Olmedo v. Total Recon Solutions

off the clock, to attend company meetings off the clock, and to make phone calls or drive off the

clock. Also, Defendant failed to pay at the proper overtime rate because did not include all

required forms of renumeration in their regular rate of pay. Finally, Olmedo alleges that

Defendant rounded the employees time entries or edited or manipulated the time entries to show

less hours than actually worked. (Compl. ¶ 11.)

On November 13, 2024, Defendant filed a notice of related case, relating Stewart Edwin Olmedo,

et al. v. Total Recon Solutions, Inc., et al., San Bernardino Superior Court Case No.

CIVSB2414801, and the Court issued an order finding them related on December 12, 2024.

The Court has fully considered all the moving papers submitted by both sides relative to

Defendant’s motion.

ANALYSIS

Plaintiff’s Request for Judicial Notice:

Plaintiff requests that the Court take judicial notice of his operative Complaint in this

matter (RJN., EXH. A) in support of his opposition. The Court Denies Plaintiff’s request as

unnecessary.

Plaintiff’s Evidentiary Objections:

Plaintiff asserts five sets of evidentiary objections to ¶¶ 3-4 and 6-7 of the Declaration of

Kathleen Williams. Plaintiff also asserts six sets of evidentiary objections to ¶¶ 8 and 13-17 of

the Declaration of Jennifer Rivas. The Court Overrules Plaintiff’s evidentiary objections as they

lack merit.

Statement of the Law

Federal Arbitration Act (FAA). The FAA authorizes enforcement of arbitration clauses unless

grounds exist in law or equity for the revocation of any contract. (9 U.S.C. § 2.) In situations

governed by the FAA, conflicting state law is preempted. (Volt Info. Sciences, Inc. v. Board of

Trustees of Leland Stanford Junior University (1989) 489 U.S. 468, 477.)

Under the FAA, to compel arbitration, a finding must be made that an agreement exists

for arbitration between the parties and that the agreement covers the dispute. (AT&T

Technologies, Inc. v. Communications Workers of America (1986) 475 U.S. 643, 648-649.) The

enforcement of an arbitration clause is a matter of ordinary state-law contract principles and

should be enforced according to its terms. (AT&T Mobility LLC v. Concepcion (2011) 563 U.S.

333, 339.) Thus, arbitration agreements can be declared unenforceable on contract defenses of

fraud, duress, or unconscionability. (Ibid.) Any doubt about the arbitrability of a dispute under the

FAA is resolved in favor of arbitration. (Moses H. Cone Memorial Hosp. v. Mercury Constr. Corp.

(1983) 460 U.S. 1, 24-25.)

California Arbitration Act (CAA). Under the CAA, a party to an arbitration agreement may

move to compel arbitration, and the court shall order the parties to arbitrate if an agreement to

arbitrate exists unless (a) the right to arbitration is been waived, (b) grounds exist to revoke the

agreement, or (c) a party to the arbitration agreement is a party to a pending action with a third-

party, arising from the same or series of related transactions, and a probability exists of

conflicting rulings. (Code Civ. Proc., § 1281.2.)

The court must determine whether a written arbitration agreement exists, if any defense

to its enforcement is raised, and whether the agreement is enforceable. (Rosenthal v. Great

Western Fin. Sec. Corp. (1996) 14 Cal.4th 394, 413.) The petitioner bears the burden of proving

the existence of the arbitration agreement by the preponderance of the evidence, while the

respondent bears the burden of proving by a preponderance of the evidence any defense to

enforcement. (Ibid.) The trial court’s role is to resolve these factual issues. (Id. at p. 414.) Like

the FAA, any doubts about the arbitrability of a dispute is resolved in favor of arbitration. (In re

Tobacco I (2004) 124 Cal.App.4th 1095, 1103.)

