Southern California Pizza Wage And Hour Cases

Opposition

Cal. Super. - 4th Dist.July 9, 2012

A W N SS OO XX 9 O N Wn 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Jeremiah Frei-Pearson (pro hac vice) D. Greg Blankinship (pro hac vice) Bradley F. Silverman (pro hac vice forthcoming) FINKELSTEIN, BLANKINSHIP, FREI-PEARSON & GARBER, LLP 445 Hamilton Avenue, Suite 605 White Plains, New York 10605 Telephone: (914) 298-3281 Facsimile: (914) 824-1561 jfrei-pearson@fbfglaw.com gblankinship@fbfglaw.com bsilverman@fbfglaw.com ELECTROMICALLY FILED Superior Court of Califarnia, County of Orange 03/01/2019 at 04:43:00 PM Clerk of the Superior Court By Sarah Loose, Deputy Clerk Attorneys for Plaintiffs Carolina Huerta and Claudio Raigoza and Proposed Co-Lead Collective and Class Counsel [Additional counsel listed on following page] SUPERIOR COURT OF THE STATE OF CALIFORNIA FOR THE COUNTY OF ORANGE Coordination Proceeding Special Title (Rule 3.550) SOUTHERN CALIFORNIA PIZZA WAGE AND HOUR CASES Included actions: Ramirez v. Southern California Pizza Company, LLC, L.A.S.C. Case No. BC 470642 Huerta v. Southern California Pizza Company, LLC, L.A.S.C. Case No. BC 516989 Hernandez v. Southern California Pizza Company, LLC, L.A.S.C. Case No. BC 544871 Tascic v. Southern California Pizza Company, LLC, R.C.S.C. Case No. RIC 1406622 Gregory v. Southern California Pizza Company, LLC, L.A.S.C. Case No. BC557320 Banas v. Southern California Pizza Company, LLC, L.A.S.C. Case No. BC563801 Najarro v. Southern California Pizza Company, LLC, L.A.S.C. Case No. BC634946 JCCP No. 4725 [Coordination Trial Judge: Hon. William D. Claster, Dept. CX104] PLAINTIFFS’ MEMORANDUM OF POINTS AND AUTHORITIES IN OPPOSITION TO MOTION TO COMPEL ARBITRATION Date: April 12,2019 Time: 9:00 a.m. Dept.: CX-104 MEMORANDUM IN OPPOSITION TO MOTION TO COMPEL ARBITRATION OO 00 NN OO Un hh W N = N N N N ND ND ND N N N D NN N = e e e e e d e m e d e d c o JI O N Wn pA W O N D = O O VO NN N R A W N = Oo Falero v. Southern California Pizza Company, LLC, L.A.S.C. Case No. BC657077 Deanda v. Southern California Pizza Company, LLC, L.A.S.C. Case No. BC672995 Eric A. Grover, Esq., SBN 062238 KELLER GROVER LLP 1965 Market Street San Francisco, CA 94103 Telephone: (415) 543-1305 Facsimile: (415) 543-7861 email: eagrover@kellergrover.com Melissa Grant (SBN 205633) Melissa.Grant@capstonelawyers.com Robert J. Drexler, Jr. (SBN 119119) Robert.Drexler@capstonelawyers.com Molly DeSario (SBN 230763) Molly.DeSario@capstonelawyers.com Jonathan Lee (SBN 267146) Jonathan.Lee@capstonelawyers.com CAPSTONE LAW APC 1875 Century Park East, Suite 1000 Los Angeles, California 90067 Telephone: (310) 556-4811 Facsimile: (310) 943-0396 Attorneys for Plaintiffs Carolina Huerta and Claudio Raigoza and Proposed Co-Lead Collective and Class Counsel MEMORANDUM IN OPPOSITION TO MOTION TO COMPEL ARBITRATION H W S S OO 00 NN O N Wn 1 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 TABLE OF CONTENTS TABLE TF AUTHORITIES omens sss aos io sas sss assis il ETE TRE NEIIN cms ep tani bsg ADSI 1 RELEVANT FACTS AND PROCEDURAL HISTORY ...cooviiiiiiieiiciiinieeiesieere se rs eves 2 BL CTL TINIE cits ios stom A EE A A SO AAS AROS 6 L DEFENDANT HAS WAIVED ITS RIGHT TO ARBITRATE. ......ccccoevveieiiiinnens 6 A. Defendant’s Actions Are Inconsistent With The Right To Arbitrate. ............ 7 B. The Litigation Machinery Has Been Substantially Invoked............cccoou...... 8 C. Defendant Has Delayed In Seeking To Compel Arbitration. ...........ccceveeee. 8 D. Intervening Steps Hove Taken PIABE. scsumsmsminssnssmsssrsmmms a in 9 E. The Delay Has Resulted In Prejudice. .......ccooueviiiniiiininiiiiiciceecee 9 II. DEFENDANT IS JUDICIALLY ESTOPPED FROM SEEKING ARBITRATION. cousins 11 III. ARBITRATION AGREEMENTS ARE UNENFORCEABLE AGAINST PUTATIVE CLASS MEMBERS OF PRE-EXISTING CLASS ACTIONS........... 11 A. A Defendant Must Disclose Existing Class Actions When It Asks A Putative Class Member To Sign An Arbitration Agreement. .......... 12 B. Mr. Raigoza’s Arguments Regarding The Unenforceability Of The Arbitration Agreement Apply Equally To FLSA And Non-FLSA Claims.......cc.ccccevueveenenrenneinennnns 14 ERIN LLIB oo commissions steve sins oni ms mame 5 SEAN EAE 15 ee MEMORANDUM IN OPPOSITION TO MOTION TO COMPEL ARBITRATION hn A W N S S OO 0 uN 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 ¥7 28 TABLE OF AUTHORITIES Page(s) Cases Aguilar v. Lerner, 88 P.3d 24 (Cal. 2004) ...eouviireeieeeiieeteeie etait s testcase eerste suse s beste estes sat ena shasta sheen an esse sane ens 11 Balasanyan v. Nordstrom, Inc., 204 ER.) 350 (B.D). C8, ZOLT), ccinsresssnsinssrsissnmsonbonszsnsssmsmmmnsnmensiasinnsnmtmsn smoms ssr yreass graves imams bea nsss 13 Balasanyan v. Nordstrom, Inc., 2012 ‘WL. 780566 (8.10. Cul. Mar. §, 2012). ommmmmmnmunmmmmsssss nnn 12, 13 Billingsley v. Citi Trends, Inc., 560 Fed. AppX. 914 (11th Cir. 2014) .eoeiioiieieeeeeee eee eres eee esas esas 12 Blix St. Records, Inc. v. Cassidy, 181 Cal. App. 41h 30 (ZU). cismummsnnmnmammnssmmmsi mss ass ss mas an iia sags 11 Bojorquez v. Abercrombie & Fitch, Co., 193 F. Supp. 3d 1117 (C.D. Cal. 2016)....ccuerierieiirieieeienienieeieeiesieere sie see seers sae sae sre ssa ens 15 Bower v. Inter-Con Sec. Sys., Inc., 232 Cal. App, Mth LOBE LRA)... comsnmncimsmisines sninadsbanssssbihabissnmsassididsmmsns comms imtsssax mssmtyssbissos bh 2,7 County of Santa Clara v. Astra USA, Inc., 2010 WL 2724512 (N.D. Cal. July 8, 2010) ....ccuereeereereeienieeiieeiesieeteseestesieesee sae e sree sa esneesene s s 14 Degidio v. Crazy Horse Saloon and Rest. Inc., 880 