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Date: 05-29-2019
Case Style: Xavier Nunez v. Nevell Group, Inc.
Case Number: G056585
Judge: Fybel, J.
Court: California Court of Appeals Fourth Appellate District, Division Three on appeal from the Superior Court, County of Orange
Plaintiff's Attorney: Scott K. Dauscher and Amber S. Healy
Defendant's Attorney: James Hawkins, Christina Lucio, Ryan H. Wu, John E. Stobart and Bevin Allen Pike
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Nevell Group, Inc. (Nevell) filed a motion to compel arbitration of the
claims filed against it by former employee Xavier Nunez. Nevell and the union to which
Nunez belonged were parties to a collective bargaining agreement (CBA) that provided
for arbitration of alleged violations of the relevant wage order. The trial court denied the
motion based on Nevell’s waiver of its right to compel arbitration, Nevell’s delay in
filing its motion, and the prejudice Nunez would suffer if the motion were to be granted.
We affirm.
Nevell explicitly waived any right to compel arbitration by advising the
trial court in writing that it would not file a motion to compel. Nevell also impliedly
waived arbitration by permitting two court-ordered deadlines, by which it was to have
filed a motion to compel, to pass, and by engaging in significant discovery and other
litigation activities inconsistent with the right to arbitration. Nevell argues that he could
not have filed a motion to compel arbitration before the Court of Appeal issued its
opinion in Cortez v. Doty Bros. Equipment Co. (2017) 15 Cal.App.5th 1 (Cortez). We
reject that argument because Cortez does not reflect a change in the law.
Nunez would suffer prejudice if Nevell’s motion to compel arbitration were
granted at this point because Nevell’s delay in seeking to compel arbitration
unnecessarily extended the time the case was pending and caused Nunez to expend
resources on litigation activities inconsistent with arbitration, such as class-based
discovery, the preparation of a demand package based on a class action, and preparing
and serving notice to the putative class members. Nevell delayed the filing of its motion
to compel arbitration for more than three years after the complaint was filed, and more
than eight months after the Cortez case was filed.
3
STATEMENT OF FACTS AND PROCEDURAL HISTORY
I.
THE COLLECTIVE BARGAINING AGREEMENT
Nevell is a commercial construction contractor. From October 2014 to
March 2015, Nunez was employed by Nevell as a stocker-scrapper. Nunez was a
member of the United Brotherhood of Carpenters and Joiners of America through his
affiliation with the Southwest Regional Council of Carpenters, Local No. 2361 (the
Carpenters Union).
Nevell is a member of the Western Wall & Ceiling Contractors
Association, Inc., a trade organization. Through its membership in this trade
organization, Nevell is a signatory to a CBA with the Carpenters Union (the agreement).
The agreement provides, in relevant part: “Section 12. Wage Order 16 of the Industrial
Welfare Commission of the State of California, Department of Industrial Relations, is
incorporated herein in its entirety. Any alleged violations of Wage Order 16 shall be
subject to the grievance and arbitration provisions of Article VIII of this Agreement.”
The agreement also provides for arbitration of all disputes, grievances, or questions
arising under the agreement (with exceptions not relevant here). Any arbitration award
would be final and binding, and the agreement provides that the arbitration award would
be enforceable by means of a petition to confirm.
II.
APRIL 2015 THROUGH APRIL 2016— COMPLAINT FILED; NEVELL MISSES TWO
COURT-ORDERED DEADLINES TO FILE A MOTION TO COMPEL ARBITRATION
In April 2015, Nunez filed a complaint against Nevell, which was twice
amended. As amended, the complaint alleged violations of the Labor Code due to unpaid
minimum wages, unpaid overtime, failure to provide meal periods, failure to authorize
and provide rest periods, failure to provide compliant wage statements, failure to timely
pay wages owed at separation, and unreimbursed business-related expenses. The
4
amended complaint also alleged unlawful and unfair business practices in violation of
Business and Professions Code section 17200 and a claim under the Private Attorneys
General Act of 2004 (Lab. Code, § 2698). Nunez sought to represent a putative class of
more than 2,500 hourly, nonexempt workers employed by Nevell during the class period.
The case was stayed until the initial case management conference in
November 2015, at which time Nevell represented that Nunez “was a union employee
covered by a collective bargaining agreement that specifically exempted Nevell from the
meal period and rest break requirements [and] that Nevell would seek to enforce the
collective bargaining agreement and compel individual arbitration of [Nunez]’s claims.”
The trial court ordered Nevell “to file its motion to enforce the collective bargaining
agreement by January 19, 2016,” and continued the stay on discovery through that date.
In a letter dated December 18, 2015, Nevell’s counsel demanded arbitration
pursuant to the CBA. Nunez’s counsel refused the demand on January 13, 2016. Nevell
did not file a motion to compel arbitration by the court-imposed deadline, and Nunez
served discovery demands after the stay on discovery lifted.
