70 Cal.App.5th 560
Cal. Ct. App.2021Background
- Deeveria Lacy filed a retaliation complaint with the Labor Commissioner (DLSE) under Cal. Lab. Code § 98.7 after her termination; the Commissioner opened an investigation.
- Lacy had signed Crestwood’s mandatory arbitration agreement. Crestwood petitioned the superior court to compel arbitration and sought a stay of DLSE proceedings; the Commissioner was notified of the petition but not served with the petition or told a stay was sought.
- The trial court granted Crestwood’s petition and stayed all DLSE proceedings pending arbitration; Crestwood later mailed the arbitration order to the Commissioner on April 22, 2019.
- About 100 days later the Commissioner filed an ex parte application to intervene and then a noticed motion to intervene and to vacate (or reconsider) the stay; the trial court denied intervention as untimely and treated the motion to vacate as moot.
- The Court of Appeal reversed: it held the intervention motion was timely and that the stay impaired the Commissioner’s ability to vindicate the public interest, and it ruled the FAA did not preempt the Commissioner’s authority to investigate, seek interim relief, or issue a determination under § 98.7.
Issues
| Issue | Plaintiff's Argument (Crestwood) | Defendant's Argument (Labor Commissioner) | Held |
|---|---|---|---|
| Timeliness of the intervention motion | Commissioner had notice of Crestwood’s petition on Feb. 25 and voluntarily suspended the investigation, so waiting until Aug. 12 was untimely and prejudicial | Timeliness should be measured from receipt of the arbitration order (Apr. 22); ex parte filing July 31 (~100 days) shows prompt action and no prejudice | Motion to intervene was timely; trial court abused its discretion in denying it |
| Whether the arbitration stay impaired the Commissioner’s ability to protect the public interest | The stay only delayed the investigation; Commissioner had agreed to suspend the investigation; no impairment of statutory powers | The stay prevented the Commissioner from pursuing interim injunctive relief, issuing determinations, or otherwise exercising independent prosecutorial authority, potentially indefinitely | The stay impaired the Commissioner’s ability to vindicate the public interest; mandatory intervention appropriate |
| FAA preemption of the Commissioner’s § 98.7 authority | Arbitration agreement and Sonic II support applying FAA to displace DLSE proceedings and the stay was proper | Under Waffle House and analogous authority, when an agency acts prosecutorially (investigation, interim relief, determinations) the FAA does not preempt the agency’s enforcement role | FAA does not preempt the Commissioner’s authority to investigate, seek interim relief, or issue determinations under § 98.7 (distinguishing Berman/Sonic II which involved adjudicatory processes) |
| Remedy / disposition of motion to vacate | Denial of intervention made vacation motion moot; trial court properly took the vacate motion off calendar | Commissioner sought vacatur of the stay and review on appeal | Court of Appeal reversed denial of intervention and the effective denial of the vacate motion; remanded for consideration whether to vacate the stay |
Key Cases Cited
- Waffle House, Inc. v. E.E.O.C., 534 U.S. 279 (2002) (agency prosecutorial/enforcement role can proceed despite employee’s arbitration agreement)
- Preston v. Ferrer, 552 U.S. 346 (2008) (FAA preempts where administrative actor functions as adjudicator tied to contractual dispute)
- Sonic-Calabasas A, Inc. v. Moreno, 57 Cal.4th 1109 (2013) (FAA preemption applies to Berman wage-hearing process viewed as adjudicatory)
- Iskanian v. CLS Transportation Los Angeles, LLC, 59 Cal.4th 348 (2014) (PAGA representative/enforcement actions fall outside FAA coverage)
- Pearson Dental Supplies, Inc. v. Superior Court, 48 Cal.4th 665 (2010) (arbitration agreements can limit access to administrative adjudicatory forums absent other defects)
- Joulé, Inc. v. Simmons, 459 Mass. 88 (2011) (state agency enforcement process not displaced by FAA where agency acts in prosecutorial role)
- Rent-A-Center, Inc. v. Iowa Civil Rights Comm., 843 N.W.2d 727 (Iowa 2014) (FAA did not bar state civil-rights commission from pursuing enforcement action)
- Truck Ins. Exchange v. Superior Court (Transco Syndicate), 60 Cal.App.4th 342 (1997) (intervention timeliness considered in light of prejudice to parties)