Soltero v. Precise Distribution, Inc.

322 Cal.Rptr.3d 133

Nelida SOLTERO, Plaintiff and Respondent,

v.PRECISE DISTRIBUTION, INC., Defendant and Appellant.

D083308

Court of Appeal, Fourth District, Division 1.

Filed June 18, 2024

APPEAL from an order of the Superior Court of San Bernardino County, David Cohn, Judge. Affirmed. (Super. Ct. No. CIVSB2203669)

OZ Law Group, Greg Ozhekim, Encino, and Susan K. Laffer for Defendant and Appellant.

Gonzalez Weerasuriya and Suren N. Weerasuriya for Plaintiff and Respondent.

BUCHANAN, J.

Precise Distribution, Inc. (Precise) appeals from an order denying its motion to compel arbitration of an employment action brought against it by Nelida Soltero, who previously worked in a Precise distribution warehouse. Precise argues the trial court should have compelled arbitration under the terms of an arbitration agreement between Soltero and Real Time Staffing Services, LLC (Real Time), a temporary staffing agency that placed Soltero with Precise as a temporary worker. Real Time itself is not a party to the lawsuit. We conclude that the trial court correctly denied Precise’s motion because it was not a party to the arbitration agreement between Soltero and Real Time, and it cannot compel arbitration based on theories of equitable estoppel, third-party beneficiary, or agency. We therefore affirm the order.

FACTUAL AND PROCEDURAL BACKGROUND

Real Time is a temporary staffing agency that hires and places temporary workers at businesses in California, including Precise. Real Time is a subsidiary of EmployBridge, LLC (EmployBridge).¹

Soltero applied for employment with Real Time in December 2016. As part of the onboarding process, she electronically signed the Spanish language version of a Mutual Agreement Regarding Arbitration and Class Claims (Agreement). The appellate record includes a purported translation of the document into English.

The Agreement defined "the [C]ompany" to include EmployBridge, multiple other named companies, "and all related entities," but not their clients.² The Agreement stated that in the event of "any dispute between [Soltero] and the [C]ompany relating to or arising out of the employment or the termination of’ her employment, "[Soltero] and the Company agree to submit all such claims or disputes to be resolved by final and binding arbitration, in accordance with the procedural rules of the Federal Arbitration Act." The Agreement stated that such disputes included, but were not limited to, grievances for breach of contract, wages, compensation, reimbursement, the Federal Labor Standards Act "and status of comparable or local the laws [sic]."

Real Time placed Soltero on a temporary work assignment with Precise from October 2017 through January 2021. A Real Time manager worked onsite at Precise, serving as the main point of contact for Real Time employees assigned to work there.

In February 2022, Soltero filed a class action complaint against Precise for its alleged failure to provide required meal periods and rest breaks to employees, failure to pay premiums for meal and rest break violations, and related claims for inaccurate wage statements and failure to immediately pay all wages due upon separation of employment, including meal and rest break premiums. Soltero asserted these claims under identified provisions of the Labor Code, the Industrial Welfare Commission’s wage orders, and the unfair competition law (Bus. & Prof. Code, § 17200 et seq.). Soltero did not name Real Time as a defendant. The complaint mentioned Real Time only in the venue paragraph, which alleged that Soltero "was staffed by [Real Time], located in San Bernardino, to work at Precise’s distribution warehouse." The complaint did not mention any of the terms of Soltero’s employment agreement with Real Time.

Precise filed a motion to compel arbitration under the Agreement between Soltero and Real Time. Precise argued that even as a nonsignatory to the Agreement, it was entitled to compel arbitration based on theories of equitable estoppel, third-party beneficiary, and agency. Soltero opposed the motion. After a hearing, the trial court denied Precise’s motion to compel arbitration.

DISCUSSION

By its terms, the Agreement only requires arbitration of employment disputes "between [Soltero] and the [C]ompany." Although Precise is not a party to the Agreement and does not claim that it falls within its definition of "the Company," Precise argues that it is nevertheless entitled to compel arbitration under the Agreement based on theories of equitable estoppel, third-party beneficiary, and agency. We address each theory in turn.

I Standard of Review

[1] Because the material facts are undisputed, we review de novo whether the trial court correctly denied Precise’s motion to compel arbitration. (Fuentes v. TMCSF, Inc. (2018) 26 Cal.App.5th 541, 547, 237 Cal.Rptr.3d 256 (Fuentes); Goldman v. KPMG, LLP (2009) 173 Cal. App.4th 209, 226, fn. 9, 92 Cal.Rptr.3d 534 (Goldman).)

