Relying heavily on Garrido v. Air Liquide Industrial, U.S. LP (2015)
FACTUAL AND PROCEDURAL BACKGROUND
Cornerstone is a full service employee staffing firm providing assistance to a variety of employers throughout California, Nevada, Michigan, and New Jersey. Cornerstone's website promotes itself as specializing in, among other things, "Logistics & Transportation Staffing & Recruitment". Cornerstone derived over eight percent of its total revenue in 2015 from its transportation division, and has an employee whose self-described position is "Department of Transportation Compliance Coordinator/Payroll Administrator."
Cornerstone hired Muro around May 2012 to drive trucks for Cornerstone's client, Team Campbell, which ships products from its Fontana, California location throughout the country. Muro occupied that position from approximately May 2012 through August 2014. During his tenure as a driver, he had routes both within California аnd across state lines. He made frequent trips to or through Arizona, Nevada, Utah, Oregon, Washington, New Mexico, Idaho, and Wyoming.
As part of his employment contract, Muro signed an agreement containing the arbitration provisions that are at the center of the present dispute. Under the relevant Mutual Arbitration Policy (the policy), nearly all disputes had to
Muro filed his initial complaint against Team Campbell and subsequently added Cornerstone as a defendant. The complaint, styled as a proposed class action complaint, alleged causes of action for: (1) failure to pay all compensation for time worked; (2) failure to provide meal periods; (3) failure to authorize and permit rest breaks; (4) knowing and intentional failure to comply with itemized wаge statements; (5) failure to pay timely wages due at termination/waiting time penalties; and (6) violation of the unfair competition law.
Cornerstone petitioned to compel Muro to arbitrate his claims on an individual basis. It maintained the FAA applied because Cornerstone and Muro were engaged in interstate commerce and because the policy itself referred tо the FAA. It further asserted that the FAA required
Muro opposed the petition claiming he was a "transportation worker" within the ambit of a specific FAA exemption. He argued that under the pertinent analysis in Garrido , the FAA did not govеrn the court's evaluation of Cornerstone's petition to compel arbitration. According to Muro, because the FAA did not apply, California law as expressed in Gentry continued to govern. He contended that because he satisfied the Gentry factors, the class arbitration waiver provision was unenforceable and his claims should be permitted to proceed in the current сivil action. He also argued that under Labor Code section 229, his action to recover unpaid wages could proceed notwithstanding the terms of the policy.
Relying on Garrido , the trial court held that the express exemption contained in section 1 made the FAA inapplicable to the policy because Muro was a transportation worker. The court also rejected Cornеrstone's claim that it was not part of the "transportation industry," concluding that evidence of Cornerstone's employment of a Department of Transportation Compliance Coordinator and its transportation-related revenues demonstrated that it was
DISCUSSION
When a trial court's order is based on a question of law, we accord no deference to the ruling and instead will review the order de novo. ( Garrido, supra ,
1. The Trial Court Correctly Ruled the FAA Did Not Apply
The trial cоurt implicitly found, and the parties do not dispute on appeal, that Cornerstone was engaged in interstate commerce and that Muro's employment contract was therefore a contract "evidencing a transaction involving commerce" within the meaning of section 2 of the FAA, which potentially triggers application of the FAA to the policy. (§ 2; see Allied-Bruce Terminix Companies, Inc. v. Dobson (1995)
There is substantial evidence, and indeed Cornerstone does not dispute, that Muro was a driver who transported goods and often did so across state lines. Courts have repeatedly concluded that contracts of employment with drivers whose routes include transporting goods across state lines
Cornerstone maintains that Muro's job as a transportation worker, while a necessary predicate, it is not sufficient to trigger section 1's exemption. It urgеs us to disagree with Garrido and instead adopt the rationale of Hill v. Rent-A-Center, Inc. (11th Cir. 2005)
We decline the invitation because we question whether Hill's gloss on section 1 and the Circuit City decision are supported by the language of the statute. Section 1 exempts " 'contracts of employment of ... any other class of workers engaged in foreign or interstate commerce' " withоut mentioning whether (or to what extent) their employers' business must be devoted to the transportation industry . ( Hill,
