Galen v. Redfin Corp.
| Decision Date | 21 July 2014 |
| Docket Number | A138642 |
| Court | California Court of Appeals Court of Appeals |
| Parties | Scott GALEN, Plaintiff and Respondent, v. REDFIN CORPORATION, Defendant and Appellant. |
174 Cal.Rptr.3d 847
Scott GALEN, Plaintiff and Respondent,
v.
REDFIN CORPORATION, Defendant and Appellant.
A138642
Court of Appeal,
First District, Division 1, California.
Filed July 21, 2014
See 1 Witkin, Summary of Cal. Law (10th ed. 2005) Contracts, § 332 et seq.
Alameda County Superior Court, Hon. Steven A. Brick, Trial Judge. (Alameda County Super. Ct. No. RG13663672)
Ronald D. Arena, Michael Hoffman, San Francisco, and Christopher D. Baker of Arena Hoffman LLP, for Defendant and Appellant.Laura L. Ho, and James Kan of Goldstein, Borgen, Dardarian & Ho, Oakland, for Plaintiff and Respondent.
Dondero, J.
In this employment dispute, defendant Redfin Corporation appeals from the trial court's order denying its motion to compel arbitration of the claims asserted in plaintiff Scott Galen's class action lawsuit. The court concluded plaintiff's claims are based on alleged statutory violations and are therefore not encompassed by the parties' contractual agreement. Additionally, the court found that even if the claims fall within the agreement, the agreement's arbitration provision is unconscionable and therefore invalid. We now reverse.
Defendant provides residential real estate brokerage services for home buyers and sellers. The company is based in Seattle, Washington. Plaintiff lives in Danville, California.
On August 26, 2009, the parties entered into a “Field Agent Independent Contractor Agreement” (Agreement). The Agreement is approximately three and a half pages long, with two columns on each page. The document is a form contract drafted by defendant. Pursuant to the Agreement, defendant engaged plaintiff as a Contract Field Agent (CFA). The parties agreed that plaintiff, as a CFA, would “perform his/her duties and services hereunder as an independent contractor.” In this capacity, plaintiff was to “spend part of [his] work time doing work activities in the field and away from an office, including but not limited to taking prospective residential home buyers on home tours, providing access to properties for home inspections and appraisals, conducting open houses at homes that [were] for sale, as well as driving to and from various properties associated with these assignments throughout [his] assigned territor[y].” Either party could terminate the Agreement without cause with five days written notice. Additionally, plaintiff was required to bear certain costs, such as auto insurance and membership in a Multiple Listing Service (MLS).
On January 16, 2013, plaintiff filed the instant complaint on behalf of himself and other similarly situated individuals, alleging defendant improperly classified him and other CFA's as independent contractors when they were actually serving as employees under California law. Plaintiff alleged claims under the Labor Code and Unfair Competition Laws (UCL) for unpaid overtime, missed meal and rest periods, inaccurate and untimely wage statements, waiting time penalties, and unreimbursed business expenses.
On April 2, 2013, defendant filed a motion to compel arbitration. In its motion, defendant noted Paragraph 26 of the Agreement requires all disputes be submitted to mediation and binding arbitration. It also noted the Agreement provides that it is to be governed, construed, and enforced in accordance with the laws of the state of Washington.1
Paragraph 26 provides, in part: “All disputes among the parties arising out of or related to this Agreement which have not been settled by mediation shall be resolved by binding arbitration within the State of Washington.... If the parties cannot agree upon an arbitrator within twenty (20) days from the date written demand for arbitration is served, the party demanding arbitration may commence an action for the limited purpose of obtaining appointment of an arbitrator by the ... Superior Court of the State of Washington for King County. Any arbitration shall be conducted in accordance with the rules of the American Arbitration Association [AAA] then in effect, although the arbitration need not be conducted [by the AAA]. Any arbitration award may be enforced by judgment entered in the Superior Court of the State of Washington for King County.”
On April 25, 2013, plaintiff filed his opposition to the motion to compel arbitration. He asserted that because his misclassification claims were extra-contractual and not otherwise dependent upon the existence of the Agreement, the arbitration clause did not apply and arbitration could not be compelled as a matter of law. He further asserted the clause was invalid due to the combined procedural and substantive unconscionability of its terms. He also argued that the Washington state choice-of-law provision did not apply to this dispute. In an accompanying declaration, he stated his belief that his right to redress was unduly burdened by the Agreement's requirement that he pay all of defendant's attorney fees if he loses at arbitration. He also asserted traveling to Washington state to attend an arbitration would impose an excessive financial burden.
