Court Opinion

ID: 4656046
Source: CourtListenerOpinion
Date Created: 2021-01-29 22:02:24.350115+00
Date Added: 2024-06-11T08:00:36.671222
License: Public Domain

Filed 1/29/21 Santana v. Postmates CA2/2
   NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
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IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                         SECOND APPELLATE DISTRICT

                                        DIVISION TWO

 WENDY SANTANA,                                                         B296413

           Plaintiff and Respondent,                                    (Los Angeles County
                                                                        Super. Ct. No. BC720151)
           v.

 POSTMATES, INC.,

           Defendant and Appellant.

      APPEAL from an order of the Superior Court of Los
Angeles County. Rafael A. Ongkeko, Judge. Affirmed.
      Gibson, Dunn & Crutcher, Theane Evangelis, Michele L.
Maryott, Bradley J. Hamburger and Dhananjay S.
Manthripragada for Defendant and Appellant.
      Parris Law Firm, R. Rex Parris, Kitty K. Szeto, John M.
Bickford, Michelle J. Lopez and Alexander R. Wheeler for
Plaintiff and Respondent.
               _________________________________
       Postmates, Inc. (Postmates) appeals from an order denying
its petition for arbitration in a representative action brought by
respondent Wendy Santana under the Labor Code Private
Attorneys General Act of 2004 (PAGA), Labor Code section 2698
et seq.1 In denying the petition, the trial court followed our
Supreme Court’s decision in Iskanian v. CLS Transportation Los
Angeles, LLC (2014) 59 Cal.4th 348 (Iskanian), which, among
other things, held that: (1) an employee’s right to bring a
representative action under the PAGA is unwaivable under
California law, and (2) this state law rule is not preempted by the
Federal Arbitration Act (FAA), title 9 United States Code
section 1 et seq.
       Postmates argues that our Supreme Court’s holding in
Iskanian was subsequently abrogated by the United States
Supreme Court’s decision in Epic Sys. Corp. v. Lewis (2018) __
U.S. __ [138 S.Ct. 1612] (Epic Systems). Along with every
published Court of Appeal decision that has decided this issue,
we reject the argument. Epic Systems did not consider the same
issue concerning the nonwaivable nature of PAGA claims that
Iskanian decided. We must therefore follow our Supreme Court’s
holding.

      1Subsequent undesignated statutory references are to the
Labor Code.

                                 2
                          BACKGROUND
1.    The Arbitration Agreement
      Santana began working as a courier for Postmates in
September 2017.2 As a courier, she delivered products from local
merchants to customers who placed orders through Postmates’s
on-line platform.
      As a condition of working for Postmates, Santana executed
a “Fleet Agreement” governing her employment (Employment
Agreement). The Employment Agreement included an
arbitration provision in which Santana and Postmates “mutually
agree[d] to resolve any disputes between them exclusively
through final and binding arbitration instead of filing a lawsuit
in court.”3 The arbitration provision stated that it was “governed
exclusively by the [FAA] and shall apply to any and all claims
between the Parties, including but not limited to . . . the
Contractor’s classification as an independent Contractor.”
      The arbitration provision included a class action waiver
and a representative action waiver. The representative action
waiver stated that the parties agreed that “by entering into this
Agreement, they waive their right to have any dispute or claim
brought, heard or arbitrated as a representative action, or to
participate in any representative action, and an arbitrator shall
not have any authority to arbitrate a representative action.”

      2 Santana’s complaint uses the term “driver.” Postmates
refers to its drivers as “couriers.” Both parties use the term
“courier” in their briefs, and we therefore do so as well.
      3 Santana originally signed a version of the Employment
Agreement that was effective March 1, 2017. She later agreed to
a version effective May 11, 2018. The relevant provisions are the
same in both versions.

