A158830
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA FIRST APPELLATE DISTRICT DIVISION THREE
October 19, 2021
City and County of San Francisco Super. Ct. No. CPF-19-516552
CERTIFIED FOR PUBLICATION
Deeveria Lacy, a former employee of respondent Crestwood Behavioral Health, Inc. (Crestwood), filed a retaliation complaint against Crestwood with appellant Lilia Garcia-Brower, in her official capacity as the California Labor Commissioner (Labor Commissioner or Commissioner), pursuant to
Approximately 100 days after Crestwood alerted her to the trial court‘s ruling, the Labor Commissioner moved ex parte to intervene so shе could vacate the order. After requiring the Commissioner to file a noticed motion, the trial court denied her motion to intervene because it was untimely and because the order staying the Commissioner‘s investigation did not impair or impede her ability to protect her interest in Lacy‘s retaliation complaint. As a result, the court denied the Commissioner‘s motion to vacate that order as moot. We conclude that the motion to intervene was timely and that the order staying the Commissioner‘s investigation impaired her ability to vindicate the public interest. We therefore reverse.
BACKGROUND
Crestwood is a provider of mental health services. Lacy worked in Crestwood‘s San Francisco facility as a recovery coach. When Lacy joined Crestwood, she signed and agreed to Crestwood‘s “Dispute Resolution & Arbitration” policy (arbitration policy). Under that policy, “Crestwood, as well as every employee of Crestwood, agree to submit unresolved employment-related legal disputes tо an impartial, objective individual called an arbitrator. . . . [¶] Arbitration is agreed to in lieu of a civil action before a judge or jury, and the arbitrator‘s decision is final and binding.” (Some underlining omitted.)
Crestwood terminated Lacy after she allegedly complained to a co-worker about being assaulted on the job. On January 7, 2019, Lacy filed a retaliation complaint against Crestwood with the Labor Commissioner. The Commissioner accepted the complaint and began an investigation pursuant to
After contacting Lacy and her attorney to inform them of its intent to arbitrate, Crestwood also informed the Labor Commissioner about the arbitration policy. The Commissioner responded that it was not bound by the policy and that it would continue to investigate Lacy‘s complaint.
Lacy opposed the petition, arguing that: (1) Crestwood failed to provide Lacy with notice of its intent to arbitrate; (2) the Labor Commissioner had jurisdiction over her retaliation claims under
On July 31, 2019, the Labor Commissioner filed an еx parte application for leave to intervene so it could move to vacate the arbitration order. The trial court denied the application because there were no grounds for ex parte relief and “advised the Commissioner to file a noticed motion” to intervene. The Commissioner then filed a motion for leave to intervene (intervention motion) and a motion to vacate or, in the alternative, for reconsideration (motion to vacate) on August 12, 2019.
The trial court denied the intervention motion. First, the court found the motion untimely. According to the court, the Labor Commissioner “was placed on notice on February 25, 2019 that Crestwood had filed a petition to compel arbitration of” Lacy‘s claims, “which were then pending solely before the Commission . . . . In response, the Commissioner voluntarily suspended her investigation pending the Court‘s resolution of that petition. The Court granted the petition on April 17, 2019, fully resolving the entire matter before it. Although the Commissioner evidently had a later change of heart, her motion, filed on August 12, comes several months too late.”
Second, the court found that the arbitration order did not impair or impede the Labor Commissioner‘s ability to protect her interest in Lacy‘s retaliation complaint. (
Because it denied the intervention motion, the trial court took the motion to vacate “off calendar as moot.” The Labor Commissioner timely appealed. (See Noya v. A.W. Coulter Trucking (2006) 143 Cal.App.4th 838, 841 [“An order denying a motion to intervene is appealable when it finally and adversely determines the right of the moving party to proceed in the action“].)
DISCUSSION
I.
The Intervention Motion
Mandatory intervention is governed by
The Labor Commissioner moved for mandatory intervention under
A.