If arbitration is ordered, the action between the arbitrating parties shall be stayed. (Code

Civ. Proc., § 1281.4; 9 U.S.C. § 3; Leenay v. Superior Court (Lowe’s Home Centers, LLC) (2022)

81 Cal.App.5th 553, 563 (Leenay); California Crane School, Inc. v. Google LLC (N.D. Cal. 2022)

621 F.Supp.3d 1024, 1032-1033 (California Crane).) For non-parties to the arbitration, the Court

may stay the litigation between the non-arbitration defendant and the plaintiff pending the

resolution of the arbitration. (Code Civ. Proc., § 1281.2, subd. (d); Leenay, supra, 81 Cal.App.5th

at pp. 558, 562, 563; California Crane, supra, 621 F.Supp.3d at p. 1033.)

Merits of Defendant’s Motion

Defendant requests that the issue of arbitrability be determined by the arbitrator pursuant to a

delegation clause, except on the representative PAGA claims, which is to be decided by the

Court.

Under both the Federal Arbitration Act (FAA) and California Arbitration Act (CAA), the court is

presumed the decider of disputes on arbitrability. (BG Group plc v. Republic of Arg. (2014) 572

U.S. 25, 34; Sandquist v. Lebo Automotive, Inc. (2016) 1 Cal.5th 233, 251-252 (Sandquist),

overruled on other grounds per Lamps Plus, Inc. v. Valera (2019) 139 S.Ct. 1407, 1413, 1418-

1419; Dream Theater, Inc. v. Dream Theater (2004) 124 Cal.App.4th 547, 553 (Dream Theater).)

However, the agreement may provide otherwise through a delegation clause. (First Options of

Chicago, Inc. v. Kaplan (1995) 514 U.S. 938, 943 (First Options); Sandquist, supra, 1 Cal.5th at

p. 243.) Nonetheless, the Court must first determine the gateway issue of whether a contract

was formed. (Mendoza v. Trans Valley Transport (2022) 75 Cal.App.5th 758, 776; Ahlstrom v.

DHI Mortg. Co., L.P. (9th Cir. 2021) 21 F.4th 631, 635.) If a contract exists, the court must then

determine if the delegation clause is valid and enforceable.

Does the FAA Apply? The answer is yes.

Here, the Mutual Voluntary Agreement for Individual Arbitration (Arbitration Agreement)

expressly states that it “is covered by and made pursuant to the Federal Arbitration Act (the

‘FAA’), 9 U.S.C. § 1 et seq., and shall be construed, interpreted, governed and enforced in

accordance with the FAA.” (Williams Decl. at ¶ 4, Exh. A at p. 2, ¶ 1- Law Governing

Agreement.) Based on this language, the FAA will apply. (Cronus Investments, Inc. v. Concierge

Services (2005) 35 Cal.4th 376, 394; Davis v. Shiekh Shoes, LLC (2022) 84 Cal.App.5th 956,

964.)

Was a contractual relationship formed? The answer is yes.

A contract is formed when there are parties capable of contracting who consent to a lawful

objective and there is a sufficient cause or consideration. (Civ. Code, § 1550.) For arbitration

agreements, an agreement only needs to be found to exist, not an evidentiary determination of

its validity. (Condee v. Longwood Management Corp. (2001) 88 Cal.App.4th 215, 218-219.) The

defendant providing an executed copy of the arbitration agreement satisfies the initial burden.

(Espejo v. Southern California Permanente Medical Group (2016) 246 Cal.App.4th 1047, 1058-

1060 (Espejo).) The burden then shifts to the plaintiff to dispute the signature. (Id. at p. 1059;

Ruiz v. Moss Bros. Auto Group, Inc. (2014) 232 Cal.App.4th 836, 846 (Ruiz).) If the plaintiff

disputes the signature, then the defendant bears the burden of authenticating the signature on

the agreement, i.e., the signature is the act of the plaintiff. (Espejo, supra, 246 Cal.App.4th at p.

1060; Ruiz, supra, 232 Cal.App.4th at p. 846.)

