Application — Addie Smith, Petitioner v. Syhadley, LLC

SUPREME COURT OF THE UNITED STATES

Addie Smith,

Petitioner,

vs.

SyHadley, L.L.C.,

Respondent.

APPLICATION FOR A STAY OF PROCEEDINGS PENDING A PETITION FOR A

WRIT OF CERTIORARI

Addie Smith

Pro Se

2601 76" Ave SE

Apt 502

Mercer Island, WA 98040

Email: absmith27@icloud.com

(425) 399-3331

Friend of the Court

20-Fw

TABLE OF CONTENTS

TtrOductiOn......c.ccesscesseesssesseessssseesecseeseeueeseseseesseseeseeesseeeeeecseensseaeeseessecaseseenseeaecseeeueceaeessasenseeatenees

Statement. sccsssancscesvexnsecusasanssannnsancaunsnenseutsonsnuissavavavneduannnacassnaceus ea seaisin ounces coanvenstakaubaNaaeuRS TNS

A. Back ground. sass cass sessasssassssecnssarsesuscoscispenatusavissascctvuns obisielsesvisnsniiluscassielecdhaasessdesuateusnelNs

B. Facts and procedural history sgssasssasvaegeccasyaaguteqsazancnseqaconsvexenanseveuacsse vaanssaaennapanceaceavensanvs

PANE UT S00. PR De adel I I oI cc ello gE EE a cee ol cel acres

I. There is a reasonable probability that this Court will grant certiorari... .ceceeseeeeeeeteeneeees

A. The questions presented are important and warrants review in this CaSe...........:cseeseeees

B. There is a significant possibility that this Court will reverse the Court of Appeals’

CECISION............... .deistinanisioaea sejawas enews sulasinls gies aoieins ss selenide ReWNscaewasvneslicsesss

II. Absent a stay, applicants will suffer irreparable harm................:cscesseescsseeeseeteceneeeeeeeseeeaeseneenses

IIT. The equities favor a Stay... cscseessessesscesesseecessesesecesseesseeseseessessessesasesasaeeaeeaeeeseasensseaseaeeees

Conclusion........c.cccccesccsccccscoccccccecccccecescescessecsseeseveveeeevevecesececeseeseecssceseceesseeesveneetuseuveceeeesesseseessecere

TABLE OF AUTHORITIES

CASES

14 Penn Plaza LLC v. Pyett, 556 U.S. 247 (2009) :csssssivsosssisisnsssnisssesesevssvenussbionsaisungnntenasntacisasanes

Alascom, Inc. v. ITT North Electric Co., 727 F.2d 1419 (9th Cir. 1984) woe ceeceeseseeteesseeees

Allied-Bruce Terminix Co. v. Dobson, 513 U.S. 265 (1995) wocccccseseeseeseeeseeseeeseassenseeeeeseenees

American Express Co. v. Italian Colors Restaurant, 570 U.S. 228 (2013) ....cceeeseseesesseeeeees

AT&T Mobility LLC v. Concepcion, 563 U.S. 333 (2011) cc cccecsccsssetseeteeesenseseetesenes passim

AT&T Technologies, Inc. v. Communications Workers of America, 475 U.S. 643 (1986) ...

Barnes v. E-Systems, Inc. Group Hospital Medical & Surgical Insurance Plan, 501 U.S. 1301

(1991)

ORR R Eee eee eee EEE OEE EERE eee E REET E ESE OE EEE EEE H EEE EE EEE EEE EEE EES EE EEE HEHEHE EEE EEE EEE EEE SESE EEE EEEEEE SE ERESEESEEEE EEE EEEH EEE HE EEE E EE

Belnap v. lasis Healthcare, 844 F.3d 1272 (10th Cir. 2017) oo... cccccsccsseeeseceeseseecsssesseesseeenseee

BG Group, PLC v. Republic of Argentina, 134 S. Ct. 1198 (2014) wee eeeeeecreteeeeeeteeeneees

Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440 (2006) ...cccccecccccesesseeeseeeeeeneeeeuee

CompuCredit Cotp: v. ‘Greenwood, 565 U.S. 95 (2012) cicscosssveccescssessnssosenasessesssacnsosasoasavsensoass

Dean Witter Reynolds, Inc. v. Byrd, 470 U.S. 213 (1985) woe eecceceesesseeseerseeeeeeeseeesetecensenerenes

Peayetrv. | nitedsstates. 453" UsSLI30I (1.9877) ........--xessenraeme estos soon esernenmeeescesetiaccteneesain>

Douglas v. Regions Bank, 757 F.3d 460 (Sth Cir. 2014) ccc ccecsecssssecseessssssreeesseteeeeees passim

Dream Theater, Inc. v. Dream Theater, 21 Cal. Rptr. 3d 322 (Cal. Ct. App. 2004) wee

EEOC v. Waffle House, Inc., 534 U.S. 279 (2002) oo... cecsesccscceseseccesseseercsesecceseeseeeeeseaeeaseasenesens

Ehleiter v. Grapetree Shores, Inc., 482 F.3d 207 (3d Cir. 2007) .o..ccccccescssscesteessseeeessrerteeeeseenes

First Options of Chicago, Inc. v. Kaplan, 514 U.S, 938 (1995) woceccccecsccceseeeseceseseneeeeeeseeeesees

Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20 (1991) woeccccecceccccsseesseeeseessesesseseeesseenees

Green Tree Financial Corp. v. Randolph, 531 U.S. 79 (2000) oo... ecseesseesecessesseeceeseeseeseeesenase

Hollingsworth v. Perry, 558 U.S. 183 (2010) oon. cecccccsscsscesseseessesseeeecesseessesereesceseenereneseceereneees

Jones v. Waffle House, Inc., 866 F.3d 1257 (11th Cir. 2017) .....ccceccsscesscssesecssessesseesenseeseceseees

Local No. 358, Bakery & Confectionery Workers Union, AFL-CIO v. Nolde Brothers, 530 F.2d

548 (4th Cir. 1975)

FERRERO REE RHEE HEE EEE EE AEE E EEE EEE HEEEEEEEEEEEHEEEESEEETEEEEEEEHEEEHEEEEESEEEEEEEEESEEEEESEREEEEOEEEEE HEHEHE ES EEH HEHE EEEHH SOE EEEEEHEEE EEE EE EEE ES

Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, 473 U.S. 614 (1985) ....ecccccseeeseeceeeens

Moses H. Cone Memorial Hospital v. Mercury Construction, 460 U.S. 1 (1983) wccceeeeeeees

Oracle America, Inc. v. Myriad Group A.G., 724 F.3d 1069 (9th Cir. 2013) w.eccccecccsesseeseeseeee

Qualcomm Inc. v. Nokia Corp., 466 F.3d 1366 (Fed. Cir. 2006) ....ccccccccsesscseeeseseeseesseeessesseeees

Rent-A-Center, West, Inc. v. Jackson, 561 U.S. 63 (2010) wo... cecesecsseessseceseeseseeseerseeesce passim

Shearson/American Express, Inc. v. McMahon, 482 U.S. 220 (1987) ......cccccssessesseeseesseeseeneeees

Simply Wireless, Inc. v. T-Mobile US, Inc., 877 F.3d 522 (4th Cir, 2017) v..ccceecessseseeeeeeneees

Southland Corp: v. Keating: 465 U.S. 1 (1984) cccescsssssccssvessrssscsssnssuaasssssnscvacsosnssossessssovensssvesssos

Stolt-Nielsen S.A. v. Animal Feeds Int] Corp., 559 U.S. 662 (2010) ...ccceeccccseesssesseeeseeseeeeenes

Turi v. Main St. Adoption Services, LLP, 633 F.3d 496 (2011) wo. eeececesseesesesceseenceseeseeneeeaeees

Landa v. Holiday Appelwick, J.

No. 74406-2-I Court of Appeals of the State of Washington..................ccccceceeseeeaeeeeees

Kindred Nursing Centers L.P. v. Clark,

2017 U.S. Lexis 2948... cece cree cece cece cee seeeseessesteeteennnnnerstettctsstteetsetnsnnennnns

U.S.C. 16(a) sesecccsssscccsssssseccsssssssnscecssssvecesssssseesssssssecsessnsesesessssuvesessusscsessssnsvsesssesssuesessnnueesessseeeseese

DUR ROMS) Eee

DS. CLR. 23) seeceesprcanaaraienrsssesincassceressaausginansavesetaSeasin eee eeemeT aieennarncereseeresnaesrmeenneenteenneans

To the Honorable Elena Kagan, Supreme Court Justice of the United States and Circuit

Justice for Washington State.

Petitioner, Ms. Smith, and her teenaged daughter are hate crime survivors. The Petitioner

and Respondents, SyHadley, LLC, a multi-million dollar property management, construction and

development company signed a binding arbitration agreement. Ms. Smith requested arbitration

on September 16, 2019. The request for arbitration, to date, has been ignored by the

Respondents.

Petitioner respectfully moves for a stay of proceedings in the Court of Appeals

pending this Court’s consideration of petitioner’s petition for a writ of certiorari in Addie Smith

v. SyHadley, LLC. See 28 U.S.C. 2101(f); 28 U.S.C. 1651(a)-(b).

Petitioner has satisfied the requirement of Supreme Court Rule 23 for seeking a stay from

a Circuit Justice. They have sought relief in the Court of Appeals, and that request was denied by

the order dated February 4, 2020. Petitioner’s Motion for Discretionary Review and Request for

Stay were denied in the Washington State Supreme Court on July 8, 2020.

Petitioner has also satisfied the standards for obtaining a stay of proceedings pending this

Court’s disposition of the petition for certiorari: Petitioner is required to show that there is a

reasonable probability that certiorari will be granted; that there is a significant possibility of

reversal; and that irreparable harm would otherwise result. Petitioner has readily satisfied each of

those requirements. In light of the serious risk of harm created by the Court of Appeal’s

continuation of proceedings, petitioner now requests a stay of the Court of Appeal’s proceedings

from the Circuit Justice. Having exhausted available avenues for relief from the Washington

State Supreme Court, petitioner has addressed this application to the Circuit Justice for Washing

State. See Rules 22.3, 23.1.

INTRODUCTION

This case presents a recognized and important circuit conflict concerning the

interpretation of the Federal Arbitration Act (FAA). In the decision below, the court of appeals

denied the petitioner’s motion to compel arbitration as “premature and part of the notice of

appeal”. The Washington State Supreme Court denied the petitioner’s Motion for Discretionary

Review. The United States Supreme Court, in a 7-1 decision, Justice Kagan writing for the

majority, reiterated that “the FAA preempts any state law that discriminates against arbitration

on its face,” and also held that the “FAA preempts any [state] rule that covertly accomplishes the

same objective by disfavoring contracts that (oh so coincidentally) have the defining features of

arbitration agreements”. Kindred Nursing Centers L.P. v. Clark, 2017 U.S. Lexis 2948. Ms.