                                3
      The Employment Agreement included a provision
permitting Santana to opt out of the arbitration provision. She
did not do so.
2.    Santana’s Complaint
      Santana filed her original complaint in this action on
September 4, 2018. The complaint alleged a single cause of
action “on behalf of aggrieved employees” pursuant to the PAGA.
      Santana claimed that Postmates willfully misclassified its
couriers as independent contractors rather than employees to
minimize costs. She alleged that Postmates’s couriers are “under
the control and direction of POSTMATES in connection with the
performance of their work, perform work that is part of the usual
course of POSTMATES’ business, and are not customarily
engaged in an independently established trade, occupation or
business in the same nature of the work performed for
POSTMATES.”
      Santana alleged that Postmates’s misclassification of its
couriers as independent contractors deprived her and other
couriers of various statutory and regulatory rights given to
employees, including minimum wages, mandated meal breaks,
rest breaks, premium payment for missed breaks, itemized wage
statements, timely payment of wages, and workers compensation
protection. Santana sought penalties, attorney fees and costs
“individually, and on behalf of all aggrieved employees,” which,
under the PAGA, would be distributed 75 percent to the Labor
and Workforce Development Agency (Agency) and 25 percent to
the aggrieved employees. (See § 2699, subd. (i).)
      Santana subsequently filed a first amended complaint
(FAC) to clarify that she sought only civil penalties under the
PAGA and not any individual relief. Like her original complaint,

                                4
Santana’s FAC sought civil penalties under section 2699 along
with attorney fees and costs, and also clarified that Santana “is
not seeking any sort of individualized (i.e., victim-specific) relief
as described in Esparza v. KS Industries, L.P. ([2017]) 13
Cal.App.5th 1228 [(Esparza)].”4
3.    Postmates’s Motion to Compel Arbitration
      Postmates filed a petition to compel arbitration on
October 12, 2018. The petition acknowledged the holding in
Iskanian that PAGA waivers are unenforceable under state law.
(See Iskanian, supra, 59 Cal.4th at p. 384.) However, Postmates
argued that the representative action waiver in the Employment
Agreement should be enforced because Epic Systems undermined
the basis for our Supreme Court’s holding in Iskanian.
Postmates also argued that, even if the holding in Iskanian still
applied, Santana’s individual claims must be arbitrated.

      4 Esparza held that an employee who asserts claims for
individual, “victim-specific” relief along with a PAGA claim for
civil penalties may be compelled to arbitrate the individual
claims. (Esparza, supra, 13 Cal.App.5th at p. 1234.) In the trial
court, Postmates argued that Santana’s decision not to assert any
claim for individual relief meant that she was not an “aggrieved
employee” and therefore lacked standing to sue under the PAGA.
(See § 2699, subds. (a) & (c).) The trial court did not reach the
issue, and Postmates has not raised it on appeal as an alternative
ground for reversal. In any event, the argument has now been
foreclosed by our Supreme Court’s decision in Kim v. Reins
International California, Inc. (2020) 9 Cal.5th 73, 85 (Kim) [“The
statutory language reflects that the Legislature did not intend to
link PAGA standing to the maintenance of individual claims
when such claims have been alleged”].)

                                  5
       In her opposition, Santana argued that Epic Systems did
not consider whether the FAA preempts the state law rule
established in Iskanian prohibiting enforcement of PAGA
waivers. She argued that the trial court was therefore obligated
to follow the holding in Iskanian. Santana also confirmed that
she did not seek individual remedies.
       The trial court denied Postmates’s petition. The court
concluded that it was “bound by Iskanian” because the United
States Supreme Court did not decide the “same question
differently” in Epic Systems. And the court concluded that there
were no claims for individual relief to be arbitrated because
Santana sought only civil penalties in a representative claim
under the PAGA.
                           DISCUSSION
1.     Appealability
       The absence of any request for individual relief in
Santana’s FAC suggests that this appeal may be moot. Neither
party has raised this issue,5 but we may examine it on our own
initiative. (See City of Hollister v. Monterey Ins. Co. (2008) 165
Cal.App.4th 455, 479 (City of Hollister).)
       Postmates requests that this court reverse the trial court’s
ruling and “order Santana to arbitrate any and all claims against
Postmates on an individual basis.” But Santana’s FAC confirms
that Santana asserts no such individual claims. And Postmates
is not entitled to, and apparently does not seek, arbitration of
Santana’s representative PAGA claim. The contractual provision

      5Nor has Santana raised as an alternative ground for
affirmance that no arbitrable issue would exist even if Postmates
were to prevail on appeal.

