BOREN, P. J.—
The individual respondents are truck drivers who entered into "Independent Contractor Agreements" with appellant. After the individual respondents filed wage claims against appellant, appellant petitioned to compel arbitration based on arbitration provisions in the agreements. The trial court denied the petition, ruling that the agreements were exempt from the Federal Arbitration Act (9 U.S.C. § 1 et seq.) (FAA) because the individual respondents were transportation workers and arbitration was not compelled under California law. The trial court also found that the arbitration provisions did not apply to the individual respondents' claims.
Appellant Performance Team Freight Systems, Inc. (Performance Team), is a motor carrier company involved in warehousing, shipping, and distributing merchandise from the Ports of Long Beach and Los Angeles to locations throughout California and the United States. The individual respondents
At various points in 2012 through 2014, the individual respondents filed wage claims for unreimbursed business expenses and improper deductions with California's Division of Labor Standards Enforcement (DLSE). Respondent Julie Su is California's Labor Commissioner, head of the DLSE, which investigates wage claims filed by California workers. (Lab. Code, § 98, subd. (a).) Following the filing of a wage claim, the commissioner may either accept the matter and conduct an administrative hearing (commonly known as a "Berman hearing"), prosecute a civil action for collection of wages and other money due employees, or take no further action. (Post v. Palo/Haklar & Associates (2000) 23 Cal.4th 942, 946 [98 Cal.Rptr.2d 671, 4 P.3d 928].) In matters where a Berman hearing is held, the commissioner determines whether the claimant was an employee, and issues an order, decision, or
In this matter, the commissioner set hearings for the individual respondents' wage claims. In July 2014, however, prior to commencement of the Berman hearings, Performance Team filed in the superior court a petition to compel arbitration and motion to stay the Berman hearings. Performance Team asserted that each of the individual respondents entered into "Independent Contractor Agreements" that set forth the terms of trucking services to be provided to Performance Team. The agreements contained an arbitration provision stating: "Any dispute between the parties with respect to the interpretation or the performance of the terms of this Agreement may be submitted to arbitration by reason of either party giving written notice of its desire for arbitration to the other party."
Performance Team argued that the subject agreements were governed by the FAA, and that the individual respondents' claims fell within the scope of the arbitration provision and were subject to arbitration. In moving for arbitration, Performance Team submitted copies of each of the agreements signed by the individual respondents. Performance Team also submitted the declaration of its driver manager. The declaration discussed the work performed by the individual respondents and circumstances surrounding the execution of the subject agreements.
The commissioner filed opposition papers to Performance Team's petition. The commissioner argued that the claims asserted by the individual respondents were not covered by the arbitration provision, that the individual respondents were exempt from the FAA because they were transportation workers, and that, in any event, the agreements were unconscionable.
The individual respondents filed a response to Performance Team's petition, generally denying all contested allegations, but the individual respondents did not file a formal opposition. Nor did they submit declarations or present evidence in opposition to the petition.
The trial court denied Performance Team's petition to compel arbitration and its request to stay the Berman hearings. The court found that the individual respondents were exempt from the FAA and that, in any case, the wage claims were not covered by the arbitration provision.
Performance Team timely appealed.
Truck drivers who cross interstate lines usually are considered transportation workers. "`The most obvious case where a plaintiff falls under the FAA exemption is where the plaintiff directly transports goods in interstate, such as [an] interstate truck driver whose primary function is to deliver mailing packages from one state into another.'" (Veliz v. Cintas Corp. (N.D.Cal., Apr. 5, 2004, No. C 03-1180 SBA) 2004 U.S.Dist. Lexis 32208, p. *18 (Veliz).) "[T]he FAA is inapplicable to drivers . . . who are engaged in interstate commerce." (Harden v. Roadway Package Systems, Inc. (9th Cir. 2001) 249 F.3d 1137, 1140 (Harden).)
It is not clear, however, that the individual respondents were transportation workers under section 1. There is no evidence in the record that the individual respondents ever provided interstate trucking services to Performance Team; rather, the parties agree that the individual respondents' routes were relatively short and to destinations within California. The commissioner argues that, by transporting international cargo from the Ports of Long Beach and Los Angeles to destinations within California, the individual respondents were transportation workers involved in interstate or foreign commerce. Performance Team counters that, because the individual respondents worked exclusively within California, they were not engaged in foreign or interstate commerce.
We need not determine whether the individual respondents were transportation workers under section 1, though, because we find there is insufficient evidence to establish the other component of section 1—that the subject agreements were "contracts of employment."
The only evidence relevant to the issue of whether the individual respondents entered into contracts of employment was presented by Performance Team, which submitted the subject agreements and the declaration of its driver manager.
