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Borelli v. Black Diamond Aggregates, Inc.

United States District Court, E.D. California

March 20, 2017



         This matter comes before the court on the parties' cross-motions to compel arbitration. See ECF Nos. 46, 53. Defendants Black Diamond Aggregates, Inc. (“Black Diamond”) and Basic Resources, Inc. (“Basic Resources”) argue claims brought by plaintiffs Edward Borelli, Christina Pitassi, and James Muniz against Black Diamond should be subject to arbitration, with the claims against Basic Resources stayed pending the outcome of arbitration. Defs.' Mot. to Compel Arbitration (“Defs.' Mot.”), ECF No. 46. Plaintiffs argue they are not subject to arbitration. Pls.' Opp'n to Defs.' Mot. (Pls.' Opp'n), ECF No. 52. Alternatively, plaintiffs argue if they are subject to arbitration, their claims against defendant Basic Resources should be subject to arbitration as well. Pls.' Mot. to Compel Arbitration (“Pls.' Mot.”), ECF No. 53. Defendant Basic Resources opposes plaintiffs' motion. Defs.' Opp'n to Pls.' Mot. (Defs.' Opp'n), ECF No. 55. For the following reasons, the court GRANTS defendants' motion to compel arbitration with plaintiffs Pitassi and Muniz, GRANTS plaintiffs' motion to compel such that any arbitration will include Basic Resources as a party, and will set a focused evidentiary proceeding to hear testimony as to whether plaintiff Borelli received the first page of his arbitration agreement.

         I. BACKGROUND

         A. Factual Background

         Plaintiffs are former employees of Black Diamond, a wholly owned subsidiary of Basic Resources engaged in the trucking business. See generally First Am. Compl., ECF No. 37. When each plaintiff began working at Black Diamond, each signed an arbitration agreement that required binding arbitration of all claims arising from employment. Gaalswyk Decl. at 1-2, ECF No. 46-3. Borelli signed his arbitration agreement on June 6, 2013. Borelli Arbitration Agreement (“Borelli Agreement”), Gaalswyk Decl. at 4-5. Pitassi signed her arbitration agreements on July 18, 2007 and March 21, 2008. Pitassi Arbitration Agreements (“Pitassi Agreements”), Gaalswyk Decl. at 6-7. Muniz signed his arbitration agreement on May 2, 2006. Muniz Arbitration Agreement (“Muniz Agreement”), Gaalswyk Decl. at 8. The arbitration agreements signed by Pitassi and Muniz contain the same language, but the language in Borelli's arbitration agreement is different from the other two. The two types of arbitration agreements are described below.

         1. Borelli's Arbitration Agreement

         Borelli's employment arbitration agreement requires the parties to submit to arbitration under the following terms:

If the parties are unable to resolve a dispute related to this agreement through mediation, they shall submit any such dispute (whether based on contract, tort, or statute duty or prohibition against discrimination or harassment) to binding arbitration, in accordance with the California Code of Civil Procedure §§ 1280 through 1294.2 and the Rules of the American Arbitration Association. Either party may enforce the award of the arbitrator under Code of Civil Procedure § 1285. The parties understand that they are waiving their rights to a jury trial.[1]

         Borelli Agreement.

         Borelli's arbitration agreement contains the following language regarding fees and costs associated with arbitration:

Basic Resources, Inc., shall pay the arbitrator's expenses and fees, all charges, and any other expenses that would not have been incurred if the case had been litigated in the judicial forum having jurisdiction over it. Unless otherwise ordered by the arbitrator, each party shall pay its own attorney's fees, witness fees, and other expenses incurred by the party for his or her own benefit.
The arbitrator may award the prevailing party his or her expenses and fees of arbitration, including reasonable attorneys' fees and witness fees, in such proportion as the arbitrator decides.[2]


         Borelli's arbitration agreement includes four signature lines for the following parties: (1) “Employer”; (2) “Employee”; (3) “Witness”; and (4) “Human Resources.” Id. The only signed lines are the employee line, which is signed by Borelli and dated June 6, 2013, and the witness line, which is illegible and dated 6-6-2013; the employer and human resources lines are not signed. See id.

