Crestwood Behavioral Health, Inc. v. Lacy

• Citation: 285 Cal.Rptr.3d 477,70 Cal.App.5th 560
• Decision Date: 19 October 2021
• Docket Number: A158830
• Parties: CRESTWOOD BEHAVIORAL HEALTH, INC., Plaintiff and Respondent, v. Deeveria LACY, Defendant and Respondent; Lilia García-Brower, as Labor Commissioner, etc., Movant and Appellant.
• Court: California Court of Appeals

70 Cal.App.5th 560

285 Cal.Rptr.3d 477

CRESTWOOD BEHAVIORAL HEALTH, INC., Plaintiff and Respondent,

v. Deeveria LACY, Defendant and Respondent;Lilia García-Brower, as Labor Commissioner, etc., Movant and Appellant.

A158830

Court of Appeal, First District, Division 3, California.

Filed October 19, 2021

State of CA, Dept. of Industrial Relations, Division of Labor Standards Enforcement, Miles E. Locker, Phoebe P. Liu, and Adalberto Corres for Appellant.

Littler Mendelson, Jennifer J. Walt and Bianca Rodriguez for Plaintiff and Respondent.

Chou, J.^* Deeveria Lacy, a former employee of respondent Crestwood Behavioral Health, Inc. (Crestwood), filed a retaliation complaint against Crestwood with appellant Lilia Garcia-Brower, in her official capacity as the California Labor Commissioner (Labor Commissioner or Commissioner), pursuant to Labor Code section 98.7, subdivision (a).¹ After the Commissioner notified Crestwood of its investigation of Lacy's complaint, Crestwood filed a petition to compel arbitration against Lacy but did not include the Commissioner as a party. In granting the petition, the trial court not only compelled Lacy to arbitrate her retaliation complaint, it also stayed the Commissioner's investigation pending the completion of that arbitration.

Approximately 100 days after Crestwood alerted her to the trial court's ruling, the Labor Commissioner moved ex parte to intervene so she could vacate the order. After requiring the Commissioner to file a noticed motion, the trial court denied her motion to intervene because it was untimely and because the order staying the Commissioner's investigation did not impair or impede her ability to protect her interest in Lacy's retaliation complaint. As a result, the court denied the Commissioner's motion to vacate that order as moot. We conclude that the motion to intervene was timely and that the order staying the Commissioner's investigation impaired her ability to vindicate the public interest. We therefore reverse.

BACKGROUND

Crestwood is a provider of mental health services. Lacy worked in Crestwood's San Francisco facility as a recovery coach. When Lacy joined Crestwood, she signed and agreed to Crestwood's "Dispute Resolution & Arbitration" policy (arbitration policy). Under that policy, "Crestwood, as well as every employee of Crestwood, agree to submit unresolved employment-related legal disputes to an impartial, objective individual called an arbitrator.... [¶] Arbitration is agreed to in lieu of a civil action before a judge or jury, and the arbitrator's decision is final and binding." (Some underlining omitted.)

Crestwood terminated Lacy after she allegedly complained to a co-worker about being assaulted on the job. On January 7, 2019, Lacy filed a retaliation complaint against Crestwood with the Labor Commissioner. The Commissioner accepted the complaint and began an investigation pursuant to section 98.7, subdivision (a). On January 22, 2019, the Commissioner sent a letter, notifying Crestwood of Lacy's complaint and the Commissioner's investigation of that complaint.

After contacting Lacy and her attorney to inform them of its intent to arbitrate, Crestwood also informed the Labor Commissioner about the arbitration policy. The Commissioner responded that it was not bound by the policy and that it would continue to investigate Lacy's complaint.

Crestwood then filed a "Petition to Compel Arbitration and for a Stay of DLSE Proceedings" (petition). On February 25, 2019, Crestwood's attorney notified the Labor Commissioner of this petition "to compel Ms. Lacy to arbitrate issues she asserted in" her retaliation complaint. The Commissioner agreed to suspend her investigation of Lacy's complaint pending a ruling on the petition by the trial court. Crestwood did not, however, provide the Commissioner with a copy of the petition itself or inform the Commissioner that it was moving for a stay of all DLSE proceedings, including the investigation.

Lacy opposed the petition, arguing that: (1) Crestwood failed to provide Lacy with notice of its intent to arbitrate; (2) the Labor Commissioner had jurisdiction over her retaliation claims under sections 6307 and 6312 ; and (3) the cases cited by Crestwood only applied to collective bargaining agreements. The trial court granted the petition and "stayed" "the DLSE proceedings ... pending the arbitration of" Lacy's claims (arbitration order). On April 22, 2019, Crestwood sent a copy of the arbitration order to the Commissioner by email and regular mail.

On July 31, 2019, the Labor Commissioner filed an ex parte application for leave to intervene so it could move to vacate the arbitration order. The trial court denied the application because there were no grounds for ex parte relief and "advised the Commissioner to file a noticed motion" to intervene. The Commissioner then filed a motion for leave to intervene (intervention motion) and a motion to vacate or, in the alternative, for reconsideration (motion to vacate) on August 12, 2019.

