O'ROURKE, J. —
Securitas Security Services USA, Inc. (Securitas), petitions for a writ of mandate and/or prohibition challenging the superior court's order granting its amended motion to compel arbitration in which the court ordered the parties to arbitrate all of real party in interest Denise Edwards's claims, including her class action and representative claims under the Labor Code Private Attorneys General Act of 2004 (PAGA) (Lab. Code, § 2698 et seq.). Securitas contends the court impermissibly rewrote the parties' written dispute resolution agreement, which contained an express waiver of class, collective or representative claims; it argues the parties did not mutually agree to arbitrate class and/or representative claims and the agreement should have been deemed silent on arbitration of any class or representative action. It further contends the court erred by refusing to enforce the lawful class action waiver, as well as the PAGA waiver, because as to the latter, Edwards's waiver was voluntary, rendering the circumstances unlike those in Iskanian v. CLS Transportation (2014) 59 Cal.4th 348 [173 Cal.Rptr.3d 289, 327 P.3d 129] (Iskanian), certiorari denied sub nom. CLS Transportation Los Angeles v. Iskanian (2015) 574 U.S. ___ [190 L.Ed.2d 911, ___ S.Ct. ___]. Securitas argues that because Iskanian does not apply, the parties' arbitration agreement should be enforced in its entirety as to Edwards's individual claims.
We conclude the trial court correctly ruled thatIskanian rendered the PAGA waiver within the parties' dispute resolution agreement unenforceable. However, the court then erred by invalidating and severing the waiver provision, including an enforceable class action waiver, from the agreement and sending Edwards's entire complaint, including her class action and PAGA claims, to arbitration. Under the plain language of the parties' agreement, in the event Edwards sought to arbitrate a PAGA claim, her PAGA waiver (or any other waiver of the right to bring a dispute as a class or collectively) was not severable from the remainder of the agreement, thus rendering the entire dispute resolution agreement unenforceable and precluding the court from requiring the parties to arbitrate their disputes. Though we grant Securitas's petition to the extent it seeks to set aside the order compelling Edwards's
Securitas provides specialized security services throughout the United States. In June 2011, Edwards, a Securitas employee, signed an acknowledgment of receipt of Securitas's dispute resolution agreement, which was eventually placed in her personnel file. Though the dispute resolution agreement gives employees 30 days to opt out of the agreement,
The dispute resolution agreement provides in part: "This Agreement applies to any dispute arising out of or related to Employee's employment with Securitas .... Except as it otherwise provides, this Agreement is intended to apply to the resolution of disputes that otherwise would be resolved in a court of law, and therefore
Finally, the dispute resolution agreement contains the following severability clause in paragraph No. 10: "In the event any portion of this Agreement is deemed unenforceable, the remainder of this Agreement will be enforceable. If the Class Action Waiver is deemed to be unenforceable, [Securitas] and [Edwards] agree that this Agreement is otherwise silent as to any party's ability to bring a class, collective or representative action in arbitration."
In 2013, Edwards sued Securitas in the San Diego Superior Court, and eventually filed a first amended class action complaint alleging Securitas failed to provide all legally required meal and rest breaks to employees and failed to itemize missed meal breaks on wage statements. She sought restitution and injunctive relief under the unfair competition law (UCL; Bus. & Prof. Code, § 17200 et seq.), damages (Lab. Code, § 226), and a representative claim for civil penalties under the PAGA.
Securitas moved to compel arbitration and stay proceedings first in February 2014, and then via an amended motion filed in August 2014, addressing the California Supreme Court's opinion in Iskanian, supra, 59 Cal.4th 348. It asked the trial court to (1) compel Edwards to arbitrate her individual claims; (2) dismiss and/or sever and stay her class claims; and (3) dismiss and/or stay her PAGA claim. Alternatively, it asked the court to sever and stay Edwards's PAGA claim under Code of Civil Procedure section 1281.2. Securitas argued that the Federal Arbitration Act (9 U.S.C. § 1 et seq.; (FAA) required enforcement of Edwards's voluntary agreement to arbitrate her claims on an individual basis, and that the dispute resolution agreement required her class and PAGA claims be dismissed. It argued that Iskanian held agreements containing class action waivers were enforceable, and that Edwards's PAGA claim was an individual claim because Iskanian did not apply to voluntary agreements to arbitrate PAGA claims individually. It maintained that because Edwards was not compelled to agree to the dispute resolution agreement but voluntarily did so by not opting out, Iskanian did not govern, requiring enforcement of the dispute resolution agreement in its entirety. Securitas further challenged Iskanian's reasoning and viability under other United States Supreme Court precedent and federal preemptive rules.
