Court Opinion

ID: 5128512
Source: CourtListenerOpinion
Date Created: 2021-11-22 23:02:35.511007+00
Date Added: 2024-06-11T08:23:07.270362
License: Public Domain

Filed 11/22/21 Schwendeman v. Travel Staff CA1/1
                 NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or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

                                     FIRST APPELLATE DISTRICT

                                                   DIVISION ONE

 CONNIE SCHWENDEMAN,
             Plaintiff and Appellant,
                                                                        A159147
 v.
 TRAVEL STAFF, LLC et al.,                                              (Contra Costa County
                                                                        Super. Ct. No. MSC1801132)
             Defendants and Respondents.

         As part of appellant Connie Schwendeman’s employment as a traveling
nurse, she signed an arbitration agreement with respondent Travel Staff
LLC. She later sued Travel Staff and respondents Cross Country Healthcare,
Inc. and Cross Country Staffing, Inc., which were not signatories to the
arbitration agreement.1 Cross Country filed a motion to compel arbitration,
which the trial court granted. Schwendeman argues that she should not be
forced to arbitrate with nonparties to the arbitration agreement. Because the
trial court applied well settled exceptions to the requirement that only
signatories to an arbitration may compel arbitration, we affirm.

       We sometimes refer to these two respondents collectively in the
         1

singular as “Cross Country.”

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                                    I.
                          FACTUAL AND PROCEDURAL
                               BACKGROUND
      Travel Staff “provides healthcare staffing and workforce management
solutions by offering temporary placement of travel nurses.” Schwendeman
is a registered nurse. She worked as a “Traveler” from December 2016 to
April 2017 in Los Angeles and then from April to July 2017 in Walnut Creek.
The operative complaint alleges that Travel Staff “does not actually employ
Travelers,” and that Travel Staff has no supervisors or managers. Instead,
according to the complaint, Travel Staff is designated as “the nominal
employer,” but Cross Country Healthcare, Inc. and Cross Country Staffing,
Inc. are “the actual employers of Travelers because they exercise control over
Travelers’ wages, hours, and working conditions.”
      On March 23, 2017, while Schwendeman was working as a travel
nurse, she electronically executed (using a program called “DocuSign”) an
acknowledgement of receipt of a 2017 Cross Country Staffing document titled
“Employment Terms & Conditions” (Terms and Conditions Booklet). The
booklet contained a section titled “XXVI. Miscellaneous,” providing in part
that “[a]ny and all disputes arising under this Agreement or in any way
related to the relationship between the Company and you shall be governed
by the laws of the State of Florida regardless of where your services are
performed. The jurisdiction and venue of such disputes shall reside
exclusively in the Judicial Circuit in and for Palm Beach County, Florida
without regard to its principles of conflicts of law.” Although the record
contains later versions of the booklet with the same section, Schwendeman
did not sign acknowledgements of any of these later versions.
      Also on March 23, 2017, shortly after she signed the acknowledgment
of having received the Terms and Conditions Booklet, Schwendeman

                                       2
electronically executed an arbitration agreement with Travel Staff. Travel
Staff is identified in the agreement as “A Cross Country Staffing Company.”
The agreement provides in relevant part that Travel Staff and Schwendeman
“agree that binding arbitration shall be the exclusive remedy for all claims
between them, including employment-related or other disputes involving
Travel Staff clients and vendors. Final and binding arbitration before a
single, neutral arbitrator shall be the exclusive remedy for any covered claim.
A ‘covered claim’ is any claim (except a claim that by law is non-arbitrable)
now existing or arising in the future, including but not limited to a claim for:
breach of contract; violation of any provision of the California Labor Code or a
Wage Order; unpaid expenses or wages; unpaid compensation or penalties for
missed meal or rest breaks; wrongful termination; unfair competition; or
discrimination, harassment or unlawful retaliation.” The agreement further
provides that “[e]ach party also waives the right to bring, maintain,
participate in, or receive money from, any class, collective, or representative
proceeding, whether in arbitration or otherwise.” Schwendeman does not in
this appeal challenge the agreement’s validity or enforceability, and it is
undisputed that Cross Country was not a signatory to the agreement.
      Schwendeman stopped working as a Traveler a few months after
having signed the arbitration agreement. A little over a year later, in
June 2018, she sued Travel Staff. The complaint does not appear in the
record on appeal, but Schwendeman apparently alleged individual causes of
action for wage-and-hour violations (Labor Code, §§ 558, 1197.1)2 as well as
claims under the Labor Code Private Attorneys General Act of 2004 (§ 2698
et seq., PAGA). Travel Staff filed a petition to compel arbitration, and the

