Court Opinion

ID: 5120195
Source: CourtListenerOpinion
Date Created: 2021-10-21 21:02:33.044146+00
Date Added: 2024-06-11T08:22:16.246758
License: Public Domain

Filed 10/21/21 Green v. Shipt CA2/1
   NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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has not been certified for publication or ordered published for purposes of rule 8.1115.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 ONE

 JADE GREEN                                                    B309061

           Plaintiff and Respondent,                           (Los Angeles County
                                                               Super. Ct. No. 20STCV01001)
           v.

 SHIPT, INC.,

           Defendant and Appellant.

     APPEAL from an order of the Superior Court of Los
Angeles County, Maurice A. Leiter, Judge. Affirmed.
     Gibson, Dunn & Crutcher, Theane Evangelis, Michele L.
Maryott, Bradley J. Hamburger and Dhananjay S.
Manthripragada for Defendant and Appellant.
     Blumenthal Nordrehaug Bhowmik De Blouw, Norman B.
Blumenthal and Kyle R. Nordrehaug for Plaintiff and
Respondent.

                                ________________________
       Plaintiff Jade Green sued defendant Shipt, Inc. under the
Labor Code Private Attorneys General Act of 2004 (PAGA; Lab.
Code, § 2698 et seq.) alleging she and other workers in California
were misclassified as independent contractors. Green’s operative
complaint seeks only civil penalties under the PAGA for the
misclassification violation as well as additional wage and
meal/rest period violations resulting from Shipt’s failure to treat
workers as employees. Shipt moved to compel “individual”
arbitration under the parties’ agreement, which requires
arbitration as the exclusive forum for any dispute, and which
prohibits workers from joining or bringing a “class and/or
collective action” in any forum.
       The trial court denied Shipt’s motion, primarily relying on
Iskanian v. CLS Transportation Los Angeles, LLC (2014) 59
Cal.4th 348 (Iskanian), which held that agreements seeking to
waive the right to bring PAGA representative actions are
unenforceable. It rejected Shipt’s contention that intervening
United States Supreme Court authority had abrogated the
Iskanian rule.
       Although Shipt renews its assertion on appeal that
Iskanian was wrongly decided, we remain bound by Iskanian
because the specific issues in that case have yet to be decided by
the United States Supreme Court. Any waiver of Green’s PAGA
claims remains unenforceable.
       Shipt’s suggestion that Green’s PAGA action can be split off
into an individual arbitrable claim was rejected in Iskanian, and
we have previously held that threshold issues—such as Green’s
purported misclassification as an independent contractor—
cannot be compelled to arbitration in the context of a PAGA-only
suit.

                                2
      As there is nothing in Green’s PAGA-only suit to compel
arbitration, we affirm the trial court’s order.
                        BACKGROUND
      Shipt operates a website and mobile application (app) that
allows customers to purchase groceries and household items from
local merchants. Once an order is placed, nearby “Shoppers”
receive a notification via the Shipt app on their smart phone;
they can then choose whether to accept the offer and fulfill the
order by purchasing and delivering the items to the customer.
      To sign up as a Shopper, individuals follow a “click-
through” application process on the Shipt website. During this
process, prospective Shoppers are asked to sign an “Independent
Contractor Agreement” (IC Agreement) and an “Arbitration
Agreement.”1 Shoppers must execute and sign both agreements
in order to use Shipt services.
      On October 15, 2018, Green signed both agreements.
Between October 15, 2018 and October 1, 2019, Green completed
43 orders during her tenure as a Shopper. These orders were all
shopped for and delivered to locations within the state of
California.
A.    The Arbitration Agreement
      The Arbitration Agreement states that Shipt and Shoppers
“agree that any and all disputes, claims, or controversies,” “will
be resolved through mandatory, binding arbitration.” Such

      1The IC Agreement expressly references and incorporates
the Arbitration Agreement and states the Shopper agrees that
“any and all claims arising out of or relating to [the IC
Agreement] shall be resolved by binding arbitration pursuant to
the Arbitration Agreement.”

