Mondragon v. Santa Ana Healthcare & Wellness Ctr.
| Docket Number | B307872 |
| Decision Date | 18 October 2023 |
| Parties | RUBY ANN MONDRAGON, Plaintiff and Respondent, v. SANTA ANA HEALTHCARE & WELLNESS CENTRE, LP et al., Defendants and Appellants |
| Court | California Court of Appeals Court of Appeals |
NOT TO BE PUBLISHED
APPEAL from an order of the Superior Court of Los Angeles County No 19STCV26878, Rupert A. Byrdsong, Judge. Vacated and remanded with directions.
Fisher &Phillips, Grace Y. Horoupian, Christopher M. Ahearn Raymond W. Duer; Zarmi Law and David Zarmi for Defendants and Appellants.
Cohelan Khoury &Singer, Michael D. Singer, Kristina De La Rosa, Rosemary C. Khoury; Hekmat Law Group and Joseph M Hekmat for Plaintiff and Respondent.
Plaintiff Ruby Ann Mondragon (Mondragon) sued her former employer, Santa Ana Healthcare &Wellness Centre (Santa Ana), seeking civil penalties under the Private Attorneys General Act of 2004 (PAGA; Lab. Code, § 2698 et seq.)[1] for various wage, meal break and rest period violations. Santa Ana moved to compel "individual" arbitration under the parties' arbitration agreement, which provides that arbitration shall be the exclusive forum for any dispute, and which prohibits employees from joining or bringing a "representative action" or "acting as a private attorney general or representative of others."
The trial court denied Santa Ana's motion, concluding that it was bound by the California Supreme Court decision in Iskanian v. CLS Transportation Los Angeles, LLC (2014) 59 Cal.4th 348 (Iskanian), which held that agreements to waive the right to bring PAGA representative actions are unenforceable. We agreed and affirmed the trial court's decision, but after we did, the United States Supreme Court issued an opinion in Viking River Cruises, Inc. v. Moriana (2022) 596 U.S.__ [142 S.Ct. 1906, 213 L.Ed.2d 179] (Viking River) holding "that the [Federal Arbitration Act (FAA; 9 U.S.C. § 1 et seq.)] preempts the rule of Iskanian insofar as it precludes division of PAGA actions into individual and non-individual claims through an agreement to arbitrate." (Id. at p.__ .) The high court subsequently vacated the judgment in this case and remanded the matter to us with instructions to reconsider the case in light of its opinion in Viking River.
We invited both sides to submit supplemental briefing in the wake of the Supreme Court's order, and each side did so. Both sides agree, as do we, that Viking River invalidates our prior holding that the arbitration agreement was unenforceable, at least as to Mondragon's claims based on harms she alleges she personally suffered. The parties differ as to the outcome, however. Santa Ana argues that we should direct the court to enter a new order granting the motion to compel arbitration of Mondragon's individual claims. Santa Ana concedes that the representative PAGA claims, in which Mondragon alleged that Santa Ana violated the Labor Code with respect to other employees, are "unwaivable." (Iskanian, supra, 59 Cal.4th at p. 383; see Viking River, supra, 596 U.S. at p. .) Because the representative claims are not subject to arbitration under the arbitration agreement, Santa Ana contends those claims should remain stayed pending the outcome of the individual arbitration.
For her part, Mondragon argues that we should once again affirm the trial court's ruling denying the motion to compel arbitration, albeit on different grounds. According to Mondragon, Santa Ana waived its right to compel arbitration by litigating the case in court for nearly a year before filing its motion to compel. In the alternative, Mondragon contends that Santa Ana is not entitled to compel arbitration because all of Mondragon's claims are outside the scope of the arbitration agreement.