In reply, Securitas argued in part that the dispute resolution agreement did not prohibit the court from severing and staying Edwards's PAGA claim and that a complete reading of the dispute resolution agreement, particularly the class action waiver provision of paragraph No. 4 with the severability provision of par. No. 10, made clear that the parties did not agree to arbitrate a PAGA claim, and it was this concept that could not be severed. According to Securitas, if the PAGA waiver was invalid or unenforceable, the proper forum for Edwards's PAGA claim was in court, and it asked for the PAGA claim to be severed and stayed during arbitration of Edwards's individual claims.
After hearing arguments on the matter, the court granted Securitas's motion to compel arbitration. It found "the parties entered into a valid and binding arbitration agreement and there is no contractual basis to revoke the agreement." It also found the agreement was "neither procedurally nor substantively unconscionable." However, it ruled Edwards's PAGA claim could not be waived, and that because paragraph No. 4's class action waiver provision sought to eliminate or abridge Edwards's right to litigate her PAGA claim, the provision was invalid. It further ruled that because the PAGA waiver was unenforceable as a matter of California law, the severability clause (par. No. 10) of the dispute resolution agreement applied. It ordered the parties to proceed with arbitration as to Edwards's entire complaint, including her PAGA claims, observing that Edwards had elected to resolve her PAGA claims in arbitration along with her class claims.
Securitas filed this petition for peremptory writ of mandate, prohibition or review seeking an immediate stay and (1) compelling the trial court to set aside the portion of its order sending Edwards's class action and PAGA claims to arbitration and (2) compelling the court to issue a new order enforcing the dispute resolution agreement's class action and/or PAGA waivers or alternatively to sever those claims and stay them pending arbitration of Edwards's individual claims. We issued an order to show cause, stayed the trial court's order and the parties' arbitration, and deemed, absent
"When `the language of an arbitration provision is not in dispute, the trial court's decision as to arbitrability is subject to de novo review.' [Citation.] Thus, in cases where `no conflicting extrinsic evidence is introduced to aid the interpretation of an agreement to arbitrate, the Court of Appeal reviews de novo a trial court's ruling on a petition to compel arbitration.'" (Molecular Analytical Systems v. Ciphergen Biosystems, Inc. (2010) 186 Cal.App.4th 696, 707 [111 Cal.Rptr.3d 876]; see Rebolledo v. Tilly's, Inc. (2014) 228 Cal.App.4th 900, 912 [175 Cal.Rptr.3d 612] [where ruling on petition did not
Resolution of the issues presented in this writ in part depends on an understanding of the California Supreme Court's recent decision in Iskanian, so we discuss it in some detail. In Iskanian, an employee signed an agreement with his employer providing for binding arbitration of any and all claims arising out of his employment. (Iskanian, supra, 59 Cal.4th at p. 360.) The agreement contained a provision stating they agreed "`each will not assert class action or representative action claims against the other in arbitration or otherwise....'" (Iskanian, at pp. 360-361.)
The employee sued the employer, and after some maneuverings in the courts during which the California Supreme Court decided Gentry v. Superior Court (2007) 42 Cal.4th 443 [64 Cal.Rptr.3d 773, 165 P.3d 556] (Gentry),
The California Supreme Court addressed, among other things, whether the FAA preempted a state's refusal to enforce a provision in an arbitration agreement waiving the right to class action proceedings, and the viability of its holding in Gentry. (Iskanian, supra, 59 Cal.4th at p. 359.) It held that under Concepcion, the FAA preempted Gentry's rule, which had invalidated class waivers where "`a class arbitration is likely to be a significantly more effective practical means of vindicating the rights of the affected employees than individual litigation or arbitration....'" (Iskanian, 59 Cal.4th at pp. 363, 366.) Under Concepcion, state law rules against class action waivers, even if they have an exculpatory effect, are invalid because requiring the parties to engage in class arbitration or litigation after they had agreed to individual arbitration would interfere with the fundamental attributes of arbitration as a streamlined, efficient and less expensive dispute resolution mechanism. (Iskanian, at pp. 362-364.) Even where a class arbitration would be a more effective or practical means of vindicating the employee's rights, a state law rule against class action waivers "would still be preempted because states cannot require a procedure that interferes with fundamental attributes of arbitration `even if it is desirable for unrelated reasons.'" (Id. at p. 364, quoting Concepcion, supra, 563 U.S. at p. ___ [133 S.Ct. at p. 1753].)
