Martha Hoover, plaintiff and respondent, worked as a sales agent for about four months for American Income Life Insurance Company (AIL), defendant and appellant. AIL appeals from an order denying its petition to compel arbitration of Hoover's civil action based on various Labor Code statutes. (Code Civ. Proc., § 1294, subd. (a).)
The underlying issue, which we do not resolve in this appeal, concerns whether Hoover was an employee of AIL or an independent contractor. She claims she was an employee, entitled to receive minimum wage, as well as reimbursement for work-related expenses and prompt payment of earned wages due upon termination. (Lab. Code, §§ 203, 1194, 2802.)
We disagree with AIL. If Hoover was an employee with viable statutory labor claims, her claims are not subject to arbitration. If Hoover was an independent contractor she cannot assert statutory labor claims as an employee and therefore the question of arbitration seems irrelevant. In either instance, the trial court correctly denied AIL's petition to compel arbitration. Additionally, AIL's 15-month delay in petitioning for arbitration constituted a waiver of the right to compel arbitration.
There is little dispute between the parties about the objective facts. Instead, both parties attempt to characterize the facts in a way most favorable to their positions. We attempt to offer a more neutral summary of the record on appeal.
AIL is a Texas-based company that sells life insurance policies in California. Hoover worked for AIL from March 2008 to June 2008. Hoover terminated her relationship with AIL voluntarily.
Hoover's relationship with AIL was partly governed by the CBA between AIL, the Office and Professional Employees International Union, Local 277 (OPEIU Local 277), and the state general agents, like Hoover. The CBA contains the following disclaimer: "Nothing contained herein shall be construed to create the relationship of employer and employee .... [¶] The agent ... shall be acting on the agent's ... own behalf and not an
Hoover executed an agent contract which is incorporated into the CBA. The agent contract includes language indicating that the agent is an independent contractor not an employee of the company: the agent shall be responsible for all expenses and furnish her own means of transportation, office, or place of employment; the agent has no fixed hours and is free to choose the time and manner in which services are performed; the agent is paid solely by commissions "in full satisfaction of all claims upon the Company [on] account of service or expenses under this contract."
The agent contract also contains an arbitration clause, requiring the parties to arbitrate disputes arising out of or relating to the agent contract if they are unable to resolve their disputes through informal negotiations or the grievance process outlined in the CBA: "In the event of any dispute or disagreement arising out of or relating to this contract, the parties shall use their best efforts to settle such disputes. To this effect, they shall negotiate with each other in good faith to reach a just solution. If the parties do not reach a just solution by negotiations as described above, the Agent agrees to utilize the grievance process as outlined in the OPEIU Local 277 agreement. If the dispute is not settled through the grievance process, then upon written notice by either party to the other, all disputes, claims, questions, and controversies of any kind or nature arising out of or relating to this contract shall be submitted to binding arbitration pursuant to the provisions of the collective agreement with OPEIU. The findings of the arbitrator shall be final and binding on all parties and their beneficiaries, successors, assigns or anyone claiming an interest in the contract."
In September 2009, plaintiff Hoover and coplaintiff Frances Williams filed a class action complaint against AIL, alleging that AIL had hired them to sell insurance as employees, not as independent contractors, and failed to reimburse them for business expenses and to pay minimum wage during training and earned wages due after termination. The complaint alleges four causes of action against AIL for alleged violations of statutory rights under the Labor Code and for alleged unfair business practices.
The first cause of action is for reimbursement of business expenses, such as auto mileage, under section 2802. The second cause of action is based on
Between September 2009 and December 2010, the parties conducted active litigation, including two removals to federal court by AIL, AIL's demurrer, an unsuccessful mediation, discovery disputes, and plaintiffs seeking and AIL opposing a temporary restraining order (TRO).
More specifically, AIL first removed the case to federal court in October 2009. AIL also filed a motion to dismiss the complaint in federal court. The federal district court granted Hoover's motion to remand the case to state court in December 2009. AIL filed a demurrer in state court in January 2010.
In February 2010, AIL propounded special interrogatories and document requests upon Hoover and noticed her deposition. Hoover propounded a special interrogatory requesting a putative class member contact list. In March 2010, AIL propounded additional special interrogatories as well as form interrogatories, requests for admissions and document requests. On April 5, 2010, AIL filed an answer to the complaint. None of the 22 affirmative defenses allege the existence of an arbitration provision.
In April 2010, the parties agreed to stay all discovery pending mediation. After mediation failed, Hoover filed a motion to compel disclosure of the putative class member contact information, which AIL opposed. AIL finally provided discovery responses, which Hoover deemed inadequate, in August 2010.
