Evenskaas v. Cal. Transit, Inc.

Decision Date15 July 2022
Docket NumberB308354
Parties David EVENSKAAS, Plaintiff and Respondent, v. CALIFORNIA TRANSIT, INC., et al., Defendants and Appellants.
CourtCalifornia Court of Appeals Court of Appeals

Dunn DeSantis Walt & Kendrick, LLP, Kevin V. DeSantis, San Diego, and Bradley Lebow for Defendants and Appellants.

Kabateck LLP, Brian S. Kabateck, Los Angeles, Anastasia K. Mazzella, Shant A. Karnikian, Los Angeles, and Jerusalem F. Beligan ; Law Offices of Eric A. Boyajian, APC, Eric A. Boyajian, Glendale, and Amaras Zagarian for Plaintiff and Respondent.

SEGAL, J.

INTRODUCTION

The Americans with Disabilities Act of 1990 (ADA) ( 42 U.S.C. § 12101 et seq. ) requires any public entity that operates a public transportation system to provide certain paratransit services to individuals with disabilities. (See id. , § 12143.)1 Access Incorporated Services (not a party to this action) is the public entity that administers paratransit services required by the ADA in Los Angeles County. Access, in turn, contracts with California Transit, Inc. to provide those paratransit services in parts of the county.

David Evenskaas worked as a driver for California Transit. After California Transit terminated his employment, Evenskaas filed this wage and hour class action against California Transit; its owner, Timmy Mardirossian; and the company that administered California Transit's payroll, Personnel Staffing Group, LLC (collectively, the California Transit defendants). Because Evenskaas signed an arbitration agreement, in which he agreed to arbitrate all claims arising from his employment and waived his right to seek class-wide relief, the California Transit defendants filed a motion to compel arbitration.

The trial court denied the motion. The court ruled California law, rather than the Federal Arbitration Act (FAA) ( 9 U.S.C. § 1 et seq. ), applied to the agreement because the agreement did not involve interstate commerce. The court further ruled that, under the California Supreme Court's decision in Gentry v. Superior Court (2007) 42 Cal.4th 443, 64 Cal.Rptr.3d 773, 165 P.3d 556 ( Gentry ), Evenskaas's waiver of his right to bring class action claims was unenforceable.

The California Transit defendants appeal, contending the FAA applies to the arbitration agreement. They are correct. Because the paratransit services California Transit hired Evenskaas to provide involve interstate commerce for purposes of the FAA, the FAA applies to the arbitration agreement and preempts the Gentry rule that certain class action waivers in employment arbitration agreements are unenforceable. Therefore, we reverse.

FACTUAL AND PROCEDURAL BACKGROUND
A. California Transit Provides Federally Mandated Paratransit Services

Congress enacted the ADA to, among other things, address "discrimination against individuals with disabilities [that] persists in such critical areas as ... public accommodations, ... transportation, ... and access to public services ...." ( 42 U.S.C. § 12101(a)(3).) The ADA includes several provisions requiring public and private entities that provide transportation services to ensure those services are accessible to persons with disabilities. (See id. , §§ 12141-12165, 12184.) In particular, the "ADA requires municipalities to provide paratransit and other special transportation services to individuals whose disabilities do not permit them to use the regular fixed routes.[2 ] [Citation.] The level of this service must be ‘comparable’ to that afforded riders who are not disabled." ( Abrahams v. MTA Long Island Bus (2d Cir. 2011) 644 F.3d 110, 112 ; see 42 U.S.C. § 12143(a).) The United States Secretary of Transportation, pursuant to the authority given by Congress under the ADA (see 42 U.S.C. § 12143 (b) ), has issued regulations governing paratransit services, including various requirements paratransit service providers must meet "[t]o be deemed comparable to fixed route service." ( 49 C.F.R. § 37.121 (b (2022)); see id. , §§ 37.123-37.133; see also Abrahams , at p. 115.)

According to California Transit, Access is the "public entity ... charged with administering a countywide coordinated paratransit plan on behalf of [Los Angeles County's] public fixed route operators. Pursuant to that plan, Access facilitates the provision of complementary ... paratransit services to certain persons with disabilities ...." Access, in turn, contracts with California Transit, which provides "paratransit services for the West/Central Region of Los Angeles County."

B. Evenskaas Sues the California Transit Defendants , Who File a Motion To Compel Arbitration

California Transit employed Evenskaas as a driver for its paratransit service vehicles from November 2017 to August 2018.

In May 2020 Evenskaas filed a class action against the California Transit defendants on behalf of himself and other drivers, asserting various wage and hour claims.