Before the second status conference, Nevell stated in writing: “Defendant
is electing at this juncture to move forward on its motion to compel arbitration and will
file the petition to compel arbitration prior to the status conference and will seek to have
the court stay all proceedings pursuant to Code of Civil Procedure section 1281.4.”
Nunez responded that because the trial court’s deadline for filing a motion to compel
arbitration had passed, the motion was untimely.
At the status conference, Nunez informed the trial court he intended to file
an amended complaint. Nevell advised the court “a motion to compel [arbitration] may
be filed.” The court continued the status conference. The court’s notice of ruling states,
in relevant part: “The Court expects that the . . . amended complaint and the motion to
compel arbitration will be filed prior to the hearing; if the documents have not been filed,
counsel are to explain to the Court why they have not been filed.”
5
III.
APRIL 2016—NEVELL ADVISES TRIAL COURT IN WRITING IT WILL NOT SEEK ARBITRATION;
THE PARTIES CONDUCT CLASS DISCOVERY
In the third joint status conference statement, filed in April 2016, Nevell
stated: “Defendant has elected not to proceed with the petition to compel arbitration.”
Nunez’s motion for leave to file an amended complaint was granted over
Nevell’s opposition, and the second amended complaint was filed in June 2016. Nevell
filed a motion to strike the new allegations of the second amended complaint, which the
court denied. Nevell filed an answer to the second amended complaint; one of the
affirmative defenses alleged was that the claims properly belonged in arbitration.
The parties participated in a fourth case management conference in
August 2016. Nevell did not mention filing a motion to compel arbitration in the parties’
joint statement. The parties engaged in discovery, including class discovery. Nunez filed
motions to compel discovery responses in November 2016. Nunez withdrew the
motions, without prejudice, when Nevell agreed to produce documents and contact
information for putative class members. However, when Nevell refused to produce
information for all the putative class members, Nunez renewed his motions to compel
discovery, which were granted in October 2017.
IV.
AUGUST 2017—CORTEZ OPINION ISSUED; OCTOBER 2017 THROUGH MARCH 2018—
DISCOVERY MOTIONS, NOTICE PROVIDED TO PUTATIVE CLASS, PARTIES PARTICIPATE IN
MEDIATION
On August 15, 2017, the Court of Appeal, Second District, Division Seven,
issued its opinion in Cortez, supra, 15 Cal.App.5th 1. The court held that the “clear and
unmistakable” language of the arbitration clause in the collective bargaining agreement at
issue in that case covered the wage and hour claims asserted by the plaintiff employee.
6
(Id. at p. 14.) The opinion was published on September 1, 2017, and became final
October 1, 2017. (Cal. Rules of Court, rules 8.264(b)(3), (c)(2), 8.500.)
In October 2017, the court granted Nunez’s motion to compel production of
contact information for the entire putative class. When Nevell again failed to provide the
information, Nunez applied ex parte in December 2017 for an order compelling
production of the information. At the hearing on the ex parte application, the court
ordered Nunez to file the class certification motion by June 8, 2018. In December 2017,
Belaire-West notice1
was sent to 2,686 putative class members through a third party
administrator.
In March 2018, the parties attended a mediation session. In preparation for
the mediation, Nunez hired an expert to analyze the value of the case as a class action in
order to prepare a demand package. The mediation did not resolve the litigation. The
parties split the mediator’s fees equally.
Nunez filed a motion for sanctions against Nevell due to Nevell’s failure to
comply with the October 2017 discovery order. Nevell filed written opposition to the
motion for sanctions.
V.
APRIL 2018—NEVELL FILES MOTION TO COMPEL ARBITRATION
On April 26, 2018, the night before the hearing on the motion for sanctions,
Nevell filed a motion to compel arbitration. The sanctions motion nevertheless went
forward, and the trial court awarded sanctions in the amount of $3,300 against Nevell for
“evasive” conduct and for violating the discovery order.
1
“Belaire-West notice” refers to an opt-out notice sent to potential class members in
representative actions. The notice is designed to protect the privacy rights of third parties
and allow the recipient to object in writing to prevent his or her information from being
disclosed to the party seeking discovery. (Belaire-West Landscape, Inc. v. Superior
Court (2007) 149 Cal.App.4th 554, 561.)
7
The trial court denied the motion to compel arbitration. The court found
that Nevell “acted inconsistently with its right to compel arbitration resulting in prejudice
to the Plaintiff.” The court also found that Nunez would suffer significant prejudice if the
motion were to be granted: “Plaintiff has propounded substantial discovery, Defendant
has filed and opposed multiple motions, including motions to compel discovery and other
motions/applications by Plaintiff, the parties sent out Belaire-West notices, and also
engaged in private mediation regarding class claims.” Nevell filed a notice of appeal.
