Court Opinion

ID: 7806168
Source: CourtListenerOpinion
Date Created: 2022-09-02 23:01:29.571779+00
Date Added: 2024-06-11T16:30:10.620003
License: Public Domain

Filed 9/2/22
                   CERTIFIED FOR PUBLICATION

    IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                    SECOND APPELLATE DISTRICT

                             DIVISION TWO

 JEROME OSWALD,                       B312736

         Plaintiff and Respondent,    (Los Angeles County
                                      Super. Ct. No.
         v.                           20CMCV00328)

 MURRAY PLUMBING AND
 HEATING CORPORATION,

         Defendant and Appellant.

     APPEAL from an order of the Superior Court of Los Angeles
County, Kristin S. Escalante, Judge. Reversed with directions.
     Atkinson, Andelson, Loya, Ruud & Romo, Ronald W. Novotny
and Joshua N. Lange for Defendant and Appellant.
     Justice Law Corporation, Douglas Han, Shunt Tatavos-Gharajeh
and Talia Lux for Plaintiff and Respondent.
                 ___________________________________
       This appeal concerns an arbitration clause in a construction
industry collective bargaining agreement (CBA). The issue is whether
the CBA bars a Private Attorneys General Act (PAGA) lawsuit. (Lab.
Code, § 2698 et seq.)1 PAGA allows employees—once they exhaust
administrative procedures—to seek civil penalties for Labor Code
violations, on behalf of the state. (§§ 2699, subd. (a), 2699.3, 2699.5.)
       The right to file a PAGA action generally cannot be waived by
contract. However, the Labor Code exempts construction workers from
PAGA if a CBA covers wages, hours and working conditions and (1) has
a grievance and arbitration procedure to redress Labor Code violations;
(2) clearly waives PAGA; and (3) authorizes the arbitrator to award all
remedies available under the Labor Code. (§ 2699.6, subd. (a).)
       The parties’ CBA clearly waives PAGA and satisfies the
requirements of section 2699.6, as a matter of law. Their dispute is
exempt from PAGA. We reverse the trial court’s order denying the
employer’s motion to compel arbitration and direct the court to enter an
order granting the motion.
               FACTS AND PROCEDURAL HISTORY
       Appellant Murray Plumbing and Heating Corporation (Murray)
briefly employed respondent Jerome Oswald as a journeyman pipefitter
in 2019–2020. In 2020, Oswald sued for civil penalties under PAGA.
He alleges that Murray did not provide meal and rest breaks or
accurate wage statements; pay all wages in a timely manner; or
reimburse business expenses.
       The parties’ employment relationship is governed by a Master
Agreement (Agreement) between Oswald’s union and Murray’s
contractor association, effective from 2017 to 2026. The Agreement is a
CBA requiring arbitration of disputes—including ones arising under
PAGA—as the sole and exclusive remedy. Murray invoked the
Agreement and moved to compel arbitration, which Oswald opposed.
The trial court found section 2699.6 does not apply and denied
Murray’s motion on February 16, 2021.

      1   Undesignated statutory references are to the Labor Code.
                                     2
       On April 8, 2021, three days after Murray appealed the court’s
ruling, the parties’ collective bargaining representatives signed a
“Memorandum of Understanding Waiver of PAGA and Class Action
Claims” (MOU). The MOU replaces the CBA’s original arbitration
clause and is retroactive to 2017.
       On April 13, 2021, Murray’s counsel Ronald Novotny e-mailed
Oswald’s attorneys Douglas Han and Shunt Tatavos-Gharajeh, asking
them to “immediately dismiss” Oswald’s PAGA action in light of the
MOU. All the attorneys then behaved as if nothing had occurred and
briefed the appeal without mentioning the MOU. In reliance on the
briefs, this court prepared a bench memorandum analyzing the CBA’s
original arbitration clause.
       Shortly before oral argument, Attorney Novotny notified this
court about the MOU. Oswald’s attorneys oppose the belated
revelation of the MOU: They blame Novotny, though they too have
known about the MOU for 16 months.
                                DISCUSSION
       1. Admission of New Evidence
       A reviewing court may take additional evidence “in the interests
of justice.” (Code Civ. Proc., § 909.) This enables appellate courts, in
appropriate cases, to terminate litigation “if it appears that on no
reasonable theory could respondent make a further showing in the trial
court.” (People v. Benford (1959) 53 Cal.2d 1, 6.) The statute states
that it “ ‘shall be liberally construed’ ” to allow cases to “ ‘be finally
disposed of by a single appeal and without further proceedings in the
trial court.’ ” (Duncan v. Peterson (1970) 3 Cal.App.3d 607, 612.)
Courts are “more open to admitting evidence that involved events
which occurred after the judgment was entered.” (In re Elise K. (1982)
33 Cal.3d 138, 150.)
       We shall allow new evidence of the MOU in the interests of
justice. (Code Civ. Proc., § 909.) All counsel wasted judicial resources
by failing to immediately disclose the MOU to this court. They briefed
a superseded arbitration clause and encouraged this court to prepare
an unnecessary analysis, despite knowing about the MOU for 16