AIL finally made a demand for arbitration, which Hoover rejected in August 2010. In September 2010, Hoover filed an ex parte application for a TRO regarding AIL soliciting opt-out directives from putative class members. AIL's solicitation did not mention arbitration. AIL filed opposition but, before the matter was resolved, AIL filed a second notice removing the case to federal court. The case was eventually remanded to the trial court in December 2010.
On December 7, 2010, almost 15 months after the complaint was filed, AIL filed a motion to compel arbitration and to stay litigation of Hoover's
The trial court denied the motion to compel, ruling that Hoover's "statutory wage claims are not subject to arbitration because neither the arbitration agreement nor the CBA refers to the arbitration of statutory rights" and because "AIL has waived its rights to arbitrate ... through its participation in the litigation process."
AIL has appealed, staying all trial court proceedings as to Hoover. (Code Civ. Proc., §§ 916, subd. (a), 1294, subd. (a).)
The judgment or order forming the basis of the appeal is presumed to be correct. (Denham v. Superior Court (1970) 2 Cal.3d 557, 564 [86 Cal.Rptr. 65, 468 P.2d 193] ["All intendments and presumptions are indulged to support it on matters as to which the record is silent, and error must be affirmatively shown."].) If the appealed judgment or order is correct on any theory, then it must be affirmed regardless of the trial court's reasoning, whether such basis was actually invoked. (Davey v. Southern Pacific Co. (1897) 116 Cal. 325, 329 [48 P. 117]; In re Marriage of Burgess (1996) 13 Cal.4th 25, 32 [51 Cal.Rptr.2d 444, 913 P.2d 473].) As the California Supreme Court stated long ago in Davey: "No rule of decision is better or more firmly established by authority, nor one resting upon a sounder basis of reason and propriety, than that a ruling or decision, itself correct in law, will not be disturbed on appeal merely because given for a wrong reason. If right upon any theory of the law applicable to the case, it must be sustained regardless of the considerations which may have moved the trial court to its conclusion." (Davey, at p. 329.)
Even if the record demonstrates that the trial court misunderstood or misapplied the law, the ruling must be affirmed if it is supported by any legal theory. (Rappleyea v. Campbell (1994) 8 Cal.4th 975, 980-981 [35 Cal.Rptr.2d 669, 884 P.2d 126].) "Because we review the correctness of the order, and not the court's reasons, we will not consider the court's oral comments or use them to undermine the order ultimately entered." (Whyte v. Schlage Lock Co. (2002) 101 Cal.App.4th 1443, 1451 [125 Cal.Rptr.2d 277].) If the decision itself is correct, there can be no prejudicial error from incorrect logic or reasoning. (Mike Davidov Co. v. Issod (2000) 78 Cal.App.4th 597, 610 [92 Cal.Rptr.2d 897].)
The question of waiver is generally one of fact. (St. Agnes Medical Center v. PacifiCare of California (2003) 31 Cal.4th 1187, 1196 [8 Cal.Rptr.3d 517, 82 P.3d 727]; Roberts v. El Cajon Motors, Inc. (2011) 200 Cal.App.4th 832, 841 [133 Cal.Rptr.3d 350].) The waiver issue may be reviewed de novo when the question is whether the superior court properly applied the correct legal standard to the undisputed facts: "`When ... the facts are undisputed and only one inference may reasonably be drawn, the issue [of waiver] is one of law and the reviewing court is not bound by the trial court's ruling.' [Citation.]" (St. Agnes, at p. 1196; see Ruiz v. Sysco Food Services (2004) 122 Cal.App.4th 520, 525, 528 [18 Cal.Rptr.3d 700] [denying arbitration was erroneous as a matter of law because the essential facts were undisputed and the applicable standard of review was de novo].)
Additionally, independent review may be appropriate if "the waiver issue presents a mixed question of fact and law," but is "predominantly legal" when the "historical facts are undisputed" because it "`requires a critical consideration, in a factual context, of legal principles and their underlying values.'" (McKesson HBOC, Inc. v. Superior Court (2004) 115 Cal.App.4th 1229, 1235-1236 [9 Cal.Rptr.3d 812], citing Crocker National Bank v. City and County of San Francisco (1989) 49 Cal.3d 881, 888 [264 Cal.Rptr. 139, 782 P.2d 278].)
If the trial court's waiver ruling is reviewed under the substantial evidence test, this court must determine independently whether the trial court applied the correct legal standard: "[E]ven when a decision ... is generally reviewed for abuse of discretion," the court "must determine ... whether the [trial] court applied the correct legal standard." (KB Home v. Superior Court (2003) 112 Cal.App.4th 1076, 1083 [5 Cal.Rptr.3d 587].) When the substantial evidence test applies, moreover, a court cannot draw inferences based on "mere speculation or conjecture," but only from evidence that is "`reasonable..., credible, and of solid value.'" (Kuhn v. Department of General Services (1994) 22 Cal.App.4th 1627, 1633 [29 Cal.Rptr.2d 191].)
