California Court of Appeals, Second District, Fourth Division
Reposted
Upon Lifting of Bankruptcy Stay; Modified on 1/13/15 (see end
of opn.)
APPEAL
from an order of the Superior Court of Los Angeles County No.
BC472230, Deirdre Hill, Judge. Affirmed in part, dismissed in
part.
Sheppard, Mullin, Richter & Hampton, Ryan D. McCortney
and Jason M. Guyser for Defendant and Appellant.
Scott
Cole & Associates, Matthew R. Bainer and Molly A. DeSario
for Plaintiff and Respondent.
EPSTEIN, P. J.
The Wet
Seal Retail, Inc. (Wet Seal) appeals from the denial of its
motion to compel arbitration of this wage and hour action
brought by employee Elizabeth Montano. Wet Seal also
challenges the grant of Montano's motion to compel
discovery responses. We affirm the order denying the motion
to compel arbitration and dismiss the challenge to the
discovery order as nonappealable.
FACTUAL
AND PROCEDURAL SUMMARY
In
October 2011, Montano filed this putative class action
against Wet Seal, alleging that it failed to offer all
required meal and rest periods to its California non-exempt
retail employees; failed to provide all regular and overtime
pay when due or when employment terminated; and failed to
provide accurate semi-monthly itemized wage statements, in
violation of the Labor and Business and Professions Codes,
Industrial Welfare Commission Wage Order No. 7, and Title 8
of the California Code of Regulations. She brought this
action on behalf of herself and, as a class action, on behalf
of all persons similarly situated and damaged by the alleged
conduct during the specified time period. Her complaint
included a representative claim under the Private Attorneys
General Act (PAGA) (Lab. Code, § 2699).[1]
Montano
propounded various discovery requests to Wet Seal, which
responded with objections but no substantive information.
After an unsuccessful effort to meet and confer, Montano
filed a motion to compel discovery responses. Before the
hearing date for that motion, Wet Seal moved to compel
arbitration of Montano's individual claims and to stay
the action pending completion of arbitration.
Wet
Seal's motion to compel arbitration was based on a
“Mutual Agreement to Arbitrate Claims”
(arbitration agreement) signed by Montano, which provided:
“You and the Company hereby agree that any and all
disputes, claims or controversies arising out of or relating
to this Agreement, the employment relationship between the
parties, the termination of this Agreement or the termination
of the employment relationship, that are not resolved by
their mutual agreement shall be resolved by final and binding
arbitration by a neutral arbitrator.”[2]
Montano
opposed the motion to compel arbitration on several grounds,
including that the arbitration agreement was procedurally and
substantively unconscionable. The unconscionability argument
was based in part on the arbitration agreement's waiver
of the right to bring class actions and representative PAGA
actions: “The parties also waive their right to join or
consolidate claims with others or to make claims with others
as a representative or a member of a class or as a private
attorney general. The waiver in the preceding sentence is a
material or important term of this arbitration agreement. If
either party initiates or joins in a lawsuit or arbitration
against the other party in violation of this waiver
and the waiver is found to be unenforceable for any
reason by a court or arbitrator, then this entire arbitration
agreement is void and unenforceable by the parties.”
On
March 28, 2012, the trial court heard Montano's motion to
compel discovery and Wet Seal's motion to compel
arbitration. The transcript reflects the parties'
awareness of the trial court's tentative ruling to
invalidate the arbitration agreement's PAGA waiver and
sever that invalid waiver from the remainder of the
arbitration agreement, which was otherwise enforceable,
compel arbitration of Montano's individual claims, stay
the action pending completion of arbitration, and defer
Montano's motion to compel further discovery responses as
moot.[3] At the conclusion of the hearing, the
court took the matter under submission and indicated the
final order would be sent to the parties.
Later
that day, the court issued its final order, but apparently
did not send it to the parties. In that order, the court
declined to sever the invalid waiver provision, stating in
relevant part: “In terms of severing the PAGA waiver
provision, the paragraph in which it is contained states that
if the waiver is found to be unenforceable for any reason by
a court, then the entire arbitration agreement is void and
unenforceable by the parties. Thus, the PAGA waiver is not
severable.” Having determined that the entire
arbitration agreement was unenforceable, the court denied Wet
Seal's motion to compel arbitration. As to Montano's
motion to compel discovery, the final order stated in
relevant part: “The Court does not find that any of the
objections have merit, and in light of its ruling on the
motion to compel arbitration, the motion to compel further
discovery responses is granted.”
Based
on the court's Civil Case Summary-which indicated that
the court had adopted its tentative ruling as its final
ruling-the parties mistakenly assumed that the court had
adhered to its tentative decision to sever the invalid PAGA
waiver, enforce the class action waiver, grant arbitration of
the individual claims, stay the action, and defer the motion
to compel discovery as moot. Based on this mistaken belief,
the parties stipulated to the filing of a first amended
complaint in which Montano would dismiss all arbitrable
claims, leaving only the representative claim for civil
penalties under the PAGA. The trial court approved the
parties' stipulation, which erroneously stated that the
court had severed the invalid PAGA waiver, enforced the class
action waiver, granted the motion to compel arbitration of
the individual claims, stayed the action, and deferred the
motion to compel discovery as moot. With court approval,
Montano filed a first amended complaint that alleged only a
representative PAGA claim.
Subsequently,
the parties discovered the court actually had denied the
motion to compel arbitration and had granted the motion to
compel discovery. Wet Seal timely appealed from the order
denying the motion to compel arbitration. (Code Civ. Proc.,
§ 1294, subd. (a).) We deferred oral argument in this
case pending decisions by the California Supreme Court in
Sonic-Calabasas A, Inc. v. Moreno (2013) 57 Cal.4th
1109 and Iskanian v. CLS Transportation Los Angeles,
LLC (2014) 59 Cal.4th 348
(Iskanian).[4]
DISCUSSION
...