Abrishamcar v. Oracle Am.

1

MARYAM ABRISHAMCAR et al., Plaintiffs and Respondents, v. ORACLE AMERICA, INC., Defendant and Appellant.

A167116

California Court of Appeals, First District, First Division

June 24, 2024

NOT TO BE PUBLISHED

(San Mateo County Super. Ct. No. CIV535490)

LANGHORNE WILSON, J.

Defendant Oracle America, Inc. (Oracle) appeals from an order denying its motion to compel arbitration of a claim brought by plaintiffs Maryam Abrishamcar and Kavi Kapur (collectively plaintiffs) under the Private Attorneys General Act of 2004 (Lab. Code, § 2698 et seq.; PAGA). In moving to compel arbitration nearly seven years into the case, Oracle argued previously-controlling law had precluded it from enforcing plaintiffs' arbitration agreements until the United States Supreme Court issued its opinion in Viking River Cruises, Inc. v. Moriana (2022) 596 U.S. 639 [142 S.Ct 1906, 213 L.Ed.2d 179] (Viking River). The trial court concluded Oracle's motion was untimely and Oracle had waived its right to compel arbitration. We conclude however, that under the unusual circumstances of this case Oracle's motion was timely and not waived.

On the merits, we reverse the order to the extent it denied the motion to compel arbitration of the individual PAGA claims. We do so because we are duty bound to apply Viking River's holding here because this case was pending in the trial court when the Supreme Court announced its decision. (Harper v. Virginia Dept. of Taxation (1993) 509 U.S. 86, 90 [113 S.Ct. 2510, 125 L.Ed.2d 74] ["application of a rule of federal law to the parties before the Court requires every court to give retroactive effect to that decision"].) Still, we understand the trial court's reticence to refer the individual PAGA claims to arbitration in this case. The court had already conducted a trial and issued findings on some of the issues to be referred to an arbitrator. Oracle's insistence on arbitration at this point in the proceedings is seemingly more about its hope for a better result than a genuine desire for" 'an expeditious and cost-effective way of resolving disputes'" (People v. Maplebear Inc. (2022) 81 Cal.App.5th 923, 930).

I. LEGAL FRAMEWORK

Because this case involves the relationship between PAGA claims and employment arbitration agreements, we begin by summarizing the evolution of the law on the arbitration of PAGA claims.

A. PAGA Claims

"PAGA authorizes 'an aggrieved employee,' acting as a proxy or agent of the state Labor and Workforce Development Agency (LWDA), to bring a civil action against an employer 'on behalf of himself or herself and other current or former employees' to recover civil penalties for Labor Code violations they have sustained." (Adolph v. Uber Technologies, Inc. (2023) 14 Cal.5th 1104, 1113 (Adolph).) "A PAGA claim for civil penalties '" 'is fundamentally a law enforcement action.'"' [Citation.] 'The "government entity on whose behalf the plaintiff files suit is . . . the real party in interest." '" (Id. at p. 1117.)

B. PAGA Waivers: Iskanian and Viking River

In 2015-when Abrishamcar filed this lawsuit-the applicable law governing the arbitration of PAGA claims derived from Iskanian v. CLS Transportation Los Angeles, LLC (2014) 59 Cal.4th 348 (Iskanian). Under Iskanian and its progeny, PAGA claims were generally not subject to arbitration. (Iskanian, at pp. 382-383.) "After Iskanian, it was settled law in California that PAGA claims could not be compelled to arbitration, in whole or in part." (Piplack v. In-N-Out Burgers (2023) 88 Cal.App.5th 1281, 1287 (Piplack).)

In June 2022, the United States Supreme Court issued its opinion in Viking River, supra, 596 U.S. 639, which abrogated Iskanian in part. In Adolph, supra, 14 Cal.5th 1104, the California Supreme Court summarized the effect of Viking River:

"In Iskanian, we held that a predispute categorical waiver^[1] of the right to bring a PAGA action is unenforceable (Iskanian, supra, 59 Cal.4th at pp. 382-383)-a rule that Viking River left undisturbed (see Viking River, supra, 596 U.S. at pp. 659-661, 662-663 [the FAA^[2] does not preempt this rule]). We explained that such waivers violate California public policy and Civil Code sections 1668 and 3513. [Citation.]