                                 6
on which Postmates relies is a representative action waiver, not
an arbitration agreement. The representative action waiver in
the Employment Agreement specifically states that “an arbitrator
shall not have any authority to arbitrate a representative action.”
Thus, if this provision is enforceable, the remedy would be
dismissal, not arbitration.6
      However, Postmates’s appeal concerns the enforceability of
one component of a broad arbitration provision that is designed to
ensure that any disputes arising from a courier’s work for
Postmates be decided in arbitration rather than litigation. The
statutory right to appeal from an order denying arbitration is
intended to avoid the need for lengthy and expensive litigation
where parties have agreed to arbitrate their disputes. (See Henry
v. Alcove Investment, Inc. (1991) 233 Cal.App.3d 94, 99–100.)
Dismissing this appeal as moot would require the parties to
proceed through litigation to a final judgment before an appeal is
considered. Considering the appeal now furthers the policy
underlying the right to appeal from an order denying a claimed
arbitration right.
      Moreover, even when an appeal is technically moot we may
consider it if “ ‘there may be a recurrence of the same controversy
between the parties and the parties have fully litigated the
issues.’ ” (City of Hollister, supra, 165 Cal.App.4th at p. 480,

      6 Even if Santana had agreed to arbitrate her
representative PAGA claim, that agreement would likely not
have been enforceable. (See Provost v. YourMechanic, Inc. (2020)
55 Cal.App.5th 982, 992 (Provost) [citing cases holding that “an
aggrieved employee’s predispute agreement to arbitrate PAGA
claims is unenforceable absent a showing the state also consented
to the agreement”].)

                                7
quoting Cucamongans United for Reasonable Expansion v. City of
Rancho Cucamonga (2000) 82 Cal.App.4th 473, 480.) Here,
although there are no issues to arbitrate no matter who prevails
on appeal, if we were to dismiss this appeal as moot Postmates
could raise the same issue of the enforceability of Santana’s
representative action waiver in a motion challenging Santana’s
FAC or in a motion for summary judgment. Assuming that the
trial court acted consistently in denying such a motion, the issue
could then be raised in a posttrial appeal.
       Delaying consideration of an issue that has already been
fully briefed on appeal and will likely recur would “waste . . .
judicial resources.” (See City of Hollister, supra, 165 Cal.App.4th
at p. 480 [deciding appeal that, if dismissed as moot, would “only
trigger another round of litigation, perhaps followed by yet
another appeal”].) We therefore proceed to consider the merits of
the appeal.
2.     Epic Systems Did Not Decide the Same Issue as
       Iskanian Concerning the Enforceability of
       Representative Action Waivers
       As in the trial court, Postmates argues on appeal that the
United States Supreme Court’s decision in Epic Systems
abrogated the holding in Iskanian concerning the enforceability
of PAGA waivers. We disagree.
       In Iskanian, our Supreme Court considered the
enforceability of both PAGA waivers and class action waivers in
the context of employment contracts. The court held that in light
of the United States Supreme Court decision in AT&T Mobility
LLC v. Concepcion (2011) 563 U.S. 333 (Concepcion) the state
rule limiting class action waivers in employment contracts that
our Supreme Court had previously established in Gentry v.

                                 8
Superior Court (2007) 42 Cal.4th 443 (Gentry) was preempted by
the FAA. (Iskanian, supra, 59 Cal.4th at p. 364.) The court also
rejected the argument that class action waivers in employment
contracts are invalid because class actions are a type of concerted
activity that is protected under the National Labor Relations Act
(NLRA) (29 U.S.C. § 151 et seq.). The court held that, in light of
Concepcion, a rule against class action waivers is invalid because
it interferes with “fundamental attributes of arbitration” and
there is no basis to conclude that the NLRA established a
contrary rule that overrides “the FAA’s mandate.” (Iskanian,
supra, 59 Cal.4th at pp. 372–373.)
       However, with respect to a representative PAGA claim, our
Supreme Court held that: (1) a waiver of the right to bring such
a claim is invalid under state law, and (2) this state law rule is
not preempted by the FAA. (Iskanian, supra, 59 Cal.4th at pp.
382–389.) The court explained that a representative PAGA claim
is not a private action brought by an individual or a class of
individuals, but instead is a type of qui tam action brought by a
plaintiff on behalf of the state. In that role, a PAGA plaintiff may
collect civil penalties for Labor Code violations, 75 percent of
which go to the Agency and 25 percent of which are awarded to
the plaintiff. (§ 2699, subd. (i); Iskanian, at pp. 380–382.) The
court reasoned that “the FAA aims to ensure an efficient forum
for the resolution of private disputes, whereas a PAGA action is a
dispute between an employer and the state Agency.” (Iskanian,
at p. 384.)
       Postmates acknowledges that this court must follow the
holding in Iskanian unless the United States Supreme Court has
“decided the same question differently.” (See Truly Nolen of
America v. Superior Court (2012) 208 Cal.App.4th 487, 507 (Truly

