United States District Court, E.D. California
SALVADOR CALZADILLAS, on behalf of himself and others similarly situated, Plaintiffs,
v.
THE WONDERFUL COMPANY, LLC, Defendant.
ORDER GRANTING DEFENDANT'S MOTION TO COMPEL
ARBITRATION AND DISMISSING ACTION (DOC. NOS. 7)
This
matter is before the court on defendant The Wonderful
Company's (“Wonderful”) motion to compel
arbitration and to stay or dismiss this action filed on April
5, 2019. (Doc. No. 7.) A hearing on the motion was held on
May 7, 2019. Attorney Eric Kingsley appeared on behalf of
named plaintiff Salvador Calzadillas and the putative class
members (hereinafter “plaintiffs”), and attorney
Lisa A. Stilson appeared on behalf of defendant. Following
the hearing, the court issued an order granting
plaintiffs' request for limited discovery and holding the
motion to compel arbitration in abeyance pending completion
of that discovery. (Doc. No. 18.) That order also directed
the parties to submit supplemental briefing following the
conducting of that discovery. (Id.) Plaintiffs did
so on August 23, 2019, and defendant filed a response on
September 6, 2019. (Doc. Nos. 21, 22.) Having considered that
briefing, and for the reasons that follow, defendant's
motion will be granted, and this action will be dismissed
without prejudice.
BACKGROUND
Plaintiffs
commenced this action by filing a class action complaint on
February 7, 2019. In that complaint, plaintiffs allege as
follows. Plaintiffs are seasonal agricultural workers within
the meaning of the Agricultural Worker Protection Act
(“AWPA”), 29 U.S.C. § 1802(10). (Doc. No. 1
(“Compl.”) at ¶ 10.) Plaintiffs are, and
have been throughout the relevant period, non-exempt
employees within the meaning of California Labor Code §
500 et seq. and the rules and regulations of
California Industrial Welfare Commission Wage Order No.
14-2001 (“IWC Wage Order 14”). (Id. at
¶ 22.) Defendant is the world's largest grower of
tree nuts and America's largest citrus grower.
(Id. at ¶ 13.) Plaintiffs are employed to work
in defendant's fields, and are either employed directly
or through various Farm Labor Contractors
(“FLCs”). (Id. at ¶¶ 4, 15.)
Under
the parties' working arrangement, defendant is required
to pay plaintiffs their agreed-upon wages for all hours
worked, to pay workers for required rest periods, to provide
meal periods, and to abide in all respects with IWC Wage
Order 14. (Id. at 29.) The complaint alleges,
however, that plaintiffs have not been compensated by
defendant for all time worked. (Id. at ¶ 30.)
Specifically, plaintiffs have alleged that they work on a
piece-rate basis, picking mandarins in the morning.
(Id. at ¶ 32.) After this “first pick,
” workers then switch to non-piece rate work in the
late morning or afternoon, doing work such as picking up
fruit off the ground, doing a second or third pass through,
or picking “la china, ” but workers are not
compensated for this work. (Id.) Instead, defendants
use the earlier piece-rate earnings as a credit to satisfy
minimum wage obligations in violation of California law
and/or fail to pay workers for this non-piece-rate work.
(Id.) Plaintiffs also are sometimes compensated on a
“per bin” basis and paid a specific rate per bin,
but they often do not receive credit for all the bins they
pick, thus depriving workers of wages earned. (Id.
at ¶ 33.) In addition, plaintiffs are scheduled to
report to work at a specific time, but upon doing so are
frequently told to wait before they can begin harvesting
because the citrus trees are wet. (Id. at ¶
34.) This waiting time is neither recorded nor are the
workers paid for that waiting time by defendant.
