GARRETT BARKER, individually and on behalf of all others similarly situated,

Plaintiff,

vs.

THE SLEEP TRAIN, INC., MATTRESS DISCOUNTERS OPERATIONS, LLC, MATTRESS FIRM, INC., and DOES 1 through 50, inclusive,

Defendants.
Case No. 2017-1-CV-314165

TENTATIVE RULING RE: MOTION TO COMPEL ARBITRATION AND DISMISS PLAINTIFF’S ACTION

The above-entitled action comes on for hearing before the Honorable Thomas E. Kuhnle on February 9, 2018, at 9:00 a.m. in Department 5. The Court now issues its tentative ruling as follows:

I. INTRODUCTION

This is a putative class action arising out of alleged wage and hour violations. According to the allegations of the Complaint, filed on August 7, 2017, defendants Sleep Train, Inc., Mattress Firm, Inc., and Mattress Discounters Operations, LLC (collectively, “Defendants”) own and operate Sleep Train, Mattress Discounters, and Mattress Firm stores throughout California and the United States. (Class Action Complaint (“Complaint”), ¶ 18.) Plaintiff Garrett Barker (“Plaintiff”) was employed as a non-exempt hourly employee during the class period. (Complaint, ¶ 19.) Plaintiff alleges he was injured by Defendants’ failure to pay wages for all hours worked, failure to provide adequate meal and rest periods, failure to furnish accurate wage statements, and failure to timely pay all wages due upon termination of employment. (Complaint, ¶ 7.)

The Complaint sets forth the following causes of action: (1) Failure to Pay Wages for all Hours Worked; (2) Failure to Provide Rest Periods; (3) Failure to Provide Meal Periods; (4) Failure to Furnish Accurate Wage Statements; (5) Waiting Time Penalties; (6) Restitution – Unfair Business Practices; and (7) Injunction. Defendants now move to compel arbitration and dismiss Plaintiff’s action.

II. REQUEST FOR JUDICIAL NOTICE

Defendants request judicial notice of the following:

i. Order Granting Defendants Sleep Train, Inc. and Mattress Firm, Inc.’s Petition to Compel Arbitration in the matter of Eduardo Perez v. Sleep Train, Inc., et al., Case No. RG15770015 (Alameda County Superior Court, August 4, 2015); and
ii. Order Granting Defendant Sleep Train, Inc.’s Petition to Compel Arbitration in the matter of Alexis Benning v. Sleep Train, Inc., Case No. 37-2016-00012968 (San Diego County Superior Court, December 2, 2016).

Orders from unrelated cases in other trial courts are not relevant, and only relevant material is subject to judicial notice. (See Mangini v. R. J. Reynolds Tobacco Co. (1994) 7 Cal.4th 1057, 1063 [Although a court may judicially notice a variety of matters, only relevant material may be noticed.].) Accordingly, Defendants’ request for judicial notice is DENIED.

III. DISCUSSION

“A party who claims that there is a written agreement to arbitrate may petition the superior court for an order to compel arbitration.” (Banner Entertainment, Inc. v. Superior Court (1998) 62 Cal.App.4th 348, 356; see also Code Civ. Proc., § 1281.2) “[T]he petitioner bears the burden of establishing the existence of a valid agreement to arbitrate, and a party opposing the petition bears the burden of proving by a preponderance of the evidence any fact necessary to its defense.” (Ibid.)

Defendants argue Plaintiff signed a valid and enforceable arbitration agreement (the “Arbitration Agreement” or “Agreement”). Defendants have submitted a copy of the Arbitration Agreement, which Plaintiff signed on December 10, 2011. (Declaration of Bruce Kerr in Support of Defendants’ Petition to Compel Arbitration and Stay Plaintiff’s PAGA Claims (“Kerr Decl.”), Ex. B.) Plaintiff does not dispute the existence of the Arbitration Agreement. Instead, Plaintiff argues the Arbitration Agreement cannot be enforced.

Plaintiff argues the Arbitration Agreement is unenforceable for three reasons: (1) Defendants’ failure to provide the “pay raises” promised by the Arbitration Agreement constitutes a failure of consideration; (2) Defendants come to the Court with unclean hands because the Arbitration Agreement relies on consideration that is insufficient as a matter of law, Defendants never intended to deliver certain consideration, and Defendants failed to comply with California labor law in presenting the Arbitration Agreement; and (3) the Arbitration Agreement purports to require the arbitration of public injunctive relief.

A. Failure of Consideration

Plaintiff’s first argument is that Defendants cannot enforce the Arbitration Agreement because Defendants failed to provide material consideration promised in the contract. Plaintiff asserts the Agreement expressly includes future pay raises as a form of consideration. The Arbitration Agreement states it is being provided “[i]n consideration of [Plaintiff’s] employment with The Sleep Train, Inc. (the “Company”), its promise to arbitrate all employment-related disputes and [Plaintiff’s] receipt of the compensation, pay raises and other benefits paid to [Plaintiff] by the Company, at present and in the future. . . . (Kerr Decl., Ex. B, p. 1.) Plaintiff contends he never got a pay raise in return for signing the Arbitration Agreement.

Plaintiff appears to believe the consideration language in the Arbitration Agreement means that Plaintiff is entitled to certain pay raises. However, the Agreement is not so specific. The Arbitration Agreement does not state Plaintiff will receive any particular pay raise, just as it does not clarify what “other benefits” Plaintiff will be paid.

