Filed 5/15/15 Khalatian v. Prime Time Shuttle CA2/8

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for 

publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication 

or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION EIGHT

VALO KHALATIAN,

Plaintiff and Respondent,

v.

PRIME TIME SHUTTLE, INC. et al.,

Defendants and Appellants.

 B255945

 (Los Angeles County

 Super. Ct. No. BC485917)

APPEAL from a judgment of the Superior Court of Los Angeles County, 

Suzanne G. Bruguera, Judge. Reversed.

Epstein Becker & Green, David Jacobs, William O. Stein and Rhea G. Mariano 

for Defendants and Appellants.

Law Office of Tony Forberg and Tony Forberg for Plaintiff and Respondent.

* * * * * *
2

Defendants Prime Time Shuttle, Inc. (Prime Time), Rideshare Airport 

Management, LLC, formerly known as Rideshare Port Management, LLC, and Rattan 

Joea appeal a trial court order denying their motion to compel arbitration of claims based 

on the alleged misclassification of plaintiff Valo Khalatian as an independent contractor

rather than an employee. We find the Federal Arbitration Act (FAA; 9 U.S.C. § 1 et seq.) 

applies to the parties’ arbitration agreement, and all of plaintiff’s claims are arbitrable. 

We also conclude defendants did not waive their right to arbitration even though they 

waited 14 months after the complaint was filed to move to compel arbitration. Plaintiff

cannot demonstrate prejudice from the delay, which is determinative. (Saint Agnes 

Medical Center v. PacifiCare of California (2003) 31 Cal.4th 1187, 1203.) We reverse 

the trial court’s order denying the petition to compel arbitration and remand the case to 

the trial court with instructions to enter an order compelling arbitration of all of plaintiff’s 

claims.

BACKGROUND

Defendants own and operate an airport charter transport business. From about 

June 2009 until June 2012, plaintiff worked for defendants as an airport shuttle van 

driver. Plaintiff picked up and dropped off people primarily at LAX.

Plaintiff entered into an Owner-Operator Sub-Carrier Agreement (Agreement) 

with defendant Rideshare Port Management, LLC, doing business as Prime Time Shuttle, 

LLC.

1 The Agreement provides for binding arbitration of “any controversy or claim 

between the parties arising out of or relating to this Agreement or any alleged breach 

hereof, including any issues . . . that this Agreement or any part hereof is invalid, illegal, 

or otherwise voidable or void . . . .”

The Agreement also provides: “By this Agreement, Sub-Carrier and Prime Carrier 

acknowledge and agree that there does not exist between them the relationship of 

employer/employee . . . either express or implied. Sub-Carrier will not be treated as an 

 

1 The Agreement identifies the Prime Time entity as a limited liability company at 

the time the Agreement was executed. 
3

employee of Prime Carrier for any purpose, statutory or otherwise . . . .” Thus, according 

to the terms of the Agreement, plaintiff was an independent contractor and not an 

employee.

The operative complaint alleges 11 causes of action for various wage and hour 

violations of the Labor Code, as well as causes of action for conversion, breach of 

contract, wrongful termination, intentional interference with prospective economic 

advantage, unfair competition, and violation of title 29 United States Code section 206, 

which governs the federal minimum wage for employees engaged in commerce. In the 

general allegations of the complaint, plaintiff alleged he gave notice to the Labor and 

Workforce Development Agency (LWDA) of defendants’ wage and hour violations and 

is entitled to bring claims under Labor Code section 2699 (the Private Attorney General 

Act (PAGA)). However, nowhere in the operative complaint does plaintiff say anything 

about seeking recovery of a “civil penalty to be assessed and collected by the [LWDA].” 

(See § 2699, subd. (a).) The prayer for relief makes no reference to any relief plaintiff 

seeks on behalf of the public or the LWDA. At oral argument before us, plaintiff’s 

counsel confirmed that plaintiff has not asserted a PAGA cause of action. Counsel also 

confirmed plaintiff does not seek to bring a class action but alleges only individual claims 

for relief.

