Mitchell v. Lineage Logistics Services, LLC

[7] 8 UNITED STATES DISTRICT COURT 9 EASTERN DISTRICT OF CALIFORNIA [10] 11 CHARLES MITCHELL, an individual on No. 2:24-cv-02099-DJC-CSK behalf of himself and all others 12 similarly situated, 13 Plaintiff, ORDER 14 v. 15 LINEAGE LOGISTICS SERVICES LLC, a limited liability company; and DOES 1 16 through 10, Inclusive, 17 Defendants. [18] 19 Pending before the Court is Defendant’s Motion to Compel Arbitration. (ECF 20 No. 16, hereinafter “Mot.”; see ECF No. 1, Notice of Removal, Ex. A Class Action 21 Complaint, hereinafter “Compl.”) The Court held a hearing on October 31, 2024, and 22 took the matter under submission. For the reasons set forth below, the Court will 23 GRANT in part and DENY in part Defendant’s Motion to Compel Arbitration. The 24 Court will stay the surviving claims pending the resolution of the arbitrated claims. 25 BACKGROUND 26 Plaintiff Charles Mitchell was employed full-time by Defendant Lineage 27 Logistics Services LLC (“Lineage”) from January 2023 through March 2024. (Compl. [28] 1 ¶ 7.) Defendant provides frozen food storage, packaging of client frozen goods for 2 delivery, and food transportation. (Mot., Ex. A1, Declaration of Marcy Bruskin, 3 hereinafter “Bruskin Decl.” ¶ 2.) Defendant operates distribution center warehouses 4 throughout the country, including one in Sacramento, California. (Id.) 5 Plaintiff was employed at the Sacramento facility, and his work duties included 6 preparing shipments of goods to be sent to customers, which involved loading the 7 shipments onto a delivery truck. (ECF No. 18, Opposition at 3, hereinafter “Opp’n.”) 8 Plaintiff alleges that Defendant failed to pay regular wages by requiring off-the-clock 9 work, pay overtime wages, provide meal periods, authorize and permit rest periods, 10 timely pay final wages at termination, provide accurate itemized wage statements, and 11 indemnify employees for work-related expenditures. (Compl. ¶¶ 31–77.) Plaintiff 12 further alleges that these charges are in violation of California quota laws and the 13 Unfair Competition Law. (Id. ¶¶ 79–94.) Plaintiff brings this action for himself and on 14 behalf of a proposed class of similarly situated parties. 15 Plaintiff and Defendant allegedly entered into a Mutual Arbitration Agreement 16 (“MAA”), in which Plaintiff agreed to arbitrate all claims arising under the California 17 Labor Code and waived any right to bring a class action claim. Defendant moves to 18 compel arbitration under the Federal Arbitration Act (“FAA”) and California state 19 arbitration laws. Plaintiff asserts that he was an employee engaged in interstate 20 commerce and is thus exempt from any binding arbitration agreement under the FAA. 21 Plaintiff also claims that his claims are exempt from California arbitration laws. 22 Plaintiff filed his Class Action Complaint (ECF. No. 1) on June 28, 2024, in the 23 Sacramento Superior Court, which was then removed to this Court by Defendant. On 24 September 6, 2024, Defendant filed a Motion to Compel Arbitration (ECF No. 16), or 25 in the alternate, seeks to stay this action pending adjudication of Felicia Saul v. [26] 27 1 Plaintiff’s motion includes two exhibits marked Exhibit A—the first is Plaintiff’s Exhibit A, which includes the Bruskin Declaration, and the second is the Bruskin Declaration’s own Exhibit A. This citation is to 28 the first Exhibit A, which can be found at page 48 of the Motion. 1 Lineage Logistics Services, LLC, et al.,2:24-CV-01331-DJC-CSK (“Saul”), a different 2 case before this Court with nearly identical claims.2 The issue has been fully briefed. 3 I. Legal Standard 4 The FAA governs arbitration agreements. 9 U.S.C. § 2 . Under the FAA, a 5 signatory to an arbitration agreement may obtain an order directing a noncomplying 6 party to arbitrate in the manner provided for in the agreement. 9 U.S.C. § 4 . In 7 weighing a motion to compel arbitration, a court must determine: (1) whether a valid 8 agreement to arbitrate exists and, if it does, (2) whether the agreement encompasses 9 the dispute at issue. Boardman v. Pac. Seafood Grp., 822 F.3d 1011, 1017 (9th Cir. 10 2016) (“Boardman”). “Arbitration is a matter of contract, and the FAA requires courts 11 to honor parties' expectations.” AT&T Mobility LLC v. Concepcion, 563 U.S. 333 , 351 12 (2011) (“Concepcion”). But, the FAA’s mandate of arbitration contract enforcement 13 can be “overridden by a contrary congressional command.” Shearson/Am. Exp., Inc. v. 14 McMahon, 482 U.S. 220, 226 (1987) (“Shearson”). 15 “When considering a motion to compel arbitration, a court applies a standard 16 similar to the summary judgment standard” of Federal Rule of Civil Procedure 56. 