Brown v. Simplified Labor Staffing Solutions CA2/1

Filed 6/27/25 Brown v. Simplified Labor Staffing Solutions CA2/1

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions

not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion

has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION ONE

DENISE BROWN, B339521

Plaintiff and Respondent, (Los Angeles County

Super. Ct. No. 23STCV02619)

v.

SIMPLIFIED LABOR

STAFFING SOLUTIONS,

INC.,

Defendant and Appellant.

APPEAL from an order of the Superior Court of Los

Angeles County, Stephen P. Pfahler, Judge. Reversed and

remanded.

Jackson Lewis, Frank C. Olah, Jesse H. Edelman, and

Dylan B. Carp for Defendant and Appellant.

Reisner and King, Adam Jason Reisner; Pletcher Law and

Andrew S. Pletcher for Plaintiff and Respondent.

_______________________________

Pursuant to Code of Civil Procedure1 section 1291.98, the

trial court granted plaintiff Denise Brown’s motion to withdraw

her claims from arbitration and to proceed on those claims in

court, based on findings that defendant Simplified Labor Staffing

Solutions, Inc. (Simplified) failed to pay arbitration fees within 30

days after they were due. Simplified appeals from the order,

contending, among other things, that the procedural provisions of

the California Arbitration Act (§ 1280 et seq.; CAA), including

section 1281.98, do not apply here because the parties’ arbitration

agreement is governed by the substantive and procedural

provisions of the Federal Arbitration Act (9 U.S.C. § 1 et seq.;

FAA). We agree with Simplified and reverse the order.

BACKGROUND

A. Brown’s Employment With Simplified

Brown is a former employee of Simplified, a temporary

staffing services company with offices in California, Washington,

Georgia, and New Jersey. At all times relevant to this action,

Simplified supplied labor and staffing to customers located in and

outside of California.

On September 15, 2017, around the time Simplified hired

Brown and placed her with one of its customers, Brown signed

the first of two arbitration agreements she would sign during her

employment with Simplified. Later, in 2020, Simplified provided

its employees with a written notice, explaining that it had

“adopted and implemented a new arbitration policy” that would

“govern any existing and all future disputes” between Simplified

1 Undesignated statutory references are to the Code of Civil

Procedure.

2

and its employees. Simplified referred to the new policy as

“MAP,” short for “Mutual Arbitration Policy.” The three-page

notice about MAP informed employees, among other things:

“The MAP shall be governed solely by the Federal

Arbitration Act (‘FAA’), 9 U.S.C. § 1, et seq. If for any reason the

FAA is deemed inapplicable, only then will the MAP be governed

by the applicable state arbitration statutes. The Employment

Arbitration Rules of the American Arbitration Association (‘AAA’)

in place at the time of the dispute will govern the procedures to

be used in arbitration, unless you and [Simplified] agree

otherwise in writing. . . .” The notice also states that an

arbitrator or a court “may sever any part of the MAP that does

not comport with the Federal Arbitration Act.”

On January 24, 2020, Brown signed a one-page “Employee

Agreement to Arbitrate” (hereafter, the Agreement),

acknowledging she had received and reviewed a copy of the MAP

and understood that the MAP was a condition of her employment.

The Agreement, like the written notice explaining the new

arbitration policy, states that the arbitration “will be conducted

under the Federal Arbitration Act and the applicable rules of the

American Arbitration Association (‘AAA’).” Neither the notice

nor the Agreement references the CAA or states generally that

California law will govern the arbitration.2

2 The earlier 2017 arbitration agreement, which provided

that arbitration would be conducted “pursuant to the provisions

of” the FAA, and be administered pursuant to AAA’s rules,

included a provision stating, “The terms of this Agreement shall

be governed by the laws of the State of California,” and a

provision stating the parties could use California discovery

procedures.

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B. Brown’s Complaint and Simplified’s Petition to

Compel Arbitration

In February 2023, Brown filed this action against

Simplified, asserting sex discrimination under the California Fair

Employment and Housing Act and other related employment

causes of action. According to the allegations of the complaint,

Brown’s employment with Simplified terminated around May 25,

2022.

