Leenay v. Superior Court of San Bernardino Cnty.

81 Cal.App.5th 553

297 Cal.Rptr.3d 204

Ann LEENAY, Petitioner,

v.The SUPERIOR COURT OF SAN BERNARDINO COUNTY, Respondent;

Lowe's Home Centers, LLC, Real Party in Interest.

E077292

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

Filed July 22, 2022

The Graves Firm, Allen Graves, Pasadena, and Jacqueline S. Treu for Petitioner.

No appearance for Respondent.

Gibson, Dunn & Crutcher, Katherine V.A. Smith, Los Angeles, Michele L. Maryott, Katie M. Magallanes, Irvine, and Bradley J. Hamburger, Los Angeles, for Real Party in Interest.

OPINION

MENETREZ, J.

Section 1281.4 of the Code of Civil Procedure requires a court to stay an action pending arbitration "of a controversy which is an issue involved" in the action. (Unlabeled statutory citations refer to the Code of Civil Procedure.) In this writ proceeding, we must decide what the statute means. Specifically, does it authorize the court to stay a plaintiff's action on the basis of a pending arbitration to which the plaintiff is not a party?

Ann Leenay brought an action against her former employer, Lowe's Home Centers, LLC (Lowe's), under the Private Attorneys General Act of 2004 (PAGA). ( Lab. Code, § 2698 et seq. ) The trial court granted a petition to coordinate her action with a number of other PAGA actions against Lowe's. Lowe's then moved to stay the coordinated actions under section 1281.4. Lowe's based the motion on over 50 arbitration proceedings against it, but Leenay and the other plaintiffs in the coordinated actions are not parties in any of those arbitration proceedings. The trial court granted the motion to stay, and Leenay filed a petition for writ of mandate asking us to vacate the order.

We conclude that the trial court erred by granting the motion to stay. Section 1281.4 does not authorize the court to stay a plaintiff's action on the basis of a pending arbitration to which the plaintiff is not a party. Rather, section 1281.4 applies only when a court has ordered parties to arbitration, the arbitrable issue arises in the pending court action, and the parties in the arbitration are also parties to the court action. Under those circumstances, the court must stay the action (or enter a stay with respect to the arbitrable issue, if the issue is severable). ( § 1281.4.) Those circumstances do not exist in this case. We therefore grant Leenay's writ petition.

BACKGROUND

I. Leenay's Complaint

In September 2019, Leenay filed her PAGA complaint against Lowe's in Los Angeles County Superior Court. She brought the lawsuit on behalf of current and former commissioned employees of Lowe's, alleging that Lowe's miscalculated the employees' premium pay when compensating them for missed meal periods and overtime hours. More specifically, she alleged that (1) Lowe's failed to include employees' sales commissions when calculating their regular rate of compensation for missed meal period premiums, and (2) Lowe's used an erroneous formula for calculating the commission component of the overtime premium. Leenay further alleged that the commissioned employees' wage statements did not disclose information necessary to determine how Lowe's was calculating the overtime premium. In addition, she alleged that Lowe's failed to provide timely and uninterrupted meal periods for commissioned employees.

On the basis of the foregoing allegations, Leenay alleged causes of action for failure to pay overtime wages ( Lab. Code, § 510 ), failure to provide meal periods ( Lab. Code, §§ 226.7, subd. (b), 512 ), failure to pay missed meal period premiums ( Lab. Code, § 226.7, subd. (c) ), failure to timely pay wages ( Lab. Code, § 204 ), failure to pay wages due upon discharge or resignation ( Lab. Code, §§ 201, 202 ), and failure to provide accurate itemized wage statements ( Lab. Code, § 226, subd. (a) ).

II. The Petition for Coordination

In May 2020, the plaintiffs in Ceniceros, et al. v. Lowe's Home Centers, LLC (Ceniceros ) (San Diego Super. Ct. No. 37-2020-00010047-CU-OE-CTL) submitted a petition for coordination of eight PAGA actions against Lowe's. The Ceniceros plaintiffs sought to coordinate their own action, Leenay's action, and six other actions pending across the state. They asserted that the eight PAGA actions involved parallel, though not identical, claims regarding the alleged unlawful practices of Lowe's, including failure to provide meal or rest periods, failure to pay all wages or overtime wages, failure to provide accurate itemized wage statements, and unlawful deductions from wages. The Ceniceros plaintiffs argued that coordination would prevent costly and duplicative discovery and potentially inconsistent rulings. Leenay opposed the petition for coordination, arguing that her action was not factually or legally similar to the other actions in the coordination petition.