                                    3
months. We cannot allow this gamesmanship to go unaddressed. It
reflects poorly on all the lawyers involved in this case.
       2. Policy Favoring Arbitration
       Public policy favors contractual arbitration “ ‘ “as a speedy and
relatively inexpensive means of dispute resolution.” ’ ” (Vandenberg v.
Superior Court (1999) 21 Cal.4th 815, 830.) Courts enforce arbitration
agreements if “a party to the agreement refuses to arbitrate [a]
controversy.” (Code Civ. Proc., § 1281.2.) It is undisputed that the
parties’ relationship is governed by the Agreement, which has an
arbitration clause.
       Arbitration provisions in a CBA are enforceable with respect to
claims made by a union member. (14 Penn Plaza LLC v. Pyett (2009)
556 U.S. 247, 260; Posner v. Grunwald-Marx, Inc. (1961) 56 Cal.2d 169,
180.) “[W]hether a collective-bargaining agreement creates a duty for
the parties to arbitrate the particular grievance—is undeniably an
issue for judicial determination.” (AT&T Technologies, Inc. v.
Communications Workers of America (1986) 475 U.S. 643, 649.)
       3. PAGA Civil Actions
       PAGA allows employees, acting on behalf of the state, to bring
civil actions to redress Labor Code violations. (Arias v. Superior Court
(2009) 46 Cal.4th 969, 986.) “Without the state’s consent, a predispute
agreement between an employee and an employer cannot be the basis
for compelling arbitration of a representative PAGA claim because the
state is the owner of the claim and the real party in interest, and the
state was not a party to the arbitration agreement.” (Correia v. NB
Baker Electric, Inc. (2019) 32 Cal.App.5th 602, 622; Tanguilig v.
Bloomingdale’s, Inc. (2016) 5 Cal.App.5th 665, 677–680 [PAGA claim is
not subject to arbitration, absent state consent].)
       As a rule, “an employee’s right to bring a PAGA action is
unwaivable.” (Iskanian v. CLS Transportation Los Angeles, LLC (2014)
59 Cal.4th 348, 383, overruled in part in Viking River Cruises, Inc. v.
Moriana (2022) ___ U.S. ___ [142 S.Ct. 1906, 2022 U.S. Lexis 2940].)
As a result, employment agreements waiving an employee’s right to
assert a PAGA claim in a judicial forum are unenforceable. (Julian v.

                                   4
Glenair, Inc. (2017) 17 Cal.App.5th 853, 869–871 [an employee who
signs such an agreement “is not then authorized to waive the state’s
right to a judicial forum”].) “[W]hile a PAGA action might be subject to
arbitration, relying on a predispute agreement with a private party will
not suffice to compel arbitration of a PAGA claim.” (Betancourt v.
Prudential Overall Supply (2017) 9 Cal.App.5th 439, 446.)
       In 2018, the Legislature carved out an exception to the rule
prohibiting contractual waivers of PAGA suits by enacting a PAGA
statute that applies to the construction industry.2 Section 2699.6
precludes “a civil action under Section 2699” if certain requirements
are met. (§2699.6, subd. (b).) We must determine if section 2699.6
applies to the parties’ CBA.
       4. Section 2699.6 Applies Here
       a. The MOU is retroactive
       The MOU states that it “shall apply to any representative PAGA
claims and class action claims that arise or are pending during the
term of the parties’ 2017-2026 Master Agreement regardless of when

