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ROSENLOEV v. 24 HOUR FITNESS USA, INC., B230632. (2012)

Court: Court of Appeals of California Number: incaco20120125049 Visitors: 6
Filed: Jan. 25, 2012
Latest Update: Jan. 25, 2012
Summary: NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS TURNER, P. J. Defendant, 24 Hour Fitness USA, Inc., appeals from an order denying its petition to compel arbitration in a class action filed by plaintiffs, Deborah Rosenloev and Anthony Marks. Notwithstanding defendant's failure to provide a proper record, we reach the merits of its contentions. We affirm. We apply the test for determining waiver of the right to compel contractual arbitration as set forth in St. Agnes Medical Center v. PacifiCare o
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NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

TURNER, P. J.

Defendant, 24 Hour Fitness USA, Inc., appeals from an order denying its petition to compel arbitration in a class action filed by plaintiffs, Deborah Rosenloev and Anthony Marks. Notwithstanding defendant's failure to provide a proper record, we reach the merits of its contentions. We affirm.

We apply the test for determining waiver of the right to compel contractual arbitration as set forth in St. Agnes Medical Center v. PacifiCare of California (2003) 31 Cal.4th 1187, 1195 and footnote 4. (See Knight et al., Cal. Practice Guide: Alternative Dispute Resolution (The Rutter Group 2011) ¶ 5:167.1, p. 5-131 (rev. # 1, 2011).) We review the trial court's finding of arbitration waiver using the substantial evidence test. (Id. at p. 1196 ["Generally, the determination of waiver is a question of fact, and the trial court's finding, if supported by substantial evidence, is binding on the appellate court"]; Engalla v. Permanente Medical Group, Inc. (1997) 15 Cal.4th 951, 983; Platt Pacific, Inc. v. Andelson (1993) 6 Cal.4th 307, 319.) However, when the facts are undisputed and only one inference may be reasonably drawn, the issue is one of law and we review de novo. (St. Agnes Medical Center v. PacifiCare of California, supra, 31 Cal.4th at p. 1196; Platt Pacific, Inc. v. Andelson, supra, 6 Cal.4th at p. 319.)

The following, when all the facts are considered together and not separately as defendant would have us do, constitutes the substantial evidence it waived the right to compel arbitration. Although not dispositive, the complaint was filed on June 5, 2009, but the motion to compel arbitration was not filed until August 20, 2010. On June 5, 2009, plaintiffs filed a class action questionnaire. On September 8, 2009, defendant demurred to the merits of the complaint's first cause of action. Defendant asserted that no split shift premium could be recovered by plaintiff for the alleged violation of California Industrial Welfare Commission Wage Order No. 4-2001 in a judicial action. Defendant's demurrer reasoned that only the California Department of Labor Standards Enforcement could enforce the split shift premium right. Defendant cited two unpublished federal district court opinions. (Johnson v. GMRI, Inc. (E.D.Cal. May 21, 2007) No. CV-F-07-0283 LJO DLB [2007 WL 1490819, *5]; Johnson v. GMRI, Inc. (E.D.Cal. March 29, 2007) CV-F-07-0283 LJO DLB [2007 WL 963209, *5].) On October 1, 2009, plaintiffs filed an opposition to defendant's demurrer and appendix. On October 13, 2009, the demurrer was overruled. Defendant has not provided the reporter's transcript of the October 13, 2009 hearing. On November 3, 2009, defendant filed its answer to plaintiffs' complaint. Defendant's answer makes no reference to the arbitration clauses in plaintiffs' employment papers.

Further, on December 1, 2009, Salvatore Suppa, stipulated to transfer venue of his class action complaint from Los Angeles to Orange County Superior Court. Mr. Suppa's class action complaint sought penalties, damages and injunctive relief for wage and hour violations from defendant. Plaintiffs, even though they were not parties to the Los Angeles Superior Court proceeding involving Mr. Suppa, signed the stipulation. The stipulation states: plaintiffs' case, which had been labeled complex, is to be consolidated in Orange County Superior Court with Mr. Suppa's complaint, which was designated noncomplex; the classes in Mr. Suppa's and plaintiffs' cases were "the same, or a subset of the same"; the issues were the same; consolidation would lead to judicial economy as it was anticipated there would be a "large volume of pre-trial motions"; one issue would be a determination as to the propriety of class certification; consolidation would avoid inconsistent rulings; a stay that was in existence would allow for coordination of the two class actions; and Mr. Suppa's case is to be transferred "for all purposes" to Orange County Superior Court.