In the trial court, the question whether California law or the FAA applies to the 

arbitration agreement was not raised in defendants’ motion to compel arbitration, nor in 

plaintiff’s opposition, nor in defendants’ reply. Plaintiff’s chief argument in opposition 

to the motion to compel arbitration, both in the trial court and in the Court of Appeal, has 

been that defendants waived the right to compel arbitration. Plaintiff has never 

contended the arbitration agreement was unconscionable.

At the initial hearing on the motion to compel arbitration, held September 20, 

2013, the court granted plaintiff an opportunity to submit supplemental briefing by 

October 4, 2013, and gave defendants a chance to file a response by October 18, 2013. 

The court continued the hearing on the motion to October 30, 2013. At the hearing held 

October 30, 2013, the court granted defendants an opportunity to file a second 
4

supplemental brief. Defendants filed the second supplemental brief, along with 

supplemental declarations and a request for judicial notice, on November 18, 2013, 

asserting FAA preemption for the first time. The record does not include any further 

briefing by plaintiff. No reporter’s transcripts are included in the record. The court took 

the matter under submission and issued its minute order February 20, 2014, denying the 

motion to compel arbitration.

The trial court order denying arbitration (prepared and proposed to the court by 

plaintiff) made no reference to the FAA. First, the court concluded defendants waived 

the right to arbitrate by litigating. Second, the court concluded that plaintiff did not agree 

to arbitrate his statutory labor claims. The court explained that because the complaint is 

based principally on the violation of Labor Code statutes, defendants could not compel 

arbitration. The court relied on California law and did not address defendants’ contention 

that the FAA governed the interpretation of the arbitration agreement. 

DISCUSSION

1. The Claims Are Arbitrable.

a. Federal preemption

California Labor Code section 229 provides that a cause of action that seeks to 

collect due and unpaid wages pursuant to Labor Code sections 200 through 244 can be 

maintained in court, despite an agreement to arbitrate. (Lane v. Francis Capital 

Management LLC (2014) 224 Cal.App.4th 676, 684 (Lane).) Thus, if California law 

governs the interpretation of the arbitration agreement, then plaintiff’s two causes of 

action for due and unpaid wages under Labor Code sections 200 through 244 (the fifth

and sixth causes of action) can be maintained in court. But if the FAA applies, all of 

plaintiff’s statutory claims may be arbitrated. (See Perry v. Thomas (1987) 482 U.S. 483, 

492 [where FAA applies, it preempts Labor Code, § 229].) PAGA claims are not subject 

to private arbitration agreements (Iskanian v. CLS Transportation Los Angeles LLC 

(2014) 59 Cal.4th 348, 382-385 (Iskanian)), but plaintiff has not alleged a PAGA claim.

“A party seeking to enforce an arbitration agreement has the burden of showing 

FAA preemption.” (Lane, supra, 224 Cal.App.4th at p. 687.) A petitioner seeking 
5

an order to compel arbitration must show that the subject matter of the agreement 

involves interstate commerce. (Id. at pp. 687-688; Giuliano v. Inland Empire Personnel,

Inc. (2007) 149 Cal.App.4th 1276, 1286 [same].) When an arbitration agreement is 

subject to the FAA, “questions concerning the construction and scope of the arbitration 

clause are determined by federal law.” (Baker v. Aubry (1989) 216 Cal.App.3d 1259, 

1263.)

b. The dispute involves interstate commerce.

The FAA applies when the contract “evidences a transaction involving interstate 

commerce . . . .” (Shepard v. Edward Mackay Enterprises, Inc. (2007) 148 Cal.App.4th 

1092, 1101 (Shepard).) 

