Case Name: Otto Tielemans v. Aegion Energy Services, Inc., et al.

Case No.: 19-CV-349343

Currently before the Court is the motion by defendants Aegion Energy Services, Inc. (“Aegion”) and Schultz Industrial Services, Inc. (“Schultz”) (collectively, “Defendants”), formerly known as Schultz Mechanical Contractors, Inc., to compel arbitration of the second through eighth causes of action of plaintiff Otto Tielemans’ (“Plaintiff”) operative first amended complaint (“FAC”) and stay proceedings as to all claims.

Factual and Procedural Background

This is a putative class and Private Attorneys General Act (“PAGA”) action brought by Plaintiff, on behalf of himself and all others similarly situated, primarily alleging wage and hour violations by Defendants.

According to the allegations of the FAC, Plaintiff worked for Defendants as a non-exempt, hourly employee from approximately August 11, 2016 through July 2, 2018. (FAC, ¶ 24.) When Plaintiff applied for employment, Defendants performed a background check on him. (Id. at ¶ 25.) But Defendants did not provide legally compliant disclosure and authorization forms to Plaintiff and the putative class. (Id. at ¶ 26.) In addition, Plaintiff and the putative class were not paid for their travel time to and from their jobsite to “the yard,” a predetermined location where they were required to meet and wait for the foreman and/or supervisor. (Id. at ¶¶ 27-36.) Moreover, Plaintiff and other class members were not allowed to take off duty meal breaks due to their rigorous work schedules. (Id. at ¶¶ 40-51.) They were also denied proper rest periods. (Id. at ¶¶ 52-54.) Furthermore, Plaintiff and the putative class were not reimbursed for business expenses incurred in purchasing their own steel-toe boots, fire-retardant pants, safety goggles, gloves, and other tools. (Id. at ¶¶ 55-57.) Due to these violations, Defendants failed to provide employees with compliant itemized wage statements and violated the Unfair Competition Law (“UCL”). (Id. at ¶¶ 58-62.) The violations also provide the basis for Plaintiff’s representative action for civil penalties under PAGA. (Id. at ¶¶ 184-189.)

Based on these allegations, Plaintiff filed the FAC against Defendants, alleging causes of action for: (1) failure to provide proper disclosures under the Fair Credit Reporting Act (“FCRA”); (2) failure to provide required meal periods in violation of Labor Code sections 204, 218.6, 223, 226.7, 512, and 1198; (3) failure to provide required rest periods in violation of Labor Code sections 204, 223, 226.7, and 1198; (4) failure to pay hourly and overtime wages in violation of Labor Code sections 204, 218.6, 223, 510, 1194, 1197, and 1198; (5) failure to reimburse in violation of Labor Code section 2802; (6) failure to provide accurate itemized wage statements in violation of Labor Code section 226; (7) failure to pay wages when due in violation of Labor Code sections 201-203; (8) unfair competition in violation of the UCL; and (9) violation of PAGA, Labor Code section 2698, et seq.

On October 23, 2019, Defendants filed the instant motion to compel arbitration and stay proceedings. Plaintiff filed papers in opposition to the motion on December 13, 2019. On January 6, 2020, Defendants filed a reply.

Discussion

Pursuant to Code of Civil Procedure sections 1281.2 and 1281.4, Defendants move to compel arbitration of the second through eighth causes of action of the FAC and stay the action in its entirety.

I. Request for Judicial Notice

In connection with their moving papers, Defendants ask the Court to take judicial notice of Industrial Welfare Commission (“IWC”) wage order No. 16-2001 (“Wage Order 16”) (8 Cal. Code Regs., § 11160).

As Defendants persuasively argue, IWC Wage Order 16 is a proper subject of judicial notice. (See Morales v. 22nd Dist. Agricultural Assn. (2016) 1 Cal.App.5th 504, 540 [taking judicial notice of wage order under Evidence Code section 452, subdivision (c)]; see also Rodriguez v. E.M.E., Inc. (2016) 246 Cal.App.4th 1027, 1037, fns. 3 & 4 [taking judicial notice of wage orders].)

Accordingly, Defendants’ request for judicial notice is GRANTED.

II. Legal Standard

Code of Civil Procedure section 1281.2 provides that a court must grant a petition to compel arbitration “if it determines that an agreement to arbitrate … exists, unless it determines that: (a) The right to compel arbitration has been waived by the petitioner; or (b) Grounds exist for the revocation of the agreement[; or] (c) A party to the arbitration agreement is also a party to a pending court action or special proceeding with a third party … and there is a possibility of conflicting rulings ….” (Code Civ. Proc., § 1281.2; see also 9 U.S.C. § 3 [the court must grant a motion to compel arbitration if any suit is brought upon “any issue referable to arbitration under an agreement for such arbitration”].)