In response to the complaint, Simplified filed a petition to

compel arbitration based on the MAP and the Agreement. On

June 8, 2023, the trial court granted the petition and stayed the

action pending arbitration. In its written ruling, the court noted,

the “Agreement indicates that it will be solely governed by the

Federal Arbitration Act, and the arbitration will be subject to the

rules of the American Arbitration Association (AAA).” Under a

heading in the ruling titled “Governing Law,” the court stated,

“The Agreement is governed by the FAA because the Agreement

provides that it is to be governed by the FAA, and [Simplified]

has indicated that it conducts business within interstate

commerce.”

C. Brown’s Motion to Withdraw From Arbitration and

Proceed in Court

In March 2024, around eight months after the trial court

ordered this matter to arbitration, Brown filed a motion to

withdraw her claims from arbitration and proceed with this

action in court. She argued she was entitled to make this election

under section 1281.98 of the CAA because Simplified failed to pay

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arbitration fees within 30 days after they were due.3 She also

sought monetary sanctions for the asserted breach under section

1281.99.

Simplified opposed the motion, arguing section 1281.98 is

inapplicable because the “FAA expressly controls this arbitration

and therefore the CAA does not apply.” Simplified also indicated,

even if the CAA applies, section 1281.98 remains inapplicable

because the FAA preempts it. On the merits of the dispute,

Simplified challenged Brown’s assertions that its payments were

late, maintaining (1) that Brown extended the deadline for

Simplified to pay a December 6, 2023, $750 invoice from AAA,

and Simplified paid it on January 16, 2024, one day before the

new deadline; and (2) that a January 2, 2024 invoice from AAA

for $6,250 was superseded by a February 1, 2024 invoice in the

same amount, and Simplified timely paid it on February 6. In

3 Section 1281.98, subdivision (a)(1), provides, “In an

employment or consumer arbitration that requires, either

expressly or through application of state or federal law or the

rules of the arbitration provider, that the drafting party pay

certain fees and costs during the pendency of an arbitration

proceeding, if the fees or costs required to continue the

arbitration proceeding are not paid within 30 days after the due

date, the drafting party is in material breach of the arbitration

agreement, is in default of the arbitration, and waives its right to

compel the employee or consumer to proceed with that

arbitration as a result of the material breach.” In that case, the

employee may elect to “[w]ithdraw the claim from arbitration and

proceed in a court of appropriate jurisdiction.” (§ 1281.98, subd.

(b)(1).) The term “ ‘[d]rafting party,’ ” as used in the CAA,

includes “the company or business that included a predispute

arbitration provision in a contract with a consumer or employee.”

(§ 1280, subd. (e).)

5

her reply brief, Brown challenged Simplified’s assertion that its

payments of arbitration fees were timely, but she did not respond

to Simplified’s arguments that section 1281.98 is inapplicable

because the arbitration was governed by the FAA and not the

CAA, or that the FAA preempts section 1281.98.

At a hearing on Brown’s motion, Simplified only made

arguments regarding the timeliness of its payment of arbitration

fees. There was no discussion of the other arguments it made in

its opposition. After hearing oral argument, the trial court took

the matter under submission and later granted Brown’s motion

to withdraw from the arbitration, lifting the stay of the court

action, and sanctioning Simplified and its counsel jointly and

severally in the amount of $17,406.25.

As reflected in its order, the court concluded Simplified was

in material breach of the Agreement, within the meaning of

section 1281.98, based on the court’s findings that Simplified paid

the $750 and $6,250 invoices more than 30 days after they were

due. The court further concluded, the “FAA in no way excuses

the application of Code of Civil Procedure section 1281.97,[4] et

seq. under the facts of the subject action.” In support of this

conclusion, the court cited Gallo v. Wood Ranch USA, Inc. (2022)

81 Cal.App.5th 621, 629-630 (Gallo), a case in which the parties

expressly incorporated the CAA in their arbitration agreement,

4 Section 1281.97 is similar to section 1281.98, but applies

when the drafting party fails to make payments required to

initiate the arbitration rather than to continue the arbitration.