“Section 2 of the FAA provides in relevant part: ‘A written provision in . . . a 

contract evidencing a transaction involving commerce to settle by arbitration a 

controversy thereafter arising out of such contract or transaction . . . shall be valid, 

irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the 

revocation of any contract.’ (9 U.S.C. § 2.)” (Pinnacle Museum Tower Assn. v. Pinnacle 

Market Development (US), LLC (2012) 55 Cal.4th 223, 234-235.) 

Defendants cite Abel v. Southern Shuttle Services, Inc. (11th Cir. 2011) 631 F.3d 

1210 (Abel) in support of their argument that this dispute involves interstate commerce. 

In Abel, the court considered whether a former “SuperShuttle” employee was entitled to 

overtime pay under the Federal Labor Standards Act (FLSA). In the context of analyzing 

whether the plaintiff fell within the Motor Carrier Act exemption to the overtime pay 

requirement,

2 the court concluded “that the purely intrastate transport of passengers to 

and from an airport may, under certain circumstances, constitute interstate 

commerce . . . .” (Abel, at p. 1216.) In Abel, the circumstances justified finding the 

employee and his employer were engaged in interstate commerce because the passengers 

 

2 One criteria for the exemption is that the employee’s work must directly affect the 

safety of operation of motor vehicles in the transportation of passengers or property in 

interstate or foreign commerce within the meaning of the Motor Carrier Act. (Abel, 

supra, 631 F.3d at p. 1213.) 
6

using the employer’s service often travelled from other states. In addition, passengers 

purchased package deals on the internet which included hotel accommodations, airfare, 

and vouchers for free airport transportation which the customers used to board the 

employer’s airport shuttles. “In other words, [the] local transport of these package-deal 

travelers has a ‘practical continuity of movement’ with the overall interstate journey.” 

(Id. at pp. 1216-1217.)

Defendants submitted evidence and a request for judicial notice in support of their 

second supplemental brief demonstrating their operations are substantially the same as 

the operations of the employer in Abel. Defendants also provide shuttle service to and 

from major airports and harbors throughout California, contract with Expedia and other 

web vendors to advertise on their websites, and permit passengers to use the internet to 

make a shuttle reservation and pay for their reservation online. Plaintiff was a shuttle 

driver who picked up and dropped off people primarily at LAX. Plaintiff acknowledges 

that defendants’ evidence “clearly” shows defendants were involved in interstate 

commerce but contends he was not engaged in interstate commerce because he only 

drove shuttles within California. Presented with virtually the same facts as those before 

the court in Abel, we follow the reasoning of that decision in finding the Agreement 

between the parties involves interstate commerce. California law is consistent with this 

conclusion. (Shepard, supra, 148 Cal.App.4th at p. 1101.)

3

 

c. The dispute falls within the arbitration provisions.

Arbitration is strongly favored, and any doubts concerning the scope of arbitrable 

issues will be resolved in favor of arbitration. (Steelworkers v. Warrior & Gulf Co.

 

3 The FAA (9 U.S.C. § 1) exempts “contracts of employment of transportation 

workers” (Circuit City Stores, Inc. v. Adams (2001) 532 U.S. 105, 119), but some federal 

district court authorities have held it does not exempt contracts establishing an 

independent contractor (rather than employment) relationship. (See, e.g., OwnerOperator Independent Drivers v. Swift (D.Ariz. 2003) 288 F.Supp.2d 1033, 1035-1036

& fn. 3 [also noting contrary authority].) Plaintiff has never asserted he is a 

transportation worker within the meaning of this exemption. That issue was not briefed 

by the parties. Therefore, we do not consider it further.
7

(1960) 363 U.S. 574, 582-583; United Transportation Union v. Southern Cal. Rapid 

Transit Dist. (1992) 7 Cal.App.4th 804, 808.) When deciding whether the parties agreed 

to arbitrate a dispute, courts generally apply ordinary state-law principles of contract 

interpretation. (First Options of Chicago, Inc. v. Kaplan (1995) 514 U.S. 938, 944.) 

