Superior Court, State of California



DATE: NOVEMBER 4, 2021 TIME: 1:30 P.M.

PREVAILING PARTY SHALL PREPARE THE ORDER

UNLESS OTHERWISE STATED (SEE RULE OF COURT 3.1312)

|LINE # |CASE # |CASE TITLE |RULING |

|LINE 1 |19CV355315 |Ortmann v. Adecco USA, Inc., et al. |See tentative ruling. The Court will |

| | | |prepare the final order. |

|LINE 2 |18CV336219 |Rotor v. Signature Consultants, LLC, et al. |See tentative ruling. The Court will |

| | | |prepare the final order. |

|LINE 3 |21CV375435 |Edwards v. Central Portfolio Control, Inc. |See tentative ruling. The Court will |

| | | |prepare the final order. |

|LINE 4 |21CV375187 |Edwards v. Complete Credit Solutions, Inc. |See tentative ruling. The Court will |

| | | |prepare the final order. |

|LINE 5 |2015-1-CV-285377 |L. Nguyen vs M. Durham, et al |The Court agrees with all of Plaintiff’s |

| | | |changes to Defendant’s proposed settled |

| | | |statement, and will issue an order to that|

| | | |effect. |

|LINE 6 |17CV310026 |Julie Pavlina San Giorgio vs Stephen Pavlina,|Good cause appearing, and in light of the |

| | |Jr. et al |parties’ agreement, the Court GRANTS the |

| | | |motion for complexity designation. The |

| | | |Court sets an informal status conference |

| | | |in this case for 11/12/21 at 2 pm to |

| | | |discuss next steps. This conference will |

| | | |be conducted by audio/video CourtCall; no |

| | | |in-person appearances are permitted for |

| | | |this conference. No further briefing is |

| | | |necessary, and no additional CMC |

| | | |statements are required. |

|LINE 7 | | | |

|LINE 8 | | | |

|LINE 9 | | | |

|LINE 10 | | | |

|LINE 11 | | | |

|LINE 12 | | | |

|LINE 13 | | | |

Calendar Line 1

Case Name: Olga Ortmann v. Adecco USA, Inc., et al.

Case No.: 19CV355315

This is an action under the Private Attorneys General Act (PAGA), alleging wage and hour violations by Defendants Adecco USA, Inc., Google LLC (sued as “Google North America Inc.”), Waymo, LLC, and Waymo Auto, LLC.

Before the Court is Google’s motion for summary judgment on the grounds that it is not an alter ego of Waymo and it did not employ Plaintiff. Plaintiff opposes Google’s motion, arguing that there are disputed issues of fact concerning whether Google was her joint employer.

As discussed below, the Court GRANTS summary judgment.

I. BACKGROUND

As alleged in the operative complaint, Plaintiff Olga Ortmann was hired by Defendants as an hourly, non-exempt employee who worked in California during July 2018. (FAC, ¶ 9.) She was not provided with 30-minute meal periods for each five hour work period due to Defendants’ policy of not scheduling meal periods for each shift; their imposition of so much work on employees—including studying for a required exam at the end of their training—that it was unlikely employees would be able to take breaks; and their lack of a formal policy encouraging employees to take their meal and rest periods. (Id., ¶¶ 10–12.) For the same reasons, Plaintiff was not provided with rest periods of at least 10 minutes for each four hour work period or major fraction thereof. (Id., ¶¶ 13–14.) While Defendants allotted employees two hours of paid time to study for their exams, they failed to pay Plaintiff for one to two hours of additional off-the-clock study time. (Id., ¶¶ 12–15.) Finally, Defendants failed to reimburse Plaintiff for the required use of her cell phone for work purposes. (Id., ¶¶ 19–21.)

The FAC alleges that Defendants acted as one another’s agents, “carried out a joint scheme, business plan or policy in all respects pertinent hereto, and that the acts of each defendant are legally attributable to each of the other defendants.” (FAC, ¶ 8.)

Based on these allegations, Plaintiff brings a single claim for PAGA penalties against Defendants on behalf of similarly situated employees, alleging violations of several underlying Labor Code provisions. She filed her initial complaint against Google and Adecco on September 19, 2019. On March 5, 2020, she filed an amendment naming Waymo, LLC and Waymo Auto, LLC as Does 1 and 2.

In an order filed on February 5, 2021, the Court overruled a demurrer by Google and Adecco and granted a motion to quash by the Waymo entities. Google and Adecco filed answers on February 16. On May 6, the Court granted Google’s motion to bifurcate discovery so that the issue of whether it employed Plaintiff could be addressed first. The instant motion followed.

II. LEGAL STANDARD

“A defendant seeking summary judgment must show that at least one element of the plaintiff’s cause of action cannot be established, or that there is a complete defense to the cause of action.  …  The burden then shifts to the plaintiff to show there is a triable issue of material fact on that issue.”  (Alex R. Thomas & Co. v. Mutual Service Casualty Ins. Co. (2002) 98 Cal.App.4th 66, 72; see also Code Civ. Proc., § 437c, subd. (p)(2).)        

This standard provides for a shifting burden of production; that is, the burden to make a prima facie showing of evidence sufficient to support the position of the party in question.  (See Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 850–851 (Aguilar).) The burden of persuasion remains with the moving party and is shaped by the ultimate burden of proof at trial.  (Ibid.)  “There is a triable issue of material fact if, and only if, the evidence would allow a reasonable trier of fact to find the underlying fact in favor of the party opposing the motion in accordance with the applicable standard of proof.”  (Ibid.)  The opposing party must produce substantial responsive evidence that would support such a finding; evidence that gives rise to no more than speculation is insufficient.  (Sangster v. Paetkau (1998) 68 Cal.App.4th 151, 162–163.)                        

 

  The traditional method for a defendant to meet its burden on summary judgment is by “negat[ing] a necessary element of the plaintiff’s case” or establishing a defense with its own evidence.  (Guz v. Bechtel Nat’l, Inc. (2000) 24 Cal.4th 317, 334 (Guz).) The defendant may also demonstrate that an essential element of plaintiff’s claim cannot be established by “present[ing] evidence that the plaintiff does not possess, and cannot reasonably obtain, needed evidence-as through admissions by the plaintiff following extensive discovery to the effect that he has discovered nothing.”  (Aguilar, supra, 25 Cal.4th at p. 855.)      

 

On summary judgment, “the moving party’s declarations must be strictly construed and the opposing party’s declaration liberally construed.”  (Hepp v. Lockheed-California Co. (1978) 86 Cal.App.3d 714, 717 (Hepp); see also Johnson v. American Standard, Inc. (2008) 43 Cal.4th 56, 64 [the evidence is viewed in the light most favorable to the opposing plaintiff; the court must “liberally construe plaintiff’s evidentiary submissions and strictly scrutinize defendant’s own evidence, in order to resolve any evidentiary doubts or ambiguities in plaintiff’s favor”].) Summary judgment may not be granted by the court based on inferences reasonably deducible from the papers submitted, if such inferences are contradicted by others which raise a triable issue of fact.  (Hepp, supra, 86 Cal.App.3d at pp. 717–718.)     

III. MATERIAL FACTS

The following facts are essentially undisputed. In late 2016, a Google project known as Project Chauffer spun off into a new company called Waymo LLC. (Google’s Sep. Statement (GS) and Pl.’s Resp. (PS), issue 1, no. 1.) Waymo was formed as an independent company from Google and became a wholly-owned subsidiary of Alphabet, Inc.—just as Google itself has been since 2015. (GS and PS, issue 1, nos. 2 & 3 [disputed only on the ground that this is a “legal conclusion for which Google offers no evidence”].)[1] As part of the spin-off, Google employees who had worked on Project Chauffeur were terminated from their employment with Google and presented with offers to join Waymo. (GS and PS, issue 1, no. 4.)