F.3d 135 (4th Cir. 2018) ...cuiiciieiieiiesieetiee esterase esas ete sr e t esses ees ta sae sseesae ssa e saa ansnas 7, 14 Epic Sys. Corp. v. Lewis, 138 B. CE DOL2 CIDR) coins omens nsson on ogssonn 3500e5000 00537805 63850000 530005 S055 SAS EASES HERE 5 5% 13 Gulf Oil Co. v. Bernard, 432 1.8. BY [TIBI] ) .mmsmnmsssnumsmnsmnssnnpsnunesusammmossvsssssmrny pessoas wens sess bs es sees s sh SA A s same S45 14 In re Currency Conversion Fee Antitrust Litig., 361 ¥. Bip. 2d 237 {ER DLALY . TOUS Jc ssenoncommumasunmmsiio simian sn at moa ums 15 Jimenez v. Menzies Aviation Inc, als UL AFATE? ULL GL. 80 11, 218 mmm ens sisal sss 12, 13, 15 Koo v. Rubio's Restaurants, Inc., 109 Cal. App. 4th 719 (2003)...cccueeeeeeieeiieeeeieeieree es sters teste ese sst ete sa sate ste ste sae esse sseensaennsenns 11 die MEMORANDUM IN OPPOSITION TO MOTION TO COMPEL ARBITRATION wn RA W N O© 0 0 3 OO 10 11 12 13 14 15 16 17 18 19 20 21 2 23 24 25 26 27 23 Kullar v. Foot Locker Retail, Inc., 191 Cal. App. Ath. LIT CIOL TJs son mnmmnssnsissonsonosnsmsssmn snus snp ma sama sa sis mamas 9 Lillehagen v. Alorica, Inc., 2014 WL 12768156 (C.D. Cal. Dec. 18, 2014) ..cceeieriieeieiieriienieciecteeeeie ieee ieee eee sas 13 Marino v. CACafe, Inc., S017 "WL 1540717 (NIE. Gal. Apr. 28, D017) ccna mst fomssmmss 14 Martin v. Yasuda, 820 F 3A 1118 [DUH Cr, ZDT0) cccsncnsivsuusssoomssvnmsnsnmsansssss sa s ss sss ss s e a 6, 14 McKee v. Audible, Inc., 2018 WL 2422582 (C.D. Cal. Apr. 6, 2018).....cccceceeeereereeneerreneesieeeessiessessesssesssennns 2,12,13,14 Offices of lan Herzog v. L. Offices of Joseph M. Fredrics, 1 Cl. pps. ARG BE TIE | casossosmnsisonsiomssinsonessansmnsorn s os ss ro s a EE 11 Oregel v. PacPizza, LLC, 237 Cal. APP. 4th 342 (2015)...ccuiiiuiiiererrienieitenieseetesteeee ste etes tense ss esssnesas esss sssessaessassasesssens 6,7 Piekarski v. Amedisys Illinois, LLC, AF. Bip 3d 952 PND TIL BOTY See Declaration of Claudio Raigoza (“Raigoza Decl.”) § 3. (annexed as Frei-Pearson Decl. Ex. 2). Nor does Defendant contend otherwise. Def. Mem. at 12. Moreover, Defendant did not previously disclose to the Court that Mr. Raigoza or any other putative class members were subject to an arbitration agreement with a class action waiver. On June 24, 2016, this Court certified a class in the Ramirez action consisting of all non- exempt or hourly paid employees of Defendant who worked in California and were provided by Defendant a wage statement from September 30, 2010. See Dkt. # 438. For this reason, since that time, Mr. Raigoza has effectively been a party to this litigation.” A class notice was sent to Mr. I' See McCoy Decl. 99 4-7; Def. Responses to Eighth Set of Special Interrogatories (annexed as Exhibit 1 to the Declaration of Jeremiah Frei-Pearson (“Frei-Pearson Decl.”)) at Response 53. 2 To the extent Defendant suggests that the arbitration agreements were not mandatory, Defendant admits that a// of the thousands of its employees presented with an arbitration agreements executed it and none refused. Frei-Pearson Decl. Exhibit 1 at Response 54. This indicates that the agreement was in fact, treated as mandatory by all employees. Moreover, Defendant refuses to state that no adverse action would be taken against an employee who does not sign the agreement, but that, if an employee ever were to refuse, “Defendant will consider their situation on a case-by-case basis.” Id. Conveniently, no employee has ever refused. 3 See Kullar v. Foot Locker Retail, Inc., 191 Cal. App. 4th 1201, 1204-06 (2011). 3. MEMORANDUM IN OPPOSITION TO MOTION TO COMPEL ARBITRATION S S © 0 NN OS 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Raigoza and all other class members. * In its papers in opposition to the motion for class certification and in support of its motion to deny class certification, Defendant never argued that claims of putative class members were subject to arbitration agreements. Dkt. ## 335, 405. Nor did Defendant ever assert (either before or after certification) that Mr. Raigoza is not or cannot be a member of this certified class because of the arbitration agreement. Defendant has actually taken the exact opposite position. On May 9, 2017 (over two years after Mr. Raigoza entered into the arbitration agreement), new class allegations were added to this proceeding that included FLSA claims. Dkt. # 642 9949-58. A global class settlement was then presented to this Court for approval. Dkt. ## 637-38. That settlement covered a class consisting of “all non-exempt employees who worked at any of Defendants California locations at any time on or after August 1, 2008 until . . . May 6, 2017.” Dkt. # 638, Exhibit 1 § 5. Mr. Raigoza and thousands of employees subject to arbitration agreements with class action waivers were putative members of that class. The proposed settlement covered virtually any wage and hour claim that any employee might have against Defendant, including all claims under the FLSA. Id., Exhibit 1 § 25. 4 See Declaration of Mary Butler (“Butler Decl.”) § 2 (annexed as Frei-Pearson Decl. Ex. 3). 