California Court of Appeals, Fourth District, First Division
Petition for writ of mandate from an order of the Superior Court of San Diego County No. 37-2013-00080841- CU-OE-CTL, Judith F. Hayes, Judge.
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Tharpe & Howell, Sherry B. Shavitt, Jennifer S. McGeorge; Littler Mendelson and Henry Lederman for Petitioner.
Blumenthal, Nordrehaug & Bhowmik, Norman B. Blumenthal, Kyle R. Nordrehaug; and Mark A. Osman for Real Party in Interest.
Securitas Security Services USA, Inc. (Securitas) petitions for a writ of mandate and/or prohibition challenging the superior court's order granting its amended motion to compel arbitration in which the court ordered the parties to arbitrate all of real party in interest Denise Edwards's claims, including her class action and representative claims under the Labor Code Private Attorneys General Act of 2004 (PAGA) (Lab. Code, § 2698 et seq.). Securitas contends the court impermissibly rewrote the parties' written dispute resolution agreement, which contained an express waiver of class, collective or representative claims; it argues the parties did not mutually agree to arbitrate class and/or representative claims and the agreement should have been deemed silent on arbitration of any class or representative action. It further contends the court erred by refusing to enforce the lawful class action waiver, as well as the PAGA waiver, because as to the latter, Edwards's waiver was voluntary, rendering the circumstances unlike those in Iskanian v. CLS Transportation (2014) 59 Cal.4th 348 [173 Cal.Rptr.3d 289, 327 P.3d 129] (Iskanian), certiorari denied sub nom. CLS Transportation Los Angeles v. Iskanian (2015) 574 U.S. ___ [190 L.Ed.2d 911, ___S.Ct. ___]. Securitas argues that because Iskanian does not apply, the parties' arbitration agreement should be enforced in its entirety as to Edwards's individual claims.
We conclude the trial court correctly ruled that Iskanian rendered the PAGA waiver within the parties' dispute resolution agreement unenforceable. However, the court then erred by invalidating and severing the waiver provision, including an enforceable class action waiver, from the agreement and sending Edwards's entire complaint, including her class action and PAGA claims, to arbitration. Under the plain language of the parties' agreement, in the event Edwards sought to arbitrate a PAGA claim, her PAGA waiver (or any other waiver of the right to bring a dispute as a class or collectively) was not severable from the remainder of the agreement, thus rendering the entire dispute resolution agreement unenforceable and precluding the court from requiring the parties to arbitrate their disputes. Though we grant Securitas's petition to the extent it seeks to set aside the order compelling Edwards's
class and PAGA claims to arbitration, we deny the remainder of its requested relief, and based on our de novo interpretation of the parties' agreement, direct the trial court to enter a new order denying Securitas's amended motion to compel arbitration.
FACTUAL AND PROCEDURAL BACKGROUND
Securitas provides specialized security services throughout the United States. In June 2011, Edwards, a Securitas employee, signed an acknowledgment of receipt of Securitas's dispute resolution agreement, which was eventually placed in her personnel file. Though the dispute resolution agreement gives employees 30 days to opt out of the agreement,  Edwards did not.
The dispute resolution agreement provides in part: "This Agreement applies to any dispute arising out of or related to Employee's employment with Securitas.... Except as it otherwise provides, this Agreement is intended to apply to the resolution of disputes that otherwise would be resolved in a court of law, and therefore this Agreement requires all such disputes to be resolved only by an arbitrator through final and binding arbitration and not by way of court or jury trial. Such disputes include without limitation disputes arising out of or relating to interpretation or application of this Agreement, but not as to the enforceability, revocability or validity of the Agreement or any portion of the Agreement. The Agreement also applies, without limitation, to disputes regarding the employment relationship, any city, county, state or federal wage-hour law, trade secrets, unfair competition, compensation, breaks and rest periods, uniform maintenance, training, termination, or harassment and claims arising under the Uniform Trade Secrets Act, Civil Rights Act of 1964, Americans With Disabilities Act, Age Discrimination in Employment Act, Family Medical Leave Act, Fair Labor Standards Act, Employee Retirement Income Security Act, Genetic Information Non–Discrimination Act, and state statutes, if any, addressing the same or similar subject matters, and all other state statutory and common law claims (excluding workers compensation, state disability insurance and unemployment insurance claims)."
Paragraph No. 4 of the dispute resolution agreement further provides in part: "[T]here will be no right or authority for any dispute to be brought, heard or arbitrated as a class, collective or representative action ('Class Action Waiver'). Notwithstanding any other clause in this Agreement, the preceding sentence shall not be severable from this Agreement in any case in which the dispute to be arbitrated is brought as a class, collective or representative action.... Notwithstanding any other clause contained in this Agreement, any claim that all or part of the Class Action Waiver is unenforceable, unconscionable, void or voidable may be determined only by a court of competent jurisdiction and not by an arbitrator."
Finally, the dispute resolution agreement contains the following severability clause in paragraph No. 10: "In the event any portion of this Agreement is deemed unenforceable, the remainder of this Agreement will be enforceable. If the Class Action Waiver is deemed to be unenforceable, [Securitas] and [Edwards] agree that this Agreement is otherwise silent as to any party's ability to bring a class, collective or representative action in arbitration."
In 2013, Edwards sued Securitas in the San Diego Superior Court, and eventually filed a first amended class action complaint alleging Securitas failed to provide all legally required meal and rest breaks to employees and failed to itemize missed meal breaks on wage statements. She sought restitution and injunctive relief under the unfair competition law (UCL; Bus. & Prof. Code, § 17200 et seq.), damages (Lab. Code, § 226), and a representative claim for civil penalties under the PAGA.
Securitas moved to compel arbitration and stay proceedings first in February 2014, and then via an amended motion filed in August 2014, addressing the California Supreme Court's opinion in Iskanian, supra, 59 Cal.4th 348. It asked the trial court to (1) compel Edwards to arbitrate her individual claims; (2) dismiss and/or sever and stay her class claims, and (3) dismiss and/or stay her PAGA claim. Alternatively, it asked the court to sever and stay Edwards's PAGA claim under Code of Civil Procedure section 1281.2. Securitas argued that the Federal Arbitration Act (9 U.S.C. § 1 et seq.; (FAA)) required enforcement of Edwards's voluntary agreement to arbitrate her claims on an individual basis, and that the dispute resolution agreement required her class and PAGA claims be dismissed. It argued that Iskanian held agreements containing class action waivers were enforceable, and that Edwards's PAGA claim was an individual claim because Iskanian did not apply to voluntary agreements to arbitrate PAGA claims individually. It maintained that because Edwards was not compelled to agree to the dispute resolution agreement but voluntarily did so by not opting out, Iskanian did not govern, requiring enforcement of the dispute resolution agreement in its entirety. Securitas further challenged Iskanian's reasoning and viability under other United States Supreme Court precedent and federal preemptive rules.
Edwards opposed the motion. She pointed out that in the absence of the PAGA waiver, she would not contest the enforceability of the class action waiver. As to her right to bring a representative PAGA claim, she argued that notwithstanding the dispute resolution agreement's opt out provision, her right was unwaivable and the PAGA waiver contrary to public policy under Iskanian, supra, 59 Cal.4th 348, which held prospective, predispute PAGA waivers unenforceable. She asserted that because the dispute resolution agreement prohibited severance of the PAGA ...