Judge Alison Mackenzie, Case Number: 23STCV27711, Date: 2024-06-18 Tentative Ruling

A party seeking arbitration has the burden of proving by a preponderance of evidence that a valid arbitration agreement exists. Ruiz v. Moss Bros. Auto Group, Inc. (2014) 232 Cal.App.4th 836, 842; see also § CCP 1281.2. A party meets its initial burden by reciting the terms of the governing provision, or by attaching a copy of the provisions. Sprunk v. Prisma LLC (2017) 14 Cal.App.5th 785, 793. Once the petitioner meets its burden, “the burden shifts to the party opposing the motion to compel, who may present any challenges to the enforcement of the agreement and evidence in support of those challenges.” Baker v. Italian Maple Holdings, LLC (2017) 13 Cal.App.5th 1152, 1160.

Defendant argues that the Federal Arbitration Act (“FAA”) governs the arbitration agreement. California courts must apply procedural provisions of the FAA when the parties expressly agree that the FAA will apply. Rodriguez v. American Technologies, Inc. (2006) 136 Cal.App.4th 1110, 1122. Here, Section 1 of the arbitration agreement expressly provides that the FAA shall apply. Rodriguez Decl., Ex. A, ¶ 1.

Plaintiff contends that he is exempt from the FAA. The FAA exemption “is applicable to ‘transportation workers,’ defined as workers actually engaged in the movement of goods in interstate commerce.” E.g., Nieto v. Fresno Beverage Co. (2019) 33 Cal.App.5th 274, 281 (internal quotations omitted). Plaintiff’s declaration does not state that he was involved in the movement of goods and so no exemption applies.

Nevertheless, “even when the Federal Arbitration Act applies, state law governs such matters as who is bound by and who may enforce an arbitration agreement.” Thomas v. Westlake (2012) 204 Cal.App.4th 605, 614 n. 7. Under both state law and the FAA, “[w]hen a party to an arbitration agreement challenges the agreement as unenforceable, we decide the issue based on the same state law standards that apply to contracts generally.” Boghos v. Certain Underwriters at Lloyd's of London (2005) 36 Cal.4th 495, 501. Thus, the Court will apply California law as it relates to the FAA.

In support of its argument that the parties have a valid agreement to arbitrate, Defendant attaches an arbitration agreement that it purportedly provided to Plaintiff through Defendant’s Workday HR management system on 11/15/2022 . Rodriguez Decl., Ex. A. Defendant admits that Plaintiff never signed the agreement and never acknowledged the agreement through the Workday program. Id., ¶¶ 4, 7. Rather, Defendant contends that Plaintiff assented to the arbitration agreement because it sent him an email on 11/22/2022 telling him that if he continued to work for Defendant after 11/21/2022, Defendant was “relying on your conduct and agreement to be bound by the terms of this Agreement.” Id., ¶ 8, Ex. E.

Arbitration is a matter of contract, and a party cannot be required to arbitrate a dispute unless agreed. Ajida Technologies, Inc. v. Roos Instruments, Inc. (2001) 87 Cal.App.4th 534, 541. Arbitration agreements are not formed where the writing does not look like a contract, and its inconspicuous terms were not called to the recipient’s attention. Metters v. Ralphs Grocery Co. (2008) 161 Cal.App.4th 696, 702-704 (substantial evidence showed that an agreement to arbitrate was on a form provided to employee for submitting a grievance, under circumstances that did not alert the employee that he would agree to arbitrate).

“‘[W]hen an employee continues his or her employment after notification that an agreement to arbitration is a condition of continued employment, that employee has impliedly consented to the arbitration agreement.’” Mar v. Perkins (2024) _Cal.App.5th _, _ [2024 WL 2313700, at *7].) (Underscoring added.) In one case, there was no implied-in-fact agreement to arbitrate, based upon an employee’s continued employment, after notice of an arbitration policy, under the particular circumstances. See, e.g., Gorlach v. Sports Club Co. (2012) 209 Cal.App.4th 1497, 1510.

Here, there is insufficient evidence that Plaintiff viewed and knew about the email telling him that his continued employment would constitute consent to the arbitration agreement. The evidence is incompetent for multiple reasons. For instance, Ms. Rodriguez’s declaration states she started working for Defendant on 1/1/2023 and does not show any personal knowledge of personnel handling the events occurring on 11/15/22 and after. Rodriguez Decl., ¶¶ 1, 4. Although her supplemental declaration states she worked previously as HR Leader, there is inadequate evidentiary foundation to show how she has personal knowledge. Courts have broad discretion in determining whether witnesses are qualified to testify concerning “‘the identity and mode of preparation’” of business records, to permit a determination that ‘[t]he sources of information and method and time of preparation were such as to indicate its trustworthiness.’” Sierra Managed Asset Plan, LLC v. Hale (2015) 240 Cal.App.4th Supp. 1, 9 (declaration that successor received business records falls short of necessary foundation).

