Performance Team Freight Sys., Inc. v. Aleman

• Decision Date: 02 November 2015
• Docket Number: B259146
• Court: California Court of Appeals Court of Appeals
• Parties: PERFORMANCE TEAM FREIGHT SYSTEMS, INC., Plaintiff and Appellant, v. Jorge Garcia ALEMAN et al., Defendants and Respondents.

241 Cal.App.4th 1233

194 Cal.Rptr.3d 530

PERFORMANCE TEAM FREIGHT SYSTEMS, INC., Plaintiff and Appellant,

v.Jorge Garcia ALEMAN et al., Defendants and Respondents.

B259146

Court of Appeal, Second District, Division 2, California.

Filed November 2, 2015

Ogletree, Deakins, Nash, Smoak & Stewart, Johnnie A. James, Robert R. Roginson, Kathleen Choi, for Plaintiff and Appellant.

McAvoy & Rivera, D. Briana Rivera, Patricia Shackelford, for Defendants and Respondents Jorge Garcia Aleman, Silvia De Leon, Mauricio Orellana, Eulalio Figueroa, Jorge Gomez Galvin, Martin Gonzalez, Jose Martin Gonzalez, Jose Luis Gonzalez, Erasto Granados, Samuel Luna Granados, Jorge Luis Gutierrez Solis, Juan Medel, Victor Orozco, Carlos Paredes, Armando Diaz, Alejandro Salazar, Ruben Funez Torres, Aldo Vargas and Miguel A. Bravo Villalobos.

Bird, Marella, Boxer, Wolpert, Nessim, Drooks, Lincenberg & Rhow, Paul S. Chan, Thomas V. Reichert, Douglas A. Fretty; Willeken Wilson Loh & Delgado, Paul J. Loh, Aarti K. Wilson, for Defendant and Respondent Julie A. Su.

Opinion

BOREN, P.J.

The individual respondents are truck drivers who entered into “Independent Contractor Agreements” with appellant. After the individual respondents filed wage claims against appellant, appellant petitioned to compel arbitration based on arbitration provisions in the agreements. The trial court denied the petition, ruling that the agreements were exempt from the Federal Arbitration Act (9 U.S.C. § 1 et seq.) (FAA) because the individual respondents were transportation workers and arbitration was not compelled under California law. The trial court also found that the arbitration provisions did not apply to the individual respondents' claims.

We reverse. Respondents presented no evidence supporting their argument that the agreements were exempt from the FAA, and we find that the arbitration provisions were broad enough to cover the claims asserted. Moreover, respondents failed to submit any evidence in support of their additional argument that the agreements were unconscionable. The trial court, therefore, erred by denying appellant's petition to compel arbitration.

BACKGROUND

Appellant Performance Team Freight Systems, Inc. (Performance Team) is a motor carrier company involved in warehousing, shipping, and distributing merchandise from the Ports of Long Beach and Los Angeles to locations throughout California and the United States. The individual respondents¹are truck drivers who provided trucking services to Performance Team.

At various points in 2012 through 2014, the individual respondents filed wage claims for unreimbursed business expenses and improper deductions with the Division of Labor Standards Enforcement (DLSE). Respondent Julie Su is the California Labor Commissioner, head of the DLSE, which investigates wage claims filed by California workers. (Lab.Code, § 98, subd. (a).) Following the filing of a wage claim, the commissioner may either accept the matter and conduct an administrative hearing (commonly known as a “Berman hearing”), prosecute a civil action for collection of wages and other money due to employees, or take no further action. (Post v. Palo/Haklar & Associates(2000) 23 Cal.4th 942, 946, 98 Cal.Rptr.2d 671, 4 P.3d 928.) In matters where a Berman hearing is held, the commissioner determines whether the claimant was an employee, and issues an order, decision, or award stating, among other things, whether any sums are owing to the claimant. (Id.at p. 947, 98 Cal.Rptr.2d 671, 4 P.3d 928; Lab.Code, § 98.1.) “The Berman hearing procedure is designed to provide a speedy, informal, and affordable method of resolving wage claims.” (Post,at p. 947, 98 Cal.Rptr.2d 671, 4 P.3d 928.)

In this matter, the commissioner set hearings for the individual respondents' wage claims. In July 2014, however, prior to commencement of the Berman hearings, Performance Team filed in the superior court a petition to compel arbitration and motion to stay the Berman hearings. Performance Team asserted that each of the individual respondents entered into “Independent Contractor Agreements” that set forth the terms of trucking services to be provided to Performance Team. The agreements contained an arbitration provision stating: “Any dispute between the parties with respect to the interpretation or the performance of the terms of this Agreement may be submitted to arbitration by reason of either party giving written notice of its desire for arbitration to the other party.”