The California Transit defendants filed a motion to compel Evenskaas to arbitrate his individual claims and to dismiss his class claims. The defendants submitted an arbitration agreement Evenskaas signed in November 2017 that "covered all claims, controversies or disputes ... arising out of employment, including, but not limited to ... wages, compensation, benefits, ... [and] violation of any federal, state and city or county laws, statutes, regulations or ordinances ...." The agreement provided:

"Arbitration. The parties mutually agree to submit all claims, controversies or disputes covered by this Agreement, to binding arbitration .... Both [California Transit] and [Evenskaas] acknowledge that each is knowingly and voluntarily waiving any right to pursue such claims in court before a judge or jury, including bringing or participating in class action claims, and instead will pursue such claims exclusively through binding arbitration .... Both [California Transit] and [Evenskaas] acknowledge and agree that only individual claims, and not any claims on behalf of a group or class, can be subject to arbitration under this agreement."

The California Transit defendants contended the FAA applied to the arbitration agreement. They argued the agreement involved interstate commerce because California Transit provided "ADA-compliant paratransit services" and Evenskaas "perform[ed] trips for passengers with disabilities." The defendants also argued the court should dismiss Evenskaas's claims for class-wide relief because the FAA preempts the California Supreme Court's decision in Gentry, supra , 42 Cal.4th 443, 64 Cal.Rptr.3d 773, 165 P.3d 556 that certain class action waivers in employment arbitration agreements are unenforceable.

Evenskaas contended the FAA did not apply. He argued the arbitration agreement did not involve interstate commerce because California Transit provided paratransit services only in Los Angeles County and never outside California. Evenskaas also argued the class action waiver was unenforceable under Gentry . In reply the defendants argued the class action waiver was enforceable under Gentry even if the FAA did not apply. They conceded, however, that if the class action waiver was unenforceable, the entire arbitration agreement was unenforceable because the waiver was "an inextricable and material aspect of the" agreement.

C. The Trial Court Denies the Motion

The trial court denied the motion, largely agreeing with Evenskaas. The court ruled the FAA did not apply to the arbitration agreement because the California Transit defendants failed to show that any passengers who used their services were interstate passengers and therefore only "intrastate activities were involved." The court ruled that under Gentry the class action waiver was unenforceable because a class action would be more effective than individual claims in "permitting the [California Transit] employees to enforce their statutory rights." (See Gentry, supra , 42 Cal.4th at p. 463, 64 Cal.Rptr.3d 773, 165 P.3d 556.) Finally, in light of the defendants’ concession the entire arbitration agreement was unenforceable if the class action waiver was unenforceable, the court denied the motion to compel arbitration in its entirety. The California Transit defendants timely appealed.

DISCUSSION
A. Applicable Law and Standard of Review

"The FAA was enacted in 1925 ... and then reenacted and codified in 1947 as Title 9 of the United States Code.... [I]ts ‘purpose was to reverse the longstanding judicial hostility to arbitration agreements that had existed at English common law and had been adopted by American courts, and to place arbitration agreements on the same footing as other contracts.’ " ( E.E.O.C. v. Waffle House, Inc. (2002) 534 U.S. 279, 288-289, 122 S.Ct. 754, 151 L.Ed.2d 755 ; see Viking River Cruises, Inc. v. Moriana (2022) ––– U.S. ––––, 142 S.Ct. 1906, 1917-1918, ––– L.Ed.2d ––––.) The FAA stands as "a congressional declaration of a liberal federal policy favoring arbitration agreements, notwithstanding any state substantive or procedural policies to the contrary." ( Pinnacle Museum Tower Assn. v. Pinnacle Market Development (US), LLC (2012) 55 Cal.4th 223, 235, 145 Cal.Rptr.3d 514, 282 P.3d 1217 ; see Epic Systems Corp. v. Lewis (2018) ––– U.S. ––––, 138 S.Ct. 1612, 200 L.Ed.2d 889.)

"Section 2, the primary substantive provision of the FAA, provides: ‘A written provision in any ... contract evidencing a transaction involving commerce to settle by arbitration a controversy thereafter arising ... shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.’ " ( Cronus Investments, Inc. v. Concierge Services (2005) 35 Cal.4th 376, 384, 25 Cal.Rptr.3d 540, 107 P.3d 217.) For purposes of section 2, the "word ‘involving’ is broad and is indeed the functional equivalent of ‘affecting,’ " which "signals Congress’ intent to exercise its Commerce Clause powers to the full." ( Allied-Bruce Terminix Companies, Inc. v. Dobson (1995) 513 U.S. 265, 273, 115...

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