Here, Defendant presents the Arbitration Agreement that Olmedo signed on January 26,

2023. (Williams Decl. at ¶¶ 4-9, Exh. A; Rivas Decl. at ¶¶ 2-17.) Plaintiff offers no challenge to

his signature on the Arbitration Agreement. Additionally, the Arbitration Agreement defines the

parties as the employee (Olmedo) and the Company, i.e., Partners Personnel-Management

Services, LLC (PPMS), and parent companies, holding companies, agents, subsidiaries and

affiliated companies, officers, directors, successors, assigns, clients, customers, or alleged joint

employers. (Williams Decl. at ¶ 9, Exh. A at p. 1 - Claims Covered by this Agreement.)

Olmedo was specifically placed at Total Recon Solutions, Inc. (Defendant), who is a

client of PPMS. The Arbitration Agreement expressly states that “client[s] and customer[s] are

third-party beneficiaries of the Arbitration Agreement. (Williams Decl. at ¶ 9, Exh. A at p. 2 -

Third-Party Enforcement.) Based on this, a contractual relationship exists between Plaintiff and

Defendant.

In his opposition, Plaintiff does not raise any issue concerning Defendant being able to enforce

the Arbitration Agreement as a third-party beneficiary. However, even if he did, as will be

addressed, there is a valid delegation clause so the arbitrator will need to determine that issue.

Is there a valid delegation clause? The answer is yes.

An arbitration agreement must clearly and unmistakably delegate to the arbitrator the

issues of arbitrability and enforceability. (First Options, supra, 514 U.S. at p. 944; Gostev v. Skillz

Platform, Inc. (2023) 88 Cal.App.5th 1035, 1048.) In reviewing the delegation clause, California

contract principles govern. (First Options, supra, 514 U.S. at p. 944; Sandquist, supra, 1 Cal.5th

at pp. 243-44.) Thus, one can challenge a delegation clause under general contract defenses,

e.g., fraud, duress, and unconscionability. (Rent-A-Center, W., Inc. v. Jackson (2010) 561 U.S.

63, 68.) Yet the defense must be specific to the delegation clause because, otherwise, a

challenge to the arbitration agreement as a whole is for the arbitrator. (Id. at p. 72.) Now, if the

arbitration agreement contains a clear and unmistakable delegation and no defense is raised or

established, then “a court may not override the contract. In those circumstances, a court

possesses no power to decide the arbitrability issue.... [¶] [A] court may not decide an

arbitrability question that the parties have delegated to an arbitrator.” (Henry Schein, Inc. v.

Archer & White Sales, Inc. (2019) 139 S.Ct. 524, 529-30.)

Here, the Arbitration Agreement states, “You and the Company agree and acknowledge

that any and all disputes between You and the Company that may arise out of or be related in

any way to your application for employment and/or employment with the Company and/or this

Agreement will be submitted and resolved exclusively through binding individual arbitration,

which is the submission of a dispute to a neutral, impartial arbitrator as an alternative to the

judicial system of a judge and/or jury, where the arbitrator is presented with evidence through a

formal arbitration process or hearing and a decision is rendered based on the evidence.”

(Williams Decl. at ¶ 4, Exh. A at p. 1 – Opening Paragraph.)

The above is clearly and unmistakably providing for the arbitrator to resolve all issues of

arbitrability, which includes the issue on the enforceability of the Agreement, defenses to the

Agreement, and scope of the parties thereto and claims therein. The exception is the issue of

PAGA claim by Olmedo on behalf of any other person.

Viking River Cruises v. Moriana (2022) 596 U.S. 639, 660-661 (Viking River) makes clear that

the FAA requires recognition that representative PAGA actions have a separate individual PAGA

component that is subject to arbitration and held that by requiring an employee to choose

between arbitrating all of the alleged aggrieved employees’ PAGA claims or none of them,

California’s “indivisibility” rule was coercive and preempted by the FAA. While all PAGA claims

are “representative” in the sense they are brought on behalf of the state, the Supreme Court

recognized for the first time the distinction between “individual” PAGA claims (claims for civil

penalties based on Labor Code violations personally suffered by the plaintiff) and representative,

or “non-individual,” PAGA claims (claims for civil penalties based on Labor Code violations

allegedly suffered by other employees). (Ibid.) Parties who agree to arbitrate individual claims,

as Plaintiff did, must be compelled to do so. (Id. at 662-663.)