Since Waymo’s formation and continuing today, Waymo and Google have operated as independent companies. (GS and PS, issue 1, no. 6 [disputed only on the ground that this is a “legal conclusion for which Google offers no evidence”].) Waymo is financed independently from Google and has an independent management team. (GS and PS, issue 1, no. 7 [same].) Waymo has its own independent human resources function, and its own employment policies. (GS and PS, issue 1, no. 8.)[2] Alphabet’s public filing confirms that Google and Waymo are separate businesses. (GS and PS, issue 1, no. 9 [disputed as “improper under Reeves v. Safeway Stores, Inc.” (Reeves) and apparently as hearsay].)[3]

After forming as an independent company, Waymo became the contractual successor to a temporary staffing services agreement (TSSA) with Adecco. (GS and PS, issue 2, no. 1.) Plaintiff was contacted by an Adecco recruiter to work as a Vehicle Operator in May 2018. (GS and PS, issue 2, no. 2.) She completed an Adecco employment application. (GS and PS, issue 2, no. 3.) After submitting her employment application and passing a background check, Plaintiff was selected for a driving interview with Waymo. (GS and PS, issue 2, no. 4.) No Google employee interviewed or participated in the decision to hire Plaintiff. (GS and PS, issue 2, no. 5.) Adecco assigned Plaintiff to work at Waymo. (GS and PS, issue 2, no. 6 [disputed only to the extent that one of the documents introduced by Google “defines the term ‘Waymo’ as

including all related entities” and “the evidence shows Google’s [indirect] control over Plaintiff’s working conditions”].) Per the TSSA, Waymo, not Google, was responsible for all payment obligations to Adecco for Plaintiff’s assignment to Waymo. (GS and PS, issue 2, no. 8.)

In discovery, Plaintiff did not identify a single Google employee with whom she worked. (GS and PS, issue 2, no. 9 [disputed only under Reeves].) No Google employee directed Plaintiff’s work. (GS and PS, issue 2, no. 10 [disputed only on the ground that “[t]he evidence shows Google’s [indirect] control over Plaintiff’s working conditions”].) No Google employee evaluated Plaintiff’s work or performance. (GS and PS, issue 2, no. 11.) During her assignment, Plaintiff drove Waymo-branded cars and carried a Waymo security badge so that it was visible at all times. (GS and PS, issue 2, nos. 12 & 13.) She received an email from the Lead HR Business Partner at Waymo addressed to “[a]ll Waymo employees, interns, temps, vendors, and contractors” about additional training she was required to complete. (GS and PS, issue 2, no. 14.)

Plaintiff’s employment was ultimately terminated when she failed to pass her trainee driving test, but not by any Google employee. (GS and PS, issue 2, no. 15; see also Decl. of Christopher Parodi ISO Mot., ¶¶ 8–9 [explaining why Plaintiff was terminated].) After her assignment ended, Plaintiff’s former attorneys sent Waymo a request for her personnel records. (GS and PS, issue 2, no. 16.)

Plaintiff does not offer her own affirmative statement of undisputed facts in her separate statement filed in opposition to Google’s motion. But she points to documents that she contends establish Google’s “indirect control” over her employment, which are discussed below.

IV. DISCUSSION

PAGA “permits an ‘aggrieved employee’ to bring an action on behalf of himself or herself and other current or former employees to recover civil penalties for Labor Code violations. (Lab. Code, § 2699, subd. (a).) An ‘ “aggrieved employee” means any person who was employed by the alleged violator and against whom one or more of the alleged violations was committed.’ (Id., § 2699, subd. (c).)” (Amalgamated Transit Union, Local 1756, AFL-CIO v. Superior Court (2009) 46 Cal.4th 993, 1004–1005.) A PAGA plaintiff who was not an employee of the defendant “cannot satisfy the express standing requirements of the act.” (Id. at p. 1005.)

As an initial matter, Google shows that it is not Waymo’s alter ego, and Plaintiff does not appear to dispute this point.[4] So the Court will focus on the issue Plaintiff does dispute: if there are triable issues of fact concerning whether Google was her joint employer. (See Depew v. Crocodile Enters. (1998) 63 Cal.App.4th 480, 492, fn. 12 [theory of liability not raised in opposing summary judgment considered abandoned].)

A. Standard for Joint Employment and Google’s Initial Burden

The parties agree that the standard stated in Martinez v. Combs (2010) 49 Cal.4th 35 (Martinez) governs.[5] Under that standard, there are three alternative definitions of an employer: (a) one who “exercise[s] control over the wages, hours or working conditions” of employees, or (b) one who “suffer[s] or permit[s] [employees] to work,” or (c) one who “engage[s] [employees], thereby creating a common law employment relationship.” (Id. at p. 64.)

Under any of these definitions, Google has satisfied its initial burden to show that it did not exercise control over Plaintiff’s employment, suffer or permit her to work, or engage her in an employment relationship. Google introduces evidence—which is ultimately undisputed—that it did not recruit or hire Plaintiff; no Google employees directed or evaluated her work, or worked with her at all; and no one at Google terminated her employment. (See Taylor v. Financial Casualty & Surety, Inc. (2021) 67 Cal.App.5th 966, 991–993 (Taylor) [similar evidence by alleged joint employer satisfied its initial burden on summary judgment].) And it introduces evidence that it is independently operated from and does not control Waymo, which assumed the TSSA with Adecco governing Plaintiff’s assignment long before Plaintiff was hired. This evidence satisfies Google’s initial burden to show it did not directly or indirectly control Plaintiff’s employment or otherwise act as her employer.

B. Plaintiff’s Theory and Evidence

Since Google meets its initial burden, the Court must decide whether Plaintiff raises a triable issue of fact concerning joint employment.

The question of whether an employment relationship exists is generally a question reserved for the trier of fact. This remains true where the evidence, though not in conflict, permits conflicting inferences. However, if neither the evidence nor inferences are in conflict, then the question of whether an employment relationship exists becomes a question of law.

(Taylor, supra, 67 Cal.App.5th 966, 993–994, internal citations and punctuation omitted.)

As urged by Plaintiff, Martinez held that an employer includes “ ‘any person … who directly or indirectly, or through an agent or any other person, employs or exercises control over the wages, hours, or working conditions of any person.’ ” (Martinez, supra, 49 Cal.4th at p. 71, italics original.) It observed that employment is defined in terms of control “to reach situations in which multiple entities control different aspects of the employment relationship,” as, “for example, when one entity (such as a temporary employment agency) hires and pays a worker, and another entity supervises the work.” (Id. at p. 76.) But Martinez rejected the plaintiffs’ argument that a business partner of their employer exercised indirect control over their wages, hours, or working conditions simply because the two entities had a close business relationship. (Id. at p. 71–74.) In doing so, it focused on the actual terms of the two entities’ relationship and on the actual exercise of control over the employees.

Here, Google meets it initial burden to show it did not exercise control over Waymo or Plaintiff’s employment, whether directly or indirectly. And Plaintiff does not provide any contrary evidence regarding Google’s actual exercise of control over her employment or its actual relationship with Waymo. Rather, Plaintiff relies entirely on certain documents associated with her employment (apparently provided by Adecco) that reference Google:[6]

Plaintiffs’ paystubs state that the work location is: “Google/Fieldglass” or in one case “Google/Smarttrack.” Segal Decl. Exh. 1. … Plaintiff signed an “Associate Driver Release” that states: “You will be required to drive your automobile in connection with your assignment at our client Google. . . . By signature to this release, you also agree to release Adecco and our client Google from any responsibility or liability as respects operation of your vehicle on this assignment.” Segal Decl. Exh. 2. Plaintiff was required to register in Google’s GCrew system. Segal Decl. Exh. 3. Plaintiff was informed regarding expenses that: “Once you have completed and submitted your expense sheet, it will be routed to your Google supervisor for approval and processing.” Segal Decl. Exh. 4. [Another document stated]: “Timesheets will route to your Google supervisor for approval and processing.” Segal Decl. Exh. 5.

Plaintiff was provide[d] a Google GBike and signed a GBike Usage Waiver that stated: “I further understand that I am voluntarily partaking in use of a GBike and that such usage will not be taking place within the scope of my assignment at Google.” Segal Decl. Exh. 6. Further, Adecco provided Plaintiff with a Notice pursuant to Labor Code section 2810.5 which identified Google as “the other entity for whom this employee will perform work.” Segal Decl. Exh. 7. Plaintiff signed a Commitment Sheet which in the bottom right hand corner identifies Google as the employer. Segal Decl. Exh. 8.

Further Plaintiff”s personnel file as produced by Adecco never mentions Waymo but mentions Google 13 times. Segal Decl. ¶ 3.

As an initial matter, Google correctly objects to the Court’s consideration of this evidence, all of which is purportedly authenticated only by a declaration by Plaintiff’s counsel. Google’s objections, based on hearsay and lack of proper authentication, are SUSTAINED.

