United States District Court, C.D. California
CIVIL MINUTES - GENERAL
VIRGINIA A. PHILLIPS, District Judge.
PROCEEDINGS: MINUTE ORDER DENYING PLAINTIFF'S MOTION TO REMAND (DOC. NO. 16) AND GRANTING-IN-PART DEFENDANT'S MOTION TO COMPEL ARBITRATION (DOC. NO. 17) (IN CHAMBERS)
Owing to serious wage theft, unchecked by the state's own enforcement of its wage-and-hour laws, California enacted the Labor Code Private Attorneys General Act of 2004 ("PAGA"), Cal. Labor Code §§ 2698, et seq. Iskanian v. CLS Transp. L.A., LLC, 59 Cal.4th 348, 379 (2014), cert. denied 135 S.Ct. 1155 (Jan. 20, 2015). PAGA deputizes an employee, or group of employees, to sue their employer on behalf of themselves and any other employees who have been the victims of certain Labor Code violations. Rather than compensatory damages, however, PAGA allows the aggrieved employees to pursue civil penalties that would ordinarily fall to the California Labor and Workforce Development Agency ("LWDA") to collect. If the aggrieved employees prevail, the LWDA collects 75 percent of the penalties they collect, with the remainder to the aggrieved employees. Cal. Labor Code § 2699(I).
Plaintiff Jesse Alvarez filed a lawsuit containing PAGA claims in California state court. Defendant AutoZone, Inc. ("AutoZone") removed it to this Court on the basis of the Court's diversity jurisdiction, see 28 U.S.C. § 1332(a), and now seeks to compel Alvarez to arbitrate his claims, pursuant to the terms of a "Dispute Resolution Agreement" (see Mot. to Compel Arbitration (Doc. No. 17)). Alvarez seeks, simultaneously, to have the matter remanded to the state court. (See Mot. to Remand (Doc. No. 16).)
Alvarez worked on an hourly basis as a senior sales representative at AutoZone stores in Colton, Fontana, and Bloomington, California. (Compl. (Doc. No. 1-1) ¶ 17.) During that employment, Alvarez alleges that AutoZone required him and other employees, to for example, wait off-the-clock for the arrival of trucks they were supposed to unload (see id. ¶ 45), work through their meal breaks (see id. ¶¶ 57-58), work through their rest breaks (see id. ¶¶ 65-66), leave early without collecting pay for reporting in (see id. ¶¶ 91-92), and work a shift at one store and a shift at another without compensation for the time between shifts (see id. ¶¶ 98-99).
On October 29, 2014, Alvarez filed a nine-count Complaint, premised on those allegations (and other, related ones), in California state court. The Complaint was titled "ENFORCEMENT ACTION UNDER THE PRIVATE ATTORNEYS GENERAL ACT, CALIFORNIA LABOR CODE §§ 2698 ET SEQ." Alvarez served AutoZone with the Complaint and a summons on October 30, and AutoZone filed a timely Notice of Removal (Doc. No. 1) of the action to this Court on December 1.
AutoZone premised its removal on the Court's diversity jurisdiction, as the parties are citizens of different states, and the amount in controversy is over $75, 000, according to AutoZone. (See generally Notice of Removal.) AutoZone arrived at that conclusion by aggregating, across all of its California stores, a low estimate of the civil penalties Alvarez could collect under PAGA on behalf of AutoZone's "aggrieved employees." (See, e.g., id. ¶ 24.) AutoZone then reduced that amount by the 75 percent of the prospective judgment payable to the LWDA, and determined that Alvarez stood to gain $221, 425 on behalf of himself and other aggrieved employees. (Id. ¶ 31.)
Once in this Court, AutoZone sought to enforce its Dispute Resolution Agreement, requiring the arbitration of "any dispute arising out of or related to" Alvarez's "employment with AutoZone or one of its affiliates, " including "disputes regarding the employment relationship, any city, county, state or federal wage-hour law... compensation, [and] breaks and rest periods...." (Culvahouse Decl. Ex. A (Doc. No. 17-3).) Notably - because PAGA authorizes Alvarez to sue AutoZone on behalf of other aggrieved employees - the Agreement also waives (in boldface text) Alvarez's ability to be part of any representative action:
There 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"), and this Class Action Waiver means neither party will have the right to participate in or be a representative plaintiff in a class, collective or representative action.
Then the Agreement adds, in plain text, that the representative-action waiver is not severable from the rest of the Agreement:
Notwithstanding any other clause contained 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 ...