Additionally, Ms. Rodriguez’s declarations do not lay the foundation to show the declarant’s technical knowledge to establish what Plaintiff actually viewed and the authentication and security processes utilized. Cf. Ruiz v. Moss Bros. Auto Group, Inc. (2014) 232 Cal.App.4th 836, 843 (Ruiz) ("she did not explain how she arrived at that conclusion or inferred ... the person who electronically signed the 2011 agreement."); Fabian v. Renovate Am., Inc. (2019) 42 Cal.App.5th 1062, 1069 (“did not provide any evidence from or about DocuSign in its petition,…”); Espejo v. S. California Permanente Med. Grp. (2016) 246 Cal. App. 4th 1047, 1062 (factual details properly authenticated electronic signature, such as using security, passwords, time and IP address); J.B.B. Investment Partners, Ltd. v. Fair (2014) 232 Cal.App.4th 974, 989 (insufficient proof to show party printed name at the end of e-mail with any intent to formalize electronic transaction); and Perez v. Kaiser Found. Health Plan, Inc. (2023) 91 Cal.App.5th 645, 652 (electronic arbitration agreement may be shown in any manner including computer security).

Also, the Workday computer printout listing documents purportedly in Plaintiff’s Workday account has no date of acknowledging the arbitration agreement, whereas other documents have dated acknowledgments. Rodriguez Decl, Ex. D, p. 14. Thus, the computer data further indicates that Plaintiff did not acknowledge the arbitration agreement. “[C]omputer systems that automatically record data in real time … are presumed to be accurate.” People v. Dawkins (2014) 230 Cal.App.4th 991, 1003.

The Court further finds that Plaintiff did not assent to the arbitration agreement by continuing to work, because he never viewed any communication sufficiently placed or worded to call his attention to binding arbitration. Plaintiff’s declaration states that he does not recall receiving emails about arbitration, and the ones that Defendant placed in evidence were not worded so as to alert him to an agreement to arbitration. As to electronic assent, plaintiffs’ failures to recall are indeed relevant proof. E.g., Ruiz, supra, 232 Cal.App.4th at p. 846 (“In the face of … failure to recall signing … had the burden of proving by a preponderance of the evidence that the electronic signature was authentic….”).

“Under the Federal Arbitration Act…, the enforceability of an arbitration agreement is ordinarily to be determined by the court…. The parties may agree in the arbitration provision, however, that the enforceability issue will be delegated to the arbitrator…. To establish this exception, it must be shown by ‘clear and unmistakable’ evidence that the parties intended to delegate the issue to the arbitrator.” Ajamian v. CantorCO2e, L.P. (2012) 203 Cal.App.4th 771, 781.

Even if the agreement states that an arbitrator decides enforceability, such a term is of no consequence here because the Court has concluded that Plaintiff never assented to the agreement. Hence, this Court will decide the issue of arbitration enforceability.

Claims brought under the Fair Employment and Housing Act (FEHA) are subject to arbitration, if there are provisions for arbitrator neutrality, discovery, written decisions, and expense limits. O'Hare v. Municipal Resource Consultants (2003) 107 Cal.App.4th 267, 273. An arbitration agreement that is a required condition of employment, with some one-sided provisions, can be unenforceable as unconscionable. Martinez v. Master Protection Corp. (2004) 118 Cal.App.4th 107, 113-114.

Evidence that a moving party never communicated that an arbitration agreement was nonnegotiable, in response to opposing proof to the contrary, failed to “create a meaningful conflict in the evidence,” because the moving party did not affirmatively establish that it had made opposing party aware of an ability to negotiate. Htay Htay Chin v. Advanced Fresh Concepts Franchise Corp. (2011) 194 Cal.App.4th 704, 710.

In this case, Defendant did not provide any evidence that Defendant explained to Plaintiff that he could negotiate the arbitration agreement. To the contrary, the electronic documentation awkwardly communicates that the agreement will be binding on a date certain, based just on Plaintiff’s continuing to work. Rodriguez Decl. ¶¶ 4-9.

Here, the Court is given no contract statement or other proof to show that the AAA rules were readily available to Plaintiff. Further, because Plaintiff never accessed the whole agreement, or discussed it, per his declaration, it follows that he did not have any information for ready access to the rules.