17 Concat LP v. Unilever, PLC, 350 F. Supp. 2d 796, 804 (N.D. Cal. 2004) (citations 18 omitted) (“Concat”); see also Cox v. Ocean View Hotel Corp., 533 F.3d 1114, 1119 (9th 19 Cir. 2008) (“[D]enial of a motion to compel arbitration has the same effect as a grant of 20 partial summary judgment denying arbitration . . . .”); Greystone Nevada, LLC v. 21 Anthem Highlands Cmty. Ass'n, 549 F. App'x 621, 623 (9th Cir. 2013) (reversing an 22 order compelling arbitration where opposing party had been afforded no opportunity 23 to present evidence and argument). The party opposing arbitration receives the 24 benefit of any reasonable doubts and the court draws reasonable inferences in that 25 party's favor, and only when no genuine disputes of material fact surround the 26 arbitration agreement's existence and applicability may the court compel arbitration. [27] 2 The Saul and Mitchell Orders are being issued concurrently, so the request to stay this proceeding 28 pending Saul is moot. 1 Concat, 350 F. Supp. 2d at 804 ; see Three Valleys Mun. Water Dist. v. E.F. Hutton & 2 Co., Inc., 925 F.2d 1136, 1141 (9th Cir. 1991). Nevertheless, the decision to compel 3 arbitration is mandatory, not discretionary, if the requirements are met. Dean Witter 4 Reynolds, Inc. v. Byrd, 470 U.S. 213, 218 (1985) (“Dean”). The FAA preempts state 5 laws that conflict with the purpose of the FAA by applying stricter requirements to 6 arbitration agreements than contracts generally. See Concepcion, 563 U.S. at 343. 7 II. Discussion 8 For the reasons set forth below, the Court finds that the evidence submitted by 9 Defendant sufficiently proves the existence of an arbitration agreement, signed by 10 Plaintiff, that encompasses the disputed issues. However, the Court finds that Plaintiff, 11 due to his specific work duties, is covered by the FAA’s transportation worker 12 exemption, and thus, the FAA cannot be used to mandate compliance with the 13 agreement. The Court further finds that two causes of action are not covered by the 14 arbitration agreement under California arbitration laws. Accordingly, the Court will 15 not compel Plaintiff to arbitrate those specific claims against Defendant. Further, the 16 Court finds that the class action waiver is not valid, and thus, the remaining claims can 17 proceed on a class basis, pending the resolution of the arbitrated claims. 18 1. Existence of a valid arbitration agreement that encompasses the 19 disputed issues 20 As an initial step, the Court must determine: (1) whether a valid agreement to 21 arbitrate exists and, if it does, (2) whether the agreement encompasses the dispute at 22 issue. Boardman, 822 F.3d at 1017 . The party seeking to compel arbitration bears the 23 burden of proving by a preponderance of the evidence the existence of an agreement 24 to arbitrate. Knutson v. Sirius XM Radio Inc., 771 F.3d 559, 565 (9th Cir. 2014). In 25 resolving a motion to compel arbitration, “[t]he summary judgment standard [of 26 Federal Rule of Civil Procedure 56] is appropriate because the district court’s order 27 compelling arbitration ‘is in effect a summary disposition of the issue of whether or not 28 there had been a meeting of the minds on the agreement to arbitrate.’” Hansen v. 1 LMB Mortg. Servs., Inc., 1 F. 4th 667, 670 (9th Cir. 2021) (internal quotations omitted). 2 “When deciding whether the parties agreed to arbitrate a certain matter . . ., courts 3 generally . . . should apply ordinary state-law principles that govern the formation of 4 contracts.” First Options of Chi., Inc. v. Kaplan, 514 U.S. 938, 944 (1995). “Mutual 5 assent is determined under an objective standard applied to the outward 6 manifestations or expressions of the parties, i.e., the reasonable meaning of their 7 words and acts, and not their unexpressed intentions or understandings.” Alexander 8 v. Codemasters Grp. Ltd., 104 Cal. App. 4th 129, 141 (2002), disapproved of on other 9 grounds by Reid v. Google, Inc., 50 Cal. 4th 512, 524 (2010). 10 Defendant alleges that Plaintiff electronically signed an arbitration agreement, 11 entitled “Mutual Arbitration Agreement,” on October 18, 2023. (Mot. at 1.) As proof 12 of this, Defendant offers the declaration of Marcy Bruskin, who is the Vice President of 13 Human Resources Operations for Lineage and who has “personal knowledge” about 14 the company’s onboarding protocols. (Bruskin Decl. ¶ 4.) In her declaration, Bruskin 15 avers that at the time of hire, employees are provided with copies of Lineage’s various 16 policies, including the MAA. (Id. ¶ 6.) According to Bruskin, new employees “can take 17 as much time as desired to review any of the documents before” signing them and 18 that they may ask human resources personnel any questions related to those 19 documents. (Id. ¶ 7.) Onboarding documents are presented and signed via a 20 program called Workday, which requires new employees to create a unique password 21 to access company documents. (Id. ¶¶ 4–6.) An employee’s password is not viewable 22 or otherwise accessible by company staff. (Id. ¶ 5.) 