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Khalatian v. Prime Time Shuttle, Inc.

California Court of Appeals, Second District, Eighth Division

May 15, 2015

VALO KHALATIAN, Plaintiff and Respondent,
PRIME TIME SHUTTLE, INC. et al., Defendants and Appellants.

APPEAL from a judgment of the Superior Court of Los Angeles County, No. BC485917, Soussan G. Bruguera, Judge.

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Epstein Becker & Green, David Jacobs, William O. Stein and Rhea G. Mariano for Defendants and Appellants.

Law Office of Tony Forberg and Tony Forberg for Plaintiff and Respondent.



Defendants Prime Time Shuttle, Inc. (Prime Time), Rideshare Airport Management, LLC, formerly known as Rideshare Port Management, LLC, and Rattan Joea appeal a trial court order denying their motion to compel arbitration of claims based on the alleged misclassification of plaintiff Valo Khalatian as an independent contractor rather than an employee. We find the Federal Arbitration Act (FAA; 9 U.S.C. § 1 et seq.) applies to the parties’ arbitration agreement, and all of plaintiff’s claims are arbitrable. We also conclude defendants did not waive their right to arbitration even though they waited 14 months after the complaint was filed to move to compel arbitration. Plaintiff cannot demonstrate prejudice from the delay, which is determinative. (Saint

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Agnes Medical Center v. PacifiCare of California (2003) 31 Cal.4th 1187, 1203 [8 Cal.Rptr.3d 517, 82 P.3d 727].) We reverse the trial court’s order denying the petition to compel arbitration and remand the case to the trial court with instructions to enter an order compelling arbitration of all of plaintiff’s claims.


Defendants own and operate an airport charter transport business. From about June 2009 until June 2012, plaintiff worked for defendants as an airport shuttle van driver. Plaintiff picked up and dropped off people primarily at Los Angeles International Airport (LAX).

Plaintiff entered into an Owner-Operator Sub-Carrier Agreement (Agreement) with defendant Rideshare Port Management, LLC, doing business as Prime Time Shuttle, LLC.[1] The Agreement provides for binding arbitration of “any controversy or claim between the parties arising out of or relating to this Agreement or any alleged breach hereof, including any issues... that this Agreement or any part hereof is invalid, illegal, or otherwise voidable or void....”

The Agreement also provides: “By this Agreement, Sub-Carrier and Prime Carrier acknowledge and agree that there does not exist between them the relationship of employer/employee... either express or implied. Sub-Carrier will not be treated as an employee of Prime Carrier for any purpose, statutory or otherwise....” Thus, according to the terms of the Agreement, plaintiff was an independent contractor and not an employee.

The operative complaint alleges 11 causes of action for various wage and hour violations of the Labor Code, as well as causes of action for conversion, breach of contract, wrongful termination, intentional interference with prospective economic advantage, unfair competition, and violation of title 29 United States Code section 206, which governs the federal minimum wage for employees engaged in commerce. In the general allegations of the complaint, plaintiff alleged he gave notice to the Labor and Workforce Development Agency (LWDA) of defendants’ wage and hour violations and is entitled to bring claims under Labor Code section 2699 (the Labor Code Private Attorneys General Act of 2004; PAGA). However, nowhere in the operative complaint does plaintiff say anything about seeking recovery of a “civil penalty to be assessed and collected by the [LWDA].” (Lab. Code, § 2699, subd. (a).) The prayer for relief makes no reference to any relief

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plaintiff seeks on behalf of the public or the LWDA. At oral argument before us, plaintiff’s counsel confirmed that plaintiff has not asserted a PAGA cause of action. Counsel also confirmed plaintiff does not seek to bring a class action but alleges only individual claims for relief.

In the trial court, the question whether California law or the FAA applies to the arbitration agreement was not raised in defendants’ motion to compel arbitration, or in plaintiff’s opposition, or in defendants’ reply. Plaintiff’s chief argument in opposition to the motion to compel arbitration, both in the trial court and in the Court of Appeal, has been that defendants waived the right to compel arbitration. Plaintiff has never contended the arbitration agreement was unconscionable.

At the initial hearing on the motion to compel arbitration, held September 20, 2013, the court granted plaintiff an opportunity to submit supplemental briefing by October 4, 2013, and gave defendants a chance to file a response by October 18, 2013. The court continued the hearing on the motion to October 30, 2013. At the hearing held October 30, 2013, the court granted defendants an opportunity to file a second supplemental brief. Defendants filed the second supplemental brief, along with supplemental declarations and a request for judicial notice, on November 18, 2013, asserting FAA preemption for the first time. The record does not include any further briefing by plaintiff. No ...

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