      2 All statutory references are to the Labor Code unless otherwise
specified.

                                       3
trial court ordered Schwendeman to arbitrate her individual claim for unpaid
wages. Schwendeman apparently abandoned that claim.
         Then in August 2019, Schwendeman filed a first amended complaint,
adding both Cross Country entities as defendants. The complaint purported
to be a class action lawsuit against Cross Country, which was alleged to have
implemented the policies that gave rise to the Labor Code violations listed in
the complaint. Schwendeman alleged that Cross Country failed to pay
overtime (§§ 510, 1194), failed to furnish accurate wage statements (§ 226),
willfully failed to pay wages owed to a discharged employee (§ 203), and
engaged in unfair business practices (Bus. & Prof. Code, § 17200 et seq.).
Schwendeman also again alleged a PAGA cause of action against Travel
Staff.
         Cross Country filed a petition to compel arbitration and to dismiss or
stay proceedings. It argued both that (1) Schwendeman was estopped from
avoiding arbitration because her class claims against Cross Country arose
out of her employment with Travel Staff, and that (2) Cross Country could
enforce the Travel Staff arbitration agreement as a result of agency
principles. Schwendeman opposed the petition.
         The trial court agreed with Cross Country and granted the petition. It
thus ordered Schwendeman to arbitrate her individual claims against Cross
Country, and it dismissed all of her putative class action claims against Cross
Country. Because that left only Schwendeman’s claim against Travel Staff,

                                         4
the court dismissed all claims against Cross Country and stayed the
remaining claim against Travel Staff. Schwendeman appealed. 3
                                       II.
                                 DISCUSSION
      Schwendeman contends that she cannot be compelled to arbitrate her
claims against Cross Country because the Cross Country entities were not
parties to the arbitration agreement with Travel Staff. She is mistaken.
      Schwendeman is correct that “the general rule is ‘one must be a party
to an arbitration agreement to be bound by it or invoke it.’ ” (Garcia v. Pexco,
LLC (2017) 11 Cal.App.5th 782, 785 (Garcia).) But, as the trial court found,
two exceptions to that rule apply here, one arising under equitable-estoppel
principles and the other arising under agency principles.
      We begin with the equitable-estoppel exception. “Under this exception,
‘a nonsignatory defendant may invoke an arbitration clause to compel a
signatory plaintiff to arbitrate its claim when the causes of action against the
nonsignatory are “intimately founded in and intertwined” with the
underlying contract obligations.’ [Citation.] The doctrine applies where the
claims are ‘ “ ‘based on the same facts and are inherently inseparable’ ” from

      3 “Orders granting motions to compel arbitration are generally not
immediately appealable. [Citations.] Such orders are normally subject to
review only on appeal from the final judgment. (Code Civ. Proc., §§ 906,
1294.2; [citation].)” (Nelsen v. Legacy Partners Residential, Inc. (2012)
207 Cal.App.4th 1115, 1121–1122.) Schwendeman contends that the order
granting arbitration is appealable because it eliminated Cross Country from
the action and thus is final as to those entities and because the elimination of
the putative class claims made the order appealable under the “death knell
doctrine.” Respondents do not challenge the appealability of the order. We
need not decide the issue because even if the order were not appealable we
would exercise our discretion to treat the appeal as a petition for a writ of
mandate. (Id. at p. 1123.)