Smith filed a timely Motion to Compel Arbitration, on November 20, 2019, in trial court. To date

the trial court has refused to rule on the motion. It is still sitting in trial court without a decision.

Ms. Smith filed a Motion to Compel Arbitration in the Court of Appeals on January 3, 2020,

months after appealing the trial court’s decision granting the Respondent’s Unlawful Detainer.

The Court of Appeals then ordered the Respondents to get a ruling from the trial court on a

Supersedeas Bond. Still no ruling on the Motion to Compel Arbitration. The rationale of the

decision indicates the court’s desire to enforce conflicting state laws. It singles out arbitration

agreements for different treatment than other contracts. This Court has numerous precedents

recognizing that the “‘primary’ purpose of the FAA is to ensure that private agreements to

arbitrate are enforced according to their terms.” Stolt-Nielsen S.A. v. AnimalFeeds Int’ Corp.,

559 U.S. 662, 682 (2010). As it has in many other recent cases, this Court should grant certiorari

to correct the lower courts’ ruling of the FAA and reaffirm the “emphatic federal policy in favor

of arbitral dispute resolution.” Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, 473 U.S.

614, 631 (1985).

A stay of the court of appeals proceedings pending the disposition of the Ms. Smith’s

petition for writ of certiorari is necessary because she will suffer irreparable harm if the Court

does not stay this case. Trial in this matter is forth coming in the Court of Appeals, Division I of

Washington State. Forcing the petitioner to engage in further litigation will forever deprive her

of her right to resolve claims efficiently, privately, and expeditiously through arbitration. A stay

will prevent those harms while also ensuring that the parties and the courts do not waste any

more time and resources litigating a case that is highly likely to be sent to arbitration after this

Court’s review.

This case readily satisfies the standard for a stay of proceedings. As a vehicle and on its

merits, it is an ideal candidate for certiorari. There is a significant possibility that, after granting

certiorari, this Court will reverse the court of appeals’ decision. The harm that petitioner will

suffer from being compelled to litigate cannot be remedied by a later order sending the case to

arbitration after she has already tried her case. Petitioner respectfully requests that this Court stay

proceedings in the court of appeals’ pending its disposition of her petition for certiorari.

STATEMENT

A. Background

Congress enacted the FAA to “reverse the longstanding judicial hostility to arbitration

agreements.” Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 24 (1991). Section 2 of

the FAA, the Act’s “primary substantive provision,” Moses H. Cone Memorial Hospital v.

Mercury Construction, 460 U.S. 1, 24 (1983), guarantees that “[a] written provision in... a

contract evidencing a transaction involving commerce to settle by arbitration a controversy

thereafter arising out of such contract... shall be valid irrevocable, and enforceable, save

upon such grounds as exist at law or in equity for the revocation of any contract.” 9 U.S.C. 2.

Section 2 reflects “both a liberal federal policy favoring arbitration and the fundamental

principle that arbitration is a matter of contract.” AT&T Mobility LLC v. Concepcion, 563

USS. 333, 344 (2011). As construed, Section 2 of the FAA requires courts to “place []

arbitration agreements on an equal footing with other contracts[] and... enforce them

according to their terms.” Rent-A-Center, 561 U.S. at 67.

B. Facts And Procedural History

1. Petitioner was employed by the Respondents and is exempt from RLTA 59.12 and

59.18 pursuant to RCA 59.18.40 (8) Occupancy by an employee of a landlord whose right to

occupy is conditioned upon employment in or about the premises. This case presents the

question of whether the Federal Arbitration Act standard of the rule is satisfied when the courts

violate Petitioner’s right to arbitrate by enforcing conflicting state laws. Petitioner requested

arbitration on September 16, 2019, Petitioner was employed by the Respondents, SyHadley

LLC., as the community manager of Hadley Apartments in May, 2019. As part of her

salary, she was provided an apartment onsite. By June of 2019, Petitioner began reporting hate

crimes to the Respondents. The harassment, stalking, threats, and attacks continued from

June, 2019 through February 2020. On August 7, 2019, the Respondents terminated Ms. Smith.

It was over the phone, on a mental health day, after being attacked for 10 hours straight by racists

who were allowed to continue to live in the building Petitioner was hired to manage. The

Respondents retaliated with an eviction notice two days later, on September 18, 2019. Despite

the fact that the eviction notice was improperly served, despite the retaliation, despite the

Arbitration Agreement that was signed by both parties, despite Washington State Residential

Landlord Tenant Act (RLTA) 59.18 and 59.12. Ms. Smith is a former employee. The trial court

granted an unlawful detainer for the Respondents on November 19, 2019, and ordered the clerk

to issue a writ of restitution. She is exempt pursuant to 59.18.40(8) Landa v. Holiday Appelwick,

J. No. 74406-2-I. Despite Ms. Smith’s exemption; despite the improper service; despite the

arbitration agreement, King County Superior Court granted the Respondents an eviction. The

King County Superior Court presiding judge still hasn’t ruled on Ms. Smith’s timely filed

Motion to Compel Arbitration on November 20, 2019. As the case now stands there is a real risk

that Ms. Smith will be evicted during a pandemic and unemployed. Ms. Smith is the mother of a

teenaged daughter whom also lives in the home. Federal Arbitration Act 9 U.S.C. §§ 1-16 Under

the strong national Policy favoring arbitration is “so integral to modern dispute resolution that

the FAA preempts conflicting state law.” § 2 of the FAA mandates arbitration because

employment relationships are considered related to interstate commerce and are therefore

governed by the FAA. § 3 of the FAA requires this court to stay the Washington State action

while arbitration is pending. Not only did Congress require courts to respect and enforce

agreements to arbitrate; it also specifically directed them to respect and enforce the parties’

chosen arbitration procedures. See §3 (providing for a stay of litigation pending arbitration “in

accordance with the terms of the agreement”); §4 (providing for “an order directing that. . .

arbitration proceed in the manner provided for in such agreement”).

2. On direct appeal of the eviction, Ms. Smith renewed her argument that her Motion to

Compel Arbitration had not been ruled upon in trial court. Ms. Smith filed her direct appeal with

the Court of Appeals on November 20, 2019. Ms. Smith filed her Motion to Compel Arbitration

in the Court of Appeals on January 3, 2020. From the Court of Appeals, Commissioner Mary

Neel issued a ruling on December 19, 2019, The Court of Appeals acknowledged the parties’

10

arbitration agreement stating, “In her emergency motion for stay, Smith has raised issues that

appear to go beyond the dispute over possession. She argues that the unlawful detainer statutes

do not apply here because her occupancy of the apartment was part of her employment, citing

RCW 59.18.040(8) (the following living arrangements are not intended to be governed by the

provisions of this chapter: occupancy of an employee of a landlord whose right to occupy is

conditioned upon employment in or about the premises). At this point Syhadley has not

addressed Smith’s argument that the unlawful detainer procedure is unavailable. Smith also

argues that as part of her employment she signed an arbitration agreement and that the dispute

must go to arbitration. Again, Syhadley has not yet addressed this argument.” Petitioner filed a

Motion to Compel Arbitration in both the trial court and the court of appeals. Despite the parties’

binding arbitration agreement and despite the acknowledgement of Petitioner’s employment and

citing the RCW exempting her from the Residential Landlord Tenant Act, the Court of Appeals

then ruled that a decision on a Supersedeas Bond must be made from the trial court. King County

Superior Court Judge Bill Bowman, now a Court of Appeals Division I judge, ruled in favor of a

Supersedeas Bond, despite the fact that Ms. Smith is exempt from the Residential Landlord

Tenant Act (RLTA) 59.12 and 59.18. Despite the fact that the trial court, and now the Court of

Appeals refused to rule on the parties’ arbitration agreement. Judge Bowman granted the

Respondents a supersedeas bond in the amount of $53,631.85. Ms. Smith filed a Motion for

Reconsideration and an Objection to the Ruling on January 27, 2020. This is not a

straightforward landlord tenant matter. Both courts have violated Ms. Smith’s right to arbitrate

by enforcing conflicting state laws. Although Ms. Smith was employed by the Respondents, and

exempt from the Residential Landlord Tenant Act, in Otis Housing Association v. Ha, 165

Wn.2d 582, 201 P.3d 309 (2009), “the court, in a 5-4 decision, held that an optionee under a

11

lease agreement waived the right to arbitration claims because of a failure to assert the claims

during an unlawful detainer action.” This is not the case with Ms. Smith. She has informed the

court and the Respondents in the trial court, Court of Appeals, and the Washington State

Supreme Court. Ms. Smith filed Motions to Modify Commissioner Mary Neel’s rulings on

December 19, 2019, January 31, 2020 and February 5, 2020 rulings. On February 20, 2020, the

Court of Appeals denied Ms. Smith’s Motion to Compel Arbitration and Motions to Modify. The

Court of Appeals denied Ms. Smith’s Motion to Compel Arbitration as “Smith’s motion to

compel arbitration goes to the merits of her appeals and is denied as premature.” On February 24,

2020, Ms. Smith, Petitioner, filed her Motion for Discretionary Review and Motion for

Accelerated Consideration and Emergency Motion for Stay. Commissioner Michael Johnston

denied Ms. Smith Motion for Discretionary Review on April 9, 2020. Ms. Smith filed a Motion

to Modify the commissioner’s ruling. On July 8, 2020, Department I of the Washington State

Supreme Court, composed of Chief Justice Stephens and Justices Johnson, Owens, Gordon

McCloud and Montoya-Lewis unanimously agreed, “That the Petitioner’s motion to modify the

Commissioner’s ruling is denied. The Respondent’s motion for an order requiring the Appellant

to provide a transcript of the oral argument before the Commissioner is also denied. Further, the

stay imposed in the Supreme Court Commissioner’s April 9, 2020, ruling is now lifted. DATED

at Olympia, Washington, this 8" day of July, 2020.”

ARGUMENT

Under 28 U.S.C. 2101(f), this Court may stay proceedings in the court of appeals’

pending the disposition of Ms. Smith’s petitioner for a writ of certiorari. In reviewing such a stay

application, this Court considers whether there is (1) “a reasonable probability that certiorari will

12

be granted, “ (2) “a significant possibility that the judgment below will be reversed,” and (3) “a

likelihood of irreparable harm (assuming the correctness of the applicant’s position) if the

[proceeding are] not stayed.” Barnes v. E-Systems, Inc. Group Hospital Medical & Surgical

Insurance Plan, 501 U.S. 1301, 1302 (1991) (Scalia, J., in chambers); see also Deaver v. United

States, 483 U.S. 1301, 1302 (1987). “In close cases,” the Court will further “balance the equities

and weigh the relative harms to the applicant and to the respondent.” Hollingsworth v. Perry,

558 U.S. 183, 190 (2010) (per curiam). This case satisfies each of those criteria. The court of

appeals decided an important question of law. This case is an optimal vehicle for review. If

proceedings in the court of appeals are not stayed, Petitioner will lose her right to arbitration,

face eviction during a pandemic with her teenaged daughter, and suffer irreparable harm. And

the balance of the equities weighs strongly in the Petitioner’s favor. The application for stay

should be granted.