II Equitable Estoppel

[2, 3] Although there is a strong public policy in favor of contractual arbitration, there is no policy compelling anyone to accept arbitration of controversies which they have not agreed to arbitrate. (Victoria v. Superior Court (1985) 40 Cal.3d 734, 744, 222 Cal.Rptr. 1, 710 P.2d 833.) Because arbitration is a matter of contract, the basic rule is that one must be a party to an arbitration agreement to be bound by it or invoke it—with limited exceptions. (DMS Services, LLC v. Superior Court (2012) 205 Cal.App.4th 1346, 1352, 140 Cal. Rptr.3d 896.)

[4, 5] One such exception is the doctrine of equitable estoppel. Equitable estoppel precludes a party from asserting rights they otherwise would have had against another when their own conduct renders assertion of those rights inequitable. (Goldman, supra, 173 Cal.App.4th at p. 220, 92 Cal.Rptr.3d 534.) As applied in the arbitration context, "if a plaintiff relies on the terms of an agreement to assert his or her claims against a nonsignatory defendant, the plaintiff may be equitably estopped from repudiating the arbitration clause of that very agreement. In other words, a signatory to an agreement with an arbitration clause cannot ‘have it both ways’; the signatory ‘cannot, on the one hand, seek to hold the non-signatory liable pursuant to duties imposed by the agreement, which contains an arbitration provision, but, on the other hand, deny arbitration’s applicability because the defendant is a non-signatory.’ " (Ibid., internal quotation marks omitted.)

[6, 7] "[T]he sine qua non for application of equitable estoppel as the basis for allowing a nonsignatory to enforce an arbitration clause is that the claims [the] plaintiff asserts against the nonsignatory must be dependent upon, or founded in and inextricably intertwined with, the underlying contractual obligations of the agreement containing the arbitration clause." (Goldman, supra, 173 Cal.App.4th at pp. 217-218, 92 Cal.Rptr.3d 534.) " ‘The plaintiff’s actual dependence on the underlying contract in making out the claim against the nonsignatory … is … always the sine qua non of an appropriate situation for applying equitable estoppel.’" (Fuentes, supra, 26 Cal.App.5th at p. 552, 237 Cal.Rptr.3d 256, internal quotation marks omitted.) "This requirement comports with, and indeed derives from, the very purposes of the doctrine: to prevent a party from using the terms or obligations of an agreement as the basis for his claims against a nonsignatory, while at the same time refusing to arbitrate with the nonsignatory under another clause of that same agreement." (Goldman, at p. 221, 92 Cal. Rptr.3d 534.)

[8] Applying these principles, we conclude that the trial court correctly declined to compel arbitration based on the doctrine of equitable estoppel. Soltero is suing Precise for its alleged violations of Labor Code provisions governing meal and rest breaks, premium payments for missed meal and rest breaks, wage statements, and immediate payment of final wages upon separation of employment. Her complaint does not mention or rely on any provision of her employment agreement with Real Time as a basis for imposing liability on Precise. Accordingly, Soltero’s complaint against Precise is not "founded in and inextricably bound up with the obligations imposed by the agreement containing the arbitration clause." (Goldman, supra, 173 Cal.App.4th at p. 219, 92 Cal. Rptr.3d 534.) She is not trying to have it both ways because she is not seeking to impose liability on Precise based on the terms of her employment agreement with Real Time while simultaneously seeking to avoid the arbitration clause of that same agreement.

Precise relies on the holding of Garcia v. Pexco, LLC (2017) 11 Cal.App.5th 782, 217 Cal.Rptr.3d 793 (Garcia), which also involved the Real Time staffing agency. In that case, the plaintiff Garcia signed an arbitration agreement with Real Time as part of its hiring process. Real Time assigned him to work as a temporary employee for Pexco, which was not a party to the arbitration agreement. After Garcia was terminated, he filed a class action suit against both Real Time and Pexco for violations of the Labor Code and unfair business practices pertaining to payment of wages. Real Time and Pexco moved to compel arbitration, and the trial court granted the motion, relying on theories of equitable estoppel and agency as to Pexco. Garcia appealed the order only as to Pexco—not disputing that the trial court had properly ordered arbitration as to Real Time. (Id. at pp. 784-785, 217 Cal.Rptr.3d 793.)

In affirming the trial court’s equitable estoppel ruling as to Pexco, the Court of Appeal first noted that "[e]ven though Garcia’s claims are styled as Labor Code violations, the arbitration agreement applies" because "Labor Code violations are clearly, and indeed expressly, included as one of the types of disputes covered by the arbitration agreement." (Garcia, supra, 11 Cal.App.5th at p. 786, 217 Cal.Rptr.3d 793.) The court noted that even Garcia had conceded...