Notwithstanding the policy favoring arbitration, because “ ‘arbitration is a matter of 

contract[,] a party cannot be required to submit to arbitration any dispute which he has 

not agreed so to submit.’ [Citation.]” (AT&T Technologies v. Communications Workers 

(1986) 475 U.S. 643, 648; see also Lawrence v. Walzer & Gabrielson (1989) 207 

Cal.App.3d 1501, 1505.) The party opposing arbitration has the burden to show that the 

agreement does not apply to the dispute. (Buckhorn v. St. Jude Heritage Medical Group

(2004) 121 Cal.App.4th 1401, 1406.)

The Agreement between the parties here provides “there does not exist between 

them the relationship of employer/employee . . . either express or implied. Sub-Carrier 

will not be treated as an employee of Prime Carrier for any purpose, statutory or 

otherwise . . . .” The Agreement also provides that “any controversy or claim between 

the parties arising out of or relating to this Agreement or any alleged breach thereof, 

including any issues . . . that this Agreement or any part hereof is invalid, illegal, or 

otherwise voidable or void, shall be submitted to binding arbitration.” 

The complaint alleges that plaintiff was misclassified as an independent 

contractor, and was entitled to protections conferred upon employees by the Labor Code, 

notwithstanding the representations made in the Agreement. The resolution of plaintiff’s 

claims requires a determination whether the Agreement sets the terms of plaintiff’s 

compensation or whether instead the Agreement is “invalid, illegal, or otherwise voidable 

or void” for inaccurately characterizing the parties’ relationship in order to deprive 

plaintiff of his rightful compensation under the Labor Code. In short, this dispute 

concerns a controversy or claim between the parties arising out of or relating to their

Agreement, including plaintiff’s claim that the compensation provisions of the 

Agreement are invalid, illegal, voidable or void.
8

The language “arising out of or relating to” as used in the parties’ arbitration 

provision is generally considered a broad provision. (Larkin v. Williams, 

Woolley, Cogswell, Nakazawa & Russell (1999) 76 Cal.App.4th 227, 230 [holding 

complaint for dissolution of partnership arises out of and relates to partnership 

agreement]; Baudoin v. Mid-Louisiana Anesthesia Consultants, Inc. (5th Cir. 2009) 306

Fed.Appx. 188, 192 [“broad arbitration clauses are those where the language of the clause 

requires arbitration of any dispute that arises out of or relates to” the agreement, or 

disputes that are “ ‘ “in connection with” the agreement’ ”].) In Southland Corp. v. 

Keating (1984) 465 U.S. 1, the United States Supreme Court found a contract covering 

“ ‘any controversy or claim arising out of or relating to this Agreement or the breach 

hereof’ ” to encompass claims under the California Franchise Investment Law. (Id. at 

p. 15, fn. 7.)

Broad arbitration clauses such as this one are consistently interpreted as applying 

to extra-contractual disputes between the contracting parties. (Coast Plaza Doctors 

Hospital v. Blue Cross of California (2000) 83 Cal.App.4th 677, 681, fn. 2, 686 [where 

parties agreed to arbitrate “ ‘[a]ny problem or dispute arising under this Agreement 

and/or concerning the terms of this Agreement,’ ” the arbitration agreement was broad 

enough to encompass tort claims]; Berman v. Dean Witter & Co., Inc. (1975) 

44 Cal.App.3d 999, 1003 [“The phrase ‘any controversy . . . arising out of or relating to 

this contract . . .’ is certainly broad enough to embrace tort as well as contractual 

liabilities so long as they have their roots in the relationship between the parties which 

was created by the contract”].)

Indeed, the high court has established that statutory claims are arbitrable when the 

parties’ contract involves interstate commerce and is therefore governed by the FAA. 