23 Bruskin claims that she has “personally reviewed documents concerning 24 Plaintiff that are maintained . . . in the normal course of business” and that based on 25 that review, Bruskin knows that Plaintiff accessed the MAA and clicked the “’I agree’ 26 box next to the signature statement for that document.” (Id. ¶¶ 9, 12.) Attached to 27 Bruskin’s declaration is an “Exhibit A” (id. at 7–10), which is a copy of the MAA, and an [28] 1 “Exhibit B,” which is an electronic signature from Plaintiff Mitchell acknowledging his 2 agreement to the MAA (id. at 11–12). 3 Here, no reasonable inference can be drawn in Plaintiff’s favor that the 4 arbitration agreement does not exist or was not formed. Plaintiff provides no 5 evidence that the Agreement does not exist; he only provides his own declaration that 6 he does not remember signing the Agreement and disputes that any signature was 7 added by him. (ECF No. 18, Declaration of Plaintiff, hereinafter “Mitchell Decl.” ¶ 16.) 8 Meanwhile, Defendant presents sufficient evidence to substantiate the existence of 9 the Agreement, signed by Plaintiff. Bruskin’s declaration avers that only employees 10 themselves may access their Workday account to sign documents, and that the MAA 11 was one of those documents. (Bruskin Decl. ¶¶ 4–6.) Defendant also attaches a 12 signature confirmation page indicating that Plaintiff Mitchell’s account was used to 13 sign the MAA (id. at 12) and a declaration from Lineage’s Director of Human 14 Resources Joanna Murphy and Site Trainer Joseph Larzelere, documenting the 15 location where and exact time the MAA was signed and Plaintiff Mitchell’s Workday 16 account history, which shows he was active on Workday when the Agreement was 17 signed. (ECF No. 20, Declaration of Joseph Larzelere, hereinafter “Larzelere Decl.” ¶ 18 7; Declaration of Joanna Murphy Ex. F and G.) Plaintiff’s mere statement that he “does 19 not recall” seeing or signing the document (Mitchell Decl.” ¶ 16) is insufficient to 20 create a material question of fact in light of Defendant’s evidence to the contrary, even 21 when considering all evidence in the light most favorable to Plaintiff. 22 Plaintiff does not contest that the MAA, if it is valid, encompass the types of 23 claims brought here. Nor can he. The text of the agreement explicitly mentions the 24 claims brought in this case—employment claims related to wages, overtime, breaks, 25 reimbursement, and violations of state law. (See Bruskin Decl. Ex. A (“Claims subject 26 to this Agreement include all claims involving your employment or other relationship 27 with the Company, including during the application and background check process, 28 during employment, at separation, or after the relationship ends. This includes without 1 limitation any and all claims for discrimination, harassment, or retaliation; wages, 2 overtime, breaks, reimbursement, or any other compensation; breach of any express 3 or implied contract; negligence or other tort; or violation of any federal, state, or local 4 law.”).) The only conclusion that can be drawn from the text of the Agreement is that 5 the parties intended the Agreements to cover the types of claims raised in the present 6 action. 7 The Court concludes that Defendant has met its burden of showing by a 8 preponderance of evidence that a valid arbitration agreement exists (the Mutual 9 Arbitration Agreement), that the parties agreed to the arbitration agreement, and that 10 the Agreement encompasses the disputed issues. 11 2. The Federal Arbitration Act generally requires courts to enforce 12 arbitration agreements 13 The FAA establishes a strong federal policy favoring arbitration, requiring 14 courts to “rigorously enforce agreements to arbitrate.” Shearson, 482 U.S. 220 at 226 , 15 quoting Dean, 470 U.S. at 221 . Under the FAA, arbitration agreements shall generally 16 be “valid, irrevocable, and enforceable.” 9 U.S.C. § 2 . Courts shall “enforce covered 17 arbitration agreements according to their terms,” and any “ambiguities about the 18 scope of an arbitration agreement must be resolved in favor of arbitration.” Lamps 19 Plus v. Varela, 587 U.S. 176, 178, 189 (2019). 20 The terms of the arbitration agreement agreed to by Plaintiff explicitly specify 21 the signatories’ intent that those agreements be governed by the FAA. (See Bruskin 22 Decl. Ex. A (“This Agreement is governed by the Federal Arbitration Act, 9 U.S.C. § 1 23 et seq.”).) Given the agreement’s express identification of the FAA as the governing 24 statute and the general principle that the FAA governs arbitration agreements, the 25 Court concludes that there is a presumption that the agreement is enforceable under 26 the FAA absent a statutory exception indicating otherwise. 