But even if this evidence was properly considered, it would not raise a triable issue of fact. The asserted fact that pay stubs issued by Adecco list “Work Locations” referring to Google’s campus does not support an inference that a particular Google entity controlled Plaintiff’s working conditions—nor does Adecco’s requirement that Plaintiff execute a waiver connected with her potential “use [of] a GBike to traverse the Google Mountain View Campus.” And considered in light of the undisputed evidence that Waymo spun off from Google and assumed its agreement with Adecco, outdated references to “Google” in these and other documents provided by Adecco[7] do not support a reasonable inference that Google retained control over Plaintiff’s employment. This is particularly true where Google offers unrebutted evidence (in the form of a declaration by Adecco’s Director of Contract Compliance) that these references were mistakes. (See Decl. of Nicole Lupo ISO Mot.)

Plaintiff further argues that Google uses a “ ‘service center approach’ to provide human resources” as in Castaneda v. Ensign Group, Inc. (2014) 229 Cal.App.4th 1015 (Ensign), citing the modifications to the TSSA acknowledging that Waymo was Google’s successor. But these documents do not say this, and they both state that the term “Google” in the relevant documents “will refer to Waymo.” Plaintiff’s unsupported and facially incorrect reading of these documents does not create a triable issue of fact. (See Taylor, supra, 67 Cal.App.5th 966, 1003–1004 [“That the bail bond paperwork identifies FCS as the ‘Surety Company’ … does not alone demonstrate such control over details of plaintiffs’ fugitive recovery work as to create a common law employment relationship …. [¶] Plaintiffs’ subjective belief that these documents made FCS their employer or joint employer is the sort of self-serving, uncorroborated evidence that does not meet their burden to demonstrate triable issues of material fact ….”].)

C. The Parties’ Principal Authorities

As noted above, Plaintiff relies on Ensign, which confirms that “[a]n entity that controls the business enterprise may be an employer even if it did not ‘directly hire, fire or supervise’ the employees.” (Ensign, supra, 229 Cal.App.4th at p. 1019, internal citation omitted.) But in Ensign, the controlling entity owned all of the stock of the second entity and the plaintiff introduced ample evidence that it actually “exercised control over [the second entity’s] operations and the employees.” (Id. at p. 1020.) Based on that evidence, the Court of Appeal found triable issues of material fact even though a contract between the two entities characterized the second entity as the only employer. (Id. at p. 1021.) There is no such evidence here.

Plaintiff also cites Medina v. Equilon Enters. (2021) 68 Cal.App.5th 868 (Medina), which again held that “[i]f [a] putative joint employer … exercises enough control over [an] intermediary entity to indirectly dictate the wages, hours, or working conditions of [an] employee, that is a sufficient showing of joint employment.” (At p. 879.) But the joint employer in Medina, a Shell Oil Company subsidiary that owned gas stations operated by other companies, had “near-complete control over the [station] operators’ finances, day-to-day operations, facilities, and practices” (at p. 881), including the contractual power to remove employees from a particular station (at p. 880). Again, these facts bear no resemblance to those before the Court.

Google’s main authority, Futrell v. Payday California, Inc. (2010) 190 Cal.App.4th 1419 (Futrell), is more to the point. Futrell affirmed summary judgment in favor of a payroll company, holding that it was not the plaintiff’s joint employer notwithstanding that plaintiff’s employer had “ ‘outsourced’ its payroll department” to the payroll company. (Id. at p. 1424.) This was true even where the plaintiff “submitted his own declaration attesting he ‘understood’ he was a Payday employee because of the payroll documents that Payday processed, and because representatives of Payday made statements to that effect.” (Ibid.) The plaintiff in Futrell also submitted “a declaration from an industry expert … who [opined] that, ‘[i]n the motion picture industry, it is quite common for the production company to work with another firm that actually employs the crewmembers. This other firm is generally referred to as the “Payroll Company,” despite the fact that it operates in a fashion that is quite different from a traditional payroll company such as ADP.’ ” (Id. at pp. 1426–1427.) Here, Plaintiff does not even provide this much evidence.

Similar to Plaintiff here, the Futrell plaintiff argued that “the various payroll documents that passed between him and Payday, e.g., employee information sheets, timecards, and W-4 and W-2 tax forms,” established that the payroll company was his employer. (Futrell, supra, 190 Cal.App.4th at p. 1431.) The Court of Appeal rejected this argument because the authorities “do not support the proposition that an employer-employee relationship for purposes of the Labor Code wage statutes may be based on any one particular factor, e.g., payroll and tax-related documents.” (Ibid.) The dispositive issue was the lack of “evidence in the record showing Payday exercised any control over Futrell’s [wages,] hours or working conditions.” (Id. at p. 1431.) The payroll “documents—as a matter of law—[we]re not sufficient to support a conclusion an employer-employee relationship existed between Futrell and Payday for purposes of the Labor Code wage statutes,” where “Payday did not and could not hire or fire Futrell, nor did Payday have any control over Futrell’s work activities.” (Id. at p. 1435.) The Court of Appeal expressly found that this was not improper “weighing” of evidence: rather, the documents’ incorrect labelling of the payroll company as the employer was properly “ignored where the evidence of the parties[’] actual conduct establishes that a different relationship exists.” (Id. at p. 1437.)

Here, just as in Futrell, the evidence of the parties’ actual conduct and Google’s actual relationship to Waymo and Plaintiff’s employment all shows that Google did not employ Plaintiff, whether directly or indirectly. Futrell squarely rejects the notion that erroneous or otherwise incorrect references to Google as a potential employer in documents issued by Adecco somehow create a triable issue of fact. In sum, Futrell supports the entry of summary judgment here, and Plaintiff’s authorities are not to the contrary.

V. CONCLUSION

Google’s motion for summary judgment is GRANTED.

The Court will prepare the order. Google shall prepare and lodge a proposed judgment with Plaintiff’s input as to form.

***

LAW AND MOTION HEARING PROCEDURES

The Court rescinded, effective June 21, 2021, all prior general orders restricting courthouse access.  Remote appearances for complex civil matters are still permitted, but are no longer mandatory.  (See General Order Rescinding Portion of May 6, 2020 General Order Concerning Complex Civil Actions, available at

RescindingPortionof050621GeneralOrderConcerningComplexCivilActions.pdf.)  If a party gives notice that a tentative ruling will be contested, any party seeking to participate in the hearing remotely should contact CourtCall.

Public access to hearings is available on a listen-only line by calling 888-808-6929 (access code 2752612).

State and local rules prohibit recording of court proceedings without a court order.  These rules apply while in court and also while participating in a hearing remotely or listening in on a public access line.  No court order has been issued which would allow recording of any portion of this motion calendar.

The court does not provide court reporters for proceedings in the complex civil litigation departments.  Any party wishing to retain a court reporter to report a hearing may do so in compliance with this Court’s October 13, 2020 Policy Regarding Privately Retained Court Reporters.  The court reporter may participate remotely and need not be present in the courtroom.  

The court does not provide court reporters for proceedings in the complex civil litigation departments.  Any party wishing to retain a court reporter to report a hearing may do so in compliance with this Court’s October 13, 2020 Policy Regarding Privately Retained Court Reporters.  The court reporter may participate remotely and need not be present in the courtroom.  

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Calendar Line 2

Case Name: Tanya Rotor v. Signature Consultants, LLC, et al.

Case No.: 18CV336219

This is a putative class action alleging violations of the Fair Credit Reporting Act (FCRA), the California Investigative Consumer Reporting Agencies Act (ICRAA), and the California Consumer Credit Reporting Agencies Act (CCRAA) in connection with pre-employment background checks.

Before the Court is Plaintiff’s motion for preliminary approval of a settlement, which is unopposed. As discussed below, the Court GRANTS preliminary approval, subject to a few modifications to the class notices.

I. BACKGROUND

As alleged in the operative First Amended Complaint (FAC), Defendants routinely acquire consumer reports to conduct background checks on prospective, current, and former employees. (FAC, ¶ 2.) When Plaintiff applied for employment with Defendants, she was required to fill out a disclosure and authorization form to perform a background investigation, but the disclosures provided contained extraneous and superfluous language that did not consist solely of the disclosure as required by federal and state laws. (Id., ¶¶ 22–24.) The disclosure also requested a plethora of information from Plaintiff and required her to certify it was correct. (Id., ¶¶ 25–26.)

Based on these allegations, Plaintiff asserts putative class claims for (1) failure to provide proper disclosure in violation of the FCRA, (2) failure to give proper summary of rights in violation of the FCRA, (3) failure to make proper disclosure in violation of the ICRAA, (4) failure to make proper disclosure in violation of the CCRAA, and (5) unfair competition.

This action was filed by Plaintiff Tanya Rotor. Following its removal to federal court and subsequent remand, Defendants moved for summary judgment based in part on Ms. Rotor’s lack of standing. Plaintiff identified Lydia Wilson as an alternative plaintiff with standing, and the parties stipulated to the filing of the FAC to substitute Ms. Wilson as the named plaintiff.