Standard of Review
Under California and federal cases, a “determination of the timeliness оf intervention” is reviewed “for an abuse of discretion.” (Lofton, supra, 27 Cal.App.5th at p. 1012; see Smith v. Los Angeles Unified School Dist. (9th Cir. 2016) 830 F.3d 843, 853 (Smith) [“timeliness determination is reviewed for abuse of discretion“].) But “California cases are not settled on whether we review the denial of a request for mandatory intervention pursuant to [
B.
Timeliness
The trial court found that the Labor Commissioner‘s intervention motion, “filed on August 12,” 2019, came “several months too late” because she had notice of the petition “on February 25, 2019.” Crestwood contends the court did not abuse its discretion in so finding because the Commissioner provided no explanation for the delay and because Crestwood and Lacy have suffered prejudice. We disagree.
“Timeliness is determined by the totality of the circumstances facing would-be intervenors, with a focus on three primary factors: ‘(1) the stage of the proceeding at which an applicant seeks to intervene; (2) the prejudice to other parties; and (3) the reason for the delay.’ ” (Smith, supra, 830 F.3d at p. 854.) ” ’ [D]elay in itself does not make a request for intervention untimely. ’ ” (Kane County, Utah v. United States (10th Cir. 2019) 928 F.3d 877, 891.) When mandatory intervention “is sought, because ‘the would-be intervenor may be seriously harmed if intervention is denied, courts should be reluctant to dismiss such a request for intervention as untimely, even though they might deny the request if the intervention were merely permissive.’ ” (Lopez-Aguilar v. Marion County Sheriff‘s Dept. (7th Cir. 2019) 924 F.3d 375, 388–389; see Benjamin, supra, 701 F.3d at p. 948 [“There is a general reluctance to dispose of a motion to intervene as of right on untimeliness grounds because the would-be intervenor may be seriously harmed if not allowed to intervene“].)
Although the totality of the circumstances should be considered, “prejudice to existing parties is ‘the most important consideration in deciding whether a motion for intervention is timely.’ ” (Smith, supra, 830 F.3d at p. 857.) This does not, however, include prejudice that would result from allowing intervention. (Ibid.) Rather, only the ” ‘prejudice causеd by the movant‘s delay’ ” should be considered. (Kane County, supra, 928 F.3d at p. 891Truck Ins. Exchange v. Superior Court (Transco Syndicate) (1997) 60 Cal.App.4th 342, 351 (Truck Ins. Exchange) [“timeliness is hardly a reason to bar intervention when a direct interest is demonstrated and the real parties in interest have not shown any prejudice other than being required to prove their case“]; see also Kane County, at p. 891 [motion to intervene filed three months after intervenor
In this case, the Labor Commissioner‘s delay in moving to intervene should be measured from April 22, 2019—the date Crestwood sent the arbitration order to the Commissioner—rather than February 25, 2019—the date Crestwood informed the Commissioner about its petition. In determining whether intervention is timely, courts “focus ’ “on the date the person attempting to intervene should have been aware his interest[s] would no longer be protected adequately by the parties, rather than the date the person learned of thе litigation.” ’ ” (Ziani, supra, 243 Cal.App.4th at p. 281.) According to its own correspondence, Crestwood only informed the Commissioner on February 25 of its petition “to compel Ms. Lacy to arbitrate issues she asserted in” her retaliation complaint. (Italics added.) Crestwood did not tell the Commissioner that it was also seeking to stay all DLSE proceedings, including the investigation, and did not provide the Commissioner with a copy of its petition. Thus, the Commissioner had no reason to believe that the petition would affect her authority to investigate and act on the complaint under
Meanwhile, the other relevant date for measuring the delay should be July 31, 2019—the date the Labor Commissioner filed her ex parte application to intervene—rather than August 12, 2019—the date the Commissioner filed her intervention motion. Thus, the relevant delay for determining timeliness is 100 days—from April 22, 2019 to July 31, 2019.
Based on this delay, the factors heavily favor, if not compel, intervention. First, the stage of the proceedings strongly supports intervention. Indeed, there is no evidence in the record that an arbitration has even been initiated.
