Filed 2/26/20 Rodriguez v. Lawrence Equipment, Inc. CA2/3

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(a). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115(a).
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION THREE

JULIAN RODRIGUEZ,

Plaintiff and Appellant,

v.

LAWRENCE EQUIPMENT, INC.,

Defendant and Respondent. B291180

Los Angeles County

Super. Ct. No. BC605692

APPEAL from a judgment of the Superior Court of Los Angeles County, Elihu M. Berle, Judge. Affirmed.

Levi & Ebrahimian, Joseph Lavi and Jordan D. Bello for Plaintiff and Appellant.

Lewis Brisbois Bisgaard & Smith, Raul L. Martinez and John Haubrich, Jr. for Defendant and Respondent.

_______________________________________

INTRODUCTION

Julian Rodriguez appeals from a judgment confirming an arbitration award entered in favor of Lawrence Equipment, Inc. (Lawrence), his former employer. On appeal, Rodriguez contends: (1) the court erred in refusing to review the merits of the arbitrator’s decision for errors of law; and (2) the arbitrator committed clear legal error when it found Lawrence complied with California’s wage-and-hour laws in scheduling Rodriguez’s meal and rest breaks. We affirm.

FACTS AND PROCEDURAL BACKGROUND

1. Rodriguez’s Employment
2.
Lawrence is a machine manufacturing company based in Los Angeles. Lawrence manufactures “flat bread machinery” in the United States and Europe.

Rodriguez started working for Lawrence as an hourly machine operator in April 1999. Rodriguez usually worked five or six days a week, from 6:00 a.m. until 3:30 p.m. Lawrence required its employees, including Rodriguez, to take a 20-minute paid rest break at 10:00 a.m. and a 40-minute break at 1:00 p.m., which consisted of a 30-minute unpaid meal break and a 10-minute paid rest break. Lawrence prohibited its employees from taking their breaks at any other times.

In July 2014, Rodriguez signed an acknowledgment included in Lawrence’s employee manual. The acknowledgment contained an arbitration agreement (Arbitration Agreement), which provided that any dispute between Lawrence and Rodriguez that “is in any way related to the employment of [Rodriguez] … shall be submitted to arbitration before the American Arbitration Association (AAA) or any other individual or organization on which the parties agree or which a court may appoint.” The Arbitration Agreement permitted both parties to conduct “reasonable discovery,” and it required that any arbitration award “shall be in writing and binding and final on both parties, and shall state the essential findings and conclusions upon which the arbitration is based.” The Arbitration Agreement also included a provision allowing the parties to obtain limited judicial review of any arbitration award: “There shall be limited judicial review of the arbitrator’s decision. Such review shall be limited to deciding whether the arbitrator complied with statutory law.”

In July 2015, Lawrence issued a new employee manual. The new manual included a revised arbitration agreement, which provided that any employment-related dispute between an employee and Lawrence would be “subject to final and binding arbitration pursuant to the provisions of the Federal Arbitration Act.” Rodriguez never signed the revised arbitration provision or any acknowledgment that he had received the new employee manual because “he was out of work on a medical leave of absence and had a recently signed arbitration policy in his file.”

Lawrence terminated Rodriguez’s employment in late October 2015.

3. Rodriguez’s Lawsuit
4.
In December 2015, Rodriguez filed a class action lawsuit against Lawrence. The operative first amended complaint alleged eight causes of action: (1) failure to pay wages for all time worked in violation of Labor Code sections 1194 and 1197; (2) failure to pay overtime wages in violation of Labor Code sections 510, 1194, and 1198; (3) failure to pay wages for inadequate meal breaks in violation of Labor Code sections 226.7 and 512; (4) failure to provide adequate rest breaks in violation of Labor Code section 226.7; (5) failure to provide complete and accurate wage statements in violation of Labor Code section 226; (6) failure to pay all earned wages at time of separation of employment in violation of Labor Code sections 201, 202, and 203; (7) unfair business practices in violation of Business and Professions Code section 17200 et seq.; and (8) a claim for civil penalties and wages under the Private Attorneys General Act (PAGA) (Lab. Code, § 2698 et seq.).