(Id.) Plaintiffs also do not regularly receive rest
breaks as required by California law, nor are they
compensated for those rest breaks. (Id. at ¶
37.) The complaint further alleges that by words, conduct,
practice, agreement, or custom and usage, defendant agreed to
provide plaintiffs with all necessary tools and equipment to
perform their work, yet during the relevant period,
plaintiffs were required to provide their own tools,
including pruning shears, picking clippers, cloth sacks,
protective gloves, and similar items. (Id. at ¶
38- 39.) Plaintiffs have not been reimbursed for the cost of
purchasing these items. (Id. at ¶ 40.) As part
of their employment, plaintiffs were required to travel
between fields to perform work tasks, which required
plaintiffs to use their own vehicles because defendants did
not provide transportation. (Id.) Defendants failed
to reimburse plaintiffs for the use of their vehicle.
(Id. at ¶ 41.) In addition, this travel time
between fields was not recorded by defendants and was not
compensated. (Id. at ¶ 42.) Defendant also
failed to provide plaintiffs with meal periods as required
under California law and failed to issue itemized wage
statements accurately reflecting all of the hours and rates
worked by plaintiffs. (Id. at ¶ 43-44.)
Based
on these allegations, plaintiffs assert a total of eleven
causes of action, alleging violations of both state and
federal law. (Id. at ¶¶ 58-94.) As noted,
on April 5, 2019, defendant moved to compel arbitration and
to stay or dismiss this action. (Doc. No. 7.) As also noted,
on April 17, 2019, plaintiffs filed an ex parte
application for an order permitting them to conduct discovery
and an order continuing the hearing date on defendant's
motion. (Doc. No. 11.) On April 23, 2019, plaintiff filed an
opposition to defendant's motion. (Doc. No. 12.)
LEGAL
STANDARD
A
written provision in any contract evidencing a transaction
involving commerce to settle a dispute by arbitration is
subject to the Federal Arbitration Act (“FAA”). 9
U.S.C. § 2. The FAA confers on the parties involved the
right to obtain an order directing that arbitration proceed
in the manner provided for in a contract between them. 9
U.S.C. § 4. In deciding a motion to compel arbitration,
the “court's role under the Act . . . is limited to
determining (1) whether a valid agreement to arbitrate exists
and, if it does, (2) whether the agreement encompasses the
dispute at issue.” Chiron Corp. v. Ortho Diagnostic
Sys., Inc., 207 F.3d 1126, 1130 (9th Cir. 2000).
There
is an “emphatic federal policy in favor of arbitral
dispute resolution.” Mitsubishi Motors Corp. v.
Soler Chrysler-Plymouth, 473 U.S. 614, 631 (1985). As
such, “‘any doubts concerning the scope of
arbitrable issues should be resolved in favor of arbitration,
whether the problem at hand is the construction of the
contract language itself or an allegation of waiver, delay,
or a like defense to arbitrability.'” Id.
at 626 (quoting Moses H. Cone Mem'l Hosp. v. Mercury
Const. Corp., 460 U.S. 1 at 24-25 (1983)).
“Because waiver of the right to arbitration is
disfavored, ‘any party arguing waiver of arbitration
bears a heavy burden of proof.'” Fisher v. A.G.
Becker Paribas Inc., 791 F.2d 691, 694 (9th Cir. 1986)
(quoting Belke v. Merrill Lynch, Pierce, Fenner &
Smith, 693 F.2d 1023, 1025 (11th Cir. 1982)). Therefore,
an arbitration agreement may only “be invalidated by
‘generally applicable contract defenses, such as fraud,
duress, or unconscionability,' but not by defenses that
apply only to arbitration or that derive their meaning from
the fact that an agreement to arbitrate is at issue.”
AT & T Mobility LLC v. Concepcion, 563 U.S. 333,
339 (2011) (quoting Doctor's Assocs., Inc. v.
Casarotto, 517 U.S. 681, 687 (1996)). Courts may not
apply traditional contractual defenses, like duress and
unconscionability, in a broader or more stringent manner to
invalidate arbitration agreements and thereby undermine
FAA's purpose to “ensur[e] that private arbitration
agreements are enforced according to their terms.”
Id. at 344 (quoting Volt Info. Scis., Inc. v.
Bd. of Trs., 489 U.S. 468, 478 (1989)).