Second, neither Crestwood nor Lacy have suffered any prejudice from the delay. Crestwood identified no prejudice in its papers before the trial court, and the trial court cited none in its order denying the intervention motion. On appeal, Crestwood contends, for the first time, that it and Lacy would suffer prejudice because they would have to “relitigate the court‘s order granting Crestwood‘s petition.” But this prejudice results from the fact of intervention—and not from the Commissioner‘s delay in seeking intervention. (See Truck Ins. Exchange, supra, 60 Cal.App.4th at p. 351; Kane County, supra, 928 F.3d at p. 891; Smith, supra, 830 F.3d at p. 857.)
Finally, contrary to Crestwood‘s assertion, the Labor Commissioner did provide an excuse for the delay—the large volume of complaints that she
C.
Impairment of Ability to Protect the Public Interest
Crestwood contends the arbitration order did not impair or impede the Labor Commissioner‘s ability to protect the public interest because: (1) the order only delayed, but did not prevent, the Commissioner‘s investigation; (2) the Commissioner had already agreed to suspend her investigation; and (3) the arbitration policy superseded any DLSE proceedings on Lacy‘s retaliation complaint, including the Commissioner‘s investigation, under the Federal Arbitration Act (FAA). We disagree and find that the arbitration order impaired the Commissioner‘s ability to protect the public interest.
1.
Anti-Retaliation Provisions of the Labor Code
”
An investigation of suspected retaliation has priority. (American Corporate Security, supra, 220 Cal.App.4th at p. 43.) “The investigation shall include, where appropriate, interviews with the complainant, respondent, and any witnesses who may have information concerning the alleged violation, and a review of any documents that may be relevant to the disposition of the complaint.” (
During its investigation, the Labor Commissioner may petition a court “for appropriate temporary or injunctive relief, or both temporary and preliminary injunctive relief” if she finds “reasonable cause to believe that any person has engaged in or is engaging in” retaliation in violation of the
Upon completing her investigation, the Labor Commissioner has three options. First, the Commissioner may determine that “no violation has occurred.” (
Third, the Labor Commissioner may issue a citation if she “determines . . . that a violation has occurred.” (
If the person cited does not challenge the citation, then it becomes “final.” (
If the person cited wishes to challenge the citation, that person may request an “informal hearing” with the Labor Commissioner. (
Finally, “the rights and remedies provided by”
2.
Impairment from Delay of the Investigation
As a threshold matter, the arbitration order, by delaying the Labor Commissioner‘s investigation, impaired her ability to vindicate the public interest “in protecting the rights of individual employees and job applicants who could not otherwise afford to protect themselves.” (Stats. 2001, ch. 820, § 1.) For example, the order prevents the Commissioner from obtaining “temporary or preliminary injunctive relief” before Lacy‘s retaliation complaint is resolved by the arbitration. (
In any event, delaying the Commissioner‘s investigation contravenes the very purpose behind the anti-retaliation provisions of the
That the Lаbor Commissioner may have agreed to suspend its investigation temporarily in this case does not alter this conclusion. The Commissioner only agreed to suspend her investigation pending the resolution of the petition by the trial court. Thus, when the Commissioner moved to intervene, she had no longer agreed to suspend her investigation. In any event, even if that agreement had remained in effect, the arbitration order still impaired the Commissioner‘s ability to protect the public interest because it prevented her from changing her mind and exercising her independent statutory authority under
3.
FAA Preemption of the Commissioner‘s Investigation
Crestwood also contends the arbitration order did not impair or impede the Labor Commissioner‘s ability to protect the public interest because the FAA supersedes any proceedings established by
The FAA—which covers all “[e]mployment contracts, except for those covering workers engaged in transportation” (Waffle House, supra, 534 U.S. at p. 289)—” ‘declare[s] a national policy favoring arbitration’ of claims that parties contract to settle in that manner” (Preston, supra, 552 U.S. at p. 353). To effectuate this policy, the FAA “provides for stays of proceedings in . . . courts when an issue in the proceeding is referable to arbitration, and for orders compelling arbitration when one party has failed or refused to comply with an arbitration agreement.” (Waffle House, at p. 289.) Nothing in the FAA, however, “authorizes a court to compel arbitration . . . by any parties[] that are not already covered in the agreement.” (Waffle House, at p. 289.) Nor does the FAA “mention enforcement by public agencies.” (Waffle House, at p. 289.)