This appeal concerns the applicability of section 1281.98,

however, case law concerning the applicability of section 1281.97

is equally persuasive on the issue before us.

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and the Court of Appeal rejected the employer’s argument that

the FAA preempted sections 1281.97, 1281.98, and 1281.99.

In its order, the court did not squarely address Simplified’s

argument that the CAA is inapplicable under the terms of the

MAP and the Agreement—the issue we decide here.

DISCUSSION

Simplified contends the trial court erred in granting

Brown’s motion to withdraw from the arbitration because section

1281.98 does not apply, as the parties agreed the arbitration

would be governed not only by the FAA’s substantive provisions,

but also by the FAA’s procedural provisions. For the following

reasons, we agree.

Section 1281.98 is a procedural provision of the CAA. (See

Suarez v. Superior Court (2024) 99 Cal.App.5th 32, 42

[characterizing section 1281.97 as a procedural provision of the

CAA]; Gallo, supra, 81 Cal.App.5th at pp. 641-642 [same].) By

default, where an arbitration agreement does not specify

otherwise, the procedural provisions of the CAA apply in

California state court proceedings. (Espinoza v. Superior Court

(2022) 83 Cal.App.5th 761, 785-786.)

An arbitration agreement governed by the FAA’s

substantive provisions is not necessarily governed by the FAA’s

procedural provisions in an action filed in a California state

court. For example, where the substantive provisions of the FAA

apply because the state court action involves interstate

commerce, the CAA’s procedural provisions apply unless the

arbitration agreement “contains a choice-of-law clause expressly

incorporating” the FAA’s procedural provisions. (Valencia v.

Smyth (2010) 185 Cal.App.4th 153, 173-174 (Valencia).)

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In this appeal, Brown does not dispute the Agreement is

governed by the FAA’s substantive provisions. Nor does she

dispute that if the parties adopted the FAA’s procedural

provisions, then the CAA’s procedural rules, including section

1281.98, do not apply. But she disagrees with Simplified’s

contention that the parties adopted the FAA’s procedural

provisions.

In determining what procedural law applies, in the absence

of conflicting extrinsic evidence, we independently review the

arbitration agreement. (Rodriguez v. American Technologies, Inc.

(2006) 136 Cal.App.4th 1110, 1117 (Rodriguez).) “[W]e examine

the language of the contract to determine whether the parties

intended to apply the FAA to the exclusion of California

procedural law.” (Cronus Investments, Inc. v. Concierge Services

(2005) 35 Cal.4th 376, 383 (Cronus).) “ ‘ “ ‘The fundamental goal

of contractual interpretation is to give effect to the mutual

intention of the parties. . . . If contractual language is clear and

explicit, it governs.’ ” ’ ” (Valencia, supra, 185 Cal.App.4th at p.

177.)

As a threshold matter, we address Brown’s assertion, made

for the first time tangentially in a footnote in her respondent’s

brief, and later as a central point of her oral argument, that the

2017 arbitration agreement was never “explicitly superseded,” so

we must consider it in combination with the MAP and the

Agreement in determining whether the FAA’s or CAA’s

procedural law governs the arbitration. As discussed above, in

2020, Simplified notified its employees that it had “adopted and

implemented a new arbitration policy,” the MAP, that would

“govern any existing and all future disputes” between Simplified

and its employees. Thereafter, Brown signed the Agreement,

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expressly stating she understood that any arbitration between

her and Simplified would be governed by the MAP. Based on this

clear language in the MAP and the Agreement, Brown’s

argument that the parties intended that the 2017 arbitration

agreement would continue to govern their disputes is

unpersuasive. We turn to our interpretation of the choice-of-law

provisions in the MAP and the Agreement.

The MAP states it “shall be solely governed” by the FAA,

and only if “the FAA is deemed inapplicable,” will it be “governed

by the applicable state arbitration statutes.” (Italics added.) The

MAP further provides that AAA’s Employment Arbitration Rules

“will govern the procedures to be used in arbitration, unless you

and [Simplified] agree otherwise in writing.” Finally, the MAP

states that an arbitrator or a court “may sever any part of the

MAP that does not comport with the Federal Arbitration Act.”

