Judge: Alison Mackenzie, Case: 24STCV05996, Date: 2024-08-09 Tentative Ruling

Case Number: 24STCV05996    Hearing Date: August 9, 2024    Dept: 55

NATURE OF PROCEEDINGS:  Defendant Charles R. Drew University of Medicine and Science’s Motion to Compel Arbitration to Stay Pending Litigation

The motion to compel arbitration is granted.

Plaintiff and Defendants shall arbitrate the controversies between them, including the entire Complaint. This entire case is stayed until such arbitration has been completed.

On 3/11/24, DIANE MARIE BRECKENRIDGE (“Plaintiff”) filed a Complaint against CHARLES R. DREW UNIVERSITY OF MEDICINE & SCIENCE, CHARLES R. DREW UNIVERISTY [sic] OF MEDICINE & SCIENCE FOUNDATION, STEVE MICHAEL, NICOLA MARTIN (collectively, “Defendants”), and Does 1 to 100, inclusive, based on Plaintiff’s employment with Defendants between April 2018 and June 2021.

The causes of action are: 1) Wrongful Termination in Violation of Public Policy; 2) Disability and Medical Condition Based discrimination; 3) Disability Harassment; 4) Failure to Accommodate; 5) Failure to Engage in the Interactive Process; 6) Retaliation in Violation of the Fair Employment & Housing Act; 7) Failure to Prevent, Investigate and/or Remedy Unlawful Harassment, Discrimination and Retaliation; 8) Discriminatory Termination; 9) Interfering with the Rights and Refusing an Employee’s Request for a CFRA Family Care Leave; 10) Retaliatory Termination for Requesting and Going on a Family Care Leave; 11) Common Law Retaliation; 12) Promissory Estoppel; 13) Breach of Covenant of Good Faith and Fair Dealing; 14) Promissory Estoppel; 15) Breach of Covenant of Good Faith and Fair Dealing; 16) Intentional Infliction of Emotional Distress; 17) Unfair Business Practices; and 18) Declaratory Relief.

On April 19, 2024, Defendant CHARLES R. DREW UNIVERSITY OF MEDICINE & SCIENCE (“Moving Party”) moved to compel arbitration. On April 30, 2024, Plaintiff opposed the motion. On July 17, 2024, Moving Party replied.[1]

Arbitration Agreement

Moving Party argues that Plaintiff signed an arbitration agreement (the Arbitration Agreement) that covers all of her employment related claims, and she should therefore be required to arbitrate all of her claims in this action. (Motion, 6:27-8:5.) Moving Party contends there is a strong public policy favoring arbitration under the Federal Arbitration Act (“FAA”), and notes that the FAA governs the enforcement of the Arbitration Agreement. (8:17-9:21.)

In opposition, Plaintiff contends her eleventh and seventeenth causes of action are not subject to arbitration because they seek public injunctive relief, which cannot be compelled to arbitration. (Opp., 3:1-4:4.) Plaintiff relies on the cases of Cruz v. PacifiCare Health Systems, Inc. (2003) 30 Cal.4th 303 (Cruz) and McGill v. Citibank, N.A. (2017) 2 Cal.5th 945 (McGill) to support these arguments.

In reply, Moving Party contends the Ninth Circuit held that the FAA preempts state laws shielding entire types of claims from arbitration, citing Ferguson v. Corinthian Colleges, Inc., (2013) 733 F.3d 928 and Kilgore v. KeyBank, Nat Ass’n, (2012) 673 F.3d 947. Moving Party further contends that Plaintiff’s claim for injunctive relief is not for public relief because the facts of Plaintiff’s are very specific to Plaintiff.

“[T]he FAA's procedural provisions do not apply unless the contract contains a choice-of-law clause expressly incorporating them. [T]he question is not whether the parties adopted the CAA’s procedural provisions: The state's procedural statutes apply by default because Congress intended the comparable FAA sections to apply in federal court. The question, therefore, is whether the parties expressly incorporated the FAA’s procedural provisions into their agreements.” (Victrola 89, LLC v. Jaman Properties 8 LLC (2020) 46 Cal.App.5th 337, 345 (Victrola 89), internal citations omitted and italics in original.) “[P]revious cases have held that when an arbitration agreement provides that its ‘enforcement’ shall be governed by California law, the [CAA] governs a party's motion to compel arbitration. It follows that when an agreement provides that its ‘enforcement’ shall be governed by the FAA, the FAA governs a party's motion to compel arbitration.” (Id., at p. 346.)

The Court finds that this motion to compel arbitration is governed by the FAA since the Arbitration Agreement specifically mentions that its enforcement is governed by the FAA. (Nagao-Bugarin Decl., Ex. A, ¶ 3; Victrola 89, supra, 46 Cal.App.5th at p. 345.)

