Dominguez v. Sonesta International Hotels Corporation

Background

Bertha Dominguez brought a putative class action against Sonesta International Hotels Corporation asserting wage-and-hour claims under the California Labor Code, including a claim for civil penalties under the Private Attorneys General Act (PAGA). The opinion states that she worked as a housekeeper or housekeeper supervisor at Sonesta ES Suites San Francisco Airport from approximately November 2020 through January 7, 2022.

As part of the onboarding process, Dominguez signed a document titled “Mutual Agreement to Resolve Disputes and Arbitrate Claims.” The agreement required the parties to use a grievance process and then arbitration for employment-related claims that could be brought in court. It also included a class and collective action waiver requiring claims to be pursued individually. The agreement provided that Sonesta would pay the arbitration firm’s and arbitrator’s fees and filing fees, while each party would generally pay its own other costs and fees.

The Parties’ Arguments

Sonesta argued that Dominguez’s claims fell within a valid and enforceable arbitration agreement. It asked the court to compel arbitration on an individual basis and dismiss all class and representative claims without prejudice. Sonesta relied on the Federal Arbitration Act and the Supreme Court’s decision in Viking River Cruises, Inc. v. Moriana, arguing that Dominguez’s individual PAGA claim had to be arbitrated and that her non-individual representative PAGA claims had to be dismissed.

Dominguez argued that the arbitration agreement was unconscionable, meaning that it was presented without a meaningful choice and contained unfairly one-sided terms. She also argued that although federal law preempted California’s prohibition on class-action waivers, it did not preempt California’s prohibition on waiving representative PAGA actions. She contended that Viking River had misinterpreted PAGA’s standing requirements and asked the court to stay the representative claims pending the California Supreme Court’s decision in Adolph v. Uber Technologies, Inc.

Court’s Analysis

The court held that requiring an employee to sign an arbitration agreement as a condition of employment created some procedural unconscionability because of unequal bargaining power. But, absent additional misconduct such as lying, manipulation, or duress, the court characterized that unconscionability as low. The court found that Dominguez had not shown significant substantive unconscionability.

The court rejected Dominguez’s argument that the agreement was substantively unconscionable because its definition of covered claims was too broad. The agreement applied to claims between Dominguez and Sonesta and did not purport to require arbitration of enforcement actions brought by the Equal Employment Opportunity Commission. The court also found that Dominguez had cited no authority showing that the PAGA issue should be resolved through unconscionability analysis. The court therefore held that the arbitration agreement was not invalid on unconscionability grounds and that Dominguez’s claims fell within its scope.

Applying Viking River, the court concluded that Dominguez’s individual PAGA claim was subject to arbitration. It also concluded that the agreement’s waiver of her non-individual PAGA claim was invalid because Viking River held that the Federal Arbitration Act did not preempt California’s rule prohibiting a wholesale waiver of representative PAGA claims.

The court then addressed whether the non-individual PAGA claim should be dismissed or stayed. It found persuasive the reasoning of another Northern District of California decision that stayed similar claims while the California Supreme Court considered the PAGA standing issue in Adolph. The court therefore stayed Dominguez’s non-individual PAGA claim rather than dismissing it.

Disposition

The court granted Sonesta’s motion in part and compelled arbitration of all of Dominguez’s claims except her non-individual PAGA claim. The court denied the motion as to Sonesta’s request to dismiss that claim. Instead, the court stayed the non-individual PAGA claim pending resolution of Adolph and ordered the parties to notify the court when that decision issued or if the case ended without a substantive decision.