In May 2016, Lawrence filed a motion to compel arbitration of the allegations in the first seven causes of action, to dismiss Rodriguez’s class claims, and to stay the eighth cause of action—i.e., the PAGA claim—until arbitration was resolved. Lawrence argued, among other things, that Rodriguez was required to arbitrate his claims pursuant to the Arbitration Agreement that he signed in July 2014.

In July 2016, the court granted Lawrence’s motion and ordered the parties to arbitrate the allegations in the first seven causes of action. The court also dismissed Rodriguez’s class claims and stayed the PAGA claim pending resolution of the arbitration.

5. Arbitration
6.
In early February 2018, the parties participated in a two-day arbitration hearing. At the hearing, Rodriguez claimed Lawrence violated the Labor Code and “the Industrial Wage Commission’s Wage Order 4-2001” when it failed to: (1) pay Rodriguez for all regular and overtime hours that he worked; (2) provide Rodriguez legally compliant meal and rest breaks; (3) compensate Rodriguez for each day that he was not provided a legally compliant meal or rest break; (4) timely pay Rodriguez all outstanding wages at the time of his termination; and (5) provide Rodriguez accurate wage statements. Rodriguez also claimed Lawrence’s Labor Code violations constituted unfair business practices under the Business and Professions Code.

On February 12, 2018, the arbitrator issued a written award (Award) in favor of Lawrence. The arbitrator found Lawrence did not fail to pay Rodriguez for any wages that he had earned. The arbitrator also found Lawrence did not schedule Rodriguez’s meal and rest breaks in an unlawful manner.

7. Post-Arbitration Petitions
8.
In March 2018, Rodriguez filed a motion to vacate the Award. As a threshold matter, Rodriguez argued the trial court was authorized to review the merits of the arbitrator’s decision because: (1) the Arbitration Agreement provided for “limited review” of any award to determine whether the arbitrator complied with statutory law; and (2) precluding review of the Award would be inconsistent with the purpose of the wage and hour laws Rodriguez sought to enforce at the arbitration hearing. With respect to the merits of the Award, Rodriguez argued the arbitrator failed to properly apply California’s laws governing the scheduling of employees’ meal and rest breaks.

In April 2018, Lawrence filed a petition to confirm the Award as well as an opposition to Rodriguez’s motion to vacate. Lawrence argued Rodriguez’s motion was procedurally improper and, in any event, the court’s review of the Award was limited to the grounds set forth in Code of Civil Procedure sections 1286.2 and 1286.6, which do not permit the court to review the merits of the arbitrator’s decision for errors of law or fact.

In May 2018, the court granted Lawrence’s petition to confirm the Award and denied Rodriguez’s motion to vacate. The court found the Arbitration Agreement was governed by the Federal Arbitration Act (FAA) because Rodriguez’s employment involved interstate commerce and, as a result, the Award was not subject to expanded judicial review for errors of law or fact. Alternatively, the court concluded that even if the Arbitration Agreement was governed by California law, the language in the agreement providing for “limited review” of the Award did not expand the scope of the court’s review beyond the grounds identified in sections 1286.2 and 1286.6. The court also rejected Rodriguez’s argument that the nature of his claims challenging the manner in which Lawrence scheduled its meal and rest breaks entitled him to expanded judicial review of the arbitrator’s decision.

In June 2018, the court entered judgment on the first seven causes of action in Lawrence’s favor. Rodriguez appeals.

DISCUSSION

Rodriguez contends the court erred when it denied his motion to vacate the Award. Specifically, Rodriguez argues the court should have reviewed the merits of the arbitrator’s decision because the Arbitration Agreement expressly permits limited judicial review of any award to determine whether the arbitrator “complied with statutory law,” which Rodriguez insists includes substantive wage-and-hour laws. Alternatively, Rodriguez argues the court should have reviewed the merits of the Award because his wage-and-hour claims implicate “unwaivable statutory rights” entitled to expanded judicial review. Finally, Rodriguez urges us to vacate the Award because the arbitrator failed to properly apply California’s wage-and-hour laws to his claims. As we explain, the court correctly declined to review the merits of the Award.