Applying these principles, the United States Supreme Court in Waffle House held that the FAA did not prevent the federal Equal Employment Opportunity
Six years later, the United States Supreme Court distinguished Waffle House. In Preston, the petitioner sought to arbitrate a contract dispute with the respondent. In response, the respondent invoked an administrative rеmedy, asking the Labor Commissioner to invalidate the contract under the California Talent Agencies Act (TAA). (Preston, supra, 552 U.S. at p. 350.) In holding that the FAA preempted that administrative proceeding under the TAA, the high court found Waffle House inapplicable. (Preston, at p. 359.) According to the court, the Commissioner in the TAA proceeding “functions not as an advocate advancing a cause before a tribunal authorized to find the facts and apply the law; instead, the Commissioner serves as impartial arbiter.” (Preston, at p. 359.) By contrast, the EEOC in Waffle House acted “not as adjudicator but as prosecutor, pursuing an enforcement action in its own name or reviewing a discrimination charge to determine whether to initiate judicial proceedings.” (Preston, at p. 359.) Consistent with this distinction, the high court made clear that “[e]nforcement of the parties’ arbitration agreement in this case does not displace any independent authority the Labor Commissioner may have to investigate and rectify violations of the TAA.” (Preston, at p. 359, fn. 7.)
Since Waffle House and Preston, the California Supreme Court has applied this distinction when determining whether the FAA supersedes a proceeding authorizеd by the
To obtain relief through a Berman hearing, an employee must file a written “complaint or claim for wages, penalties or other demand for compensation” with the Labor Commissioner. (
If the Commissioner opts to conduct a Berman heаring, then she must hold that hearing within 90 days from the date she decides to do so. (
Thus, under the Berman hearing process, the Labor Commissioner acts as the adjudicator—and not as a prosecutor. As our high court explained, “the Berman hearing itself provides an accessible, informal, and affordable mechanism for laypersons to seek resolution of” their wage claims. (Sonic II,
supra, 57 Cal.4th at p. 1129, italics added.) Indeed, the Commissioner is not a party in any de novo appeal from the hearing decision and has no authority to appeal that decision. Instead, the Commissioner only has the authority to represent the employee “claimant” in the appeal.3 (
By contrast, the California Supreme Court refused to enforce an arbitration agreement under the FAA when the employee is “enforcing our labor laws on behalf of state law enforcement agencies.” (Iskanian v. CLS Transportation Los Angeles, LLC (2014) 59 Cal.4th 348, 388 (Iskanian).) In Iskanian, our state high court considered whether the FAA restricts the ability of an employee to pursue a representative PAGA claim. (See Iskanian, at pp. 359, 360.) Under PAGA, an “aggrieved employee” may bring an action personally and on behalf of current or former employees to recover civil penalties against his or her employer for Labor Code violations. (
Thus, whether the FAA displaces our Labor Code in this case depends on whether the Labor Commissioner acts as a prosecutor or an adjudicator when she investigates and acts on a retaliation complaint pursuant to sections 98.7 and 98.74. If the Commissioner is acting as a prosecutor on behalf of the state, then the FAA is inapplicable and does not prevent the Commissioner from investigating and acting on the retaliation complaint. If the Commissioner is acting as an adjudicator, then the FAA applies and
In reaching this conclusion, we initially note that the authority of the Labor Commissioner to investigate suspected retaliation and seek interim relief does not depend on the actions of the employee. The Commissioner may “commence investigating an employer” for retaliation “with or without” an employee complaint. (
The same is true when the Labor Commissioner issues a determination. If the Commissioner determines that no violation has occurred, then the employee may file a lawsuit but has no right to challenge that determination. (
Thus, the determination process “confers on the” Commissioner “the authority to evaluate the strength of the public interest at stake” and authorizes the Commissioner “to proceed in a judicial forum” if she determines that it is justified by the public interest. (Waffle House, supra, 534 U.S. at pp. 291–292.) In this respect, the determination process is no different than the EEOC process in Waffle House. (See id. at p. 286.) Consequently, “the
Whether the same is true when the Labor Commissioner issues a citation is not as clear. Unlike the determination process, the citation process does not require the Commissioner to decide whether to proceed in an administrative or judicial forum. Instead, the employer has the burden of challenging the citation by seeking an “informal hearing” before the Commissioner (
This conclusion is bolstered by decisions from other state and federal courts. Those courts have concluded that the FAA does not displace the authority of a state or local agency to investigate and obtain victim-specific relief under a state or local statutory scheme analogous to section 98.7.
