NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

SUZUKAWA, J.

INTRODUCTION

This case returns to the court following remand by the Supreme Court. In our original opinion, we reversed the trial court's order denying as premature plaintiff Sonic Calabasas A, Inc.'s petition to compel arbitration of a statutory wage claim filed by defendant Frank Moreno pursuant to the "Berman" process provided in Labor Code section 98 et seq. (Sonic-Calabasas A, Inc. v. Moreno (2009) 174 Cal.App.4th 546, rev. granted Sept. 9, 2009 (S174475).) We concluded that Moreno had waived, as a condition of his employment, his right to a Berman proceeding, and that such a waiver was not contrary to public policy and was therefore enforceable. The Supreme Court disagreed with our conclusion. (Sonic-Calabasas A, Inc. v. Moreno (2011) 51 Cal.4th 659.) Accordingly, we remand the matter to the trial court with directions to reinstate its order denying plaintiff's petition to compel arbitration as premature.

FACTUAL AND PROCEDURAL BACKGROUND

We set forth the factual and procedural background as outlined by the Supreme Court.

"The facts are not in dispute. Frank Moreno is a former employee of Sonic-Calabasas A, Inc. (Sonic), which owns and operates an automobile dealership. As a condition of his employment with Sonic, Moreno signed a document entitled `Applicant's Statement & Agreement.' The agreement set forth a number of conditions of employment, including consent to drug testing and permission to contact former employers, as well as a provision making the employment at will. Critically for our case, the agreement contained a paragraph governing dispute resolution. The agreement required both parties to submit their employment disputes to `binding arbitration under the Federal Arbitration Act, in conformity with the procedures of the California Arbitration Act (Cal. Code Civ. Proc. sec. 1280 et seq. . . .).' The agreement applied to `all disputes that may arise out of the employment context . . . that either [party] may have against the other which would otherwise require or allow resort to any court or other governmental dispute resolution forum[,] . . . whether based on tort, contract, statutory, or equitable law, or otherwise.' The agreement specified that it did not apply to claims brought under the National Labor Relations Act (29 U.SC. § 151 et seq.) or the California Workers' Compensation Act, or to claims before the Employment Development Department. Furthermore, the agreement provided that the employee was not prevented from `filing and pursuing administrative proceedings only before the California Department of Fair Employment and Housing or the U.S. Equal Opportunity Commission.'

"At some point, Moreno left his position with Sonic. In December 2006, Moreno filed an administrative wage claim with the Labor Commissioner for unpaid vacation pay pursuant to Labor Code section 98 et seq.1 Moreno alleged that he was entitled to unpaid `[v]acation wages for 63 days earned 7/15/02 to 7/15/06 at the rate of $441.29 per day.' The filing of this claim is the first step toward obtaining a Berman hearing.

"In February 2007, Sonic petitioned the superior court to compel arbitration of the wage claim and dismiss the pending administrative action. (Code Civ. Proc., § 1281.2.) Sonic argued Moreno waived his right to a Berman hearing in the arbitration agreement.

"The Labor Commissioner intervened below on Moreno's behalf (§ 98.5), and Moreno adopted the Labor Commissioner's arguments. The Labor Commissioner argued that the arbitration agreement, properly construed, did not preclude Moreno from filing an administrative wage claim under section 98 et seq. The Labor Commissioner argued that resort to a Berman hearing was compatible with the arbitration agreement, because the hearing could be followed by arbitration in lieu of a de novo appeal to the superior court that is provided in section 98.2, subdivision (a). The Labor Commissioner contended that a contrary interpretation of the arbitration agreement to waive a Berman hearing would violate public policy, relying on our decision regarding mandatory employment arbitration agreements in Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83 (Armendariz).

"The superior court denied the petition to compel arbitration as premature. Citing Armendariz, the superior court stated that, as a matter of `basic public policy . . . until there has been the preliminary non-binding hearing and decision by the Labor Commissioner, the arbitration provisions of the employment contract are unenforceable, and any petition to compel arbitration is premature and must be denied.'

"Sonic appealed from the order of denial. (Code Civ. Proc., § 1294, subd. (a).) The Labor Commissioner did not participate in the appeal, nor in proceedings before this court. During the briefing period, the United States Supreme Court decided Preston [v. Ferrer (2008) 552 U.S. 346 (Preston)], which held that the Labor Commissioner's original and exclusive jurisdiction under the Talent Agencies Act (Lab. Code, § 1700 et seq.) was preempted when the parties entered into an arbitration agreement governed by the FAA. (Preston, supra, 552 U.S. 346.)

"The Court of Appeal concluded at the threshold that Preston was not dispositive of the appeal, reasoning that Preston applied to cases in which a party was challenging the validity of a contract as a whole and seeking to have that challenge adjudicated by an administrative agency; it did not apply to cases in which the party was challenging the arbitration clause itself as unconscionable. The Court of Appeal further concluded that the arbitration agreement, correctly interpreted, constituted a waiver of a Berman hearing. By its terms, the agreement precluded Moreno from pursuing any judicial `or other government dispute resolution forum,' subject to certain enumerated exceptions. `Given that neither the Division of Labor Standards Enforcement nor the Labor Commissioner was listed among the stated exceptions, we conclude, as a matter of law, that Moreno was barred from pursuing an administrative wage claim under section 98 et seq.'

"The Court of Appeal then concluded, for reasons explained below, that a Berman waiver was not contrary to public policy. Moreno petitioned for review, contending the Court of Appeal decided this question incorrectly. Sonic, in its answer to the petition, contended the Court of Appeal was correct, and renewed its argument that a holding invalidating a Berman waiver would be preempted by the FAA, as construed in Preston. We granted review to decide these questions." (Sonic-Calabasas A, Inc. v. Moreno, supra, 51 Cal.4th at pp. 669-671.)

DISCUSSION

In brief summary, the Supreme Court concluded that a provision in an arbitration agreement that an employee enters as a condition of employment, requiring waiver of the statutory option of a Berman hearing, is contrary to public policy and unconscionable. Further, it concluded that arbitration agreements may be enforced after a Berman hearing has taken place, i.e., the appeal from such a hearing may be made, pursuant to a valid arbitration agreement, in front of an arbitrator rather than in court. Finally, the Supreme Court found that its holding—that a Berman waiver in an arbitration agreement is unconscionable and contrary to public policy—is not preempted by the Federal Arbitration Act (9 U.S.C. § 1 et seq.); the United States Supreme Court case, Preston, supra, 552 U.S. 346, is distinguishable from the situation presented in this case.

In accordance with the Supreme Court's directions, we therefore remand the matter to the trial court with directions to reinstate its order denying Sonic's petition to compel arbitration as premature.

DISPOSITION

We affirm the trial court's order stating that "until there has been the preliminary non-binding hearing and decision by the Labor Commissioner, the arbitration provisions of the employment contract are unenforceable, and any petition to compel arbitration is premature and must be denied." Costs on appeal are awarded to Moreno.

We concur:

WILLHITE, Acting P. J.

MANELLA, J.