Opinion
G030088.
7-30-2003
RONALD J. ORMOND et al., Plaintiffs and Respondents, v. SUPERSHUTTLE ORANGE COUNTY, INC., etc., et al., Defendants and Appellants.
Squire, Sanders & Dempsey, George Brandon, Thomas T. Liu, Kurt Merschman, and Brian A. Cabianca, for Defendants and Appellants. Pope, Berger & Williams, Harvey C. Berger, Timothy G. Williams; Law Offices of Marc D. Roberts & Associates and Marc D. Roberts, for Plaintiffs and Respondents.
SuperShuttle Orange County, Inc., Preferred Transportation, Inc., Stephen D. Allan, and SuperShuttle International, Inc. (collectively, SuperShuttle) appeal the trial courts order denying their petition to compel arbitration on claims for overtime pay by Ronald Ormond and a potential class of other SuperShuttle van drivers. We reverse the order of the trial court and remand for entry of a new order compelling arbitration.
I
FACTS AND PROCEDURAL BACKGROUND
Plaintiffs are the named representatives of a putative class of present and former airport shuttle van drivers for SuperShuttle in Orange County. They have not yet sought class certification. Their complaint alleged three causes of action premised on illegal payroll practices, namely, that SuperShuttle: (1) unlawfully treated the drivers as exempt from the Labor Codes minimum wage and hours law; (2) failed to pay overtime wages in accordance with state law; and (3) improperly required the drivers to absorb certain "pass-through charges," for example by deducting passenger vouchers and "bounced" credit card billings from the drivers pay. Plaintiffs also alleged these payroll practices violated Business and Professions Code section 17200. Their complaint sought compensatory damages, restitution, attorney fees, punitive damages, and statutory penalties.
SuperShuttle answered the complaint and immediately moved for an order to compel plaintiffs to arbitrate. SuperShuttle relied on arbitration provisions contained in the series of collective bargaining agreements (CBAs) it negotiated with the drivers union in 1994, 1998, and 1999. Under the 1994 CBA, arbitration was required for "any grievance . . . which cannot be settled directly by the Driver . . . with management . . . ." (Italics added.) The 1998 CBA called for arbitration of "all grievances and disputes regarding the interpretation or application of this Agreement." Similarly, the 1999 CBA required arbitration of "grievances arising out of and during the term of the Agreement" (italics added) and defined "grievances" as matters "which involve[] the interpretation or application of, or the compliance with, the express provisions of this Agreement."
Below and on appeal the parties dispute whether plaintiffs particular wage claims concern matters covered by the CBAs and hence are subject to arbitration.
The trial court ordered arbitration on plaintiffs claim of unpaid minimum wages, but denied it on their overtime wage claim. The court granted in part and denied in part SuperShuttles request for arbitration on the improper deductions claim, which plaintiffs eventually dismissed. The court stayed further proceedings on the unfair business practices cause of action pending the outcome of this appeal. The sole issue on appeal is whether arbitration should have been ordered on the plaintiffs overtime wage claim.
II
DISCUSSION
An immediate appeal lies from the denial of a petition to compel arbitration. (Code Civ. Proc., § 1294, subd. (a); Coast Plaza Doctors Hospital v. Blue Cross of California (2000) 83 Cal.App.4th 677, 683 (Coast Plaza).) Arbitration is a matter of contract (First Options of Chicago, Inc. v. Kaplan (1995) 514 U.S. 938, 944, 131 L. Ed. 2d 985, 115 S. Ct. 1920; Victoria v. Superior Court (1985) 40 Cal.3d 734, 744, 222 Cal. Rptr. 1, 710 P.2d 833), and a petition to compel arbitration simply seeks specific performance of the contract. (Engineers & Architects Assn. v. Community Development Dept. (1994) 30 Cal.App.4th 644, 653.) The parties control the scope of arbitration; hence, any choices they make to limit that scope must be respected. (Ericksen, Arbuthnot, McCarthy, Kearney & Walsh, Inc. v. 100 Oak Street (1983) 35 Cal.3d 312, 323, 197 Cal. Rptr. 581, 673 P.2d 251.)