Nevertheless, Plaintiff has not argued that the AAA rules contain anything unconscionable. Cases that have held that the failure to provide a copy of the arbitration rules support finding procedural unconscionability, have involved an unconscionability claim that depended upon the incorporated arbitration rules. Baltazar v. Forever 21, Inc. (2016) 62 Cal.4th 1237, 1246.

FEHA Forum Selection: Plaintiff points out that the arbitration agreement prejudicially requires litigation to be in Texas under Texas law, and thus changes venue from that specified in the FEHA statute. Opposition, 13:13-14:17.

An arbitration clause is substantively unconscionable if it requires employees to relinquish their “administrative and judicial rights under federal and state statutes.” Sparks v. Vista Del Mar Child and Family Services (2012) 207 Cal.App.4th 1511, 1523.

Perhaps analogously, there is a split of authority whether an unenforceable arbitration provision can be saved by impliedly incorporating the FEHA attorney fee standard. See Ramirez v. Charter Communications, Inc. (2022) 75 Cal.App.5th 365, 382, citable pending review per Ramirez v. Charter Communications, Inc. (2022) 293 Cal.Rptr.3d 813.

Here, Plaintiff did not cite any governing case holding that the FEHA venue statute can be the basis of finding substantive unconscionability supporting denial arbitration, and the Court’s independent research revealed no such governing case. Generally, an arbitration provision specifying a forum is a reasonable restriction, and conscionable. Coon v. Nicola (1993) 17 Cal.App.4th 1225, 1237.

Additionally, the agreement provides for an arbitration forum that would be fewer than 45 miles from Plaintiff’s work, which distance is not too oppressive. Rodriguez Decl., Ex. A, p. 2, ¶ 2. .The agreement changes the venue as to court cases, and not, prejudicially, as to arbitration. See Rodriguez Decl., Ex. A, p. 4, ¶ 1 (“subject to the parties’ agreement to arbitrate any and all disputes as previously set forth, Employee expressly consents to the personal jurisdiction and mandatory venue of the Texas state and federal courts for any lawsuit relating to this Agreement.”).

In sum, it is somewhat debatable as to whether the FEHA venue must apply to avoid substantive unconscionability, but the issue is unripe absent Plaintiff’s assent. Otherwise, the Court would find that the venue provision is not a basis of substantive unconscionability.

The Court of Appeal concluded that arbitration confidentiality terms (“‘[e]xcept as may be required by law, no party or arbitrator(s) may disclose the existence, content or results of any arbitration hereunder without the prior written consent of both parties’”) did not raise colorable claims of unconscionability, because of two limitations placed on the breadth of the provision in this case— i.e., not applicable where disclosure is required by law, or the parties’ consent. Htay, supra, 194 Cal.App.4th at p. 714.

The instant agreement allows for disclosure of arbitration information with the parties’ written consent. Rodriguez Decl., Ex. A, p. 2, ¶ 6 (“neither a party nor an Arbitrator may disclose the existence, content, or results of any arbitration hereunder without the prior written consent of all parties.”)

That a party seeking to compel contractual arbitration is a repeat player before arbitrators does not, taken alone, constitute a cognizable ground to deny a request to compel arbitration, but instead is part of the analysis of factors of unconscionability. Imagistics Internat., Inc. v. Dep't of Gen. Services (2007) 150 Cal.App.4th 581, 592 (“being a repeat player would not of itself be sufficient to render an arbitration agreement unconscionable.”).

A provision for appealing an arbitration ruling is not required. For example, in deciding issues regarding confirmation of an award, an appellate court opined that a provision for a second arbitration of review was not unconscionable where no restriction on review existed. Cummings v. Future Nissan (2005) 128 Cal.App.4th 321, 330, fn.9.

Here, the agreement provides for undefined reviews of arbitration rulings, which could even include appeals. Rodriguez Decl., Ex. A, p. 2, ¶ 6 (“A court of competent jurisdiction shall have the authority to affirm or vacate the award made pursuant to the arbitration to the extent allowed under the Federal Arbitration Act.”).

Arguably, by the broad descriptions, the agreement is clear enough that even past events would be subject to arbitration, although the agreement does not specify retroactive application. Rodriguez Decl., Ex. A, p. 1, ¶ 1 (“applies to any dispute between Employee and Clear Channel Outdoor Holdings, Inc. or any past, present, and future parents, divisions, operating companies, subsidiaries, and affiliates … arising out of or related to Employee’s employment with Company, application for employment, or termination of employment.”).