For example, in Joulé, Inc. v. Simmons (2011) 459 Mass. 88, 93 (Joulé), the Massachusetts Supreme Court held that the FAA did not
Comparing this process to the EEOC process in Waffle House, the Massachusetts Supreme Court held that the FAA did not preempt the MCAD process “notwithstanding” the arbitration agreement between the employee and emрloyer. (Joulé, supra, 459 Mass. at p. 99.) According to the court, the MCAD, like the EEOC, has “the power to investigate” and “pursue complaints filed by individuals . . . in its own name.” (Id., at p. 93.) Because the MCAD “has not agreed to arbitration of” the employee‘s “MCAD complaint,” the court concluded that the FAA does not preclude “the MCAD from proceeding with its investigation and resolution of” that complaint—“including . . . granting relief specific to” the employee. (Joulé, at p. 95.)
Similarly, the Iowa Supreme Court held that the FAA did not bar the Iowa Civil Rights Commission (ICRC) from pursuing an administrative enforcement action based on an employee‘s discrimination complaint. (Rent-A-Center, Inc. v. Iowa Civil Rights Com. (Iowa 2014) 843 N.W.2d 727, 728 (Rent-A-Center).) Under Iowa law, both an employee and the ICRC may initiate a discrimination complaint that the ICRC staff must investigate. (Id. at p. 731.) If the ICRC staff, with the concurrence of an administrative law judge, finds “probable cause to believe a discriminatory practice has occurred,” then the ICRC engages in a conciliation process with the employer. (Ibid.) If that process does not resolve the complaint, then the ICRC may file charges in its own nаme that the employer must answer “at an administrative hearing.” (Ibid.) Following that hearing, the ICRC may order victim-specific relief. (Id. at pp. 731–732.)
Applying the reasoning of Joulé, the Iowa Supreme Court held that the arbitration agreement between the employee and employer did not ” ‘displace any independent authority’ the ICRC has ‘to investigate and rectify violations’ of the” Iowa Civil Rights Act. (Rent-A-Center, supra, 843 N.W.2d at p. 741.) In so holding, the court concluded that Waffle House, and not Preston, controlled (Rent-A-Center, at pp. 735–736, 737), because of the “considerable similarities” between the EEOC process in Waffle House and the ICRC enforcement process (Rent-A-Center, at p. 734). According to the court, Preston was inapposite because the ICRC “is not only a forum“; it is also “a public agency acting in its prosecutorial capacity to bring an enforcement action,” independent of the employee‘s actions, “to protect the public interest under the Iowa Civil Rights Act.” (Rent-A-Center, at p. 737.)
More recently, two federal district courts have followed the reasoning of Joulé and Rent-A-Center. In SBM Site Serv., LLC. v. Alvarez (D.Neb. Jan. 19, 2018, No. 4:17CV3028) 2018 U.S.Dist. LEXIS 19990, *12 (SBM), the federal court held that the FAA did not bar the Lincoln Commission on Human Rights (LCHR) from pursuing an administrative enforcement action based on an employee‘s discrimination claim even though the employee had agreed to arbitrate that claim. Because LCHR brought the action in its own name “to advance the City of Lincoln‘s interest in preventing employment discrimination,” the court held that “[t]he LCHR‘s pursuit of victim-specific relief does not transform the enforcement proceeding into one brought directly by” the employee. (SBM, at p. *12.)