1. Standard of Review
2.
We independently review a court’s ruling confirming an arbitration award. (Advanced Micro Devices, Inc. v. Intel Corp. (1994) 9 Cal.4th 362, 376, fn. 9.) If the court’s ruling relies on a determination of disputed factual issues, we apply the substantial evidence test when reviewing those issues. (Toal v. Tardif (2009) 178 Cal.App.4th 1208, 1217.)

3. The Arbitration Agreement does not provide for expanded judicial review of the Award.
4.
California and federal law have strong public policies in favor of arbitration as a speedy and relatively inexpensive means of dispute resolution. (St. Agnes Medical Center v. PacifiCare of California (2003) 31 Cal.4th 1187, 1195.) By agreeing to arbitrate, a party waives its right to a jury trial on claims governed by the arbitration agreement and accepts strict limits on the scope of judicial review of an arbitration award. (Madden v. Kaiser Foundation Hospitals (1976) 17 Cal.3d 699, 714 [waiver of jury trial]; Moncharsh v. Heily & Blase (1992) 3 Cal.4th 1, 10 (Moncharsh) [generally, judicial intervention in the arbitration process is “minimized”].)

Consistent with the public policy favoring finality of arbitration awards, a party generally is not entitled to judicial review of an arbitrator’s decision for errors of fact or law. (Moncharsh, supra, 3 Cal.4th at p. 11.) Rather, review of an award is limited to the grounds specified in the California Arbitration Act (CAA) or the FAA, whichever applies to the parties’ arbitration agreement. (Cable Connection, Inc. v. DIRECTV, Inc. (2008) 44 Cal.4th 1334, 1343–1344 (Cable Connection).)

The CAA and the FAA provide nearly identical grounds for review of an arbitrator’s decision. (Cable Connection, supra, 44 Cal.4th at p. 1344.) “Under both statutes, courts are authorized to vacate an award if it was (1) procured by corruption, fraud, or undue means; (2) issued by corrupt arbitrators; (3) affected by prejudicial misconduct on the part of the arbitrators; or (4) in excess of the arbitrators’ powers. (§ 1286.2, subd. (a); 9 U.S.C. § 10(a).) An award may be corrected for (1) evident miscalculation or mistake; (2) excess of the arbitrators’ powers; or (3) imperfection in form. (§ 1286.6; 9 U.S.C. § 11.)” (Cable Connection, supra, 44 Cal.4th at p. 1344, fns. omitted.)

Under the CAA, the parties may agree to expand the scope of judicial scrutiny to encompass review of the arbitrator’s decision for errors of fact or law. (Cable Connection, supra, 44 Cal.4th at p. 1356 [“while the statutory grounds for correction and vacation of arbitration awards do not ordinarily include errors of law, contractual limitations on the arbitrators’ powers can alter the usual scope of review”].) If the parties agree that the FAA’s procedural provisions apply to their dispute, however, they may not contract to allow for expanded judicial review of the merits of the award beyond the grounds listed in the FAA. (See Hall Street Associates L.L.C. v. Mattel, Inc. (2008) 552 U.S. 576, 579–580.)

Here, the court found the FAA’s procedural provisions applied and, as a result, the parties could not consent to expanded judicial review of the Award beyond the grounds listed in the FAA. Rodriguez contends the court erred in finding the FAA’s procedural provisions apply in this case because the parties never expressly agreed to be bound by them. (See Los Angeles Unified School Dist. v. Safety National Casualty Corp. (2017) 13 Cal.App.5th 471, 482 [if the parties “do not ‘expressly designate that any arbitration proceeding should move forward under the FAA’s procedural provisions rather than under state procedural law’ [citation], California procedures necessarily apply”].) We need not determine whether the court erred in finding the FAA’s procedural provisions apply in this case because, even under the CAA, the language of the Arbitration Agreement does not allow for expanded judicial review of the Award for errors of fact or law.

