Garcia v. Pexco, LLC
11 Cal. App. 5th 782
| Cal. Ct. App. | 2017Background
- Plaintiff Narciso Garcia was hired by temporary staffing company Real Time (Select Staffing) and assigned to work for Pexco; Garcia signed an employment application with an arbitration agreement between him and Real Time only.
- The arbitration clause covered “any dispute” including statutory wage-and-hour claims (expressly listing Labor Code and FLSA/Equal Pay Act issues).
- Garcia sued Real Time, Pexco, and Aerotek for Labor Code violations and unfair business practices, alleging all defendants acted as agents/joint employers and pleading each cause of action against “All Defendants.”
- Real Time and Pexco moved to compel individual arbitration; the trial court granted the motions and dismissed class claims; Garcia appealed the order as to Pexco.
- Garcia conceded the arbitration agreement binds him with Real Time but argued Pexco, a nonsignatory, could not compel arbitration because the claims were statutory (Labor Code) and not contractual.
- The Court of Appeal affirmed, holding Garcia was equitably estopped from denying arbitration with Pexco and that the agency exception also allowed Pexco to enforce the arbitration clause.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Can a nonsignatory (Pexco) compel arbitration when plaintiff signed an arbitration agreement with a signatory (Real Time)? | Garcia: No — Pexco is not a party; claims are statutory Labor Code claims, not contract claims, so arbitration shouldn’t bind Pexco. | Pexco: Yes — doctrine of equitable estoppel applies because claims against Pexco are intertwined with the arbitration agreement; alternatively agency exception applies because complaint alleges joint employer/agency. | Held: Yes; nonsignatory Pexco may compel arbitration under equitable estoppel and the agency exception. |
Key Cases Cited
- Boucher v. Alliance Title Co., Inc., 127 Cal.App.4th 262 (recognizing equitable estoppel allows nonsignatories to invoke arbitration when claims are intertwined with an agreement)
- DMS Services, LLC v. Superior Court, 205 Cal.App.4th 1346 (distinguishing facts where equitable estoppel did not apply because claims arose under a different agreement)
- Metalclad Corp. v. Ventana Environmental Organizational Partnership, 109 Cal.App.4th 1705 (equitable estoppel applies where claims are inherently inseparable from arbitrable claims)
- Coast Plaza Doctors Hospital v. Blue Cross of California, 83 Cal.App.4th 677 (broad arbitration clauses may cover tort or statutory claims arising from the contractual relationship)
- Barsegian v. Kessler & Kessler, 215 Cal.App.4th 446 (boilerplate agency allegations insufficient in some contexts to compel arbitration)
- Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, 473 U.S. 614 (federal policy favors arbitration and arbitration clauses cover statutory claims where appropriate)