*1 Filed 6/25/14; pub. & mod. order 7/22/14 (see end of opn.)
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA SECOND APPELLATE DISTRICT DIVISION SEVEN
TIMOTHY SANDQUIST, B244412 Plaintiff and Appellant, (Los Angeles County Super. Ct. No. BC476523) v.
LEBO AUTOMOTIVE, INC. et al.,
Defendants and Respondents.
APPEAL from an order of the Superior Court of Los Angeles County, Elihu M. Berle, Judge. Reversed with directions.
Sanford Heisler, Janette Wipper and Felicia Medina for Plaintiff and Appellant. Fisher & Phillips, James J. McDonald, Jr., and Grace Y. Horoupian for Defendants and Respondents.
__________________
INTRODUCTION In this class action, plaintiff Timothy Sandquist purports to appeal from the trial court’s August 14, 2012 order granting defendants’ motion to compel him to arbitrate his individual claims, as well as defendants’ motion to dismiss all class claims without prejudice. Although this order is not appealable, we liberаlly construe Sandquist’s notice of appeal to include the trial court’s October 5, 2012 order dismissing his class claims with prejudice, which is appealable under the death knell doctrine. Limiting our review to Sandquist’s challenges to the order dismissing the class claims, we agree with Sandquist that the trial court erred by deciding the issue whether the parties agreed to class arbitration, and that the court should have submitted the issue to the arbitrator. Therefore, we reverse.
FACTUAL AND PROCEDURAL BACKGROUND
Sandquist began working in sales at Manhattan Beach Toyota in September 2000. Joel Rabe, Sandquist’s sales floor manager, provided Sandquist with а large amount of paperwork to fill out but did not discuss any of the documents with him. Rabe simply told Sandquist to complete the paperwork quickly so he could get out onto the sales floor. The paperwork consisted of about 100 pages, including an employee handbook. Sandquist filled out the paperwork as best and as quickly as he could. Due to time constraints Sandquist did not review the documents and did not know he was signing multiple arbitration agreements. He signed the documents because he needed the job.
Among the documents Sandquist signed was a document entitled “APPLICANT’S STATEMENT & AGREEMENT.” It provided in pertinent рart: “I and the Company both agree that any claim dispute, and/or controversy (including, but not limited to, any claims of discrimination and harassment, whether they be based on the California Fair Employment and Housing Act, as well as all other applicable state or federal laws or regulations) which would otherwise require or allow resort to any court or other *3 governmental dispute resolution forum between myself and the Company (or its owners, directors, officers, managers, employees, agents, and parties affiliated with its employee benefit and health plans) arising from, related to, or having any relationship or connection whatsoever with my seeking employment with, employment by, or other association with the Company, whether based on tort, contract, statutory, or equitable law, or otherwise, (with the sole exception of claims arising under the National Labor Relations Act which are brought before the National Labor Relations Board, claims for medical and disability benefits under the California Workers’ Compensation Act, and Employment Development Department claims) shall be submitted to and determined exclusively by binding arbitration. . . .”
Sandquist also signed a separate document acknowledging that he was an “at will” employee and agreeing “that any claim, dispute, and/or controversy (including, but not limited to any claims of discrimination and harassment) which would otherwise require or allow resort to any court or other governmental dispute resolution forum, between me and the Company (or its owners, directors, officers, managers, employees agents, and parties affiliated with its employee benefits and health plans) arising from, related to, or having any relationship or connection whatsoever with my seeking employment with, employment by, or other association with, the Company, whether based on tort, contract, statutory, or equitable law, or otherwise, shall be submitted to and determined exclusively by binding arbitration . . . .”