On February 1, 2010, defendant demurred to parts of Mr. Suppa's complaint on the merits and because it was uncertain. Defendant asserted that Mr. Suppa could not recover damages for a violation of Labor Code section 204, subdivisions (a), (b) and (d). Rather, defendant asserted that only the Labor Commissioner could collect Labor Code section 204, subdivision (a), (b) and (d) penalties. The uncertainty demurrer asserted the third cause of action was uncertain as to what causes of action were subject to Labor Code section 204, subdivision (a), (b) and (d) penalties. At the same time, defendant moved to strike the Business and Professions Code section 17200 cause of action which sought restitution and penalties for failure to: pay final wages in violation of Labor Code sections 201, 202 and 204; provide accurate wage statements in violation of Labor Code section 226, subdivision (a); and pay bonuses. Also, defendant moved to strike the injunctive relief request as Mr. Suppa was only a former employee who had no standing to secure equitable orders under the unfair competition law. The demurrer and motion to strike were served on plaintiffs' counsel. Likewise, Mr. Suppa's opposition and appendix was served on plaintiffs' counsel. On March 8, 2010, defendant filed its reply to Mr. Suppa's opposition to the demurrer and motion to strike. Plaintiffs' counsel was served with defendant's reply to the opposition to the demurrer and motion to strike. On March 11, 2010, defendant filed its meet and confer statement in compliance with rule 315 of the Orange County Superior Court Rules. Arbitration was not mentioned in defendant's demurrer, motion to strike, reply and meet and confer statement. Had the demurrer been sustained or the motion to strike granted, defendant would have had avenues to attack plaintiffs' complaint. The trial court's ruling could have permitted defendant to seek partial judgment on the pleadings or move to strike portions of the plaintiffs' complaint pursuant to Code of Civil Procedure section 436. As noted, defendant stipulated the issues in the now consolidated class actions were the same. After the demurrer was overruled and motion to strike denied, defendant filed an answer to Mr. Suppa's complaint. Defendant's answer makes no reference to Mr. Suppa's arbitration agreement. The answer to Mr. Suppa's complaint was served on plaintiffs' counsel. We have not been provided with the transcript of what occurred at the demurrer hearing. Neither complaint contains a claim under Labor Code sections 2698 through 2699.5.

In addition, four case management conferences were held. On September 7, 2009, a meet and confer statement was filed. On September 17, 2009, plaintiffs filed their case management conference statement. On March 10, 2010, Mr. Suppa filed his case management conference statement which was served on plaintiffs' counsel. On March 10, 2010, plaintiffs' filed their case management conference statement which states: "Discovery is progressing smoothly. The first day of Ms. Rosenloev's deposition has been completed, and Plaintiffs are waiting for Defendant's counsel to provide potential dates for her second day of deposition[.] Mr[.] Marks' deposition has not yet been scheduled[.] Additionally, Plaintiffs' will seek to depose Defendants' corporate designee regarding many of the issues raised in this lawsuit, which should occur around the time of Mr[.] Mark's deposition[.] [¶] . . . Plaintiffs anticipate being able to provide the Court with a date certain to file its motion for class certification at the next status conference, which Plaintiffs propose occur within 60 to 90 days." On September 21, 2009, January 11, 2010, and June 14, 2010, case management conferences were held. The motion to compel arbitration was heard at the fourth status conference scheduled on September 20, 2010. According to plaintiffs' counsel, arbitration was never mentioned at any of the three initial status conferences. Defendant has not filed settled statements as to what occurred at those status conferences.

In addition, substantial discovery was conducted. Ms. Rosenloev was deposed for two full days. The arbitration agreement allows for a deposition pursuant to the Federal Rules of Civil Procedure (28 U.S.C.). The trial court could reasonably find that Ms. Rosenloev's deposition exceeded the duration limits specified in rule 30(d)(1) of the Federal Rules of Civil Procedure (28 U.S.C.) No provision of the Civil Discovery Act so limits a deposition duration. Mr. Marks was also deposed for a full day on July 26, 2010. There is under oath evidence the subject of arbitration was never raised at the two depositions.