To enable expanded judicial review of an arbitration award under the CAA, the parties must do more than agree that the arbitrator must “apply” or “act in accordance with” the law. (See Cable Connection, supra, 44 Cal.4th at pp. 1360¬–1361; see also Gravillis v. Coldwell Banker Residential Brokerage Co. (2010) 182 Cal.App.4th 503, 519 (Gravillis) [“Neither ‘apply’ nor ‘in accordance with,’ when used in an arbitration provision to identify the governing substantive law, evinces an agreement that an award be reviewed for legal error.”].) Instead, “the parties must clearly agree that legal errors are an excess of arbitral authority that is reviewable by the courts.” (Cable Connection, at p. 1361.)

As the California Supreme Court recognized in Cable Connection, “[a] provision requiring arbitrators to apply the law leaves open the possibility that they are empowered to apply it ‘wrongly as well as rightly.’ [Citation.] … Arbitrators do not ordinarily exceed their contractually created powers simply by reaching an erroneous conclusion on a contested issue of law or fact, and arbitral awards may not ordinarily be vacated because of such error, for ‘ “[t]he arbitrator’s resolution of these issues is what the parties bargained for in the arbitration agreement.” ’ [Citation.]” (Cable Connection, supra, 44 Cal.4th at pp. 1360–1361.) Thus, “parties seeking to allow judicial review of the merits [should] provide for [expanded] review explicitly and unambiguously.” (Id. at p. 1361.)

In Cable Connection, the arbitration agreement at issue stated: “ ‘The arbitrators shall not have the power to commit errors of law or legal reasoning, and the award may be vacated or corrected on appeal to a court of competent jurisdiction for any such error.’ ” (Cable Connection, supra, 44 Cal.4th at p. 1361, fn. 20.) The Supreme Court concluded the first clause of the agreement “depriv[ed] the arbitrators of the power to commit legal error,” while the second clause “specifically provided for judicial review of such error.” (Id. at p. 1361.) The court refused to decide, however, whether either clause on its own, “or some different formulation, would be sufficient to confer an expanded scope of review.” (Ibid.)

The Arbitration Agreement in this case is distinguishable from the agreement at issue in Cable Connection. Unlike the agreement in that case, the Arbitration Agreement does not expressly provide for an expanded scope of review. Rather, the agreement states that there “shall be limited judicial review of the arbitrator’s decision.” (Italics added.) This language is consistent with the well-settled principle that binding arbitration awards are generally subject to limited, not expanded, review. (See Moncharsh, supra, 3 Cal.4th at p. 33 [noting that typically the scope of judicial review of an arbitration award is “limited”].) Thus, by using the term “limited” to modify the phrase “judicial review,” the parties did not “explicitly and unambiguously” agree to broaden the scope of judicial review of the Award. (See Cable Connection, supra, 44 Cal.4th at p. 1361.)

The Arbitration Agreement also does not expressly “deprive[] the arbitrator[] of the power to commit legal error.” (Cable Connection, supra, 44 Cal.4th at p. 1361.) While the agreement states that any award is subject to limited review to determine whether the arbitrator “complied with statutory law,” that language does not prohibit the arbitrator from committing legal error. The phrase requiring the arbitrator to “compl[y] with statutory law” is synonymous with a phrase requiring an arbitrator to “act in accordance with” the law (see Alexander v. Scripps Memorial Hospital La Jolla (2018) 23 Cal.App.5th 206, 239 [equating the phrase “in compliance with” to the phrase “in accordance with”]), which, as at least two courts have held, does not deprive an arbitrator of the power to commit legal error. (See Christensen v. Smith (2009) 171 Cal.App.4th 931, 937 (Christensen); Gravillis, supra, 182 Cal.App.4th at p. 519.)