(Mitsubishi Motors v. Soler Chrysler-Plymouth (1985) 473 U.S. 614, 626 [“There is no 

reason to depart from [the policy favoring arbitration] where a party bound by an 

arbitration agreement raises claims founded on statutory rights”].) Given the preference 

for arbitration, and the broad language of the Agreement, plaintiff’s claims that the Labor 
9

Code governs his compensation, and not the compensation terms of his Agreement with 

defendants, fall within the ambit of the arbitration clause.

2. Waiver

Plaintiff filed his first amended complaint on October 1, 2012. Defendants

demurred to the complaint. The demurrer was taken off calendar when the parties agreed 

plaintiff could file a second amended complaint. A second amended complaint was filed 

March 4, 2013. Defendants answered the second amended complaint on April 16, 2013.

Discovery was limited. Plaintiff demanded documents and sent form 

interrogatories to one defendant, Prime Time. Prime Time responded to the demand for 

production of documents. Prime Time propounded one set of requests for production of 

documents and one set of special interrogatories on plaintiff. Plaintiff produced 177 

pages of documents. Defendants contend that for about one-third of the interrogatories, 

plaintiff responded “with only this statement: ‘Discovery is ongoing, and has not yet 

been completed, and this responding party will amend his responses when discovery is 

completed.’ ” According to defendants, “[i]n response to the remaining interrogatories, 

Plaintiff merely restated the allegations and conclusions” in the operative pleading. 

Neither party included the responses in the record, and plaintiff does not dispute 

defendants’ characterization of his responses.

Trial was set for October 20, 2014.

In finding waiver, the court found that the 14-month delay between the filing of 

the complaint and the filing of the motion to compel was unreasonable, and that

defendants actively participated in discovery and case management conferences and 

meetings with opposing counsel. The court also found that “[o]nly after exhausting all 

other means (Defendants’ demurrer was overruled, Defendant’s Motion to Strike was 

denied, Defendants were required to file an answer to Plaintiff’s Second Amended 

Complaint, and Defendants filed said answer) and with an impending trial looming, do 

Defendants now seek a court ordered arbitration.”

Our Supreme Court’s recent discussion of waiver of the contractual right to 

arbitrate is dispositive. “ ‘California courts have found a waiver of the right to demand 
10

arbitration in a variety of contexts, ranging from situations in which the party seeking to 

compel arbitration has previously taken steps inconsistent with an intent to invoke 

arbitration [citations] to instances in which the petitioning party has unreasonably 

delayed in undertaking the procedure. [Citations.] The decisions likewise hold that the 

“bad faith” or “willful misconduct” of a party may constitute a waiver and thus justify a 

refusal to compel arbitration. [Citation.]’ [Citation.] The fact that the party petitioning 

for arbitration has participated in litigation, short of a determination on the merits, does 

not by itself constitute a waiver.” (Iskanian, supra, 59 Cal.4th at pp. 374-375.)

The Supreme Court reaffirmed the factors relevant to the waiver inquiry:

“ ‘ “ ‘(1) whether the party’s actions are inconsistent with the right to arbitrate; 

(2) whether “the litigation machinery has been substantially invoked” and the parties 

“were well into preparation of a lawsuit” before the party notified the opposing party of 

an intent to arbitrate; (3) whether a party either requested arbitration enforcement close to 

the trial date or delayed for a long period before seeking a stay; (4) whether a defendant 

seeking arbitration filed a counterclaim without asking for a stay of the proceedings; 

(5) “whether important intervening steps [e.g., taking advantage of judicial discovery 

procedures not available in arbitration] had taken place”; and (6) whether the delay 

“affected, misled, or prejudiced” the opposing party.’ ” ’ ” (Iskanian, supra, 59 Cal.4th 

at p. 375.)

The Iskanian court also explained the standard of proof and the standard of 

review. “In light of the policy in favor of arbitration, ‘waivers are not to be lightly 

inferred and the party seeking to establish a waiver bears a heavy burden of proof.’ 

[Citation.] ‘Generally, the determination of waiver is a question of fact, and the trial 

court’s finding, if supported by sufficient evidence, is binding on the appellate court. 