                                3
arbitrable disputes include “any claims that a
worker/independent contractor should be classified as an
employee” and any disputes “regarding the scope, interpretation,
validity, and enforceability of . . . [the] Arbitration Agreement.”
       The Arbitration Agreement also contains an express “Class
Action Waiver,” through which Shoppers agreed to waive their
right to bring collective or class actions in any forum, and to
arbitrate their disputes solely on an individual basis.
       The Class Action Waiver states: “No Class Actions or
Joinder of Additional Parties. YOU AND SHIPT WAIVE ANY
RIGHT FOR ANY DISPUTE TO BE BROUGHT, HEARD,
DECIDED OR ARBITRATED AS A CLASS AND/OR
COLLECTIVE ACTION AND THE ARBITRATOR WILL HAVE
NO AUTHORITY TO HEAR OR PRESIDE OVER ANY SUCH
CLAIM . . . .”
       The Class Action Waiver further provides: “You agree that
You will not serve as a class representative or participate as a
class member in an arbitration proceeding . . . . A dispute
between us that is required to be arbitrated under this
Arbitration Agreement will be arbitrated only between us, even if
there are additional parties to the dispute or even if You make
allegations that Your dispute should be handled as a class and/or
collective action.”
       Shoppers wishing to opt out of the Arbitration Agreement
could do so by submitting an “Arbitration Opt Out Form” within
30 days of accepting the IC Agreement.2

      2   Green did not opt out of the Arbitration Agreement.

                                  4
B.    The Complaint for Civil Penalties Under the PAGA
      1.    The Complaint
      On January 9, 2020, Green filed a lawsuit against Shipt
alleging individual, PAGA, and class action claims.
      On February 24, 2020, Green amended her complaint to
dismiss her individual and class claims, leaving only a single
cause of action for civil penalties under the PAGA. The
complaint alleges that she and other Shoppers in California were
misclassified as independent contractors in violation of the
California Labor Code and that Shipt is further liable for
additional Labor Code violations (such as wage and meal/rest
period requirements) resulting from the misclassification. The
complaint expressly states that Green “does not seek to recover
anything other than penalties as permitted by California Labor
Code [section] 2699 [the PAGA]” (bold and underscoring omitted)
and that she is acting “[o]n behalf of the State of California and
with respect to all [a]ggrieved employees.” (Capitalization
omitted.)
      2.    Background on the PAGA
       The California Legislature enacted the PAGA in 2003 after
deciding that lagging labor law enforcement resources made
additional private enforcement necessary “ ‘to achieve maximum
compliance with state labor laws.’ ” (Iskanian, supra, 59 Cal.4th
at p. 379, quoting Arias v. Superior Court (2009) 46 Cal.4th 969,
980.) “The purpose of the PAGA is not to recover damages or
restitution, but to create a means of ‘deputizing’ citizens as
private attorneys general to enforce the Labor Code.” (Brown v.
Ralphs Grocery Co. (2011) 197 Cal.App.4th 489, 501.) Seventy-
five percent of any penalties collected by a PAGA representative
are distributed to the Labor Workforce Development Agency

                                5
(LWDA), while the remaining 25 percent are distributed to the
aggrieved employees.3 (Lab. Code, § 2699, subd. (i).)
C.    The Motion to Compel Individual Arbitration
      In April 2020, Shipt moved to compel “individual”
arbitration under the Arbitration Agreement. Shipt pointed out
that Green waived her right to bring a representative PAGA
action under that agreement and agreed to resolve all disputes—
including any disputes regarding her classification as an
independent contractor—“on an individual basis.” Shipt further
argued that our high court’s holding in Iskanian (that PAGA
waivers are unenforceable) had been abrogated by Epic Systems
Corp. v. Lewis (2018) 584 U.S. ___ [138 S.Ct. 1612, 200 L.Ed.2d
887] (Epic Systems) and was therefore no longer good law.
      On September 22, 2020, the trial court denied Shipt’s
motion to compel arbitration, primarily relying on Iskanian,
which held that agreements seeking to waive the right to bring
PAGA representative actions were unenforceable and rejected
Shipt’s contention that Epic Systems had abrogated the Iskanian
rule.

      3  Labor Code section 2699.3 of the PAGA requires a
plaintiff to “notify the employer and the [LWDA] of the specific
labor violations alleged, along with the facts and theories
supporting the claim.” (Kim v. Reins International California,
Inc. (2020) 9 Cal.5th 73, 81; see Lab. Code, § 2699.3, subd.
(a)(1)(A).) The employee may commence a PAGA action only “[i]f
the [LWDA] does not investigate, does not issue a citation, or
fails to respond to the notice within 65 days.” (Kim, supra, at
p .81; see Lab. Code, § 2699.3, subd. (a)(2).) On October 15, 2019,
Green sent the requisite PAGA notice to the LWDA and Shipt,
detailing the facts and theories in support of her allegations of
Labor Code violations.