Finally, Sandquist signed a document entitled “EMPLOYEE ACKNOWLEDGMENT AND AGREEMENT.” In addition to an acknowledgment of receipt of the dealership’s employee handbook, the document contained the following arbitration provision: “I agree that any claim, or dispute, or controversy (including, but not limited to, any and all claims of discrimination and harassment) which would otherwise require or allow resort to any court or other governmentаl dispute resolution forum between myself and the Company (or its owners, directors, officers, managers, employees, agents, and parties affiliated with its employee benefit and health plans) arising from, related to, or having any relationship or connection whatsoever with my *4 seeking employment with, employment by, or other association with the Company, whether based on tort, contract, statutory, or equitable law, or otherwise, (with the sole exception of claims arising under the National Labor Relations Act which are brought before the National Labor Relations Bоard, claims for medical and disability benefits under the California Workers Compensation Act, and Employment Development Department claims), shall be submitted to and determine[d] exclusively by binding arbitration . . . .”
All three arbitration provisions further specified that arbitration would be governed by the Federal Arbitration Act (FAA) in conformity with the procedures of the California Arbitration Act (Code Civ. Proc., § 1280 et seq.).
Sandquist, who is African-American, filed this class action on January 9, 2012 against defendants Lebo Automotive, doing business as John Elway’s Manhattan Beach Toyota, John Elway, Mitchell D. Pierce, Jerry L. Williams, and Darrell Spеrber, who had purchased the dealership in 2007. On February 1, 2012 Sandquist filed his operative first amended class action complaint alleging violations of California’s Fair Employment and Housing Act (FEHA; Gov. Code, § 12940 et seq.) and Unfair Competition Law (Bus. & Prof. Code, § 17200 et seq.), and seeking injunctive and declaratory relief and damages.
Sandquist asserted individual and class claims against the dealership for race, color, national origin, and ancestry discrimination and against all the defendants for hostile work environment. Sandquist also alleged an individual claim against the dealership for constructive discharge. He alleged that despite his “enormous success at and loyalty to the dealership, [he] was passed over for promotions, denied salary increases, and harassed on the basis of his race. [He] not only experienced discrimination on a routine basis, but he also witnessed” Elway, Pierce, and Williams “participate in, aid, abet, substantially assist, condone, or ratify discrimination and harassment in the face of widespread complaints that GM Sperber was a ‘repeat harasser’ who freely and openly harassed employees of color. After persevering for fоur years against the ongoing discrimination and hostile work environment that permeated” the dealership, Sandquist “was forced to resign in 2011.”
On March 20, 2012 defendants filed a motion to compel individual arbitration pursuant to Code of Civil Procedure section 1281.2 and to stay or dismiss the proceedings with the trial court retaining jurisdiction to enforce any arbitration award. In support of their motion defendants relied on the three arbitration agreements signed by Sandquist on his first day of work.
On August 14, 2012 the trial court granted the motion. The trial court concluded that the FAA applied and that the agreement was not unconscionable, finding no substantive unconscionability and a “low” level of procedural unconscionability. 1 With regard to the class claims the trial court ruled: “And to clean up any procedural details with regard to . . . class allegations, the Court is going to dismiss or strike the class allegations as being irrelevant, false or an improper matter in the complaint under Code of Civil Procedure section 436 [2] because there’s no basis, contractual basis, to compel [class] arbitration. [¶] Since the plaintiff himself is now going to be subject to individual arbitration, there would no longer be any represеntative in the lawsuit that would be able to adequately represent a class action to pursue the claims that are asserted by plaintiff.” The trial court further stated that it would “dismiss the class allegations without prejudice and set a time limit of 60 days for plaintiff to amend. And if plaintiff does not amend to bring forth a class representative that could support this class action to reinstitute the class allegations, then the defendant may request the dismissal of the case with prejudice.”
1 The parties do not dispute the trial court’s determination that the FAA, which applies in cases involving interstate commerce, governs this case. In fact, all three arbitration provisions specify that the arbitration is governed by the FAA.
2 Code of Civil Procedure section 436 provides: “The court may, upon a motion made pursuant to Section 435, or at any time in its discretion, and upon terms it deems proper: [¶] (a) Strike out any irrelevant, false, or improper matter inserted in any pleading. [¶] (b) Strike out all or any part of any pleading not drawn or filed in conformity with the laws of this state, a court rule, or an order of the court.”