The moving party must prove by a preponderance of evidence the existence of the arbitration agreement and that the dispute is covered by the agreement. (See Cruise v. Kroger Co. (2015) 233 Cal.App.4th 390, 396 [under both federal and state law, “the threshold question presented by a petition to compel arbitration is whether there is an agreement to arbitrate”]; Rosenthal v. Great Western Fin’l Securities Corp. (1996) 14 Cal.4th 394, 413 (Rosenthal) [moving party’s burden is a preponderance of the evidence].) The burden then shifts to the resisting party to prove a ground for denial. (Rosenthal, supra, 14 Cal.4th at p. 413.)

If the court orders arbitration “of a controversy which is an issue involved in [the] action or proceeding pending before [it], the court … shall, upon motion of a party …, stay the action or proceeding until an arbitration is had in accordance with the order to arbitrate or until such earlier time as the court specifies.” (Code Civ. Proc., § 1281.4.) “If the issue which is the controversy subject to arbitration is severable, the stay may be with respect to that issue only.” (Ibid.)

III. Existence and Validity of Arbitration Agreement

A. The Parties’ Arguments

In their moving papers, Defendants argue Plaintiff is bound by two collective bargaining agreements in effect during his employment—the “2015-2018 Southern California Laborers Master Agreement” and the “2018-2022 Southern California Laborers Master Agreement” (collectively, “CBAs”) between Association of Construction Employers (“ACE”) and Southern California District Council of Laborers affiliated with the Laborers’ International Union of North America (“SCDCL-LiUNA”)—which contain a mandatory arbitration provision. Defendants state Plaintiff is bound by the CBAs because he was a member of SCDCL-LiUNA Local Union No. 585 from August 10, 2016 through July 3, 2018 (i.e., the entirety of his employment with Defendants) and the CBAs were entered into by SCDCL-LiUNA on behalf of itself and its affiliated Local Unions.

Next, Defendants argue they are bound by and entitled to enforce the mandatory arbitration provision in the CBAs. They assert Schultz is bound by and may invoke the mandatory arbitration provision in the CBAs because Schultz became an ACE member on March 15, 2018, and the CBAs are binding on corporations that become eligible members of ACE during the term of the agreement. Defendants urge that Aegion can enforce the mandatory arbitration provision in the CBAs under an agency theory because it is the parent company of Schultz and the claims against Aegion arise out of the agency relationship. They also contend Aegion can invoke the mandatory arbitration provision in the CBAs under the doctrine of estoppel because Aegion’s alleged conduct is intertwined with Schultz’s alleged conduct and Schultz is a signatory of the CBAs.

Defendants further argue the mandatory arbitration provision in the CBAs clearly and unmistakably requires arbitration of Plaintiff’s second through eighth causes of action. Defendants contend the arbitration provision explicitly applies to claims brought under IWC Wage Order 16, the Labor Code sections identified in Labor Code section 2699.5, and federal, state, and local law concerning wage and hour requirements, wage payment, and meal or rest periods. Defendants assert the second through eighth causes of action are brought under California statutes expressly identified in the arbitration provision. They also state that most of those claims are brought under IWC Wage Order 16.

Lastly, Defendants argue that the action, in its entirety, should be stayed pending arbitration in the interest of judicial economy and because the PAGA claim is premised on claims that should be compelled to arbitration.

In opposition, Plaintiff argues that an agreement to arbitrate did not exist between the parties. Although Plaintiff concedes he was a union member of SCDCL-LiUNA, he contends he is not bound by the CBAs because he never personally signed or ratified the CBAs. With respect to Defendants, Plaintiff concedes Schultz is a party to the CBAs and does not dispute that Schultz appointed ACE as its agent with respect to the CBAs. As to Schultz, Plaintiff only asserts that the CBAs, if found to be enforceable, should be applied prospectively from March 15, 2018 (i.e., from the date Schultz joined ACE). Plaintiff also contends that Aegion is not a party to the CBAs, but does not address Defendants’ argument that Aegion can enforce the mandatory arbitration provision in the CBAs under an agency theory and the doctrine of estoppel.

Next, Plaintiff argues the mandatory arbitration provision in the CBAs is a waiver of his statutory rights and does not clearly and unmistakably require arbitration of the statutory claims alleged in the second through eighth causes of action.

Plaintiff further argues the mandatory arbitration provision in the CBAs is unconscionable. Plaintiff contends the arbitration provision is procedurally unconscionable because it is adhesive and was a condition of employment. Plaintiff asserts the arbitration provision is substantively unconscionable because it requires him to waive his representative claim under PAGA, waives his right to seek injunctive relief under Business & Professions Code section 17200, does not provide the full range of statutory remedies available to him under the law, and contains an impermissible fee-shifting provision that violates Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83 (Armendariz). Lastly, Plaintiff contends that he should be allowed to litigate his claims because class action litigation is an important public policy.