A number of cases have examined the effect of similar agreements characterizing truck drivers as independent contractors. The majority of these cases have held that the agreements should not be deemed "contracts of employment" unless the party opposing arbitration demonstrates that they are such. (Swift, supra, 288 F.Supp.2d 1033, 1035-1036; Villalpando v. Transguard Ins. Co. of America (N.D.Cal. 2014) 17 F.Supp.3d 969, 982 (Villalpando); Alvarado v. Pacific Motor Trucking Co. (C.D.Cal., Aug. 7, 2014, No. EDCV 14-0504-DOC (DTBx)) 2014 U.S.Dist. Lexis 109740, pp. *10-*12 (Alvarado); Owner-Operator Independent Drivers v. United Van Lines, LLC (E.D.Mo., Nov. 15, 2006, No. 4:06CV219 JCH) 2006 U.S.Dist. Lexis 97022, *7-*10; Port Drivers Federation 18, Inc. v. All Saints Express, Inc. (D.N.J. 2011) 757 F.Supp.2d 463, 471-472; Carney v. JNJ Express, Inc. (W.D.Tenn. 2014) 10 F.Supp.3d 848, 852-854.) This line of cases has held that "`unless the non-moving party proves to the Court that the FAA does not apply, the court should apply the characterization of the relationship described in the agreement and find that [the non-moving party] characterized as an independent contractor does not have a contract of employment with the carrier.'" (Alvarado, supra, 2014 U.S.Dist. Lexis 109740 at p. *11.) This standard "`effectuates the FAA's goals'" because it "`not only furthers the
Here, only minimal evidence was presented to the trial court relevant to the issue of whether the subject agreements were contracts of employment. The
In sum, although an agreement of the sort here does not definitively establish an independent contractor relationship, it does weigh in favor of a conclusion that the agreement is not a contract of employment under section 1. Absent any countervailing evidence, we find that respondents failed to meet their burden in demonstrating that the section 1 exemption should apply. Therefore, the trial court erred by finding that the subject agreements were not governed by the FAA.
The arbitration provision in the subject agreements states: "Any dispute between the parties with respect to the interpretation or the performance of the terms of this Agreement may be submitted to arbitration by reason of either party giving written notice of its desire for arbitration to the other party. Said notice shall provide for each party to appoint an arbitrator, and a third (but no more than three [3]) arbitrator shall be selected by the two arbitrators and the majority decision of the arbitrators shall be final and binding on all parties. Any arbitration shall be conducted in Los Angeles, California, in accordance with the provisions of Title IX of the California Code of Civil Procedure, Section 1280 et seq. The costs of any such arbitration shall be shared equally by the parties." (Italics added.)
The commissioner argues that the individual respondents' claims against Performance Team—wage claims requiring a determination of whether Performance Team correctly classified respondents as independent contractors rather than employees under California law—are not disputes "with respect to the interpretation or the performance of the terms of" the agreements. The commissioner characterizes the scope of the arbitration provision as "narrow" and contends there is no controversy as to the terms of the agreements themselves.
In Elijahjuan, a case relied on by the commissioner, which involved claims of alleged misclassification of employees as independent contractors, the arbitration provision applied to disputes regarding the "`application or interpretation' of the parties' contracts." 210 Cal.App.4th 15, 17.) Division Eight of this district found, in the majority opinion, that the lawsuit did "not concern the application or interpretation of the Agreements, but instead seeks to enforce rights arising under the Labor Code benefitting employees but not independent contractors." (Id. at p. 21.) The court determined that the ultimate conclusion of whether workers were employees or
In so deciding, the Elijahjuan court cited to Narayan v. EGL, Inc. (9th Cir. 2010) 616 F.3d 895, 899, a case involving misclassification claims but not an arbitration agreement. In finding that a choice-of-law provision regarding how the agreement would be "`interpreted and enforced'" did not apply to the plaintiffs' claims, the Narayan court wrote: "While the contracts will likely be used as evidence to prove or disprove the statutory claims, the claims do not arise out of the contract, involve the interpretation of any contract terms, or otherwise require there to be a contract." (Narayan, at p. 899.) The court noted, however, that the scope of the choice-of-law provision was "narrow." (Id. at p. 898.) Similarly, in Elijahjuan, the arbitration provision was "much more narrow and obviously differs from one encompassing `"any and all employment-related disputes."'" (Elijahjuan, supra, 210 Cal.App.4th at p. 24.)
In contrast, the language used in the arbitration provision here is not considered narrow. In AT&T Tech, the United States Supreme Court examined a provision nearly identical to the one in the subject agreements, that required arbitration of "`differences arising with respect to the interpretation of this contract or the performance of any obligation thereunder.'" (AT&T Tech, supra, 475 U.S. 643, 644-645.) The high court deemed the arbitration provision "broad." (Id. at p. 650.)