Similarly, the federal court in Charter Communications, Inc. v. Derfert (W.D.N.Y. 2021) 510 F.Supp.3d 8, 19 (Charter Communications I), held that the FAA does not displace an administrative hearing on an employee‘s discrimination complaint initiated and conducted by the New York State Division of Human Rights (NYSDHR). Finding that the NYSDHR “performs both prosecutorial and adjudicative functions,” the court nonetheless concluded that “this case is more like Waffle House than like Preston” (Charter Communications I, at p. 16), even though the only complaint was the one filed by the employee (id. at p. 19). According to the court, this is because of the similarities in “the role of the EEOC and” NYSDHR “in enforcing civil rights protections by recovering ‘make whole’ damages for individual employees, the broad authority conferred upon both agencies to investigate and address particular violations, and the role of both agencies аs advocates before a neutral forum.” (Charter Communications, Inc. v. Derfert (W.D.N.Y. Mar. 12, 2021, No. 1:20-cv-915) 2021 U.S.Dist. LEXIS 47241, *20 (Charter Communications II).)
The determination process under section 98.7 is not materially different from the processes considered in the above cases. Like the agencies in those cases, the Labor Commissioner may investigate and act on her own without an employee complaint. (Compare
In reaching this conclusion, we find the fact that the Labor Commissioner is a state, rather than a federal, agency to be immaterial. As the Iowa Supreme Court explained, “[t]he essential point of Waffle House is that the FAA‘s reach does not extend to a public agency that is neither a party to an arbitration agreement nor a stand-in for a party.” (Rent-A-Center, supra, 843 N.W.2d at p. 736.) In any event, our state high court has already extended Waffle House to enforcement actions by state agencies. (See Iskanian, supra, 59 Cal.4th at pp. 386–387.)
Crestwood‘s attempt to analogize the interim relief and determination processes established by section 98.7 to the Berman hearing process established by section 98.2 is unavailing. “[S]ection 98.2 and section 98.7 provide for very different procedures.” (American Corporate Security, supra, 220 Cal.App.4th at p. 45.) For example, although the Labor Commissioner may represent the employee in the Berman hearing process (
That the Labor Commissioner may hold “an investigative hearing” as part of the determination process does not compel a contrary conclusion. (
Finally, the legislative history of the 2017 and 2019 amendments to the Labor Code does not suggest otherwise. In 2017, the Legislature added, among other things, the citation process found in section 98.74. (See Stats.2017, ch. 460, § 2 [adding
Accordingly, the arbitration policy does not displace the independent statutory authority of the Labor Commissioner to investigate Lacy‘s retaliation complaint, seek interim relief, or issue a determination. Because the arbitration order prevents the Commissioner from exercising this authority indefinitely, it necessarily impairs the ability of the Commissioner to protect the public interest. The denial of the intervention motion is therefore reversed.
III.
The Motion to Vacate
Because it denied the intervention motion, the trial court took the Labor Commissioner‘s motion to vacate “off calendar as moot.” In doing so, the court, in effect, denied that motion. Because we reverse the denial of the intervention motion, we reverse the denial of the motion to vacate. On remand, the trial court should consider whether the arbitration order should be vacated in whole or in part in light of this opinion.
DISPOSITION
The September 11, 2019 Order Denying Labor Commissioner‘s Motion for Leave to Intervene and the September 17, 2019 Order Deeming Labor Commissioner‘s Motion to Vacate and in the Alternative for Reconsideration Moot are reversed. The matter is remanded for proceedings consistent with the views expressed in this opinion. The Labor Commissioner is entitled to recover her costs on appeal.
Chou, J.*
WE CONCUR:
Tucher, P. J.
Petrou, J.
A158830
* Judge of the Superior Court of San Mateo County, assigned by the Chief Justice pursuant to article VI, section 6 of the California Constitution.
Crestwood Behavioral Health, Inc. v. Lacy
(A158830)
Trial Court: San Mateo County Superior Court
Trial Judge: Hon. Ethan P. Schulman
Attorneys:
State of CA, Dept. of Industrial Relations, Division of Labor Standards Enforcement, Miles E. Locker, Phoebe P. Liu, and Adalberto Corres for Appellant.
Littler Mendelson, Jennifer J. Walt and Bianca Rodriguez for Plaintiff and Respondent.