A party seeking to compel arbitration meets their initial burden of establishing the existence of a valid arbitration agreement by attaching a copy to the motion or petition to compel arbitration. (Espejo v. Southern California Permanente Medical Group (2016) 246 Cal.App.4th 1047, 1060.) The Court notes that Plaintiff does not dispute the existence of the Arbitration Agreement. (Sexton v. Superior Court (1997) 58 Cal.App.4th 1403, 1410; C. Opposing the Motion—and Rebutting the Opposition, Cal. Prac. Guide Civ. Pro. Before Trial Ch. 9(I)-C, ¶ 9:105.10; see also Moulton Niguel Water Dist. v. Colombo (2003) 111 Cal.App.4th 1210, 1215 [“Contentions are waived when a party fails to support them with reasoned argument and citations to authority. [Citation.]”]) Accordingly, Moving Party has satisfied its burden on this point.

An arbitration agreement must not only exist; it must also cover the disputed claims. (Omar v. Ralphs Grocery Co. (2004) 118 Cal.App.4th 955, 961.) The Court notes that Plaintiff only contends two of her eighteen claims are not covered by the Arbitration Agreement, and therefore necessarily concedes that the other sixteen are covered by it. (See Opp., 3:2-4:4.) As for the two remaining claims, the Court disagrees with Plaintiff. Moving Party correctly notes that the FAA preempts the rule set forth in Cruz which prohibits arbitration of claims seeking public injunctive relief. (Ferguson v. Corinthian Colleges, Inc., supra,  733 F.3d at p. 934.) Since the subject arbitration is governed by the FAA, the public injunctive relief rule set forth in Cruz is preempted.

Accordingly, the Court finds all of Plaintiff’s claims are covered by the Arbitration Agreement.

Unconscionability

Moving Party contends the Arbitration Agreement is not unconscionable. More specifically, Moving Party contends there is no procedural unconscionability because Plaintiff was free to review the Arbitration Agreement at her discretion and signed a day after receiving it. (Motion, 11:1-27.) Moving Party also argues that it contains clear language apprising Plaintiff of the waiver of her right to a jury trial and an opt-out provision that Plaintiff did not use. (Id.) Moving Party also contends the Arbitration Agreement is not substantively unconscionable because it is not one-sided, but rather requires both parties to arbitrate any claims they may have against each other, and otherwise provides the requisite safeguards to ensure a fair resolution. (Id., 11:1-12:18.) Moving Party further argues the Arbitration Agreement complies with the requirements set forth in Armendariz v. Foundation Health Psychare Services, Inc. (2000) 24 Cal.4th 83, namely that it provides a neutral arbitrator, does not limit statutory remedies, provides for the full range of discovery, requires a written decision, and Plaintiff is not required to pay the costs associated with arbitration.

In opposition, Plaintiff contends the Arbitration Agreement is both procedurally and substantively unconscionable. Plaintiff contends the evidence shows there was oppression, and the arbitration clause at the end of the standardized employment contract requires the employees to sign to be considered for employment. (Opp., 4:5-57.) Plaintiff notes that she signed it before beginning work and did not have a choice because the application could not be completed without agreeing to the Arbitration Agreement. (Id.) Plaintiff argues there was procedural unconscionability because Moving Party did not provide a copy of the relevant FAA rules with the Arbitration Agreement. (Id., 5:8-6:2.) As for substantive unconscionability, Plaintiff simply contends there is significant amounts of substantive unconscionability. (Id., 5:3-8.) Plaintiff further argues the requirements the “clear and unmistakable” test for a delegation clause are not met, pointing to two different provisions of the Arbitration Agreement and contending they conflict with each other. (Id., 6:9-7:4.)

In reply, Moving Party contends the Arbitration Agreement is not a contract of adhesion since there was an opt-out provision Plaintiff never used, and adhesion alone is insufficient to support a finding of procedural unconscionability. (Reply, 3:3-11.) Moving Party then contends that the failure to provide a copy of the FAA rules with the Arbitration Agreement is only a factor in the procedural unconscionability analysis; it is not sufficient by itself to find procedural unconscionability. (Reply, 3:12-23.) Moving Party then argues that Plaintiff’s delegation clause argument fails because the two clauses Plaintiff mentions do not conflict with each other. (Reply, 3:24-4:7.)

“[P]rocedural and substantive unconscionability must both be present in order for a court to exercise its discretion to refuse to enforce a contract or clause under the doctrine of unconscionability.” (Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83, 102 (Armendariz).) The courts invoke a sliding scale which disregards the regularity of the procedural process of the contract formation, that creates the terms, in proportion to the greater harshness or unreasonableness of the substantive terms themselves, i.e., the more substantively oppressive the contract term, the less evidence of procedural unconscionability is required to conclude that the term is unenforceable, and vice versa. (Id., at p. 114.)  Plaintiff bears the burden of proving that the provision at issue is both procedurally and substantively unconscionable.