5 The “FLSA Released Claims” and “Released Claims” were very broad and defined as follows: “Released Claims” means all claims, rights, demands, liabilities, and causes of action, whether known or unknown, arising from, or related to, the same set of operative facts alleged or that could have been alleged as those set forth in the operative complaint in the proposed Fourth Amended Complaint, including, but not limited to, all claims under California Industrial Welfare Commission Wage Order Nos. 5-2001, 7-2001 and any other applicable wage orders, as well as claims under California Labor Code §§ 201, 202, 203, 204, 221, 224, 226, 226.7, 510, 512, 1174, 1194, 1197, 1197.1, 1198, 2800, and 2802. The Released Claims shall also include all claims derived from the claims alleged or that could have been alleged in the operative complaint, including claims under the California Private Attorneys General Act of 2004, California Labor Code §§ 2698-2699.5; and claims under the California Unfair Competition Law, California Business & Professions Code §§ 17200, et seq. The Released Claims as described herein shall include any remedies for any of the claims described herein, including, damages, penalties, restitution, declaratory relief, equitable or injunctive relief, interest, attorneys’ fees and costs. In addition, all FLSA Class Members will release any and all causes of action under the Fair Labor Standards Act relating to Released Claims (the “FLSA Released Claims”). Dkt. # 638 at Exhibit 1 4 25 (emphasis added). This includes FLSA claims relating to unreimbursed expenses. -4- MEMORANDUM IN OPPOSITION TO MOTION TO COMPEL ARBITRATION S S OO 0 NN S N Wn Bs 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 As the Court noted, “the settlement was engineered so that Defendant could clear the deck of as many possible wage and hour claims as possible.” See Dkt. # 653 at 2. The settlement included the FLSA claims of Mr. Raigoza that Defendant now asserts must be sent to individual arbitration. When pursuing its settlement strategy, Defendant did not disclose that class members were subject to arbitration agreements with class action waivers. Rather, for its own benefit, Defendant sought to use remedies available only from a court, namely, a classwide settlement of any and all employee claims (including Mr. Raigoza’s FLSA claims). Despite the fact that the Court rejected the global class settlement, Defendant continues to ask this Court to assert jurisdiction over, and resolve, most of Mr. Raigoza’s claims -- even though it simultaneously asks this Court to compel arbitration of Mr. Raigoza’s FLSA claims. On December 20, 2017, another more limited class settlement was presented to this Court for approval. See Dkt. ## 749-50. That settlement was limited to claims pertaining to inaccurate wage statements, but covers a class consisting of “all non-exempt employees who worked at any of Defendant’s California locations and received one or more wage statements from Defendant during the period from September 30, 2010 to February 21, 2017 ....” See Dkt. # 750, Exhibit 1 q 5. Again, this class includes Mr. Raigoza and thousands of employees subject to arbitration agreements with class action waivers. And again, Defendant did not disclose this fact -- because the resolution of the claims of those class members in this Court is beneficial to Defendant. On June 6, 2018, this Court preliminarily approved this settlement. See Dkt. # 865. Thereafter, a class notice was sent to Mr. Raigoza. Butler Decl. q 3. This class notice makes no mention of arbitration. Dkt. # 750, Exhibit 1, Exhibit A. In support of the currently-pending motion for final approval, on February 15, 2019, Defendant filed with the Court an 82-page list of the names of over 20,000 class members. Dkt. # 968. Mr. Raigoza’s name is on the list. This demonstrates that Defendant is specifically seeking to use the judicial machinery of this Court to resolve Mr. Raigoza’s claims. Further, in the Complaint, Mr. Raigoza alleges claims on behalf of himself and classes of similarly situated persons for, not just violations of the FLSA, but violations of the California Labor JE MEMORANDUM IN OPPOSITION TO MOTION TO COMPEL ARBITRATION S © 0 NN O N Wn BAA W N N O N N N N N N N N m m m m e m p m p d e m ee d e d e d e e 0 9 O N nM RA W N N = O O 0 NN B R A W N Code and the UCL. Dkt. # 921. Some of these state claims overlap with the FLSA claims. Yet, Defendant does not seek to have those state claims arbitrated. In fact, Defendant wants a// of Mr. Raigoza’s claims litigated or settled in this Court, except for the FLSA claims. Defendant has been taking advantage of the judicial mechanisms of this Court for years in its efforts to litigate and resolve Mr. Raigoza’s claims (including his FLSA claims), and continues to do so. Defendant cannot now ask that this Court to compel arbitration of one of Mr. Raigoza’s claims. ARGUMENT I. DEFENDANT HAS WAIVED ITS RIGHT TO ARBITRATE. Defendant has repeatedly litigated the legal rights of Mr. Raigoza arising from his employment in this Court, ignoring the arbitration agreement that Defendant now seeks to enforce. Defendant cannot now look to that same arbitration agreement to pick and choose claims of Mr. Raigoza that Defendant would rather not litigate in this Court. As noted by the Ninth Circuit: A party that signs a binding arbitration agreement and has subsequently been sued in court has a choice: it can either seek to compel arbitration or agree to litigate in court. It cannot choose both. A party may not delay seeking arbitration until after the district court rules against it in whole or in part; nor may it belatedly change its mind after first electing to proceed in what it believed to be a more favorable forum. Allowing it to do so would result in a waste of resources for the parties and the courts and would be manifestly unfair to the opposing party. Martin v. Yasuda, 829 F.3d 1118, 1128 (9th Cir. 2016). “No single test defines the conduct that will constitute waiver of an arbitration right. Rather, courts look to a number of factors to determine whether waiver has