27 //// 28 //// 1 3. Exemption to the Federal Arbitration Act for workers engaged in 2 interstate commerce 3 Although there is a strong presumption in favor of enforcing arbitration 4 agreements, “the Arbitration Act's mandate may be overridden by a contrary 5 congressional command.” Shearson, 482 U.S. at 226 . One such contrary 6 congressional command is section 1 of the FAA, under which a court shall exempt 7 “contracts of employment of seamen, railroad employees, or any other class of 8 workers engaged in foreign or interstate commerce” from the binding nature of 9 arbitration agreements. See 9 U.S.C. § 1 . There are two key cases that provide 10 context of the definition of an employee engaged in interstate commerce within the 11 meaning of the FAA. 12 First is Sw. Airlines Co. v. Saxon, 596 U.S. 450 (2022) (“Saxon”), which laid out a 13 two-step process for analyzing exemption claims under 9 U.S.C. § 1 , which it referred 14 to as a “transportation worker exemption.” There, the Supreme Court instructed 15 courts to: (1) determine the relevant class of workers to which the plaintiff belongs, 16 and (2) determine whether that class is engaged in foreign or interstate commerce. 17 Saxon, 596 U.S. at 455 . Saxon involved an employee of Southwest Airlines whose 18 work responsibilities required her to load and unload baggage, airmail, and 19 commercial cargo on and off airplane that traveled across the country. Id. at 453–54. 20 The plaintiff sued Southwest for failure to pay overtime wages and sought to resist 21 arbitrating her claim with Southwest by claiming the transportation worker exemption. [22] Id. at 454 . 23 The Supreme Court began by confronting the threshold question of how to 24 define a “class of workers.” Id. at 455 . To answer this question, it focused on the 25 specific work duties of the plaintiff, rather than the general industry she worked in or 26 the title of her position. Id. at 456–57. The high court reasoned that even though the 27 plaintiff was employed within the airline industry, which undoubtedly would include at 28 least some transportation workers, she still needed to show that her specific duties 1 qualified her own position as a transportation worker. Id. at 456 . Looking solely at the 2 plaintiff’s work duties, the Supreme Court determined that she belonged to a class of 3 worker who “physically load and unload cargo on and off planes.” Id. 4 Next, the Supreme Court weighed whether that class was engaged in foreign 5 or interstate commerce under 9 U.S.C. § 1 . Id. The Supreme Court reasoned that 6 because the plaintiff handled cargo that was travelling in interstate commerce, she 7 herself was, as “a practical matter, part of the interstate transportation of goods.” Id. at 8 457–58. In other words, a worker that “play[s] a direct ‘and necessary role in the free 9 flow of goods across borders,” or is” actively ‘engaged in transportation’ of those 10 goods across borders via the channels of foreign or interstate commerce” can be a 11 “transportation worker” under 9 U.S.C. § 1 . Id. at 458 , quoting Circuit City Stores, Inc. 12 v. Adams, 532 U.S. 105, 115 (2001). Because the plaintiff’s loading and unloading of 13 the cargo planes was sufficiently linked to the transportation of goods in interstate 14 commerce, the plaintiff qualified under the transportation worker exemption. 15 The second case is Ortiz v. Randstad Inhouse Servs., LLC, 95 F.4th 1152 (9th Cir. 16 2024), in which the Ninth Circuit held that warehouse workers who received and 17 processed goods from international locations that were then shipped to destinations 18 in various U.S. states were similarly covered under the transportation worker 19 exemption in 9 U.S.C. § 1 . The plaintiff in Ortiz was tasked with moving boxes inside 20 of and preparing packages to be shipped out of a specific warehouse. Id. at 1158 . 21 When the plaintiff sued the warehouse operator, the operator moved to compel 22 arbitration, citing an arbitration agreement signed by the parties. Id. The Ninth 23 Circuit first addressed the issue as to which class the plaintiff belonged, defining that 24 class as one consisting of workers handling goods as they progressed through the 25 supply chain. Id. at 1161 . Noting that the plaintiff was responsible for the movement 26 of packages within the facility that were tied to interstate commerce, the Ninth Circuit 27 then reasoned that the plaintiff’s work was sufficiently tied to those items’ travel, and 28 thus, the plaintiff was a transportation worker. Id. at 1161–62. Even though the 1 plaintiff’s work was localized to a single facility, the products that moved through the 2 warehouse were destined for myriad locations, including out-of-state destinations, 3 and thus the local nature of the employee’s work was not controlling. Id. at 1162 (“If 4 Saxon stands for anything, it is that an employee is not categorically excluded from the 5 transportation worker exemption simply because he performs his duties on a purely 6 local basis.”) Because the plaintiff was a worker who was sufficiently implicated in the 7 chain of interstate commerce, he was exempt from federal enforcement of the 8 arbitration clause under 9 U.S.C. § 1 . 