                                 6
      On November 13, 2020, Shipt timely appealed the trial
court’s order.
                          DISCUSSION
A.    Standard of Review
      Where, as here, the trial court’s order denying a motion to
compel arbitration “rests solely on a decision of law,” we review
that decision de novo. (Robertson v. Health Net of California, Inc.
(2005) 132 Cal.App.4th 1419, 1425.)
B.    The Federal Arbitration Act
      In 1925, the Federal Arbitration Act (FAA; 9 U.S.C. § 1 et
seq.) was enacted in response to widespread judicial hostility to
arbitration agreements.4 (AT&T Mobility LLC v. Concepcion
(2011) 563 U.S. 333, 339 [131 S.Ct. 1740, 179 L.Ed.2d 742]
(Concepcion).) Section 2 of the FAA states in relevant part: “A
written provision in any maritime transaction or 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.)
      Although “[t]he FAA contains no express pre-emptive
provision” and does not “reflect a congressional intent to occupy
the entire field of arbitration” (Volt Info Sciences v. Leland
Stanford Jr. U. (1989) 489 U.S. 468, 477), it preempts state law
“to the extent that ‘it stands as an obstacle to the

      4 The Arbitration Agreement signed by Green expressly
states it “is made pursuant to a transaction involving interstate
commerce and shall be governed by the [FAA].”

                                 7
accomplishment and execution of the full purposes and objectives
of Congress.’ [Citation.]” (Ibid.)
       For example, in Concepcion, the United States Supreme
Court held that the FAA preempted California’s rule classifying
class action or collective action waivers in consumer contracts of
adhesion as unconscionable. (Concepcion, supra, 563 U.S. at
pp. 340-352.) The Concepcion court noted that while California’s
rule did not explicitly discriminate against arbitration (see id. at
pp. 341-343,) it “interfer[ed] with fundamental attributes of
arbitration” (id. at p. 344), by effectively imposing formal
classwide arbitration procedures on the parties against their will.
(Id. at pp. 345-347.) As such, the rule was preempted by the
FAA. (Concepcion, at p. 352.)
C.    The Iskanian Rule
      In Iskanian, the plaintiff-employee signed an agreement
which provided that “ ‘any and all claims’ ” arising out of his
employment were to be submitted to binding arbitration before a
neutral arbitrator and that neither the employee nor the
employer could “ ‘assert class action or representative action
claims against the other.’ ” (Iskanian, supra, 59 Cal.4th at
p. 360.) The employee subsequently brought both a class action
and a PAGA representative action against his employer.
(Iskanian, at p. 361.)
      The Iskanian court first determined that, under
Concepcion, the refusal to enforce a class action waiver in an
employment arbitration agreement would conflict with the FAA
by interfering with the fundamental attributes of arbitration.
(Iskanian, supra, 59 Cal.4th at p. 364.)
      The court reached a different conclusion with respect to the
waiver of the employee’s PAGA action. It held that a complete
ban on PAGA actions was contrary to public policy, and

                                 8
unenforceable as a matter of state law, because it would “disable
one of the primary mechanisms for enforcing the Labor Code”—
the use of deputized citizen-employees to augment the limited
enforcement capability of the LWDA and pursue the civil
penalties used to deter such violations. (Iskanian, supra, 59
Cal.4th at p. 384.) The court held that such a rule did not conflict
with the FAA because the FAA was intended to govern “the
resolution of private disputes, whereas a PAGA action is a
dispute between an employer and the state . . . [a]gency.”
(Iskanian, at p. 384.) The court analogized a PAGA claim to a qui
tam action and stated that such actions generally fall outside the
FAA’s purview. (Iskanian, at pp. 382, 387.)
      Since Iskanian, several California Courts of Appeal have
held that any PAGA arbitration requirement in a predispute
arbitration agreement is unenforceable. (See, e.g., Contreras v.
Superior Court (2021) 61 Cal.App.5th 461, 472; Correia v. NB
Baker Electric, Inc. (2019) 32 Cal.App.5th 602, 620; Julian v.
Glenair, Inc. (2017) 17 Cal.App.5th 853, 869-872; Betancourt v.
Prudential Overall Supply (2017) 9 Cal.App.5th 439, 445-449.)
      Conversely, federal courts have concluded that PAGA
claims can be arbitrated under Iskanian but “may not be waived
outright.” (Sakkab v. Luxottica Retail North American, Inc. (9th
Cir. 2015) 803 F.3d 425, 434; see also Valdez v. Terminix
Internal. Co. Ltd Partnership (9th Cir. 2017) 681 Fed.Appx. 592;
Wulfe v. Valero Refining Co. (9th Cir. 2016) 641 Fed.Appx 758,
760; Cabrera v. CVS Rx Services, Inc. (2018) 2018 U.S.Dist.
LEXIS 43681].)
D.    The Iskanian Rule Remains Binding Authority
      Regarding Enforceability of PAGA Waivers
      Shipt claims the United States Supreme Court’s
interpretation of the FAA preemption clause in recent cases

