California Court of Appeals, Fourth District, First Division
from an order of the Superior Court of San Diego County No.
37-2015-0007723-CU-OE-CTL, Joan M. Lewis, Judge. Affirmed.
Ogletree, Deakins, Nash, Smoak & Stewart, Jack S.
Sholkoff, Alexandra A. Bodnar and Ashley B. McAteer for
Defendant and Appellant.
& Mara, William Turley, David Mara and Jamie Serb for
Plaintiff and Respondent.
Tony Muro entered into an employment contract with defendant
Cornerstone Staffing Solutions, Inc. (Cornerstone). The
contract included a provision requiring that all disputes
arising out of Muro's employment with Cornerstone to be
resolved by arbitration. It also incorporated a class action
waiver provision. In response to Muro's present action,
which was styled as a proposed class action and alleged
various Labor Code violations, Cornerstone moved to compel
arbitration and dismiss the class claims.
heavily on Garrido v. Air Liquide Industrial, U.S.
LP (2015) 241 Cal.App.4th 833 (Garrido), the
trial court concluded the contract was exempted from the
operation of the Federal Arbitration Act (FAA; 9 U.S.C.
§ 1 et seq.) and was instead governed by California
law. It further determined that the California Supreme
Court's decision in Gentry v. Superior Court
(2007) 42 Cal.4th 443 (Gentry) (overruled on other
grounds in Iskarian v. CLS Tranportation, Los Angeles,
LLC (2014) 59 Cal.4th 348) continued to provide the
relevant framework for evaluating whether the class waiver
provision in the contract was enforceable under California
law. After applying Gentry to the record here, the
court found the class waiver provision of the contract
unenforceable and denied the motion to compel arbitration.
Cornerstone appeals, but finding no error, we affirm.
AND PROCEDURAL BACKGROUND
is a full service employee staffing firm providing assistance
to a variety of employers throughout California, Nevada,
Michigan, and New Jersey. Cornerstone's website promotes
itself as specializing in, among other things,
"Logistics & Transportation Staffing &
Recruitment". Cornerstone derived over eight percent of
its total revenue in 2015 from its transportation division,
and has an employee whose self-described position is
"Department of Transportation Compliance
hired Muro around May 2012 to drive trucks for
Cornerstone's client, Team Campbell, which ships products
from its Fontana, California location throughout the country.
Muro occupied that position from approximately May 2012
through August 2014. During his tenure as a driver, he had
routes both within California and across state lines. He made
frequent trips to or through Arizona, Nevada, Utah, Oregon,
Washington, New Mexico, Idaho, and Wyoming.
of his employment contract, Muro signed an agreement
containing the arbitration provisions that are at the center
of the present dispute. Under the relevant Mutual Arbitration
Policy (the policy), nearly all disputes had to be submitted
to binding arbitration. The policy is governed "solely
by the Federal Arbitration Act" and provides that
arbitration would be pursuant to the National Rules for the
Resolution of Employment Disputes of the American Arbitration
Association. The parties agreed to waive a jury trial and
"the right to initiate or proceed on a class action
basis or participate in a class action in the
filed his initial complaint against Team Campbell and
subsequently added Cornerstone as a defendant. The complaint,
styled as a proposed class action complaint, alleged causes
of action for: (1) failure to pay all compensation for time
worked; (2) failure to provide meal periods; (3) failure to
authorize and permit rest breaks; (4) knowing and intentional
failure to comply with itemized wage statements; (5) failure
to pay timely wages due at termination/waiting time
penalties; and (6) violation of the unfair competition law.
petitioned to compel Muro to arbitrate his claims on an
individual basis. It maintained the FAA applied because
Cornerstone and Muro were engaged in interstate commerce and
because the policy itself referred to the FAA. It further
asserted that the FAA required the court to enforce the
policy according to its terms, ordering Muro to arbitrate his
various wage and hour claims on an individual basis and
dismissing all purported class claims.
opposed the petition claiming he was a "transportation
worker" within the ambit of a specific FAA exemption. He
argued that under the pertinent analysis in Garrido,
the FAA did not govern the court's evaluation of
Cornerstone's petition to compel arbitration. According
to Muro, because the FAA did not apply, California law as
expressed in Gentry continued to govern. He
contended that because he satisfied the Gentry
factors, the class arbitration waiver provision was
unenforceable and his claims should be permitted to proceed
in the current civil action. He also argued that under Labor
Code section 229, his action to recover unpaid wages could
proceed notwithstanding the terms of the policy.
on Garrido, the trial court held that the express
exemption contained in section 1 made the FAA inapplicable to
the policy because Muro was a transportation worker. The
court also rejected Cornerstone's claim that it was not
part of the "transportation industry, " concluding
that evidence of Cornerstone's employment of a Department
of Transportation Compliance Coordinator and its
transportation-related revenues demonstrated that it was
"at least somewhat involved in the transportation
industry." (Garrido, supra, 241 Cal.App.4th at
p. 840.) Because the FAA did not apply, the court turned to
the California Arbitration Act to assess whether
Cornerstone's petition to compel individual arbitration
was proper under Gentr ...