In their reply, Defendants point out that Plaintiff presents no legal authority supporting his contention that he is not bound by the CBAs because he never personally signed or ratified the CBAs. Similarly, Defendants note Plaintiff does not identify any legal authority providing that the CBAs should only be applied prospectively. Defendants also highlight Plaintiff’s failure to address their argument that Aegion can enforce the mandatory arbitration provision in the CBAs under an agency theory and the doctrine of estoppel.

Next, Defendants contend that the mandatory arbitration provision is not a waiver of Plaintiff’s statutory rights, but merely calls for Plaintiff to enforce his rights in a different forum. In addition, Defendants assert the collectively-bargained agreement to arbitrate Plaintiff’s statutory claims under IWC Wage Order 16, the Labor Code, and the UCL must be enforced as it is clear and unmistakable.

Regarding unconscionability, Defendants argue Plaintiff does not establish procedural unconscionability because the CBAs are not contracts of adhesion. Defendants also state the arbitration provision is not substantively unconscionable because the provision gives the arbitrator full authority to award any and all remedies available at law, it does not seek to arbitrate Plaintiff’s PAGA claim and the CBAs are otherwise enforceable, the fee provision does not violate Armendariz, and the provision does not waive Plaintiff’s right to seek public injunctive relief under Business & Professions Code section 17200. Defendants further assert that Plaintiff’s public policy argument regarding class litigation fails because state law rules against class action waivers are invalid.

Defendants conclude by noting Plaintiff did not address their argument that the action, in its entirety, should be stayed pending arbitration.

B. Existence of Agreement to Arbitrate Between the Parties

It is undisputed that the CBAs contain a mandatory arbitration provision. The parties’ dispute centers on whether they are bound by the agreements.

“ ‘Generally speaking, one must be a party to an arbitration agreement to be bound by it or invoke it.’ ” (Molecular Analytical Systems v. Ciphergen Biosystems, Inc. (2010) 186 Cal.App.4th 696, 706 (Molecular).)

Here, the evidence shows that Plaintiff is bound by the arbitration provision in the CBAs. Plaintiff was a member of SCDCL-LiUNA Local Union No. 585 during his employment with Schultz from August 10, 2016 to July 3, 2018. (Teague Dec., ¶ 7; Dudley Dec., ¶ 3.) The CBAs, which collectively have effective dates from July 1, 2015 to June 30, 2022, were entered into by SCDCL-LiUNA on behalf of itself and its affiliated Local Unions. (Teague Dec., ¶ 5, Ex. 3, p. 1, & Ex. 4, p. 1.) The CBAs provide that SCDCL-LiUNA is the sole and exclusive collective bargaining agent for itself and all of its affiliated Local Unions. (Teague Dec., ¶ 5, Ex. 3, p. 9, & Ex. 4, p. 9.) Moreover, the law is clear that a union may generally bind an employee to an arbitration agreement as part of the collective bargaining process. (Cortez v. Doty Bros. Equipment Co. (2017) 15 Cal.App.5th 1, 11 (Cortez); 14 Penn Plaza LLC v. Pyett (2009) 556 U.S. 247, 256-257 (14 Penn Plaza).) Thus, Plaintiff is bound by the arbitration provision in the CBAs.

Although Plaintiff contends he is not bound by the CBAs because he never personally signed or ratified the CBAs, he does not present reasoned argument or legal authority supporting his contention. Consequently, Plaintiff’s assertion is deemed to be without merit and requires no further discussion. (See Badie v. Bank of America (1998) 67 Cal.App.4th 779, 784-785 (Badie) [“When [a party] fails to raise a point, or asserts it but fails to support it with reasoned argument and citations to authority, we treat the point as waived.”]; see also Schaeffer Land Trust v. San Jose City Council (1989) 215 Cal.App.3d 612, 619, fn. 2 (Schaeffer) [“[A] point which is merely suggested by a party’s counsel, with no supporting argument or authority, is deemed to be without foundation and requires no discussion.”].)

Next, Schultz is bound by and may invoke the arbitration provision in the CBAs. The evidence shows that Schultz became a member of ACE on March 15, 2018. (Teague Dec., ¶ 3, Ex. 1.) The CBAs were entered into by ACE on behalf of its members. (Teague Dec., ¶ 5, Ex. 3, p. 1, & Ex. 4, p. 1.) Furthermore, the CBAs state they are binding on corporations, like Schultz, who become members of ACE during the terms of the agreements. (Teague Dec., ¶ 5, Ex. 3, p. 3, & Ex. 4, p. 3.) Notably, Plaintiff also concedes that Schultz is bound by the CBAs. Thus, Schultz is bound by and may invoke the arbitration provision in the CBAs.