occurred.” Oregel v. PacPizza, LLC, 237 Cal. App. 4th 342, 344-45 (2015). The California Supreme Court has “confirmed that a court may consider the following six factors in assessing a waiver claim: (1) whether the party’s actions are inconsistent with the right to arbitrate; (2) whether ‘the litigation machinery has been substantially invoked’ and the parties ‘were well into preparation of a lawsuit’ before the party notified the opposing party of an intent to arbitrate; (3) whether a party either requested arbitration enforcement close to the trial date or delayed for a long period before seeking a stay; (4) whether a defendant seeking arbitration filed a counterclaim without asking for a stay of -6- MEMORANDUM IN OPPOSITION TO MOTION TO COMPEL ARBITRATION S O © XX N N nn B R A W N = [\ ®] No No No [\ ®] N o N o N o rN - - - -_- -_- - - pt hd l i co J AN Wn HL S Ww No - oo © © J aN Wh +H Ww No - proceedings;® (5) ‘whether important intervening steps [e.g., taking advantage of judicial discovery procedures not available in arbitration] had taken place’; and (6) whether the delay ‘affected, misled, or prejudiced’ the opposing party.” Id. at 355 (quoting St. Agnes Medical Center v. PacifiCare of California, 31 Cal.4th 1187, 1196 (2003)). A. Defendant’s Actions Are Inconsistent With The Right To Arbitrate. Defendant’s actions are clearly inconsistent with the right to arbitrate. Bower v. Inter-Con Sec. Sys., Inc., 232 Cal. App. 4th 1035, 1044-45 (2014) is directly on point. There, the defendant took advantage of the court’s jurisdiction and attempted to resolve plaintiff’s claims on a classwide basis. Only after settlement efforts fell apart did defendant seek to compel arbitration. The court held that defendant's “attempt to settle the case on a classwide basis was inconsistent with its right under the arbitration agreement to insist that any claims had to be arbitrated on an individual basis only.” Id. at 1045. (“One can infer that [defendant’s] chose to conduct discovery, delay arbitration, and seek a classwide settlement because it saw an advantage in pursuing that course of action in the judicial forum.”). Similarly, in Degidio v. Crazy Horse Saloon and Rest. Inc, 880 F.3d 135 (4th Cir. 2018), cert. denied, 138 S. Ct. 2666 (2018), defendant pursued a strategy of attempting to extinguish claims of an entire class through summary judgment. Only later, did defendant seek to compel arbitration of individual class members’ claims. The court found a waiver holding that: In pursuing this merits-based strategy for three years, Crazy Horse actively sought to obtain a favorable legal judgment. . . . Of course, if the district court had granted any of Crazy Horse's motions for summary judgment, then arbitration would have been unnecessary: the district court would already have resolved the dispute and arbitration would serve no purpose. The only possible purpose of the arbitration agreements, then, was to give Crazy Horse an option to revisit the case in the event that the district court issued an unfavorable opinion. In other words, Crazy Horse did not seek to use arbitration as an efficient alternative to litigation; it instead used arbitration as an insurance policy in an attempt to give itself a second opportunity to evade liability. Degidio, 880 F.3d at 141 (emphasis in the original). Here, too, Defendant has attempted to resolve the claims of class members subject to arbitration agreements through the court, but only resorted to ® The fourth factor is inapplicable here, but Defendant has affirmatively sought judicial remedies from this Court in the form of an approved class settlement. 25 MEMORANDUM IN OPPOSITION TO MOTION TO COMPEL ARBITRATION S S © 0 NON O N nn BA W N = N O N N N N N N N N N N N N m o m md md p d md mk p d p d pe 0 9 A Un RA W N = O O N Y B R A W N enforcement of those arbitration agreements when its prior strategy failed. Moreover, Defendant wants to litigate all of Mr. Raigoza state claims in this Court - just not the FLSA claims. Defendant may strategically wish to prevent Plaintiffs from moving to certify drivers under the FLSA, but Defendant cannot simultaneously ignore the arbitration agreement and seek to enforce it.” Defendant had to choose one or the other and, after years of litigation and settlement efforts in this Court (including the attempted settlement of the same FLSA claims), Defendant has made its choice. Arbitration is no longer available. B. The Litigation Machinery Has Been Substantially Invoked. The first of the consolidated actions was commenced on September 30, 2011 - 7% years ago. See Dkt. # 26. Nine cases alleging almost all types of wage and hour claims have been consolidated and Mr. Raigoza has been a member of many of the alleged putative classes since he began his employment in 2011. Since Mr. Raigoza entered into the arbitration agreement in 2015, this prolonged, complex litigation has continued for many years and, during this time: much effort has been expended; discovery has occurred; a class (which includes Mr. Raigoza) has been certified; this Court was asked to approve a global class settlement that would have included all of Mr. Raigoza’s claims (including his FLSA claims); this Court has preliminarily approved a more- limited class settlement, which covers claims by Mr. Raigoza; and Defendant currently consents to the litigation of all of Mr. Raigoza’s claims in this Court, except for the FLSA claim. The litigation machinery has been invoked and its gears have been turning for a long time. Cs Defendant Has Delayed In Seeking To Compel Arbitration. Mr. Raigoza