Iskanian then turned to whether an employee's waiver of his or her right to bring a representative claim under the PAGA (which we refer to generally as a PAGA waiver) was permissible under California law, and if not, whether the FAA preempted a state law rule prohibiting such waivers. (Iskanian, supra, 59 Cal.4th at pp. 378, 372.) On that question, it held an employee's right to bring a PAGA claim was "unwaivable." (59 Cal.4th at p. 383.) The court announced its holding as follows: "As explained below, we conclude that an arbitration agreement requiring an employee as a condition of employment to give up the right to bring representative PAGA actions in any forum is contrary to public policy." (Id. at p. 360.)
The court explained that by enacting the PAGA, the Legislature declared that it was "in the public interest to allow aggrieved employees, acting as private attorneys general, to recover civil penalties for Labor Code violations, with the understanding that labor law enforcement agencies were to retain primacy over private enforcement efforts." (Iskanian, supra, 59 Cal.4th at p. 379.) Thus, under the PAGA, "`an "aggrieved employee" may bring a civil action personally and on behalf of other current or former employees to recover civil penalties for Labor Code violations. [Citation.] Of the civil
In view of the nature of a PAGA claim, the court held: "[W]here, as here, an employment agreement compels the waiver of representative claims under the PAGA, it is contrary to public policy and unenforceable as a matter of state law." (Iskanian, supra, 59 Cal.4th at p. 384.) It reasoned such an agreement would contravene two statutes undergirding the unwaivability of statutory rights, Civil Code sections 1668 and 3513,
Finally, Iskanian observed the rule against PAGA waivers did not frustrate the FAA's objectives because the FAA's aim was to ensure an efficient forum for resolution of private disputes, unlike a PAGA action, which constitutes a dispute between an employer and the Labor and Workforce Development Agency. (Iskanian, supra, 59 Cal.4th at p. 384.) "[A] PAGA claim lies outside the FAA's coverage because it is not a dispute between an employer and an employee arising out of their contractual relationship. It is a dispute between an employer and the state, which alleges directly or through its agents — either the Agency or aggrieved employees — that the employer has violated the Labor Code." (Iskanian, at pp. 386-387.) "There is no indication that the FAA was intended to govern disputes between the government in its law enforcement capacity and private individuals." (Id. at p. 385.) The court concluded: "Our FAA holding applies specifically to a state law rule barring predispute waiver of an employee's right to bring an action that can only be brought by the state or its representatives, where any resulting judgment is binding on the state and any monetary penalties largely go to state coffers." (Id. at p. 388, italics added.) Iskanian held that the employer could not compel the waiver of the employee's representative PAGA claim but that the agreement was otherwise enforceable according to its terms. (59 Cal.4th at p. 391.)
On January 20, 2015, the United States Supreme Court denied the petition for certiorari filed in CLS Transportation v. Iskanian, supra, 574 U.S. ___ [190 L.Ed.2d 911].
We begin with the parties' arguments concerning Iskanian and the enforceability of the dispute resolution agreement's class action and PAGA waiver.
Edwards does not dispute Securitas's arguments as to her ability to waive the right to bring class action claims. As to the validity of her PAGA waiver, however, she argues Iskanian is conclusive under these circumstances, that Iskanian holds that any prospective waiver of a party's right to bring a representative PAGA action — a waiver that occurs "before any dispute arises" — is against public policy and may not be enforced. In her return, Edwards points out that the statutes underlying Iskanian's reasoning, Civil Code sections 1668 and 3513, do not exempt contracts that are entered into voluntarily.
Iskanian does not involve an agreement with an opt-out provision, and thus does not squarely address the question. Indeed, nothing in Iskanian details the circumstances under which the plaintiff entered into this agreement. (Iskanian, supra, 59 Cal.4th at p. 360 [simply stating that "[i]n December 2004, Iskanian signed a `Proprietary Information and Arbitration Policy/Agreement'..."].) That the agreement in that case "compel[led] the waiver of representative claims under the PAGA" (id. at p. 384) says nothing about whether the plaintiff's agreement was entirely voluntary or was a condition precedent to his employment. Nevertheless, applying Iskanian's principles, we cannot hold that Edwards entered into an enforceable waiver of her right to bring a PAGA action by merely "opting in" to the arbitration agreement, i.e., by signing an acknowledgment of receipt and not telephoning the designated phone number to opt out within the designated period of time. Rather, as we explain, Iskanian compels us to conclude that the agreement's PAGA waiver violates public policy, notwithstanding the fact that Edwards was not required or compelled to enter into it as a condition of employment.
