Case Number: BC594530 Hearing Date: February 06, 2020 Dept: 14

BROWNLEE V. CALIFORNIA INTERMODAL ASSOCIATES, INC.

PETITION TO CONFIRM ARBITRATION AWARD

TENTATIVE RULING

Grant petition to confirm arbitration award

DISCUSSION

I. Background

Plaintiff Jason Brownlee (“Plaintiff”) brought this putative class action against Defendants California Intermodal Associates, Inc. (“CIA”) and California Transportation Dynamics, LLC (“CTD”) (collectively, “Defendants”). Defendants provide intermodal and warehousing services, and utilize drivers, which retrieve container freight from ports and rail yards, and then drive long distances to deliver the freight to Defendants’ customers. [Complaint, ¶1.] Plaintiff alleges Defendants misclassified him and their other intermodal truck drivers (“Drivers”) as “independent contractors” instead of “employees.” [Complaint, ¶1.] Plaintiff alleges that Defendants’ classification scheme violates firmly rooted California law concerning who is to be considered an employee versus an independent contractor. [Id.] Through this allegedly unlawful classification scheme, Defendants both deny the Drivers fundamental employment protections that are guaranteed by California law, as well as shirk their tax obligations to the community at large. [Complaint, ¶2.]

According to Plaintiff, Defendants have been the legal employer of Plaintiff and the other Drivers, and have, inter alia, retained the right to control Plaintiff and the other Drivers’ schedules, routes, products, customers, trucks, equipment, pay rate, insurance, and other details of the job. [Complaint, ¶3.] In fact, the Complaint alleges, Defendants have provided Plaintiff and the other Drivers with all of the equipment they use (including the trucks), deduct their costs directly from their paychecks, require the Drivers to store the trucks on Defendants’ premises, and forbid them from using the trucks to provide services for any entity other than Defendants. [Id.] Yet, by misclassifying Plaintiff and the other Drivers as independent contractors, rather than as employees, Defendants have allegedly unlawfully evaded their obligation to pay these Drivers the full wages and employment benefits they are due under applicable law. [Id.] Defendants allegedly employ over 150 Drivers in California. [Complaint, ¶4.]

Based on these allegations and the other allegations fully set forth in the Complaint, Plaintiff alleges claims for failure to pay minimum wages (in violation of California Labor Code §§1182.11, 1182.12, 1194, 1197 and 1197.1, and IWC Wage Order No. 9 and Minimum Wage Order); failure to pay overtime compensation (in violation of Labor Code §§510, 515.5, 1194 and 1198, et seq., and IWC Wage Order No. 9); and failure to pay for all hours worked (in violation of Labor Code §§201, 202, 204, and 221-223). Plaintiff brings these claims on behalf of the following putative class:

All individuals who have personally transported one or more intermodal containers for Defendants in California, while being classified by Defendants as an independent contractor at any time beginning four years before the filing of this Complaint until the date of class notice. [Complaint, ¶70.]

Defendants moved to compel Plaintiff to arbitration and to dismiss or stay the proceedings, pending completion of the arbitration proceeding. The Court, on October 26, 2016, granted in part the motion to compel arbitration. With respect to any claims accruing on or after the May 2, 2014 Independent Contractor Subhaul Agreement, the Court granted the motion (but deferred to the arbitrator the issue of class arbitrability). The Court denied the motion to compel arbitration as to those claims which accrued before May 2, 2014, and stayed the claims accruing before that date, pending completion of the arbitration proceedings.

Defendants moved for an order reconsidering the October 26, 2016 Ruling, based on recent discovery of earlier arbitration agreements entered into by Plaintiff Brownlee with effective dates of May 11, 2012 and May 22, 2013. The Court, on January 12, 2017, granted the motion for reconsideration, and modified the October 26, 2016 Ruling and Order re: Arbitration accordingly.

The parties proceeded to engage in activity before the arbitration of Plaintiff’s individual claims commenced (such as taking multiple depositions and filing cross-motions for summary judgment). Before the arbitration actually started, however, the parties mediated the case and settled the Plaintiff’s individual claims on August 3, 2018.

On August 16, 2018, the Parties notified the court of their Settlement Agreement and Requested a Stay and Continuing Jurisdiction. (Ex. “G” to Lagunas Dec.) On August 17, 2018, the American Arbitration Association stayed the matter until the terms of the Settlement Agreement were fulfilled. (Lagunas Dec., ¶ 11.) On August 28, 2018, the court ordered Plaintiff to file declarations pursuant to CRC 3.770 and to give notice to LWDA of the Settlement Agreement. (Exhibit “I” to Lagunas Dec.) On October 25, 2018, the Plaintiff notified LWDA of the Settlement Agreement. (Exhibit “J” to Lagunas Dec.) On October 29, 2018, the court rejected the Request for Dismissal on the basis that a dismissal would “constitute prejudice to the class within the meaning of CRC 3.770” and ordered the parties to file a joint status report by noon on January 30, 2019. (Ex. “K” to 15 Lagunas Dec.)

Defendants moved for an order enforcing the settlement agreement. The Court (Judge Lisa Hart Cole) required counsel for Plaintiff to file a new Declaration pursuant to CRC 3.770, and continued the motion to enforce the settlement agreement to May 9, 2019.