"Although the parties intent controls regarding whether they agreed to arbitrate a particular dispute, determining their intent is a question of law for the court to decide," and strong state and federal policies favoring arbitration require that "those intentions [be] generously construed as to issues of arbitrability. [Citations.]" (Cione v. Foresters Equity Services, Inc. (1997) 58 Cal.App.4th 625, 642.) Thus, "the burden must fall upon the party opposing arbitration to demonstrate that an arbitration clause cannot be interpreted to require arbitration of the dispute." (Coast Plaza, supra, 83 Cal.App.4th at pp. 686-687.) " Determinations of arbitrability, like the interpretation of any contractual provision, are subject to de novo review. [Citation.]" (Stirlen v. Supercuts, Inc. (1997) 51 Cal.App.4th 1519, 1527, fn. omitted.)
The CBAs manifest an intent to address compensation for drivers overtime hours. True, the word "overtime" is nowhere in the specific provisions of the 1998 and 1999 CBAs that cover drivers. And while a "WORK WEEK AND OVERTIME" heading appears in the 1994 CBA, that agreement makes no further mention of overtime. But a collective bargaining agreement, like any contract, must be construed as a whole. (Morgan v. City of Los Angeles Bd. of Pension Comrs. (2000) 85 Cal.App.4th 836, 844; Nish Noroian Farms v. Agricultural Labor Relations Bd. (1984) 35 Cal.3d 726, 735, 201 Cal. Rptr. 1, 677 P.2d 1170.)
Viewed as a whole, the CBAs establish a compensation scheme for all hours - regular and overtime - worked by SuperShuttles employees, drivers, and nondrivers alike. In this scheme, drivers are paid by commission (with an exception we discuss below), whereas nondrivers are paid a fixed hourly rate according to their job description. Notably, though neither party called it to the trial courts attention or to ours, the 1998 and 1999 CBAs expressly provide for overtime wages for nondrivers. Plaintiffs apparently would have us believe that when negotiating the CBAs the union and SuperShuttle either forgot to consider compensation for drivers overtime hours or consciously chose to leave the issue unresolved, in spite of resolving it for nondrivers. Neither scenario seems plausible given the drivers prominence within the union (exemplified by the fact that the 1994 CBA was negotiated solely for their benefit and had no provisions for nondrivers).
Rather, it seems clear the commission system in place for drivers was meant to apply to both their regular and overtime hours. Under each of the CBAs, drivers are paid a percentage of the total weekly net revenues they generate from passenger fares, minus certain "pass through" deductions. The percentage increases with seniority. No distinction is made between regular and overtime hours.
Plaintiffs seize on the CBAs failure to distinguish drivers overtime hours from regular hours as a blatant violation of state law requiring premium pay for overtime hours. (See Lab. Code, § 1198 [authorizing Industrial Welfare Commission (IWC) to set conditions for overtime]; Cal. Code Regs., tit. 8, § 11090, P 3(D) (IWC wage order No. 9, eff. Jan. 1, 1990 until Dec. 31, 1999) [requiring that collective bargaining agreements provide "premium wage rates for all overtime hours worked" in order to exempt union employees from standard IWC requirement of time and one-half wages for overtime labor]; Lab. Code, § 514 (eff. Jan. 1, 2000) [codifying wage order No. 9].) Plaintiffs point out that the protections afforded by state minimum wage and overtime compensation law may not be waived, "notwithstanding any agreement to work for a lesser wage . . . ." (Lab. Code, § 1194; see also Cramer v. Consolidated Freightways, Inc. (9th 2001) 255 F.3d 683, 692 [holding "the CBA must include clear and unmistakable language waiving the covered employees state right for a court even to consider whether it could be given effect"].)