                                       5
the arbitrable claims against signatory defendants.’ ” (Garcia, supra,
11 Cal.App.5th at p. 786.)
      Garcia, which was cited by the trial court in its order compelling
arbitration, is on point and directs the outcome in this case. There, a
temporary staffing company hired an hourly employee, who signed an
arbitration agreement providing that binding arbitration would determine
“any dispute” between the company and the employee. (Garcia, supra,
11 Cal.App.5th at p. 784.) The agreement defined arbitrable disputes as
including “those regarding wages, vacation pay, sick time pay, overtime pay,
state and federal employment laws and regulation,” including specific federal
statutes. (Ibid.) The employee then was assigned to work for a separate
company. (Ibid.) He later sued both the staffing company and the company
to which he had been assigned for Labor Code violations and unfair business
practices regarding payment of his wages during his assignment to the
company. (Id. at p. 785.) Each cause of action in the operative complaint was
alleged against both companies, and both companies moved to compel
arbitration. (Ibid.) The trial court granted the motion, and the Court of
Appeal affirmed. (Id. at pp. 785, 789.) The court concluded that all of the
employee’s claims were “intimately founded in and intertwined with his
employment relationship with [the staffing company], which [wa]s governed
by the employment agreement compelling arbitration.” (Id. at p. 787; see also
Franklin v. Community Regional Medical Center (9th Cir. 2021) 998 F.3d
867, 871–872 [Garcia required that travel nurse arbitrate claims with
nonsignatory hospital where they were intertwined with employment
contract with staffing agency].)
      Likewise here, Schwendeman’s arbitration agreement with Travel Staff
provides that it shall cover “all claims between them, including employment-

                                       6
related or other disputes involving Travel Staff clients and vendors.” (Italics
added.) Because Schwendeman’s employment relationship with Cross
Country arose because of her relationship with Travel Staff, her causes of
action against Cross Country could not be more “founded in and intertwined
with [her] employment relationship with” Travel Staff. (Garcia, supra,
11 Cal.App.5th at p. 787.) Schwendeman contends that equitable estoppel
does not apply because the arbitration clause was not as broadly worded as
the one in Garcia. Instead, according to Schwendeman, the clause expressly
applied only to claims “between them” (i.e., Schwendeman and Travel Staff).
But she omits the additional language that the agreement covers disputes
“between them, including employment-related or other disputes involving
Travel Staff clients and vendors.” (Italics added.) This language specifically
contemplated that parties other than Travel Staff would be covered by the
agreement, and it did not, as appellant’s counsel insisted at oral argument,
rule out Schwendeman’s employment claims against Cross Country. Under
these circumstances, the trial court properly found that the equitable-
estoppel exception to the rule that one must ordinarily be a party to an
arbitration agreement to be bound by it applies.
      The trial court also properly found that a second exception to the
general rule, one based on agency principles, applies. “The agency exception
is another exception to the general rule that only a party to an arbitration
agreement may enforce it. [Citation.] The exception applies, and a defendant
may enforce the arbitration agreement, ‘when a plaintiff alleges a defendant
acted as an agent of a party to an arbitration agreement . . . .’ ” (Garcia,
supra, 11 Cal.App.5th at p. 788; see also Dryer v. Los Angeles Rams (1985)
40 Cal.3d 406, 418 [where individual defendants were not signatories to
arbitration agreement but were alleged to be acting as agents of signatory,