ANALYSIS
The
court's prior order of June 3, 2019, has already
addressed most of the contentions raised in the parties'
first round of briefing, and that analysis need not be
repeated here. The only question that remains unanswered is
whether defendant is an intended third-party beneficiary of
the “Mutual Agreement to Arbitrate Disputes” (the
“Agreement”). (Doc. No. 7-2 at 4-5.) If so,
defendant possesses standing to enforce that agreement, and
arbitration of plaintiffs' claims is required.
“It
is well established that a nonsignatory beneficiary of an
arbitration clause is entitled to require arbitration.”
Harris v. Superior Court, 188 Cal.App.3d 475, 478
(1986) (citing Dryer v. L.A. Rams, 40 Cal.3d 406,
418 (1985); Berman v. Dean Witter & Co., Inc.,
44 Cal.App.3d 999 (1975); and Frame v. Merrill Lynch,
Pierce, Fenner & Smith, Inc., 20 Cal.App.3d 668,
671-72 (1971)). Thus, nonsignatories of a contract may
nonetheless enforce its terms if, among other things, they
are third party beneficiaries of the contract. See Comer
v. Micor, Inc., 436 F.3d 1098, 1101 (9th Cir. 2006).
However, “the mere fact that a contract results in
benefits to a third party does not render that party a third
party beneficiary; rather, the parties to the contract must
have intended the third party to benefit.” Norcia
v. Samsung Telecomms. Am., LLC, 845 F.3d 1279, 1290 (9th
Cir.) (internal quotation marks and brackets omitted),
cert. denied, U.S., 138 S.Ct. 203 (2017). Under
California law,
The test for determining whether a contract was made for the
benefit of a third person is whether an intent to benefit a
third person appears from the terms of the contract. If the
terms of the contract necessarily require the promisor to
confer a benefit on a third person, then the contract, and
hence the parties thereto, contemplate a benefit to the third
person. The parties are presumed to intend the consequences
of a performance of the contract.
Souza v. Westlands Water Dist., 135 Cal.App.4th 879,
891 (2006). “Generally, it is a question of fact
whether a particular third person is an intended beneficiary
of a contract[.]” Epitech, Inc. v. Kann, 204
Cal.App.4th 1365, 1372 (2012). “However, where . . .
the issue can be answered by interpreting the contract as a
whole and doing so in light of the uncontradicted evidence of
the circumstances and negotiations of the parties in making
the contract, the issue becomes one of law that we resolve
independently.” Prouty v. Gores Tech. Grp.,
121 Cal.App.4th 1225, 1233 (2004). The party seeking to
compel arbitration bears the burden of putting forward
evidence affirmatively establishing its status as an intended
third-party beneficiary. See Norcia, 845 F.3d at
1291 (“Samsung does not point to any evidence in the
record indicating that Norcia and Verizon Wireless intended
the Customer Agreement to benefit Samsung. Therefore, we
conclude that Samsung fails to bear its burden of
establishing that it was a third-party beneficiary.”).
As
noted in the court's prior order, defendant has already
produced one piece of evidence tending to establish that it
is a third-party beneficiary of the Agreement. The
arbitration provision in the Agreement signed by plaintiff
states that “Wonderful Citrus Packing LLC . . . and you
voluntarily agree that any claim, dispute, or controversy
arising out of or relating to your employment with any entity
or person retained to perform services for the Company, your
alleged employment with the Company, or the separation of
employment shall be submitted to final and binding
arbitration[.]” (Doc. No. 7-2 at 5.) The Agreement
further states that it applies not merely to claims against
Wonderful Citrus Packing LLC itself, but also to claims
against any of its “partners, affiliated companies,
successors, contractors, . . . assigns, owners, directors,
officers, shareholders, employees, managers, members, [and]
agents.” (Id.) Defendant previously argued
that it was an affiliate of Wonderful Citrus Packing LLC,
because of which it was an intended third-party beneficiary.
As evidence of its status as an affiliate, defendant
submitted the declaration of Craig ...