9 For 9 U.S.C. § 1’s exemption to apply, the Plaintiff in the present matter must 10 show that he is sufficiently linked to the movement of goods in interstate commerce as 11 the plaintiffs in Saxon and Ortiz. 12 4. Plaintiff’s supply chain job plays a tangible and meaningful role in the 13 movement of goods through interstate commerce 14 Because Plaintiff seeks relief under the transportation worker exemption in 9 15 U.S.C. § 1 , the Court must first identify the class of workers to which Plaintiff belongs. 16 Although Defendant provides “food transportation in multiple states throughout the 17 United States” (Bruskin Decl. ¶ 2), it is the specific nature of Plaintiff’s work, rather than 18 the employer’s, that is the basis for any qualification as a transportation worker. At a 19 minimum, Plaintiff and Defendant agree that Plaintiff’s work duties included 20 organizing boxes so that they could be sent to storage or picked up by a third-party 21 delivery company.3 Under this framing, Plaintiff’s class would be that of a worker who 22 is tasked with organizing boxes as they are prepared for storage within the warehouse 23 facility or for shipment outside the warehouse to various locations. 24 This meets the requirements of Ortiz: whether “an employee's relationship to 25 the movement of goods [is] sufficiently close enough to conclude that his work plays a [26] 27 3 There is a factual dispute as to Plaintiff’s work duties. (Compare Mitchell Decl. ¶ 5 with ECF No. 16, Declaration of Luis Vargas ¶ 6–8.) The Court need not resolve this dispute, as even the narrower scope 28 of duties is sufficient to bring Plaintiff within the ambit of 9 U.S.C. § 1 . 1 tangible and meaningful role in their progress through the channels of interstate 2 commerce.” Ortiz, 95 F. 4th at 1160 . Here, Plaintiff’s responsibilities are meaningfully 3 tied to the movement of goods into interstate commerce. The role of preparing 4 boxes for egress from the facility or organizing them for storage before they are ready 5 to be shipped is necessary to the subsequent transit of those goods out of the facility. 6 In other words, those goods cannot be transported without the workers like Plaintiff 7 who organize them for shipment. 8 Turning to the question of how those goods enter the channels of interstate 9 commerce, the Court finds that Defendant’s Sacramento warehouse is sufficiently tied 10 to the travel of goods through channels of interstate commerce. Plaintiff asserts that 11 when he organized packed boxes in the Sacramento facility, he witnessed a large 12 number of them marked for travel to destinations outside of California. (Mitchell Decl. 13 ¶¶ 5–7.) In response, Defendant argues that the shipment of goods from the 14 Sacramento facility “were primarily destined for locations in California,” but does not 15 contest that the facility still regularly sent goods to out-of-state destinations. (See ECF 16 No. 16, Declaration of Luis Vargas ¶ 9.) But again, the parties’ disagreement does not 17 matter—even if a majority of the goods shipped from Defendant’s Sacramento facility 18 were to be destined for intrastate rather than interstate commerce as Defendant 19 claims, the facility is routinely sending shipments to out-of-state locations and is thus 20 tied to the flow of goods out of California under either party’s framing. (See id.) 21 Thus, the Court finds that Plaintiff is a member of a class that is linked to the 22 travel of goods through interstate commerce and thus, that he qualifies under the 23 transportation worker exemption. 24 5. In the absence of the Federal Arbitration Act, California arbitration laws 25 govern 26 The text of the agreement agreed to by the parties in this litigation expressly 27 provides that California state law controls if the FAA is found not to apply. (Bruskin Ex. 28 A (“[I]f the FAA is found not to apply [to the Mutual Arbitration Agreement], then the 1 arbitration law of the state in which Employee is employed or was last employed by 2 the Company will apply.”).) Finding that the FAA does not apply, the Court next turns 3 to whether California arbitration laws require Plaintiff to arbitrate his claims. The Court 4 finds that California arbitration laws permit two of Plaintiff’s causes of action to 5 proceed on a class basis. 6 California has a “strong public policy in favor of arbitration as a speedy and 7 relatively inexpensive means of dispute resolution.” Ericksen, Arbuthnot, McCarthy, 8 Kearney & Walsh, Inc. v. 100 Oak St., 35 Cal. 3d 312, 322 (1983). Like the FAA, the 9 Court must enforce the arbitration clause under state law unless a specific exemption 10 applies. Plaintiff raises two such exemptions here. First, Plaintiff points to California 11 Labor Code section 229, under which “[a]ctions to enforce the provisions of this article 12 [sections 200 to 244] for the collection of due and unpaid wages claimed by an 13 individual may be maintained without regard to the existence of any private 14 agreement to arbitrate.” Second, Plaintiff relies on Gentry v. Superior Court, 42 Cal. 15 4th 443 (2007), abrogated on other grounds by Concepcion, 563 U.S. 333 , for the 16 proposition that the class action waiver in his arbitration agreement is unenforceable. 