DISCUSSION
“On petition of a party to an arbitration agreement alleging the existence of
a written agreement to arbitrate a controversy and that a party to the agreement refuses to
arbitrate that controversy, the court shall order the petitioner and the respondent to
arbitrate the controversy if it determines that an agreement to arbitrate the controversy
exists, unless it determines that: [¶] . . . The right to compel arbitration has been waived
by the petitioner.” (Code Civ. Proc., § 1281.2, subd. (a).)
Because the facts relating to the issue of alleged waiver are undisputed, we
review the trial court’s order denying the motion to compel arbitration de novo.
(St. Agnes Medical Center v. PacifiCare of California (2003) 31 Cal.4th 1187, 1196
(St. Agnes).)
“State law, like the FAA, reflects a strong policy favoring arbitration
agreements and requires close judicial scrutiny of waiver claims. [Citation.] Although a
court may deny a petition to compel arbitration on the ground of waiver [citation],
waivers are not to be lightly inferred and the party seeking to establish a waiver bears a
heavy burden of proof.” (St. Agnes, supra, 31 Cal.4th at p. 1195.) The following factors
are relevant to the court’s determination of whether Nevell waived its right to compel
arbitration: (1) whether Nevell’s actions are inconsistent with the right to arbitrate;
(2) whether litigation procedures had been “‘substantially invoked’” before Nevell
8
notified Nunez of its intent to arbitrate; (3) whether the motion to compel arbitration was
filed close to the trial date, or after a long delay; (4) whether Nevell filed a counterclaim
without seeking a stay; (5) whether “‘important intervening steps’” had taken place,
including but not limited to conducting discovery not available in arbitration; and
(6) whether the delay in seeking arbitration prejudiced Nunez. (Id. at p. 1196.)
Nevell’s written election not to proceed with the filing of a petition to
compel arbitration was an explicit waiver of its right to arbitrate Nunez’s claims.
Notably, that explicit waiver occurred after Nevell had demanded in writing that Nunez
submit his claims to arbitration and twice advised the trial court in writing that it would
be filing a motion to compel, only to miss the court-imposed deadline both times.
Nevell contends that this waiver was not really a waiver because it could
not have succeeded on a motion to compel arbitration before the issuance of the opinion
of the Court of Appeal in Cortez, supra, 15 Cal.App.5th 1. Nevell contends that Cortez
reflected a change in the law.
To the contrary, the Cortez court made clear that the only way to interpret
the agreement’s language requiring arbitration for wage order claims, when such claims
must be brought under the Labor Code, is to conclude that the agreement to arbitrate
applies to Labor Code claims. “While recognizing that provision[2]
clearly and
unmistakably requires arbitration of claims arising under the wage order, Cortez insists
he brought his claims under the Labor Code, not the wage order. Therefore, he asserts,
his Labor Code claims are not subject to arbitration. [¶] Cortez’s argument has some
superficial appeal. The Labor Code is not mentioned in the CBA, and no extrinsic
evidence was offered to explain that omission. Ordinarily, as we stated in Mendez [v.
2
The language of the clause requiring arbitration of Wage Order No. 16 claims at issue
in Cortez is substantively similar to the language at issue here: “The CBA governing
Cortez’s employment provided that ‘[a]ny dispute or grievance arising from this Wage
Order 16[] shall be processed under and in accordance with’ the arbitration procedure
outlined in article V of the CBA.” (Cortez, supra, 15 Cal.App.5th at p. 13.)
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Mid-Wilshire Health Care Center (2013) 220 Cal.App.4th 534, 541], the failure to cite
the statute at issue in the arbitration provision itself is fatal to any claim that the waiver of
the right to enforce the statute in court is clear and explicit. [Citations.] [¶]
Nonetheless . . . the agreement to arbitrate claims ‘arising under’ Wage Order 16 is clear
and unmistakable. Although the Labor Code is not specifically mentioned, we cannot
disregard the reality that an employee may enforce the protections of the wage order in
court only by bringing a claim under the Labor Code. (Flowers v. Los Angeles County
Metropolitan Transportation Authority (2015) 243 Cal.App.4th 66, 74 . . . [there is no
private right of action to enforce wage order; employee must rely on Lab. Code sections
that require compliance with the wage order to enforce its terms]; Thurman v. Bayshore
Transit Management, Inc. (2012) 203 Cal.App.4th 1112, 1132 . . . [same].) As the
Supreme Court observed in an analogous context, employers and employees become
subject to the Labor Code requirements for minimum wage ‘only under the terms of an
applicable wage order[;] and an employee who sues [under the Labor Code] to recover
unpaid minimum wages actually and necessarily sues to enforce the wage order.’