As to Schultz, Plaintiff only asserts that the arbitration provision in the CBAs, if found to be enforceable, should be applied prospectively from March 15, 2018 (i.e., from the date Schultz joined ACE). The Court disagrees. First and foremost, Plaintiff does not present reasoned argument or legal authority supporting his assertion and, consequently, it is deemed to be without merit and requires no further discussion. (See Badie, supra, 67 Cal.App.4th at pp. 784-785 “When [a party] fails to raise a point, or asserts it but fails to support it with reasoned argument and citations to authority, we treat the point as waived.”]; see also Schaeffer, supra, 215 Cal.App.3d at p. 619, fn. 2 [“[A] point which is merely suggested by a party’s counsel, with no supporting argument or authority, is deemed to be without foundation and requires no discussion.”].)

Moreover, the arbitration provision states:

In addition to Contractual Disputes that may be brought by the Union or Local Union as described above, all employee disputes concerning violations of, or arising under Wage Order 16 …, the California Labor Code Sections identified in California Labor Code section 2699.5 as amended, the California Private Attorneys General Act (Labor Code section 2698, et seq.), and federal, state and local law concerning wage-hour requirements, wage payment and meal or rest period, including claims arising under the Fair Labor Standards Act (hereinafter ‘Statutory Dispute’ or ‘Statutory Disputes’) shall be subject to and must be processed by the employee pursuant to the procedures set forth in this Appendix C as the sole and exclusive remedy.

(Teague Dec., Ex. 3, p. 61, & Ex. 4, p. 62.) This language does not restrict the arbitration agreement to any particular time period, but instead is very broad and applies to any dispute regarding violations of various laws. Thus, Plaintiff’s assertion lacks merit.

Lastly, the evidence shows that Aegion may invoke the arbitration provision in the CBAs. It is undisputed that Aegion is not a signatory to the CBAs. Nonetheless, “[t]here are exceptions to the general rule that a nonsignatory to an agreement cannot be compelled to arbitrate and cannot invoke an agreement to arbitrate, without being a party to the arbitration agreement.” (Molecular, supra, 186 Cal.App.4th at p. 706.)

A nonsignatory to an arbitration agreement may compel or be bound to arbitration under the agreement on several theories, including status as an agent or the doctrine of equitable estoppel. (Molecular, supra, 186 Cal.App.4th at p. 706; DMS Services, LLC v. Super. Ct. (Zurich Services Corp.) (2012) 205 Cal.App.4th 1346, 1353 [these theories are recognized under both federal and California law].)

“In a parent-subsidiary relationship, the agency doctrine may bind a parent to the contracts of its subsidiary where, in addition to owning the subsidiary, the parent company exercises ‘sufficient control over the [subsidiary’s] activities’ such that the subsidiary becomes a ‘mere agen[t] or “instrumentality” of the parent.’ [Citations.]” (Cohen v. TNP 2008 Participating Notes Program, LLC (2019) 31 Cal.App.5th 840, 862.) Additionally, “California law permits a nonsignatory defendant to compel a signatory plaintiff to arbitrate where there is a connection between the claims alleged against the nonsignatory and its agency relationship with a signatory.” (Id. at p. 863.)

Under the doctrine of equitable estoppel, “ ‘a nonsignatory defendant may invoke an arbitration clause to compel a signatory plaintiff to arbitrate its claims when the causes of action against the nonsignatory are “intimately founded in and intertwined” with the underlying contract obligations.’ [Citation.] ‘By relying on contract terms in a claim against a nonsignatory defendant, even if not exclusively, a plaintiff may be equitably estopped from repudiating the arbitration clause contained in that agreement.’ [Citations.]” (Molecular, supra, 186 Cal.App.4th at p. 706.) “ ‘The focus is on the nature of the claims asserted by the plaintiff against the nonsignatory defendant.’ [Citation.] ‘Claims that rely upon, make reference to, or are intertwined with claims under the subject contract are arbitrable.’ ” (Id. at p. 715.)

Here, Defendants present evidence that Aegion is the parent and holding company of Schultz. (Dudley Dec., ¶ 2.) Additionally, Aegion acted as Schultz’s agent as both Aegion’s President and General Counsel signed and served as the “officers or owners” on behalf of Schultz’s application for membership to ACE, in which it gave ACE authorization as its collective bargaining representative and power of attorney. (Teague Dec., ¶ 3, Ex. 1.) Moreover, the claims alleged against Aegion are based on the same facts and are inherently inseparable from the claims alleged against Schultz. There are no factual allegations unique to Aegion or Schultz. Notably, Plaintiff implicitly concedes Aegion can invoke the arbitration provision under the doctrines of agency and equitable estoppel as Plaintiff does not address Defendants’ arguments regarding those doctrines. Therefore, Aegion is bound by and may invoke the arbitration provision in the CBAs.