The parties have now reached a settlement. Plaintiff moves for an order preliminarily approving the settlement of the class claims, provisionally certifying the settlement class, approving the form and method for providing notice to the class, and scheduling a final fairness hearing

II. LEGAL STANDARD FOR SETTLEMENT APPROVAL

Generally, “questions whether a [class action] settlement was fair and reasonable, whether notice to the class was adequate, whether certification of the class was proper, and whether the attorney fee award was proper are matters addressed to the trial court’s broad discretion.”  (Wershba v. Apple Computer, Inc. (2001) 91 Cal.App.4th 224, 234–235 (Wershba), disapproved of on other grounds by Hernandez v. Restoration Hardware, Inc. (2018) 4 Cal.5th 260.)   

   

In determining whether a class settlement is fair, adequate and reasonable, the trial court should consider relevant factors, such as the strength of plaintiffs’ case, the risk, expense, complexity and likely duration of further litigation, the risk of maintaining class action status through trial, the amount offered in settlement, the extent of discovery completed and the stage of the proceedings, the experience and views of counsel, the presence of a governmental participant, and the reaction of the class members to the proposed settlement.    

 

(Wershba, supra, 91 Cal.App.4th at pp. 244–245, internal citations and quotations omitted.)

        

In general, the most important factor is the strength of the plaintiffs’ case on the merits, balanced against the amount offered in settlement. (See Kullar v. Foot Locker Retail, Inc. (2008) 168 Cal.App.4th 116, 130 (Kullar).) But the trial court is free to engage in a balancing and weighing of factors depending on the circumstances of each case.  (Wershba, supra, 91 Cal.App.4th at p. 245.)  The trial court must examine the “proposed settlement agreement to the extent necessary to reach a reasoned judgment that the agreement is not the product of fraud or overreaching by, or collusion between, the negotiating parties, and that the settlement, taken as a whole, is fair, reasonable and adequate to all concerned.”  (Ibid., citation and internal quotation marks omitted.)

The burden is on the proponent of the settlement to show that it is fair and reasonable.  However “a presumption of fairness exists where: (1) the settlement is reached through arm’s-length bargaining; (2) investigation and discovery are sufficient to allow counsel and the court to act intelligently; (3) counsel is experienced in similar litigation; and (4) the percentage of objectors is small.”    

 

(Wershba, supra, 91 Cal.App.4th at p. 245, citation omitted.)  The presumption does not permit the Court to “give rubber-stamp approval” to a settlement; in all cases, it must “independently and objectively analyze the evidence and circumstances before it in order to determine whether the settlement is in the best interests of those whose claims will be extinguished,” based on a sufficiently developed factual record.  (Kullar, supra, 168 Cal.App.4th at p. 130.)

III. SETTLEMENT PROCESS

According to Plaintiff, Defendants are a staffing firm with at least 28 locations and a multitude of consultants across the nation. After Defendants removed this case to federal court and it was remanded following motion practice, the parties agreed to attempt mediation. They conducted an all-day mediation with Todd Smith, Esq. on December 16, 2020.

The case did not settle that day, but the parties continued to negotiate with Mr. Smith’s assistance while pursuing formal discovery, including filing discovery motions. They were ultimately able to reach a settlement on March 1, 2021. The parties executed the agreement before the Court on October 5, after Ms. Wilson was substituted in as the named plaintiff.

IV. SETTLEMENT PROVISIONS

The non-reversionary gross settlement amount is $323,128.  Attorney fees and litigation costs of up to $107,709.33 (one-third of the gross settlement), and administration costs of up to $55,000 will be paid from the gross settlement. The named plaintiff will also seek an enhancement award of $5,000.

The net settlement, approximately $155,418.67, will be allocated to settlement class members pro rata. By the Court’s calculation, the average settlement payment will approximately $8.73, to each of the 17,796 class members.[8] Class members will not be required to submit a claim to receive their payments. Settlement payments will be allocated 100 percent to interest and penalties for tax purposes. Funds associated with checks uncashed after 180 days will be paid to the Legal Aid at Work.

 

In exchange for the settlement, class members will release all claims “that were alleged in the Litigation or which could have been alleged based on the facts asserted in the Litigation. These claims include, but are not limited to: violations of 15 U.S.C. §§ 1681b(b)(2)(A); violations of 15 U.S.C. §§ 1681d(a)(1) and 1681g(c); violations of California Civil Code §§ 1786, et seq.; violations of California Civil Code §§ 1785, et seq.; and violations of Business & Professions Code §§ 17200, et seq. based on the foregoing facts and claims; and any other applicable provisions of state or federal law.” The release is appropriately tailored to the allegations at issue. (See Amaro v. Anaheim Arena Mgmt. (Sep. 28, 2021, No. G058371) ___Cal.App.5th___, 2021 Cal. App. LEXIS 801, at *21.)

V. FAIRNESS OF SETTLEMENT

 

The FCRA’s damages provision limits recovery for willful violations to between $100 and $1,000 or actual damages, whichever is greater.  With approximately 17,796 class members, the FCRA statutory damages are between $1,779,600 and $17,796,000. The $323,128 settlement is over 18 percent of their value assuming a $100 penalty, which Plaintiff believes is more likely given the less egregious nature of the violations at issue.

The Court agrees with Plaintiff that the settlement is fair and reasonable to the class in light of the risks on the merits, particularly with regard to proving willfulness and considering the likelihood of a lower penalty award.

The Court notes that Plaintiff does not address the merits and potential value of the ICRAA and CCRAA claims alleged in the FAC, but understands from its work on similar cases that these claims are unlikely to add additional value to the case. Still, Plaintiff shall address this issue prior to final approval. Also prior to final approval, Plaintiff shall provide a declaration describing her efforts on the case.

The Court retains an independent right and responsibility to review the requested attorney fees and award only so much as it determines to be reasonable.  (See Garabedian v. Los Angeles Cellular Telephone Co. (2004) 118 Cal.App.4th 123, 127–128.)  While 1/3 of the common fund for attorney fees is generally considered reasonable, counsel shall submit lodestar information prior to the final approval hearing in this matter so the Court can compare the lodestar information with the requested fees.  (See Laffitte v. Robert Half Intern. Inc. (2016) 1 Cal.5th 480, 504 [trial courts have discretion to double-check the reasonableness of a percentage fee through a lodestar calculation].)

VI. PROPOSED SETTLEMENT CLASS

 

Plaintiff requests that the following settlement class be provisionally certified:  

All current and former employees or applicants for employment of Defendants in the United States on whom Defendants procured or caused to be procured a consumer report from October 12, 2013 through September 13, 2021.

A.   Legal Standard for Certifying a Class for Settlement Purposes 

 

Rule 3.769(d) of the California Rules of Court states that “[t]he court may make an order approving or denying certification of a provisional settlement class after [a] preliminary settlement hearing.”  California Code of Civil Procedure Section 382 authorizes certification of a class “when the question is one of a common or general interest, of many persons, or when the parties are numerous, and it is impracticable to bring them all before the court ….”

Section 382 requires the plaintiff to demonstrate by a preponderance of the evidence: (1) an ascertainable class and (2) a well-defined community of interest among the class members.  (Sav-On Drug Stores, Inc. v. Superior Court (2004) 34 Cal.4th 319, 326, 332 (Sav-On Drug Stores).) “Other relevant considerations include the probability that each class member will come forward ultimately to prove his or her separate claim to a portion of the total recovery and whether the class approach would actually serve to deter and redress alleged wrongdoing.”  (Linder v. Thrifty Oil Co. (2000) 23 Cal.4th 429, 435.)  The plaintiff has the burden of establishing that class treatment will yield “substantial benefits” to both “the litigants and to the court.”  (Blue Chip Stamps v. Superior Court (1976) 18 Cal.3d 381, 385.)      

In the settlement context, “the court’s evaluation of the certification issues is somewhat different from its consideration of certification issues when the class action has not yet settled.”  (Luckey v. Superior Court (2014) 228 Cal.App.4th 81, 93.)  As no trial is anticipated in the settlement-only context, the case management issues inherent in the ascertainable class determination need not be confronted, and the court’s review is more lenient in this respect.  (Id. at pp. 93–94.) But considerations designed to protect absentees by blocking unwarranted or overbroad class definitions require heightened scrutiny in the settlement-only class context, since the court will lack the usual opportunity to adjust the class as proceedings unfold.  (Id. at p. 94.)  