The significance of Edwards's decision not to opt out was that it manifested her acceptance of the dispute resolution agreement's benefits, consistent with the trial court's ruling that the agreement was validly entered into and binding on the parties. That was the point of the Ninth Circuit's decision on which Securitas urges us to rely, Johnmohammadi v. Bloomingdale's, Inc., supra, 755 F.3d at page 1074 ("By not opting out within the 30-day period, [the plaintiff] became bound by the terms of the arbitration agreement."). In Johnmohammadi, the sole question on review was whether a provision
The fact Edwards was given an opportunity to opt out of the agreement also may be an indication that the dispute resolution agreement was not an adhesion contract — that it was free from procedural unconscionability. (See Conception, supra, 563 U.S. at p. ___ [131 S.Ct. at p. 1746] [under 9 U.S.C. § 2 arbitration agreements may be invalidated by generally applicable contract defenses such as unconscionability]; Serpa v. California Surety Investigations, Inc. (2013) 215 Cal.App.4th 695, 704 [155 Cal.Rptr.3d 506].) But neither party raises these questions or challenges the court's rulings on them. Those matters — whether an agreement has been validly formed, and whether its terms are adhesive or unconscionable — are different from the determination of whether Edwards entered into a knowing and intelligent waiver of her right to bring a PAGA claim, notwithstanding she agreed to arbitrate disputes at the inception of her employment before any dispute had arisen, or whether Iskanian compels a conclusion that such a waiver is unenforceable as against public policy.
The consequence of Iskanian, supra, 59 Cal.4th 348, is that the dispute resolution agreement's PAGA waiver is unenforceable, while Edwards's waiver of her right to bring class action claims, which is contained in the same sentence in the dispute resolution agreement, is valid and enforceable. On these points, the trial court ruled: "[Edwards's] representative claims under PAGA cannot be waived.... Inasmuch as the `Class Action Waiver' contained in the dispute resolution agreement seeks to eliminate or abridge Plaintiff's right to litigate PAGA claims in a representative capacity, the Court finds the waiver to be invalid. [¶] Accordingly, since the waiver is unenforceable as a matter of California law, paragraph [No.] 10 of the dispute resolution agreement applies. [¶] The parties are ordered to proceed with arbitration as to plaintiff's entire complaint, including her PAGA claims. Based on plaintiff's counsel's representation at oral argument, plaintiff elects
Having concluded under Iskanian that the PAGA waiver within the dispute resolution agreement is not enforceable and upholding the court's ruling on that point, we must decide whether the court correctly severed the class action waiver and enforced the remainder of the agreement. Securitas argued below that the dispute resolution agreement allowed severance of Edwards's PAGA claim — that the bar against severability in the dispute resolution agreement applied only to the notion that the parties had not agreed to arbitrate a PAGA claim. Edwards argued to the contrary: that the inability to sever the PAGA waiver rendered the entire agreement unenforceable. The court's ruling as to severability therefore came at the parties' invitation. To the extent the court's action contradicted the dispute resolution agreement's provision that disputes "relating to [its] interpretation or application" were to be arbitrated, the parties invited the error. (See Norgart v. Upjohn Co. (1999) 21 Cal.4th 383, 403 [87 Cal.Rptr.2d 453, 981 P.2d 79] [doctrine of invited error rests on the principle that "`[w]here a party by his conduct induces the commission of error, he is estopped from asserting it as a ground for reversal' on appeal"].)
We reject Securitas's contention that the severability question is outside the scope of its writ, and that we should disregard Edwards's arguments because Edwards did not herself seek writ review of the trial court's order on that point or file a cross-petition.
Let a writ of mandate issue directing the superior court to (1) vacate its September 9, 2014 order that the parties proceed to arbitrate Denise Edwards's entire complaint and (2) enter a new order denying Securitas Security Services USA, Inc.'s amended motion to compel arbitration. In all other respects, the petition is denied. The stay issued on November 18, 2014, is vacated. The parties are to bear their own costs in this writ proceeding.
Nares, Acting P. J., and McIntyre, J., concurred.