                                        7
they were “entitled to the benefit of the arbitration provisions”].) In Garcia,
the employee alleged that the defendants were acting as agents of one
another as joint employers, and each cause of action alleged identical claims
against all defendants without distinction. (Garcia, at p. 788.) The court
held that the agency exception thus applied. (Ibid.) Likewise here,
Schwendeman’s first amended complaint alleged that Cross Country
“designate[d]” Travel Staff as a nominal employer and that Travel Staff
“relie[d] exclusively on [the Cross Country entities] for all services related to
the employment of Travelers.” It further alleged that Cross Country “caused
Travel Staff, LLC, acting on Cross Country’s behalf, to violate Labor Code
sections 201 and 510.” (Italics added.)
      In her briefing on appeal, Schwendeman does not directly address the
agency exception. Instead, she argues that the trial court somehow conflated
the issues of agency and alter ego and treated Travel Staff and the Cross
Country entities “as one and the same entity under the arbitration
agreement.” To be sure, “[a]gency and alter ego are two different and distinct
concepts. In the case of an alter ego, the court pierces the corporate veil. In
the case of an agency the corporate identity is preserved but the principal is
held liable for the acts of its agent.” (Northern Natural Case Co. v. Superior
Court (1976) 64 Cal.App.3d 983, 994.) But we disagree with Schwendeman’s
contention that the trial court somehow failed to draw a distinction between
the two principles. Agency and “veil-piercing/alter ego” are two separate
exceptions to the general rule that arbitration is a contractual right available
only to those who have signed the agreement. (Boucher v. Alliance Title Co.,
Inc. (2005) 127 Cal.App.4th 262, 268 [noting that federal courts have
identified five separate exceptions].)

                                         8
      Schwendeman relies on Hogan v. SPAR Group, Inc. (1st Cir. 2019)
914 F.3d 34, but that case actually supports the trial court’s order compelling
arbitration. In Hogan, an employee signed an agreement that included an
arbitration clause with a staffing company, which then assigned the
employee to perform services for a retail-services provider. (Id. at p. 36.) The
agreement was limited to disputes “between the Parties” (id. at pp. 37–38),
which were “unambiguously defined” as the employee and the staffing
company. (Id. at p. 41.) Although the two companies were affiliated with one
another and the staffing company provided most of the retail-services
provider’s workers, the court concluded that the retail-services company
could not compel arbitration when the employee sued both companies
because the arbitration clause was clearly limited to the two signatories.
(Id. at pp. 36, 40.) Notably, the agreement elsewhere referred to the staffing
company’s customers, but it omitted that reference in the arbitration clause.
(Id. at p. 40.) The staffing company “could have easily modified the
arbitration clause to make it applicable to” any dispute between the parties
“ ‘and/or any [staffing company] customer,’ ” but did not do so. (Id. at p. 40.)
Here, of course, the agreement specifically referred to Travel Staff “clients
and vendors.” And while the defendant companies in Hogan “chose to
conduct their business as separate corporate structures” (id. at p. 42), here
the principal-agent relationship between Cross Country and Travel Staff was
conceded by Schwendeman who alleged that Cross Country designated Travel
Staff as “the nominal employer” of travel nurses and thus controlled the
Labor Code violations that allegedly occurred. The trial court here thus did
not “disregard[]” respondents’ corporate forms or “deem[] . . . [them] to be one
and the same under the arbitration agreement,” as Schwendeman argues,

                                        9
but followed the law as it applies to the corporate relationship Schwendeman
alleged.
      Schwendeman’s other attempts to avoid arbitration likewise fail. She
points to the fact that the Cross Country Terms and Conditions Booklet
contained a “judicial forum clause.” She contends that because she signed
the booklet on the same day as the arbitration agreement, the two documents
must be construed together as one agreement. (Holguin v. Dish Network LLC
(2014) 229 Cal.App.4th 1310, 1320 [several papers relating to same subject
matter and executed as parts of substantially one transaction are to be
construed together as one contract, whether or not they expressly refer to one
another].) Cross Country, by contrast, contends that because the Terms and
Conditions Booklet provided that the company “reserve[d] the right to
change, add to, or delete any of [its] provisions . . . at any time,” and
Schwendeman signed the arbitration agreement after she signed an
acknowledgement of the booklet, the arbitration agreement “superseded” the
forum-selection clause.
      We do not sanction an employer having an employee sign two
conflicting documents on the same day and later claiming that a provision in
one of those documents has no effect because of the order in which the
documents were signed. But it is not clear to us that the two documents here
are in fact as inconsistent as Schwendeman insists. The Terms and
Conditions Booklet states that the “jurisdiction and venue of . . . disputes . . .
shall reside exclusively in the Judicial Circuit in and for Palm Beach County,
Florida.” This language specifies a location for the resolution of disputes but

