Chuc v. City Fibers, Inc.

• Decision Date: 17 May 2021
• Docket Number: B299854,B301008
• Parties: EDWIN ROGELIO XULU CHUC, Plaintiff and Respondent, v. CITY FIBERS, INC. et al., Defendants and Appellants.
• Court: California Court of Appeals Court of Appeals

EDWIN ROGELIO XULU CHUC, Plaintiff and Respondent, v. CITY FIBERS, INC. et al., Defendants and Appellants.

B299854

B301008

COURT OF APPEAL OF THE STATE OF CALIFORNIA SECOND APPELLATE DISTRICT DIVISION SEVEN

May 17, 2021

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

(Los Angeles County Super. Ct. No. 18STCV04741)

APPEAL from an order of the Superior Court of Los Angeles County, Rafael A. Ongkeko, Judge. Reversed and remanded.

Hill, Farrer & Burrill and E. Sean McLoughlin for Defendant and Appellant, City Fibers, Inc.

Rutan & Tucker, Steven J. Goon, Brandon L. Sylvia and Michael J. Rossiter for Defendants and Appellants, PriorityWorkforce, Inc., Workforce Outsourcing, Inc. and Geneva Staffing, Inc.

Bibiyan Law Group and David D. Bibiyan for Plaintiff and Respondent.

____________________

PriorityWorkforce, Inc., Workforce Outsourcing, Inc. and Geneva Staffing, Inc. (collectively Priority), related employment agencies that provide temporary workers to businesses throughout the United States, and City Fibers, Inc. appeal the order denying their motion to compel Edwin Rogelio Xulu Chuc (Xulu) to arbitrate his individual wage and hour claims, which Xulu filed as part of a putative class action lawsuit in superior court. Priority and City Fibers contend the court erred in concluding, because Xulu had signed two different arbitration agreements with conflicting provisions at about the same time, there was no meeting of the minds with respect to arbitration. We agree and reverse. Construing the two agreements together as required by Civil Code section 1642, an agreement to arbitrate employment-related disputes unquestionably exists, subject to any defenses to enforcement advanced by Xulu.

FACTUAL AND PROCEDURAL BACKGROUND

Xulu began working on assignment in October 2016 as a machine operator for City Fibers, a recycling services operator and client of Priority, at City Fibers's Vernon facility. His employment was terminated on June 14, 2018.

1. Xulu Signs Four Agreements To Arbitrate

As part of the hiring process and in advance of any assignment, on September 26, 2016 PriorityWorkforce had Xulu sign two documents written in Spanish, a Mutual Agreement to Arbitrate Claims (Mutual Agreement) and an Employment At-Will and Arbitration Agreement (Employment Agreement). The Mutual Agreement, but not the Employment Agreement, had a line for the signature of a company representative. Martha Rubio, human resources director at PriorityWorkforce, signed the agreement as Priority's representative.

For reasons not explained, Xulu was asked to, and did, sign another set of the same two documents on February 8, 2017 at Priority's offices. The February 8, 2017 Mutual Agreement was countersigned by a Priority representative, identified by Rubio as Caroline Tinoco, a PriorityWorkforce recruiter. The parties agree the text of the two sets of documents is identical and the February 8, 2017 documents superseded the September 26, 2016 set.

The Mutual Agreement provides for binding arbitration as the sole and exclusive remedy for all claims between the parties and defines claims to mean "all past, present, and future claims, disputes, and controversies of any nature in any way arising out of, relating to, or associated with Employee's employment with Employer." The Employment Agreement similarly provides for binding arbitration as "the sole and exclusive means to resolve all disputes that may arise out of or be related in any way to my employment, including but not limited to the termination of my employment and my compensation."

Xulu asserts he signed the documents on each occasion without reading or understanding them. He does not dispute it is his signature on the agreements.

2. Xulu's Class Action and Representative Action Complaint

On November 13, 2018 Xulu filed a complaint against City Fibers, PriorityWorkforce, Workforce Outsourcing and Geneva Staffing alleging individual and putative class claims for failure to pay overtime wages, failure to pay minimum wages, failure to provide meal periods, failure to provide rest periods, failure to pay wages due at termination, wage statement violations, failure to indemnify employees for necessary expenditures and unfair business practices. Xulu filed a first amended complaint on February 19, 2019 realleging the same eight individual and putative class causes of action in his original complaint and adding new representative causes of action for civil penalties under the Labor Code Private Attorneys General Act of 2004 (PAGA) (Lab. Code, § 2698 et seq.) for violations of a host of Labor Code provisions.

