Torres v. Merit Aluminum Foundry CA4/3
G064311
Cal. Ct. App.May 29, 2025Background
- Ralph Torres was employed by Merit Aluminum Foundry, a subsidiary of Merit Aluminum Inc., from December 2021 to July 2022 and signed a Mutual Agreement to Arbitrate Claims as a condition of employment.
- In June 2023, Torres filed a putative class action and later amended his complaint to add a PAGA claim, alleging various wage and labor violations under the California Labor Code.
- Defendants moved to compel arbitration of Torres’s individual claims, dismiss class claims, and stay representative PAGA claims under the FAA, but the trial court denied the motion.
- The trial court determined defendants failed to establish that the FAA applied, and thus held that California law (including Gentry and Labor Code §229) prohibited enforcement of class and PAGA waivers in arbitration.
- Defendants appealed the denial of their motion to compel arbitration, arguing the FAA governs the agreement and preempts contrary California law.
Issues
| Issue | Torres's Argument | Defendants' Argument | Held |
|---|---|---|---|
| Whether the FAA governs the arbitration agreement | FAA doesn’t apply; Foundry didn’t show sufficient interstate nexus | FAA applies; business and job involved interstate commerce | FAA governs; sufficient connection to interstate commerce |
| Enforceability of class and PAGA waivers | Waivers invalid under CA law (Gentry, Iskanian, §229) | FAA preempts CA law; waivers enforceable | FAA preempts CA law; waivers enforceable |
| Interpretation of agreement's carve-out provisions | References to state law mean all CA law, not just non-preempted law | Carve-outs only refer to valid, non-preempted state law | Carve-outs refer only to non-preempted (valid) law |
| Whether individual and representative PAGA claims can be arbitrated | Representative claims not subject to arbitration; individual can be | Individual PAGA claims arbitrable; representative claims should be stayed | Compel arbitration of individual claims, stay representative PAGA claims |
Key Cases Cited
- Allied-Bruce Terminix Cos. v. Dobson, 513 U.S. 265 (1995) (FAA applies broadly to transactions involving interstate commerce)
- Citizens Bank v. Alafabco, Inc., 539 U.S. 52 (2003) (only general business practices need bear substantially on interstate commerce for FAA applicability)
- DIRECTV, Inc. v. Imburgia, 577 U.S. 47 (2015) (arbitration clauses referencing “state law” refer only to valid, non-preempted law)
- Cronus Investments, Inc. v. Concierge Servs., 35 Cal.4th 376 (Cal. 2005) (ambiguities in arbitration agreements are resolved in favor of arbitration)
- Gentry v. Superior Court, 42 Cal.4th 443 (Cal. 2007) (class action waivers can be unenforceable under CA law, but preempted by FAA)