      2  The statute, effective January 1, 2019, provides that the right to
bring a civil action under PAGA “shall not apply to an employee in the
construction industry with respect to work performed under a valid
collective bargaining agreement . . . that expressly provides for the
wages, hours of work, and working conditions of employees, premium
wage rates for all overtime hours worked, and for the employee to
receive a regular hourly pay rate of not less than 30 percent more than
the state minimum wage rate, and the agreement does all of the
following:
       “(1) Prohibits all of the violations of this code that would be
redressable pursuant to this part, and provides for a grievance and
binding arbitration procedure to redress those violations.
       “(2) Expressly waives the requirements of this part in clear and
unambiguous terms.
       “(3) Authorizes the arbitrator to award any and all remedies
otherwise available under this code, provided that nothing in this
section authorizes the award of penalties under this part that would be
payable to the Labor and Workforce Development Agency.” (§ 2699.6,
subd. (a).)
                                        5
they were filed with any court or administrative agency.” (Boldface
added.) Thus, the MOU is retroactive to 2017. Oswald’s claims arose
in 2019–2020, during the term of Agreement.
       Oswald does not question the legitimacy of the MOU but argues
that it does not apply to him personally because it was signed after his
employment ended, while his lawsuit was pending. We disagree. The
MOU applies here.
       Oswald relies on cases involving individuals who signed
arbitration agreements. Unlike the cited cases, Oswald is not a
signatory to the Agreement or MOU. Instead, a union negotiated and
signed them, on Oswald’s behalf. As a union member, Oswald enjoys
the benefits of the union’s bargaining power but he is also subject to the
burdens imposed by the CBA, which limit his remedy for Labor Code
violations to an arbitral forum. (See Florio v. City of Ontario (2005) 130
Cal.App.4th 1462, 1466 [“ ‘a member of a bargaining unit is bound by
the terms of a valid collective bargaining agreement’ ”].) Oswald cites
no limitation, restriction or qualifying language in the Agreement
preventing his union from signing a MOU that is retroactive to 2017
and incorporates section 2699.6. The union’s agreement to make the
MOU retroactive affects Oswald’s pending claims.
       A contracting party may agree to an arbitration clause that
applies retroactively to a pending lawsuit, affecting claims that arose
while the plaintiff worked for the defendant but before the arbitration
clause was signed, if the clause explicitly applies to all claims relating
to the employment. (Franco v. Graystone Ridge Condominium (2019)
39 Cal.App.5th 221, 228–230; Salgado v. Carrows Restaurants, Inc.
(2019) 33 Cal.App.5th 356, 358–362 [arbitration agreement signed
during litigation applied to any claim, dispute, or controversy, with no
limitation placed on the age of the claim, which unequivocally required
arbitration of an employee’s pending lawsuit].) The same reasoning
applies here, where the contracting party (Oswald’s union) agreed to
retroactively modify and clarify an existing arbitration clause.
       It bears noting that before the parties brought the MOU to our
attention, shortly before oral argument, this court analyzed the

                                    6
Agreement without the MOU. We concluded that the original
arbitration provisions satisfied section 2699.6 and barred Oswald’s civil
suit. The clear terms of the MOU, modeled on the language of section
2699.6, reinforce our conclusion.
       b. The elements of section 2699.6 are satisfied
       Oswald worked in construction under a CBA that covers wages,
hours and conditions. His hourly rate of $50 was 400 percent more
than the state minimum wage of $12. He was entitled to premium
overtime wage rates. The first paragraph of section 2699.6, subdivision
(a) is satisfied.
       The right to bring a PAGA civil action does not apply to an
employee in the construction industry performing work under a CBA
that “[p]rohibits all of the violations of this code that would be
redressable pursuant to this part, and provides for a grievance and
binding arbitration procedure to redress those violations.” (§ 2699.6,
subd. (a)(1).)
       The Agreement, as amended and clarified by the MOU, satisfies
this element on its face. It reads, “The parties . . . agree that the 2017-
2026 Master Agreement prohibits any and all violations of the
California Labor Code sections identified in Labor Code §§ 2699.5 and
2699(f) as well as any others that would be redressable by PAGA, and
that such claims shall be resolved exclusively through the Grievance-
Arbitration procedure contained in this Memorandum of Agreement
and shall not be brought in a court of law or before any administrative
agency such as the California Labor Commissioner.” The Agreement—
both before and after the MOU—encompasses violations of more than
150 statutes listed in PAGA section 2699.5. All the violations alleged
in Oswald’s complaint are listed in section 2699.5.3

      3  The complaint alleges wage violations (§§ 510, 1194, 1197,
1198); meal and rest break violations (§§ 226.7, 512); untimely wage
payment (§§ 201–204); wage statement violations (§§ 226, 1174); and
business expense violations (§§ 2800, 2802). These statutes are all
listed in section 2699.5.
                                   7
       Next, section 2699.6 requires that a CBA “[e]xpressly waive[] the
requirements of this part in clear and unambiguous terms.” (§ 2699.6,
subd. (a)(2).) The Agreement, as amended and clarified by the MOU,
satisfies this element. It reads, “Pursuant to California Labor Code
Section 2699.6, the Parties hereby expressly and unambiguously waive
the provisions of the California Private Attorneys General Act (PAGA),
Labor Code Section 2698, et seq., and agree that none of the provisions
of that statute apply to any of the employees covered by the 2017-2026
Master Agreement.”
       Finally, the CBA must “[a]uthorize[] the arbitrator to award any
and all remedies otherwise available under this code, provided that
nothing in this section authorizes the award of penalties under this
part that would be payable to the Labor and Workforce Development
Agency.” (§ 2699.6, subd. (a)(3).)
       The Agreement, as amended and clarified by the MOU, satisfies
this third element. Echoing the statutory language, the MOU reads,
“An arbitrator presiding over an arbitration conducted pursuant to the
Grievance/Arbitration Procedure shall have the authority to make an
award of any and all remedies otherwise available under the California
Labor Code, except for an award of penalties that would be payable to
the Labor and Workforce Development Agency.”
       5. Enforcing the Agreement Satisfies the Purpose of
          Section 2669.6
       “PAGA does not create any new substantive rights or legal
obligations, but ‘is simply a procedural statute allowing an aggrieved
employee to recover civil penalties—for Labor Code violations—that
otherwise would be sought by state labor law enforcement agencies.’
(Amalgamated Transit Union, Local 1756, AFL-CIO v. Superior Court
(2009) 46 Cal.4th 993, 1003.)” (Julian v. Glenair, Inc., supra, 17
Cal.App.5th at p. 871.)
       By enacting section 2669.6, the Legislature eliminated the need
for state consent to or involvement in an agreement to arbitrate claims
that would otherwise be subject to a civil action under PAGA, if the

                                   8
parties’ employment relationship is governed by a qualifying
construction industry CBA.
       Section 2669.6 is intended to “ ‘commit PAGA claims arising in
the building and construction industry to the grievance and arbitration
machinery of a collective bargaining agreement (“CBA”) maintained by
employers and [a] union in that industry so long as the CBA expressly
provides for’ key provisions such as a grievance and binding arbitration
procedure.” (Assembly Com. on Labor and Employment, Analysis of
Assem. Bill No. 1654 (2017–2018 Reg. Sess.) as amended Aug. 24, 2018,
p. 2.) It allays “ ‘significant legal abuse’ ” that PAGA encourages by
allowing “ ‘class action type lawsuits over minor employment issues.’ ”
(Ibid.) The Assembly Committee cited the carpenters’ union sponsoring
the legislation, which said PAGA undermines CBAs offering workplace
protections with well-developed, effective and fair grievance/arbitration
dispute resolution procedures. (Ibid.)
       Moreover, “ ‘This would not be forced arbitration imposed by
employers on individual, unrepresented workers but a mutually agreed
upon alternative to costly and time-consuming litigation in which the
union would be able to represent all its members and a mutually
agreed upon arbitrator could award full relief to all workers’ ” to “ ‘free
up court resources to deal with claims by workers who lack union
representation.’ ” (Sen. Judicial Com., Analysis of Assem. Bill No. 1654
(2017–2018 Reg. Sess.) as amended June 18, 2018, p. 5.)
       The Agreement, as modified by the MOU, meets the
requirements of section 2699.6. The negotiated terms of the Agreement
protect the interests of all union employees covered by it. Oswald must
arbitrate his claims through the procedures specified in the
Agreement.4

      4In light of our conclusion, we do not discuss Viking River
Cruises, Inc. v. Moriana, supra, ___ U.S. ___ [142 S.Ct. 1906, 2022 U.S.
Lexis 2940], which does not involve a CBA or discuss section 2699.6.
                                    9
                              DISPOSITION
      The order denying the motion to compel arbitration is reversed.
The matter is remanded with directions to enter an order directing the
parties to arbitrate their dispute pursuant to their collective bargaining
agreement. The parties to bear their own costs on appeal.
      CERTIFIED FOR PUBLICATION.

                                           LUI, P. J.
We concur:

      CHAVEZ, J.

      HOFFSTADT, J.

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