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Lorena Nelsen v. Legacy Partners Residential

July 18, 2012

LORENA NELSEN, PLAINTIFF AND APPELLANT,
v.
LEGACY PARTNERS RESIDENTIAL, INC., DEFENDANT AND RESPONDENT.



Trial Court: San Francisco City and County Superior Court Trial Judge: Hon. Charlotte Walter Woolard Super. Ct. No. CGC-10-501912)

The opinion of the court was delivered by: Margulies, J.

CERTIFIED FOR PUBLICATION

(San Francisco City & County

Lorena Nelsen filed a putative class action lawsuit against her former employer, Legacy Partners Residential, Inc. (LPI), alleging multiple violations of the California Labor Code. Based on an arbitration agreement she signed when LPI hired her, LPI moved to compel Nelsen to submit her individual claims to arbitration. Nelsen purports to appeal from the ensuing order granting LPI's motion. Although Nelsen fails to meet her burden to show the court's order is appealable, we exercise our discretion to treat the appeal as a petition for writ of mandate. We find (1) the arbitration agreement is not unconscionable; and (2) notwithstanding that the agreement precludes class arbitration by its own terms, Nelsen fails to show that compelling her to individual arbitration violates state or federal law or public policy. Accordingly, we deny Nelsen's petition and affirm the correctness of the trial court's order.

I. BACKGROUND

Nelsen was employed by LPI as a property manager in California from approximately July 2006 until June 2009. At the inception of her employment, Nelsen was provided with multiple employment forms to read and sign, including a 43-page "Team Member Handbook." The last two pages of the handbook contained a section entitled, "TEAM MEMBER ACKNOWLEDGEMENT AND AGREEMENT" (Agreement), followed by signature lines for the "TEAM MEMBER" and a "LEGACY PARTNERS REPRESENTATIVE." The signature line was preceded by a sentence in bold print, stating, "My signature below attests to the fact that I have read, understand, and agree to be legally bound to all of the above terms." Nelsen and a representative of LPI both signed the Agreement in July 2006.

The first four paragraphs of the preprinted, form Agreement recited Nelsen's acknowledgments she (1) had received the handbook, (2) understood and agreed to all terms and conditions of employment outlined in the handbook, (3) agreed LPI could modify any of the policies or benefits set forth in the handbook at any time and for any reason, and (4) understood and agreed she was an "at will" employee. The fifth paragraph contained the following relevant arbitration language: "I agree that any claim, dispute, or controversy . . . which would otherwise require or resort [sic] to any court . . . between myself and Legacy Partners (or its owners, partners, directors, officers, managers, team members, agents, related companies, and parties affiliated with its team member benefit and health plans) arising from, related to, or having any relationship or connection whatsoever with my seeking employment with, employment by, or other association with, the Legacy Partners, . . . shall be submitted to and determined exclusively by binding arbitration under the Federal Arbitration Act [9 U.S.C. § 1 et seq., (FAA)], in conformity with the procedures of the California Arbitration Act . . . ."*fn1 *fn2

On July 26, 2010, Nelsen filed the present suit against LPI alleging causes of action arising under provisions of the California Labor Code for failure to (1) pay overtime, (2) provide meal periods, (3) provide rest breaks, (4) timely pay wages, (5) pay wages upon termination, (6) provide accurate itemized wage statements, (7) maintain payroll records, or (8) reimburse for necessary business expenses. The complaint also included a cause of action for violation of the Unfair Competition Law (UCL), Business and Professions Code section 17200 et seq., based on the aforementioned statutory wage claims, and seeking injunctive and other relief under that statute. The complaint was styled as a class action by Nelsen on behalf of all current and former California-based property managers who worked for LPI at any time from four years preceding the filing of the complaint until final judgment in the suit. In addition to consequential damages, restitution, and injunctive relief on behalf of the class, the complaint sought statutory penalties and attorney fees.

LPI sent Nelsen a letter advising her of the arbitration agreement and requesting she stipulate to the dismissal of her action and submit her individual claims to arbitration. After receiving no response from Nelsen, LPI moved two weeks later to compel Nelsen to arbitrate her claims. Nelsen opposed the motion on the grounds the arbitration agreement was unconscionable and violated California public policy favoring class actions and wage and hour lawsuits.

The trial court granted LPI's motion and entered an order requiring Nelsen to submit her individual claims to arbitration and staying the action in its entirety. Nelsen timely appealed from the order, citing Franco v. Athens Disposal Co., Inc. (2009) 171 Cal.App.4th 1277 (Franco) in her notice of appeal as the basis for her right to appeal.