Here, the Agreement provides:

“You hereby voluntarily waive any right to participate, in any manner, in a class, collective, or

representative action (‘Class and Representative Action Waiver’). You acknowledge that You are

not being required to agree to this Class and Representative Action Waiver as a condition of

employment, continued employment, the receipt of any employment-related benefit, or as a

condition of entering into a contractual agreement. To the extent applicable law prohibits

enforcement of the Class and Representative Action Waiver with respect to representative

claims under California’s Private Attorneys General Act (‘PAGA’), California Labor Code § 2698

et seq., such representative claims would not be covered by this Agreement, unless applicable

law allows PAGA claims to be arbitrated, then, in such cases, You agree that all PAGA claims

shall be subject to individual arbitration under this Agreement. Any dispute as to the

enforceability of the Class and Representative Action Waiver shall be decided exclusively by a

court of competent jurisdiction and not by the arbitrator.” (Williams Decl. at ¶ 4, Exh. A at p. 1 -

Class and Representative Action Waiver.)

Indeed, here, the Agreement expressly requires Olmedo to submit his individual PAGA claims to

binding arbitration. Further, it limits the arbitrator’s authority to providing individual relief. (Id.)

Accordingly, Plaintiff’s individual PAGA claims must be severed from the non-individual,

representative portion of the PAGA claims and sent to arbitration. (Viking River, supra, 596 U.S.

at pp. 662-663; Adolph, supra, 14 Cal.5th pp. at 1118-1119.)

Stay. Olmedo’s representative PAGA claims should be stayed pending completion of his

individual arbitration. To ensure the parties’ agreement to arbitrate the merits of Plaintiff’s

individual PAGA claims is enforced according to its terms as required by Viking River, the non-

individual, representative PAGA claims must be stayed pending completion of the individual

arbitration. (9 U.S.C., § 3; Code of Civil Proc., § 1281.4; Franco v. Arakelian Enterprises, Inc.

(2015) 234 Cal.App.4th 947, 966 (“Because the issues subject to litigation under the PAGA

might overlap those that are subject to arbitration of [plaintiff’s] individual claims, the trial court

must order an appropriate stay of trial court proceedings”); Adolph, supra, 14 Cal. 5th at pp.

1123-24; Leenay v. Superior Court (2022) 81 Cal.App.5th 553, 563; Heritage Provider Network,

Inc. v. Superior Court (20080 158 Cal.App.4th 1146, 1153.)

Therefore, as an arbitration contract exists that provides for the arbitrability issue to be

determined by the arbitrator, the Court GRANTS the motion to compel arbitration subject to the

arbitrator determining the gateway issue of the enforceability and defenses to the Agreement,

including whether it is unconscionable, and whether non-signatories, may rely on it to also

compel Plaintiff to arbitration. Hence, the Court STAYS this litigation in its entirety.

RULING

Based on the foregoing analysis, the Court rules as follows:

(1) GRANTS Defendant’s motion to compel arbitration subject to the arbitrator

determining the gateway issue of the enforceability and defenses to the

Agreement, including whether it is unconscionable, and whether non-signatories,

may rely on it to also compel Plaintiff to arbitration.

(2) STAYS case no. CIVSB2419099 and case no. CIVSB2414801in their entirety.

(3) DENIES Plaintiff’s request for judicial notices as unnecessary.

(4) OVERRULES Plaintiff’s evidentiary objections to ¶¶ 3-4 and 6-7 of the Declaration

of Kathleen Williams; and ¶¶ 8 and 13-17 of the Declaration of Jennifer Rivas.

(5) SETS OSC re Status of Arbitration on January 15, 2027, 8:30 am, in Department

S37.

(6) ORDERS counsel for Defendant to give notice of the above ruling and OSC

hearing in January 2027.