L THERE IS A REASONABLE PROBABILITY THAT THIS COURT WILL

GRANT CERTIORARI

This case presents a straightforward conflict among the courts of appeals on an important and

frequently recurring question involving the FAA. The court of appeals’ decision reinforces an

existing conflict among the circuits on the question whether a court may decline to compel

arbitration. In denying the motion to compel arbitration, the court of appeals misapplied it to the

merits of the Petitioner’s appeal. These motions were filed on two separate dates and two

different months, and two different years. The U.S. Supreme Court, in a 7-1 decision, Justice

Kagan writing for the majority, reiterated that the FAA preempts any state law that discriminates

against arbitration on its face, and also held that the FAA preempts, “any [state] rule that covertly

accomplishes the same objective by disfavoring contracts that (oh so coincidentally) have the

13

defining features of arbitration agreements”. The supersedeas bond does not preempt the FAA.

As the Supreme Court has noted in Section 2 of the FAA, “limits the grounds for denying

enforcement of “written provision[s] in ... contract[s]’ providing for arbitration,” and because of

these limits, courts commonly find that the FAA preempts state laws or judicial rules that

interfere with these contracts.

Conventry Health Care of Mo., Inc. v. Nevils, 137 S. Ct. 1190, 1199, (2017).

The parties signed a legal, binding arbitration agreement. Under the supremacy clause, from

which the preemption doctrine is derived, “any state law, however clearly with a state’s

acknowledged power, which interferes with or is contrary to federal law, must yield.”

Dean Witter Reynolds Inc., v. Byrd, 470 U.S. 213, 219-220 (1985)

A. The Question Presented Is Important and Warrants Review In This Case

The questions presented in this case is a recurring one of substantial legal and practical

importance. The Court’s intervention is necessary to safeguard the FAA’s commitment to the

enforceability of commercial arbitration agreements and to provide clarity and uniformity in the

law. This case, which cleanly presents each question, is an optimal vehicle for the Court’s

review.

1. As demonstrated by this Court’s frequent grants of certiorari in cases involving the FAA,

commercial arbitration is a critical part of our Nation’s legal system. Among other

valuable benefits, arbitration agreements allow private parties to resolve a broad range of

disputes while avoiding the costs associated with traditional litigation. Parties frequently

seek to maximize those efficiencies by delegating questions of arbitrability to the

arbitrator as well. This case well illustrates that concern. Petitioner first moved to compel

arbitration last year, November 20, 2019. Indeed, this Court routinely grants certiorari

14

even where a circuit conflict is shallow (or non-existent) when the question presented

concerns the interpretation of the FAA. See American Express Co. v. Italian Colors

Restaurant, 570 U.S. 228 (2013); AT&T Mobility, 563 U.S. 662 at 333; Stolt-Nielsen

S.A. v. AnimalFeeds Int'l Corp., 559 U.S. 662 (2010).

2. This case is an apt vehicle in which to decide the questions presented. These questions

are pure questions of law, and formed the sole basis for the court of appeals’ decision

below. In addition, this case presents the questions both squarely and in depth. The

petition for writ of certiorari in this case will thus provide the Court with an ideal

opportunity to consider and resolve the questions presented.

B. THERE IS A SIGNIFICANT POSSIBILITY THAT THIS COURT WILL

REVERSE THE COURT OF APPEALS’ DECISION

There is a significant possibility — indeed, again a high likelihood — that this Court will

reverse the court of appeals’ decision. This Court has repeatedly instructed lower courts to

enforce arbitration agreements according to their terms. See, e.g., Italian Colors, 570 U.S. at 233;

CompuCredit Corp. v. Greenwood, 565 U.S. at 67.

A. “[A]rbitration is simply a matter of contract between the parties.” First Options. 514 U.S.

at 943. This Court’s precedents, moreover, mandate that an arbitration agreement should be

strictly enforced regardless of a court’s views of the merits of the claim made by the party

seeking to compel arbitration. For example, in AT&T Technologies, Inc. v. Communications

Workers of America, 475 U.S. 643 (1986), this Court explained that the requirement to compel

arbitration under valid agreements applies “whether the claims of the party seeking arbitration

are “‘arguable’ or not, indeed even if it appears to the court to be frivolous.” Id. At 649-650.

Whatever the merits of the movant’s claim, “the courts... have no business weighing the merits

15

of the grievance,” because “[t]he agreement is to submit all grievances to arbitration, not merely

those which the court will deem meritorious.” Id. at 650.

To begin with, the court of appeals’ decision finds no basis in the text of the FAA.

Section 2 of the FAA establishes that arbitration agreements “shall be valid, irrevocable, and

enforceable, save upon such grounds as exist at law or in equity for the revocation of any

contract.” 9 U.S.C. 2. That provision does not authorize judicial interference with arbitration

agreements; rather, it simply “places arbitration agreements on equal footing with all other

contracts.” Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440, 443 (2006). The FAA

directs courts to enforce a party’s claim for arbitration “even if it appears to the court to be

frivolous.” AT&T Technologies, 475 U.S. at 649-650. In so doing, the court of appeals violated

the settled rule that, “in deciding whether the parties have agreed to submit a particular grievance

to arbitration, a court is not to rule on the potential merits of the underlying claims.” AT&T

Technologies, 475 U.S. at 649. “By its terms, the [FAA] leaves no place for the exercise of

discretion by a district court, but instead mandates that district courts shall direct the parties to

proceed to arbitration on issues as to which an arbitration agreement has been signed.” Dean

Witter Reynolds, Inc. v. Byrd, 470 U.S. 213, 218 (1985).

In any event, courts “cannot rely on... judicial policy concern[s] to refuse to honor

arbitration agreements, 14 Penn Plaza LLC v. Pyett, 556 U.S. 247, 270 (2009). A party that

proves the existence of a valid arbitration agreement is entitled to “an order directing that such

arbitration proceed in the manner provided for in such agreement.” 9 U.S.C. 4 (emphasis added).

The court of appeals’ decision was erroneous, and appellants are likely to succeed on the merits

in the event certiorari is granted.

16

I. ABSENT A STAY, APPLICANTS WILL SUFFER IRREPARABLE HARM

Absent a stay of proceedings in the court of appeals, Petitioner will suffer irreparable harm.

Without a stay, therefore, the parties’ dispute will likely be litigated on the merits before a jury,

not before an arbitrator. Unlike the potential harm to Respondents, moreover, the deprivation of

Petitioner’s right to arbitrate cannot be fully remedied by an order compelling arbitration

following an appeal. Petitioner’s stay has been lifted by the court of appeals and Supreme Court.

Indeed, Congress has implicitly recognized the irreparable nature of the harm petitioners face.

That asymmetrical regime exists to “avoid[] the possibility that a litigant seeking to invoke his

arbitration rights will have to endur[e] a full trial on the underlying controversy before [he] can

receive a definitive ruling on whether [he] was legally obligated to participate in such a trial in

the first instance.” Ehleiter v. Grapetree Shores, Inc., 482 F.3d 207, 214 (3d Cir. 2007)

(internal quotation marks and citation omitted; alteration in original). Put another way, if a party

must “undergo the expense and delay of a trial before being able to appeal, the advantages of

arbitration — speed and economy ~ are lost forever.” Alascom, Inc. v. ITT North Electric Co.,

727 F.2d 1419, 1422 (9" Cir. 1984). Petitioner will suffer precisely that harm if the court of

appeals are not stayed petitioner seeks review in this Court. Petitioner has a teenaged daughter.

The entire country in the 2"! phase of the coronavirus pandemic; and, the King County Board of

Health Director has declared RACISM a Public Health Pandemic. The severity of the harm to

petitioner from being deprived of her right to arbitrate is magnified by the nature of the claims in

this case. Petitioner and her teenaged daughter are hate crime survivors. The Respondents

terminated the Petitioner on a mental health day, over the phone, because she was complaining

about hate crime attacks from White residents in the building. In fear for her life and safety the

Petitioner fought back on November 26, 2019, after enduring months of stalking, harassment,

17

threats and attacks by numerous White residents in the building. Led by a White woman whom

Ms. Smith would not violate state and federal law to support.

Ti. THE EQUITIES FAVOR A STAY

Finally, the equities weigh heavily in favor of a stay of the court of appeals and Washington

State Supreme Court proceedings. The additional delay that will occur while this Court considers

the Petitioner’s petition for writ of certiorari will not harm Respondents at all, let alone a degree

that exceeds the harm Petitioner will suffer if a stay is denied. The public interest also favors a

stay of proceedings. As discussed, public policy strongly favors arbitration. It is contrary to that

public policy to require the parties to burden the court and the public by continuing to litigate the

merits of this dispute — including potentially through a jury trial -- . And if this case proceeds

with a stay, the court of appeals’ and the parties’ resources will be wasted (and have already been

wasted) by litigating a matter that will ultimately be resolved by the arbitrator if and when the

court of appeals’ judgment is reversed and the case is sent to arbitration.

CONCLUSION

The application for a stay of proceedings pending a petition for a writ of certiorari should

A

ae

be granted.

Respectfully submitted,

Addie Smith

Pro Se

2601 76" Ave SE Apt 502

Mercer Island, WA 98040

absmith27@icloud.com

(425) 399-3331

November 13, 2020

18

No.

SUPREME COURT OF THE UNITED STATES

Addie Smith,

Petitioner,

vs.

SyHadley, L.L.C.,

Respondent.

APPLICATION FOR A STAY OF PROCEEDINGS PENDING A PETITION FOR A

WRIT OF CERTIORARI

DECLARATION OF PROOF OF SERVICE

Addie Smith

Pro Se

2601 76 Ave SE

Apt 502

Mercer Island, WA 98040

Email: absmith27(@icloud.com

(425) 399-3331

DECLARATION OF PROOF OF SERVICE

I, Addie Smith, am over the age of 18 and competent to stand trial. The

Respondents’ attorney of record is Andrew Peterson Mazzeo. I declare, under

penalty of perjury, that I have caused a true and correct copy of this APPLICATION

FOR A STAY OF PROCEEDINGS PENDING A PETITION FOR A WRIT OF

CERTIORARI to be mailed today November 13, 2020, via U.S. Postal three (3) day

Mail Priority Service with tracking to:

Andrew Peterson Mazzeo

Counsel for SyHadley, LLC.