has been a putative class member since 2011. Defendant began requiring employees to sign arbitration agreements in May 2014 and forced Mr. Raigoza to sign an arbitration " Defendant’s preference to arbitrate the FLSA claims is likely informed by Judge Arguello’s holding in a virtually identical case against Pizza Hut: “Plaintiffs” argument [that a class of delivery drivers should be conditionally certified] is supported by the decisions of numerous district courts, as well as this Court, that have considered motions for collective action certification under the FLSA brought by plaintiff delivery drivers against defendant pizza companies for minimum wage violations. In every case, courts have conditionally certified a collective action.” Smith v. Pizza Hut, Inc., 2012 WL 1414325, at *4 (D. Colo. Apr. 21, 2012) (collecting cases). -8- MEMORANDUM IN OPPOSITION TO MOTION TO COMPEL ARBITRATION SO S © 00 NN O N Wn BA W N = N D N N N N N N N N = e m e e e e e e e m e e e e e d CO I O N Ww» pA W N = O O O N Y BEE W N agreement on February 12, 2015. Mr. Raigoza has been a member of a certified class since June 24,2016. Defendant sought to settle all of Mr. Raigoza’s claims -- including his FLSA claims -- on May 9, 2017. Defendant sought to settle a subset of Mr. Raigoza’s claim on December 20, 2017, and obtained this Court’s preliminary approval of that settlement on June 6, 2018. All this time, Defendant has litigated this action and sought the benefits available from this Court. At no time, did Defendant disclose to the Court that Mr. Raigoza or other members of putative or certified classes are subject to arbitration agreements with class action waivers. At no time, did Defendant seek to enforce the arbitration agreement of Mr. Raigoza or any other employee with respect to any claim asserted in this proceeding. Defendant strategically decided not to do that. Only now -- four years later -- when it is useful to Defendant, does Defendant seek to invoke the arbitration agreement. Such a strategic invocation of the arbitration agreement smacks of gamesmanship. ® D. Intervening Steps Have Taken Place. Since Mr. Raigoza entered into an arbitration agreement in 2015, many intervening steps have taken place. This includes the certification of a class that includes Mr. Raigoza, the attempted global class settlement (that would have included all of Mr. Raigoza’s claims, including his FLSA claims), the preliminarily-approved limited class settlement (which includes some of Mr. Raigoza’s claims), and Mr. Raigoza’s assertion of state law class claims as a named plaintiff that Defendant does not seek to arbitrate. All of these intervening steps were only possible in a court, and could not have occurred in individual arbitration. E. The Delay Has Resulted In Prejudice. Prejudice has resulted from Defendant’s delayed invocation of arbitration rights in the form 8 Defendant argues that it previously never had the opportunity to enforce the arbitration agreement. In actuality, Defendant could have raised the arbitration agreement at numerous times over the years, including: when it opposed certification of a class that included employees subject to arbitration agreements; after a class was certified that included employees subject to arbitration agreements; before and after it caused the settlement administrator to send class notices to employees subject to arbitration agreements; when it asked the Court to approve a class settlement of all wage and hour claims of all employees, including those subject to arbitration agreements; and when it asked the Court to approve the more-limited class settlement that includes claims of employees subject to arbitration agreements. 9. MEMORANDUM IN OPPOSITION TO MOTION TO COMPEL ARBITRATION © 0 93 OO Wn» Bh WwW o N = N N N N N N N N N N = = e e e s e e e e e e e e e d c o NN O N Wn pA W N = O O OO O N Y R A W N D = O of added time and expense litigating claims potentially subject to arbitration. Mr. Raigoza has been a member of a certified class for almost three years (and a putative class member for 7% years). As a member of a certified class, he is bound by determinations of this Court and his rights have been actively litigated during this time. The litigation of those rights included the attempted settlement of all of Mr. Raigoza’s claims, including his FLSA claims. It also included Mr. Raigoza’s inclusion as a member of the settlement class that this Court has preliminarily-approved. During these years of protracted litigation, Defendant never raised the issue of arbitration. At the same time, counsel | for plaintiffs and the classes have exerted significant time, effort, and expense litigating. This included efforts to resolve claims on a classwide basis of employees apparently subject to arbitration agreements. Plaintiffs would not have taken the same steps had they known that Defendant might seek to compel the arbitration of claims of putative and actual class members.’ Mr. Raigoza was also prejudiced because he waived his rights to arbitration when he decided not to opt out of the preliminarily-approved class settlement. Had he known he might be forced into arbitration anyway, he likely would not have agreed to waive his released claims for only the approximately $85 to which he is entitled under the settlement agreement. Dkt. # 638, Exhibit 1 949 7, 8, 12, 17, 29. Notably, neither the settlement agreement, nor the class notice says anything about arbitration. Dkt. # 638, Exhibit 1; Dkt. # 750, Exhibit 1, Exhibit A. Defendant gained the benefits of the settlement agreement through waiver of the arbitration agreement, but now seeks to impose the burdens of the arbitration agreement on Mr. Raigoza. As a member of the settlement class, Mr. Raigoza had no reason to believe that the arbitration agreement could still be enforced. As a result of Defendant’s actions, Mr. Raigoza and thousands of employees subject to arbitration agreements joined the settlement class and consented to this Court’s jurisdiction. To now require otherwise, would place the rights of Mr. Raigoza and others like him in limbo. It would also undermine the authority of the Court to exercise its jurisdiction over parties, like Defendant, who have already availed themselves of the benefits of that jurisdiction. ? Such delayed invocation of arbitration rights may also cause prejudice by reducing the number of class members in long-litigated class actions because they could be picked-off through enforcement of arbitration agreements. See Roberts v. El Cajon Motors, Inc., 200 Cal. App. 4th 832, 847 (2011). Ji MEMORANDUM IN OPPOSITION TO MOTION TO COMPEL ARBITRATION A W N OO 0 9 O N Wn 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 IL. DEFENDANT IS JUDICIALLY ESTOPPED FROM SEEKING ARBITRATION. “Judicial estoppel precludes a party from gaining an advantage by taking one position, and then seeking a second advantage by taking an incompatible position.” Aguilar v. Lerner, 88 P.3d 24, 30 (Cal. 2004). “The doctrine’s dual goals are to maintain the integrity of the judicial system and to protect parties from opponents’ unfair strategies.” Id. (quoting Koo v. Rubio’s Restaurants, Inc., 109 Cal. App. 4th 719, 735 (2003)). The doctrine applies when “(1) the same party has taken two positions; (2) the positions were taken in judicial or quasi-judicial administrative proceedings; (3) the party was successful in asserting the first position (i.e., the tribunal adopted the position or accepted it as true); (4) the two positions are totally inconsistent; and (5) the first position was not taken as a result of ignorance, fraud, or mistake.” Id. (citation omitted). Further, “judicial estoppel, unlike promissory or equitable estoppel, is not dependent on the reliance of a party.” Blix St. Records, Inc. v. Cassidy, 191 Cal. App. 4th 39, 50-51 (2010). Here, Defendant has taken the position that claims of Mr. Raigoza and other employees subject to arbitration agreements may be litigated in this Court and settled on a classwide basis. Defendant's strategy has been successful and this Court has preliminarily approved a settlement. That strategy was not the result of any ignorance, mistake, or fraud upon Defendant. Rather, Defendant has been well-aware of its arbitration agreements, which were first implemented in 2014. Defendant can no longer assert that any of Mr. Raigoza’s claims must be arbitrated. The differing positions taken by Defendant over the course of this litigation are inherently inconsistent. See, e.g., Offices of lan Herzog v. L. Offices of Joseph M. Fredrics, 61 Cal. App. 4th 672, 679-80 (1998) (defendant judicially estopped from refusing to arbitrate based on the absence of a written agreement after stipulating in court to arbitrate dispute). III. ARBITRATION AGREEMENTS ARE UNENFORCEABLE AGAINST PUTATIVE CLASS MEMBERS OF PRE-EXISTING CLASS ACTIONS. Even if Defendant had not waived its right to compel arbitration, the arbitration agreement is unenforceable against Mr. Raigoza. This consolidated proceeding consists of nine class actions. Six of them were filed before Mr. Raigoza signed the arbitration agreement in 2015. Mr. Raigoza is ol Tha MEMORANDUM IN OPPOSITION TO MOTION TO COMPEL ARBITRATION HA W N S S © 0 NN O N Wn 11 12 13 14 13 16 17 18 19 20 21 22 23 24 23 26 27 28 a member of putative classes alleged in each of those six actions." A defendant may not enforce an arbitration agreement against a putative class member of an existing class action without sufficient disclosure of the rights being waived. The case law is clear on this point. See, e.g., McKee v. Audible, Inc.,2018 WL 2422582, at *5 (C.D. Cal. Apr. 6, 2018) (“Courts have also exercised their discretionary power under Fed. R. Civ. Proc. 23(d) to invalidate or refuse to enforce arbitration agreements implemented while a putative class action is pending if the agreement might interfere with members’ rights.”); Billingsley v. Citi Trends, Inc., 560 Fed. Appx. 914, 923 (11th Cir. 2014) (affirming denial of motion to compel arbitration, noting that “[d]istrict courts’ corrective actions have included refusal to enforce arbitration agreements instituted through improper means and where the timing of the execution of those agreements was similar to the post-filing, pre-certification timing in this case.”). A. A Defendant Must Disclose Existing Class Actions When It Asks A Putative Class Member To Sign An Arbitration Agreement. Any time a defendant to a class action requires putative class members to sign arbitration agreements without disclosure of the pre-existing class action, such action is deemed to be a misleading communication with a putative class member and the arbitration agreement is unenforceable. See McKee, 2018 WL 2422582, at *6; Jimenez v. Menzies Aviation Inc, 2015 WL 4914727, at *5 (N.D. Cal. Aug. 17, 2015) (“[ T]he ADR Policy is unenforceable because the policy limited class members’ rights and the manner in which [defendant] issued the policy-not informing Mijos and other putative class members of the pending litigation, not explaining the consequences of agreeing to the policy, and not providing an opt-out procedure-constituted improper class communication.); Balasanyan v. Nordstrom, Inc., 2012 WL 760566, at *3 (S.D. Cal. Mar. 8, 2012) (“To allow defendants to induce putative class members into forfeiting their rights by making them an offer and failing to disclose the existence of litigation would create an incentive to 10 Defendant admits that the first class action, “[tJhe Ramirez Class Action included Raigoza because it was brought on behalf of ‘[a]ll non-exempt or hourly paid employees who worked for Defendants in California within the four years prior to the filing of this complaint until the date of certification.” Def. Mem. at 12. 