B.   Ascertainable Class

 

A class is ascertainable “when it is defined in terms of objective characteristics and common transactional facts that make the ultimate identification of class members possible when that identification becomes necessary.” (Noel v. Thrifty Payless, Inc. (2019) 7 Cal.5th 955, 980 (Noel).) A class definition satisfying these requirements

puts members of the class on notice that their rights may be adjudicated in the proceeding, so they must decide whether to intervene, opt out, or do nothing and live with the consequences. This kind of class definition also advances due process by supplying a concrete basis for determining who will and will not be bound by (or benefit from) any judgment.

(Noel, supra, 7 Cal.5th at p. 980, citation omitted.)

“As a rule, a representative plaintiff in a class action need not introduce evidence establishing how notice of the action will be communicated to individual class members in order to show an ascertainable class.” (Noel, supra, 7 Cal.5th at p. 984.) Still, it has long been held that “[c]lass members are ‘ascertainable’ where they may be readily identified … by reference to official records.”  (Rose v. City of Hayward (1981) 126 Cal. App. 3d 926, 932, disapproved of on another ground by Noel, supra, 7 Cal.5th 955; see also Cohen v. DIRECTV, Inc. (2009) 178 Cal.App.4th 966, 975-976 [“The defined class of all HD Package subscribers is precise, with objective characteristics and transactional parameters, and can be determined by DIRECTV’s own account records. No more is needed.”].)  

Here, the estimated 17,796 class members are readily identifiable based on Defendants’ records, and the settlement class is appropriately defined based on objective characteristics.  The Court finds that the settlement class is numerous, ascertainable, and appropriately defined.

C. Community of Interest

The “community-of-interest” requirement encompasses three factors: (1) predominant questions of law or fact, (2) class representatives with claims or defenses typical of the class, and (3) class representatives who can adequately represent the class. (Sav-On Drug Stores, supra, 34 Cal.4th at pp. 326, 332.)

For the first community of interest factor, “[i]n order to determine whether common questions of fact predominate the trial court must examine the issues framed by the pleadings and the law applicable to the causes of action alleged.”  (Hicks v. Kaufman & Broad Home Corp. (2001) 89 Cal.App.4th 908, 916 (Hicks).)  The court must also examine evidence of any conflict of interest among the proposed class members.  (See J.P. Morgan & Co., Inc. v. Superior Court (2003) 113 Cal.App.4th 195, 215.)  The ultimate question is whether the issues which may be jointly tried, when compared with those requiring separate adjudication, are so numerous or substantial that the maintenance of a class action would be good for the judicial process and to the litigants.  (Lockheed Martin Corp. v. Superior Court (2003) 29 Cal.4th 1096, 1104–1105 (Lockheed Martin).)  “As a general rule if the defendant’s liability can be determined by facts common to all members of the class, a class will be certified even if the members must individually prove their damages.”  (Hicks, supra, 89 Cal.App.4th at p. 916.)

Here, common legal and factual issues predominate.  Plaintiff’s claims all arise from Defendants’ background screening practices applied to the similarly-situated class members.    

 

As to the second factor,      

 

The typicality requirement is meant to ensure that the class representative is able to adequately represent the class and focus on common issues. It is only when a defense unique to the class representative will be a major focus of the litigation, or when the class representative’s interests are antagonistic to or in conflict with the objectives of those she purports to represent that denial of class certification is appropriate. But even then, the court should determine if it would be feasible to divide the class into subclasses to eliminate the conflict and allow the class action to be maintained.      

 

(Medrazo v. Honda of North Hollywood (2008) 166 Cal. App. 4th 89, 99, internal citations, brackets, and quotation marks omitted.)    

 

 Like other members of the class, Plaintiff applied to work for Defendants and alleges that she experienced the violations at issue. The anticipated defenses are not unique to Plaintiff, and there is no indication that Plaintiff’s interests are otherwise in conflict with those of the class.

 

Finally, adequacy of representation “depends on whether the plaintiff’s attorney is qualified to conduct the proposed litigation and the plaintiff’s interests are not antagonistic to the interests of the class.”  (McGhee v. Bank of America (1976) 60 Cal.App.3d 442, 450.)  The class representative does not necessarily have to incur all of the damages suffered by each different class member in order to provide adequate representation to the class.  (Wershba, supra, 91 Cal.App.4th at p. 238.) “Differences in individual class members’ proof of damages [are] not fatal to class certification.  Only a conflict that goes to the very subject matter of the litigation will defeat a party’s claim of representative status.”  (Ibid., internal citations and quotation marks omitted.)

 

   Plaintiff has the same interest in maintaining this action as any class member would have.  Further, she has hired experienced counsel.  Plaintiff has sufficiently demonstrated adequacy of representation.

 

D.   Substantial Benefits of Class Certification  

 

“[A] class action should not be certified unless substantial benefits accrue both to litigants and the courts. . . .”  (Basurco v. 21st Century Ins. (2003) 108 Cal.App.4th 110, 120, internal quotation marks omitted.)  The question is whether a class action would be superior to individual lawsuits.  (Ibid.)  “Thus, even if questions of law or fact predominate, the lack of superiority provides an alternative ground to deny class certification.”  (Ibid.)  Generally, “a class action is proper where it provides small claimants with a method of obtaining redress and when numerous parties suffer injury of insufficient size to warrant individual action.”  (Id. at pp. 120–121, internal quotation marks omitted.)        

 

Here, there are an estimated 17,796 class members.  It would be inefficient for the Court to hear and decide the same issues separately and repeatedly for each class member.  Further, it would be cost prohibitive for each class member to file suit individually, as each member would have the potential for little to no monetary recovery. It is clear that a class action provides substantial benefits to both the litigants and the Court in this case.     

VII. NOTICE

 

The content of a class notice is subject to court approval.  (Cal. Rules of Court, rule 3.769(f).)  “The notice must contain an explanation of the proposed settlement and procedures for class members to follow in filing written objections to it and in arranging to appear at the settlement hearing and state any objections to the proposed settlement.” (Ibid.)  In determining the manner of the notice, the court must consider: “(1) The interests of the class; (2) The type of relief requested; (3) The stake of the individual class members; (4) The cost of notifying class members; (5) The resources of the parties; (6) The possible prejudice to class members who do not receive notice; and (7) The res judicata effect on class members.”  (Cal. Rules of Court, rule 3.766(e).)      

 

  Here, Plaintiff proposes to mail class members a postcard notice and make a long form notice available online. The notices describe the lawsuit, explain the settlement, and instruct class members that they may opt out of the settlement or object.  The gross settlement amount is stated on both notices, but the estimated deductions are provided only on the long form notice. Class members’ estimated payments are also stated only on the long form notice. Class members are given 60 days to request exclusion from the class or submit a written objection to the settlement. The notices make it clear that class members may appear at the final approval hearing to make an oral objection without submitting a written objection. The long form notice instructs class members that they may appear remotely by CourtCall and class counsel will cover any associated fees.

The notices are generally adequate, but must be modified to instruct class members that they may object or request to be excluded from the class by simply providing their name, without the need to provide the last four digits of their Social Security Numbers. And the postcard notice must be modified to provide the amounts of the estimated deductions from the gross settlement for administration costs, attorney fees and costs, and Plaintiff’s service award, and to provide class members’ estimated payments.

Turning to the notice procedure, the parties have selected Atticus Administration, LLC as the settlement administrator. The administrator will mail the postcard notice within 40 calendar days of preliminary approval, after updating class members’ addresses using the National Change of Address Database. The administrator re-mail returned notices to any forwarding address provided or located through a search. These notice procedures are appropriate and are approved.

VIII. CONCLUSION

Plaintiff’s motion for preliminary approval is GRANTED. The final approval hearing shall take place on April 7, 2022 at 1:30 p.m. in Dept. 1.  The following class is preliminarily certified for settlement purposes:  

 

All current and former employees or applicants for employment of Defendants in the United States on whom Defendants procured or caused to be procured a consumer report from October 12, 2013 through September 13, 2021.

Prior to final approval, Plaintiff shall provide a declaration describing her efforts on the case, and she shall lodge any individual settlement agreement she may have executed with Defendants for the Court’s review. Plaintiff’s motion for final approval shall address the merits and potential value of the ICRAA and CCRAA claims alleged in the FAC.

The Court will prepare the order.    