Lifetime Legal, Plic/Peterson Mazzeo

1235 4" Ave E Ste 200

Olympia, WA 98506-4278

dpm(@lifetime.legal

(360) 754-1976

Addie Smith

2601 76" Ave SE

Apt 502

Mercer Island, WA 98040

Absmith27@icloud.com

(425) 399-3331

APPLICATION FOR A STAY OF

PROCEEDINGS PENDING A PETITION FORA

WRIT OF CERTIORARI

ATTACHMENTS

Resolution — Declaring Racism a Public Health Crisis King County,

Washington State...........ccscsssccesccesccvscsscccscccsesccescevesee Page la

Nelsen v. Legacy Partners Residential, Inc.,

207 Cal.App.4™ 1115 144 Cal. Rptr.3d 198..........cccsecsceeseens Page 6a

SyHadley, LLC., Respondent v. Addie Smith, Appellant

Court of Appeals

No. 80780-3-I December 19, 2019............cccecccccecccccscsvevece Page 14a

SyHadley, LLC., Respondent v. Addie Smith, Appellant

Court of Appeals

No. 80780-3-I January 31, 2020............ccccccecscceccescescevees Page 18a

SyHadley, LLC., Respondent v. Addie Smith, Appellant

Court of Appeals

No. 80780-3-I February 5, 2020..........sccccscccscesccsveecscecscvess Page 24a

SyHadley, LLC., Respondent v. Addie Smith, Appellant

Court of Appeals Order Denying Motions to Modify and to Compel

Arbitration and Lifting Temporary Stays

No. 80780-3-I February 20, 2020..........ccccccsosscncvcccccsccsceees Page 27a

SyHadley, LLC., Respondent v. Addie Smith, Appellant

Washington State Supreme Court Commissioner’s Order

Denying Discretionary Review

No. 98196-5 April 9, 2020...........cccescccceccccccssccccssccesccccecens Page 29a

SyHadley, LLC., Respondent v. Addie Smith, Appellant

Washington State Supreme Court En Banc Order Denying Appellant’s

Motion to Modify Commissioner’s Ruling

NO. 98196-S July 8, 2020.......cccccvecccccccccsvecccssccscsceccccccvces Page 35a

19

DocuSign Envelope ID: 59F46137-7465-4D6F-87B9-F42DA6AC63BC

18

19

1200 King County Courth

. KING COUNTY 516 Third Avenue

Ka Seattle, WA 98104

Signature Report

King County g P

Resolution

Proposed No. 20-08.2 Sponsors

A RESOLUTION declaring racism a public health crisis.

WHEREAS, racism has deep and harmful impacts that unfairly disadvantages

Black, Indigenous and People of Color ("BIPOC") and unfairly advantages people who

identify as white, and

WHEREAS, racism harms every person in our society and is the root cause of

poverty and economic inequality, and

WHEREAS, "injustice anywhere is a threat to justice everywhere," as King

County's namesake, the Reverend Dr. Martin Luther King, Jr., said, and

WHEREAS, whether intended or not, racism becomes ingrained in institutional

policies and practices, creating differential access to opportunities and resources, and

causes disparate outcomes in all aspects of life affecting health, and

WHEREAS, by maintaining the status quo and existing systems of power and

privilege based on our country’s long history of and continued persistence of white

supremacy, institutional policies and practices do not need to be explicitly racist in order

to have racist impacts on residents, and

WHEREAS, culture across institutions and systems is critical, and the legacy of

racist policies and practices continues to exist even once the policies and practices have

been changed, and

WHEREAS, reversing the legacy of institutional racism calls for an

10/28/2020 NELSEN v. LEGACY PARTNERS | 207 Cal.App.4th 1115... | 20120718006] Leagle.com

@ in] oO

Home / Browse Decisions / Cal.App.4th / 207Cal.App.4th / 207 Cal.App.4th 1115 (2012)

NELSEN v. LEGACY PARTNERS RESIDENTIAL, INC.

No. A132927. Email | Print | Comments (0)

View Case Cited Cases Citing Case

207 Cal.App.4th 1115 (2012)

144 Cal. Rptr. 3d 198

LORENA NELSEN, Plaintiff and Appellant, v. LEGACY PARTNERS RESIDENTIAL, INC., Defendant and Respondent.

Court of Appeals of California, First District, Division One.

July 18, 2012.

Attorney(s) appearing for the Case

R. Rex Parris Law Firm, R. Rex Parris , Alexander R, Wheeler , Jason P. Fowler, Kitty Szeto , Douglas Han ; Lawyers for Justice and Edwin Aiwazian for

Plaintiff and Appellant.

Rutan & Tucker, Mark J. Payne and Brandon L. Sylvia for Defendant and Respondent.

OPINION

MARGULIES, J. —

Lorena Nelsen filed a putative class action lawsuit against her former employer, Legacy Partners Residential, Inc. (LPI), alleging multiple violations of

the Labor Code. Based on an arbitration agreement she signed when LPI hired her, LPI moved to compel Nelsen to submit her individual claims to

arbitration. Nelsen purports to appeal from the ensuing order granting LPI's motion. Although Nelsen fails to meet her burden to show the court's order

is appealable, we exercise our discretion to treat the appeal as a petition for writ of mandate. We find (1) the arbitration agreement is not unconscionable

and (2) notwithstanding that the agreement precludes class arbitration by its own terms, Nelsen fails to show that compelling her to individual

arbitration violates state or federal law or public policy. Accordingly, we deny Nelsen's petition and affirm the correctness of the trial court's order.

(207 Cal.App.4th 1120)

1. BACKGROUND

Nelsen was employed by LPI as a property manager in California from approximately July 2006 until June 2009. At the inception of her employment,

Nelsen was provided with multiple employment forms to read and sign, including a 43-page "Team Member Handbook." The last two pages of the

handbook contained a section entitled, "TEAM MEMBER ACKNOWLEDGEMENT AND AGREEMENT" (Agreement), followed by signature lines for the

"TEAM MEMBER" and a "LEGACY PARTNERS REPRESENTATIVE." The signature line was preceded by a sentence in bold print, stating, 'My signature

below attests to the fact that I have read, understand, and agree to be legally bound to all of the above terms." Nelsen and a representative of LPI both

signed the Agreement in July 2006.

mm. £82.24 6-8... wares 6B EBRs oo 2..e- 2 £. Bivens ary eee eee Yd eee | A een ee a ' Fe8 Be Dd tee Bod, 4. A et Fe Jeuntee 3 ’

hitps://www.leagle.com/decision/incaco201207 18006 1/9

10/28/2020 NELSEN v. LEGACY PARTNERS | 207 Cal.App.4th 1115... | 20120718006] Leagle.com

eee sane ee pee ge pace Va cee pec pecceee ne aweene es

agreed to all terms and conditions of employment outlined in the handbook, (3) agreed LPI could modify any of the policies or benefits set forth in the

handbook at any time and for any reason, and (4) understood and agreed she was an “at will" employee. The fifth paragraph contained the following

relevant arbitration language: "I agree that any claim, dispute, or controversy ... which would otherwise require or resort [sic] to any court ... between

myself and Legacy Partners (or its owners, partners, directors, officers, managers, team members, agents, related companies, and parties affiliated

with its team member 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 Legacy Partners, ... shall be submitted to and determined exclusively by binding

arbitration under the Federal Arbitration Act [(9 U.S.C. § 1 et seq.;)], in conformity with the procedures of the California Arbitration Act ....""1, 2

On July 26, 2010, Nelsen filed the present suit against LPI alleging causes of action arising under provisions of the Labor Code for failure to (1) pay

[207 Cal.App.4th 1121]

overtime, (2) provide meal periods, (3) provide rest breaks, (4) timely pay wages, (5) pay wages upon termination, (6) provide accurate itemized wage

statements, (7) maintain payroll records, or (8) reimburse for necessary business expenses, The complaint also included a cause of action for violation

of the unfair competition law (UCL), Business and Professions Code section 17200 et seq., based on the aforementioned statutory wage claims, and

seeking injunctive and other relief under that statute. The complaint was styled as a class action by Nelsen on behalf of all current and former

California-based property managers who worked for LPI at any time from four years preceding the filing of the complaint until final judgment in the

suit. In addition to consequential damages, restitution, and injunctive relief on behalf of the class, the complaint sought statutory penalties and

attorney fees.

LPI sent Nelsen a letter advising her of the arbitration agreement and requesting she stipulate to the dismissal of her action and submit her individual

claims to arbitration. After receiving no response from Nelsen, LPI moved two weeks later to compel Nelsen to arbitrate her claims. Nelsen opposed the

motion on the grounds the arbitration agreement was unconscionable and violated California public policy favoring class actions and wage and hour

lawsuits.

The trial court granted LPI's motion and entered an order requiring Nelsen to submit her individual claims to arbitration and staying the action in its

entirety. Nelsen timely appealed from the order, citing Franco v. Athens Disposal Co., Inc. (2009) 171 Cal. App.4th 1277 [90 Cal.Rptr.3d 539) (Franco) in

her notice of appeal as the basis for her right to appeal.

II. DISCUSSION

Nelsen contends (1) the order compelling arbitration is appealable, (2) the arbitration clause is unconscionable and unenforceable, (3) enforcement of

the arbitration clause to preclude class arbitration would violate California and federal law and public policy in the employment field, and (4) her

injunctive relief claim under the UCL is not subject to arbitration.

A. Appealability

(1) Orders granting motions to compel arbitration are generally not immediately appealable. (Abramson v. Juniper Networks, Inc. (2004) 115_Cal.App.4th

638, 648-649 [9 Cal. Rptr.3d 422]; Gordon v. G.R.O.U.P., Inc. (1996) 49 Cal App.éth 998, 1004, fn. 8 [56 Cal.Rptr.2d 914].) Such orders

[207 Cal. App.4th 1122]

are normally subject to review only on appeal from the final judgment. (Code Civ. Proc., §§ 906, 1294.2; see Muao v. Grosvenor Properties, Ltd. (2002)

99 Cal. App. Ath 1085, 1088-1089 [122 Cal.Rptr.2d 131].) Nelsen claims this case comes within an exception to the general rule recognized in Franco based

on the so-called "death knell" doctrine. Franco permitted an immediate appeal from an order made in a putative class action requiring arbitration of

individual claims and waiving class arbitration because such an order is effectively the ''death knell" of the class litigation. (See Franco, supra, 171

Cal.App.4th at p. 1288.)

(2) As an initial matter, LPI points out Nelsen failed to cite Franco or any other authority supporting the appealability of the trial court's order anywhere

in her opening brief, in violation of California Rules of Court, rule 8.204(a)(2)(B). On that basis, LPI asks this court to (1) strike Nelsen's opening brief,

and (2) find Nelsen waived any argument for appealability based on Franco. (See Lester v, Lernane (2000) 84 Cal.App.4th 536, 557 [101 Cal.Rptr.2d 86]

(holding Court of Appeal has discretion to strike opening brief that fails to include an adequate statement of appealability]; Baugh v. Garl (2006) 137

Cal.App.4th 737, 746 [40 Cal, Rptr.3d 539] [contentions not raised in appellant's opening brief deemed waived).) We decline to grant either remedy in

this case. Nelsen's citation to Franco in her notice of appeal put LPI on notice of her position regarding appealability and LPI took advantage of the

opportunity in its respondent's brief to address that case and cite authority arguably contrary to it, LPI cannot reasonably claim prejudice from our

consideration of Nelsen's argument based on Franco.