[Citations.] “When, however, the facts are undisputed and only one inference may 

reasonably be drawn, the issue is one of law and the reviewing court is not bound by the 

trial court’s ruling.” ’ ” (Iskanian, supra, 59 Cal.4th at p. 375.) Here the parties dispute 

the underlying facts, and we review the trial court’s determination for substantial 

evidence.
11

If the facts were as the trial court found, the conclusion that defendants had 

abandoned the right to arbitrate would be correct. But the trial court’s findings are not 

supported by the record. While the court found defendants actively participated in 

discovery, the evidence showed that only one defendant propounded discovery. That 

defendant propounded only one set of interrogatories, to which plaintiff responded with 

nothing more than references to the allegations of the complaint, and one request for 

production, to which plaintiff responded with 177 pages of documents. No depositions 

were taken, and no discovery motions were filed or heard. There is no evidence plaintiff

provided any strategic information or any information he would not be required to 

provide in arbitration.

The trial court’s finding that defendants failed to seek arbitration until they 

“exhausted all other means” also is not supported by the record. The court specifically 

stated defendants’ demurrer was overruled and their motion to strike was denied. But 

that is not what happened. The record shows that the demurrer and motion to strike were 

taken off calendar when defendants agreed plaintiff could file a second amended 

complaint. Answering a complaint does not result in waiver. (Gloster v. Sonic 

Automotive, Inc. (2014) 226 Cal.App.4th 438, 449 (Gloster).) Although filing a demurrer 

may lead to a determination on the merits, none was made here.

The trial court’s finding that the trial was looming also is unsupported. The trial 

date was more than a year away when defendants filed their motion to compel. Plaintiff

cites no evidence to support the court’s finding that his counsel conferred with opposing 

counsel, but assuming that to be true, such conduct is insufficient to demonstrate waiver. 

Indeed, other than citing to the trial court’s order, plaintiff cites only to the case summary 

sheet which is not evidence in support of the court’s findings.

Finally, even though there was a 14-month period from the filing of the original 

complaint to the filing of the motion to compel, absent prejudice, the delay is insufficient 

to support the waiver. (Iskanian, supra, 59 Cal.4th at pp. 376-377.) In Iskanian, our 

Supreme Court rejected the argument that a plaintiff’s efforts over three years, including 

considerable effort and expense, resulted in waiver. (Ibid.) Participating in litigation 
12

itself does not result in waiver. (Id. at p. 377.) Causing the other party to incur expenses 

as part of litigation also does not result in waiver. (Gloster, supra, 226 Cal.App.4th at 

p. 450.) Here, there was no evidence that defendants stretched out the litigation process, 

gained information about plaintiff’s case they could not have learned in an arbitration, or 

waited until the eve of trial to move to compel arbitration. (See Iskanian, at p. 377.) 

Plaintiff identifies no information revealed during discovery that would not have been 

revealed in an arbitration. The motion to compel arbitration was made over a year before 

trial, not weeks before trial, as in Burton v. Cruise (2010) 190 Cal.App.4th 939, 949.

Because plaintiff demonstrated no prejudice from defendants’ delay in moving to compel 

arbitration, the court erred in finding waiver.

DISPOSITION

The trial court’s order denying defendants’ motion to compel arbitration is 

reversed. The case is remanded to the trial court with instructions to enter a new order 

granting the motion to compel arbitration. Appellants are awarded costs on appeal.

GRIMES, J.

I CONCUR:

BIGELOW, P. J.
1

Flier, J., Concurring and Dissenting

Because I conclude the arbitration provision does not encompass all of respondent 

Valo Khalatian’s causes of action, I write separately.1 I would affirm in part and reverse 

in part the trial court’s order denying appellants’ (Prime Time Shuttle, Inc., Rideshare 

Airport Management, LLC, formerly known as Rideshare Port Management, LLC, and 

Rattan Joea) petition to compel arbitration.

