Ocean Cities Pizza, Inc. v. Superior Court
| Decision Date | 01 August 2022 |
| Docket Number | A160891 |
| Parties | OCEAN CITIES PIZZA, INC., et al., Petitioners, v. THE SUPERIOR COURT OF CONTRA COSTA COUNTY, Respondent; ISMAIL ALAMMARI, Real Party in Interest. |
| Court | California Court of Appeals |
NOT TO BE PUBLISHED
Contra Costa County Super. Ct. No. MSC19-02640
Ismail Alammari filed a wage-and-hour complaint against Ocean Cities Pizza, Inc., Home County Pizza, Inc., Hishmeh Enterprises Inc., and Central Cities Pizza, Inc. (collectively petitioners), asserting causes of action both on an individual and on a class basis. Petitioners purport to appeal, pursuant to Code of Civil Procedure section 1294 subdivision (a) (section 1294(a)), from an order granting their motion to compel Alammari to submit his individual claims to arbitration but denying their request to strike his class allegations. The court held that the parties' arbitration agreement requires classwide arbitration of the class claims.
Section 1294(a) authorizes appeals only from orders dismissing or denying petitions to compel arbitration. The challenged order, however, granted the petition in part, although denying the request to strike class allegations. As held in Reyes v. Macy's, Inc. (2011) 202 Cal.App.4th 1119 (Reyes), the order is not appealable. Petitioners contend that the Federal Arbitration Act (FAA) preempts the rule of Reyes and they request in the alternative that we treat the purported appeal as a petition for writ relief. Because classwide arbitration would be unduly costly if ordered erroneously, we will treat the appeal as a writ petition and, thus, need not resolve the preemption issue. On the merits, the trial court correctly held that the agreement unambiguously authorizes class arbitration, so we will deny the petition, effectively affirming the trial court's order.
In 2018, Alammari became an employee of Ocean Cities Pizza and signed an arbitration agreement that the parties agree is enforceable and governed by the FAA.[1] It states that any dispute the company and employee cannot resolve informally "shall be resolved and decided through binding arbitration as set forth in this agreement." The agreement adds that, with certain exceptions not relevant here, the parties intend for it to apply to "any dispute that arises out of the employee's employment with the company" and to encompass "all claims that are arbitrable under applicable law." Further, the agreement states that it applies to "any claim brought on an individual, class action, putative class action, collective action, multiple-party, representative plaintiff and/or private attorney general basis by employee or on employee's behalf, that employee may have against the company," including, but not limited to, "any claims related to wages ([with one irrelevant exception]), reimbursements, penalties, alleged state Labor Code violations, alleged Wage Order or 'wage and hour' violations, discrimination, retaliation and harassment, whether based on state or federal law, and any other employment-related claim."
Alammari worked for Ocean Cities Pizza for approximately a year. In 2019, he filed a class-action complaint against all four petitioners alleging wage-and-hour violations. His first amended complaint asserts 10 causes of action. The first nine seek damages and restitution on behalf of Alammari and a proposed class, for wage-and-hour claims arising out of his and the class's employment by petitioners.[2]
Petitioners jointly moved to compel individual arbitration of all but the PAGA cause of action, to strike the "class claims," and to stay proceedings on the PAGA cause of action pending the arbitration. The court issued an order finding the arbitration agreement valid and governed by the FAA-as was undisputed-and holding that the agreement compels arbitration of all but the PAGA cause of action, on which the court stayed litigation pending the arbitration.
The court then turned to the one disputed issue-whether to order arbitration of the causes of action only on an individual basis or also on a class basis. It addressed Lamps Plus, Inc. v. Varela (2019) __U.S.__ (Lamps Plus), which held that the FAA preempts any rule of state contract law that would require a court to construe an ambiguous arbitration agreement so as to require class arbitration based on policy considerations rather than the parties' expressed intent. (139 S.Ct. at pp. 1417-1418.) The court distinguished Lamps Plus by noting that the arbitration agreement in that case did not mention class proceedings (id. at p. 1413), whereas the agreement here specifies that it applies to" 'any claim brought on an individual, class action, putative class action, collective action, multiple-party, representative plaintiff and/or private attorney general basis by employee or on employee's behalf'" (italics added by trial court). Noting further that the agreement did not include a class-action waiver or refer in any other way to class actions, the court found that the agreement unambiguously requires class arbitration of class members' employment-related claims. The court found support for its ruling in Garner v. Inter-State Oil Co. (2020) 52 Cal.App.5th 619 (Garner), a post-Lamps Plus opinion in which the Third Appellate District held that an arbitration agreement with somewhat similar language expressly required arbitration of class claims. The court thus ordered both individual and class arbitration of Alammari's claims.