We find both parties' proposals unpersuasive in part. We disagree with Mondragon that her individual claims are outside the scope of the arbitration agreement, and we decline to rule on whether Santa Ana waived its right to arbitrate. The latter is a primarily factual question (Davis v. Shiekh Shoes, LLC (2022) 84 Cal.App.5th 956, 962) that is best left for the trial court to decide in the first instance upon remand. Although we see no objection in principle to Santa Ana's proposal to stay the representative claims if the court indeed orders arbitration of the individual claims, the management of litigation while arbitration is pending is a matter for the discretion of the trial court. (See Barrera v. Apple American Group LLC (2023) 95 Cal.App.5th 63, 95.)
From December 18, 2017 to April 3, 2019, Mondragon was employed by Santa Ana as a nurse and medication technician. Throughout her employment Mondragon worked at Country Villa Plaza, a skilled nursing facility operated by Santa Ana.[2] On December 18, 2017, as a condition of her employment, Mondragon signed an agreement to be bound by an alternative dispute resolution (ADR) policy (the arbitration agreement).[3]
The ADR policy states, in relevant part:
The ADR policy also contained a class action waiver:
The separate document signed by Mondragon entitled "agreement to be bound by [ADR] policy" (capitalization and bold omitted) reiterated that the "ADR [p]olicy is understood to apply to all disputes relating to my employment, the terms and conditions of my employment," and also reiterated the class/representative action waiver, stating: "I agree this ADR [p]olicy prohibits me from joining or participating in a class action or representative action, acting as a private attorney general or representative of others, or otherwise consolidating a covered claim with the claims of others."
On July 31, 2019, after the requisite 65-day notice period,[4]Mondragon filed a "PAGA representative action" against Santa Ana, seeking civil penalties on behalf of herself and other aggrieved employees for a variety of wage, meal break, and rest period violations. The complaint pleaded nine causes of action, each stating that Mondragon was proceeding "as a representative of the general public," and was seeking "to recover any and all penalties for each and every violation, in an amount according to proof, as to those penalties that are otherwise only available in public agency enforcement actions."
In her prayer for relief, Mondragon again stated that she sought "[m]aintenance of this claim as a [r]epresentative [a]ction under the PAGA" and prayed for judgment "only as to those remedies which are permissible . . . pursuant to the PAGA."
The Legislature enacted the PAGA in 2003 after deciding that limited labor law enforcement resources made additional private enforcement necessary" 'to achieve maximum compliance with state labor laws.'" (Iskanian, supra, 59 Cal.4th at p. 379, quoting Arias v. Superior Court (2009) 46 Cal.4th 969, 980.)
"The purpose of the PAGA is not to recover damages or restitution, but to create a means of 'deputizing' citizens as private attorneys general to enforce the Labor Code." (Brown v. Ralphs Grocery Co. (2011) 197 Cal.App.4th 489, 501.) Seventy-five percent of any penalties collected by a PAGA representative are distributed to the LWDA, while the remaining 25 percent are distributed to the aggrieved employees. (§ 2699, subd. (i).)
On July 24, 2020, Santa Ana moved to compel "individual (and not collective or representative) arbitration" arguing that the California Supreme Court's holding in Iskanian-that California public policy bars the waiver of PAGA representative claims-was wrongly decided and had since been further undermined by United States Supreme Court precedent defining the broad preemptive scope of the FAA. Santa Ana stated the court should "dismiss this litigation or, in the alternative, stay the proceedings pending the outcome of [Mondragon's individual] arbitration."
On August 17, 2020, the court denied the motion at a hearing with the parties, stating "the Iskanian case is still the good-to-go authority on this issue." Later that day, the trial court issued a minute order and statement of decision summarizing its ruling.
In 1925, the FAA was enacted in response to widespread judicial hostility to arbitration agreements. (AT&T Mobility LLC v. Concepcion (2011) 563 U.S. 333, 339 [131 S.Ct. 1740, 179 L.Ed.2d 742] (Concepcion).) Section 2 of the FAA-its primary substantive provision-states in relevant part: "A written provision in any . . . contract evidencing a transaction involving commerce to settle by arbitration a controversy thereafter arising out of such contract . . . shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract." (9 U.S.C. § 2.)
The final clause of section 2...
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