At the outset, we conclude AIL waived the right to seek arbitration by actively litigating this action for more than a year and causing prejudice to Hoover.
In a legal malpractice action, plaintiff undertook extensive discovery, initiated and engaged in a meet and confer process, filed motions seeking to compel discovery responses, sought discovery sanctions, noticed defendant's
Waiver was found where defendant delayed six months in seeking arbitration to plaintiff's prejudice. Defendant filed two demurrers, engaged in attempts to schedule discovery, accepted and contested discovery requests, and failed to assert arbitration in the case management statement. Defendant did not produce the arbitration agreement until after the second demurrer hearing on the day the demurrer was overruled and slightly more than three months before the scheduled trial date. Defendant's actions substantially impaired plaintiff's ability to obtain the cost savings and other benefits provided by arbitration. (Adolph v. Coastal Auto Sales, Inc. (2010) 184 Cal.App.4th 1443, 1451-1452 [110 Cal.Rptr.3d 104].)
Citing federal preemption and the strong national policy favoring arbitration, AIL argues Hoover's statutory wage claims under the Labor Code and the Business and Professions Code are subject to arbitration under the Federal Arbitration Act (FAA), 9 United States Code section 1 et seq. The question before us is whether the parties agreed to resolve an employee's state statutory labor claims by arbitration.
In Barrentine v. Arkansas-Best Freight System, Inc., supra, 450 U.S. at page 730, employee-truckdrivers were not compensated for the time spent complying with federal regulations requiring they conduct safety inspections of their trucks. After a collective bargaining grievance was rejected, the plaintiffs filed a lawsuit in federal court alleging violation of the FLSA (Fair Labor Standards Act of 1938; 29 U.S.C. § 201 et seq.). (Barrentine, at pp. 730-731.) Barrentine determined that "[w]hile courts should defer to an arbitral decision where the employee's claim is based on rights arising out of the collective-bargaining agreement, different considerations apply where the employee's claim is based on rights arising out of a statute designed to
AIL argues the CBA and the agent contract evidence a transaction involving interstate commerce, relying on cases involving employment agreements. (Thorup v. Dean Witter Reynolds, Inc. (1986) 180 Cal.App.3d 228, 233 [225 Cal.Rptr. 521] [employment agreement between stock brokerage and its account executive involves interstate commerce and is subject to FAA]; Circuit City Stores, Inc. v. Adams (2001) 532 U.S. 105, 113 [149 L.Ed.2d 234, 121 S.Ct. 1302] [rejecting argument that "an employment contract is not a `contract evidencing a transaction involving interstate commerce'" subject to FAA].)
Based on this record, it cannot be said the subject agreement involves interstate commerce. AIL had the burden to demonstrate FAA coverage by declarations and other evidence. (Shepard v. Edward Mackay Enterprises, Inc. (2007) 148 Cal.App.4th 1092, 1101 [56 Cal.Rptr.3d 326]; Woolls v. Superior Court (2005) 127 Cal.App.4th 197, 213-214 [25 Cal.Rptr.3d 426].) The only established facts are that Hoover was a California resident who sold life insurance policies. Even though AIL is based in Texas, there was no evidence in the record establishing that the relationship between Hoover and AIL had a specific effect or "bear[ing] on interstate commerce in a substantial way." (Citizens Bank v. Alafabco, Inc. (2003) 539 U.S. 52, 57 [156 L.Ed.2d 46, 123 S.Ct. 2037].) Hoover was not an employee of a national stock brokerage firm or the employee of a member of a national stock exchange. (Thorup v.
AIL further contends that Hoover agreed to arbitrate her statutory wage claims under the agent contract and the CBA. AIL maintains that the broad language of the arbitration provision covers any disputes between Hoover and AIL, including those which involve statutory wage claims, which AIL also argues that Hoover, as an independent contractor, has no right to assert.
The agent contract does not mention the arbitration of statutory claims or identify any statutes. Instead, the language of the agent contract describes its scope as applying to "any dispute or disagreement arising out of or relating to this contract" and "all disputes, claims, questions, and controversies of any kind or nature arising out of or relating to this contract." Even if the parties could resolve statutory rights violations through arbitration, there is no provision in the agent contract or the CBA where Hoover agreed to do so. Even if the issues of minimum wage, reimbursement, and earned wages could be construed as subjects of the two contracts, Hoover still did not agree to arbitrate her statutory labor claims. The agent contract does not reflect an agreement to arbitrate Hoover's claims, as asserted under state law, rather than her claims under the contract.
In this fluid and volatile area of the law, the trial court assessed AIL's motion properly and correctly denied the petition to compel arbitration of Hoover's individual statutory wage claims.
We affirm the trial court's order. Hoover as the prevailing party shall recover her costs on appeal.
McKinster, Acting P. J., and King, J., concurred.