Franco involved a lawsuit filed by an employee against his employer seeking relief on behalf of himself and other employees for alleged state statutory

wage and hour violations. (Franco, supra, 171 Cal.App.4th at p. 1282.) Franco's employer filed a petition to compel arbitration based on an arbitration

agreement containing provisions waiving class arbitrations, and precluding Franco from bringing claims in arbitration on behalf of other employees,

(Id. at pp. 1283-1284.) The trial court granted the petition, directed Franco to submit his individual claims to arbitration, denied class arbitration, and

ordered the civil action to be dismissed for all purposes except enforcement of the arbitration order or to confirm, modify or vacate any arbitration

award. (Id. at pp. 1285, 1287.) The employer contended Franco's ensuing appeal from the order was improper. Without further elaboration, the Court of

Appeal found the order was appealable: "The (trial court's) order found that the class arbitration waiver was enforceable and instructed Franco to

arbitrate his claims individually. That was the ‘death knell' of class litigation through arbitration." (/d. at p. 1288.)

[207 CaLApp.4th 1123]

(3) The "death knell" doctrine was explained as follows in General Motors Corp. v. Superior Court (1988) 199 Cal. App.3d 247 at page 251 (244 Cal. Rptr,

776): "Our Supreme Court ... has held that where an order has the ‘death knell' effect of making further proceedings in the action impractical, the order

is appealable. In Daar v. Yellow Cab Co. [(1967)) 67 Cal.2d 695 [63 Cal.Rptr. 724, 433_P.2d 732], the court held that an order sustaining a demurrer to

class action allegations and transferring the action from superior court to municipal court was an appealable order. The court stated: ‘{H]ere the order

under examination not only sustains the demurrer, but also directs the transfer of the cause from the superior court, where it was commenced as a class

action. to the municipal court. We must assav the total substance of the order. It determines the legal insufficiencv of the complaint as a class suit and

hitps:/Awww.leagle.com/decision/incaco20 120718006 2/9

40/28/2020 NELSEN v. LEGACY PARTNERS | 207 Cal.App.4th 1115... | 20120718006] Leagle.com

preserves for the plaintiff alone his cause of action for damages. In "its legal effect'' the order is tantamount to a dismissal of the action as to all

members of the class other than plaintiff. It has virtually demolished the action as a class action. If the propriety of such disposition could not now be

reviewed, it can never be reviewed.'"

Thus, "(t]he death knell doctrine [applies] when it is unlikely the case will proceed as an individual action." (Szetela v. Discover Bank (2002) 97

Cal App.4th 1094, 1098 [118 Cal.Rptr.2d 862] (Szetela), italics added {finding an order sharply limiting the scope of class arbitration was not a "death

knell" order].) Here, Nelsen fails to explain or demonstrate how the trial court's order makes it impossible or impracticable for her to proceed with the

action at all. > However, despite Nelsen's default, we need not decide whether her appeal comes within the death knell doctrine. As the Court of Appeal

did in Szetela, we exercise our discretion to treat Nelsen's appeal as a petition for a writ of mandate. (Szetela, at p. 1098; Olson v. Cory (1983) 35_CaL3d

390, 401 [197 Cal Rptr. 843, 673_P.2d 720].) This will ensure appellate review of the court's arbitration order in the event there is no future appellate

proceeding in which the order will be reviewable.

B. Unconscionability

(4) Section 2 of the FAA provides in relevant part as follows: "A written provision in any ... contract evidencing a transaction involving commerce to

settle by arbitration a controversy thereafter arising out of such contract or transaction ... shall be valid, irrevocable, and enforceable, save upon such

grounds as exist at law or in equity for the revocation of any contract." (9 U.S.C. § 2, italics added.) Section 2 is a "congressional declaration of a

(207 CaLApp.4th 1124]

liberal federal policy favoring arbitration agreements, notwithstanding any state substantive or procedural policies to the contrary. The effect of the

section is to create a body of federal substantive law of arbitrability, applicable to any arbitration agreement within the coverage of the Act." (Moses H.

Cone Hospital v. Mercury Constr. Corp. (1983) 4.60 U.S. 1, 24 [74 L.Ed.2d 765, 103 S.Ct. 927).) The italicized portion of section 2 — known as its "savings

clause" — provides an exception to the enforceability of arbitration agreements for "generally applicable contract defenses, such as fraud, duress, or

unconscionability,'" (AT&T Mobility LLC v. Concepcion (2011) 563U.S.__,___(179 L.Ed.2d 742, 131 S.Ct. 1740, 1746] (Concepcion).)

(5) Invalidating an arbitration agreement for unconscionability under California law requires a two-part showing: "[T]he party opposing arbitration...

ha[s] the burden of proving that the arbitration provision [is] unconscionable. [Citation.] ... [1] Unconscionability requires a showing of both procedural

unconscionability and substantive unconscionability. [Citations.] Both components must be present, but not in the same degree; by the use of a sliding

scale, a greater showing of procedural or substantive unconscionability will require less of a showing of the other to invalidate the claim." (Ajamnian v.

CantorCO2e, L.P. (2012) 203 Cal.App.4th 771, 795 [137 Cal.Rptr.3d 773].) Where the relevant extrinsic evidence is undisputed, as it appears to be here, the

appellate court reviews the arbitration contract de novo to determine whether it is legally enforceable. (Mercuro v. Superior Court (2002) 96 CalApp.4th

167, 174 [116 Cal. Rptr.2d 6711.)

Several factors support a finding LPI's arbitration agreement is procedurally unconscionable. It was part of a preprinted form agreement drafted by LPI

that all of LPI's California property managers were required to sign on a take-it-or-leave-it basis. The arbitration clause was located on the last two

pages of a 43-page handbook. While the top of page 42 contains a highlighted prominent title "TEAM MEMBER ACKNOWLEDGMENT AND

AGREEMENT," the title makes no reference to arbitration and the arbitration language itself appears in a small font not set off in any way to stand out

from the rest of the agreement or handbook. Moreover, unless Nelsen happened to be conversant with the rules of pleading in the Code of Civil

Procedure, the law and procedure applicable to appellate review, and the rules for the disqualification of superior court judges, the terms and rules of

the arbitration referenced in the clause would have been beyond her comprehension. (Cf. Trivedi v. Curexo Technology Corp, (2010) 189 Cal.App.4th 387,

393 [116 Cal. Rptr.3d 804) [employment arbitration provision was procedurally unconscionable because it was prepared by the employer, mandatory,

and no copy of the applicable arbitration rules was provided].)

(6) Substantive unconscionability depends on the terms of the arbitration clause itself. In this case, the issue of whether the clause in question is

[207 Cal.App.4th 1125)

substantively unconscionable has already been addressed by the California Supreme Court in Little v. Auto Stiegler, Inc. (2003) 29 Cal.4th 1064 [130

CaL.Rptr.2d 892, 63 P.3d 979] (Little). (See Marshall v. Pontiac (S.D.Cal. 2003) 287 F.Supp,2d 1229 [identical language, outcome controlled by Little].)

The employment arbitration agreement in issue in Little was, for all practical purposes, identical to Nelsen's. 4 There is just one substantive difference

between the two arbitration agreements: the agreement in issue in Little provided that only awards exceeding $50,000 required the arbitrator's

“written reasoned opinion'" ox triggered the right to appeal to a second arbitrator. (29 Cal.4th at p. 1070.) The Supreme Court found this one provision

substantively unconscionable because, as a practical matter, the $50,000 appeal minimum operated in a lopsided way — it was much more likely to give

the employer a right to appeal an unfavorable award than the employee. (Jd. at pp. 1071-1074.) However, the Supreme Court did not toss out the

arbitration provision as a whole on that basis. It ordered the $50,000 appeal threshold severed from the rest of the arbitration agreement, and found the

rest of the arbitration agreement valid and enforceable. (Jd, at pp. 1074-1076, 1085.) The provision severed by the court in Little does not appear in the

arbitration agreement before this court.

Relying on Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83 at page 113 [99 Cal.Rptr.2d'745, 6 P.3d 669]

[207 Cal.App.4th 1126]

(Armendariz), Nelsen claims the arbitration agreement is substantively unconscionable because it lacks bilaterality. Citing language identical to that

found in Nelsen's arbitration agreement, the Little court rejected the same bilaterality argument Nelsen makes here: "[UJnlike the agreement in

Armendariz, which explicitly limited the scope of the arbitration agreement to wrongful termination claims and therefore implicitly excluded the

employer's claims against the employee [citation], the arbitration agreement in the present case contained no such limitation, instead applying to “any

claim, dispute, or controversy ... between [the employee] and the Company." (Little, supra, 29 Cal.4th at p. 1075, fn. 1.) Little is controlling on that issue.

(Auto Equity Sales, Inc. v. Superior Court (1962) 57 Cal.2d 4.50, 455 [20 Cal.Rptr. 321, 369 P.2d 937].) °

We therefore reject Nelsen's argument that her arbitration agreement with LPI is substantively unconscionable. Because she had the burden of

demonstrating both procedural and substantive unconscionability (Ajamian v. CantorCO2e, L.P., supra, 203 Cal.App.4th at p. 795), we find the

arbitration agreement was not unenforceable due to unconscionability.

C. Violation of California Publie Policy

https:/Awww.leagle.com/decision/incaco201207 18006 3/9

10/28/2020 NELSEN v. LEGACY PARTNERS | 207 Cal.App.4th 1115... | 20120718006] Leagle.com

1. Overview of Gentry

In her opposition to LPI's motion to compel arbitration in the trial court, Nelsen sought classwide arbitration of her claims in the alternative, if the

arbitration clause as a whole was not found to be unconscionable, Relying on Gentry v. Superior Court (2007) 42 Cal.4th 443 [64 Cal.Rptr.3d 773, 165,

P.3d_556] (Gentry), Nelsen contends requiring individual arbitration of her wage and hour claims would violate California public policy even if the

arbitration agreement is otherwise found to be valid and enforceable. As explained in Arguelles-Romero v. Superior Court (2010) 184 Cal.App.4th 825,

(109 Cal.Rptr.3d 289) (Arguelles-Romero), "Gentry is concerned with the effect of a class action waiver on unwaivable statutory rights regardless of

unconscionability." (Id. at p. 836.)

"Gentry involved a class of employees who alleged that their employer had improperly characterized them as exempt and therefore did not pay them

[207 Cal App.4th 1127]

overtime. [Citation.] The statutory right to recover overtime is unwaivable. [Citation.] The Supreme Court then concluded that, in wage and hour cases,

a class action waiver would frequently have an exculpatory effect and would undermine the enforcement of the statutory right to overtime pay.

(Citation.] The court identified several factors which, if present, could establish a situation in which a class action waiver would undermine the

enforcement of the unwaivable statutory right. These factors included: (1) individual awards ‘tend to be modest' [citation]; (2) an employee suing his or

her current employer is at risk of retaliation [citation]; (3) some employees may not bring individual claims because they are unaware that their legal

rights have been violated [citation]; and (4) even if some individual claims are sizeable enough to provide an incentive for individual action, it may be

cost effective for an employer to pay those judgments and continue to not pay overtime — only a class action can compel the employer to properly

comply with the overtime law [citation]." (Arguelles-Romero, supra, 184 Cal.App.4th at p. 840.)

(7) Thus, Gentry holds that when a class action is requested in a wage and hour case notwithstanding an arbitration agreement expressly precluding

class or representative actions, the court must decide whether individual arbitration is so impractical as a means of vindicating employee rights that

requiring it would undermine California's public policy promoting enforcement of its overtime laws, (Arguelles-Romero, supra, 184 Cal.App.4th at pp.

840-841, If the court makes that determination, Gentry requires that it invalidate the class arbitration waiver and require class arbitration. (Arguelles-

Romero, at pp. 840-841.) Gentry further held that refusing to enforce class arbitration waivers on such public policy grounds would not violate the FAA.

(Gentry, supra, 42 Cal.4th at p. 465.)

As noted, Gentry applies when the arbitration agreement expressly waives class arbitration. Here, the agreement includes no express waiver of

classwide arbitration, and the parties come to opposite conclusions about what inferences are to be drawn from that fact. LPI takes the position that

silence cannot be construed as a waiver of class arbitration and, therefore, Gentryhas no application. Nelsen on the other hand invites us to construe the

arbitration agreement's silence as a de facto waiver of class arbitration. She correctly points out that LPI wants to have it both ways — class arbitration

is precluded because the agreement does not expressly authorize it, yet Gentry is inapplicable because the agreement does not expressly waive such

arbitration. In our view, Gentry's application should not turn on whether an arbitration agreement bars class arbitration expressly or only impliedly. In

either case, enforcement of the arbitration agreement according to its terms in a wage and hour case raises the identical policy issues. On the other

hand, if the agreement allows class arbitration, Nelsen is entitled to such arbitration

[207 Cal.App.4th 1128]

without regard to Gentry. We must therefore determine as a threshold matter whether the arbitration agreement in this case impliedly either precludes

or allows class arbitration.

2. Does the Agreement Permit Class Arbitration?

(8) The starting point for our analysis is the U.S. Supreme Court's holding in Stolt-Nielsen S. A. v. AnimalFeeds Int'l Corp. (2010) 559 U.S. [176

L.Ed.2d 605, 130 S.Ct. 1758] (Stolt-Nielsen). Stolt-Nielsen held "a party may not be compelled under the FAA to submit to class arbitration unless there

is a contractual basis for concluding that the party agreed to do so." (559 U.S. at p.___—s«(130 S.Ct. at p. 1775], first italics added.) The court did not

specify what is affirmatively required in order to show there is a “contractual basis" for finding an agreement to class arbitration. At the same time, it

did not hold that the intent to agree to class arbitrations must be expressly stated in the arbitration agreement. The court stated: "We have no occasion

to decide what contractual basis may support a finding that the parties agreed to authorize class-action arbitration. Here ... the parties stipulated that

there was ‘no agreement' on the issue of class-action arbitration." (Id, at p. , fn. 10 [130 S.Ct. at p. 1776, fn. 10].) Stolt-Nielsen did hold that the

agreement's "silence on the question of class arbitration" cannot be taken as dispositive evidence of an intent to allowclass arbitration. (Id. at p._

[130 S.Ct. at p. 1775].) Thus, "f{a]n implicit agreement to authorize class-action arbitration ... is not a term that the arbitrator may infer solely from the

fact of the parties' agreement to arbitrate." (Ibid., italics added.) Stolt-Nielsen recognizes that "the interpretation of an arbitration agreement is

generally a matter of state law..." (id. at p.___—([130 S.Ct. at p. 1773] citing Arthur Andersen LLP v. Carlisle (2009) 556 U.S. 624, 630-631 [173 L.Ed.2d

832, 129 S.Ct. 1896, 1901-1902].) The question of whether there is a contractual basis for concluding the parties intended to allow class arbitration must

therefore be based on state law principles of contract interpretation to the extent they are consistent with the parameters of the FAA as described in

Stolt-Nielsen. (See Jock v. Sterling Jewelers (2d Cir. 2011) 646 F.3d 113, 126.) Thus, whatever other state law principles apply, consent to class arbitration

cannot be inferred solely from the agreement to arbitrate, and the decision cannot be based on the court's view of sound policy regarding class

arbitration but must be discernible in the contract itself. (Stolt-Nielsen, at pp.__-__—_—s[130 S.Ct. at pp. 1767-1768.)

We recognize 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) 793_E.Supp.2d 611, 617-618, and cases

[207 Cal App.4th 1129]

collected therein.) © Here, however, neither party has proposed we leave the question of class arbitration for the arbitrator. Both parties invite this court

to decide the issue. LPI asks that we find the arbitration agreement does not reflect its consent to class arbitration, while Nelsen 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.

(9) "The fundamental rule is that interpretation of ... any contract ... is governed by the mutual intent of the parties at the time they form the contract.

[Citation.] The parties' intent is found, if possible, solely in the contract's written provisions. [Citation.] ‘The "clear and explicit'' meaning of these

nravicinne internrated in their "ardinary and nanular canca " inlace "ead hu tha nartiac in a tacrhnical cance nr a cnarial maaning ic aiven ta tham hw

https://Awww.leagle.com/decision/incaco20120718006 4/9

10/28/2020 NELSEN v. LEGACY PARTNERS | 207 Cal. -App.- 4th 1115... | POLeeriestel Leagle. com

usage’ (citation), controls judicial interpretation.’ [Citation. ] If a layperson ould give the c contract +t language an uneribipibuem meaning, we ie Sop that

meaning." (Lockheed Martin Corp. v. Continental Ins. Co. (2005) 134 Cal.App.4th 187, 196 [35_Cal.Rptr.3d 799], disapproved on another point in State of

California v. Allstate Ins. Co. (2009) 45 Cal.4th 1008, 1036, fn. 11 [90 Cal.Rptr.3d 1, 201 P.3d 1147].)

As an initial matter, the record does not disclose any admissible extrinsic evidence reflecting on the parties' intent with respect to class arbitration.

Neither party has suggested there was any preagreement communication about whether the arbitration agreement covered class arbitration or any

prelitigation conduct contradicting the positions the parties are taking on that subject now. We accordingly confine ourselves to construing the parties'

intent based solely on the language of their arbitration agreement.

While the arbitration agreement in issue broadly encompasses any employment-related "claim, dispute, or controversy ... which would otherwise

require or [allow] resort to any court," it contains one very significant limitation. The agreement only covers claims, disputes, and controversies

[207 Cal.App.4th 1130]

"between myself and Legacy Partners," that is, between Nelsen and LPI. A class action by its very nature is not a dispute or controversy "between

(Nelsen] and Legacy Partners," In this case (assuming a class was certified) it would be a dispute between LPI and numerous different individuals, one

of whom is Nelsen. Although LPI agreed with Nelsen to arbitrate all kinds of disputes that might arise between them, this choice of contractual

language, by its ordinary meaning, unambiguously negates any intention by LPI to arbitrate claims or disputes to which Nelsen was not a party. 7

The Court of Appeal in Kinecta Alternative Financial Solutions, Inc. v. Superior Court (2012) 205_CaLApp.4th 506 [140 Cal,Rptr.3d_ 34,7) (Kinecta) was

faced with a nearly identical question in a putative wage and hour class action brought by a credit union employee against her former employer. The

employee arbitration agreement in that case covered '“any claim, dispute, and/or controversy that either J may have against the Credit Union (or its

owners, directors, officers, managers, employees, agents, and parties affiliated with its employee benefit and health plans) or the Credit Union may

have against me, arising from, related to, or having any relationship or connection whatsoever with my seeking employment with, employment by, or

other association with the Credit Union ....'" (Kinecta, at p. 511, fn. 1, italics added.) The trial court had ordered the parties to class arbitration. (Jd. at p.

509.) The Court of Appeal granted the employer's petition for writ of mandate overturning the trial court's order, holding the language of the

arbitration agreement was inconsistent with an intent to allow class arbitration: "The arbitration provision identifies only two parties to the agreement,

“I, Kim Malone’ and ‘Kinecta Federal Credit Union and its wholly owned subsidiaries' (referred to ... as ‘the Credit Union’). It makes no reference to

employee groups or to other employees of Kinecta, and instead refers exclusively to “I,' “me,' and ‘my' (designating Malone)." (Id. at p. 517.) Applying

Stolt-Nielsen, the court found there was no contractual basis for finding the agreement authorized class arbitration. (Kinecta, at p. 517.)

(10) As in Kinecta, the arbitration contemplated by Nelsen's arbitration agreement in this case involves only disputes between two parties — Nelsen

("myself") and LPI. It does not encompass disputes between other employees or groups of employees and LPI. Other portions of the agreement

reinforce the two-party intent of the agreement. The agreement provides for an appeal of the arbitrator's award "at either party's written request."

(Italics added.) In bold letters, the agreement states, "I understand by agreeing to this binding

[207 CaLApp.4th 1131]

arbitration provision, both Legacy Partners and I give up our rights to trial by jury." (Italics added.) All of the relevant contractual language thus

contemplates a two-party arbitration. No language evinces an intent to allow class arbitration. ®

We therefore conclude the agreement does not permit class arbitrations. We turn now to the question of whether the agreement is enforceable in that

respect, notwithstanding Gentry.

3. Enforceability under Gentry

As the parties recognize, the continuing vitality of Gentry has been called into serious question by a recent decision of the United States Supreme Court

holding that a state law rule requiring classwide arbitrations based on public policy grounds rather than the parties' arbitration agreement itself does

violate the FAA. (See Concepcion, supra, 563 U.S. at pp.__—s-_—S_—s«((132. S.Ct. at’ pp. 174,8-1753].) Concepcion expressly overruled Discover Bank v.

Superior Court (2005) 36 Cal.4th 148 (30 Cal.Rptr.3d 76, 113_P. ia 1100] (Discover Bank), which had adopted a rule permitting the plaintiffs in certain

consumer class action cases to demand classwide arbitration notwithstanding express class arbitration waivers in their arbitration agreements.

(Concepcion, at pp. (131 S.Ct. at pp. 1750-1751, 1753].) Concepcion held the so-called Discover Bank rule was preempted by the FAA

because "{rJequiring the availability of classwide arbitration interferes with fundamental attributes of arbitration and thus creates a scheme

inconsistent with the FAA." (Concepcion, at pp. [131 S.Ct. at pp. 1748, 1753].) Under the FAA, classwide arbitration cannot be imposed on a

party who never agreed to it, as the Discover Bank rule requires. (Concepcion, at pp.___—-__—_—[131 S.Ct. at pp. 1750-17511].)

One California appellate court and a number of federal district courts have found Concepcion applies equally to Gentry and the FAA therefore precludes

California courts from ordering classwide arbitration of wage and hour claims unless the parties have agreed to it. (See Iskanian v. CLS Transportation

Los Angeles, LLC (2012) 206 Cal.App.4th 949, 959-961 (142 Cal.Rptr.3d 372] (Iskanian); Jasso v. Money Mart Express, Inc. (N.D.Cal. 2012)

F.Supp.2d__-_—Ss [2012 WL 1309171, pp. *4-*7] (Jasso); Sanders v. Swift Transportation Co. of Arizona, LLC(N.D.Cal. 2012)__—F.Supp.2d__,

[207 Cal.App.4th 1132]

(2012 WL 523527, p. *3]; Lewis v. UBS Financial Services Inc. (N.D.Cal. 2011) 818 E.Supp.2d 1161 (Lewis); Murphy v. DIRECTV, Inc. (C.D.Cal., Aug. 2, 2011,

No. 2:07-cv-06465-JHN-VBKx) 2011 WL 3319574, p. *4.) The reasoning of a Ninth Circuit decision in Coneff v. AT & T Corp. (9th Cir. 2012) 673.F,3d 1155,

— finding a Washington State rule deeming class arbitration waivers unconscionable was preempted by the FAA in light of Concepcion — would also

seem to apply equally to Gentry, as the federal district court held in Jasso. Jasso,__F.Supp.2datp.__ [2012 WL 523527 at p. *7].)9

(11) But we need not decide here whether Concepcion abrogates the rule in Gentry. By its own terms, Gentry creates no categorical rule applicable to the

enforcement of class arbitration waivers in all wage and hour cases. (Gentry, supra, 42 Cal.4th at p. 462.) As discussed earlier, before such waivers can

be held unenforceable, Gentry requires a predicate showing that (1) potential individual recoveries are small; (2) there is a risk of employer retaliation;

(3) absent class members are unaware of their rights; and (4) as a practical matter, only a class action can effectively compel employer overtime law

compliance. (Jd. at p. 463.) The trial court was in no position in this case to make a determination that any of the Gentry factors applied. Nelsen

supported her opposition to LPI's motion to compel with a one and a half page declaration solely addressing facts relevant to procedural

unconscionability. She submitted no evidence as to any of the factors discussed in Gentry. The record is thus wholly insufficient to apply Gentry even

mn neionn Ene thn nalen Af ne nleenian Taw tere bin wnt hnnn -tbt nen d Lee anne antnn (Win ntn neem Ane Onl Aan beh nbn Pan Vase eelind aan Cadet Lane

https:/www.leagle.com/decision/incaco201207 18006 5/9

10/28/2020 NELSEN v. LEGACY PARTNERS | 207 Cal.App.4th 1115... | 20120718006] Leagle.com

opposition to the motion to compel in the trial court, it was Nelsen's burden to come forward there with factual evidence supporting her position

classwide arbitration was required. (Kinecta, at p. 510.) She is not entitled to a remand for the purpose of affording her a second opportunity to produce

such evidence, as she now requests.

D. Violation of Federal Law

Finally, Nelsen cites a recent administrative decision of the National Labor Relations Board (the Board), D. R. Horton, Inc. (Jan. 3, 2012) 357 NLRB

[207 Cal.App.4th 1133]

No. 184 (Horton). '° In Horton, the Board determined it was a violation of the National Labor Relations Act (NLRA) (29 U.S.C. § 151 et seq.) to require

employees as a condition of employment to waive the filing of class action or other joint or collective claims regarding wages, hours, or working

conditions in any forum, arbitral or judicial.‘ (Horton, at p. 1.) According to the Board, such a requirement violates the substantive rights vested in

employees by section 7 of the NLRA to "engage in ... concerted activities for the purpose of collective bargaining or other mutual aid or protection." (29

U.S.C. § 157.) Such mutual aid or protection, the Board asserted, had long been held — with judicial approval — to encompass "employees' ability to join

together to pursue workplace grievances, including through litigation." (Horton, at p. 2.)

The Board further found in Horton that its interpretation of the NLRA to bar mandatory waivers of class arbitration over wages, hours, and working

conditions did not conflict with the FAA or with the Supreme Court's decisions in Concepcion and Stolt-Nielsen. Concepcion involved a conflict between

the FAA and state lawwhich, under the supremacy clause, had to be resolved in favor of the FAA. (Horton, supra, 357 NLRB No. 184, at p. 12.) By contrast,

the NLRA reflected federal substantive law, removing supremacy clause considerations from the equation. The Board reasoned that the strong federal

policy embodied in the NLRA to protect the right of employees to engage in collective action trumped the FAA, (Horton, at pp. 8-12.) Further, the Board

opined it was not in fact mandating class arbitration, contrary to Concepcion and Stolt-Nielsen, but holding employers may not, consistent with the

NLRA, require individual arbitration without leaving a judicial forum open for class and collective claims. (Horton, at pp. 8-12.)

(12) For a number of reasons, we decline to follow Horton here. Since we are not bound by the decisions of lower federal courts on questions of federal

law, it follows we are also not bound by federal administrative interpretations. (See Etcheverry v. Tri-Ag Service, Inc. (2000) 22 Cal.4th 316, 320-321 [93

Cal. Rptr.2d 36, 993_P.2d 366], overruled in part by Bates v. Dow Agrosciences LLC (2005) 544. U.S, 431 [161 L.Ed.2d 687, 125 S.Ct. 1788]; Debtor

Reorganizers, Inc. v. State Bd. of Equalization (1976) 58 Cal.App.3d 691, 696 [130 Cal.Rptr. 64].) Although we may nonetheless consider the Horton

decision for whatever persuasive value it has, several factors counsel caution in doing so. Only two Board members subscribed to it, and the subscribing

members therefore lacked the benefit of dialogue with a full board or dissenting colleagues. The subject matter of the decision — the

(207 Cal.App, 4th 1134]

interplay of class action litigation, the FAA, and section 7 of the NLRA — falls well outside the Board's core expertise in collective bargaining and unfair

labor practices. The Board's decision reflects a novel interpretation of section 7 and the FAA. It cites no prior legislative expression, or judicial or

administrative precedent suggesting class action litigation constitutes a "concerted activit[y] for the purpose of ... other mutual aid or protection" (29

U.S.C. § 157), or that the policy of the FAA favoring arbitration must yield to the NLRA in the manner it proposes. In fact, before Horton was decided, two

federal district courts had specifically rejected arguments that class action waivers in the labor context violated section 7 of the NLRA. (Grabowski v.

1:10-CV-0460-JEC) 2010 WL 5186622, p. *2 [class arbitration waiver].)

At least two federal district court cases rejected Horton after it was decided. (See Jasso, supra, F.Supp.2d at pp... - Ss [2012 WL 1309171 at pp.

*7-*10] ["Because Congress did not expressly provide [in the NLRA] that it was overriding any provision in the FAA, the Court cannot read such a

provision into the NLRA and is constrained by Concepcion to enforce the instant agreement according to its terms."); LaVoice v. UBS Financial Services,

Inc. (S.D.N.Y., Jan. 13, 2012, No. 11 Civ. 2308(BSJ) (JLC)) 2012 WL 124590, p. *6 [Concepcion precludes any argument, such as that made in Horton, that

an absolute right to collective action can be reconciled with the FAA's '“overarching purpose' of ‘ensuring the enforcement of arbitration agreements

according to their terms so as to facilitate streamlined proceedings'"].) Another district court found Horton inapposite where, as in this case, the

plaintiff's putative class action complaint and opposition to arbitration made no allegation his claims alleging violations of California wage and hour

laws were covered by the NLRA. (Sanders v. Swift Transp. Co. of Arizona, LLC, supra,___ F.Supp.2datp.___, fn. 1 [2012 WL 523527 at p. *4, fn. 1].)

(13) As illustrated in the United States Supreme Court's decision in CompuCredit Corp. v. Greenwood (2012) 565U.S.___ [181 L.Ed.2d 586, 132 S.Ct. 665]

(CompuCredit), a federal statute will not be found to override an arbitration agreement under the FAA unless such a congressional intent can be shown

with clarity in the statute's language or legislative history. (565 U.S. at pp.__——- {132 S.Ct. at pp. 672-673]; see Jasso, supra, F.Supp.2d at p.

___ [2012 WL 1309171 at p. *8].) As the district court found in Jasso, "there is no language in the NLRA (or in the related Norris-LaGuardia Act)

demonstrating that Congress intended the employee concerted action rights therein to override the mandate of the FAA." (Jasso, at p.__—s [2012 WL

1309171 at p. *8].)

[207 CaLApp.4th 1135]

The Second District Court of Appeal in /skanian has rejected Horton based on the CompuCredit analysis and because the decision goes well beyond the

scope of the Board's administrative expertise by interpreting a statute — the FAA — that the agency is not charged with enforcing. (Iskanian, supra, 206

Cal.App.4th at pp. 962-963.)

(14) Even if we ignored all of these authorities and found Horton persuasive, it would be inapplicable to this case in any event. Section 7 of the NLRA

concerns the rights of covered "[e]mployees." (29 U.S.C. § 157.) Under the NLRA, "[t]he term ‘employee’ ... shall not include ... any individual employed

as a supervisor ...." (29 U.S.C. § 152(3), italics added.) A "supervisor" includes anyone who exercises independent judgment in, inter alia, hiring,

assigning, directing, rewarding, promoting, disciplining, or discharging other employees, or in making recommendations in those areas. (29 U.S.C. §

152(11).) There is no evidence in the record as to the nature of Nelsen's duties at LPI. Her title as "Property Manager" suggests she would not even be

covered by the NLRA. Decisional law generally excludes "managerial employees" from the coverage of the NLRA. (See NLRB v. Bell Aerospace Co. (1974)

416 U.S, 267 [40 L.Ed.2d 134, 94 S.Ct. 1757].) Thus, we have no basis to conclude the NLRA or Horton have any relevance to the arbitration agreement

before this court.

E. injunctive Relief Claim

https:/Awww.leagle.com/decision/incaco201207 18006 6/9

10/28/2020 NELSEN v. LEGACY PARTNERS | 207 Cal.App.4th 1115... | 20120718006] Leagle.com

In her complaint, Nelsen requested injunctive relief for LPI's alleged violations of the UCL. She contends this claim is nonarbitrable under the

Broughton-Cruz doctrine. ” LPI maintains (1) Nelsen waived her Broughton-Cruz argument by failing to raise it in the trial court, and (2) Broughton-

Cruz has, in any event, been abrogated in the wake of Concepcion, We agree with LP! on both counts.

