87 Cal.App.5th 208
Cal. Ct. App.2023Background
- Chatman and Hall worked at Tesla's Fremont plant via staffing agencies in late 2016–2017; Tesla sent offer letters in July 2017 stating a first day of direct employment of August 2, 2017, which they signed.
- The offer letters contained an arbitration provision covering "disputes . . . arising from or relating to your employment" and barred class/representative and non-individual relief (including an arbitrator granting relief to a group).
- Plaintiffs allege race-based harassment occurring both before and after August 2, 2017, and seek class/subclass relief and a public injunction under the Fair Employment and Housing Act (FEHA).
- Tesla moved to compel arbitration of all claims and argued plaintiffs cannot seek public injunctions under FEHA and that the Federal Arbitration Act (FAA), as interpreted in Viking River, preempts California's rule invalidating waivers of public injunctive relief.
- The trial court ordered arbitration only for claims arising on or after August 2, 2017; it held pre-August claims (while plaintiffs worked for staffing agencies) were not covered and declined to enforce the contract waiver of public injunctive relief.
- The Court of Appeal affirmed: arbitration is limited to claims arising after the start of direct employment, and California’s no-waiver rule for public injunctions under McGill survives Viking River as applied to FEHA public-injunction claims.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Temporal scope: whether the arbitration clause covers conduct before direct employment (pre‑Aug 2, 2017) | Plaintiffs: "employment" in the contract begins Aug 2, 2017; pre‑Aug conduct is outside the clause | Tesla: ‘‘arising from or relating to’’ is broad; pre‑Aug claims at same workplace "relate to" employment and must be arbitrated | Held: Arbitration applies only to disputes arising on or after Aug 2, 2017; pre‑contract claims are not arbitrable |
| Availability of public injunction under FEHA | Plaintiffs: FEHA enforces public policy; injunctions may have primary public purpose and thus are public injunctions | Tesla: FEHA protects individual "aggrieved" persons; public injunctions not authorized or applicable here | Held: Plaintiffs may seek a public injunction under FEHA; request has primary purpose/effect of protecting the public |
| FAA preemption of California’s no‑waiver rule (McGill) after Viking River | Plaintiffs: McGill remains good law; FAA does not require enforcement of contractual waivers of public injunctive remedies | Tesla: Viking River shows FAA preempts state rules that prevent contractual waiver of representative/related remedies | Held: Viking River does not preempt McGill’s rule as applied to public‑injunction waivers under FEHA; FAA does not compel enforcement of such waivers |
| Severing/arbitrating only part of the claims (temporal division) | Plaintiffs: court can keep pre‑Aug claims and send arbitrable post‑Aug claims to arbitration | Tesla: hostile‑work‑environment claims should not be split; must arbitrate all | Held: Trial court properly severed and ordered arbitration only for arbitrable (post‑Aug) claims; stay/proceedings for non‑arbitrable claims appropriate |
Key Cases Cited
- McGill v. Citibank, N.A., 2 Cal.5th 945 (2017) (predispute arbitration waiver of the right to seek public injunctive relief is invalid under California law)
- Viking River Cruises, Inc. v. Moriana, 142 S. Ct. 1906 (2022) (FAA preempts state rules that compel joinder of other employees’ claims in arbitration; limited Iskanian)
- Lamps Plus, Inc. v. Varela, 139 S. Ct. 1407 (2019) (ambiguities about arbitration‑scope are for courts to resolve in favor of arbitration under FAA precedent)
- Pinnacle Museum Tower Assn. v. Pinnacle Market Dev. (US), LLC, 55 Cal.4th 223 (2012) (arbitration is consent‑based; courts apply state contract law to formation/interpretation)
- Salgado v. Carrows Restaurants, Inc., 33 Cal.App.5th 356 (2019) (arbitration language held to apply retroactively where agreement clearly encompassed all claims related to employment)
- Franco v. Greystone Ridge Condo., 39 Cal.App.5th 221 (2019) (arbitration clause covering pre‑hire through post‑termination held to encompass previously accrued employment claims)