17 Plaintiff raises a number of claims related to his employment with Defendant 18 that potentially come within the ambit of Labor Code section 229. Those claims 19 specifically include alleged violations of: (1) Labor Code sections 204, 1194, 1197 20 (failure to pay wages), (2) Labor Code sections 1194, 1198 (failure to pay overtime 21 wages); (3) Labor Code sections 226.7 and 512 (failure to provide meal breaks or 22 compensation in lieu thereof), (4) Labor Code sections 226.7 (failure to authorize and 23 permit rest breaks or compensation in lieu thereof), (5) Labor Code sections 201, 202, 24 and 203 (failure to pay all wages due upon termination), (6) Labor Code section 226 25 (failure to provide accurate wage statements), (7) Labor Code section 2802 (failure to 26 reimburse expenses), and (8) Business and Professions Code section 17200 et seq. 27 (violation of the Unfair Competition Law). 28 Plaintiff’s first and fifth causes of actions pertain to the alleged nonpayment of 1 wages by Defendant brought under Article I of the Labor Code and are therefore 2 exempted from mandatory arbitration under Labor Code section 229. However, 3 Plaintiff’s second, third, fourth, sixth, seventh, and eighth claims are brought under 4 different provisions of the Labor Code, and thus are not subject to section 229’s 5 application. Lane v. Francis Capital Mgmt. LLC, 224 Cal. App. 4th 676, 684 (holding 6 that section 229 applies only to sections 200 through 244 because “[s]ection 229 is 7 found in article 1 of division 2, part I, chapter 1 of the Labor Code, encompassing 8 sections 200 through 244”). 9 Plaintiff argues that under the Supreme Court’s decision in Naranjo v. Spectrum 10 Sec. Services, Inc., 13 Cal. 5th 93 (2022), the remaining claims are in fact claims for 11 unpaid wages and therefore covered by Labor Code section 229. In Naranjo, plaintiffs 12 had sued for a violation of state meal break requirements under an Industrial Welfare 13 Commission wage order. Id. at 102 . Pursuant to Labor Code section 226.7, plaintiffs 14 sought an additional hour of pay for each day on which the defendant failed to 15 provide the legally required break. Id. at 102–03. On review, the issue was whether 16 the failure to give the “premium pay” required by section 226.7(c) also constituted a 17 failure to pay the wages of an employee who is discharged or quits under Labor Code 18 section 203. Id. at 105 . While the California Supreme Court recognized that the 19 premium pay is in part a penalty, it concluded that pay owed under section 226.7 “can 20 equally be viewed as wages.” Id. at 107 . Accordingly, the Court concluded that 21 “missed-break premium pay constitutes wages for purposes of Labor Code section 22 203, and so waiting time penalties are available under that statue if the premium pay 23 is not timely paid.” Id. at 117 . 24 In reaching its conclusion, the California Supreme Court distinguished a prior 25 case, Kirby v. Immoos Fire Prot., Inc., 53 Cal. 4th 1244 (2012). In Kirby, the California 26 Supreme Court concluded that an action brought under Labor Code section 226.7 27 was not an “action brought for the nonpayment of wages” for purposes of the attorney 28 fee provision in Labor Code section 218.5(a). Id. at 1255 . Rather, the court 1 concluded, “a section 226.7 action is brought for the nonprovision of meal and rest 2 periods, not for the ‘nonpayment of wages.’” Id. (emphasis omitted). While some 3 lower state courts had read Kirby to suggest that “the legal violation underlying a 4 section 226.7 claims is . . . not the nonpayment of wages,” Naranjo, 13 Cal. 5th at 111 5 (internal citations omitted), the California Supreme Court rejected that conclusion and 6 highlighted the different inquiry that was the subject of Kirby: 7 Kirby explained that our prior conclusion that premium pay is a wage did not necessarily mean that an action under section 226.7 is an action [8] for nonpayment of wages under section 218.5. The characterization of 9 the nature of an action under section 218.5 turns instead on the nature of the underlying legal violation the action seeks to remedy, not the [10] form of relief that might be available to cure that violation. [11] 12 Naranjo, 13 Cal. 5th at 111. That is to say, while Kirby was concerned with the “action” 13 as that term was understood in section 218.5, Naranjo was concerned with what 14 constituted “wages” for purposes of section 203. 