II. DISCUSSION

Nelsen contends (1) the order compelling arbitration is appealable, (2) the arbitration clause is unconscionable and unenforceable, (3) enforcement of the arbitration clause to preclude class arbitration would violate California and federal law and public policy in the employment field, and (4) her injunctive relief claim under the UCL is not subject to arbitration.

A. Appealability

Orders granting motions to compel arbitration are generally not immediately appealable. (Abramson v. Juniper Networks, Inc. (2004) 115 Cal.App.4th 638, 648-649; Gordon v. G.R.O.U.P., Inc. (1996) 49 Cal.App.4th 998, 1004, fn. 8.) Such orders are normally subject to review only on appeal from the final judgment. (Code Civ. Proc., §§ 906, 1294.2; see Muao v. Grosvenor Properties, Ltd. (2002) 99 Cal.App.4th 1085, 1088-1089.) Nelsen claims this case comes within an exception to the general rule recognized in Franco based on the so-called "death knell" doctrine. Franco permitted an immediate appeal from an order made in a putative class action requiring arbitration of individual claims and waiving class arbitration because such an order is effectively the "death knell" of the class litigation. (See Franco, supra, 171 Cal.App.4th at p. 1288.)

As an initial matter, LPI points out Nelsen failed to cite Franco or any other authority supporting the appealability of the trial court's order anywhere in her opening brief, in violation of California Rules of Court, rule 8.204(a)(2)(B). On that basis, LPI asks this court to (1) strike Nelsen's opening brief, and (2) find Nelsen waived any argument for appealability based on Franco. (See Lester v. Lennane (2000) 84 Cal.App.4th 536, 557 [holding Court of Appeal has discretion to strike opening brief that fails to include an adequate statement of appealability]; Baugh v. Garl (2006) 137 Cal.App.4th 737, 746 [contentions not raised in appellant's opening brief deemed waived].) We decline to grant either remedy in this case. Nelsen's citation to Franco in her notice of appeal put LPI on notice of her position regarding appealability and LPI took advantage of the opportunity in its respondent's brief to address that case and cite authority arguably contrary to it. LPI cannot reasonably claim prejudice from our consideration of Nelsen's argument based on Franco.

Franco involved a lawsuit filed by an employee against his employer seeking relief on behalf of himself and other employees for alleged state statutory wage and hour violations. (Franco, supra, 171 Cal.App.4th at p. 1282.) Franco's employer filed a petition to compel arbitration based on an arbitration agreement containing provisions waiving class arbitrations, and precluding Franco from bringing claims in arbitration on behalf of other employees. (Id. at pp. 1283-1284.) The trial court granted the petition, directed Franco to submit his individual claims to arbitration, denied class arbitration, and ordered the civil action to be dismissed for all purposes except enforcement of the arbitration order or to confirm, modify or vacate any arbitration award. (Id. at pp. 1285, 1287.) The employer contended Franco's ensuing appeal from the order was improper. Without further elaboration, the Court of Appeal found the order was appealable: "The [trial court's] order found that the class arbitration waiver was enforceable and instructed Franco to arbitrate his claims individually. That was the 'death knell' of class litigation through arbitration." (Id. at p. 1288.)

The "death knell" doctrine was explained as follows in General Motors Corp. v. Superior Court (1988) 199 Cal.App.3d 247 at page 251: "Our Supreme Court . . . has held that where an order has the 'death knell' effect of making further proceedings in the action impractical, the order is appealable. In Daar v. Yellow Cab Co. [(1967)] 67 Cal.2d 695, the court held that an order sustaining a demurrer to class action allegations and transferring the action from superior court to municipal court was an appealable order. The court stated: '[H]ere the order under examination not only sustains the demurrer, but also directs the transfer of the cause from the superior court, where it was commenced as a class action, to the municipal court. We must assay the total substance of the order. It determines the legal insufficiency of the complaint as a class suit and preserves for the plaintiff alone his cause of action for damages. In "its legal effect" the order is tantamount to a dismissal of the action as to all members of the class other than plaintiff. It has virtually demolished the action as a class action. If the propriety of such disposition could not now be reviewed, it can never be reviewed.' "

Thus, "[t]he death knell doctrine [applies] when it is unlikely the case will proceed as an individual action." (Szetela v. Discover Bank (2002) 97 Cal.App.4th 1094, 1098 (Szetela), italics added [finding an order sharply limiting the scope of class arbitration was not a "death knell" order].) Here, Nelsen fails to explain or demonstrate how the trial court's order makes it impossible or impracticable for her to proceed with the action at all.*fn3 However, despite Nelsen's default, we need not decide whether her appeal comes within the death knell doctrine. As the Court of Appeal did in Szetela, we exercise our discretion to treat Nelsen's appeal as a petition for a writ of mandate. (Szetela, at p. 1098; Olson v. Cory ...


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