Under Plaintiff’s interpretation, there would necessarily be a period of time during which the Arbitration Agreement would not yet be in effect, i.e. prior to Plaintiff receiving a raise. Moreover, because no monetary value is assigned to the raise, a raise of one dollar or even just a penny would theoretically be sufficient. This interpretation of the Agreement is not reasonable. A more reasonable interpretation of the Arbitration Agreement is that it was provided in exchange for Plaintiff’s employment and whatever compensation, pay raises, and other benefits Plaintiff might receive in connection with that employment. In other words, the Agreement does not promise any specific compensation to Plaintiff, only that the compensation Plaintiff may receive is part of the consideration for the Agreement, which is related to Plaintiff’s employment, and which undisputedly is sufficient consideration for a binding agreement. Plaintiff has not established that consideration was lacking for the Arbitration Agreement.

B. Unclean Hands

Plaintiff contends the unclean hands doctrine prevents enforcement of the Agreement. “The doctrine [of unclean hands] demands that a plaintiff act fairly in the matter for which he seeks a remedy. He must come into court with clean hands, and keep them clean, or he will be denied relief, regardless of the merits of his claim.” (Kendall-Jackson Winery, Ltd. v. Superior Court (1999) 76 Cal.App.4th 970, 978.) Whether the particular misconduct is a bar to the alleged claim for relief depends on (1) analogous case law, (2) the nature of the misconduct, and (3) the relationship of the misconduct to the claimed injuries. (Id. at p. 979.)

Plaintiff argues Defendants engaged in inequitable and misleading conduct by: (1) including at least three forms of illusory consideration in the Agreement; (2) including at least three forms of insufficient consideration; (3) presenting to employees as fact that individual arbitration “frequently” results in a “higher award” than class actions; and (4) failing to reimburse Plaintiff for travel time or expenses for traveling to a presentation related to the Agreement.

Plaintiff cites to no authority to establish that Defendants’ purported conduct can give rise to “unclean hands” such that the signed Arbitration Agreement should not be given effect. With regard to the consideration, as discussed previously, compensation, pay raises, and other benefits are byproducts of Plaintiff’s employment, which is sufficient consideration for the Agreement. As for the statement that arbitration frequently results in a higher award than class actions, Defendants point out that the PowerPoint presentation at the meeting attended by Plaintiff stated employees could consult someone outside of work like an attorney. (Declaration of Carey A. James, Ex. C.) Further, Plaintiff did not sign the Agreement until 20 days after receiving it, so he had time to obtain more information and evaluate whether to sign it. (See Declaration of Bruce Kerr in Support of Defendants’ Reply ISO Petition to Compel Arbitration and Dismiss Action, Ex. A.) Finally, Defendants’ purported failure to reimburse Plaintiff goes to the substantive merits of this case that can be adjudicated in an arbitration, and it does not change the fact that Plaintiff was able to attend the presentation regarding the Arbitration Agreement.

“The doctrine of unclean hands requires unconscionable, bad faith, or inequitable conduct by the plaintiff in connection with the matter in controversy.” (Fladeboe v. American Isuzu Motors Inc. (2007) 150 Cal.App.4th 42, 56.) Plaintiff fails to show that the conduct of Defendants rises to the level of “unclean hands.”

C. Public Injunctive Relief

Lastly, Plaintiff argues the Agreement cannot be enforced because it purports to require the arbitration of public injunctive relief. Plaintiff cites several cases, including McGill v. Citibank, N.A. (2017) 2 Cal.5th 945, 953, for the proposition that, under what is known as the Broughton-Cruz rule, agreements to arbitrate claims for public injunctive relief under the CLRA, the UCL, or the false advertising law are not enforceable in California. Defendants contend the Broughton-Cruz rule has been overturned.

The Court need not reach the issue of whether Broughton-Cruz is still the law in California because Plaintiff does not seek public injunctive relief. As explained by the California Supreme Court:

[P]ublic injunctive relief under the UCL, the CLRA, and the false advertising law is relief that has “the primary purpose and effect of” prohibiting unlawful acts that threaten future injury to the general public. [Citation.] Relief that has the primary purpose or effect of redressing or preventing injury to an individual plaintiff – or to a group of individuals similarly situated to the plaintiff – does not constitute public injunctive relief.

(McGill v. Citibank, N.A. (2017) 2 Cal.5th at p. 955.)

Plaintiff seeks injunctive relief under the UCL to stop Defendants from engaging in the alleged wage and hour violations that have injured Plaintiff and the putative class members. (See Complaint, ¶¶ 21-25, 71-75.) There is no allegation that Defendants’ conduct had any impact on anyone other than Plaintiff and the putative class members. Any injunction would affect only employees of Defendants, who are individuals similarly situated to Plaintiff, and not other members of the general public. Therefore, Plaintiff does not seek public injunctive relief, the Broughton-Cruz rule is not implicated, and the injunction “cause of action” is subject to arbitration.

* * * *

For the reasons discussed, Defendants’ Petition to Compel Arbitration and Dismiss Plaintiff’s Action is GRANTED IN PART. Plaintiff must submit his claims to arbitration pursuant to the terms of the Arbitration Agreement. However, the Court will not dismiss this case at this time. The case is stayed pending the completion of arbitration proceedings. (Code Civ. Proc., § 1281.4.) A further case management conference is scheduled for September 14, 2018 at 10:00 a.m. in Department 5. If the arbitration is not yet completed, the parties can arrange for the conference to be continued without appearing.

The Court will prepare the final order if this tentative ruling is not contested.