, proof, and questions of law which could be expected to result from a stay." Id. (citing CMAX, Inc. v. Hall, 300 F.2d 265, 268 (9th Cir. 1962)). Here, despite Plaintiffs' contention that the California Supreme Court is expected to clarify the PAGA standing issue in Adolph, the Supreme Court's decision in Viking River is on point in this matter, and this Court has no assurances of when Adolph will be decided. The Court "declines to issue an indefinite stay of months, or possibly years, on the possibility that the California Supreme Court's interpretation of statutory standing will differ from the interpretation articulated in [Viking River]." Radcliff, 627 F.Supp.3d at 1172, 2022 U.S. Dist. LEXIS 165054, at *10-11; see also Dependable Highway Exp., Inc. v. Navigators Ins. Co., 498 F.3d 1059, 1066 (9th Cir. 2007) ("Generally, stays should not be indefinite in nature."). Therefore, the Court will apply Viking River and dismiss Hansber and Moreno's non-individual PAGA claims.
3. Stay of Chan's Claims
Defendant's Arguments
UBC argues that all proceedings in this litigation, including Chan's claims against UBC, should be stayed until the arbitrations of Hansber and Moreno's individual claims are complete. According to UBC, all three Plaintiffs assert identical claims against UBC involving common questions of fact and law. Therefore, even if Chan is a nonsignatory to any arbitration agreement, Hansber or Moreno's arbitrations will likely resolve significant factual and legal questions at issue in Chan's claims. Moreover, UBC claims that a discretionary stay by the Court is also warranted because a stay would not prejudice Chan but would prejudice UBC, and because a stay would best serve the orderly course of justice.
Plaintiffs' Arguments
Plaintiffs argue that the litigation of Chan's claims against UBC should not be stayed pending the competition of Hansber and Moreno's individual arbitrations. According to Plaintiffs, the Court must rely on its inherent discretionary power to control its proceedings in determining whether to stay Chan's claims. Plaintiffs assert that such a discretionary stay is not appropriate here because UBC faces no risk of irreparable injury absent a stay, the issues to be decided in Hansber and Moreno's arbitrations will not impact Chan's case, and Chan would be substantially prejudiced if the stay is granted.
Legal Standard
Where a suit presents issues referable to arbitration under a written agreement the court "shall on application of one of the parties stay the trial of the action until such arbitration has been had in accordance with the terms of the agreement." 9 U.S.C. § 3; Int'l All. of Theatrical Stage Emple. v. Insync Show Prods., Inc., 801 F.3d 1033, 1039 (9th Cir. 2015). Although it may be advisable to stay litigation among nonarbitrating parties pending the outcome of the arbitration, that decision is one left to the district court as a matter of its discretion to control its docket. Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 20 n.23, 103 S.Ct. 927, 74 L.Ed.2d 765 (1983); Portland GE v. Liberty Mut. Ins. Co., 862 F.3d 981, 986 (9th Cir. 2017); see also Congdon v. Uber Techs., 226 F. Supp. 3d 983, 990 (N.D. Cal. 2016). A "district court's inherent, discretionary power to control its proceedings should promote economy of time and effort for itself, for counsel, and for litigants." Congdon, 226 F. Supp. 3d at 990. "Where a stay is proposed, the court should weigh the competing interests that will be affected, including: the possible damage which may result from granting the stay, the hardship or inequity which a party may suffer in being required to go forward, and 'the orderly course of justice measured in terms of the simplifying or complicating of issues, proof, and questions of law which could be expected to result from a stay.' " Id. (citing CMAX, Inc. v. Hall, 300 F.2d 265, 268 (9th Cir. 1962)).