"In addition, Iskanian held unenforceable an agreement that, while providing for arbitration of alleged Labor Code violations sustained by the plaintiff employee (what Viking River called individual claims), compels waiver of claims on behalf of other employees (i.e., non-individual claims).^[3] (Iskanian, supra, 59 Cal.4th at p. 384; see Viking River, supra, 596 U.S. at pp. 648-649.) We explained that 'whether or not an individual claim is permissible under the PAGA, a prohibition of representative [i.e., nonindividual] claims frustrates the PAGA's objectives.' (Iskanian, at p. 384; see ibid. ['[W]here . . . an employment agreement compels the waiver of representative claims under the PAGA, it is contrary to public policy and unenforceable as a matter of state law.'].) Viking River also left this rule intact. [Citations.]

"Following our decision in Iskanian, various courts held that employers may not require employees to 'split' PAGA actions in a manner that puts individual and non-individual components of a PAGA claim into bifurcated proceedings. [Citations.] Viking River held that 'the FAA preempts the rule of Iskanian insofar as it precludes division of PAGA actions into individual and non-individual claims through an agreement to arbitrate.' (Viking River, supra, 596 U.S. at p. 662.) . . . Requiring parties to adjudicate a PAGA action entirely in one proceeding, the high court said, 'compels parties to either go along with an arbitration in which the range of issues under consideration is determined by coercion rather than consent, or else forgo arbitration altogether. Either way, the parties are coerced into giving up a right they enjoy under the FAA.' (Viking River, at p. 661.) Thus, Viking River requires enforcement of agreements to arbitrate a PAGA plaintiff's individual claims if the agreement is covered by the FAA." (Adolph, supra, 14 Cal.5th at pp. 1117-1119.) "Consequently, under Viking River, employers may enforce an agreement mandating arbitration of a plaintiff's individual PAGA claim, even if the agreement does not require arbitration of the plaintiff's nonindividual claims." (Gregg v. Uber Technologies, Inc. (2023) 89 Cal.App.5th 786, 796.)

II. BACKGROUND

A. Plaintiffs' Arbitration Agreements

Abrishamcar and Kapur worked for Oracle as sales representatives until 2015 and 2017, respectively. As part of their employment, they entered into substantively identical arbitration agreements (agreement) with Oracle. The agreement stated, "Employee and Oracle understand and agree that, except as set forth below, any existing or future dispute or claim arising out of or related to Employee's Oracle employment, or the termination of that employment, including but not limited to disputes arising under the Plan, will be resolved by final and binding arbitration and that no other forum for dispute resolution will be available to either party, except as to those claims identified below."

The agreement included a class/representative action waiver stating, "Any claim by Employee against Oracle which is subject to arbitration under the terms of this Agreement to Arbitrate Disputes must be brought in Employee's individual capacity and not as a plaintiff or class member in any purported class, collective, representative, multiple plaintiffs or similar non- individual proceeding ('class action'). Employee expressly waives any and all rights to bring, participate in or maintain in any forum any class action regarding or raising claims which are subject to arbitration under the terms of this Agreement to Arbitrate Disputes. The arbitrator shall not have authority to combine or aggregate similar claims or conduct, or conduct any class action or make an award to any person or entity not a party to the arbitration. Any claim that all or part of the class action waiver . . . is unenforceable or voidable may be determined only by a court of competent jurisdiction and not by an arbitrator."

Additionally, the agreement included a severability clause stating, "If any portion of this Agreement to Arbitrate Disputes is for any reason, held invalid or unenforceable, or contrary to public policy or any law, the remainder of the Agreement to Arbitrate Disputes shall not be affected by such invalidity or unenforceability, but shall remain in full force and effect, as if the invalid or unenforceable term or portion thereof had not existed within this Agreement to Arbitrate Disputes."

The agreement provided it was governed by the FAA.

B. Proceedings Below

In September 2015, Abrishamcar filed a complaint against Oracle asserting a single cause of action under PAGA brought in her individual capacity (individual claim) and on behalf of all aggrieved former and current Oracle employees (non-individual claim). She alleged numerous Labor Code violations, including failure to provide a timely, written, signed commission contract; failure to set forth the method for computing and paying commission wages; unlawful deductions from earned commission wages; failure to pay commission wages when due; and imposition of an illegal confidentiality agreement.

In response, Oracle did not move to compel arbitration.^[4] Instead, in November 2015, Oracle demurred to and moved to strike the complaint. Oracle included a reservation of rights in its motion, stating the agreement to arbitrate and class/representative action waiver was inapplicable to PAGA claims under then-current authority, and it reserved "the right to assert its right to arbitrate Plaintiff's individual PAGA claim, and her waiver of...