(Martinez v. Combs (2010) 49 Cal.4th 35, 57 . . . ; accord, Flowers, supra, 243
Cal.App.4th at p. 86.) To hold that wage and hour disputes arising under Wage Order 16
are arbitrable under the CBA only in theory, but not in practice because they are, by
necessity, brought under the Labor Code, would result in the very absurdity courts are
required to avoid.” (Cortez, supra, 15 Cal.App.5th at pp. 13-14, fn. omitted.)
The cases Nevell cites do not support its argument that Cortez reflected a
change in the law and are factually distinguishable. Significantly, none held that a CBA
requiring arbitration for wage order claims did not cover claims asserted under the Labor
Code for actions violating the relevant wage order. In Vasquez v. Superior Court (2000)
80 Cal.App.4th 430, the CBA provided that the employer would not discriminate against
any employee based on race, color, religion, sex, age, or national origin, and that the
employer would make a good faith effort to be an equal opportunity employer. (Id. at
10
p. 433.) That agreement also provided that all grievances or disputes arising from the
interpretation or application of the agreement would be resolved by the agreement’s
grievance procedures. (Ibid.) Finally, the agreement provided that the grievance
procedures would culminate in mandatory, binding arbitration. (Ibid.)
The Vasquez court concluded that the plaintiff’s claims for disability
discrimination under the Americans with Disabilities Act, disability and national origin
discrimination under the California Fair Employment and Housing Act, and retaliatory
harassment were not subject to the agreement’s grievance procedures. “Neither disability
discrimination, the FEHA, nor the ADA is mentioned in the CBA. Thus, we cannot
conclude that the union clearly and unmistakably waived Vasquez’s right to a judicial
forum for his statutory disability discrimination claim. The general language of the CBA
is simply insufficient.” (Vasquez v. Superior Court, supra, 80 Cal.App.4th at p. 436.)
“[T]here is a contractual commitment not to discriminate on the basis of national origin,
but there is no express provision that the antidiscrimination commitment is subject to the
grievance and arbitration provisions. Nor are the ADA and the FEHA explicitly
incorporated in the CBA. Indeed, these statutes are not even mentioned. There is of
course the general language making all contractual disputes subject to the grievance and
arbitration procedure. . . . [W]ith respect to statutory discrimination claims, there is no
presumption of arbitrability and the waiver of a judicial forum must be clear and
unmistakable.” (Ibid.)
The CBA in Vasserman v. Henry Mayo Newhall Memorial Hospital (2017)
8 Cal.App.5th 236, provided for binding arbitration as the final step in a three-stage
grievance procedure. The portion of that CBA addressing compensation did not
reference any statutes, and did not address the CBA’s grievance procedures. The
provision of that CBA addressing meal and rest periods provided the employer would
comply with the applicable wage order and pay penalties due under the wage order for
meal or rest period violations, and that the failure to pay such penalties would permit the
11
employee to pursue his or her remedies under the grievance procedures. (Id. at
pp. 240-241.) The only reference to the wage orders in the agreement was a specific
reference to the employer’s agreement to pay penalties required under the agreement, the
wage order or the Labor Code. (Id. at p. 249.) As the court noted, the “agreement to pay
a penalty required by law is not the same thing as a union’s agreement to waive
members’ rights to a judicial forum for statutory violations.” (Ibid.)
The federal district court cases Nevell cites are not binding. Federal
decisional authority does not bind the California Courts of Appeal on matters of state
law. (People v. Avena (1996) 13 Cal.4th 394, 431; Golba v. Dick’s Sporting Goods, Inc.
(2015) 238 Cal.App.4th 1251, 1269.)
Nevell delayed filing its motion to compel arbitration in two different ways.
First, the motion to compel was filed in April 2018, three years after the complaint was
filed. Second, Nevell filed its motion to compel arbitration more than eight months after
the Cortez opinion was issued.
Nunez was unquestionably prejudiced by Nevell’s late decision to file a
motion to compel arbitration. Nevell twice advised the trial court, in writing, that it
intended to file a motion to compel. On both occasions, the trial court stayed the
litigation, which ultimately had no effect but to delay the case because Nevell allowed the
time to pass without filing a motion. After Nevell specifically waived its right to seek to
compel arbitration, class discovery was conducted, Nunez filed discovery motions, and
the parties sent Belaire-West notice to all putative class members. Nunez also hired an
expert to analyze time and pay records in order to determine the value of the case as a
class action, not an individual action. The expert’s work was the basis for the demand
package prepared for and used at the unsuccessful mediation session. Nunez expended
significant time and money on these matters.
Outcome: The order is affirmed. Respondent to recover costs on appeal.
Plaintiff's Experts:
Defendant's Experts:
Comments: