Brown v. Cedars-Sinai Medical Center CA2/2

Filed 12/6/23 Brown v. Cedars-Sinai Medical Center CA2/2

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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not been certified for publication or ordered published for purposes of rule 8.1115.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 TWO

ERIK BROWN, B324446

Plaintiff and Respondent, (Los Angeles County

Super. Ct. No. BC689955)

v.

CEDARS-SINAI MEDICAL

CENTER,

Defendant and Appellant.

APPEAL from an order of the Superior Court of Los

Angeles County, Lawrence P. Riff, Judge. Affirmed.

Sheppard, Mullin, Richter & Hampton, Richard J.

Simmons, Daniel J. McQueen, Melissa M. Smith and Tyler J.

Johnson for Defendant and Appellant.

Matern Law Group, Matthew J. Matern, Kiran Prasad,

Mikael H. Stahle and Irina A. Kirnosova for Plaintiff and

Respondent.

Defendant and appellant Cedars-Sinai Medical Center

(Cedars-Sinai) appeals from a November 1, 2022 order denying

its petition to compel arbitration of individual claims asserted by

plaintiff and respondent Erik Brown on behalf of the California

Labor and Workforce Development Agency under the Labor Code

Private Attorneys General Act of 2004 (Lab. Code, § 2698 et seq.)1

(PAGA).2 We affirm the trial court’s order.

BACKGROUND

Brown was employed by Cedars-Sinai from November 2003

until June 2017. Before commencing his employment, Brown

executed a “Mutual Agreement to Arbitrate Claims” (arbitration

agreement) in which he agreed to submit to binding arbitration

any claim or controversy relating to his employment or

termination of employment if the claim demands $25,000 or

more.3 Brown had worked 17 pay periods at the time Cedars-

Sinai terminated his employment in June 2017.

1 All further statutory references are to the Labor Code.

2 The November 1, 2022 order also denied Cedars-Sinai’s

motion to dismiss nonindividual PAGA claims Brown asserted on

behalf of other aggrieved Cedars-Sinai employees. Cedars-Sinai

does not challenge that portion of the trial court’s order.

3 In the arbitration agreement, the parties agreed “to submit

all claims or controversies in any way relating to or associated

with your employment or the termination of employment

(‘Claims’), to the Conflict Resolution Procedure of the Medical

Center. If a Claim is not resolved by the Conflict Resolution

Procedure, and if the Claim demands $25,000.00 or more, you

and Cedars-Sinai agree that the Claim will be resolved

exclusively by binding arbitration.” The parties further agreed

that “[i]f any part of this Agreement is found to be void or

2

Brown commenced this action against Cedars-Sinai in

January 2018, alleging a single cause of action under PAGA for

his individual Labor Code violation claims and nonindividual

claims on behalf of “other similarly aggrieved current and former

non-exempt employees.” He sought to recover unpaid wages and

civil penalties for “illegal rest period policies, failure to pay all

wages due to discharged and quitting employees, failure to

provide accurate itemized wage statements, failure to maintain

required records,” and for “interest, attorneys’ fees, costs, and

expenses.” On the civil case cover sheet accompanying his

complaint, Brown checked the box indicating the amount

demanded exceeds $25,000. The prayer for relief in Brown’s

complaint sought “civil penalties according to proof, including but

not limited to the amount of any unpaid wages of PLAINTIFF

and other aggrieved employees and all penalties authorized by

the Labor Code §§ 210, 226.3, 558, 1174.5, 1197.1, and 2699(a)

and (f),” in addition to interest, attorney fees, and costs.

In June 2022, Cedars-Sinai moved to compel arbitration of

Brown’s individual PAGA claims and to dismiss the

nonindividual PAGA claims asserted on behalf of other aggrieved

employees. Cedars-Sinai based its motion on Viking River

Cruises, Inc. v. Moriana (2022) 596 U.S. __ [142 S.Ct. 1906], in

which the United States Supreme Court held that the Federal

Arbitration Act (9 U.S.C. § 1 et seq.) (FAA) preempted the

California state law rule that invalidated agreements to arbitrate

“‘individual PAGA claims for Labor Code violations that an

employee suffered,’” overruling Iskanian v. CLS Transportation

unenforceable, that part will be eliminated, and the rest of this

Agreement will remain in full force.”

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Los Angeles, LLC (2014) 59 Cal.4th 348. (Viking River, at

p. 1923, quoting Iskanian, at p. 383.)

In its motion, Cedars-Sinai argued that Brown’s action

came within the arbitration agreement because the complaint

alleged employment-related claims, and the civil case cover sheet

filed with the complaint contained a judicial admission that

Brown’s claims demanded more than $25,000. Cedars-Sinai

further argued that Brown’s demand exceeded $25,000 even if

the trial court considered only Brown’s individual PAGA claims.

Cedars-Sinai reasoned as follows: Brown’s potential recovery in

civil penalties alone would exceed the $25,000 threshold in the

arbitration agreement if he sought to recover only the $100

default penalty available under PAGA for each of the 10 alleged

Labor Code violations during the initial pay period he worked (10

violations x 1 pay period x $100 = $1,000), and the $200 default

penalty for the 16 remaining pay periods he worked (10 violations

x 16 pay periods x $200 = $32,000), for a total potential recovery

of $33,000 ($1,000 + $32,000).4

In opposing the motion to compel arbitration, Brown

argued that Cedars-Sinai failed to meet its burden of proving the

4 Under PAGA, the civil penalty for an initial violation is

$100 per employee per pay period, and the penalty for each

subsequent violation is $200 per employee per pay period.

Section 2699, subdivision (f)(2) provides: “For all provisions of

this code except those for which a civil penalty is specifically

provided, there is established a civil penalty for a violation of

these provisions, as follows: [¶] . . . [¶] . . . If, at the time of the

alleged violation, the person employs one or more employees, the

civil penalty is one hundred dollars ($100) for each aggrieved

employee per pay period for the initial violation and two hundred

dollars ($200) for each aggrieved employee per pay period for

each subsequent violation.”

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existence of an agreement to arbitrate his individual PAGA

claims. He maintained there was no evidence that his individual

PAGA claims demanded $25,000 or more; Cedars-Sinai’s

valuation of the individual PAGA claims was speculative; Cedars-

Sinai conceded that imposition of the default $100 statutory

penalty under section 2699, subdivision (f) alone would not bring

his claims within the $25,000 arbitration threshold; and without

imposing the additional $200 statutory penalty, the dispute did

not come within the scope of the arbitration agreement. Brown

further argued that because Cedars-Sinai had moved to compel

arbitration of only the individual PAGA claims, the value of the

nonindividual claims was not at issue and should not be

considered.

On November 1, 2022, following a hearing at which the

parties argued, the trial court issued an order denying the motion

to compel arbitration. The court found that Cedars-Sinai failed

to meet its burden of showing that Brown’s individual PAGA

claims demand $25,000 or more as required by the arbitration

agreement. The trial court stated: “While the whole of the PAGA

claims exceed $25,000 as shown on the civil cover sheet, one

cannot discern that Brown’s ‘individual’ PAGA claims exceed that

sum. To the extent that Cedars-Sinai invites the court to parse

evidence at this point to determine the amount of such claim, the

court respectfully declines. [¶] As Brown notes, an employee

affected by at least one Labor Code violation may pursue

penalties on the state’s behalf for unrelated violations by the

same employer. [Citation.] The plaintiff’s ‘individual’ PAGA

claim might therefore demand only $100 in penalties, excusing

the Claim from arbitration under the Agreement, while as to

other aggrieved employees, the plaintiff seeks penalties that in

the aggregate total far more than the $25,000.”

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This appeal followed.

DISCUSSION

I. Standard of review

“Generally, the standard of review applicable to the denial

of a petition to compel arbitration is determined by the issues

presented on appeal [citation]. To the extent the denial relies on

a pertinent factual finding, we review that finding for the

existence of substantial evidence. [Citation.] In contrast, to the

extent the denial relies on a determination of law, we review the

trial court’s resolution of that determination de novo.” (Bautista

v. Fantasy Activewear, Inc. (2020) 52 Cal.App.5th 650, 655.)

Whether an arbitration agreement applies to a controversy is a

question of law to which we apply our independent judgment

when no conflicting extrinsic evidence in aid of interpretation was

introduced in the trial court. (Ahern v. Asset Management

Consultants, Inc. (2022) 74 Cal.App.5th 675, 687.)

Finally, when an order denying a motion to compel

arbitration is based on the trial court’s finding that the petitioner

failed to carry its burden of proof, the reviewing court must

determine whether that finding was erroneous as a matter of law.

(Trinity v. Life Ins. Co. of North America (2022) 78 Cal.App.5th

1111, 1121 (Trinity).) “‘“Specifically, the question becomes

whether the appellant’s evidence was (1) ‘uncontradicted and

unimpeached’ and (2) ‘of such a character and weight as to leave

no room for a judicial determination that it was insufficient to

support a finding.’”’” (Ibid.)

II. Applicable law

The parties do not dispute that the FAA governs the

arbitration agreement. “The FAA embodies a clear federal policy

in favor of arbitration” (Simula, Inc. v. Autoliv, Inc. (9th

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Cir.1999) 175 F.3d 716, 719), and “any doubts concerning the

scope of arbitrable issues should be resolved in favor of

arbitration” (Moses H. Cone Memorial Hospital v. Mercury

Construction Corp. (1983) 460 U.S. 1, 24-25). When determining

the rights of parties to enforce an arbitration agreement governed

by the FAA, courts apply state contract law while giving due

regard to the federal policy favoring arbitration. (Volt

Information Sciences, Inc. v. Board of Trustees of Leland Stanford

Junior University (1989) 489 U.S. 468, 474.)

Code of Civil Procedure section 1281.2 requires a trial court

to grant a petition to compel arbitration “if [the court] determines

that an agreement to arbitrate the controversy exists.” A party

seeking to compel arbitration bears the burden of proving by a

preponderance of the evidence the existence of a valid arbitration

agreement that covers the dispute at issue. (Trinity, supra, 78

Cal.App.5th at p. 1120; Nixon v. AmeriHome Mortgage Co., LLC

(2021) 67 Cal.App.5th 934, 946; Larian v. Larian (2004) 123

Cal.App.4th 751, 760.) “[T]he policy favoring arbitration ‘ “does

not override ordinary principles of contract interpretation.” . . .

“‘[T]he terms of the specific arbitration clause under

consideration must reasonably cover the dispute as to which

arbitration is requested.’”’” (Vaughn v. Tesla, Inc. (2023) 87

Cal.App.5th 208, 218-219.) “[A] court may order arbitration of a

particular dispute only where the court is satisfied that the

parties agreed to arbitrate that dispute.” (Granite Rock Co. v.

International Brotherhood of Teamsters (2010) 561 U.S. 287, 297.)

Once the petitioning party has met its burden of proving

the existence of an agreement to arbitrate the dispute, the

burden shifts to the party opposing arbitration to prove by a

preponderance of the evidence any fact necessary to its defense,

such as fraud, waiver, or unconscionability. (Engalla v.

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Permanente Medical Group, Inc. (1997) 15 Cal.4th 951, 972-976;

Rosenthal v. Great Western Fin. Securities Corp. (1996) 14

Cal.4th 394, 413.) Some California appellate courts have

imposed an additional burden “upon the party opposing

arbitration to demonstrate that an arbitration clause cannot be

interpreted to require arbitration of the dispute.” (Coast Plaza

Doctors Hospital v. Blue Cross of California (2000) 83

Cal.App.4th 677, 686-687 (Coast Plaza); accord, Howard v.

Goldbloom (2018) 30 Cal.App.5th 659, 663; Aanderud v. Superior

Court (2017) 13 Cal.App.5th 880, 890.)

