67 Cal.App.5th 934
Cal. Ct. App.2021Background
- Nixon worked for AmeriHome from Oct. 2015 to Feb. 2018 and signed an Employment and Confidentiality Agreement containing a broad arbitration clause and a California choice-of-law provision.
- Nixon sued AmeriHome in 2019 on behalf of a putative class for unpaid wages and related UCL violations; her first cause of action was brought under Labor Code §229 (wage claims not subject to private arbitration).
- AmeriHome moved to compel arbitration of Nixon’s individual claims, arguing the FAA governs because her work involved interstate commerce; it sought dismissal of class claims and a stay of court proceedings.
- Nixon conceded the agreement and interstate commerce but argued §229 barred arbitration (pointing to the California choice-of-law clause) and invoked the third-party litigation exception (Code Civ. Proc. §1281.2(c)) because a separate PAGA action (Brooks) was pending.
- The trial court granted AmeriHome’s motion: it held the FAA applied, §229 was preempted and not incorporated by the general choice-of-law clause, and it declined to deny/stay arbitration under §1281.2(c); the court dismissed the class claims and stayed the case pending arbitration.
- On appeal the court treated the challenge to the arbitration order as a writ petition, denied it on the merits, affirmed dismissal of class claims, and dismissed the appeal from the arbitration order.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Labor Code §229 (bar on private arbitration of unpaid wage claims) applies despite FAA coverage where agreement contains a California choice-of-law clause | Nixon: The contract’s broad California choice-of-law clause means §229 governs and precludes arbitration of wage claims | AmeriHome: FAA governs because the contract involves interstate commerce; the choice-of-law clause does not unambiguously incorporate §229 and cannot override FAA preemption | Held: FAA applies and preempts §229; the general choice-of-law clause does not unmistakably incorporate §229, so wage claim is arbitrable |
| Whether the trial court abused discretion under Code Civ. Proc. §1281.2(c) by compelling arbitration despite a pending third-party PAGA action (Brooks) | Nixon: The pending PAGA representative action risks conflicting rulings and justifies denying or staying arbitration under §1281.2(c) | AmeriHome: No same-transaction/likelihood of conflicting rulings; even if exception applied, court may still order arbitration of parties who agreed to arbitrate | Held: No abuse of discretion—Brooks (a PAGA representative action) is conceptually different from Nixon’s individual claim and the court permissibly ordered arbitration |
| Whether the order compelling arbitration (issued with dismissal of class claims) was reviewable on appeal | Nixon: The arbitration order should be reviewable as part of her appeal from dismissal of class claims (death-knell doctrine) | AmeriHome: Orders compelling arbitration are generally nonappealable (must await final judgment) | Held: Court exercised discretion to treat the appeal portion as a writ petition and reviewed the arbitration order on the merits; petition denied |
Key Cases Cited
- Mastrobuono v. Shearson Lehman Hutton, 514 U.S. 52 (U.S. 1995) (choice-of-law clause does not automatically exclude arbitrability; ambiguities resolved in favor of arbitration)
- Perry v. Thomas, 482 U.S. 483 (U.S. 1987) (FAA §2 creates federal substantive law of arbitrability; state laws requiring judicial forum for arbitrable claims are preempted)
- Volt Info. Sciences v. Bd. of Trustees of Leland Stanford Jr. Univ., 489 U.S. 468 (U.S. 1989) (parties may choose governing law for arbitration procedure; FAA preemption limits state laws that undermine arbitration)
- Cronus Investments, Inc. v. Concierge Services, 35 Cal.4th 376 (Cal. 2005) (FAA’s substantive policy applies in state court; parties may opt to have California procedural arbitration rules apply)
- Bravo v. RADC Enterprises, Inc., 33 Cal.App.5th 920 (Cal. Ct. App. 2019) (general California choice-of-law clause does not clearly incorporate Labor Code §229 to exclude wage claims from arbitration)
- Mt. Diablo Medical Ctr. v. Health Net of Cal., 101 Cal.App.4th 711 (Cal. Ct. App. 2002) (choice-of-law clause can incorporate state procedural arbitration rules, but courts must exclude state rules that conflict with FAA policy)
- Kim v. Reins Int’l California, Inc., 9 Cal.5th 73 (Cal. 2020) (PAGA representative claims are legally and conceptually distinct from an employee’s individual claims)