C. Scope of Agreement to Arbitrate

Because arbitration is a contractual matter, a party who has not agreed to arbitrate a controversy cannot be compelled to do so. (Harris v. Tap Worldwide, LLC (2016) 248 Cal.App.4th 373, 380.) While there is a strong public policy favoring contractual arbitration, that policy does not extend to parties who have not agreed to arbitrate; absent “a clear agreement” to do so, courts will not infer that the right to a jury trial has been waived. (Esparza v. Sand & Sea, Inc. (2016) 2 Cal.App.5th 781, 787, 790.)

A union representative may agree on an employee’s behalf as part of the collective bargaining process to require the employee to arbitrate controversies relating to an interpretation or enforcement of a CBA. [Citations.] In fact, when a CBA includes an arbitration provision, contractual matters under a CBA are presumed arbitrable; that is, arbitration must be granted as long as the CBA is reasonably susceptible to an interpretation in favor of arbitration. [Citation.]

However, the presumption of arbitration in a CBA does not apply to statutory violations. [Citations.] Thus, although a union representative in negotiating a CBA in good faith may waive the employee’s right to pursue in a judicial forum an action for a statutorily protected right [citation], the United States Supreme Court has made clear that waiver of the right to prosecute a statutory violation in a judicial forum is only effective if it is explicit, “ ‘clear and unmistakable.’ ” [citations.]

(Cortez, supra, 15 Cal.App.5th at pp. 11-12.) In determining whether there has been a sufficiently explicit waiver, the courts look to the generality of the arbitration clause, explicit incorporation of statutory requirements, and the inclusion of specific statutory provisions. (Vasquez v. Super. Ct. (2000) 80 Cal.App.4th 430, 434.)

As an initial matter, Plaintiff contends—citing cases decided prior to 14 Penn Plaza, supra, 556 U.S. 247—that the rights guaranteed to him under the Labor Code are nonwaivable and cannot be negotiated away as part of the collective bargaining process. (See e.g. Barrentine v. Arkansas-Best Freight System, Inc. (1981) 450 U.S. 728, 740 (Barrentine ) [holding that union representative could not waive on employee’s behalf employee’s right to pursue in court wage and hour claims under the Fair Labor Standards Act]; Zavala v. Scott Brothers Dairy, Inc. (2006) 143 Cal.App.4th 585, 592-593 [citing Barrentine to support its holding that union representative could not waive employee’s right to litigate in court wage and hour violation under Labor Code].)

Plaintiff’s contention lacks merit. “[A]s [14] Penn Plaza recognized, there is no waiver of the substantive statutory right by requiring arbitration, only the right to seek relief from a court, rather than an arbitrator, in the first instance.” (Cortez, supra, 15 Cal.App.5th at p. 12, fn. 1, citing 14 Penn Plaza, supra, 556 U.S. at p. 266.)

Moreover, the mandatory arbitration provision contains a clear and explicit agreement to arbitrate the statutory claims alleged in Plaintiff’s second through eighth causes of action. As is relevant here, the arbitration provision states that “all employee disputes concerning violations of, or arising under Wage Order 16 …, the California Labor Code Sections identified in California Labor Code section 2699.5 as amended, the California Private Attorneys General Act (Labor Code section 2698, et seq.), and federal, state and local law concerning wage-hour requirements, wage payment and meal or rest period” are subject to arbitration. (Teague Dec., Ex. 3, p. 61, & Ex. 4, p. 62.) As is readily apparent, the provision explicitly cites to IWC Wage Order 16 and incorporates the Labor Code sections identified in Labor Code section 2699.5. Furthermore, the arbitration provision specifically states that it applies to disputes concerning violations of, or arising under, state law concerning wage and hour requirements, wage payment, and meal or rest periods.

Plaintiff’s second through seventh causes of action plead claims for failure to: provide required meal periods in violation of Labor Code sections 204, 218.6, 223, 226.7, 512, and 1198; provide required rest periods in violation of Labor Code sections 204, 223, 226.7, and 1198; pay hourly and overtime wages in violation of Labor Code sections 204, 218.6, 223, 510, 1194, 1197, and 1198; reimburse in violation of Labor Code section 2802; provide accurate itemized wage statements in violation of Labor Code section 226; and pay wages when due in violation of Labor Code sections 201-203. Each of these causes of action concern violations of, or arise under, IWC Wage Order 16 and/or the statutes identified in Labor Code section 2699.5. (FAC, ¶¶ 85-163.) Furthermore, the eighth cause of action for unfair competition in violation of the UCL is based on Defendants’ alleged violations of IWC Wage Order 16 and the Labor Code. (Id. at ¶¶ 164-183.) Consequently, the second through eighth causes of action fall within the parties’ agreement to arbitrate. (See Cortez, supra 15 Cal.App.5th at pp. 14-16 [an express agreement to arbitrate claims arising under IWC Wage Order 16 was clear and unmistakable such that causes of action for overtime pay, meal and rest break violations, reporting and record keeping violations, and unfair competition based on violations of the Labor Code—all of which sought to enforce the protections in IWC Wage Order 16 and either mirrored or informed the Labor Code sections cited in the complaint to support the claims—were subject to arbitration].)

D. Unconscionability

In Sanchez v. Valencia Holding Co., LLC (2015) 61 Cal.4th 899, the California Supreme Court summarized the rules applicable to the unconscionability defense in a case involving an automobile sales contract. The Court described the general principles of the doctrine as follows:

One common formulation of unconscionability is that it refers to an absence of meaningful choice on the part of one of the parties together with contract terms which are unreasonably favorable to the other party. As that formulation implicitly recognizes, the doctrine of unconscionability has both a procedural and a substantive element, the former focusing on oppression or surprise due to unequal bargaining power, the latter on overly harsh and one-sided results. The prevailing view is that procedural and substantive unconscionability must both be present in order for a court to exercise its discretion to refuse to enforce a contract or clause under the doctrine of unconscionability. But they need not be present in the same degree. Essentially a sliding scale is invoked [where] the more substantively oppressive the contract term, the less evidence of procedural unconscionability is required to come to the conclusion that the term is unenforceable and vice versa.

(Sanchez, supra, 61 Cal.4th at p. 910, internal citations and quotations omitted, italics in original.)

1. Procedural Unconscionability

“ ‘Procedural unconscionability’ concerns the manner in which the contract was negotiated and the circumstances of the parties at that time. [Citation.] It focuses on factors of oppression and surprise. [Citation.] The oppression component arises from an inequality of bargaining power of the parties to the contract and an absence of real negotiation or a meaningful choice on the part of the weaker party.” (Kinney v. United HealthCare Services, Inc. (1999) 70 Cal.App.4th 1322, 1329 (Kinney); McManus v. CIBC World Markets Corp. (2003) 109 Cal.App.4th 76, 91.) “The second component of procedural unconscionability encompasses an aspect of surprise, with the terms to which the party supposedly agreed being hidden in a prolix printed form drafted by the party seeking to enforce them.” (Kinney, supra, 70 Cal.App.4th at p. 1329.)

“Unconscionability analysis begins with an inquiry into whether the contract is one of adhesion.” (Armendariz, supra, 24 Cal.4th at p. 113.) “Procedural unconscionability is satisfied by a determination that the contract is adhesive, i.e., ‘a standardized contract, which, imposed and drafted by the party of superior bargaining strength, relegates to the subscribing party only the opportunity to adhere to the contract or reject it.’ [Citation.]” (Wilens v. TD Waterhouse Group, Inc. (2003) 120 Cal.App.4th 746, 753.)

Here, Plaintiff’s conclusory argument that the parties’ arbitration agreement is adhesive and was a condition of employment lacks merit. Plaintiff does not discuss the circumstances surrounding the negotiation and execution of the CBAs or the parties’ relative bargaining power. Similarly, Plaintiff does not address his decision to become a member of his local union and subject to the terms of the CBAs. Additionally, Plaintiff does not proffer any evidence establishing that the CBAs are standard, non-negotiable contracts. For these reasons, Plaintiff has not established that parties’ arbitration agreement is a contract of adhesion. (See Badie, supra, 67 Cal.App.4th at pp. 784-785 “When [a party] fails to raise a point, or asserts it but fails to support it with reasoned argument and citations to authority, we treat the point as waived.”]; see also Schaeffer, supra, 215 Cal.App.3d at p. 619, fn. 2 [“[A] point which is merely suggested by a party’s counsel, with no supporting argument or authority, is deemed to be without foundation and requires no discussion.”].)

Even assuming for the sake of argument that the arbitration agreement is a contract of adhesion, a contract of adhesion in the employment context contains only a modest amount of procedural unconscionability, unless the contract involves surprise or other sharp practices. (Nguyen v. Applied Medical Resources Corp. (2016) 4 Cal.App.5th 232, 248 (Nguyen); Carbajal v. CWPSC, Inc. (2016) 245 Cal.App.4th 227, 244.) Plaintiff does not assert any portion of the CBAs was hidden or that he was prevented from reading the CBAs before becoming bound to the agreements. Similarly, there is nothing in the record demonstrating that Plaintiff did not have a meaningful opportunity to negotiate any terms. Thus, even if Plaintiff had shown that the arbitration agreement is a contract of adhesion, which he has not, it would only establish only a modest degree of procedural unconscionability.

