Hoover v. Am. Income Life Ins. Co.

Citation142 Cal.Rptr.3d 312,12 Cal. Daily Op. Serv. 6543,206 Cal.App.4th 1193,2012 Daily Journal D.A.R. 7869
Decision Date16 May 2012
Docket NumberNo. E052864.,E052864.
CourtCalifornia Court of Appeals Court of Appeals
PartiesMartha HOOVER, Plaintiff and Respondent, v. AMERICAN INCOME LIFE INSURANCE COMPANY, Defendant and Appellant.

OPINION TEXT STARTS HERE

SNR Denton U.S. LLP, Los Angeles, Joel D. Siegel, David Simonton and Leanna M. Anderson, for Defendant and Appellant.

Law Offices of James M. Gilbert, James M. Gilbert, Los Angeles; Law Offices of Joseph Antonelli, Chino Hills, Joseph Antonelli, Janelle Carney; Law Offices of Darren D. Daniels and Darren D. Daniels, Ontario, for Plaintiff and Respondent.

OPINION

CODRINGTON, J.

IINTRODUCTION 1

Martha Hoover, plaintiff and respondent, worked as a sales agent for about four months for American Income Life Insurance Company (AIL), defendant and appellant. AIL appeals from an order denying its petition to compel arbitration of Hoover's civil action based on various Labor Code statutes. (Code Civ. Proc., § 1294, subd. (a).)

The underlying issue, which we do not resolve in this appeal, concerns whether Hoover was an employee of AIL or an independent contractor. She claims she was an employee, entitled to receive minimum wage, as well as reimbursement for work-related expenses and prompt payment of earned wages due upon termination. (§§ 203, 1194, and 2802.) Hoover further contends her statutory labor claims are not subject to arbitration.

In opposition, AIL counters that Hoover was an independent contractor who was not entitled as an employee to receive minimum wage, reimbursement, or earned wages. Nevertheless, AIL contends Hoover's statutory labor claims are subject to arbitration as provided in the agent contract, as incorporated by the collective bargaining agreement (CBA).

We disagree with AIL. If Hoover was an employee with viable statutory labor claims, her claims are not subject to arbitration. If Hoover was an independent contractor she cannot assert statutory labor claims as an employee and therefore the question of arbitration seems irrelevant. In either instance, the trial court correctly denied AIL's petition to compel arbitration. Additionally, AIL's 15–month delay in petitioning for arbitration constituted a waiver of the right to compel arbitration.2

IIFACTUAL AND PROCEDURAL BACKGROUND

There is little dispute between the parties about the objective facts. Instead, both parties attempt to characterize the facts in a way most favorable to their positions. We attempt to offer a more neutral summary of the record on appeal.

A. Preliminary Facts

AIL is a Texas-based company that sells life insurance policies in California. Hoover worked for AIL from March 2008 to June 2008. Hoover terminated her relationship with AIL voluntarily.

Hoover's relationship with AIL was partly governed by the CBA between AIL, the Office and Professional Employees International Union Local 277 (OPEIU Local 277), and the state general agents, like Hoover. The CBA contains the following disclaimer: “Nothing contained herein shall be construed to create the relationship of employer and employee.... [¶] The agent ... shall be acting on the agent's ... own behalf and not an employee, ... The agent ... shall refrain from holding themselves out as an employee.” The CBA includes a section on grievance procedures, including discovery proceedings. Article 18 provides for agent compensation: “Compensation of agents shall be in conformity with contract. Agents shall have a written agreement. The agreement shall become part of this Agreement....”

Hoover executed an agent contract which is incorporated into the CBA. The agent contract includes language indicating that the agent is an independent contractor not an employee of the company: the agent shall be responsible for all expenses and furnish her own means of transportation, office, or place of employment; the agent has no fixed hours and is free to choose the time and manner in which services are performed; the agent is paid solely by commissions “in full satisfaction of all claims upon the Company [on] account of service or expenses under this contract.”

The agent contract also contains an arbitration clause, requiring the parties to arbitrate disputes arising out of or relating to the agent contract if they are unable to resolve their disputes through informal negotiations or the grievance process outlined in the CBA:

“In the event of any dispute or disagreement arising out of or relating to this contract, the parties shall use their best efforts to settle such disputes. To this effect, they shall negotiate with each other in good faith to reach a just solution. If the parties do not reach a just solution by negotiations as described above, the Agent agrees to utilize the grievance process as outlined in the OPEIU Local 277 agreement. If the dispute is not settled through the grievance process, then upon written notice by either party to the other, all disputes, claims, questions, and controversies of any kind or nature arising out of or relating to this contract shall be submitted to binding arbitration pursuant to the provisions of the collective agreement with OPEIU. The findings of the arbitrator shall be final and binding on all parties and their beneficiaries, successors, assigns or anyone claiming an interest in the contract.”