(15) Nelsen asserts she is entitled to raise her Broughton-Cruz argument for the first time on appeal because it is based on "new authority," namely, the

Supreme Court's opinion in Concepcion which, according to Nelsen "drastically changed the legal landscape in regards to arbitration." While it is

[207 Cal App.4th 1136]

true Concepcion did change the legal landscape regarding arbitration, nothing in Concepcion's reasoning or analysis strengthens Nelsen's Broughton-

Cruz argument. To the contrary, as discussed post, Concepcion may have destroyed the underpinnings of Broughton-Cruz, That doctrine predated the

proceedings in the trial court, and nothing prevented Nelsen from raising it there. In our view, she has forfeited the issue. (P&D Consultants, Inc. v. City

of Carlsbad (2010) 190 Cal. App,4th 1332, 1344 [119 Cal.Rptr.3d 253] [as a general rule, theories not raised in the trial court cannot be asserted for the first

time on appeal].) Since the application of Broughton-Cruz depends upon a disputed factual assertion — that the injunctive relief Nelsen seeks would

more than incidentally benefit the public — the forfeiture rule must be stringently applied. (Bogacki v. Board of Supervisors (1971) 5_Gal.3d_771, 780 [97

Cal. Rptr. 657, 489 P.2d 5371.)

(16) In any event, a recent decision of the Ninth Circuit Court of Appeals in Kilgore v. KeyBank, National Assn. (9th Cir. 2012) 673, F.3d 947 (Kilgore) casts

grave doubt on whether Broughton-Cruz survives in the wake of Concepcion. We agree with Kilgore that Concepcion adopts a sweeping rule of FAA

preemption. Under Concepcion, the FAA preempts any rule or policy rooted in state law that subjects agreements to arbitrate particular kinds of claims

to more stringent standards of enforceability than contracts generally. Absolute prohibitions on the arbitration of particular kinds of claims such as that

reflected in Broughton-Cruz are the clearest example of such policies: "Although the Broughton-Cruz rule may be based upon the sound public policy

judgment of the California legislature, we are not free to ignore Concepcion's holding that state public policy cannot trump the FAA when that policy

prohibits the arbitration of a ‘particular type of claim.' Therefore, we hold that ‘the analysis is simple: The conflicting [Broughton-Cruz] rule is

displaced by the FAA.’ Concepcion, 131 S.Ct. 1747. Concepcion allows for no other conclusion." (Kilgore, at p. 963.) Since Broughton-Cruz prohibits

outright the arbitration of claims for public injunctive relief, it is in conflict with the FAA, Nelsen's argument for exempting that claim from arbitration

would have to be rejected on the merits if she had not forfeited it.

Hoover v. American Income Life Ins. Co. (2012) 206 Cal.App.4th 1193 [142 Cal.Rptr.3d 312], cited by Nelsen following oral argument, does not convince us

otherwise. Hoover does not mention Kilgore or analyze Concepcion's potential relevance to the continued application of Broughton-Cruz. Moreover, the

court in Hoover found the arbitration agreement in issue was not subject to the FAA and did not encompass state statutory claims. (Hoover, at pp. 1208-

1209.) That is not our case.

Nelsen's injunctive relief claim must be arbitrated.

(207 Cal.App.4th 1137)

111. DISPOSITION

We deny Nelsen's petition for writ of mandate and affirm the correctness of the trial court's order compelling Nelsen to individual arbitration with LPI.

Marchiano, P. J., and Dondero, J., concurred.

FootNotes

1. The arbitration clause further provided for (1) the arbitrator to be a retired superior court judge, subject to disqualification "on the same grounds as

would apply to a judge of such court"; (2) all rules of pleading and evidence to be applicable, "including the right of demurrer ... [,] summary judgment,

judgment on the pleadings, and judgment under California Code of Civil Procedure Section 631"; (3) the arbitration award to include a "written reasoned

opinion"; and (4) a right of appeal "at either party's written request" to a second arbitrator who would review the award "according to the law and

procedures applicable to appellate review by the California Court of Appeal ... of a civil judgment following court trials."

2. There is no dispute the Federal Arbitration Act (FAA) governs the arbitration agreement. (See Perry v. Thomas (1987) 482 U.S. 483, 489 [96 LEd.2d

426, 107 S.Ct. 2520] [FAA applies to all arbitration agreements in contracts evidencing interstate commerce, and preempts Cal. statute exempting Lab.

Code wage claims from arbitration].)

3. As noted, Nelsen made no mention whatsoever of Franco or the death knell doctrine in her opening brief. In her reply brief she argues the court's

order effectively ended the class litigation, but she makes no contention and cites to no evidence in the record showing it is impracticable for her to

proceed with individual arbitration.

4, The agreement read in relevant part as follows: '"I agree that any claim, dispute, or controversy ... which would otherwise require or allow resort to

any court ... between myself and the Company ... arising from, related to, or having any relationship or connection whatsoever with my seeking

employment with, employment by, or other association with, the Company... shall be submitted to and determined exclusively by binding arbitration

under the Federal Arbitration Act, in conformity with the procedures of the California Arbitration Act (... including (Code of Civil Procedure] section

12.83.05 and all of the act's other mandatory and permissive rights to discovery); provided, however, that: In addition to requirements imposed by law,

any arbitrator herein shall be a retired California Superior Court Judge and shall be subject to disqualification on the same grounds as would apply toa

judge of such court. To the extent applicable in civil actions in California courts, the following shall apply and be observed: all rules of pleading

(including the right of demurrer), all rules of evidence, all rights to resolution of the dispute by means of motions for summary judgment, judgment on

the pleadings, and judgment under Code of Civil Procedure section 631.8. Resolution of the dispute shall be based solely upon the law governing the

claims and defenses pleaded, and the arbitrator may not invoke any basis other than such controlling law, including but not limited to, notions of "just

https://www.leagle.com/decision/incaco20120718006 719

10/28/2020 NELSEN v. LEGACY PARTNERS | 207 Cal.App.4th 1115... | 20120718006] Leagle.com

Lauac. Fats] acasuiauiy Lequicu ww auuw tui usc auu DCLciae uL uu apiccunein 3 miUGuaeauiuis w cue auto pivecuucs, Luc q@auiaiuun auietie eALCUU Luc

times set by the act for the giving of notices and setting of hearings. Awards exceeding $50,000.00 shall include the arbitrator's written reasoned

opinion and, at either party's written request within 20 days after issuance of the award, shall be subject to reversal and remand, modification, or

reduction following review of the record and arguments of the parties by a second arbitrator who shall, as far as practicable, proceed according to the

law and procedures applicable to appellate review by the California Court of Appeal of a civil judgment following court trial. I understand by agreeing to

this binding arbitration provision, both I and the Company give up our rights to trial by jury.'" (Little, supra, 29 Cal.4th at pp. 1069-1070.)

5. Nelsen's arbitration agreement, like that in Little, is silent with respect to costs unique to the arbitration forum, such as arbitrator fees. (See Little,

supra, 29 Cal.4th at pp. 1076-1085.) Because the employee's claim in Little involved nonwaivable statutory rights, the Supreme Court construed the

arbitration agreement to require the employer to pay all types of costs unique to arbitration without regard to which party prevailed in the arbitration.

(Id. at pp. 1076-1077, 1085, following Armendariz, supra, 24 Cal.4th at p. 113.) Since Nelsen's claims are also based on nonwaivable statutory rights, her

arbitration agreement with LPI must be construed in the same fashion.

6. In reliance on Green Tree Financial Corp. v. Bazzle (2003) 539 U.S. 444, [156 LEd.2d 414, 123 S.Ct. 24,02] (Bazzle), the Court of Appeal in Garcia v.

DIRECTV, Inc. (2004) 115 Cal. App.4th 297 [9 Cal.Rptr.3d 190] also held the arbitrator, not the court, must determine whether class arbitration was

permitted by the arbitration agreement. As Stolt-Nielsen reminds us, however, Bazzlewas only a plurality decision on that point and is not binding.

(Stolt-Nielsen, supra, 559 U.S, at p. [130 S.Ct. at p. 1772].) Stolt-Nielsen itself expressly declined to decide whether the court or the arbitrator must

determine if there is a contractual basis for finding an intent to allow class arbitration. ( Ibid.)

7. The agreement encompasses employment-related disputes between Nelsen and LPI or its owners, partners, directors, officers, managers, team

members, agents, related companies, and parties affiliated with its team member benefit and health plans." The common thread in all such potential

disputes is that they involve the adjudication of Nelsen's rights or obligations, not those of other employees or groups of employees.

8. The agreement provides that all "rules of pleading" shall apply in the arbitration to the extent applicable to civil actions in California courts. The

authorization for class actions, Code of Civil Procedure section 382, is not in the rules of pleading, which are found in part 2, title 6, chapter 1 of the Code

of Civil Procedure, section 420 et seq. (See Kinecta, supra, 205 Cal.App.4th at p, 519, fn. 3 [rejecting the argument that a similar reference to the rules of

pleading evidenced an intent to allow class arbitrations].)

9. The analysis in Lewis is representative: "Though acknowledging that Concepcion abrogated Discover Bank, Plaintiff nonetheless contends that

Gentry remains viable because it addresses arbitration agreements contained in employment contracts, while Concepcion pertains to consumer

contracts. Concepcion cannot be read so narrowly.... Like Discover Bank, Gentry advances a rule of enforceability that applies specifically to arbitration

provisions, as opposed to a general rule of contract interpretation. As such, Concepcion effectively overrules Gentry." (Lewis, supra, 818 F.Supp.2¢ at p.

1167.)

10. Horton was decided after Nelsen filed her opening brief. She cited it for the first time in her reply brief. At our request, LPI responded by letter brief

to the new issues raised by Nelsen based on Horton.

11. The decision was rendered by two members of the Board. The third member was recused (Horton, supra, 357 NLRB No. 184, at p. 1, fn. 1), and two of

the five positions on the Board were vacant at the time.

12, Broughton v. Cigna Healthplans (1999) 21 Cal.4th 1066, 1082-1084 [90 Cal.Rptr.2d 334, 988 P.2d 67] (Broughton) held claims for injunctive relief

under the Consumers Legal Remedies Act (Civ. Code, § 1750 et seq.; CLRA) designed to protect the public from deceptive business practices were not

subject to arbitration. Cruz v. PacifiCare Health Systems, Inc. (2003) 30 Cal.4th 303 {133 Cal.Rptr.2d 58, 66 P.3d 1157] (Cruz) extended Broughton to

include claims to enjoin unfair competition under the UCL if relief is sought to prevent further harm to the public at large rather than merely to redress

or prevent injury to a plaintiff. (Cruz, at pp. 315-316.)

https://www.leagle.com/decision/incaco20 120718006 8/9

[OCR skipped on page(s) 31-35]

[Read from a scan; the first 30 pages.]