13- MEMORANDUM IN OPPOSITION TO MOTION TO COMPEL ARBITRATION S S O O 0 NN 4 nm B R A W N N O N N N N N N N NN N N N m e m e m e m p m p m p d p d p d pe 0 NN O N wn hh W N D = O O NN S Y N R W ND engage in misleading behavior.”)!'; In re Currency Conversion Fee Antitrust Litig., 361 F. Supp. 2d 237,252 (S.D.N.Y. 2005) (“As a result, this Court holds that [defendants] cannot enforce the arbitration clause because those banks possessed information regarding this litigation which they withheld from their cardholders when they added the clause to their contracts. In the absence of candid disclosure, it would be unconscionable to allow [defendants] to nullify cardholders’ rights.”). This rule applies regardless of whether an actual class has yet been certified. McKee, 2018 WL 2422582, at *7; Jimenez, 2015 WL 4914727, at *2, 5.12 Defendant does not dispute that it did not advise its employees of the pending class actions when it had them sign arbitration agreements. Mr. Raigoza was never told of any class actions before he was required to enter into an arbitration agreement. Raigoza Decl. § 3. Instead, Defendant argues that the arbitration agreement should be enforced because its employees had “constructive notice” of the class actions because the class actions are a matter of public record. Notably, Defendant is unable to cite a single authority that supports the proposition that such “constructive notice” is sufficient to enforce an arbitration agreement against a putative class member.* Accordingly, the arbitration agreement is unenforceable. "The Balasanyan decision was subsequently revisited. Defendant inaccurately characterizes the subsequent decision in that case, Balasanyan v. Nordstrom, Inc., 294 F.R.D. 550 (S.D. Cal. 2013) (“Balasanyan IT) as “uph[olding] employment arbitration agreement, even though there was a pending class action lawsuit and the arbitration agreement failed to disclose the existence of the pending lawsuit.” Def. Mem. at 12n.11. In actuality, it says the opposite. Balasanyan II refused to enforce the arbitration agreement against existing employees, and merely permitted its enforcement against subsequently-hired new employees who signed the arbitration agreement at the time they were hired. See Balasanyan II, 294 F.R.D. at 574 (“Prospective California Class Members who were employed prior to Nordstrom's use of the [individual arbitration agreements] may not be excluded from the class nor may the California Class Period be modified to reflect the signing of the [individual arbitration agreements], which was an improper communication.”). Mr. Raigoza was not a new employee when he was required to sign the arbitration agreement. 12 Defendant’s citation to Lillehagen v. Alorica, Inc., 2014 WL 12768156 (C.D. Cal. Dec. 18, 2014) is inapposite. In fact, string-citing cases, Lillehagen notes that “[m]ultiple courts have refused to enforce arbitration clauses imposed on potential class members that omit information or provide misleading information about pending litigation because they are improper communications with potential class members.” Lillehagen, 2014 WL 12768156, at *4-5 13 Defendant also makes a futile attempt to argue that language in Epic Sys. Corp. v. Lewis, 138 S. Ct. 1612 (2018) supports its position by analogizing the enforcement of arbitration agreements to -13- MEMORANDUM IN OPPOSITION TO MOTION TO COMPEL ARBITRATION Oo 0 NN O N wn kA W N 10 11 12 13 14 15 16 17 18 19 20 21 £2 23 24 25 26 27 28 B. Mr. Raigoza’s Arguments Regarding The Unenforceability Of The Arbitration Agreement Apply Equally To FLSA And Non-FLSA Claims. Defendant suggests that the arbitration agreement is enforceable because a FLSA collective member must opt-in to the collective, whereas a non-FLSA class member is automatically in a class unless he or she opts out. This is a distinction without a difference. Just as an arbitration agreement without adequate disclosure is not enforceable against a non-FLSA putative class member even before a class is certified (see McKee, 2018 WL 2422582, at *7), the same arbitration agreement is also not enforceable against a putative FLSA collective member even before a collective is certified or a member opts in. See, e.g., Degidio, 880 F.3d at 139, 143-44; Martin, 829 F.3d at 1122; Piekarski v. Amedisys Illinois, LLC, 4 F. Supp. 3d 952, 956 (N.D. Ill. 2013); Williams v. Securitas Sec. Services USA, Inc., 2011 WL 2713741, at *4 (E.D. Pa. July 13, 2011). Defendant also argues that it could not have given Mr. Raigoza notice of FLSA claims back the enforcement of release agreements. Defendant cites non-class action cases for the unremarkable proposition that a general release of all claims need not identify specific claims that are being released. However, in the class action context, releases obtained from putative class members without sufficient disclosure of information about the pending class actions are unenforceable. See, e.g., Marino v. CACafe, Inc., 2017 WL 1540717, at *2 (N.D. Cal. Apr. 28, 2017) (release unenforceable where “the communications did not inform putative class members that there was a lawsuit pending that concerned their legal rights, the nature of the claims, plaintiff's counsel's contact information, the status of the case, or any other information that might have permitted them to allow them to make an informed decision about the waiver of their rights.”); County of Santa Clara v. Astra USA, Inc., 2010 WL 2724512, at *4 (N.D. Cal. July 8, 2010) (“[Defendant] at a minimum should have [inter alia] explained the specific claims that plaintiffs allege against defendant . . . . [T]he putative class must have been given the necessary information to choose whether to accept the settlement checks.”). As set forth in these cases pertaining to releases (and not arbitration agreements), the requirement that sufficient disclosures be made to putative class members applies equally to arbitration contracts and non-arbitration contracts. It derives, not from policies specific to arbitration, but from the inherent authority of courts to oversee and preserve the fairness of class actions. “‘Because of the potential for abuse, a district court has both the duty and the broad authority to exercise control over a class action and to enter appropriate orders governing the conduct of counsel and parties.” Marino, 2017 WL 1540717, at *2 (quoting Gulf Oil Co. v. Bernard, 452 U.S. 89, 100 (1981)). “The prophylactic power accorded to the court presiding over a putative class action under Rule 23(d) is broad; the purpose of Rule 23(d)’s conferral of authority is not only to protect class members in particular but to safeguard generally the administering of justice and the integrity of the class certification process.” Id. (quoting Retiree Support Grp. of Contra Costa Cty. v. Contra Costa Cty., 2016 WL 4080294, at *5 (N.D. Cal. July 29, 2016)). For these reasons, Defendants arguments premised on Epic regarding defenses to arbitration agreements that are inapplicable to non-arbitration agreements are without merit. -14- MEMORANDUM IN OPPOSITION TO MOTION TO COMPEL ARBITRATION © 0 9 OO Ww» SA W N 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 when he entered into the arbitration agreement. This argument is, at best, disingenuous, as Defendant never gave Mr. Raigoza notice of any claims at the time he entered into the arbitration agreement, including those overlapping state claims predicated on the same underlying facts (i.e., the failure to reimburse expenses) that had been alleged before Defendant required Mr. Raigoza to sign the arbitration agreement. Dkt. # 119 99 7, 25-49; Dkt. # 161 9 66-77, 86-111. To that end, the FLSA claims also do not reflect a new theory of liability. They are based on the exact same underlying facts and injuries as the alleged state law claims predicated on the failure to reimburse employees for business expenses. '* Complaint §§ 75-94. Whether that injury is denominated as unpaid expenses or as unpaid wages makes no practical difference in this context. See, e.g., Bojorquez v. Abercrombie & Fitch, Co., 193 F. Supp. 3d 1117, 1125-27 (C.D. Cal. 2016) (FLSA claims dismissed in second action under the claim splitting doctrine as a result of Labor Code claims for unreimbursed expenses pending in previously-filed first action where the FLSA claims and Labor Code claims were the same because they “arise out of the same facts™). The claims are the same and Defendant gave no notice of them. ° Moreover, “Federal and California law favor the adjudication of common claims in a single action.” Jimenez, 2015 WL 4914727, at *4. It would be highly disfavored to litigate the state law claims in this Court while pursuing FLSA claims in another forum. Defendant wants to litigate all state claims in this Court while arbitrating the FLSA claims. This would result in identical claims proceeding in different forums. That is improper. CONCLUSION For all the foregoing reasons, Plaintiff Claudio Raigoza respectfully requests that the Court deny Defendant’s motion and grant such other relief as the Court deems just and proper. 14 Also, Mr. Raigoza’s claim under the UCL incorporates all other violations, including the FLSA violations and all state Labor Code violations predicated on unreimbursed expenses and unpaid minimum wages. Complaint 9 165-76. IS Moreover, Defendant previously asked this Court to settle a// potential employee FLSA claims (including those of Mr. Raigoza). See Dkt. # 638, Exhibit 1 § 25. Defendant cannot now raise an arbitration agreement as a barrier to the litigation of the same FLSA claims in this Court. -15- MEMORANDUM IN OPPOSITION TO MOTION TO COMPEL ARBITRATION Dated March 1, 2019 & A Grr Eric A. Grover Eric A. Grover, Esq., SBN 062238 KELLER GROVER LLP 1965 Market Street San Francisco, CA 94103 Telephone: (415) 543-1305 Facsimile: (415) 543-7861 email: eagrover@kellergrover.com Jeremiah Frei-Pearson (pro hac vice) D. Greg Blankinship (pro hac vice) Bradley F. Silverman (pro hac vice forthcoming) FINKELSTEIN, BLANKINSHIP, FREI-PEARSON & GARBER, LLP 445 Hamilton Avenue, Suite 605 White Plains, New York 10605 Telephone: (914) 298-3281 Facsimile: (914) 824-1561 jfrei-pearson@fbfglaw.com gblankinship@fbfglaw.com bsilverman@ftbfglaw.com Melissa Grant Robert J. Drexler, Jr. Molly DeSario Jonathan Lee CAPSTONE LAW APC 1875 Century Park East, Suite 1000 Los Angeles, California 90067 Attorneys for Plaintiffs Carolina Huerta and Claudio Raigoza and Proposed Co-Lead Collective and Class Counsel MEMORANDUM IN OPPOSITION TO MOTION TO COMPEL ARBITRATION