***

LAW AND MOTION HEARING PROCEDURES

The Court rescinded, effective June 21, 2021, all prior general orders restricting courthouse access.  Remote appearances for complex civil matters are still permitted, but are no longer mandatory.  (See General Order Rescinding Portion of May 6, 2020 General Order Concerning Complex Civil Actions, available at

RescindingPortionof050621GeneralOrderConcerningComplexCivilActions.pdf.)  If a party gives notice that a tentative ruling will be contested, any party seeking to participate in the hearing remotely should contact CourtCall.

Public access to hearings is available on a listen-only line by calling 888-808-6929 (access code 2752612).

State and local rules prohibit recording of court proceedings without a court order.  These rules apply while in court and also while participating in a hearing remotely or listening in on a public access line.  No court order has been issued which would allow recording of any portion of this motion calendar.

The court does not provide court reporters for proceedings in the complex civil litigation departments.  Any party wishing to retain a court reporter to report a hearing may do so in compliance with this Court’s October 13, 2020 Policy Regarding Privately Retained Court Reporters.  The court reporter may participate remotely and need not be present in the courtroom.  

The court does not provide court reporters for proceedings in the complex civil litigation departments.  Any party wishing to retain a court reporter to report a hearing may do so in compliance with this Court’s October 13, 2020 Policy Regarding Privately Retained Court Reporters.  The court reporter may participate remotely and need not be present in the courtroom.  

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Calendar Lines 3 & 4

Case Name: Marguerite Ruth Edwards v. Central Portfolio Control, Inc., et al.

Case No.: 21CV375435

Case Name: Marguerite Ruth Edwards v. Complete Credit Solutions, Inc., et al.

Case No.: 21CV375187

These related putative class actions allege unlawful debt collection practices in connection with consumer credit accounts by Defendants Central Portfolio Control, Inc. (CPC) and Complete Credit Solutions, Inc. (CSS), respectively.

Before the Court are Defendants’ essentially identical petitions to compel arbitration in each case, which are based on the same arbitration agreement. Plaintiff opposes both petitions. As explained below, the Court DENIES Defendants’ petitions WITHOUT PREJUDICE, pending an evidentiary hearing.

I. BACKGROUND

Plaintiff alleges that CPC is a Minnesota corporation engaged in collecting defaulted and time-barred consumer debts in California. (Complaint, Case No. 21CV375435, ¶ 10.) It is a “debt collector” as defined by Civil Code section 1788.2. (Ibid.)

Plaintiff is alleged to have incurred a “consumer debt” under the same statute, in the form of a consumer credit account owed to Comenity Bank. (Complaint, Case No. 21CV375435, ¶ 14.) Plaintiff was unable to pay the debt and defaulted. (Id., ¶ 15.) Thereafter, on a date unknown to Plaintiff, the debt was sold to CCS for collection purposes. (Id., ¶ 16.) Plaintiff alleges on information and belief that CCS then engaged CPC to collect the debt from Plaintiff, as well as other putative class members, on CCS’s behalf. (Id., ¶ 17.)

Plaintiff alleges on information and belief that, as of October 1, 2020, collecting this debt was barred by the applicable statute of limitations. (Complaint, Case No. 21CV375435, ¶ 22.) But on this date, CPC sent her a letter (Exhibit 1 to the Complaint) in an attempt to collect. (Id., ¶ 19.) The letter did not include the notice required by Civil Code section 1788.14, subdivision (d)(1) with regard to time-barred debt.[9] (Id., ¶ 23.)

It is CPC’s standard practice to send such letters to collect time-barred consumer debts. (Complaint, Case No. 21CV375435, ¶¶ 24–25.) Plaintiff seeks to bring a class action on behalf of California residents who received such a letter from CPC in connection with time-barred debt. (Id., ¶ 27.) She asserts a single cause of action under the California Fair Debt Buying Practices Act (CFDBPA), Civil Code sections 1788.50–1788.64.

As for CCS, Plaintiff alleges that it is a Texas corporation engaged in purchasing and collecting charged-off consumer debts in California. (Complaint, Case No. 21CV375187, ¶ 8.) CCS does not originate loans or extend credit to consumers but purchases defaulted consumer debts and then contracts with a myriad of debt collectors across the country. (Ibid.) Plaintiff alleges on information and belief that CCS actively participates in and directs the participation of its accounts and is both a “debt collector” and a “debt buyer” under the relevant provisions of the Civil Code. (Ibid.) CCS is strictly liable to Plaintiff and the putative class for the violations by CPC described above. (Id., ¶¶ 12–22.) Plaintiff brings a putative class claim against CCS for violation of the CFDBPA, as well.

II. PETITIONS TO COMPEL ARBITRATION

Both CPC and CCS petition to compel arbitration pursuant to the “Your Pier 1 Credit Card Account Agreement” (Agreement) attached to the Declaration of Comenity Bank in Response to Subpoena, which was filed in support of both petitions. Plaintiff declares that she never received this agreement and argues that Defendants have failed to prove she consented to it.  Plaintiff further contends that Defendants have failed to show they were assigned the right to compel arbitration pursuant to the Agreement, which states on its face that only Comenity Bank and its affiliates, or any other company sued “at the same time” as one of those entities, are subject to arbitration.

A. Legal Standards

“The FAA [Federal Arbitration Act], which includes both procedural and substantive provisions, governs [arbitration] agreements involving interstate commerce.”[10] (Avila v. Southern California Specialty Care, Inc. (2018) 20 Cal.App.5th 835, 840.) However, “[t]he procedural aspects of the FAA do not apply in state court absent an express provision in the arbitration agreement.”  (Ibid.)    

 

The California Arbitration Act provides that a court must grant a petition to compel arbitration “if it determines that an agreement to arbitrate … exists, unless it determines that: (a) The right to compel arbitration has been waived by the petitioner; or (b) Grounds exist for the revocation of the agreement,” among other exceptions.  (Code Civ. Proc., § 1281.2.)        

 

The moving party must prove by a preponderance of evidence the existence of the arbitration agreement and that the dispute is covered by the agreement.  (See Cruise v. Kroger Co. (2015) 233 Cal.App.4th 390, 396 [under both federal and state law, “the threshold question presented by a petition to compel arbitration is whether there is an agreement to arbitrate”]; Rosenthal v. Great Western Fin’l Securities Corp. (1996) 14 Cal.4th 394, 413 (Rosenthal) [moving party’s burden is a preponderance of the evidence].)  The burden then shifts to the resisting party to prove a ground for denial. (Rosenthal, supra, 14 Cal.4th at p. 413.) “In determining the rights of parties to enforce an arbitration agreement within the FAA’s scope, courts apply state contract law while giving due regard to the federal policy favoring arbitration.”[11] (Pinnacle Museum Tower Assn. v. Pinnacle Market Development (US), LLC (2012) 55 Cal.4th 223, 236.)

If the court orders arbitration “of a controversy which is an issue involved in [the] action or proceeding pending before [it], the court … shall, upon motion of a party …, stay the action or proceeding until an arbitration is had in accordance with the order to arbitrate or until such earlier time as the court specifies.” (Code Civ. Proc., § 1281.4.) “If the issue which is the controversy subject to arbitration is severable, the stay may be with respect to that issue only.” (Ibid.)

B. Plaintiff’s Consent to the Agreement

Defendants submit a declaration by Nickesha Nichols, Comenity Bank’s custodian of records.[12] She explains that in response to a subpoena by CCS, she reviewed Comenity’s records concerning Plaintiff’s receipt of, consent to, or rejection of any arbitration provision in an agreement relating to her Comenity account. (Nichols Decl., ¶¶ 3–4.) Comenity’s records reflect that Ms. Edwards applied for a Pier 1 Imports credit card on January 14, 2014 and Comenity issued and mailed a Pier 1 Imports credit card to her on January 20, 2014. (Id., ¶ 5.) Ms. Nichols declares that “[i]t is Comenity’s standard practice to enclose a copy of the Credit Card Account Agreement that is applicable to such credit card as part of the Welcome Kit mailed with the credit card.” (Id., ¶ 6.) She attaches the Agreement in effect during January 2014 and affirms that Comenity’s records “do not reveal any documentation indicating that Comenity received any mail from Ms. Edwards rejecting the arbitration provision” in the Agreement. (Id., ¶¶ 6–7.) She declares that Plaintiff’s account was sold to Southwestern Investor Group on July 22, 2015. (Id., ¶ 8.)

For her part, Plaintiff declares that she did open a consumer card credit account with Comenity “[o]n a date or dates unknown to [her],” and used it to make purchases. (Decl. of Marguerite Ruth Edwards, ¶ 3.) But she never agreed to settle disputes regarding this account in arbitration, and never received the Agreement. (Id., ¶¶ 4–6.)