On September 28, 2012 counsel for Sandquist advised the trial court that they had been unаble to locate an employee of the dealership who had not signed the arbitration agreements. In the absence of a substitute class representative the trial court stated it would dismiss the class claims with prejudice.
On October 5, 2012 the trial court signed an order dismissing the class claims with prejudice. The court’s order noted that Sandquist “was provided up to and including September 18, 2012 to amend his Complaint in order to bring forth a class representative that could support Plaintiff’s class action to reinstate the class allegations. Plaintiff having failed to amend his complaint by Septеmber 18, 2012, IT IS HEREBY ORDERED that Plaintiff’s class claims are dismissed with prejudice.” That same day, October 5, 2012, Sandquist filed a notice of appeal from the August 14, 2012 order granting defendants’ motion to compel arbitration and dismissing class claims without prejudice, and attached a copy of the August 14 order to his notice of appeal. Sandquist did not include in the notice of appeal the October 5, 2012 order entered that same day.
DISCUSSION
A. Appealability
Because “‘the question of appealability goes to our jurisdiction, we are dutybound
to consider it on our own motion.’” (
deSaulles v. Community Hospital of the Monterey
Peninsula
(2014)
In his opening brief Sandquist states that “[t]his appeal arises from the August 14, 2012 and October 5, 2012 orders of the Los Angeles Superior Court.” In his notice of appeal, however, Sandquist only listed the August 14, 2012 order. Therefore, as a preliminary matter, we must decide whether the trial court’s August 14, 2012 order is appealable and, if not, whether Sandquist’s failure to include the court’s October 5, 2012 order in his notice of appeal requires dismissal of his appeal.
An order granting a motion to compel arbitration is not appealable. (Code Civ.
Proc., § 1294, subd. (a);
Goldman v. Sunbridge Healthcare, LLC
(2013) 220 Cal.App.4th
1160, 1164, fn. 2;
Nelsen v. Legacy Partners Residential, Inc.
(2012) 207 Cal.App.4th
1115, 1121 (
Nelsen
).) Rather, it is reviewable on appeal from the final judgment entered
after confirmation of the arbitration award. (
Nelsen
, at pp. 1121-1122;
Kinecta
Alternative Financial Solutions, Inc. v. Superior Court
(2012)
“The death knell doctrine is applied to orders in class actiоns that effectively
terminate class claims, such as orders denying class certification or decertifying a class,
while allowing individual claims to persist. [Citations.] The doctrine is animated by the
concern ‘that an individual plaintiff may lack incentive to pursue his individual claims to
judgment, thereby foreclosing any possible appellate review of class issues.’ [Citation.]
To preserve appellate review of class issues, the death knell doctrine permits appeal from
‘an order that . . . amounts to a de facto final judgment for absent plaintiffs, under
circumstances where . . . the pеrsistence of viable but perhaps de minimis individual
plaintiff claims creates a risk no
formal
final judgment will ever be entered.’ [Citation.]
Under this doctrine, an order compelling a plaintiff to pursue his or her claim in
arbitration and dismissing the action as to all other members of the class has been held to
be immediately appealable. [Citation.]” (
Phillips v. Sprint PCS
(2012) 209 Cal.App.4th
758, 766; see
In re Baycol Cases I & II
(2011)
Although the August 14, 2012 order compelled Sandquist to arbitrate his
individual claims against the defendants, the trial court’s order did not finally terminate
the class claims. By dismissing the class claims
without prejudice
the trial court left open
the possibility that the class claims would continue with the substitution of a new class
representative. Such an order was not final and appealable. (See
Aleman v. Airtouch
Cellular
(2012)
While we may treat a nonappealable order granting a motion to compel arbitration
as a writ, we decline to do so here. “‘[W]rit review of orders compelling arbitration is
proper . . . (1) if the matters ordered arbitrated fall clearly outside the scope of the
arbitration agreement or (2) if the arbitration would appear to be unduly time consuming
or expensive.’ [Citation.]” (
Kinecta Alternative Financial Solutions, Inc. v. Superior
Court
,
The question remaining is whether we may and should liberally construe
Sandquist’s notice of appeal to include an appeal from the October 5, 2012 order
*9
dismissing the class claims with prejudice. In
Walker v. Los Angeles County
Metropolitan Transportation Authority
(2005)
Here, Sandquist filed his notice of appeal the same day that the trial court entered
its order dismissing the class claims with prejudice. Because this order effectively
terminated the class claims, it was appealable under the death knell doctrine. (See
In re
Baycol Cases I & II
,
B.