15 The inquiry in this case is similar to that in Kirby: what constitutes an “action to 16 enforce the provisions of this article for the collection of due and unpaid wages 17 claimed by an individual” for purpose of Labor Code section 229. The fact that a 18 remedy may constitute wages for purposes of Naranjo is simply irrelevant in 19 determining whether the action is brought to enforce the provisions of Article I of the 20 Labor Code. While not binding on this Court, the Ninth Circuit’s unpublished decision 21 Morales v. U.S. Dist. Ct. for Cent. Dist. of Cal., L.A., No. 24-536, 2024 WL 3565262 (9th 22 Cir. July 29, 2024), reflects this same distinction. Id. at *3 (“By clearly distinguishing 23 between the violation (no breaks) and the remedy (extra compensation), Naranjo did 24 not recharacterize a claim for meal-and-rest-break violations as an action to collect 25 unpaid wages.”) These cases illustrate that in addition to being for the collection of 26 due and unpaid wages (as that term is understood in Naranjo), an action for 27 enforcement under section 229 must have a statutory basis in Article I of the Labor 28 Code. Only Plaintiff’s causes of action one and five meet this requirement. Therefore, 1 Defendant may validly seek to arbitrate Plaintiff’s second, third, fourth, sixth, seventh, 2 and eighth claims consistent with Labor Code section 229. As Plaintiff does not 3 identify any other exemption that would apply to those claims, they must be arbitrated 4 pursuant to California law. 5 While the first and fifth causes of action are not subject to arbitration, the Court 6 must also consider whether the class action waiver for these claims is valid under the 7 California Supreme Court’s decision in Gentry. The party seeking to invalidate a class 8 action waiver must provide a “proper factual showing” for the Court. Gentry, 42 Cal. 9 4th at 466. Gentry outlines four factors to be considered by courts when weighing 10 class action exemptions in arbitration agreements: (1) “the modest size of the 11 potential individual recovery”; (2) “the potential for retaliation against members of the 12 class”; (3) “the fact that absent members of the class may be ill informed about their 13 rights”; and (4) “and other real world obstacles to the vindication of class members' 14 right[s].” Id. at 463–64. If, after considering these factors, the court finds that a class 15 waiver “will likely lead to a less comprehensive enforcement of overtime laws” and that 16 class proceedings would be “a significantly more effective practical means of 17 vindicating the rights of the affected employees,” the agreement’s class prohibition is 18 unenforceable. Id. at 463 . 19 First, Plaintiff’s claims are modest and would lead to moderately low recovery 20 (approximately $7,044 at an individual level). (Opp’n. at 13.) Gentry itself provides a 21 helpful data point in weighing recovery amounts, citing with approval a case in which 22 an individual claim “as large as $37,000” was found to be an insufficient incentive for 23 individual actions under this factor. Gentry, 42 Cal. 4th at 458 (citing Bell v. Farmers 24 Ins. Exch., 115 Cal. App. 4th 715, 745 (2004)). Plaintiff here is paid a relatively low 25 salary and the unpaid wages he is suing for stem from a specific and limited period of 26 time, and would likely result in a potential recovery lower than the $37,000 that Gentry 27 believed was a modestly low recovery. Additionally, he is suing on behalf of a class of 28 workers in single factory, which necessarily limits the size of the class and of the 1 potential payout. After weighing these considerations, the Court finds the first Gentry 2 factor is in Plaintiff’s favor. 3 The second factor related to potential retaliation also weighs in Plaintiff’s favor. 4 In his declaration, Plaintiff Mitchell attests to several instances of retaliation for making 5 employment-related complaints. (Mitchell Decl. ¶ 11.) For example, he declares that 6 his supervisor directly linked making adverse complaints to Lineage’s human 7 resources department with being fired. (Id.) Further, he states that a temporary 8 employee who threatened to sue for meal break issues was later terminated. (Id.) 9 And finally, he asserts that supervisor Luis Vargas, whose declaration is included in 10 Defendant’s briefing, threatened to assign Plaintiff and other employees to a less11 desirable position if they made complaints or otherwise upset him. (Id.) 12 Defendant contests Plaintiff Mitchell’s framing of the workplace environment. 