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Date: 03-31-2019

Case Style:

Mel R. Bravo v. Radc Enterprises, Inc.

Case Number: B289506

Judge: Wiley, J.

Court: California Court of Appeals Second Appellate District, Division Eight on appeal from the Superior Court, County of Los Angeles

Plaintiff's Attorney: Bleau Fox, Martin R. Fox, Megan A. Childress, and Elizabeth M. Martin

Defendant's Attorney: Ann A. Hull and Joseph S. Socher

Description:




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This employment case concerns a choice-of-law clause in an
arbitration agreement. The trial court interpreted the clause to
mean some but not all individual employment claims must be
arbitrated. We conclude all of them must be arbitrated.
The facts are simple. RADC Enterprises, Inc. hired Mel R.
Bravo to manage a store. The parties signed a two-page
arbitration agreement covering “all disputes” arising from the
employment relationship. On page two, near the end, the
agreement added a one-sentence choice-of-law provision: “This
Agreement shall be governed by and shall be interpreted in
accordance with the laws of the State of California.”
After RADC fired him, Bravo sued RADC on individual
employment claims, as well as on representative claims under
the Private Attorneys General Act of 2004 (PAGA). RADC moved
to stay Bravo’s PAGA claims and to compel arbitration on his
individual claims.
The trial court severed and stayed the PAGA claims. The
court found RADC engaged in interstate commerce and thus the
Federal Arbitration Act governed the agreement. But the court
compelled arbitration for only three of Bravo’s nine individual
claims, denying the arbitration motion on the remaining six
individual claims. The logic was that, while the Federal
Arbitration Act did apply, the choice-of-law sentence meant the
parties wanted California law to govern their relationship.
California Labor Code section 229 directs courts to disregard
agreements to arbitrate wage claims, so the trial court declined to
send Bravo’s remaining claims to arbitration. (Lab. Code, § 229.)
On appeal, RADC correctly contends the choice-of-law
provision did not mean the parties wanted to oust arbitration
from their arbitration agreement. RADC rightly says the trial
3
court should have sent all Bravo’s individual claims to
arbitration.
We independently review contract interpretation where, as
here, there is no extrinsic evidence about contract meaning and
the facts are undisputed.
As RADC correctly explains, the choice-of-law clause does
not remove any arbitration from this arbitration agreement. The
first textual clue is the title: “ARBITRATION AGREEMENT.”
This agreement is for arbitration and not against it.
The text of the agreement swiftly announces its objective:
the parties will arbitrate “any and all disputes” arising from
Bravo’s employment, “including any claims brought by the
Employee related to wages” under the California Labor Code.
The main point of the deal was to arbitrate all employment
disputes. The parties could not have intended to apply Labor
Code section 229 to this contract because that section prohibits
arbitrating wage claims and requires courts to disregard private
agreements to arbitrate. (Lab. Code, § 229.) Applying this
California law would contradict the parties’ intent to arbitrate
“any and all disputes,” including claims “related to wages . . . .”
Interpreting the choice-of-law provision to negate the
purpose of the two-page agreement is incorrect. Readers must
assume legal authors mean to draft texts that cohere. To assume
otherwise departs from common sense and makes mischief. So
we read documents to effectuate and harmonize all contract
provisions. (E.g., Mastrobuono v. Shearson Lehman Hutton, Inc.
(1995) 514 U.S. 52, 63.) Bravo’s interpretation of the choice-oflaw
provision in this agreement is untenable because it
unnecessarily sets one clause in conflict with the rest of the
agreement. (Id. at p. 64.)
4
The choice-of-law provision becomes consistent with the
parties’ intent to arbitrate all disputes when we read “the laws of
the State of California” to include substantive principles
California courts would apply, but to exclude special rules
limiting the authority of arbitrators. (See Mastrobuono, supra,
514 U.S. at pp. 63–64; Preston v. Ferrer (2008) 552 U.S. 346, 363.)
This arbitration agreement is like the one in Preston v. Ferrer,
which contained a similar choice-of-law provision. The Supreme
Court of the United States interpreted that agreement as we
interpret this one. (Id. at pp. 362–363.)
The trial court cited Mastick v. TD Ameritrade, Inc. (2012)
209 Cal.App.4th 1258, 1264, which does not apply here. Mastick
involved Code of Civil Procedure section 1281.2, subdivision (c).
That statute is not at issue here. The same goes for Volt
Information Sciences, Inc. v. Board of Trustees of Leland Stanford
Junior University (1989) 489 U.S. 468, 471, 475–477. Code of
Civil Procedure section 1281.2, subdivision (c) permits a court to
refuse to enforce an arbitration agreement or stay arbitration
pending resolution of related litigation between a party to the
arbitration agreement and third parties not bound by it, where
there is a possibility of conflicting rulings on a common issue of
law or fact. (Id. at p. 471.) There are no third parties in this
case. Cases dealing with this third-party statute do not apply
where there are no third parties.

Outcome: We affirm part of the trial court’s order and reverse part of it. We affirm the part severing the agreement provision requiring the parties to arbitrate the PAGA claims. We also affirm the order granting RADC’s motion as to three individual
claims. We reverse the order denying the motion as to the remaining six individual claims. RADC is awarded costs on appeal.

Plaintiff's Experts:

Defendant's Experts:

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