                                        10
does not with certainty preclude arbitration in that location.4 This is
distinguishable from language in a case relied on by Schwendeman, where an
arbitration agreement conflicted with a membership agreement that provided
that any dispute would be brought “in the state and federal courts” in Salt
Lake City, Utah. (O’Shaughnessy v. Young Living Essential Oils, L.C.
(5th Cir., April 28, 2020, No. 19-51169) 2020 U.S.App. Lexis 14081, italics
added.) In any event, we agree with Cross Country that even if the forum
clause applied, that would not benefit Schwendeman in this action because
the clause stated that any dispute would be resolved in Florida using Florida
law. Schwendeman’s argument that her agreement with Cross Country
contemplates the right to sue in court falls flat since she has sued in a
different state than the one identified in the agreement. True, if we were to
find the arbitration agreement unenforceable, Schwendeman would be free to
argue on remand that forcing her to litigate in Florida would diminish her
unwaivable statutory rights (e.g., Verdugo v. Alliantgroup, L.P. (2015)
237 Cal.App.4th 141, 154–155), but we decline to do so.
      Finally, we reject Schwendeman’s argument that the trial court’s
conclusion conflicts with the Federal Arbitration Act (FAA, 9 U.S.C. §§ 1–16).
It is of course true, as Schwendeman notes, that one of the FAA’s

      4 At oral argument, Schwendeman’s counsel asserted that trial courts
in Florida are called judicial circuits and that the reference to “the Judicial
Circuit in and for Palm Beach County, Florida” was thus necessarily a
reference to a judicial forum. (Cf. Bach v. Vladigor Investments, Inc. (Fla.
Ct.App. 2021) 325 So.3d 41 [appeal of order “from the Circuit Court for the
Fifteenth Judicial Circuit, Palm Beach County”].) While we do not have the
entire employee handbook and believe a plausible argument could still be
made that the language allows parties to arbitrate in Palm Beach, we agree
that the language of the booklet suggest that disputes would be resolved in a
Florida court. Still, we cannot agree that this language overrides the more
specific and unambiguous arbitration agreement.

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foundational principles is that arbitration is a matter of consent and that
courts must enforce arbitration agreements according to their terms. (Lamps
Plus, Inc. v. Varela (2019) __ U.S. __, __ [139 S.Ct. 1407, 1412, 1415].) But
“ ‘[t]he United States Supreme Court has held that a litigant who is not a
party to an arbitration agreement may invoke arbitration under the FAA if
the relevant state contract law allows the litigant to enforce the agreement.’ ”
(Franklin v. Community Regional Medical Center, supra, 998 F.3d at p. 870.)
Here, state law contemplates arbitration for nonsignatories under certain
circumstances that were met here. This case is thus distinguishable from
Lamps Plus, where the court held that California’s doctrine of contra
proferentem (where ambiguity in a contract should be construed against the
drafter) should not be used to interpret an ambiguous contract term as
requiring class arbitration. (Lamps Plus, at pp. 1417–1418.)
      We recognize that if the facts alleged in Schwendeman’s complaint are
true, compelling her to arbitrate without resort to a class remedy in court
may deprive her of any meaningful recovery. This may be what motivated
lawmakers to enact section 432.6, which bars employers from requiring
employees to consent to arbitration as a condition of employment. (E.g.,
Chamber of Commerce of the United States v. Bonta (9th Cir., Sept. 15, 2021,
No. 20-15291) __ F.4th __, 2021 U.S.App. Lexis 27659.) The statute applies
only to employment contracts entered into, modified, or extended on or after
January 1, 2020 (§ 432.6, subd. (h)), and thus does not apply to
Schwendeman’s circumstances. And even if it did, the executed arbitration
agreement would still be valid. (§ 432.6, subd. (f).)
                                       III.
                                  DISPOSITION
      The trial court’s order is affirmed. Respondents shall recover their
costs on appeal.

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                                       _________________________
                                       Humes, P.J.

WE CONCUR:

_________________________
Margulies, J.

_________________________
Sanchez, J.

Schwendeman v. Travel Staff LLC et al. A159147

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