W. Bagel Co. v. Superior Court of L. A. Cnty.

66 Cal.App.5th 649

281 Cal.Rptr.3d 329

WESTERN BAGEL COMPANY, INC., Petitioner,

v.The SUPERIOR COURT OF LOS ANGELES COUNTY, Respondent;

Jose Calderon, Real Party in Interest.

B305625

Court of Appeal, Second District, Division 1, California.

Filed June 24, 2021

Lewis Brisbois Bisgaard & Smith, Brittany B. Sutton, Tracy D. Forbath, San Diego, and Katherine E. Akamine, Costa Mesa, for Petitioner.

No appearance for Respondent.

Bitton & Associates and Ophir J. Bitton, Studio City, for Real Party in Interest.

BENDIX, J.

At all relevant times, real party in interest Jose Calderon (Calderon), a Spanish-speaker who can read and write only basic English, was employed by petitioner Western Bagel Company, Inc. (Western Bagel) at one of its retail stores. Calderon commenced a putative class action against Western Bagel for allegedly failing to provide its employees with legally compliant meal and rest breaks. Western Bagel moved to compel arbitration, arguing that Calderon had executed an arbitration agreement that required him to resolve disputes arising out of his employment through binding arbitration. As the parties briefed the motion, it became apparent that the severability clause in the Spanish version of the arbitration agreement Calderon signed indicates the parties agreed to nonbinding arbitration, whereas the severability clause in the original English version of that document suggests the parties consented to binding arbitration. Western Bagel attributed the discrepancy to a typographical error that a third-party company had made when it translated the English version of the document to Spanish. Other provisions in both the English and Spanish versions of the agreement, however, either state explicitly, or strongly support the conclusion, that the agreement calls for binding arbitration.

The trial court found that the Federal Arbitration Act (FAA) governs the parties’ arbitration agreement, concluded that the inconsistency between the Spanish and English severability clauses creates an ambiguity regarding whether the parties consented to binding or nonbinding arbitration, resolved this ambiguity against Western Bagel pursuant to the constructive canon of contra proferentem (whereby an ambiguity in a contract is construed against the drafter thereof),¹ and ordered the parties to arbitrate their dispute on a nonbinding basis.

Although it is unclear whether Western Bagel has sought review of an appealable order, we need not reach that issue because we exercise our discretion to construe Western Bagel's appeal as a petition for writ of mandate. Upon reaching the merits of Western Bagel's writ petition, we conclude the FAA preempted the trial court's use of contra proferentem. Next, assuming arguendo there is an ambiguity regarding whether the parties consented to binding or nonbinding arbitration, we employ the FAA's default rule that any ambiguities about the scope of an arbitration agreement must be resolved in favor of arbitration as envisioned by the FAA, a fundamental attribute of which is a binding arbitral proceeding. We thus grant Western Bagel's petition and direct the trial court to enter a new order compelling the parties to arbitrate their dispute via binding arbitration in accordance with the terms of their arbitration agreement.

FACTUAL AND PROCEDURAL BACKGROUND²

We summarize only the facts relevant to this review proceeding.

1. The Relationship of the Parties, Calderon's Execution of the Spanish Version of the Arbitration Agreement, and Relevant Provisions of the English and Spanish Versions of the Document

Western Bagel is a nationwide seller of bagels that has retail locations in California. Since 1985, Calderon has worked for Western Bagel as a retail store employee. Western Bagel considers Calderon to be a "Spanish-only speaking employee," and Calderon claims that he "speak[s] broken English" and "can read and write very basic English but ... need[s] a Spanish/English translator for letters and contracts."

On December 13, 2018, Western Bagel provided Calderon with a document, written in Spanish, that was titled, "Acuerdo Mutuo Para Arbitraje De Reclamación," which, translated into English, means: "Mutual Agreement to Arbitrate Claims" (MAAC). (Boldface, underscoring, & some capitalization omitted.) Western Bagel drafted the MAAC originally in English, and it later hired a third-party company to translate the MAAC into the Spanish language version of the document that Western Bagel supplied to Calderon.³