Also, defendant served 82 categories of document production demands on plaintiffs. Defendant also served 54 categories of document production demands on Mr. Suppa. A total of three document production demands had been served by defendant. Plaintiffs and Mr. Suppa produced 1,756 pages of paperwork in response to defendant's document production demands. Mr. Suppa had served 60 special interrogatories on defendant. Further, Mr. Suppa had served a document production demand on defendant which consisted of 54 categories. Defendant had produced 711 pages of documents to plaintiffs' and Mr. Suppa's attorneys. One of Mr. Suppa's attorneys identified defendant's response to the special interrogatories and document production demand: "Defendant responded in writing to [Mr.] Suppa's special interrogatories and document requests with, among other things, various objections. I and my co-counsel, Gregg A. Farley, then met and conferred at length over an approximately [two-month] period with Defendant's counsel to attempt to resolve various of Defendant's objections. I and my co-counsel were in the midst of these meet and confer discovery negotiations when Defendant filed its motion to compel arbitration." The meet and confer process is a necessary prerequisite to seeking judicial enforcement of a litigant's disclosure duties in the interrogatory and document production demand contexts. (Code Civ. Proc., §§ 2016.040, 2023.010, subd. (i), 2023.020, 2030.300, subd. (b), 2031.310, subd. (b)(2).)

Moreover, as of the date of the filing of the opposition to the motion to compel arbitration, Mr. Suppa's attorneys had worked 312.5 hours on this case. Further, Mr. Suppa had incurred $911.60 in costs. The value of Mr. Suppa's attorneys' services was $168,125. At the fourth case management conference where the motion to compel arbitration was denied, the trial court set the hearing date for the class certification motion on January 18, 2011.

To begin with, although not dispositive, there were substantial delays in filing the motion to compel arbitration. The complaint was filed on June 5, 2009. The motion to compel arbitration was not filed until August 20, 2010. The stated justification for filing the motion to compel arbitration was the United States Supreme Court decision in Stolt-Nielsen, S.A. v. AnimalFeeds International Corp. (2010) 559 U.S. __, __ [130 S.Ct. 1758, 1775-1776]. Yet the Stolt-Nielsen, S.A. opinion was filed on April 27, 2010, but the motion to compel arbitration was not filed until August 20, 2010. By the time the motion to compel was filed, defendant had not even mentioned arbitration: in two demurrers and answers; in any case management conference memoranda; during three depositions; and at three case management conferences. (Spear v. California State Auto. Assn. (1992) 2 Cal.4th 1035, 1043; Roberts v. El Cajon Motors, Inc. (2011) 200 Cal.App.4th 832, 839 & fn. 4; Johnson v. Siegel (2000) 84 Cal.App.4th 1087, 1099.)

Based on the aforementioned summary of what occurred in the trial court, there is substantial evidence plaintiffs were prejudiced because of defendant's belated arbitration request. First, plaintiffs conducted substantial discovery concerning class certification. Defendant now asserts plaintiffs cannot secure classwide arbitration. (AT&T Mobility LLC v. Concepcion (2011) 563 U.S. ___, ___ [131 S.Ct. 1740, 1748].) As noted, neither plaintiffs' nor Mr. Suppa's complaints contain claims under Labor Code sections 2698 through 2699.5, the Private Attorney General Act of 2004. Arguably, if there were Labor Code sections 2698 through 2699.5 causes of action, then the class certification discovery could be used in connection with those claims during the arbitral process. One case holds the Federal Arbitration Act does not preempt the rule prohibiting waiver of classwide arbitration in the arbitral forum for Labor Code sections 2698 through 2699.5 claims. (Brown v. Ralph's Grocery Co. (2011) 197 Cal.App.4th 489, 504.) But in the absence of Labor Code sections 2698 through 2699.5 claims, the classwide waivers in the arbitration agreements are enforceable. (AT&T Mobility LLC v. Concepcion, supra, 563 U.S. at p.___ [131 S.Ct. at p. 1748]; see Roberts v. El Cajon Motors, Inc., supra, 200 Cal.App.4th at p. 845.) At the fourth case management conference when the motion to compel arbitration was denied, the trial court could reasonably conclude that class certification discovery had been completed. At the conclusion of the fourth case management conference hearing, a date was selected for the class certification motion hearing. In short, there is substantial evidence plaintiffs conducted substantial discovery on the class certification issue. And it is defendant's position there can be no class arbitration because of AT&T Mobility LLC. This constitutes by itself prejudice for purposes of denying defendant's motion to compel arbitration.