The Determination of Whether an Arbitration Agreement Provides
for Class Arbitration: Trial Court or Arbitrator
Sandquist contends that the trial court “wrongly conducted a clause construction
analysis of the Acknowledgements and held that they contain an
implied
class action
waiver.” Sandquist, citing
Green Tree Fin. Corp. v. Bazzle
(2003)
“‘[A]rbitration is a matter of contract and a party cannot be required to submit to
arbitration any dispute which he has not agreed so to submit.’ [Citations.]” (
Howsam v.
Dean Witter Reynolds, Inc.
(2002)
In
Howsam
,
The Supreme Court noted that “[l]inguistically speaking, one might call any potentially dispositive gateway question a ‘question of arbitrability,’ for its answer will determine whether the underlying controversy will proceed to arbitration on the merits. The Court’s case law, however, makes clear that . . . the phrase ‘question of arbitrability’ has a far more limited scope. [Citation.] The Court has found the phrase applicable in the kind of narrow circumstance where contracting parties would likely have expected a court to have decided the gateway matter, where they are not likely to have thought that they had agreed that an arbitrator would do so, and, consequently, where reference of the gateway dispute to the court avoids the risk of forcing parties to arbitrate a matter that they may well not have agreed to arbitrate.
“Thus, a gateway dispute about whether the parties are bound by a given arbitration clause raises а ‘question of arbitrability’ for a court to decide. [Citations.] Similarly, a disagreement about whether an arbitration clause in a concededly binding contract applies to a particular type of controversy is for the court. [Citations.]
“At the same time the Court has found the phrase ‘question of arbitrability’ not applicable in other kinds of general circumstance where parties would likely expect that an arbitrator would decide the gateway matter. Thus ‘“procedural” questions which grow out of the dispute and bear on its final disposition’ are presumptively not for the judge, but for an arbitrator, to decide. [Citation.] So, too, the presumption is that the arbitrator should decide ‘allegations of waiver, delay, or a like defense to arbitrability.’ [Citation.]” ( Howsam , supra , 537 U.S. at pp. 83-84.)
A majority of the United States Supreme Court has yet to decide whether the
determination of whether the parties agreed to class arbitration is a gateway question for
the court or a question for the arbitrator where, as here, the arbitration agreement is silent
on the issue of class arbitration. (See
Oxford Health Plans LLC v. Sutter
,
supra
, 569 U.S.
at p. ___ [
The Supreme Court in
Bazzle
, however, did not speak on this issue with five votes.
In
Stolt-Nielsen
,
As the court in
Nelsen
noted, “some federal courts have decided issues of class
arbitration are generally for the arbitrator to decide, at least when the arbitration
agreement does not provide otherwise. (See, e.g.,
Guida v. Home Savings of America,
Inc.
(E.D.N.Y. 2011)
Courts that have decided the issue have reached conflicting conclusions. Most
courts have concluded that the question of class arbitrability is for the arbitrator. (See,
3
The court in
Nelsen
observed that “neither party has proposed we leave the
question of class arbitration for the arbitrator. Both parties invite
this court
to decide the
issue. [The defendant] asks that we find the arbitration agreement does not reflect its
consent to class arbitration, while [the рlaintiff] requests we either find the arbitration
agreement unenforceable or interpret it to allow class arbitration. In any event, for the
reasons we will discuss, we believe it is clear the agreement precludes class arbitration
and do not think any reasonable arbitrator applying California law could find otherwise.”