B. The Class Action Litigation

In September 2009, plaintiff Hoover and coplaintiff Frances Williams filed a class-action complaint against AIL, alleging that AIL had hired them to sell insurance as employees, not as independent contractors, and failed to reimburse them for business expenses and to pay minimum wage during training and earned wages due after termination. The complaint alleges four causes of action against AIL for alleged violations of statutory rights under the Labor Code and for alleged unfair business practices.

The first cause of action is for reimbursement of business expenses, such as auto mileage, under section 2802. The second cause of action is based on sections 1194 and 1194.2 and on wage order No. 4–2001 from the Industrial Welfare Commission. Plaintiffs allege they were entitled to minimum hourly wages for training periods because they were not exempt as under section 1171 as “an outside salesman.” The third cause of action asserts AIL violated section 203 by failing to pay all “earned wages” upon termination of employment with AIL. The fourth cause of action claims AIL engaged in an unfair business practice of misclassifying sales agents as independent contractors and violating the various Labor Code provisions, as well as Business and Professions Code sections 17200 et seq.

Between September 2009 and December 2010, the parties conducted active litigation, including two removals to federal court by AIL, AIL's demurrer, an unsuccessful mediation, discovery disputes, and plaintiffs seeking and AIL opposing a temporary restraining order (TRO).

More specifically, AIL first removed the case to federal court in October 2009. AIL also filed a motion to dismiss the complaint in federal court. The federal district court granted Hoover's motion to remand the case to state court in December 2009. AIL filed a demurrer in state court in January 2010.

In February 2010, AIL propounded special interrogatories and document requests upon Hoover and noticed her deposition. Hoover propounded a special interrogatory requesting a putative class member contact list. In March 2010, AIL propounded additional special interrogatories as well as form interrogatories, requests for admissions and document requests. On April 5, 2010, AIL filed an answer to the complaint. None of the 22 affirmative defenses allege the existence of an arbitration provision.

In April 2010, the parties agreed to stay all discovery pending mediation. After mediation failed, Hoover filed a motion to compel disclosure of the putative class member contact information, which AIL opposed. AIL finally provided discovery responses, which Hoover deemed inadequate, in August 2010.

AIL finally made a demand for arbitration, which Hoover rejected in August 2010. In September 2010, Hoover filed an ex parte application for a TRO regarding AIL soliciting opt-out directives from putative class members. AILS's solicitation did not mention arbitration. AIL filed opposition but, before the matter was resolved, AIL filed a second notice removing the case to federal court. The case was eventually remanded to the trial court in December 2010.

C. The Motion to Compel Arbitration

On December 7, 2010, almost 15 months after the complaint was filed, AIL filed a motion to compel arbitration and to stay litigation of Hoover's individual claims based on the arbitration provision in the agent contract. The hearings on the discovery disputes, the TRO, and the motion to compel all took place on January 12, 2011.

The trial court denied the motion to compel, ruling that Hoover's “statutory wage claims are not subject to arbitration because neither the arbitration agreement nor the CBA refers to the arbitration of statutory rights” and because “AIL has waived its rights to arbitrate ... through its participation in the litigation process.”

AIL has appealed, staying all trial court proceedings as to Hoover. (Code Civ. Proc., §§ 916, subd. (a), 1294, subd. (a).)

IIIDISCUSSION
A. Standards of Review

The judgment or order forming the basis of the appeal is presumed to be correct. ( Denham v. Superior Court (1970) 2 Cal.3d 557, 564, 86 Cal.Rptr. 65, 468 P.2d 193 [“All intendments and presumptions are indulged to support it on matters as to which the record is silent, and error must be affirmatively shown.”].) If the appealed judgment or order is correct on any theory, then it must be affirmed regardless of the trial court's reasoning, whether such basis was actually invoked. ( Davey v. Southern Pacific Co. (1897) 116 Cal. 325, 329, 48 P. 117;In re Marriage of Burgess (1996) 13 Cal.4th 25, 32, 51 Cal.Rptr.2d 444, 913...

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