                                 9
annuls Iskanian’s holding and requires California courts to
enforce PAGA representative action waivers. Shipt relies on Epic
Systems, supra, 584 U.S. ___ [138 S.Ct. 1612] and Lamps Plus,
Inc. v. Varela (2019) 587 U.S. ___ [139 S.Ct. 1407, 1412, 203
L.Ed.2d 626] (Lamps Plus). We are not persuaded.
       “On federal questions, intermediate appellate courts in
California must follow the decisions of the California Supreme
Court, unless the United States Supreme Court has decided the
same question differently.” (Correia v. NB Baker Electric, Inc.,
supra, 32 Cal.App.5th at p. 619; see also Chesapeake & Ohio Ry.
v. Martin (1931) 283 U.S. 209, 221 [51 S.Ct. 453, 75 L.Ed 983];
Auto Equity Sales, Inc. v. Superior Court (1962) 57 Cal.2d 450,
455; People v. Whitfield (1996) 46 Cal.App.4th 947, 955-957.)
       In Epic Systems, an accountant sued his employer for
violations of the federal Fair Labor Standards Act of 1938 (FLSA;
29 U.S.C. § 201 et seq.) and California overtime law. (Epic
Systems, supra, 584 U.S. at p. ___ [138 S.Ct. at p. 1620].) The
employee had signed an arbitration agreement that “specified
individualized arbitration, with claims ‘pertaining to different
[e]mployees [to] be heard in separate proceedings.’ ” (Ibid.) The
accountant sought to litigate the state law claim as a class action
and the FLSA claim on behalf of a nationwide class under FLSA’s
collective action procedures. (Epic Systems, at p. ___ [138 S.Ct. at
p. 1620].)
       In compelling arbitration, the United States Supreme
Court reconfirmed Concepcion’s holding that the FAA requires
enforcement of class action waivers. It also rejected the
employee’s argument, as did the Iskanian court, that the
National Labor Relations Act’s guarantee of the right to engage
in “concerted activit[y]” (29 U.S.C. § 157) overcame the FAA on

                                10
this issue. (Epic Systems, supra, 584 U.S. at p. ___ [138 S.Ct. at
pp. 1623-1630]; Iskanian, supra, 59 Cal.4th at p. 372.)
       Courts considering the continuing vitality of Iskanian have
unanimously concluded that, in light of the unique nature of a
PAGA action, the United States Supreme Court’s interpretation
of the FAA’s preemptive scope in Epic Systems does not abrogate
Iskanian’s holding for purposes of an intermediate appellate
court applying the law. (See Correia v. NB Baker Electric, Inc.,
supra, 32 Cal.App.5th at p. 620; cf. Sakkab v. Luxottica Retail
North American, Inc., supra, 803 F.3d at pp. 435-436; Rivas v.
Coverall N. Am., Inc. (2021) 842 Fed.Appx. 55, 56.)
       We agree with these and other appellate courts that have
recognized the limited reach of Epic Systems in the context of
PAGA suits. (See, e.g., Winns v. Postmates Inc. (2021) 66
Cal.App.5th 803, 812; Olson v. Lyft, Inc. (2020) 56 Cal.App.5th
862, 872; Provost v. YourMechanic, Inc. (2020) 55 Cal.App.5th
982, 998; Collie v. The Icee Co. (2020) 52 Cal.App.5th 477; Correia
v. NB Baker Electric, Inc., supra, 32 Cal.App.5th at p. 620.)5

      5  In Lamps Plus, the Ninth Circuit construed an
arbitration agreement against its drafter, Lamps Plus, and
approved a classwide arbitration order. (Lamps Plus, supra, 587
U.S. at p. __ [139 S.Ct. at pp. 1413-1414].) The high court
reversed, holding the FAA preempted California’s contra
proferentem rule (requiring agreements be held against the
drafter) when the rule is used “to impose class arbitration in the
absence of the parties’ consent.” (Lamps Plus, at p. ___ [139 U.S.
at pp. 1415, 1418], fn. omitted.) The Lamps Plus decision did not
consider or resolve whether a worker could waive a right to bring
a representative action on behalf of a state government, and it
neither mentions PAGA nor similar laws from other states. We
fail to discern how Lamps Plus would compel us to abandon
Iskanian.

