Opinion
B206430.
6-25-2009
LINDSEY R. BLUNT et al., Plaintiffs and Respondents, v. VALLEY BALL MANAGEMENT, LLC, Defendant and Appellant.
Morris Polich & Purdy, Maureen M. Home, Richard H. Nakamura Jr., David J. Vendler and Dean A. Olson for Defendant and Appellant. Knapp, Petersen & Clarke and Stephen M. Harris for Plaintiffs and Respondents.
Not to be Published in the Official Reports
Lindsey R. Blunt and Melissa Arfat filed this putative class action against Valley Ball Management, LLC and other defendants. Valley Ball Management appeals from the trial courts denial of a petition to compel arbitration. We affirm.
BACKGROUND
The complaint alleges that plaintiffs Blunt and Arfat worked as dancers for several defendants including Valley Ball Management, each of which is engaged in providing "live nude, semi-nude and/or bikini dance entertainment" to "adult members of the general public." On November 5, 2007, plaintiffs filed a putative class action lawsuit against defendants for violation of various provisions of the Labor Code and associated regulations, as well as violation of Business and Professions Code section 17200. Plaintiffs allege that they and the members of the putative class (who also work as dancers for defendants) are defendants employees and that defendants fail to pay the minimum wage and overtime, take unlawful deductions from dancers wages, unlawfully collect dancers tips, and engage in other unlawful practices.
In response to the complaint, Valley Ball Management filed a petition to compel arbitration. Attached to the petition were a "Dancer License Agreement" (license agreement) and an arbitration agreement, both signed by Arfat. In a section entitled "Business Relationship of the Parties," the license agreement states that the relationship between Arfat and Valley Ball Management "is that of licensee and licensor," that "the creation and maintenance" of such a relationship is a "material and non-severable term" of the license agreement, and that neither the license agreement nor the relationship so-created "shall be interpreted as creating an employer/employee relationship." The arbitration agreement provides that "any dispute arising out of the business relationship" between Arfat and Valley Ball Management, "including without limitation . . . any wage and hour matter," shall be submitted "to binding arbitration at JAMS."
No other agreements were attached to the petition to compel arbitration. Valley Ball Management did, however, attach its general managers declaration, stating that although he has been "unable to locate the licensing file for `Lindsay R. Blunt," Valley Ball Managements custom and practice is "to enter into dancer license agreements and arbitration agreements with all of the dancers."
Plaintiffs opposed the petition on several grounds. They argued that, under the standards set by applicable Supreme Court case law, they are employees rather than independent contractors. On that basis, plaintiffs argued that the arbitration agreement is unconscionable and unenforceable because it violates the standards for arbitration agreements between employers and employees. As to Blunt, plaintiffs further contended that the petition should be denied because defendants had failed to produce any arbitration contract to which she is a party. And because the petition should be denied as to Blunt, plaintiffs argued that it should also be denied as to Arfat pursuant to Code of Civil Procedure section 1281.2, which grants the trial court discretion to deny a petition to compel arbitration if "[a] party to the arbitration agreement is also a party to a pending court action . . . with a third party, arising out of the same transaction or series of related transactions and there is a possibility of conflicting rulings on a common issue of law or fact."
The trial court denied the petition, reasoning, in part, that certain terms of the arbitration agreement were unconscionable. Valley Ball Management timely appealed.
DISCUSSION
Valley Ball Management argues that the unconscionability standards that apply to arbitration agreements between employers and employees under Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83 (Armendariz) and its progeny do not apply here because Arfat is not an employee. Valley Ball Managements sole argument for the conclusion that Arfat is not an employee, however, is that the license agreement says so. We disagree because, although "[t]he terms of a formal written contract between the parties may give some indication of the nature of their relationship," such "contractual terms are not conclusive on the issue." (3 Witkin, Summary of Cal. Law (10th ed. 2005) Agency & Employment § 42, p. 80; see also Lewis v. Constitution Life Co. (1950) 96 Cal.App.2d 191, 193, 196 [representative of insurance company was an employee even though his contract stated that "[n]othing contained herein shall be construed to create the relationship of employer and employee"].) Valley Ball Managements argument therefore fails as a matter of law—Arfat might be an employee (an issue on which we express no opinion) even though the license agreement says she is not an employee. Valley Ball Management never articulates the proper standard for determining whether an individual is an employee or argues that Arfat (or Blunt) fails to meet that standard.
The remainder of Valley Ball Managements arguments concerning unconscionability fail because they are either based on the prior conclusion that Arfat is not an employee or are so undeveloped as to constitute a waiver. On the issue of procedural unconscionability, Valley Ball Management expressly relies on the proposition that "Arfat . . . was not an employee."
On the issue of substantive unconscionability, Valley Ball Managements argument concerning cost sharing is based entirely on the claim that "[t]he strict rules prohibiting cost[]sharing have not been extended outside the employee-employer context." The argument thus rests on the implicit premise that Arfat is not an employee.
Also on the issue of substantive unconscionability, Valley Ball Managements argument concerning discovery is insufficiently developed to show that the trial court erred. Valley Ball Management accurately cites Martinez v. Master Protection Corp. (2004) 118 Cal.App.4th 107, 118-119 (Martinez ), for the proposition that "limited discovery" is not "necessarily per se unlawful." (Italics added.) But Martinez indicates that limited discovery often is unlawful, particularly in the employment context, depending upon the precise nature of the allegations and the parties consequent discovery needs. (Martinez, supra, 118 Cal.App.4th at p. 118.) Valley Ball Management never argues the issue in the manner that would be required under Martinez, i.e., by describing the nature of the allegations, the nature of the evidence that Arfat might need in order to prove them, and the likelihood that she can assemble the necessary evidence without expanded discovery. Valley Ball Management also points out that "under the JAMS [r]ules, Arfat could seek additional discovery" but never articulates which kinds of additional discovery might be available, which kinds Arfat might need, or what threshold showings she would have to make in order to get them. For all of these reasons, we conclude that Valley Ball Management has not shown that the trial court erred by determining that the discovery permitted by the arbitration agreement is inadequate under Armendariz.
Valley Ball Management asserts that in the trial court Arfat "never explained why" the discovery available under the arbitration agreement "was insufficient in this case." Assuming for the sake of argument that the assertion is correct, it does not relieve Valley Ball Management of its burden as appellant to demonstrate that the trial court erred. (Winograd v. American Broadcasting Co. (1998) 68 Cal.App.4th 624, 631 [the trial courts rulings are presumed to be correct]; State Farm Fire & Casualty Co. v. Pietak (2001) 90 Cal.App.4th 600, 610 [the appellant bears the burden of demonstrating error].) That is, given the trial courts conclusion that the discovery is insufficient (and notwithstanding Arfats putative failure to explain why that is so), it is Valley Ball Managements burden on appeal to explain why it is sufficient. Valley Ball Management has not carried that burden.
In its reply brief, Valley Ball Management purports to argue that the arbitration agreement is enforceable even "assuming for the sake of argument[] that Armendariz applies." Arguments raised for the first time in the reply brief are waived unless the appellant shows good cause for not having raised them earlier, and Valley Ball Management has not shown good cause. (Neighbours v. Buzz Oates Enterprises (1990) 217 Cal.App.3d 325, 335, fn. 8; Campos v. Anderson (1997) 57 Cal.App.4th 784, 794, fn. 3.) In any event, even in its belated argument that the arbitration agreement is enforceable under Armendariz, Valley Ball Management continues to rely on the premise that Arfat is not an employee.
DISPOSITION
The order is affirmed. Respondents shall recover their costs of appeal.
We concur:
MALLANO, P. J.
MILLER, J.