Farfan v. SSC Carmichael Operating Company LP
- Haywood Gilliam
- 4:18-cv-01472
- U.S. District Court · Northern District of California
- 5
In Farfan v. SSC Carmichael, Judge Gilliam reconsidered arbitration orders, dismissed putative class claims, required individual arbitration, and continued staying PAGA claims.
The plaintiffs’ proposed class and collective claims were dismissed, and the plaintiffs must pursue their claims individually in arbitration. Their PAGA claims remain stayed pending arbitration. The defendants obtained reconsideration of the earlier arbitration orders.
What happened
In Farfan v. SSC Carmichael Operating Company LP, the plaintiffs alleged that the defendants violated California labor laws and the Fair Labor Standards Act by failing to provide adequate meal and rest breaks and by failing to pay overtime. The plaintiffs brought the case as a proposed nationwide class and collective action.
The court changed its earlier decision after the Supreme Court clarified that an unclear arbitration agreement is not enough to authorize class arbitration. The court ruled that the plaintiffs’ class claims could not be arbitrated and dismissed those claims because the plaintiffs’ individual claims had to proceed in arbitration. The plaintiffs must arbitrate their claims individually, while the Private Attorneys General Act claims remain stayed during arbitration.
Judge Haywood Gilliam granted the defendants’ request to file a reconsideration motion, granted reconsideration, partially reconsidered the earlier orders, and dismissed the putative class claims. The parties must report on the arbitration every 90 days and notify the court within 48 hours after it ends.
The detailed version
- Farfan v. SSC Carmichael Operating Company LP · No. 4:18-cv-01472
- Haywood Gilliam
- Oct. 7, 2019
Background
Naomi Farfan and other plaintiffs brought a proposed nationwide class and collective action against SSC Carmichael Operating Company LP and other defendants. They alleged violations of California labor laws and the Fair Labor Standards Act based on alleged failures to provide adequate meal and rest breaks and to pay overtime.
Each named plaintiff had signed an Employee Dispute Resolution Agreement when applying for employment. In an earlier order, the court compelled the plaintiffs’ claims to arbitration. The court found that the agreement and an accompanying Employee Dispute Resolution Booklet were unclear about whether proposed class claims had to be arbitrated or were allowed in any forum. Applying its understanding of the Federal Arbitration Act, the court resolved that uncertainty in favor of arbitration. It separately ruled that the plaintiffs’ Private Attorneys General Act claims were not subject to mandatory arbitration and stayed those claims while arbitration proceeded.
The court later clarified that the earlier order covered all non-PAGA claims, including the proposed class claims. The defendants then sought reconsideration, relying on the Supreme Court’s decision in Lamps Plus, Inc. v. Varela, which held that a court may not infer consent to class arbitration from an ambiguous agreement.
Reconsideration
Under Civil Local Rule 7-9, a party seeking reconsideration of an interlocutory order must obtain permission and show reasonable diligence plus a material change in law or facts, newly emerged material facts or a change in law, or the court’s failure to consider material facts or dispositive legal arguments.
The court held that Lamps Plus was a change in controlling law and was decisive here. Lamps Plus clarified that ambiguity in an arbitration agreement cannot establish that the parties agreed to classwide arbitration. The court therefore granted the defendants’ motion for leave to file a motion for reconsideration and granted the motion for reconsideration.
Class claims and disposition
The court declined to change its earlier finding that the arbitration language was ambiguous. But, under Lamps Plus, the court held that the ambiguity did not provide an affirmative contractual basis for concluding that the parties agreed to arbitrate proposed class claims. The court therefore found that the proposed class claims could not be arbitrated.
Because the plaintiffs’ individual claims were required to proceed in arbitration, the court held that there was no class representative who could pursue the class claims. The court dismissed the plaintiffs’ proposed class claims. The court’s conclusion stated that it granted the defendants’ motion for leave to file a motion for reconsideration, partially reconsidered its earlier orders, and dismissed the proposed class claims.
The plaintiffs must arbitrate the claims raised in the lawsuit on an individual basis. The PAGA claims remain stayed pending arbitration. The parties must file a joint report about the arbitration 90 days after the order and every 90 days afterward until arbitration concludes. They must also jointly notify the court within 48 hours after the arbitration ends.
Read the full 5-page opinion on CourtListener, the free public archive maintained by the Free Law Project.