Discussion
Upon review, the Court finds that a stay of Chan's claims is not warranted. Proceeding with the litigation as to Chan's claims would not result in a waste of judicial resources. Congdon, 226 F. Supp. 3d at 991. If the Court stays the entire litigation and allows Hansber and Moreno's individual arbitrations to first proceed to completion, it is unclear what preclusive effect the arbitrations would have on Chan's claims. See Gile v. Dolgen Cal., 2022 WL 649279, *2, 2022 U.S. Dist. LEXIS 39631, *5 (C.D. Cal. Jan. 14, 2022); see also Global Live Events — In Liquidation v. Ja-Tail Enters., LLC, 2014 WL 1830998, *3, 2014 U.S. Dist. LEXIS 63963, *7-*10 (C.D. Cal. May 8, 2014) (collecting cases discussing the uncertain preclusive effects of arbitration on litigation). Such a result would, in any event, frustrate the intent of the employment contracts between UBC and Chan, as well as other direct hires Chan seeks to represent, in choosing not to arbitrate their claims in the first place. Congdon, 226 F. Supp. 3d at 991. Furthermore, the Court is not persuaded that proceeding with the litigation as to Chan's claims would in some way negatively impact or undermine the parallel arbitration proceedings, or would in some way prejudice UBC. As other courts have acknowledged, the potential for inconsistent results in this forum is insufficient to overcome such interests. See Global Live Events, 2014 WL 1830998, *3, 2014 U.S. Dist. LEXIS 63963, at *8-*11 (collecting cases) ("Some inconsistency is therefore an inevitable result of the piecemeal litigation required by the FAA."); see also Congdon, 226 F. Supp. 3d at 991 (citing Moses H. Cone, 460 U.S. at 20, 103 S.Ct. 927). Although there are some overlapping factual issues common to both the arbitrations and this litigation, there are also discrete issues that UBC itself acknowledges; that is, Hansber and Moreno's claims against UBC, and UBC's specific affirmative defenses thereto, are predicated on a joint employer theory of liability, which does not apply to Chan or the direct hires he seeks to represent. The Court is reluctant to accept UBC's argument that the parties intended individualized adjudication of Hansber and Moreno's claims, and in the same breath, argue that their actions should be impacted by parallel litigation. Congdon, 226 F. Supp. 3d at 991. Accordingly, the Court will exercise its discretion by denying UBC's motion to stay the litigation of Chan's claims pending the competition of Hansber and Moreno's arbitrations.
With respect to UBC's evidentiary objections to specific portions of the Declaration of Nang Chan (Doc. No. 53-1), the distinct circumstances surrounding Chan's claims, as compared to the claims of Hansber and Moreno, are relevant as to whether the entire case should be stayed pending the arbitrations of Hansber and Moreno. The Court is also disinclined to strike the statements of Nang that are based on his personal knowledge gained through his experiences working for UBC. Fuchs v. State Farm Gen. Ins. Co., 2016 WL 11504212, at *4, 2016 U.S. Dist. LEXIS 195658, at *10 (C.D. Cal. Nov. 14, 2016). Accordingly, the Court will overrule UBC's evidentiary objections.
While the parties appear to agree that the FAA applies to this action, UBC asserts that courts in California routinely cite to both the FAA and California Arbitration Act ("CAA") § 1281.4 when deciding whether to stay an action pending completion of court-ordered arbitration. Assuming without deciding that the CAA applies to this matter, the Court is not persuaded that CAA § 1281.4 requires a stay of Chan's claims. "Section 1281.4 does not authorize the court to stay a plaintiff's action on the basis of a pending arbitration to which the plaintiff is not a party." Leenay v. Superior Court, 81 Cal. App. 5th 553, 559, 297 Cal.Rptr.3d 204 (2022). The case UBC primarily cites for authority, Heritage Provid er Network, Inc. v. Superior Court, 158 Cal. App. 4th 1146, 70 Cal.Rptr.3d 645 (2008), did not hold that an arbitration proceeding may be used to "stay an action brought by a plaintiff who is not a party to the arbitration." Leenay, 81 Cal. App. 5th at 571 (referring to and distinguishing Heritage Provider Network). Indeed, Heritage Provider Network did not "even consider[ ] that proposition, so [it is] not authority for it. Id. Therefore, in light of Leenay, CAA § 1281.4 does not require a stay of Chan's claims.
ORDER
Accordingly, IT IS HEREBY ORDERED that: 1. Defendant's motions to compel individual arbitrations of Hansber and Moreno (Doc. Nos. 51, 52) are GRANTED; 2. Defendant's motion to dismiss Hansber and Moreno's non-individual PAGA claims for lack of statutory standing (Doc. Nos. 51, 52) is GRANTED; 3. Defendant's evidentiary objections to portions of Declaration of Nang Chan (Doc. No. 59) are OVERRULED. 4. Defendant's motion to stay all remaining proceedings in this case pending the completion of Hansber and Moreno's individual arbitrations (Doc. Nos. 51, 52) is DENIED. 5. Hansber and Moreno are ordered to arbitration with UBC forthwith in accordance with their respective arbitration agreements. IT IS SO ORDERED.