Plaintiff first argues that CPC and CCS lack standing to sue, as they are not named parties in the Agreement. But an assignee (like CPC and CCS) stand in the shoes of the assignor (like Comenity), and can sue a debtor if the assignor could have sued the debtor. The Court rejects Plaintiff’s contrary arguments.

Plaintiff also objects to Ms. Nichols’s declaration on various grounds, which are addressed below. As urged by Plaintiff, Ms. Nichols’s descriptions of her account records are hearsay, and are inadmissible unless the proper foundation is laid to admit them as business records (or under another hearsay exception). (See Copenbarger v. Morris Cerullo World Evangelism, Inc. (2018) 29 Cal.App.5th 1, 13 (Copenbarger).)

1. Admissibility of Business Records

Plaintiff objects to Ms. Nichols’s declaration based on hearsay, lack of foundation, and insufficient evidence that the records associated with Plaintiff’s account constitute business records. Defendants respond that because Ms. Nichols is a current custodian of records for Comenity Bank, her declaration is adequate to authenticate the Agreement.

Evidence Code section 1271 permits the admission of business records to establish the truth of the matters reflected therein if (a) the writing was made in the regular course of a business; (b) the writing was made at or near the time of the act, condition, or event; (c) the custodian or other qualified witness testifies to its identity and the mode of its preparation; and (d) the sources of information and method and time of preparation were such as to indicate its trustworthiness.  “A trial judge has broad discretion in admitting business records under Evidence Code section 1271, and it has been held that the foundation requirements may be inferred from the circumstances.” (People v. Dorsey (1974) 43 Cal.App.3d 953, 961 (Dorsey).)   

Here, Ms. Nichols’s declaration does state that she is Comenity’s current custodian of records and that the records she describes in her declaration were made and kept in the ordinary course of business. But she does not otherwise testify to the records’ mode of preparation, when they were made, and whether the sources of information and method and time of preparation were such as to indicate their trustworthiness. As a result, the Court would have to infer that these requirements are satisfied to consider her declaration. But it hesitates to do so here, where only a generic Agreement is attached to Ms. Nichols’s declaration, and no records specific to Plaintiff’s account are provided. (See Copenbarger, supra, 29 Cal.App.5th at p. 13 [testimony about invoices was inadmissible as hearsay where proponent did not lay a foundation for admitting them as business records and “did not even bring the invoices to trial”].)

To be sure, authorities hold that “ ‘bank statements prepared in the regular course of banking business and in accordance with banking regulations are in a different category than the ordinary business and financial records of a private enterprise’ ” with regard to trustworthiness. (Estate of O’Connor (2017) 16 Cal.App.5th 159, 170, quoting Dorsey, 43 Cal.App.3d at p. 960.) But in these cases, the bank at least provided account-specific records that would support an interference of trustworthiness. (See id. at p. 162 [Wells Fargo produced an unsigned account application and multiple witnesses testified that it was or would have been signed]; LPP Mortgage, Ltd. v. Bizar (2005) 126 Cal.App.4th 773, 776–777 [loan documents were attached to custodian’s declaration]; Unifund CCR, LLC v. Dear (2015) 243 Cal.App.4th Supp. 1, 7–8 [declarant attached assignment and other records and explained that they were maintained as computerized records].) Here, such records are lacking.

This case is instead similar to Taggart v. Super Seer Corp. (1995) 33 Cal.App.4th 1697 (Taggart), where a custodian’s declaration addressing only the requirements stated in a former version of Evidence code section 1561—which did not include descriptions of the records’ identity and mode of preparation—was held insufficient to authenticate a document as a business record. In direct response to Taggart, section 1561 was amended to include the missing requirements. (Cooley v. Superior Court (2006) 140 Cal.App.4th 1039, 1045.) But here, Ms. Nichols states that her declaration was made in response to an out-of-state subpoena served on Comenity, and the declaration does not conform to the current requirements of section 1561.

The Court notes that the Legislature’s response to Taggart was not to loosen the foundational requirements for introducing business records or to make an exception to those requirements for records attached to a declaration made in response to a subpoena. Rather, the Legislature amended section 1561 so that it expressly includes all of the foundational requirements for a business record, leaving undisturbed Taggart’s conclusion that “despite [a] custodian’s declaration,” business records “ha[ve] to satisfy the requirements of the business records exception” to be admissible as such. (Taggart, supra, 33 Cal.App.4th at p. 1708.)

The Court accordingly SUSTAINS Plaintiff’s objections to the records described by Ms. Nichols’s declaration for hearsay, lack of foundation, and insufficient evidence that the records are business records.

2. Additional Objections to Ms. Nichols’s Declaration

Plaintiff also objects to Ms. Nichols’s declaration on the grounds that it violates the secondary evidence rule and there is no attestation that the testimony it reflects is true under penalty of perjury under California law. Both of these objections have merit as well.

Defendants correctly urge that Ms. Nichols’s statements that it was Comenity’s practice to mail the applicable credit card account agreement with a newly issued card, and that Plaintiff’s account records “do not reveal any documentation indicating that Comenity received any mail from Ms. Edwards rejecting the arbitration provision,” are not subject to the secondary evidence rule because they do not address the contents of records. But the rest of Ms. Nichols’s declaration describes the contents of Plaintiff’s account records without attaching those records. And this is the only evidence Defendants offer to show that the January 2014 Agreement is the one that applied to Plaintiff’s account.

Evidence Code section 1523, subdivision (a) states that “[e]xcept as otherwise provided by statute, oral testimony is not admissible to prove the content of a writing.” None of the exceptions stated in section 1523 itself appear to apply here,[13] and Defendants do not identify any applicable statutory exception in their reply briefs.

The Court accordingly SUSTAINS Plaintiff’s secondary evidence objections. (See Copenbarger, supra, 29 Cal.App.5th at pp. 13–14 [oral testimony regarding invoices was inadmissible under the secondary evidence rule].)

The Court also SUSTAINS Plaintiff’s objection on the ground that Ms. Nichols’s declaration fails to comply with Code of Civil Procedure section 2015.5 by reciting that the testimony it reflects is true under penalty of perjury under California law. (See Kulshrestha v. First Union Commercial Corp. (2004) 33 Cal.4th 601, 606 [section 2015.5 “requires some acknowledgement on the face of the declaration that perjured statements might trigger prosecution under California law”].)

3. Conclusion

“An essential element of any contract is the consent of the parties, or mutual assent.” (Harris v. TAP Worldwide, LLC (2016) 248 Cal.App.4th 373, 381 (Harris), quoting Donovan v. RRL Corp. (2001) 26 Cal.4th 261, 270; see also Szambelak v. Tsipouras (Ch. Nov. 19, 2007, No. 936-VCN) 2007 Del. Ch. LEXIS 161, at *17 [mutual assent to the terms and conditions of an agreement is among the “basic elements of a contract under Delaware law”].) Plaintiff’s consent to the Agreement might be established by showing she received the Agreement and used her account without objecting to its terms. (See Harris, supra, 248 Cal.App.4th at p. 381 [based on the language of an arbitration provision and employee handbook, “plaintiff consented to arbitrate his claims when he began and continued working for [defendant]”]; Quiroz v. Cavalry SPV I, LLC (C.D. Cal. 2016) 217 F.Supp.3d 1130, 1135–1136 [accountholder’s use of account governed by arbitration provision constituted acceptance of the agreement to arbitrate].) But here the first part of the equation is missing, and Plaintiff specifically denies receiving the Agreement.[14]

In short, Defendants’ petitions must be denied because Defendants have failed to show Plaintiff agreed to arbitration with Comenity. So the Court need not address whether Defendants can enforce the arbitration provision in the Agreement.

C. Request for a Hearing

Defendants urge that if the Court is not inclined to grant their petitions, it should hold an evidentiary hearing to determine whether Plaintiff received and consented to the Agreement.

Questions regarding “the existence or validity of [an] arbitration agreement … are to be resolved by the trial court in the manner provided for the hearing and decision of motions (Code Civ. Proc., § 1290.2), either on the basis of affidavits or declarations or, in the exercise of the court’s discretion where necessary to resolve material conflicts in the written evidence, upon live testimony.” (Rosenthal, supra, 14 Cal.4th at p. 402.)

There is simply no authority for the proposition that a trial court necessarily abuses its discretion, in a motion proceeding, by resolving evidentiary conflicts without hearing live testimony. Nonetheless, we agree that where--as is common with allegations of fraud…--the enforceability of an arbitration clause may depend upon which of two sharply conflicting factual accounts is to be believed, the better course would normally be for the trial court to hear oral testimony and allow the parties the opportunity for cross-examination. As the trial court here remarked, “it’s pretty difficult to weigh credibility without seeing the witnesses.”