As the majority explains, Khalatian agreed to arbitrate “any controversy or claim 

between the parties arising out of or relating to this Agreement or any alleged breach 

thereof, including any issues . . . that this Agreement or any part hereof is invalid, illegal, 

or otherwise voidable or void.” Further, as the majority acknowledges, in evaluating a 

motion to compel arbitration, the threshold issue under both the Federal Arbitration Act 

(9 U.S.C. § 1 et seq.) and under California law is whether the parties have an agreement 

to arbitrate. (Pinnacle Museum Tower Assn. v. Pinnacle Market Development (US), LLC

(2012) 55 Cal.4th 223, 236; Elijahjuan v. Superior Court (2012) 210 Cal.App.4th 15, 20 

(Elijahjuan) [threshold issue is whether the parties have an agreement to arbitrate]; AT&T 

Technologies v. Communications Workers (1986) 475 U.S. 643, 648 [“ ‘[A]rbitration is a 

 

1 Most claims in the operative complaint are based on the alleged violation of Labor 

Code statutes governing payment and benefits to employees. The conversion cause of 

action was based on an alleged violation of Labor Code section 351, which governs 

gratuities. The breach of contract cause of action is based on an alleged agreement 

between appellants and the City of Los Angeles, requiring appellants to pay their 

employees a living wage. Khalatian’s wrongful termination cause of action was based on 

alleged violation of public policy based on various Labor Code statutes. In the cause of 

action for interference with prospective economic advantage, Khalatian alleged that 

appellants terminated his agreement “in contravention of its terms.” Similarly the unfair 

competition claim was based on an alleged improper termination in contravention of the 

terms of the agreement as well as identifying the same allegations raised in his other 

causes of action.
2

matter of contract and a party cannot be required to submit to arbitration any dispute 

which he has not agreed so to submit.’ ”].) Although the law favors arbitration, there is 

no policy compelling arbitration unless the parties agreed to arbitrate a dispute. (Bono v. 

David (2007) 147 Cal.App.4th 1055, 1063.)

Here with respect to the statutory Labor Code violations, as in Elijuajuan, supra, 

210 Cal.App.4th at page 21, the critical dispute is not whether the parties’ agreement 

describes Khalatian as an independent contractor—it does—“but whether [Khalatian 

was] in fact [an] independent contractor[] under the applicable legal principles.” (Ibid.; 

see Quinonez v. Empire Today, LLC (N.D.Cal., Nov. 4, 2010, No. C 10-02049 WHA) 

2010 WL 4569873, *4 [dispute over whether person is an employee or independent 

contractor turns on the otherwise governing law, not the parties’ agreement].) 

Khalatian’s claims are not based on any contractual provision but on the definition 

provided in the otherwise governing law. (See Elijahjuan, at p. 21.) “Labor Code claims 

do not arise out of the contract but instead are distinct from rights under the 

Agreement[].” (Id. at p. 24.) Therefore, the causes of action based on statutory Labor 

Code claims do not arise out of or relate to the parties’ agreement.

Further, the breach of contract cause of action is not based on the parties’ 

agreement but instead is based on a different agreement under which Khalatian claims 

third party beneficiary status. The breach of contract cause of action is based on an 

alleged agreement between appellants and the City of Los Angeles. No evidence in the 

record indicates that agreement contains an arbitration provision. Appellants therefore 

fail to show that the cause of action for breach of contract falls within the definition of an 

arbitrable dispute.

In contrast, some of the causes of action fall within the parties’ arbitration 

provision. In his causes of action for unlawful termination and unfair business practices, 

Khalatian alleged his termination violated the parties’ agreement. Those causes of action 

alleging that appellants breached their agreement “arise out of” the agreement. 

Therefore, they fall within the parties’ contractual arbitration provision.
3

Finally, for the reasons explained by the majority, I agree that appellants did not 

forfeit the opportunity to arbitrate by waiting 14 months to move to compel arbitration.

FLIER, J.