                                11
      Under the doctrine of stare decisis, we are bound to follow
our Supreme Court’s decision in Iskanian. (See Auto Equity
Sales, Inc. v. Superior Court, supra, 57 Cal.2d at pp. 455-456.)6
E.     Green May Not Be Compelled Either to Arbitrate Her
       PAGA Action on an “Individual” Basis or to Arbitrate
       Threshold Issues
       Shipt requests an order compelling Green to “arbitrate any
and all claims against Shipt on an individual basis.” However,
the Iskanian court directly held that “a single-claimant
arbitration under the PAGA for individual penalties will not
result in the penalties contemplated under the PAGA to punish
and deter employer practices that violate the rights of numerous
employees under the Labor Code.” (Iskanian, supra, 59 Cal.4th
at p. 384.) Because compelling a single-claimant procedure would
frustrate the core objectives of the PAGA, the court held that the
right to bring a representative PAGA case could neither be
waived nor bifurcated and compelled to arbitration on an
“individual” basis. (Iskanian, at p. 384.)

      6 We further reject Shipt’s contention that Iskanian is
inapplicable because Green had an opportunity to opt out of the
arbitration agreement. Several courts have pointed out that
Iskanian’s underlying public policy rationale does not turn on
how the employer and worker entered into the agreement, or its
mandatory or voluntary nature. Rather, it turns on fact that a
PAGA claim provides a remedy that inures to the state and that
private agreements seeking to waive such public rights are
precluded. (Winns v. Postmates Inc., supra, 66 Cal.App.5th at
pp. 810-811; Provost v. YourMechanic Inc., supra, 55 Cal.App.5th
at pp. 993-994; Williams v. Superior Court (2015) 237
Cal.App.4th 642, 647-648).

                                12
       It also makes no difference whether Green expressly agreed
to arbitrate threshold issues “regarding the scope, interpretation,
validity, and enforceability of . . . [the] Arbitration Agreement” or
“any claims that a worker/independent contractor should be
classified as an employee.” These issues are indivisible and non-
arbitrable. (Bautista v. Fantasy Activewear, Inc. (2020) 52
Cal.App.5th 650, 656-658 [rejecting contention that preliminary
questions regarding arbitrability must be sent to arbitrator in
representative PAGA-only action notwithstanding agreement to
do so]; see also Rosales v. Uber Technologies, Inc. (2021) 63
Cal.App.5th 937, 940; Contreras v. Superior Court (2021) 61
Cal.App.5th 461, 474; Provost v. YourMechanic, Inc., supra, 55
Cal.App.5th at p. 988.)7
       As there is nothing in Green’s operative PAGA-only
complaint to compel to arbitration, we affirm the trial court’s
order.

      7 Relatedly, the Class Action Waiver provides that “any
claim that all or part of the Class Action Waiver . . . is invalid,
unenforceable, unconscionable, void or voidable, may be
determined only by a court of competent jurisdiction and not by an
arbitrator.” (Italics added.) This provision also runs counter to
Shipt’s argument that threshold questions must be determined
by an arbitrator. Further, in our Bautista decision we deemed
the decision in Henry Schein, Inc. v. Archer & White Sales, Inc.
(2019) 586 U.S. ___ [139 S.Ct. 524, 202 L.Ed.2d 480]—also cited
by Shipt in this case—inapplicable in the context of a PAGA-only
action. (Bautista v. Fantasy Activewear, Inc., supra, 52
Cal.App.5th at p. 656.)

                                 13
                          DISPOSITION
      The order denying the motion to compel arbitration is
affirmed. Green shall recover her costs on appeal.8
      NOT TO BE PUBLISHED.

                                           CRANDALL, J.*

We concur:

             ROTHSCHILD, P. J.

             CHANEY, J.

      8 Green characterizes Shipt’s arguments as “frivolous” and
“sanctionable” and “submits that there should be repercussions”
for such tactics. Of course, a sanctions request cannot be made in
a brief. (Cal. Rules of Court, rule 8.276(b)(1); Cowan v.
Krayzman (2011) 196 Cal.App.4th 907, 919 [“Sanctions cannot be
sought in the respondent’s brief”].)
      *Judge of the San Luis Obispo County Superior Court,
assigned by the Chief Justice pursuant to article VI, section 6 of
the California Constitution.

                                14