Lara v. Dreyer's Grand Ice Cream, Inc.
Docket Number | A167881 |
Decision Date | 21 August 2024 |
Parties | MARIO LARA, Plaintiff and Respondent, v. DREYER'S GRAND ICE CREAM, Inc., et al., Defendants and Appellants. |
Court | California Court of Appeals |
NOT TO BE PUBLISHED
Alameda County Super. Ct. No. 22CV024868
Respondent Mario Lara brought this action under the Labor Code Private Attorneys General Act of 2004 ( ), alleging his employers, manufacturers and retailers of ice cream, violated California's wage and hour laws and other provisions of the Labor Code. Lara raises claims in his individual capacity, seeking remedies for violations committed against himself, as well as in a representative capacity, as an agent for the State of California seeking to enforce the rights of other employees. After Lara's employers, appellants Dreyer's Grand Ice Cream, Inc., Dreyer's Grand Ice Cream Holdings, Inc., and Froneri US, Inc. (collectively "Dreyer's") moved for an order compelling arbitration of Lara's individual claims and a stay of the entire action pending litigation, the trial court ordered arbitration but denied a stay of the remaining claims, which were nonarbitrable. Dreyer's now seeks to appeal from the order denying the stay arguing that a stay of nonarbitrable claims pending arbitration is mandatory as a matter of law.
Although the denial of a stay pending arbitration is a nonappealable interlocutory order, we exercise our discretion to treat Dreyer's appeal as a petition for an extraordinary writ. On the merits, we disagree that a stay is mandatory in these circumstances, but we remand the case to allow the trial court an opportunity, in light of intervening case law, to exercise its discretion whether to stay Lara's nonarbitrable claims under Code of Civil Procedure section 1281.4.[1]
Prior to the Private Attorneys General Act, the Labor Code was poorly enforced, largely due to ineffective remedies and limited enforcement capacity. (Adolph v. Uber Technologies, Inc. (2023) 14 Cal.5th 1104, 1116 (Adolph).) To address the problem, the Act established new civil penalties and authorized aggrieved employees to recover penalties, acting as private attorneys general on behalf of the state. (Ibid.; see Lab. Code, § 2699.) An employee who sues under the Act functions as an agent of the state-the real party in interest-and may seek any civil penalties that the state can seek. (Adolph, at pp. 1116-1117.) When employees recover penalties, the state receives most of the recovery. (Id., at p. 1116; see also Lab. Code, § 2699, former subd. (i).)[2] As relevant here, to have standing to bring an action as an "aggrieved employee" under the Act, the plaintiff must have been employed by the employer and suffered at least one Labor Code violation by the employer. (See Adolph, supra, 14 Cal.5th at pp. 1116, 1120-1121; Lab. Code, § 2699, former subd. (c).) Accordingly, so long as the plaintiff has standing based on one Labor Code violation, the plaintiff, as an agent of the state, may also prosecute Labor Code violations sustained by other employees of the same employer but not personally sustained by the plaintiff. (See Adolph, at p. 1122; see also Estrada v. Royalty Carpet Mills, Inc. (2024) 15 Cal.5th 582, 599 (Estrada).) We will refer to a plaintiffs personal claims under the Act as individual claims and a plaintiffs representative claims on behalf of other employees as non-individual claims. (See Adolph, at pp. 11171118; Viking River Cruises, Inc. v. Moriana (2022) 596 U.S. 639, 648-649 (Viking River).)
This case concerns the question what should happen to Lara's non-individual claims given that his individual claims have been sent to arbitration. As background, we briefly discuss a triad of arbitration cases concerning the interaction between federal and state law in the context of claims under the Act.
In Iskanian v. CLS Transportation Los Angeles, LLC (2014) 59 Cal.4th 348 (Iskanian), overruled on other grounds by Quach v. California Com. Club, Inc. (2024) ___ Cal.App.5th ___ [551 P.3d 1123], our Supreme Court considered an agreement that, in the course of providing for arbitration of an employee's individual claims, purported to categorically waive an employee's ability to bring non-individual claims under the Act. Iskanian held the waiver unenforceable because it violated public policy and undermined the Act. (Id. at p. 384; see also Adolph, supra, 14 Cal.5th at pp. 1117-1118 (discussing Iskanian).) After Iskanian, several Courts of Appeal held that individual and non-individual claims under the Act could not be split into bifurcated proceedings. (See Adolph, at p. 1118 (citing cases).)
