Longboy v. Pinnacle Property Management Services, LLC

Background

Devin Michael D. Longboy worked for Pinnacle Property Management Services, LLC as an assistant property manager from June 2020 through January 2022. In July 2020, he signed an “issue resolutions agreement” requiring arbitration of legal disputes related to his application, employment, or termination. The agreement required both Longboy and Pinnacle to arbitrate covered claims and included a three-day period for withdrawal.

Longboy filed a putative class action alleging eight California-law causes of action involving wages, meal and rest periods, business expenses, final wages, wage statements, and unfair business practices. He also brought a representative claim under California’s Private Attorneys General Act (PAGA), seeking civil penalties for himself, California, and other aggrieved employees. Pinnacle removed the case to federal court and moved to compel arbitration of Longboy’s individual claims and to dismiss the class and representative PAGA claims.

Unconscionability analysis

The court applied the Federal Arbitration Act and considered whether a valid arbitration agreement existed and whether it covered the dispute. Longboy did not dispute that he signed the agreement or that it contained arbitration provisions. Instead, he argued that the agreement was unconscionable, meaning unfairly imposed or excessively one-sided under California contract law.

The court found minimal procedural unconscionability. The agreement was a take-it-or-leave-it employment contract, which created some pressure, but the court found no evidence of additional oppression or surprise. The agreement clearly and repeatedly stated that employment-related disputes had to be arbitrated, highlighted the arbitration requirement, included the applicable rules, and gave Longboy three days to withdraw.

The court rejected Longboy’s challenges to mutuality, the $50 arbitration filing fee, and the discovery limits. It found that the agreement required both sides to arbitrate, that Longboy’s total non-attorney-fee responsibility was capped at $150, and that the limits of 20 interrogatories and three depositions were not shown to prevent adequate litigation of his claims.

The court did find substantive unconscionability in the agreement’s one-year deadline for starting arbitration. Longboy’s claims were subject to California limitations periods of three or four years, so reducing the period to one year substantially shortened the time available to bring those claims. The court severed, or removed, that provision rather than refusing to enforce the entire agreement. It concluded that the agreement was not so permeated by unlawful terms that its central purpose could not be enforced.

PAGA and class claims

The court followed the California Supreme Court’s decision in Adolph v. Uber Technologies, Inc., which held that compelling arbitration of an employee’s individual PAGA claims does not eliminate the employee’s standing to pursue non-individual PAGA claims involving other employees. The court therefore denied Pinnacle’s motion to dismiss Longboy’s non-individual PAGA claims.

To avoid re-litigating issues that might overlap with the arbitration, including whether Longboy was an aggrieved employee, the court stayed the representative PAGA claims. The court also stayed the remaining class claims.

Disposition

The court GRANTED Pinnacle’s motion to compel arbitration of Longboy’s individual claims. It STAYED the remaining class claims and representative PAGA claims until completion of the arbitration proceedings. The parties were directed to provide a statement proposing how to proceed at that time.