         2. Arbitration Agreements Signed by Pitassi and Muniz

         To the extent relevant to this motion, the arbitration agreements signed by Pitassi and Muniz require the parties to submit to arbitration as follows:

The undersigned Employer and Employee understand that any and all controversies or claims arising out of, or relating to, their employment relationship, or the termination thereof, or this Employment Agreement or the breach thereof, that cannot be resolved between or among the Employee and the Employer and/or any of its representatives, agents and/or employees (including claims of discrimination), shall be submitted exclusively to binding arbitration before a neutral arbitrator in accordance with the California Arbitration Act (Code of Civil Procedure Section 1281 et seq.) except that the Employee may seek available relief from any federal and/or state agency where the law provides for such even though the employee has signed an agreement providing that all disputes shall be resolved by final and binding arbitration.

         Pitassi Agreements; Muniz Agreement.

         These arbitration agreements contain the following language regarding fees and costs associated with arbitration:

The Employer shall be responsible for all fees and costs associated with the arbitration that exceed those fees and costs that the Employee would be required to bear if his or her action had been commenced in court . . . . The arbitrator shall issue a written decision and award and shall award fees and costs in accordance with applicable law.


         The arbitration agreements signed by Pitassi and Muniz include four signature lines for the following parties: (1) “Employer”; (2) “Employee”; (3) “Witness”; and (4) “Human Resources Director.” Id. The employer, employee, and witness lines are Dated: all agreements; the human resources director line is not signed. Id. Specifically, Pitassi's first and second arbitration agreements are identical except for the date. Pitassi signed her first agreement on 7-18-2007 and her second on 3-21-2008; Ruth M. Quadroa signed and dated Pitassi's agreements on the same dates; and the employer line is signed illegibly by the same individual and not dated on either agreement. Pitassi Agreements. Muniz signed and dated his agreement on 5-2-2006; an individual named Donna, last name illegible, signed and dated the witness line with the same date; and the same individual who signed the employer line on Pitassi's agreement signed Muniz's agreement. Muniz Agreement.

         3. Express Final and Binding Language

         Above the signature lines, all agreements provided the following language in all-caps:


         Borelli Agreement; Pitassi Agreements; Muniz Agreement.

         B. Procedural Background

         On September 9, 2014, Borelli filed this putative class action against Black Diamond. ECF No. 1. The original action did not identify future parties Pitassi, Muniz, or Basic Resources by name. Id. at 1. In it, Borelli made claims under the federal Fair Labor Standards Act, various sections of the California Labor Code, California's Unfair Competition Law, and the California Private Attorney General's Act (PAGA). See generally Id. Borelli alleged, inter alia, that Black Diamond failed to pay minimum wages, failed to authorize and permit paid rest periods, and failed to furnish accurate wage statements. See id.

         On January 22, 2015, Black Diamond filed a motion to compel arbitration. ECF No. 9. On February 26, Borelli filed a motion to amend the original complaint. ECF No. 19. On March 27, 2015, the court held a hearing on both motions. ECF No. 27. On September 4, 2015, the court granted Borelli's motion to amend the complaint. Order at 6, ECF No. 36. In doing so, the court denied Black Diamond's motion to compel arbitration as moot, subject to renewal. Id.

         On September 8, 2015, Borelli filed a first amended complaint. The amended complaint added James Muniz and Christina Pitassi as plaintiffs, and added Basic Resources as a defendant. First Am. Compl.

         On October 30, 2015, defendant Black Diamond renewed its motion to compel arbitration, Defs.' Mot., and Basic Resources joined the motion, ECF No. 50. Plaintiffs opposed, Pls.' Opp'n, and defendants replied, Defs.' Reply, ECF No. 60.

         On December 4, 2015, plaintiffs filed their motion to compel arbitration, arguing that if plaintiffs are subject to arbitration, co-defendant Basic Resources should also be subject to arbitration. Pls.' Mot. at 3. Basic Resources filed an opposition, Defs.' Opp'n, and plaintiffs replied, Pls.' Reply, ECF No. 59.


         The parties raise multiple issues in their cross-motions to compel arbitration. Specifically, they dispute whether (1) the Federal Arbitration Act (FAA) or California Arbitration Act (CAA) controls interpretation of the arbitration agreements; (2) the arbitration agreements are valid and enforceable against plaintiffs; (3) PAGA claims are subject to arbitration under the agreements; (4) the arbitration agreements are enforceable against defendant Basic Resources; and (5) the action should be stayed. The court will address each issue in turn.

         A. Whether the FAA or CAA Should Govern

         The parties dispute whether the FAA or CAA governs the arbitration agreements. See Pls.' Opp'n at 17-18; Defs.' Reply at 8-9. Defendants argue the arbitration agreements are enforceable under both the FAA and CAA. See Defs.' Reply at 8. Plaintiffs argue only the CAA applies, Pls.' Opp'n at 17, and, therefore, defendants' ...

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