Performance Team argued that the subject agreements were governed by the FAA, and that the individual respondents' claims fell within the scope of the arbitration provision and were subject to arbitration. In moving for arbitration, Performance Team submitted copies of each of the agreements signed by the individual respondents. Performance Team also submitted the declaration of its driver manager. The declaration discussed the work performed by the individual respondents and circumstances surrounding the execution of the subject agreements.

The commissioner filed opposition papers to Performance Team's petition. The commissioner argued that the claims asserted by the individual respondents were not covered by the arbitration provision, that the individual respondents were exempt from the FAA because they were transportation workers, and that, in any event, the agreements were unconscionable.

The individual respondents filed a response to Performance Team's petition, generally denying all contested allegations, but the individual respondents did not file a formal opposition. Nor did they submit declarations or present evidence in opposition to the petition.

The trial court denied Performance Team's petition to compel arbitration and its request to stay the Berman hearings. The court found that the individual respondents were exempt from the FAA and that, in any case, the wage claims were not covered by the arbitration provision.

Performance Team timely appealed.

DISCUSSION

An order denying a petition to compel arbitration is appealable. (Code Civ. Proc., § 1294, subd. (a).) When a trial court's order is based on a question of law, we review the denial de novo. (Avery v. Integrated Healthcare Holdings, Inc.(2013) 218 Cal.App.4th 50, 60, 159 Cal.Rptr.3d 444.) Decisions on issues of fact are reviewed for substantial evidence. (Ibid.)

In moving for arbitration, the petitioner bears the burden of showing, by a preponderance of the evidence, the existence of a valid arbitration agreement, while the party opposing the petition bears the burden of proving any defense. (Pinnacle Museum Tower Assn. v. Pinnacle Market Development (US), LLC(2012) 55 Cal.4th 223, 236, 145 Cal.Rptr.3d 514, 282 P.3d 1217(Pinnacle); Garcia v. Superior Court(2015) 236 Cal.App.4th 1138, 1145, 187 Cal.Rptr.3d 312(Garcia).)

I. FAA section 1

The question of whether the individual respondents' claims are arbitrable turns largely on the application of the FAA. If this matter were governed only by California law, and not the FAA, then determining arbitrability would be straightforward. Although California has a “ ‘strong public policy in favor of arbitration as a speedy and relatively inexpensive means of dispute resolution’ ” (Moncharsh v. Heily & Blase(1992) 3 Cal.4th 1, 9, 10 Cal.Rptr.2d 183, 832 P.2d 899) and any doubts of arbitrability are resolved in favor of arbitration (Wagner Construction Co. v. Pacific Mechanical Corp.(2007) 41 Cal.4th 19, 26, 58 Cal.Rptr.3d 434, 157 P.3d 1029), Labor Code section 229provides an exception under California law to this general rule favoring arbitrability. The statute states that actions to collect “due and unpaid wages claimed by an individual may be maintained without regard to the existence of any private agreement to arbitrate.” (Lab.Code, § 229.) Both sides here acknowledge that the individual respondents seek to recover due and unpaid wages within the meaning of Labor Code section 229.

Performance Team asserts, however, that Labor Code section 229is inapplicable because the subject agreements are governed by the FAA. Section 2 of the FAA provides that “[a] written provision in any maritime transaction or a 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.” Accordingly, in most cases, the FAA mandates arbitration when contracts involving interstate commerce contain arbitration provisions. (Southland Corp. v. Keating(1984) 465 U.S. 1, 10–11, 104 S.Ct. 852, 79 L.Ed.2d 1; Cable Connection, Inc. v. DIRECTV, Inc.(2008) 44 Cal.4th 1334, 1351, 82 Cal.Rptr.3d 229, 190 P.3d 586.) In matters in which the FAA applies, it preempts Labor Code section 229, requiring arbitration of claims that otherwise could be resolved in court. (Perry v. Thomas(1987) 482 U.S. 483, 490–492, 107 S.Ct. 2520, 96 L.Ed.2d 426.)

The commissioner acknowledges that the subject agreements involve interstate commerce, but argues that they fall within a narrow exception, found in section 1 of the FAA (section 1). Section 1exempts from coverage of the FAA “contracts of employmentof seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce.” (9 U.S.C. § 1, italics added; see also Circuit City Stores, Inc. v. Adams(2001) 532 U.S. 105, 109, 121 S.Ct. 1302, 149 L.Ed.2d 234(Circuit City).) This “ ‘any other class of workers engaged in foreign or interstate commerce’ ” has been defined to mean “transportation workers.” (Circuit City, at p. 121, 121 S.Ct. 1302.)

Truck drivers who cross interstate lines usually are considered transportation workers. “The most obvious case where a plaintiff falls under the FAA exemption is where the plaintiff directly transports goods in interstate, such as [an] interstate truck driver whose primary function is to deliver mailing packages from one state into another.” (Veliz v....