On May 9, 2019, this Court denied the motion to enforce the settlement agreement, without prejudice to the parties providing notice to the anticipated dismissal of the class allegations under CRC 3.770(c), and providing a further explanation to the Court on why enforcement of the settlement would not prejudice the class. The Court continued the motion to June 18, 2019, and ordered the parties to submit a supplemental declaration by June 11, 2019.

On July 3, 2019, Plaintiff filed an amended complaint and demand for class arbitration, alleging that Plaintiff and other employees were misclassified as independent contractors inapposite of the ruling in Dynamex Operations W., Inc., v. Superior Court (2018) 4 Cal. 5th 903 (2018).

On July 15, 2019 Defendants filed a motion to strike the class action claims with Arbitrator Freedman on the grounds that the Arbitration Provision between Plaintiff and Defendants did not permit class arbitration and the arbitrator lacked authority to order class wide arbitration. In response, on July 25, 2019, Plaintiff filed an opposition and on July 30, 2019, Defendants filed their reply brief. On August 1, 2019, Arbitrator Freedman held a telephonic hearing on Defendants’ motion to strike. On August 2, 2019, Arbitrator Freedman granted Defendants’ motion to strike and dismissed the class claims with prejudice, finding that the Arbitration Provision at issue did not authorize Plaintiff to proceed on a class basis. On September 27, 2019, Arbitrator Freedman issued and served his written Final Award (“Arbitration Award”) on the parties.

Defendants move to confirm the arbitration award.

II. Motion to confirm arbitration award.

CCP §1288 provides that if an arbitration award is not voluntarily paid, the party prevailing in the arbitration proceedings may file a motion to confirm the arbitration award and to enter a judgment thereon within 4 years after service of the award. California Practice Guide, Civil Procedure Before Trial, ¶9:412 (The Rutter Group 2019). “The party seeking judicial enforcement of a private arbitration award has the burden of proving the award as well as the existence of a valid arbitration agreement. “ California Practice Guide, Civil Procedure Before Trial, ¶9:412.1 (The Rutter Group 2019) (referencing Toal v. Tardif (2009) 178 Cal.App.4th 1208, 1223).

In EHM Productions, Inc. v. Starline Tours of Hollywood, Inc. (2018) 21 Cal.App.5th 1058, the Court of Appeal reviewed the procedures leading up to a court’s confirmation of an arbitration award:

Once a petition to confirm an award is filed, the superior court must select one of only four courses of action: It may confirm the award, correct and confirm it, vacate it, or dismiss the petition. [Citation.] “[I]t is the general rule that, with narrow exceptions, an arbitrator’s decision cannot be reviewed for errors of fact or law.” [Citation.] Under section 1286.2, the court may vacate the award only under “ ‘very limited circumstances.’ ” [Citation.] Neither the trial court, nor the appellate court, may “review the merits of the dispute, the sufficiency of the evidence, or the arbitrator’s reasoning, nor may [courts] correct or review an award because of an arbitrator’s legal or factual error, even if it appears on the award’s face. Instead, [courts] restrict…review to whether the award should be vacated under the grounds listed in section 1286.2.[1] [Citations.]” EHM Productions, Inc. v. Starline Tours of Hollywood, Inc. (2018) 21 Cal.App.5th 1058, 1063–1064.

The terms of the arbitration award are set forth above. The arbitrator issued and served the arbitration award on the parties on September 27, 2019. The instant motion to confirm was filed January 8, 2020, well within the four year period required under CCP §1288. This Court previously found the arbitration agreement to be valid in compelling the case to arbitration. There has been no opposition filed to the instant motion as of the date of this ruling. The Court cannot vacate the award under any of the limited circumstances set forth under CCP §1286.2(a) (discussed in footnote 1 below), and there is no showing that any of those circumstances is present here. The arbitrator, on August 2, 2019, struck the class allegations, and thus, confirmation of the arbitration order, as constituted, would not prejudice the class here. Further, the Court cannot otherwise review the arbitrator’s decision for errors in fact or law.

[1] CCP §1286.2(a) allows the Court to vacate an arbitration award if it determines any of the following (subject to CCP §1286.4):

(1) The award was procured by corruption, fraud or other undue means.

(2) There was corruption in any of the arbitrators.

(3) The rights of the party were substantially prejudiced by misconduct of a neutral arbitrator.

(4) The arbitrators exceeded their powers and the award cannot be corrected without affecting the merits of the decision upon the controversy submitted.

(5) The rights of the party were substantially prejudiced by the refusal of the arbitrators to postpone the hearing upon sufficient cause being shown therefor or by the refusal of the arbitrators to hear evidence material to the controversy or by other conduct of the arbitrators contrary to the provisions of this title.

(6) An arbitrator making the award either: (A) failed to disclose within the time required for disclosure a ground for disqualification of which the arbitrator was then aware; or (B) was subject to disqualification upon grounds specified in Section 1281.91 but failed upon receipt of timely demand to disqualify himself or herself as required by that provision. However, this subdivision does not apply to arbitration proceedings conducted under a collective bargaining agreement between employers and employees or between their respective representatives.