(
Nelsen
,
e.g.,
Quilloin v. Tenet HealthSystem Philadelphia, Inc.
(3d Cir. 2012)
Although the plurality opinion in
Bazzle
is not binding, it is persuasive. (See
Thalheimer v. City of San Diego
(9th Cir. 2011)
Those courts that have reached a contrary result have emphasized the Supreme
Court’s statements about the “‘fundamental’” differences between bilateral and classwide
arbitration. (See, e.g.,
Reed Elsevier
,
procedural arbitration mechanisms available to Plaintiffs, and does not fall into the
limited scope of this Court’s responsibilities in deciding a motion to compel arbitration”];
Guida v. Home Savings of America, Inc.
,
supra
,
We therefore hold that the question whether the parties agreed to class arbitration was for the arbitrator rather than the court to decide, and that the trial court erred by deciding that issue in this case. We do not reach, and leave for the arbitrator, the merits of whether the arbitration provisions Sandquist signed permit class arbitration. We also do not address, and leave for the arbitrator to consider, Sandquist’s argument that the trial court failed to consider extrinsic evidence demonstrating that the parties impliedly agreed to arbitrate on a class-wide basis. 5
5
In correspondence datеd April 22, 2014, counsel for Sandquist notified this court
that “Sandquist is rescinding the arguments outlined in Appellant’s Opening Brief and
Reply brief concerning the viability of
Gentry v. Superior Court
[(2007)] 42 Cal.4th
443.” In
Gentry
the California Supreme Court held that class arbitration waivers in
employment arbitration agreements should not be enforced if the trial court, after
considering specific factors, determines “that class arbitration would be a significantly
more effective way of vindicating the rights of affected employees than individual
arbitration.” (
Id
. at pp. 450, 463.) At the time we received counsel for Sandquist’s
correspondence, the question whether the United Stаtes Supreme Court’s decision in
Concepcion
,
DISPOSITION
The order dismissing the class claims is reversed and the matter is remanded to the trial court with directions to vacate its order dismissing class claims and to enter a new order submitting the issue of whether the parties agreed to arbitrate class claims to the arbitrator. Sandquist is to recover his costs on appeal.
SEGAL, J. * We concur:
PERLUSS, P. J.
WOODS, J. * Judge of the Los Angeles Superior Court assigned by the Chief Justice pursuant to article VI, section 6 of the California Constitution.
Filed 7/22/14
CERTIFIED FOR PUBLICATION
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA SECOND APPELLATE DISTRICT DIVISION SEVEN
TIMOTHY SANDQUIST, B244412 Plaintiff and Appellant, (Los Angeles County Super. Ct. No. BC476523) v.
ORDER MODIFYING OPINION LEBO AUTOMOTIVE, INC. et al., AND CERTIFYING FOR
PUBLICATION, Defendants and Respondents. NO CHANGE IN JUDGMENT
THE COURT:
It is ordеred that the opinion filed herein on June 25, 2014, be modified as follows: On page 8, the second full paragraph, the first sentence beginning “While we may treat” is revised so the sentence now reads as follows:
While we may treat an appeal from a nonappealable order granting a motion to compel arbitration as a petition for a writ, we decline to do so here.
There is no change in the judgment.
The opinion in the above-entitled matter filed on June 25, 2014, was not certified for publication in the Official Reports. For good cause it now appears that the opinion should be published in the Official Reports and it is so ordered.
__________________ _____________________ ___________________ SEGAL, J. * PERLUSS, P. J. WOODS, J.
* Judge of the Los Angeles Superior Court, assigned by the Chief Justice pursuant to article VI, section 6 of the California Constitution.
2