                                 9
Nolen).) Postmates argues that the United States Supreme
Court did just that in Epic Systems.
      In Epic Systems, the court did in fact decide one of the
same questions that our Supreme Court considered in Iskanian.
Consistent with our Supreme Court’s holding in Iskanian, the
high court held that the NLRA’s protection of the right of workers
to engage in collective bargaining and other collective conduct,
including the right “to engage in other concerted activities for the
purpose of . . . other mutual aid or protection” does not override
the FAA’s protection of the right to agree to individual
arbitration in lieu of class actions. (29 U.S.C. § 157; see Epic
Systems, supra, 138 S.Ct. at pp. 1625–1627.) But that issue is
not the one that is relevant here. The high court did not consider
or decide the issue our Supreme Court decided in Iskanian that
controls the outcome in this case—i.e., whether the FAA
preempts a state law rule prohibiting waiver of a worker’s right
to bring a representative action on behalf of the state.
      There was no need in Epic Systems for the court to address
representative actions at all, and the court did not do so. Rather,
as the court explained, the question at issue in that case was
whether employees and employers should “be allowed to agree
that any disputes between them will be resolved through one-on-
one arbitration? Or should employees always be permitted to
bring their claims in class or collective actions, no matter what
they agreed with their employers?” (Epic Systems, supra, 138
S.Ct. at p. 1619, italics added.)
      Answering that question did not require the court to decide
whether a worker may waive the right to bring a representative
action on behalf of a state government. Nor did it require the
court to address the fundamental ground of our Supreme Court’s

                                10
decision in Iskanian. As discussed, the court in Iskanian held
that a PAGA action is not an individual dispute at all, but is an
action brought on behalf of the state by an aggrieved employee
who is designated by statute to be a proper representative to
bring such an action.
       Thus, it is clear that the United States Supreme Court did
not consider the same issue concerning PAGA waivers as our
Supreme Court decided in Iskanian, much less reach a contrary
conclusion. Whether the high court might someday do so is not
the issue. Nor is it our task to analyze the United States
Supreme Court’s reasoning and language to predict how the court
might rule if the issue is ultimately presented to it. As the court
explained in Truly Nolen, with respect to federal statutory issues
“intermediate appellate courts in California are absolutely bound
to follow the decisions of the California Supreme Court, unless
the United States Supreme Court has decided the same question
differently.” (Truly Nolen, supra, 208 Cal.App.4th at p. 507.)
That is true even if the high court decides some other issue in a
way that casts doubt on our Supreme Court’s holding. (Ibid.
[concluding that the court must follow our Supreme Court’s
decision in Gentry even though the United States Supreme
Court’s decision in Concepcion “implicitly disapproved the
reasoning of the Gentry court”].)
       Postmates’s reliance on general language in Epic Systems
directing that arbitration agreements must be enforced
“according to their terms” is therefore unpersuasive. In Epic
Systems, the high court did not address the specific issue
underlying our Supreme Court’s holding in Iskanian. The court’s
general language in Epic Systems concerning the primacy of the
FAA does not contradict our Supreme Court’s holding that the

                                11
objectives of the FAA are not at stake in a representative PAGA
action because such an action is not a private dispute. (See
Iskanian, supra, 59 Cal.4th at p. 384.)
       Our Supreme Court has not directly addressed whether its
holding in Iskanian survives Epic Systems. However, in several
cases decided after Epic Systems, the court has emphasized the
representative nature of a PAGA action. That of course is the key
factor underlying the court’s decision in Iskanian that the FAA
does not preempt the state rule prohibiting waiver of PAGA
claims.
       In Kim, the court held that an employee does not lose
standing to pursue a representative PAGA claim by settling his
or her individual claims for Labor Code violations. (Kim, supra,
9 Cal.5th at p. 80.) The court confirmed that a PAGA claim is
“legally and conceptually different from an employee’s own suit
for damages and statutory penalties.” (Id. at p. 81.) The court
cited its conclusion in Iskanian that “a PAGA claim is an
enforcement action between the [Agency] and the employer, with
the PAGA plaintiff acting on behalf of the government.” (Id. at
p. 86.)
       In ZB, N.A. v. Superior Court (2019) 8 Cal.5th 175 (ZB) the
court held that some individual compensatory remedies are not
available in a representative PAGA action. (Id. at p. 182.) In
doing so, the court cited its holding in Iskanian that predispute
waivers of the right to bring such a representative action are
unenforceable, affirming its conclusion that “the FAA did not
preempt this rule or otherwise require enforcement of such a
waiver in an arbitration agreement.” (Id. at p. 185, citing
Iskanian, supra, 59 Cal.4th at pp. 384–389.)