(Rosenthal, supra, 14 Cal.4th at p. 414.)

The Court here is presented with an admissible declaration by Plaintiff denying she received the Agreement and potentially-admissible evidence by Ms. Nichols stating that the Agreement was mailed to Plaintiff. The Court therefore believes that an evidentiary hearing would be appropriate. Before the November 4, 2021 hearing, the parties should meet and confer on 2-3 possible dates and times for this evidentiary hearing (not to exceed 2 hours, and to occur before the end of 2021), and report their agreement (or lack thereof) to the Court at oral argument. Witnesses and attorneys can appear remotely on a technology platform (e.g., Zoom, Microsoft Teams, audio/video CourtCall) to be agreed upon by the parties.

III. CONCLUSION

The petitions to compel arbitration are DENIED WITHOUT PREJUDICE, pending an evidentiary hearing.

The Court will prepare the order.

***

LAW AND MOTION HEARING PROCEDURES

The Court rescinded, effective June 21, 2021, all prior general orders restricting courthouse access.  Remote appearances for complex civil matters are still permitted, but are no longer mandatory.  (See General Order Rescinding Portion of May 6, 2020 General Order Concerning Complex Civil Actions, available at

RescindingPortionof050621GeneralOrderConcerningComplexCivilActions.pdf.)  If a party gives notice that a tentative ruling will be contested, any party seeking to participate in the hearing remotely should contact CourtCall.

Public access to hearings is available on a listen-only line by calling 888-808-6929 (access code 2752612).

State and local rules prohibit recording of court proceedings without a court order.  These rules apply while in court and also while participating in a hearing remotely or listening in on a public access line.  No court order has been issued which would allow recording of any portion of this motion calendar.

The court does not provide court reporters for proceedings in the complex civil litigation departments.  Any party wishing to retain a court reporter to report a hearing may do so in compliance with this Court’s October 13, 2020 Policy Regarding Privately Retained Court Reporters.  The court reporter may participate remotely and need not be present in the courtroom.  

The court does not provide court reporters for proceedings in the complex civil litigation departments.  Any party wishing to retain a court reporter to report a hearing may do so in compliance with this Court’s October 13, 2020 Policy Regarding Privately Retained Court Reporters.  The court reporter may participate remotely and need not be present in the courtroom.  

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[1] A declaration by Google’s director of corporate development, Anil Patel—who was personally involved in forming Waymo LLC—supports these facts, and others that Plaintiff disputes on this ground. Plaintiff does not formally object to these portions of Mr. Patel’s declaration, but to the extent she contends they lack foundation or reflect legal conclusions, these arguments lack merit.

[2] While Plaintiff disputes this fact on the grounds that “documents show Google’s control over the process,” including with regard to background checks, and “Plaintiff was required to sign various agreements that were expressly for the benefit of Google,” the evidence she cites does not support these assertions, as discussed below.

[3] The Court GRANTS Google’s request for judicial notice of the fact that it and Waymo are separate companies owned by the same parent, Alphabet Inc., as reflected on Alphabet’s SEC filing. (Evid. Code, § 452, subd. (h); Apple Inc. v. Superior Court (2017) 18 Cal.App.5th 222, 242 [taking judicial notice of composition of Apple’s board of directors as reflected in SEC filings as there was “no factual dispute” on this issue].)

Plaintiff cites Reeves v. Safeway Stores, Inc. (2004) 121 Cal.App.4th 95 (Reeves) for the proposition that the Court should not consider this fact (and others) because Google addresses it “in an attributive form” (id. at p. 106) in its separate statement. But while Reeves disapproved this practice, it ultimately reached the merits in a case where this issue was much more pervasive than it is here. So too will this Court. Plaintiff does not raise any real dispute about the fact that Google and Waymo are separate companies, so the Court can take judicial notice of this fact notwithstanding any hearsay objection. And in any event, this fact is supported by admissible evidence in the form of Mr. Patel’s declaration.

[4] The FAC does not allege alter ego liability, but it does allege an agency theory and a “joint scheme.” But since Plaintiff does not defend these theories in her opposition and Google’s evidence concerning alter ego refutes these theories as well, the Court need not address them in detail.

[5] “[I]n Labor Code wage and hour violation cases, the wage order definition of the employment relationship and the Martinez test control.” (Taylor v. Financial Casualty & Surety, Inc. (2021) 67 Cal.App.5th 966, 996.) While the Court is unaware of any authority applying Martinez in the PAGA context (see Turman v. Superior Court (2017) 17 Cal.App.5th 969, 988 [remanding the issue of the standard that applies in a PAGA case to the trial court]), it sees no reason to apply a different standard here than in wage and hour cases brought directly under the Labor Code. And while the parties do not address the wage order that applies to Plaintiff’s employment, the Court assumes they are in agreement that the applicable wage order is consistent with the standard stated in Martinez.

[6] Plaintiff makes a number of other factual assertions on page 6 of her opposition and elsewhere, but cites no evidence to support these assertions. So the Court disregards them.

[7] All of the documents at issue indicate that they were last revised prior to the 2016 spin-off. (Segal Decl., Exs. 2–6, 8.)

[8] Plaintiff states that the average payment will be $8.17 but does not explain how this was calculated.

[9] The required notice would state: “The law limits how long you can be sued on a debt. Because of the age of your debt, we will not sue you for it. If you do not pay the debt, [insert name of debt collector] may [continue to] report it to the credit reporting agencies as unpaid for as long as the law permits this reporting.” (Complaint, Case No. 21CV375435, ¶ 23.)

[10] Here, Plaintiff and her creditors are located in different states, and the Agreement expressly provides that it is governed by the FAA.

[11] The Agreement contains federal and Delaware choice-of-law provisions. Federal and Delaware law are generally in accord with California law with regard to the procedure and burden governing Defendants’ petitions, and no party contends otherwise. (See Menacker v. Overture, L.L.C. (Ch. Aug. 4, 2020, No. 2019-0762-JTL) 2020 Del. Ch. LEXIS 257, at *33-34 [similar to section 2 of the FAA, 10 Del. C. § 5701 provides that an agreement to arbitrate is valid, enforceable, and irrevocable except upon a ground that exists at law or in equity for the revocation of a contract]; 10 Del. C. § 5703 [“Where there is no substantial question whether a valid agreement to arbitrate in this State was made or complied with the Court shall order the parties to proceed with arbitration. Where any such question is raised it shall be tried forthwith in said Court.”].)

There does not appear to be any dispute that Delaware contract law would apply to the interpretation of the Agreement, but there is no indication that Delaware and California law are in conflict with regard to the issues raised by Defendants’ petitions. (See Quiroz v. Cavalry SPV I, LLC (C.D. Cal. 2016) 217 F.Supp.3d 1130, 1135, fn. 6 [declining to resolve choice-of-law issue under similar circumstances].) California law governs the evidentiary issues central to the Court’s analysis below. (See Pfingsten v. Westenhaver (1952) 39 Cal.2d 12, 19 [“The law of the forum controls the rules of evidence, including the question of its sufficiency.”].)

[12] Inconsistently with the first reference to her name in the declaration, the signature line states that Ms. Nichols’s last name is “Nicols.” The Court assumes the initial reference reflects the correct spelling since it appears consistent with her signature.

[13] Section 1523 continues:

(b) Oral testimony of the content of a writing is not made inadmissible by subdivision (a) if the proponent does not have possession or control of a copy of the writing and the original is lost or has been destroyed without fraudulent intent on the part of the proponent of the evidence.

(c) Oral testimony of the content of a writing is not made inadmissible by subdivision (a) if the proponent does not have possession or control of the original or a copy of the writing and either of the following conditions is satisfied:

(1) Neither the writing nor a copy of the writing was reasonably procurable by the proponent by use of the court’s process or by other available means.

(2) The writing is not closely related to the controlling issues and it would be inexpedient to require its production.

(d) Oral testimony of the content of a writing is not made inadmissible by subdivision (a) if the writing consists of numerous accounts or other writings that cannot be examined in court without great loss of time, and the evidence sought from them is only the general result of the whole.

[14] Plaintiff’s admission that she had a consumer credit card account with Pier I Imports at some point “in the past” does not, standing alone, establish that the January 2014 Agreement applied to her account. Nor does her asserted production of documents from 2015 associated with the account.

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