2. Substantive Unconscionability

Substantive unconscionability focuses on the terms of the agreement and whether those terms are “overly harsh” or “one-sided” so as to “shock the conscience.” (See Armendariz, supra, 24 Cal. 4th at p. 114; Pardee Construction Co. v. Super. Ct. (2002) 100 Cal.App.4th 1081, 1090.) In assessing substantive unconscionability, the “paramount consideration” is mutuality of the obligation to arbitrate. (Nyulassy v. Lockheed Martin Corp. (2004) 120 Cal.App.4th 1267, 1287.)

First, Plaintiff argues the mandatory arbitration provision is substantively unconscionable because does not provide the full range of statutory remedies available to him under the Labor Code and UCL.

This argument lacks merit. “[A]n agreement to arbitrate a statutory claim implicitly incorporates ‘the substantive and remedial provisions of the statute’ so that parties to the arbitration would be able to vindicate their ‘ “ ‘statutory cause of action in the arbitral forum.’ ” ’ [Citation.]” (Armendariz, supra, 24 Cal.4th at p. 103.) The mandatory arbitration provision in the CBAs contains a clear and explicit agreement to arbitrate the statutory claims alleged in Plaintiff’s second through eighth causes of action. Therefore, the arbitration provision implicitly incorporates the substantive and remedial provisions of the relevant statutes so that Plaintiff can vindicate those claims in arbitration.

Moreover, the arbitration provision in the CBAs states:

The Arbitrator shall have full authority to fashion such remedies and award relief consistent with limitations under federal and state law, and precedent established thereunder, whether by way of damages or the award of attorneys’ fees and other costs, orders to cease and desist, or any and all other reasonable remedies designed to correct any violation which the Arbitrator may have found to have existed, including such remedies as provided under applicable state or federal law or regulation.

(Teague Dec., ¶ 5, Ex. 3, p. 62, & Ex. 4, p. 63.) Thus, the provision gives the arbitrator full authority to award any and all remedies available at law. Consequently, the parties’ arbitration agreement provides Plaintiff full range of statutory remedies available to him under the Labor Code and UCL.

Second, Plaintiff argues the mandatory arbitration provision waives his right to seek injunctive relief under Business & Professions Code section 17200. Plaintiff cites to several cases, including McGill v. Citibank, N.A. (2017) 2 Cal.5th 945, 953 (McGill), 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 actually 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, supra, 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 FAC, ¶¶ 164-183.) 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 any members of the general public. Therefore, Plaintiff does not seek public injunctive relief, the Broughton-Cruz rule is not implicated.

Third, Plaintiff argues the mandatory arbitration provision contains an impermissible fee-shifting provision that violates Armendariz, supra, 24 Cal.4th 83. In support of his argument, Plaintiff cites to a portion of the arbitration provision stating, “The Contractor shall pay all fees and costs related to the services of the American Arbitration Association and the services of the Arbitrator; however, the Arbitrator may reallocate such fees and costs in the arbitration award, giving due consideration to the individual employee’s ability to pay.” (Teague Dec., ¶ 5, Ex. 3, p. 62, & Ex. 4, p. 63.)

Armendariz holds that “when an employer imposes mandatory arbitration as a condition of employment, the arbitration agreement or arbitration process cannot generally require the employee to bear any type of expense that the employee would not be required to bear if he or she were free to bring the action in court.” (Armendariz, supra, 24 Cal.4th at pp. 110-111, italics in original.)

Here, Plaintiff does not present reasoned argument or legal authority showing that the permissive fee-shifting language in the arbitration provision requires him to bear expenses that he would not be required to bear if he were free to bring his action in court. Absent further briefing providing the requisite argument and legal authority, the Court is not prepared to find that the fee-shifting provision violates Armendariz. (See Badie, supra, 67 Cal.App.4th at pp. 784-785 “When [a party] fails to raise a point, or asserts it but fails to support it with reasoned argument and citations to authority, we treat the point as waived.”]; see also Schaeffer, supra, 215 Cal.App.3d at p. 619, fn. 2 [“[A] point which is merely suggested by a party’s counsel, with no supporting argument or authority, is deemed to be without foundation and requires no discussion.”].) Moreover, even if the fee-shifting language was impermissible, it could be severed as it is collateral to the main purpose of the contract. (See Nguyen, supra, 4 Cal.App.5th at pp. 255-256 [severing a fee-splitting provision, which required the employee to pay half the costs of the arbitration without considering his ability to do so and misinformed him he had to pay all his own attorney fees]; see also Gutierrez v. Autowest, Inc. (2003) 114 Cal.App.4th 77, 92 [holding that the main purpose of the arbitration agreement was not to regulate costs, but to provide a mechanism to resolve disputes, and severance was available because the costs provision is collateral to that purpose].)