For example, in Christensen, the reviewing court applied the principles of Cable Connection to an arbitration agreement that required the arbitrator to “render an award in accordance with substantive California law.” (Christensen, supra, 171 Cal.App.4th at p. 937.) The court rejected the plaintiff’s argument that the agreement allowed for expanded judicial review of an arbitration award because the agreement “provide[d] no hint the parties contemplated appellate review of the merits.” (Ibid.) And, unlike the agreement at issue in Cable Connection, “the terms [of the Christensen agreement] d[id] not expressly deprive the arbitrator of the power to commit legal error.” (Ibid.) Because the agreement did not “ ‘expressly provide for an expanded scope of review’ to distinguish [it] from ‘the usual expectations of parties to arbitration agreements, who accept the risk of legal error in exchange for the benefits of a quick, inexpensive, and conclusive resolution’ [citations],” the court in Christensen concluded there was “no basis for the expanded appellate review the [plaintiff] now seek.” (Ibid.)

Likewise, in Gravillis, the appellate court examined an agreement that required arbitration to be conducted “in accordance with” statutory law. (See Gravillis, supra, 182 Cal.App.4th at p. 517.) After examining Cable Connection and Christensen, the court rejected the defendant’s argument that the agreement deprived the arbitrator of the power to commit legal error and authorized expanded judicial review of the arbitrator’s decision. (Gravillis, supra, 182 Cal.App.4th at pp. 516–519.)

For the reasons discussed above, we conclude the language of the Arbitration Agreement in this case does not explicitly authorize expanded judicial review of the Award for errors of law or fact.

5. The Award is not otherwise subject to expanded review.
6.
In the alternative, Rodriguez argues the Award is subject to expanded review because it implicates Rodriguez’s unwaivable statutory right to proper meal and rest breaks under California’s wage-and-hour laws. According to Rodriguez, confirming the Award without reviewing the merits of the arbitrator’s decision would provide insufficient protection of Rodriguez’s statutory rights and contravene the public policy behind California’s wage-and-hour laws. We disagree.

As we explained above, an arbitrator’s decision generally is not subject to judicial review for errors of law or fact. (Moncharsh, supra, 3 Cal.4th at p. 11.) This rule precludes review of the merits of arbitration awards even when errors of fact or law “appear on the face of the award or cause substantial injustice to the parties.” (Richey v. AutoNation, Inc. (2015) 60 Cal.4th 909, 916 (Richey).) To be sure, there are some narrow exceptions to the general rule prohibiting expanded judicial review of an arbitrator’s decision. These exceptions, however, only “protect against error that is so egregious as to constitute misconduct or so profound as to render the process unfair.” (Heimlich v. Shivji (2019) 7 Cal.5th 350, 368; see also Richey at p. 916.) As we explain below, these exceptions are not applicable here.

In Pearson Dental Supplies, Inc. v. Superior Court (2010) 48 Cal.4th 665 (Pearson Dental), the Supreme Court addressed the scope of a trial court’s authority to vacate an arbitration award in favor of an employer in an age discrimination action under the Fair Employment and Housing Act (FEHA). There, the arbitrator’s award was based on a clearly erroneous application of the applicable statute of limitations, which denied the plaintiff a hearing on the merits on his discrimination claim. (Id. at p. 672.) Relying on Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83 (Armendariz), the trial court in Pearson Dental found the arbitrator exceeded his authority because the award was inconsistent with the plaintiff’s unwaivable statutory rights—i.e., it deprived the plaintiff of a forum to hear his employment-related claim. (Pearson Dental, supra, 48 Cal.4th at p. 672.) The trial court vacated the arbitrator’s decision, but the court of appeal reversed. (Ibid.) While the court of appeal agreed that the arbitrator misapplied the statute of limitations’ tolling period, it concluded the arbitrator’s decision was insulated from judicial review. (Ibid.)