III. No error in denial of petition to compel arbitration

Citing the Coast Plaza line of cases, Cedars-Sinai contends

it met its burden of proving the existence of an agreement to

arbitrate the individual PAGA claims, thereby shifting to Brown

the burden of proving those claims fall outside the scope of the

arbitration agreement. We disagree. The arbitration agreement

itself sets a $25,000 minimum threshold for arbitrable claims.

Interpretation of that agreement is not at issue, and the contract

language imposing the $25,000 arbitration threshold is clear and

unambiguous in any event. Cedars-Sinai failed to prove by a

preponderance of the evidence that Brown’s demand for his

individual PAGA claims meets the $25,000 threshold. The

burden of proof accordingly did not shift to Brown.

The civil case cover sheet Brown filed with his complaint is

not, as Cedars-Sinai contends, a judicial admission that Brown’s

individual PAGA claims demand more than $25,000. “Judicial

admissions may be made in a pleading, by stipulation during

trial, or by response to request for admission.” (Myers v.

Trendwest Resorts, Inc. (2009) 178 Cal.App.4th 735, 746.) Not

every document filed by a party is a pleading from which a

judicial admission may be extracted. (Ibid.) A civil case cover

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sheet, for example, is for the court’s use “for statistical purposes

and may affect the assignment of a complex case.” (Cal. Rules of

Court, rule 3.220(a).) A plaintiff’s claims are stated in his or her

pleadings, not on an administrative cover sheet.

Even if the civil case cover sheet Brown filed with his

complaint could be deemed an admission that the individual

PAGA claims Brown asserts on his own behalf, together with the

nonindividual PAGA claims he asserts on behalf of other

employees, collectively demand more than $25,000, such an

admission would not establish that Brown’s individual PAGA

claims alone demand $25,000.

Cedars-Sinai’s valuation of Brown’s individual PAGA

claims is insufficient to establish that those claims demand

$25,000 or more. Brown’s complaint seeks to recover “civil

penalties according to proof, including but not limited to the

amount of any unpaid wages” owed to him, but alleges no specific

or minimum amount of penalties sought. Cedars-Sinai’s

calculation of the minimum statutory penalties Brown may

recover for alleged violations during his initial pay period is

substantially below the $25,000 arbitration threshold. Under

Cedars-Sinai’s own analysis, the $25,000 threshold is exceeded

only if Brown can successfully prove not only the alleged

violations during his initial pay period, but subsequent violations

during the ensuing pay periods as well.5 Whether or not Brown

5 We disregard Cedars-Sinai’s argument that attorney fees

should be included in the valuation of Brown’s individual PAGA

claims when determining whether the demand for those claims

exceeds the $25,000 threshold, as Cedars-Sinai failed to raise this

argument in its opening appellate brief. (Shade Foods, Inc. v.

Innovative Products Sales & Marketing (2000) 78 Cal.App.4th

847, 894, fn. 10.)

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will succeed in doing so is uncertain. Cedars-Sinai’s valuation

analysis is not “‘“‘of such a character and weight as to leave no

room for a judicial determination that it was insufficient’”’” to

prove that the demand for Brown’s individual PAGA claims

exceeds $25,000. (Trinity, supra, 78 Cal.App.5th at p. 1121; see

Ibarra v. Manheim Investments, Inc. (9th Cir. 2015) 775 F.3d

1193, 1199 [when a damages assessment is based on

assumptions, “those assumptions cannot be pulled from thin air

but need some reasonable ground underlying them”].)

Cedars-Sinai failed to meet its initial burden of proving, by

a preponderance of the evidence, the existence of an agreement to

arbitrate the parties’ particular dispute. The trial court did not

err by denying the petition to arbitrate.

DISPOSITION

The order denying the petition to compel arbitration is

affirmed. Brown shall recover his costs on appeal.

________________________

CHAVEZ, J.

We concur:

________________________

LUI, P. J.

________________________

ASHMANN-GERST, J.

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