Nevertheless, however compelling we might find plaintiffs case that the CBAs do not comply with state overtime law, that argument has nothing to do with the arbitrability of their overtime claim. Code of Civil Procedure section 1281.2, subdivision (c), states: "If the court determines that a written agreement to arbitrate a controversy exists, an order to arbitrate such controversy may not be refused on the ground that the petitioners contentions lack substantive merit." "A reference to the Law Revision Commissions recommendation respecting the statute establishes that the just quoted language was added to make clear that upon proceedings to compel arbitration the court is not to consider the merits of the dispute sought to be arbitrated." (A. D. Hoppe Co. v. Fred Katz Const. Co. (1967) 249 Cal. App. 2d 154, 160, 57 Cal. Rptr. 95.) As SuperShuttles counsel correctly put it below, "Theres a lot of issues with this lawsuit. But the only question before the court is who should decide them, the arbitrator or the court."
Plaintiffs raise the specter that the arbitrators lack of authority to "add to, subtract from, or in any way modify or change any of the terms of this Agreement . . . ," as stated in the CBAs, will prevent the arbitrator from conforming overtime pay, if owed, to state law. But the CBAs expressly provide the arbitrator with authority to resolve grievances involving "violations of . . . state statutes . . . ." Moreover, ""by agreeing to arbitrate a statutory claim, a party does not forgo the substantive rights afforded by the statute; it only submits to their resolution in an arbitral, rather than a judicial, forum."" (Circuit City Stores, Inc. v. Adams (2001) 532 U.S. 105, 122-123, 149 L. Ed. 2d 234, 121 S. Ct. 1302.)
In sum, because the CBAs create a compensation scheme applicable to all hours worked by SuperShuttle drivers, plaintiffs claim for overtime wages for a portion of those hours is clearly a grievance within the scope of the CBAs. Any doubt on this point vanishes upon consideration of the payroll registers SuperShuttle introduced below, which unfortunately received little attention from the court or the parties. The registers, when read together with the CBAs, show the parties intended to account for overtime hours in the drivers compensation package.
Extrinsic evidence may be admitted to explain ambiguities in a contract. (Winet v. Price (1992) 4 Cal.App.4th 1159, 1165.) The threshold determination of ambiguity is a question of law subject to independent appellate review. (Ibid. ; see Eisenberg et al. , Cal. Practice Guide: Civil Appeals and Writs (The Rutter Group 2002) P 8:67.2, p. 8-28.) If the extrinsic evidence admitted to explain an ambiguity is not conflicting, we interpret the meaning of the contract as a matter of law. (Eisenberg et al., supra, Civil Appeals and Writs, P 8:67, p. 8-28; see e.g., Golden West Baseball Co. v. City of Anaheim (1994) 25 Cal.App.4th 11, 22.)
Even if the CBAs might be considered ambiguous on whether the commission system was intended to compensate drivers for their overtime hours, the payroll registers leave no doubt the parties accounted for overtime in the CBAs. The registers record driver compensation that was paid under an alternative to the commission system. This alternative was expressly provided for in the 1998 and 1999 CBAs. Those CBAs describe a "minimum wage make-up guarantee," which plaintiffs do not dispute has been paid at all relevant times since the 1994 CBA. The "minimum wage make-up guarantee" applied only to SuperShuttle drivers, not nondrivers. The guarantee states, in both the 1998 and 1999 CBAs: "In the event that a drivers earned weekly commission falls below that of federal and/or state minimum wage, the driver shall be paid a weekly wage based on hours worked and the current minimum wage as established under state and federal labor law. (The driver will be paid whichever is greater before taxes, the earned commission rate or the current minimum wage.)" Put differently, "when a drivers earned commission exceeds the properly computed minimum wage rate, the driver will receive the commission in lieu of the minimum wage make-up guarantee."
