38 Cal. App. 5th 244
Cal. Ct. App. 5th2019Background
- Plaintiff Yalila Lacayo filed a putative class action alleging multiple California wage-and-hour violations and a UCL claim based on those violations against Catalina Restaurant Group and related entities.
- Lacayo had signed an employment "Mutual Agreement to Arbitrate Claims and Class Action Waiver" (Arbitration Agreement) that: broadly covered "all claims," contained a class-action waiver, and delegated disputes about the agreement's interpretation to the arbitrator; it also stated it was governed by the FAA.
- The Arbitration Agreement included an express carve-out in a "Claims Not Covered" section allowing a party, upon showing reasonable cause, to petition a court for "immediate injunctive and/or equitable relief for unfair competition."
- Catalina Defendants moved to compel individual arbitration, to dismiss class claims, and to stay the action. The trial court compelled arbitration of Lacayo’s individual Labor Code claims, left the question of class arbitration to the arbitrator, denied arbitration of the UCL claim (but stayed it), and stayed the matter pending arbitration.
- On appeal, defendants challenged the court's refusal to (1) order arbitration of the UCL claim and (2) dismiss class claims. The appellate court held only the denial as to the UCL claim was appealable and affirmed that denial; it dismissed the appeal as to the Labor Code claims and the class-dismissal issue as not appealable.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the trial court's partial grant (compelling individual arbitration but leaving class arbitration to arbitrator) is immediately appealable | Lacayo argued the order compelling individual arbitration was not appealable and the court permissibly left class issues to the arbitrator under the delegation clause | Catalina argued Lamps Plus allows appeal where court refuses to order individual arbitration and effectively leaves or orders class arbitration or denies requested relief | Appeal dismissed as to Labor Code claims and class-dismissal request; only denial re: UCL arbitration was appealable |
| Whether the UCL injunctive/equitable claim is subject to arbitration under the Arbitration Agreement | Lacayo argued UCL injunctive/equitable relief is expressly excluded from arbitration by the "Claims Not Covered" carve-out | Catalina argued the arbitration clause broadly covered all statutory claims (including UCL) and delegation favored arbitration of gateway issues | Court affirmed denial of arbitration for UCL claim: the contract expressly carved out unfair competition injunctive/equitable relief from arbitration |
| Whether the class-action waiver must be decided by the court (not arbitrator) | Lacayo contended arbitrator should decide waiver due to broad delegation clause | Catalina contended the waiver was clear and court should dismiss class claims rather than leave to arbitrator | Court left the interpretation/enforceability of the class-action waiver to the arbitrator under the agreement’s delegation clause |
| Whether appellate/collateral writ review is appropriate to overturn trial court’s decision to leave class issues to arbitrator | Lacayo said writ relief is available only in unusual circumstances and was not shown | Catalina sought writ or immediate review arguing concrete harm; relied on Truly Nolen and Lamps Plus | Court declined to treat appeal as writ; no exceptional circumstances shown; left class-question to arbitrator |
Key Cases Cited
- Lamps Plus, Inc. v. Varela, 139 S. Ct. 1407 (U.S. 2019) (courts should not infer consent to classwide arbitration from ambiguous agreements; orders compelling class arbitration can be appealable when they depart from requested individual arbitration)
- Sandquist v. Lebo Automotive, Inc., 228 Cal. App. 4th 65 (Cal. Ct. App. 2014) (who decides gateway questions depends on parties’ agreement; broad delegation clauses can commit interpretive issues to arbitrators)
- Reyes v. Macy's, Inc., 202 Cal. App. 4th 1119 (Cal. Ct. App. 2011) (order compelling individual arbitration is generally not immediately appealable; motions to dismiss class claims are interlocutory)
- Truly Nolen of Am. v. Sup. Ct., 208 Cal. App. 4th 487 (Cal. Ct. App. 2012) (writ relief granted in context where trial court ordered classwide arbitration and parties had forfeited delegation issue below)
- Ferguson v. Corinthian Colleges, Inc., 733 F.3d 928 (9th Cir. 2013) (arbitrability of unfair-competition claims may turn on the arbitration agreement’s language; distinguishable where agreement lacked an express UCL carve-out)