Calderon signed the Spanish MAAC on December 3, 2018, as did Western Bagel's representative, Steve Ustin. The parties dispute, inter alia, whether: Calderon had the opportunity to ask a Spanish-speaking employee questions concerning the MAAC; Western Bagel required Calderon to sign and return the document within a specific timeframe; and Western Bagel provided Calderon with a copy of the Judicial Arbitration and Mediation Services, Inc. (JAMS) rules referenced in the MAAC. Western Bagel did not provide Calderon with the English MAAC.⁴

Paragraph 1 of the Spanish MAAC provides in pertinent part: "To the maximum extent permitted by law, [Western Bagel] and I mutually agree to resolution through binding arbitration for all claims or causes of action ... that [Western Bagel] may bring against me or that I may bring against [Western Bagel] ...." In addition, paragraph 1 states that "[c]laims covered by this Agreement include, [inter alia], ... any claim arising under ... state and local anti-discrimination laws, fair employment laws and labor laws, including but not limited to ... the California Labor Code."

Even though paragraph 1 states that Calderon and Western Bagel agreed to have their disputes resolved through binding arbitration, the severability provision in paragraph 10 of the Spanish MAAC states in relevant part: "If any provision of this Agreement, apart from paragraph 4,^{[5 ]} is found to be unenforceable, whether in whole or in part, this finding will not affect the validity of the rest of this Agreement and the Agreement will be carried out to the fullest possible extent to ensure that the resolution of all disputes between the parties as described herein are resolved via neutral, non-binding arbitration." (Italics added.)

In contrast, paragraph 10 of the English MAAC provides that if any part of the agreement other than paragraph 4 is found to be unenforceable, "this Agreement shall be reformed to the greatest extent possible to ensure that the resolution of all conflicts between the parties as described herein are resolved by neutral, binding arbitration." (Italics added.) Western Bagel claims that this discrepancy between the Spanish and the English versions is attributed to a "typographical error " made by the third-party translator when it prepared the Spanish MAAC.

Much like paragraph 1 of the Spanish MAAC, other portions of the document expressly declare that the parties agreed to resolve their disputes via binding arbitration. One part of the introductory paragraph provides: "I understand that by signing this [MAAC], both [Western Bagel] and I agree to resolve any differences between us (except as specifically stated below) through the binding arbitration procedures explained within this Agreement." A bullet-point under the introductory paragraph reads: "[A]ny claim arbitration [sic ] undertaken by myself or [Western Bagel] as opposed to being litigated through a court or other agency will be mutually binding." Similarly, paragraph 7(c) provides in pertinent part: "The arbitrator's decisions regarding the claims will be final and binding between the parties and are enforceable in any court that has jurisdiction thereof."

Other provisions of the Spanish MAAC reflect that the parties intended to participate in binding arbitration. For instance, paragraph 3 states: "I understand that by signing this Agreement, [Western Bagel] and I waive any rights to a jury trial for any claims against the other, as previously described in paragraph l." One of the sentences preceding the signature lines provides: "I acknowledge that, except as expressly provided within this Agreement, I waive my right to file an adjudicated claim or resolution through a court or jury, and that [Western Bagel] also waives these rights." (Boldface omitted.)

Furthermore, the following text appears below the signature lines in the Spanish MAAC: "DISCLAIMER: The translation of this document is for informational purposes only. This is a translation originally drawn up in English. Accordingly, it is understood that all legal rights, responsibilities and/or obligations are governed by the original English version of this document. Furthermore, we reserve the right to correct any errors in this document. This document is available in Spanish for your convenience only. You agree, however, that any ambiguity or issue of interpretation will be resolved solely by the English version of this document."

2. The Commencement of the Instant Litigation and Western Bagel's Motion to Compel Arbitration

On July 1, 2019, Calderon filed a class action complaint against Western Bagel, alleging four causes of action: (1) failure to provide meal breaks, (2) failure to provide rest periods, (3) waiting time penalties, and (4) unfair business practices. At bottom, Calderon avers that Western Bagel "did not have any policy for mandatory meal breaks and rest periods" until "in or around 2016," and "even after the policy change," Western Bagel failed to provide legally compliant meal and rest breaks. Calderon seeks to represent two proposed classes: (1) "All individuals employed and formerly employed by [Western Bagel] in California in Retail Store position [sic ] during the appropriate time period whom [Western Bagel] failed to authorize and permit the legally requisite meal periods"; and (2) "All individuals employed and formerly employed by [Western Bagel] in California in Retail Store position [sic ] during the appropriate time period whom [Western Bagel]...