Division Eight of this district recently considered whether a broad arbitration provision covered misclassification claims in Khalatian v. Prime Time Shuttle, Inc. (2015) 237 Cal.App.4th 651 [188 Cal.Rptr.3d 113]. As in this case, the agreement at issue in Khalatian characterized the plaintiff as an independent contractor rather than an employee. The plaintiff alleged various Labor Code violations, asserting that an employer/employee relationship existed. (Id. at p. 655.) In finding arbitration required, the majority held: "Broad arbitration clauses such as this one are consistently interpreted as applying to extracontractual disputes between the contracting parties.... [¶] ... Given the preference for arbitration, and the broad language of the Agreement, plaintiff's claims that the Labor Code governs his compensation... fall within the ambit of the arbitration clause." (Id. at p. 660, citations omitted.)
The individual respondents' claims likewise fall within the broad scope of the arbitration provision here, as the parties have disputes "with respect to the interpretation or the performance of the terms" of the agreements. The individual respondents contend that they performed the trucking services
Therefore, the trial court erred by finding that the individual respondents' claims were outside the scope of the arbitration provision.
Finally, the commissioner contends that, even if arbitration would otherwise be compelled, the subject agreements are unenforceable because they are unconscionable. The party asserting the defense of unconscionability bears the burden of proof on the issue. (Sanchez v. Valencia Holding Co., LLC (2015) 61 Cal.4th 899, 910 [190 Cal.Rptr.3d 812, 353 P.3d 741] (Sanchez).)
"`"The prevailing view is that [procedural and substantive unconscionability] must both be present in order for a court to exercise its discretion to
The subject agreements contain terms that would support a finding of substantive unconscionability. The arbitration provision requires that costs of arbitration be shared equally by the parties. A provision can be substantively unconscionable if it imposes arbitration costs on an employee or similarly situated claimant that he or she would not bear when bringing the action in court. (Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83, 110 [99 Cal.Rptr.2d 745, 6 P.3d 669]; Carlson v. Home Team Pest Defense, Inc. (2015) 239 Cal.App.4th 619, 636 [191 Cal.Rptr.3d 29] (Carlson).) Furthermore, the arbitration provision does not provide for a proceeding similar to a Berman hearing within the context of arbitration. Waiver of the sort of protections afforded by a Berman hearing can support a finding of substantive unconscionability when the agreement "does not provide an employee with an accessible and affordable arbitral forum for resolving wage disputes." (Sonic II, supra, 57 Cal.4th 1109, 1146.)
The commissioner argues that the subject agreements were adhesive and were not negotiated by the parties. If true, the individual respondents' inability to negotiate the agreements, and any lack of meaningful choice as to the terms of the agreements or the opportunity to opt out of the agreements, could have been established by declaration or other evidence. But respondents did not submit any evidence pertaining to the circumstances surrounding
Other asserted signs of procedural unconscionability are likewise unsupported. The commissioner argues that "[n]one of the agreements appear to have been accompanied by Spanish-language translations, despite the language preference of the drivers." In support of this argument, the commissioner cites to the fact that the individual respondents requested Spanish translators for the Berman hearings. No evidence was presented, however, that the individual respondents did not understand the subject agreements, that they requested Spanish translations of the agreements, that they would have benefited from Spanish translations, or that translations were never provided. The commissioner also contends that the Code of Civil Procedure was not attached to or explained in the agreements, even though it was referenced in the arbitration provision as establishing rules for arbitration. But there is no evidence regarding the extent of materials respondents received from Performance Team, and, again, given the evidence (or lack thereof), it is possible that copies of relevant code provisions were supplied.
Absent any evidence, we cannot just assume there was procedural unconscionability. The commissioner cites to three cases that she contends support her position: Carmona v. Lincoln Millennium Car Wash, Inc. (2014) 226 Cal.App.4th 74 [171 Cal.Rptr.3d 42], Samaniego v. Empire Today, LLC (2012) 205 Cal.App.4th 1138 [140 Cal.Rptr.3d 492], and Ajamian v. CantorCO2e, L.P. (2012) 203 Cal.App.4th 771 [137 Cal.Rptr.3d 773]. In each of these cases, the party opposing arbitration submitted evidence tending to show procedural unconscionability. (See Carmona, at pp. 80-81 [evidence presented that plaintiffs could not read English, were not given opportunity to negotiate, and understood that they could not work at car wash without signing the documents given to them]; Samaniego, at pp. 1145-1146 [evidence that plaintiffs could not read English, plaintiffs requested but were not given Spanish translations of documents, and plaintiffs were required to sign documents in order to work]; Ajamian, at p. 796 [plaintiff submitted declaration that she wanted to make changes to employment agreement, but was told she had to sign agreement to receive bonus and salary increase].) No evidence demonstrating procedural unconscionability was presented here.
With no showing of procedural unconscionability, the subject agreements cannot be deemed unenforceable due to unconscionability.
The trial court's order denying appellant's petition to compel arbitration is reversed. The case is remanded to the trial court with directions to enter a new order granting the petition to compel arbitration. Appellant is awarded costs on appeal.