“Procedural unconscionability focuses on the elements of oppression and surprise. [Citations] ‘Oppression arises from an inequality of bargaining power which results in no real negotiation and an absence of meaningful choice … Surprise involves the extent to which the terms of the bargain are hidden in a ‘prolix printed form’ drafted by a party in a superior bargaining position.’ [Citations]” (Roman v. Superior Court (2009) 172 Cal.App.4th 1462, 1469.)

“Substantive unconscionability focuses on the actual terms of the agreement and evaluates whether they create ‘overly harsh’ or ‘‘one-sided’ results’ [Citations] that is, whether contractual provisions reallocate risks in an objectively unreasonable or unexpected manner.  [Citation] Substantive unconscionability ‘may take various forms,’ but typically is found in the employment context when the arbitration agreement is ‘one-sided’ in favor of the employer without sufficient justification, for example, when ‘the employee’s claims against the employer, but not the employer’s claims against the employee, are subject to arbitration.’ [Citations]” (Roman, supra, 172 Cal.App.4th at pp. 1469-1470.)

The Court does not find the Arbitration Agreement unconscionable. While the Arbitration Agreement appears to be a standardized contract, that by itself is insufficient to render an arbitration provision unenforceable. (See Armendariz, supra, 24 Cal.4th at p. 102; Baltazar v. Forever 21, Inc. (2016) 62 Cal.4th 1237, 1244.) To the extent Moving Party failed to provide a copy of the FAA “rules” as Plaintiff contends, that is not enough either. The failure to provide a copy of the rules of conduct is merely one factor to consider in a procedural unconscionability analysis; it does not render an agreement unconscionable per se. (See Pokorny v. Quixtar, Inc. (9th Cir. 2010) 601 F.3d 987, 997.) The Court also is not entirely clear as to what a copy of the FAA “rules” would even be, since the FAA is a federal statute, not the internal rules of an ADR service provider like JAMS or AAA. The Court further finds Plaintiff’s argument that the evidence shows there was oppression to be conclusory and unsupported by any references to the evidence. Finally, the Arbitration Agreement contained an opt-out clause that Plaintiff never used. (Nagao-Bugarin Decl., ¶ 6, Ex. A, p. 9.)

On balance, there is some evidence of procedural unconscionability, given the standardized contract and failure to provide a copy of any required arbitration rules. But, there must be both procedural and substantive unconscionability for this argument to prevail. (Baltazar v. Forever 21, Inc., supra, 62 Cal.4th at pp. 1243-1244.) Additionally, given the minimal procedural unconscionability demonstrated here, Plaintiff must show even more substantive unconscionability to prevail on this argument. (Id.)

The Court finds the Arbitration Agreement is not substantively unconscionable. Plaintiff’s argument that there was substantive unconscionability is conclusory and without any evidentiary support. (See Opp., 6:3-8.) Plaintiff also did not dispute Moving Party’s arguments that the Arbitration Agreement complies with the Armendariz requirements, such as providing a neutral arbitrator, no limitation on statutory remedies, full range of discovery, written decision, and Plaintiff not being required to pay costs associated with arbitration. (See Motion, 12:19-14:1.) The Court construes this lack of opposition as a tacit admission that Moving Party’s arguments here are meritorious. (Sexton v. Superior Court, supra, 58 Cal.App.4th at p. 1410; C. Opposing the Motion—and Rebutting the Opposition, Cal. Prac. Guide Civ. Pro. Before Trial Ch. 9(I)-C, ¶ 9:105.10; see also Moulton Niguel Water Dist. v. Colombo, supra, 111 Cal.App.4th at p. 1215 [“Contentions are waived when a party fails to support them with reasoned argument and citations to authority. [Citation.]”])

Finally, the Court finds Plaintiff’s arguments about the two purportedly conflicting clauses from the Arbitration Agreement to be unavailing. First, there is no conflict between those two clauses. One simply says the parties agree to arbitrate their disputes instead of litigating them in court, while the other says the FAA governs the substantive and procedural enforcement of the Arbitration Agreement itself. (Nagao-Bugarin Decl., Ex. A, ¶¶ 2-3.) Second, the “clear and unmistakable” test Plaintiff references is for questions of arbitrability, i.e., what issues the parties agreed to have resolved by the arbitrator, such as the enforceability of their agreement. (See B.D. v. Blizzard Entertainment, Inc. (2022) 76 Cal.App.5th 931, 957.) If there was language in the Arbitration Agreement delegating questions like the enforceability to the arbitrator, then the arbitrator would have determined whether the Arbitration Agreement was enforceable and not this Court. But, none of the parties have pointed to any such language in the Arbitration Agreement, so it is not an issue here.

Based on the foregoing, the Court rejects Plaintiff’s argument that the Arbitration Agreement is unconscionable, and grants the motion to compel arbitration.

Conclusion

The motion to compel arbitration is granted.

Plaintiff and Defendants shall arbitrate the controversies between them, including the entire Complaint. This entire case is stayed until such arbitration has been completed.