In Viking River, the United States Supreme Court held that a rule against bifurcated proceedings for individual and nonindividual claims under the Act frustrates the Federal Arbitration Act by defeating the parties' ability to contractually determine which claims are subject to arbitration and which are not. (Viking River, supra, 596 U.S. at pp. 660-662; see also Adolph, supra, 14 Cal.5th at pp. 1118-1119 (discussing Viking River).) As a result, Viking River concluded, the Federal Arbitration Act preempts the rule of Iskanian to the extent it prevents enforcement of an agreement to arbitrate individual claims under the Act. (Viking River, at pp. 660-662.) Viking River also held that the Act does not allow a plaintiff whose individual claims have been sent to arbitration to maintain a suit in court based only on non-individual claims. (Id. at pp. 662-663.) Instead, Viking River held, a plaintiff whose individual claims have been sent to arbitration no longer has standing under the Act to advance non-individual claims in court, and the nonindividual claims must therefore be dismissed. (Ibid.) Viking River did not disturb Iskanians determination that wholesale waivers of claims under the Act are invalid. (See id. at p. 662.)
Adolph subsequently considered the standing question-a matter of state law-addressed in Viking River and reached the opposite conclusion. Our Supreme Court held that once a court has ordered arbitration of an employee's individual claims under the Act, the employee retains standing to pursue non-individual claims in court. (Adolph, supra, 14 Cal.5th at pp. 1119-1123.) Adolph explained that a plaintiffs allegations that the employer committed Labor Code violations against him suffice to confer standing to bring an action under the Act, and the arbitration of the plaintiff's individual claim does not undermine that standing. (Id. at p. 1121.) As a result, Adolph rejected the employer's argument that the plaintiff's non-individual claims had to be dismissed once the trial court ordered arbitration of the individual claims. (Id. at pp. 1123-1124.)
Lara is an hourly employee at a Dreyer's facility in Bakersfield, where he earns $24 per hour as a machine operator. In his operative complaint, he asserted Private Attorneys General Act claims alleging that Dreyer's violated numerous Labor Code provisions. He asserted these claims "on [b]ehalf of the State of California and [a]ggrieved [e]mployees." Lara also separately raised individual and class-based claims under the Labor Code as well as a class-based unfair competition claim under Business and Professions Code section 17200, et seq.
In the trial court, Dreyer's filed a motion to compel arbitration of Lara's individual claims under the Act as well as his personal Labor Code claims. Dreyer's relied on a pre-dispute arbitration agreement entered into by both parties applicable to any" 'Dispute'" between "You . . . and the Company . . . that arises out of, relates in any manner to, or has any relationship whatsoever with . . . Your seeking employment and/or . . . Your employment with the Company[.]" The agreement also contained a clause specifying that if a "Dispute" involves arbitrable and nonarbitrable claims, "the Parties agree that the Arbitrable Claims will be resolved first in arbitration, and the nonarbitrable court claims will be severed and stayed for all purposes pending completion of arbitration."
Based on the arbitration agreement, Dreyer's sought an order compelling arbitration of Lara's individual claims under the Act and dismissal, without prejudice, of Lara's non-individual claims as well as his class-based claims; in the alternative, Dreyer's sought to stay the non-individual claims. Lara stipulated to a stay of his individual claims and class claims pending arbitration, but he opposed the request to dismiss or stay the non-individual claims.
In May 2023, about two months before our Supreme Court issued its opinion in Adolph, the trial court granted the motion to compel arbitration of the individual claims and dismissed the class claims. The court denied the request to dismiss or stay Lara's non-individual claims. The court reasoned that notwithstanding Viking River, Lara's non-individual claims may proceed in court. Further, the court rejected Dreyer's argument that the arbitration agreement required a stay of the nonarbitrable claims pending arbitration, explaining that the "agreement only applies to plaintiff's own claims arising out of his employment, and not claims of the state in a [Private Attorneys General Act] representative action."
Our threshold question is whether Dreyer's challenge to the trial court's interlocutory order denying a stay of the nonindividual action is appealable. The right to appeal a trial court order exists when authorized by statute. (Griset v. Fair Political Practices Com. (2001) 25 Cal.4th 688, 696.) We conclude that the stay order is not appealable, but we exercise our discretion to treat Dreyer's appeal as a petition for writ of mandate.
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