Fourth, Plaintiff argues the arbitration provision is substantively unconscionable because it requires him waive his representative claim under PAGA. Defendants appear to agree that the parties’ arbitration agreement is unenforceable to the extent it purports to waive any PAGA claims. (See Iskanian v. CLS Transportation Los Angeles, LLC (2014) 59 Cal.4th 348, 360 [“an arbitration agreement requiring an employee as a condition of employment to give up the right to bring representative PAGA actions in any forum is contrary to public policy”].) Defendants point out they do not seek to arbitrate Plaintiff’s PAGA claim and the arbitration provision is otherwise enforceable.

A trial court has discretion as to whether to sever or restrict an unconscionable provision or whether to refuse to enforce the entire agreement. (Lhotka v. Geographic Expeditions, Inc. (2010) 181 Cal.App.4th 816, 826 (Lhotka); Armendariz, supra, 24 Cal.4th at p. 122; Civ. Code, § 1670.5, subd. (a) [“If the court as a matter of law finds the contract or any clause of the contract to have been unconscionable at the time it was made the court may refuse to enforce the contract, or it may enforce the remainder of the contract without the unconscionable clause, or it may so limit the application of any unconscionable clause as to avoid any unconscionable result.”].) The trial court has discretion under to refuse to enforce an entire agreement if the agreement is “permeated” by unconscionability. (Lhotka, supra, 181 Cal.App.4th at p. 826, citing Armendariz, supra, 24 Cal.4th at p. 122.) “An arbitration agreement can be considered permeated by unconscionability if it ‘contains more than one unlawful provision…. Such multiple defects indicate a systematic effort to impose arbitration … not simply as an alternative to litigation, but as an inferior forum that works to the [stronger party’s] advantage.’ ” (Ibid.)

As this is the only portion of the parties’ arbitration agreement Plaintiff has shown to be unconscionable, the arbitration agreement is not permeated with unconscionability. Thus, the Court, in its discretion, will sever the PAGA waiver.

Fifth and finally, Plaintiff argues he should be allowed to litigate his claims because class action litigation is an important public policy. But as Defendants persuasively argue, class action waivers are enforceable under California law. (Franco v. Arakelian Enterprises, Inc. (2015) 234 Cal.App.4th 947, 960 (Franco) [“When the parties have validly elected to resolve employment disputes in arbitration, the ineffectiveness of an individual proceeding for the resolution of their disputes does not render a class action waiver invalid or unenforceable, nor does it render the arbitration agreement itself invalid or unenforceable.”]; Cortez, supra, 15 Cal.App.5th at pp. 15-16; Kinecta Alternative Financial Solutions, Inc. v. Super. Ct. (2012) 205 Cal.App.4th 506, 517-519.) Thus, Plaintiff’s public policy argument is not well-taken.

E. Conclusion

For the reasons discussed above, Defendants have satisfied their burden to show the existence of an arbitration agreement between the parties covering the second through eighth cause of action of the FAC and their right to enforce the agreement.

IV. Stay of Proceedings

Defendants request that the action, in its entirety, be stayed pending arbitration. Defendants contend the first cause of action for failure to provide proper disclosures under the FCRA should be stayed in the interest of judicial economy, and the ninth cause of action for violation of PAGA should be stayed because it is premised on claims that should be compelled to arbitration. Plaintiff does not challenge Defendants’ request for a stay of proceedings.

Given that the second through eighth causes of action must be arbitrated, a stay of proceedings, including the first and ninth causes of action, is warranted. (See Code Civ. Proc., § 1281.4; see also Franco, supra, 234 Cal.App.4th at p. 966 [holding that “[b]ecause the issues subject to litigation under the PAGA might overlap those that are subject to arbitration of Franco’s individual claims, the trial court must order an appropriate stay of trial court proceedings”]; OTO, L.L.C. v. Kho (2019) 8 Cal.5th 111, 141 [“ ‘[A] court ordinarily has inherent power, in its discretion, to stay proceedings when such a stay will accommodate the ends of justice.’ … ‘[T]he power to stay proceedings is incidental to the power inherent in every court to control the disposition of the causes on its docket with economy of time and effort for itself, for counsel, and for litigants.’ ”].)

V. Order

Accordingly, Defendants’ motion to compel arbitration is GRANTED. The action is stayed, in its entirety, pending completion of arbitration.

The Court will prepare the order.