Moreover, even assuming Hill correctly determined that the employer's business must be part of the transportation industry, the Garrido court rejected the specifiс argument advanced by Cornerstone here. In Garrido , the defendant-employer relied on Hill to argue the exemption was inapplicable "because its primary business does not involve the transportation of third parties' goods." ( Garrido , supra ,
" Hill did not delineate the contours of the 'transportation industry.' Indeed, it appears that the term is not rigid.... [¶] Asignificant portion of [defendant- employer's] business involves the transportation of its gases across state lines. Thus, it must be said that [defеndant-employer] is at least somewhat involved in the transportation industry. And unlike the plaintiff in Hill - an 'account manager' whose truck delivery duties were incidental to his job ( Hill, supra , 398 F.3d at pp. 1287, 1289 )-Garrido's duty as a truck driver was the transportation of goods. [Defendant-employer] cites to no authority holding that a truck driver whose responsibility is to move products across state lines does not fall under sectiоn 1 of the FAA. The fact that Garrido transported [defendant-employer's] own products (rather than those of [the defendant-employer's] client) is of little consequence: 'a trucker is a transportation worker regardless of whether he transports his employer's goods or the goods of a third party; if he crosses state lines he is "actually engaged in the movement of goods in interstаte commerce." ' " ( Garrido, supra, at pp. 840-841,, quoting International Brotherhood of Teamsters Local Union No. 50 v. Kienstra Precast, LLC (7th Cir. 2012) 194 Cal.Rptr.3d 297 , 957.) 702 F.3d 954
We believe Garrido 's analysis is sound and Cornerstone's contrary arguments are unpersuasive.
2. The Trial Court's Application of Gentry Was Not an Abuse of Discretion
Because we have concluded the FAA is not applicable, the appropriate test under California law to determine whether to enforce the "class waiver" provisions of an arbitration agreement remains the four-part analysis under Gentry . (See, e.g., Garrido, supra , 241 Cal.App.4th at pp. 842-845,
It is the plaintiff's burden to show the class action waiver is invalid by making a factual showing of the four Gentry factors. ( Kinecta Alternative Financial Solutions, Inc. v. Superior Court (2012)
On the first factor, Muro's attorney submitted a detailed evaluation of his calculations, which employed "liberal assumptions" to estimate Muro's maximum individual recovery would be less than $26,000; the trial court found this amount qualified as а "modest" recovery within the meaning of Gentry . A potential award of as large as $37,000, which the court in Bell v. Farmers Ins. Exchange (2004)
On the third factor-whether absent clаss members might be ill-informed about their rights
We conclude that, in light of these determinations, the trial court correctly found a class proceeding would be a significantly more effective way of permitting
DISPOSITION
The order is affirmed. Respondent is entitled to recover his costs on appeal.
WE CONCUR:
BENKE, Acting P.J.
AARON, J.
Notes
Further statutory references are to the title 9 of the United States Code unless otherwise specified.
Although the policy excludes some disputes from binding arbitration, the parties do not contest that the claims presented by Muro's current complaint would be covered by the policy.
Cornerstone contends that the significant revenue it garners from the transportation segment of its business is irrelevant because: (1) its primary revenue is from staffing rather than transportation; (2) there are trade associations for the staffing industry that are distinct from the trade associations for the transportation industry; and (3) the Bureau of Labor Statistics groups the administrative and support service industry into a different sector from the transportation industry. The defendant in Garrido , as a producer and distributor of industrial gases (Garrido, supra,
Because Cornerstone's appeal only challenges the trial court's findings as to the first three Gentry factors, we need not evaluate the court's conclusion that the fourth factor (other real world obstacles to the vindication of employee rights) was also satisfied.
Cornerstone cites the observation in Arguelles-Romero v. Superior Court (2010)
On this third factor, Gentry observed "it may often be the case that the illegal employer conduct escapes the аttention of employees" and "some individual employees may not sue because they are unaware that their legal rights have been violated." (Gentry, supra ,
Cornerstone misreads Truly Nolen, supra , 208 Cal.App.4th at pages 510-511,