The Supreme Court reversed the court of appeal’s decision. The court held: “an arbitrator whose legal error has barred an employee subject to a mandatory arbitration agreement from obtaining a hearing on the merits of a claim based on [the right to be free from unlawful discrimination under FEHA] has exceeded his or her powers within the meaning of Code of Civil Procedure section 1286.2, subdivision (a)(4), and the arbitrator’s award may properly be vacated.” (Pearson Dental, supra, 48 Cal.4th at p. 680.) In reaching its decision, the court characterized the arbitrator’s error as one “misconstru[ing] the procedural framework under which the parties agreed the arbitration was to be conducted, rather than misinterpreting the law governing the claim itself.” (Id. at pp. 679–680.)

In Richey, the Supreme Court explained its decision in Pearson Dental: “Pearson Dental emphasized that its legal error standard did not mean that all legal errors are reviewable. [Citation.] The arbitrator had committed clear legal error by (1) ignoring a statutory mandate, and (2) failing to explain in writing why the plaintiff would not benefit from the statutory tolling period.” (Richey, supra, 60 Cal.4th at p. 918.) The arbitrator’s error at issue in Pearson Dental warranted vacating the arbitration award, the court explained, because “the legal error that occurred actually denied the plaintiff a hearing on his claim’s merits.” (Ibid.) The court emphasized that, consistent with the general rule favoring finality of arbitration awards, the holding in Pearson Dental would have “limited” and “narrow application.” (Ibid.)

Even assuming the arbitration in this case implicated Rodriguez’s “unwaivable statutory rights” under California’s wage-and-hour laws, Pearson Dental does not authorize expanded judicial review of the Award. Unlike the plaintiff in Pearson Dental, who was completely denied a hearing on the merits of his employment-related claims in any forum, Rodriguez obtained a thorough hearing on the merits of his wage-and-hour claims. As the Supreme Court has repeatedly recognized, employment claims are properly subject to arbitration. (See Armendariz, supra, 24 Cal.4th at p. 102; Pearson Dental, supra, 48 Cal.4th at p. 677; Richey, supra, 60 Cal.4th at pp. 916–918.) “When parties contract to resolve their disputes by private arbitration, their agreement ordinarily contemplates that the arbitrator will have the power to decide any question of contract interpretation, historical fact or general law necessary, in the arbitrator’s understanding of the case, to reach a decision. [Citations.] Inherent in that power is the possibility the arbitrator may err in deciding some aspect of the case.” (Gueyffier v. Ann Summers, Ltd. (2008) 43 Cal.4th 1179, 1184.)

Rodriguez nevertheless claims the arbitrator exceeded his authority in this case and violated Rodriguez’s rights under California’s wage-and-hour laws by misapplying Labor Code sections 226.7 and 512 as well as the Industrial Welfare Commission’s Wage Order No. 4-2001, when he found Lawrence did not schedule Rodriguez’s meal and rest breaks in an unlawful manner. Rodriguez’s claims challenging the arbitrator’s decision, even if they are correct on the merits, do not support vacating the Award. All of Rodriguez’s claims focus on alleged errors of law—errors that are beyond “the narrow application of [Pearson Dental’s] holding.” (See Richey, supra, 60 Cal.4th at p. 918 [“Pearson Dental emphasized that its legal error standard did not mean that all legal errors are reviewable”].)

In sum, Rodriguez is not entitled to expanded judicial review of the Award for legal or factual errors simply because that decision resolves his statutory claims under California’s wage-and-hour laws. (See Richey, supra, 60 Cal.4th at p. 917 [“ ‘ “[a]rbitrators do not ordinarily exceed their contractually created powers simply by reaching an erroneous conclusion on a contested issue of law or fact, and arbitral awards may not ordinarily be vacated because of such error …” ’ ”].) Because Rodriguez does not challenge the Award on any of the grounds authorized by the CAA, the court did not err when it confirmed the Award.

DISPOSITION

The judgment is affirmed. Lawrence shall recover its costs on appeal.

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

LAVIN, Acting P. J.

WE CONCUR:

EGERTON, J.

DHANIDINA, J.