13 But Defendant’s claims, at least at this stage, are unavailing. For example, Defendant 14 cites to the fact that it has an anonymous complaint hotline and that there is a record 15 of Plaintiff using that hotline (after he had already been fired), yet Plaintiff did not 16 subsequently submit a retaliation complaint. (ECF No. 20, Declaration of Steven 17 Rosso ¶¶ 2–5 and Ex. A. at 7 (discussing confidential hotline).) But it is apparent that 18 the hotline is not anonymous, as Defendant’s briefing acknowledges that Lineage 19 Human Resources Director Steven Rosso receives the name of the employee who 20 makes a workplace related claim. (Id. ¶¶ 4, 5.) And even if an employee does not 21 submit a retaliation claim against an employer, it does not mean that there is not a 22 culture of retaliation against workers or that workplace retaliation did occur. It would 23 merely mean that an employee, for whatever reason (including fear of further 24 retaliation or that they no longer work for Lineage), did not submit a complaint. The 25 Court finds that Plaintiff’s allegations and declaration on this issue is sufficient to sway 26 the second Gentry factor in his favor. 27 Under the third factor, whether the class members would be informed of their 28 rights, Plaintiff similarly provides satisfactory proof via his declaration. He attests that 1 “[w]hile working for Lineage, I did not fully understand my rights as an employee and 2 Lineage did not sufficiently inform me of those rights. For example, even though I felt 3 that I was not getting paid for all of the hours that I worked and [was] not receiving all 4 of my meal breaks and rest breaks on time, I did not know all of the rights that I was 5 required to receive under California law.” (Mitchell Decl. ¶ 10.) Defendant rebuts this 6 by arguing that Plaintiff cannot know that his rights are being violated without being 7 informed of those rights. (ECF No. 20, Reply at 11.) The Court rejects this framing. A 8 person can understand that their workplace rights are being violated even if they 9 cannot articulate exactly how many minutes they are entitled to for rest and meal 10 breaks or what information their employer-given wage statement must have on it. 11 And this is exactly what Plaintiff contends—that he felt something was wrong, but was 12 not informed of his exact rights. In its defense, Defendant also argues that it 13 conducted “regular policy training” at the facility. (Larzelere Decl. ¶ 10.) But it is 14 unclear how regularly this training occurred or whether it occurred during Plaintiff’s 15 limited time at the company. Nor is it apparent what areas, in addition to meal and 16 rest break policies, this training covers (e.g., wage reporting requirements, worker 17 reimbursement for work-related expenses, Unfair Competition Law). After weighing 18 both sides’ arguments, the Court finds that the third Gentry factor is in Plaintiff’s favor. 19 Plaintiff has a harder time substantiating the last Gentry factor related to real 20 world obstacles to vindicating class members’ rights. While the Court recognizes 21 there are numerous barriers to potential plaintiffs levying claims against their 22 employers, Plaintiff provides no declaration or supporting evidence that these barriers 23 exist here, other than pointing to the arbitration agreement at issue. The Court finds 24 that the fourth Gentry factor is not sufficiently substantiated by Plaintiff, and thus finds 25 this factor weighs in favor of the class waiver’s validity. But while this factor does not 26 fall in Plaintiff’s favor, a court need not give it weight if the first three Gentry factors are 27 found to support the Plaintiff. Sanchez v. W. Pizza Enterprises, Inc., 172 Cal. App. 4th 28 154 , 171 n.7 (2009), abrogated on other grounds by Concepcion, 563 U.S. 333 . 1 After weighing the Gentry factors, the Court finds that disallowance of the 2 || remaining class-based claims to proceed “will likely lead to a less comprehensive 3 | enforcement of overtime laws” and that class proceedings would be “a significantly 4 | more effective practical means of vindicating the rights of the affected employees.” 5 || Gentry, 42 Cal. 4th at 463.4 Accordingly, Plaintiff is entitled to bring his first and fifth 6 || causes of action on a class basis. While the Court finds that some of Plaintiff's claims 7 | are not bound by arbitration, those claims must be stayed pending the resolution of 8 | the claims that must be arbitrated. See Muller v. Roy Miller Freight Lines, LLC, 34 Cal. 9 | App. 5th 1056, 1070 (2019). 10 CONCLUSION 11 In accordance with the above, Defendant's Motion to Compel Arbitration (ECF. 12 | No. 16) is GRANTED in part and DENIED in part. Plaintiff may proceed with his first 13 | and fifth causes of action on a class basis, and must arbitrate his second, third, fourth, 14 | sixth, seventh, and eighth causes of action. Plaintiff's claims not destined for 15 | arbitration are ordered STAYED pending the resolution of the arbitration 16 | proceedings. IT |S SO ORDERED. [17] 18 IT IS SO ORDERED. 19 | Dated: _February 27, 2025 “Daal A CoO □□□□ Hon. Daniel alabretta 20 UNITED STATES DISTRICT JUDGE [22] 23 | DJCS - Mitchelll24cv02099.mtca [27] 4 While the plaintiff in Saul alleges nearly identical claims, the evidence provided in that suit does not 28 sufficiently satisfy the Gentry factors as done by the plaintiff in this case.