The agreement Brown signed, which makes clear that the MAP

was a condition of her employment, reiterates that the

arbitration “will be conducted under the Federal Arbitration Act

and the applicable rules of the American Arbitration Association

(‘AAA’).” Neither the MAP nor the Agreement references the

CAA or states generally that California law will govern the

arbitration.

By its plain language, the MAP evinces the parties’ intent

to apply the entirety of the FAA, both its substantive and

procedural provisions, to the arbitration. It is not clear how the

use of the word “solely” could be interpreted otherwise. We must

give effect to the parties’ clear intent and conclude the FAA’s

procedural provisions are applicable here. Under the express

terms of the MAP, because the FAA’s procedural provisions are

applicable, the CAA’s procedural provisions are not (as stated in

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the MAP, “If for any reason the FAA is deemed inapplicable, only

then will the MAP be governed by the applicable state arbitration

statutes”).

The changes Simplified made to its arbitration policy when

it adopted the MAP inform our conclusion that the MAP and the

Agreement expressly incorporate the FAA’s procedural

provisions. Simplified eliminated language from the 2017

arbitration agreement stating, “The terms of this Agreement

shall be governed by the laws of the State of California,” and the

parties may use California discovery procedures. (Cf. Cronus,

supra, 35 Cal.4th at pp. 384, 387, 394 [in an action where the

FAA’s substantive provisions applied because the action involved

interstate commerce, the FAA’s procedural provisions did not

apply where the arbitration agreement stated (1) that it was to

“ ‘be construed and enforced in accordance with and governed by

the laws of the State of California,’ ” and (2) that this choice-of-

law provision was not to “ ‘be deemed an election to preclude

application of the [FAA], if it would be applicable’ ”].) Moreover,

Simplified added the word “solely” to define the scope of the

FAA’s applicability. (Cf. Rodriguez, supra, 136 Cal.App.4th at p.

1122 [“Plainly, the language of the contract requires the parties

to arbitrate ‘in conformance to’ and ‘agreement with’ the FAA.

There is no other contract provision suggesting the parties

intended to incorporate California arbitration law, nor is there

any language suggesting the parties intended to arbitrate ‘in

conformance to’ some provisions of the FAA but not others. The

phrase ‘pursuant to the FAA’ is broad and unconditional . . . .”].)

Here, the parties “adopted the FAA—all of it—to govern their

arbitration.” (Ibid.)

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Brown argues the parties’ agreement to conduct the

arbitration under AAA’s procedural rules means they did not

agree to adopt the FAA’s procedural provisions; and therefore,

the CAA’s procedural rules, including section 1281.98, apply here

by default. Brown provides no authority for her suggestion that

the FAA’s procedural provisions are wholly inapplicable where

the parties incorporate the rules of the arbitral body into their

arbitration agreement. Taking her argument to its logical

conclusion, if the AAA’s procedural rules apply to the exclusion of

all other procedural rules, then the CAA’s procedural provisions,

including section 1281.98, do not apply here either. In other

words, if the express adoption of the AAA’s procedural rules

means the parties did not agree to adopt the FAA’s procedural

provisions, then it also means the parties did not agree to adopt

the CAA’s procedural provisions.

Because we conclude sections 1281.98 and 1281.99 are

inapplicable to this action under the express terms of the MAP

and the Agreement, we reverse the trial court’s order granting

Brown’s motion to withdraw from the arbitration, lifting the stay

of the court action, and imposing monetary sanctions on

Simplified and its counsel.5

5 Given our conclusion on this issue, we need not reach

Simplified’s remaining contentions regarding federal preemption

and the merits of the parties’ dispute concerning payment of

arbitration fees.

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DISPOSITION

The order is reversed, and the matter is remanded for

further proceedings consistent with this opinion. Simplified is

entitled to recover costs on appeal.

NOT TO BE PUBLISHED

M. KIM, J.

We concur:

ROTHSCHILD, P. J.

BENDIX, J.

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