3. The Demand To Arbitrate and Motion To Compel Arbitration

Priority and City Fibers on January 3, 2019 submitted a demand for arbitration with JAMS Mediation, Arbitration, and ADR Services. The demand attached both the September 26, 2016 and February 8, 2017 iterations of the Employment Agreement signed by Xulu as the basis for arbitration. The demand did not refer to the provisions for arbitration in the parties' Mutual Agreement. After being served with the demand, Xulu through his attorney notified JAMS he was not a party to a valid or enforceable agreement to arbitrate.

On March 12, 2019 Priority filed in Xulu's superior court action a motion for an order compelling Xulu to submit his individual claims to binding arbitration. Priority's motionattached as the basis for an order to arbitrate the September 26, 2016 and February 8, 2017 iterations of the Mutual Agreement signed by Xulu and countersigned by a PriorityWorkforce representative. Two days later City Fibers filed a petition to compel arbitration and a joinder in Priority's motion. City Fibers also relied on the two signed copies of the Mutual Agreement and, like Priority, omitted any reference to the arbitration provisions in the Employment Agreements signed by Xulu.

In his opposition to the motion and petition, filed April 5, 2019, Xulu first argued no enforceable agreement to arbitrate existed because he had signed two separate agreements to arbitrate on September 26, 2016 and again on February 8, 2017 with material differences, which made it impossible to know the terms of the parties' purported agreement. Specifically, Xulu contended there were contradictory provisions in the two forms relating to the extent to which the Federal Arbitration Act (FAA) or California law governed the procedures for arbitration, the method for selecting the arbitrator, the extent of permissible discovery, responsibility for payment of fees and costs and the location of the arbitration proceedings. In support of this argument Xulu relied upon Ragab v. Howard (10th Cir. 2016) 841 F.3d 1134, in which the court majority held, applying Colorado law regarding contract formation, where the parties during their business relationship had executed six agreements containing conflicting arbitration provisions, there was no meeting of the minds as to essential terms and, therefore, no enforceable agreement to arbitrate.

Xulu also argued in his opposition any purported agreement to arbitrate was voidable based on fraud; unconscionable, both procedurally and substantively; and, in anyevent, inapplicable to nonsignatories City Fibers, Workforce Outsourcing and Geneva Staffing.¹

In a reply memorandum Priority contended, although both documents were dated February 8, 2017, the Mutual Agreement was completed after the Employment Agreement and, because it contained an integration clause, was the operative agreement to arbitrate between the parties. As evidence for this assertion, Priority submitted a supplemental declaration from Rubio, who described Priority's standard practice with respect to having temporary workers execute arbitration agreements. "The Company's policy and practice when obtaining paperwork from contingent workers was and is to provide the workers with the required paperwork, and provide them ample time to review and sign the documents. Once the worker signs the documents, and returns them to the Company representative, Priority's representative reviews the paperwork to ensure all required signatures are present, and countersign[s] any documents as necessary." Because only the Mutual Agreement required both the employer's and the worker's signature and the general practice was for the employer to countersign the Mutual Agreement after the worker had finished all documents, Priority argued, the Mutual Agreement was necessarily completed after the Employment Agreement, which was effective on the worker's signature.

In its reply Priority also argued, even if the agreements were signed concurrently, Xulu's agreement to arbitrate employment disputes was enforceable. Analyzing the two documents, Priority insisted they contained nearly identical terms and any minor differences were properly presented to the arbitrator for resolution.

After receiving the initial round of briefing, the superior court ordered supplemental briefing to address the interplay of the Employment Agreement and the Mutual Agreement and, in particular, Xulu's argument that, applying fundamental principles of contract formation, there had been no meeting of the minds.

4. The Superior Court's Ruling

The superior court denied Priority's motion, finding there had been no meeting of the minds regarding arbitration. The court first rejected Priority's argument the Mutual Agreement was the governing document because it was executed after the Employment Agreement, concluding Rubio's declaration concerning Priority's standard practice regarding countersigning documents was insufficient to carry Priority's burden on the timing issue. The court explained, "It is just as reasonable to infer that at the same...