The trial court denied the intervention motion. First, the court found the motion untimely. According to the court, the Labor Commissioner "was placed on notice on February 25, 2019 that Crestwood had filed a petition to compel arbitration of" Lacy's claims, "which were then pending solely before the Commission .... In response, the Commissioner voluntarily suspended her investigation pending the Court's resolution of that petition. The Court granted the petition on April 17, 2019, fully resolving the entire matter before it. Although the Commissioner evidently had a later change of heart, her motion, filed on August 12, comes several months too late."

Second, the court found that the arbitration order did not impair or impede the Labor Commissioner's ability to protect her interest in Lacy's retaliation complaint. ( Code Civ. Proc., § 387, subd. (d)(1)(B).) According to the court, "nothing in" its "order granting Crestwood's petition to compel arbitration precludes the Commissioner from exercising" its statutory powers under section 98.7. "Rather, it is a question of timing and priority" because the order only stays the Commissioner's "investigation ... pending the conclusion of the contractually agreed-upon arbitration."

Finally, the court held that, under Sonic-Calabasas A, Inc. v. Moreno (2013) 57 Cal.4th 1109, 163 Cal.Rptr.3d 269, 311 P.3d 184 ( Sonic II ), the arbitration policy supplanted the Labor Commissioner's authority to investigate and act on Lacy's retaliation complaint under sections 98.7 and 98.74. Otherwise, "employees who are parties to binding arbitration agreements could routinely circumvent those agreements, or at the very least ‘impose significant delays in the commencement of arbitration,’ by filing complaints with the Labor Commissioner." In reaching this conclusion, the court found that Preston v. Ferrer (2008) 552 U.S. 346, 128 S.Ct. 978, 169 L.Ed.2d 917 ( Preston ), rather than Equal Employment Opportunity Com. v. Waffle House (2002) 534 U.S. 279, 122 S.Ct. 754, 151 L.Ed.2d 755 ( Waffle House ), controlled.

Because it denied the intervention motion, the trial court took the motion to vacate "off calendar as moot." The Labor Commissioner timely appealed. (See Noya v. A.W. Coulter Trucking (2006) 143 Cal.App.4th 838, 841, 49 Cal.Rptr.3d 584 ["An order denying a motion to intervene is appealable when it finally and adversely determines the right of the moving party to proceed in the action"].)

DISCUSSION

I.

The Intervention Motion

Mandatory intervention is governed by Code of Civil Procedure section 387, subdivision (d)(1) —which "should be liberally construed in favor of intervention." ( Simpson Redwood Co. v. State of California (1987) 196 Cal.App.3d 1192, 1200, 242 Cal.Rptr. 447.). Under that section, "a party's proposed intervention must be timely." ( Lofton v. Wells Fargo Home Mortgage (2018) 27 Cal.App.5th 1001, 1012, 238 Cal.Rptr.3d 626 ( Lofton ).) If timely, then the proposed intervenor, to establish mandatory intervention under subdivision (d)(1)(B),² must show (1) " ‘an interest relating to the property or transaction which is the subject of the action’ " ( Siena Court Homeowners Assn. v. Green Valley Corp. (2008) 164 Cal.App.4th 1416, 1423, 79 Cal.Rptr.3d 915 ( Siena Court ); italics omitted); (2) "he or she ‘is so situated that the disposition of the action may as a practical matter impair or impede’ " his or her " ‘ability to protect that interest’ " ( id. at p. 1424, 79 Cal.Rptr.3d 915 ); and (3) he or she is not " ‘adequately represented by the existing parties’ " ( ibid. ).

Code of Civil Procedure "[s]ection 387 was modeled after and is ‘virtually identical’ to rule 24 of the Federal Rules of Civil Procedure." ( Ziani Homeowners Assn. v. Brookfield Ziani LLC (2015) 243 Cal.App.4th 274, 280–281, 196 Cal.Rptr.3d 399 ( Ziani ); see Siena Court , supra , 164 Cal.App.4th at p. 1423, 79 Cal.Rptr.3d 915 [ Code of Civil Procedure section 387, subdivision (d)(1) " ‘is in substance the exact counterpart to rule 24(a) of the Federal Rules of Civil Procedure ’ "].) Thus, "[i]n assessing [the] requirements" for mandatory intervention, "we may take guidance from federal law." ( Edwards v. Heartland Payment Systems, Inc. (2018) 29 Cal.App.5th 725, 732, 240 Cal.Rptr.3d 815 ( Edwards ).)

The Labor Commissioner moved for mandatory intervention under Code of Civil Procedure section 387, subdivision (d)(1)(B). Crestwood does not appear to dispute that the Commissioner has an interest relating to the transaction which is the subject of this action. Nor could it. The arbitration order, by staying all DLSE proceedings relating to Lacy's retaliation complaint, bars the Commissioner from taking any further action under section 98.7 pending the arbitration. Crestwood also does not claim the Commissioner is adequately represented by itself or Lacy. Instead, Crestwood contends the intervention motion was not timely and the arbitration order did not impair or impede the ability of...