The payroll registers introduced by SuperShuttle show the minimum wage make-up guarantee was applied as means to assure drivers were paid overtime wages. Each weekly register recorded a host of information: the names of each driver, their commission rate, the net revenue generated by the driver for the week, the commission due the driver, the total number of hours worked by the driver, the overtime hours worked, the amount that would be due the driver at minimum wage for his "Regular" hours, the amount that would be due the driver at minimum wage multiplied by 1.5 for his "OT" hours, and - if the minimum wage total is greater than the commission total - the "minimum wage make-up" amount owed the driver.
Plaintiffs point to a host of asserted problems with this method of calculating overtime pay, alleging it accounts only for overtime hours in excess of 40 hours per week instead of greater than 8 hours per day, that it fails to establish a baseline "regular rate of pay" on which overtime can be properly calculated, and that it fails to accord the drivers the "minimum wage plus" for their regular hours that is required to exempt employees subject to a collective bargaining agreement from standard overtime pay rates. (See Lab. Code, § 510; Cal. Code Regs., tit. 8, § 11090, P 3(A); see also Cal. Div. of Labor Standards Enforcement, Enforcement Policies and Interpretations Manual (Oct. 1998) pp. 84-90.) But again, plaintiffs substantive attacks on the manner in which overtime compensation was paid have no bearing on the question of arbitrability. Because the CBAs address how compensation is to be paid for overtime hours - either by commission or through the minimum wage make-up guarantee - the subject of overtime is clearly within the purview of the CBAs. Plaintiffs must therefore arbitrate their overtime wage claims.
The authorities plaintiffs rely on to reach a contrary conclusion are inapposite. None address the arbitrability of a dispute. For instance, the court in Lujan v. Southern California Gas Co. (2002) 96 Cal.App.4th 1200 reached the merits of the plaintiffs overtime claims, which bear some similarity to those of the drivers here, but did so only after holding the defendants arbitration contention was waived "since the issue was not first raised in the trial court and the collective bargaining agreement is not part of the record . . . ." (Id. at p. 1205, fn. 3.)
Likewise, Livadas v. Bradshaw (1994) 512 U.S. 107, 129 L. Ed. 2d 93, 114 S. Ct. 2068, Lingle v. Norge Div. of Magic Chef, Inc. (1988) 486 U.S. 399, 100 L. Ed. 2d 410, 108 S. Ct. 1877, Caterpillar, Inc. v. Williams (1987) 482 U.S. 386, 96 L. Ed. 2d 318, 107 S. Ct. 2425, Gregory v. SCIE, LLC (9th Cir. 2003) 317 F.3d 1050, Balcorta v. Twentieth Century-Fox Film Corp. (9th Cir. 2000) 208 F.3d 1102, and Rawson v. Tosco Refining Co. (1997) 57 Cal.App.4th 1520 have nothing to do with whether the parties to a CBA agreed to arbitrate a dispute. Rather, these cases deal with whether section 301 of the National Labor Relations Act (NLRA, codified at 29 U.S.C. § 185(a)) preempts state law, requiring jurisdiction of the parties dispute in federal court instead of state court. Here, no party suggests California labor law is preempted by the NLRA, but instead dispute whether an arbitrator or a California trial court must decide plaintiffs overtime claims. Because the CBAs cover the issue of compensation for overtime labor, as we have discussed, and because the parties agreed to arbitration of all disputes arising out of the CBAs, the plaintiffs overtime wage claim must be arbitrated.
III
DISPOSITION
The order of the trial court denying defendants petition to compel arbitration is reversed. On remand, the trial court shall enter an order compelling arbitration of plaintiffs overtime claims.
WE CONCUR: OLEARY, ACTING P. J. IKOLA, J. --------------- Notes: "Non-Driver Overtime: Overtime shall be paid for on the basis of time and one-half (1 1/2 x) the employees straight time hourly rate for all hours worked in excess of forty (40) hours in any one (1) week." (1998 and 1999 CBAs.)