Second, Ms. Rosenloev was deposed for more than one day in what the trial court could reasonably find was in contravention of the deposition duration limits in rule 30(d)(1) of the Federal Rules of Civil Procedure (28 U.S.C.). Third, plaintiffs' counsel was required to prepare for and attend three case management conferences before the fourth one where the motion to compel arbitration was litigated. Preparation for the three case management conferences included the drafting of papers and review of files. The matters to be considered at complex case management conferences are substantial and require commensurate preparation. (Cal. Rules of Court, rules 3.350(b)-(c), 3.762).

Fourth, the trial court could reasonably find that plaintiffs' counsel had expended substantial time on the case. Mr. Suppa's attorneys had spent 312.5 hours on this case. Plaintiffs' case commenced before Mr. Suppa's complaint was filed. This is circumstantial evidence that plaintiffs' counsel had likewise expended substantial time preparing the case for the class certification issue. Fifth, plaintiffs stipulated to consolidate this case with Mr. Suppa's pending Los Angeles Superior Court action, something the trial court could find was atypical of arbitration. Further, the stipulation increased plaintiffs' costs substantially as documents in Mr. Suppa's cases were served on their counsel. And the stipulation required the case be transferred "for all purposes" to Orange County Superior Court. The stipulation, executed by defendant, expressly refers to "the large volume of pre-trial motions" and a determination as to the propriety of class certification.

Sixth, the trial court could reasonably find defendant sought dispositive rulings on some of the issues directly pertinent to plaintiffs' claims. Defendant stipulated the same facts and circumstances would be adjudicated in both plaintiffs' and Mr. Suppa's cases in determining class certification, liability and damages. Defendant challenged a portion of plaintiffs' claims in its demurrer filed September 8, 2009. Then after unsuccessfully challenging plaintiffs' complaint, defendant presented challenges to Mr. Suppa's complaint. A successful ruling on Mr. Suppa's complaint could have been used to attack plaintiffs' complaint by a partial judgment on the pleadings request or Code of Civil Procedure section 436 motion to strike. Defendant's arbitration motion was filed only after the trial court was unpersuaded by two separate merits-based attacks on parts of the two complaints which raised very similar issues. The foregoing constitutes substantial evidence plaintiffs were prejudiced by the much delayed filing of defendant's motion to compel arbitration. (Christensen v. Dewor Developments (1983) 33 Cal.3d 778, 784; Roberts v. El Cajon Motors, Inc., supra, 200 Cal.App.4th at p. 839 & fn. 4; Augusta v. Keehn & Associates (2011) 193 Cal.App.4th 331, 340-342; Burton v. Cruise (2010) 190 Cal.App.4th 939, 942-943; Adolph v. Coastal Auto Sales, Inc. (2010) 184 Cal.App.4th 1443, 1451-1452; McMillin Dev. v. Home Buyers Warranty (1998) 68 Cal.App.4th 896, 910.)

We need not further discuss the parties' preemption contentions. (AT&T Mobility LLC v. Concepcion, supra, 563 U.S. at p.___ [131 S.Ct. at p. 1748]; Brown v. Ralph's Grocery Co., supra, 197 Cal.App.4th at pp. 496-503.) Further, we need not discuss the effect of defendant's failure to provide settled statements of the first three case management conferences and transcripts of the demurrer hearings. (Maria P. v. Riles (1987) 43 Cal.3d 1281, 1295; In re Kathy P. (1979) 25 Cal.3d 91, 102.)

The order under review is affirmed. Plaintiffs, Deborah Rosenloev and Anthony Marks, shall recover their costs on appeal from defendant, 24 Hour Fitness USA, Inc.

KRIEGLER, J. and KUMAR, J.* concurs.

FootNotes


* Judge of the Los Angeles Superior Court, assigned by the Chief Justice pursuant to article VI, section 6 of the California Constitution.
Source:  Leagle

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