                                12
       In addition, several Court of Appeal decisions, including a
prior decision by this court, have either held or assumed that the
state rule prohibiting PAGA waivers announced in Iskanian
survives Epic Systems. In Correia v. NB Baker Electric, Inc.
(2019) 32 Cal.App.5th 602 (Correia), Division One of the Fourth
Appellate District rejected the argument that Postmates makes
here. The court cited Iskanian’s holding that “a ban on bringing
PAGA actions in any forum violates public policy and that this
rule is not preempted by the FAA because the claim is a
governmental claim.” (Id. at p. 619.) The court noted that Epic
Systems concerned a different issue concerning the enforceability
of an “individualized arbitration agreement” in light of the
NLRA. The court concluded that Epic Systems therefore did not
“decide the same question differently.” (Ibid.)7 In Provost, that

      7 Postmates attempts to distinguish Correia on the ground
that, unlike the Employment Agreement at issue here, the
arbitration agreement in that case did not include an opt-out
provision. The difference is irrelevant to the only argument that
Postmates makes on appeal. Postmates argues that, under Epic
Systems, the FAA preempts the state law rule announced in
Iskanian that PAGA claims are nonwaivable. By preserving the
option of pursuing a PAGA claim for aggrieved employees, an opt-
out provision might be relevant to the applicability of that state
law rule. But Postmates does not explain why such a provision
has any bearing on whether the FAA preempts it. In any event,
the opportunity to opt out of a PAGA waiver provision before the
inception of any dispute has been repeatedly rejected as a defense
to unenforceability under the court’s rationale in Iskanian. (See
Juarez v. Wash Depot Holdings, Inc. (2018) 24 Cal.App.5th 1197,
1203; Williams v. Superior Court (2015) 237 Cal.App.4th 642,
647–648; Securitas Security Services USA, Inc. v. Superior Court

                                13
same court subsequently reaffirmed its ruling in Correia that
“Epic did not overrule Iskanian.” (Provost, supra, 55 Cal.App.5th
at p. 997.) And another division of the Fourth District has
followed Correia “in holding that [Epic Systems] does not
undermine the reasoning of Iskanian.” (Collie v. The Icee Co.
(2020) 52 Cal.App.5th 477, 480.)
       Division Two of the First Appellate District also recently
adopted the holding in Correia. In Olson v. Lyft, Inc. (2020) 56
Cal.App.5th 862, the court concluded that Correia had
“thoughtfully analyzed” and rejected the argument that Iskanian
is no longer good law in light of Epic Systems. (Id. at p. 864.)
And in Zakaryan v. The Men’s Wearhouse, Inc. (2019) 33
Cal.App.5th 659, 671 (Zakaryan), in the course of deciding a
different issue, this court cited Correia in noting that “Epic
Systems did not overturn Iskanian, as only Iskanian deals with a
‘claim for civil penalties brought on behalf of the government.’ ”8
       Consistent with these cases, we conclude that Epic Systems
did not decide the same issue concerning the enforceability of

(2015) 234 Cal.App.4th 1109, 1121–1122; see also Provost, supra,
55 Cal.App.5th at pp. 993–994.)
      8 Our Supreme Court disapproved Zakaryan on an
unrelated ground. Zakaryan held that an employee’s PAGA
claim seeking remedies under section 558 could not be split
between an arbitrable claim for underpaid wages and a PAGA
claim for statutory penalties. (See Zakaryan, supra, 33
Cal.App.5th at p. 671.) In ZB, our Supreme Court disapproved
that holding to the extent that it is inconsistent with the court’s
holding in ZB that “unpaid wages under section 558 may not be
recovered through a PAGA action.” (ZB, supra, 8 Cal.5th at
p. 196, fn. 8.)

                                 14
PAGA waivers that our Supreme Court decided in Iskanian. We
therefore follow Iskanian in affirming the trial court’s order
denying Postmates’s petition for arbitration.
                          DISPOSITION
      The trial court’s order is affirmed. Santana is entitled to
her costs on appeal.
      NOT TO BE PUBLISHED.

                                          LUI, P. J.
We concur:

      ASHMANN-GERST, J.

      CHAVEZ, J.

                               15