Petitioners timely filed a notice of appeal.
The initial question is whether the order is subject to appellate review at this time.[3] Under Reyes, supra, 202 Cal.App.4th 1119, an order simultaneously granting a petition to compel arbitration and denying a request to strike class claims is not appealable under section 1294(a). (Id. at p. 1122.) Reyes was a wage-and-hour class action in which the trial court made an order very similar to the one at issue here. The employer moved to compel arbitration of the plaintiff's individual claims, dismiss her class allegations, and stay the matter until after arbitration. (Id. at p. 1122.) The trial court severed the individual claims and sent them to arbitration but denied the request to strike the class allegations. The court held that the order was not appealable under section 1294(a) because it did not deny the motion to compel arbitration, and because neither an order compelling arbitration nor an order denying a request to strike class allegations is appealable. (Id. at pp. 1122-1123.)[4]
The trial court here did not sever and stay the "class claims,"[5] as the court did in Reyes, but ordered those claims to classwide arbitration. Nonetheless, its ruling is not an order denying a petition to compel arbitration. In Reyes and here, the court compelled arbitration and refused to strike class allegations. While petitioners portray the order here as denying their petition to compel "individual arbitration," the court in fact ordered that to determine whether the agreement authorizes classwide arbitration, and neither party contends that this issue should not be determined by the court. the claims be arbitrated on both an individual and class basis. It did not deny the request to compel arbitration; it simply sent more of the case to arbitration than petitioners requested.
Petitioners argue in the alternative that the FAA as construed in Lamps Plus, supra, 139 S.Ct. 1407, preempts the rule of Reyes. Extending its prior decisions in AT&T Mobility LLC v. Concepcion (2011) 563 U.S. 333, Stolt-Nielsen S.A. v. AnimalFeeds International Corp. (2010) 559 U.S. 662 and Epic Systems Corp. v. Lewis (2018) 584 U.S. , the high court in Lamps Plus held that the FAA preempts any rule of state contract law that compels class arbitration not based on unambiguous language in an arbitration agreement authorizing such arbitration. (139 S.Ct. at p. 1418.)[6] In Lamps Plus, a federal district court in California construed an arbitration agreement that was arguably ambiguous as to whether it authorized classwide arbitration. (Id. at p. 1413.) Applying the common law rule that contracts are construed against their drafters, the court construed the ambiguous agreement to authorize classwide arbitration, and the Ninth Circuit affirmed. Reversing, the Supreme Court accepted the lower courts' interpretation of California law, under which the agreement was deemed ambiguous, but held that the FAA preempts the state law rule that contracts are construed against the drafter. (Id. at pp. 1415, 1417-1418.)
Petitioners argue that the appealability rule of Reyes is similarly preempted by the FAA. We doubt that the preemptive sweep of the FAA, even as construed in Lamps Plus, extends beyond rules of state contract law to encompass a state procedural rule on appealability. However, we need not resolve petitioners' preemption argument because we agree that in any event the circumstances warrant immediate writ review.
Purported appeals from orders compelling arbitration have been treated as writ petitions "(1) if the matters ordered arbitrated fall clearly outside the scope of the arbitration agreement or (2) if the arbitration would appear to be unduly time consuming or expensive." (Zembsch v. Superior Court (2006) 146 Cal.App.4th 153, 160.) The first rationale does not apply here because the class claims are not "clearly outside the scope of the arbitration agreement." But writ review is proper because, if wrongly ordered, "the arbitration would appear to be unduly time consuming or expensive." Several courts have found writ review of orders compelling arbitration appropriate because, if the order was improper," 'the expense to the parties in participating in and...
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