The petition was assigned to a coordination motion judge in San Bernardino County Superior Court. In August 2020, the court granted the petition in part and denied it in part. The court ruled that six of the eight actions, including Leenay's action, should be coordinated.¹ The coordinated actions were assigned to the same court that ruled on the petition for coordination.

III. The Motion to Stay the Coordinated Actions

In March 2021, Lowe's moved to stay the coordinated PAGA actions pending resolution of over 50 arbitration proceedings against Lowe's. The arbitration claimants were current or former employees at various Lowe's locations in California, and they brought their claims on an individual basis.

They alleged numerous wage and hour violations under the Labor Code, including failure to pay overtime wages, failure to pay minimum wages, failure to provide meal and rest periods, failure to reimburse for required expenses, failure to provide accurate itemized wage statements, and failure to pay wages due upon discharge or resignation. The group of arbitration claimants did not include Leenay or any of the other plaintiffs in the coordinated actions.

Lowe's argued that section 1281.4 mandated a stay of the coordinated actions. According to Lowe's, the arbitrations and the coordinated actions involved overlapping legal and factual issues, because the coordinated actions and the arbitration demands alleged many of the same Labor Code violations, and the plaintiffs in the coordinated actions sought to recover PAGA penalties on behalf of aggrieved employees, including the arbitration claimants. Lowe's argued that a stay of the coordinated actions was necessary to preserve the jurisdiction of the arbitrator and protect against inconsistent determinations by the court and arbitrator.

Leenay opposed the motion to stay. She argued that section 1281.4 did not authorize the court to stay a case when a third party litigant in a separate case had been ordered to arbitration. She further argued that her action and the arbitrations did not involve overlapping issues—none of the arbitration demands alleged the miscalculation of commissioned employees' premium pay—so there was no risk of inconsistent rulings. At oral argument, Leenay also argued that granting the motion would effect a perpetual stay of the coordinated PAGA actions, because a large employer like Lowe's, which required employees to sign arbitration agreements, would always be defending arbitrations alleging wage and hour violations.

In April 2021, the trial court granted the motion to stay all the coordinated actions. The court acknowledged that the arbitration claimants were not plaintiffs in the coordinated actions. But the court ruled that section 1281.4 "focuses on the issue rather than the parties ," and the statute does not specify "that any of the parties subject to arbitration must also be parties to the litigation." The court concluded that the arbitration claimants were in the group of aggrieved employees that the plaintiffs sought to represent in their PAGA actions, and the proceedings would present the same issues—whether Lowe's violated provisions of the Labor Code. The court determined that section 1281.4 mandated a stay under those circumstances.

The court noted the perpetual stay issue identified by Leenay, describing the issue as "[t]he best argument against a stay." But the court nevertheless rejected the argument and concluded that the coordinated actions should be stayed pending the outcome of the 50-plus arbitrations. The court reasoned that once those arbitrations are resolved, the court and the parties can determine whether Leenay's concern about perpetual arbitrations is "real." The court set a status conference for January 31, 2022, to assess the status of the arbitrations and determine whether the court should continue or lift the stay.

Leenay petitioned this court for a writ of mandate directing the trial court to vacate its order granting the motion to stay. We issued an order to show cause why the requested relief should not be granted.

STANDARD OF REVIEW

Ordinarily, we review a trial court's decision to stay an action pending arbitration for abuse of discretion. ( Jarboe v. Hanlees Auto Group (2020) 53 Cal.App.5th 539, 547, 267 Cal.Rptr.3d 640 ( Jarboe ).) But when, as here, the court's decision rests on the interpretation of a statute and its application to undisputed facts, the case presents a question of law that we review de novo. ( Cal-Western Business Services, Inc. v. Corning Capital Group (2013) 221 Cal.App.4th 304, 309, 163 Cal.Rptr.3d 911.)

DISCUSSION

Leenay argues that the court erred by staying the coordinated actions. We agree. The plaintiffs in the coordinated actions are not parties to the arbitrations. Section 1281.4 does not authorize the court to stay an action on the basis of an arbitration to which the plaintiff is not a party.

In interpreting section 1281.4, our goal " ‘is to determine the Legislature's intent so as to effectuate the law's purpose.’ [Citation.] ‘We begin by examining the statutory language, giving it a plain and commonsense meaning. [Citation.] We do not, however, consider the statutory...