On May 8, 2013, the trial court denied defendant's motion to compel arbitration. The court held the arbitration clause was governed by the Federal Arbitration Act (FAA). Faced with whether Washington or California state laws apply to construe the scope of the arbitration provision, the court resolved the issue under California law because the action was brought in California and the arbitration provision's choice-of-law clause expressly disclaimed the application of Washington “conflict or choice of laws” law. The court also found that, under California law, the arbitration clause did not apply to plaintiff's statutory claims because those claims were based on statutes and not on the parties' contract. Alternatively, the Agreement was ruled unconscionable due to “unrebutted evidence of substantial procedural unconscionability,” and “some (albeit less) substantive unconscionability.” This appeal followed.
California law favors enforcement of valid arbitration agreements. (Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83, 97, 99 Cal.Rptr.2d 745, 6 P.3d 669 (Armendariz ).) On petition by a party to an arbitration agreement, the trial court generally stays a pending action and orders the parties to arbitrate their dispute. (Code Civ. Proc., §§ 1281.2, 1281.4.) Appeal may be taken from an order denying a petition to compel arbitration. (Code Civ. Proc., § 1294, subd. (a).)
On appeal from the denial of a motion to compel arbitration, “[u]nconscionability findings are reviewed de novo if they are based on declarations that raise ‘no meaningful factual disputes.’ [Citation.] However, where an unconscionability determination ‘is based upon the trial court's resolution of conflicts in the evidence, or on the factual inferences which may be drawn therefrom, we consider the evidence in the light most favorable to the court's determination and review those aspects of the determination for substantial evidence.’ [Citation.]” (Murphy v. Check 'N Go of California, Inc. (2007) 156 Cal.App.4th 138, 144, 67 Cal.Rptr.3d 120; Armendariz, supra, 24 Cal.4th 83 at p. 122, 99 Cal.Rptr.2d 745, 6 P.3d 669.) In keeping with California's strong public policy in favor of arbitration, any doubts regarding the validity of an arbitration agreement are resolved in favor of arbitration. (Coast Plaza Doctors Hosp. v. Blue Cross of California (2000) 83 Cal.App.4th 677, 686, 99 Cal.Rptr.2d 809; see Armendariz, supra, at pp. 97–98, 99 Cal.Rptr.2d 745, 6 P.3d 669.)
We review the trial court's choice-of-law determination de novo to the extent it presents a purely legal question, but review any underlying factual determinations for substantial evidence. (Hambrecht & Quist Venture Partners v. American Medical Internat., Inc. (1995) 38 Cal.App.4th 1532, 1539, fn. 4, 46 Cal.Rptr.2d 33; see Davies Machinery Co. v. Pine Mountain Club, Inc. (1974) 39 Cal.App.3d 18, 23–24, 113 Cal.Rptr. 784.)
II. The Arbitration Agreement Encompasses Plaintiff's ClaimsWe first address whether the trial court erred in concluding plaintiff's causes of action do not fall within the scope of the arbitration provision. Plaintiff contends his misclassification claims arise from the Labor Code and not from any terms set forth in the Agreement. He asserts the assessment of whether he and the purported class were misclassified “will turn on statutory factors set forth by California law and not any rights afforded by the Agreements.” He further contends his employment status must be proven independent of the Agreement through other company documents or witness testimony. Defendant counters that the work for which plaintiff seeks compensation in this lawsuit was specifically described in, and performed as a result of, the Agreement. Additionally, the business expenses that he seeks reimbursement for were specifically referenced and assigned to the CFA's under the terms of the Agreement.
Paragraph 26 of the Agreement initially states: “In the event that any disputes arise regarding the interpretation or enforcement of this Agreement, such disputes shall be resolved as follows....” (Italics added.) The paragraph goes on to discuss the use of good faith negotiations followed by mediation, if necessary. In the event mediation fails or is refused, the Agreement provides that all disputes “ arising out of or related to this Agreement which have not been settled by mediation shall be resolved by binding arbitration within the State of Washington.” (Italics added.) After noting that any ambiguity as to the scope of “related” claims should be construed against defendant, the trial court found the arbitration provision did not encompass plaintiff's claims because they “will be determined by applicable wage and hour law, regardless of the Agreement's terms.” The court relied largely on Narayan v. EGL, Inc. (9th Cir.2010) 616 F.3d 895,...
To continue reading
Request your trial