Judge: Anne Richardson, Case: 22STCV21534, Date: 2023-04-17 Tentative Ruling

Case Number: 22STCV21534    Hearing Date: April 17, 2023    Dept: 40

Superior Court of California

County of Los Angeles

Department 40

Background

Plaintiff Pamela Cook sues Defendants University of Southern California (USC), Fatima Manuao (Manuao), Lorena (Last Name Unknown; hereafter, Lorena) (collectively, Defendants), and Does 1 to 100 pursuant to a July 1, 2022 Complaint alleging claims of (1) FEHA Race/Color/National Origin/Ancestry Discrimination, (2) FEHA Disability Discrimination, (3) Failure to Accommodate or Engage in a Good Faith Interactive Process, (4) FEHA Retaliation, (5) FEHA Hostile Work Environment [Harassment], (6) FEHA Failure to Prevent Discrimination, Harassment, and Retaliation, (6) Interference/Retaliation and Violation of Paid Sick Leave, (8) Failure to Pay Wages, (9) Failure to Reimburse Employee for Necessary Expenditures, (10) Failure to Prove Correct Itemized Wage Statements, (11) Failure to Provide Final Pay and Penalty, (12) Interference with/Violations of Kin Care, (13) Interference with/Violations of Paid Sick Leave, (14) Wrongful Termination, (15) Negligent Hiring and Retention, (16) IIED, (17) Labor Code Whistleblower Retaliation, and (18) Violation of Business and Professions Code § 17200, et seq. The claims arise from allegations that in her employment with USC, among other things, Plaintiff—an African American individual suffering from high blood pressure, headaches/migraines, stress, right foot injury, and COVID-19/potential COVID-19—was subject to disparate treatment based on race—e.g., racial slurs about “you people” against her—prompting Plaintiff to file hostile work environment complaints with USC, which were not acted upon, and that Plaintiff was not accommodated as to a variety of health-related time-off requests on the grounds that her requests were wrong or unprofessional, all culminating in her constructive discharge on August 24, 2021.

On October 24, 2022, Defendants moved to compel arbitration of Plaintiff’s claims based on an arbitration agreement between the Plaintiff and USC, executed by Plaintiff on May 7, 2021 as a condition of employment.

On April 4, 2023, Plaintiff opposed the motion to compel arbitration.

On April 10, 2023, Defendants replied to Plaintiff’s April 4th opposition.

Defendants’ motion is now before the Court.

Request for Judicial Notice

The Court DECLINES Defendants’ request for judicial notice of five other actions in which the superior court has granted motions to compel arbitration and stay action in favor of USC because they are not precedential authorities and notice thereof is not necessary for the disposition of this motion. (Mot., RJN, pp. 2-3, Exs. A-E; see Evid. Code, §§ 452, subd. (d), 453.)

Motion to Compel Arbitration and Stay Proceedings

Legal Standard

The Federal Arbitration Act (“FAA”), while a federal statute, applies in California courts and requires state courts to enforce arbitration agreements as required by the federal common law developed under the FAA. (See Southland Corp. v. Keating (1984) 465 U.S. 1, 15-16; Broughton v. Cigna Healthplans (1999) 21 Cal.4th 1066, 1074-78, superseded by statute on another ground as stated in Ferguson v. Corinthian Colleges, Inc. (9th Cir. 2013) 733 F.3d 928, 937.).) The FAA preempts and invalidates state law and state judicial decisions that disfavor arbitration or require arbitration provisions to pass higher scrutiny. (Southland Corp. v. Keating, supra, at p. 12; Perry v. Thomas (1987) 482 U.S. 483, 490.) If the parties designate the FAA applies, then California arbitration law is preempted. (See, e.g., Rodriguez v. American Techs., Inc. (2006) 136 Cal.App.4th 1110, 1121-1122.) However, courts have found that where the FAA is found not to apply, the California Arbitration Act (Code Civ. Proc. § 1280 et seq.) applies. (See Valencia v. Smyth (2010) 185 Cal.App.4th 153, 178.)

 A court’s inquiry is limited to a determination of (1) whether a valid arbitration agreement exists and (2) whether the arbitration agreement covers the dispute. (9 U.S.C. § 4; Chiron Corp. v. Ortho Diagnostics Systems, Inc. (9th Cir. 2000) 207 F.3d 1126, 1130; Howsam v. Dean Witter Reynolds, Inc. (2002) 537 U.S. 79, 84; see Simula, Inc. v. Autoliv, Inc. (9th Cir. 1999) 175 F.3d 716, 720 [if the finding is affirmative on both counts the FAA requires the Court to enforce the arbitration agreement in accordance with its terms].) “An order to arbitrate the particular grievance should not be denied unless it may be said with positive assurance that the arbitration clause is not susceptible of an interpretation that covers the asserted dispute.” (United Steelworkers of America v. Warrior & Gulf Navigation Co. (1960) 363 U.S. 574, 582-583.) 

 Moreover, the general rule is that the FAA governs all agreements to arbitrate in contracts “involving interstate commerce.” (Higgins v. Superior Court (2006) 140 Cal.App.4th 1238, 1247.) The term “involving” commerce “is broad and is indeed the functional equivalent of “affecting’ commerce.” (Allied-Bruce Terminix Companies, Inc. v. Dobson (1995) 513 U.S. 265, 273-274.) The U.S. Supreme Court has held that this broad interpretation includes employment contracts. (See Circuit City Stores v. Adams (2001) 532 U.S. 105, 106.) The defendant bears the burden of proving applicability of the FAA by showing that its activities constitute interstate commerce. (Hoover v. Am. Income Life Ins. Co. (2012) 206 Cal.App.4th 1193, 1207.) Failure to demonstrate that the employment agreement affects interstate commerce renders the FAA inapplicable. (See Lane v. Francis Capital Management LLC (2014) 224 Cal.App.4th 676, 687-688; Woolls v. Superior Court (2005) 127 Cal.App.4th 197, 212.)

Even where the FAA governs the interpretation of arbitration clauses, California law governs whether an arbitration agreement has been formed in the first instance. (Baker v. Osborne Development Corp. (2008) 159 Cal.App.4th 884, 893.) 

 The party seeking arbitration has the “burden of proving the existence of a valid arbitration agreement by a preponderance of the evidence.” (Ruiz v. Moss Bros. Auto Group, Inc. (2014) 232 Cal.App.4th 836, 842.) “Once that burden is satisfied, the party opposing arbitration must prove by a preponderance of the evidence any defense to the petition.” (Lacayo v. Cataline Restaurant Group Inc. (2019) 38 Cal.App.5th 244, 257.) “The trial court sits as the trier of fact, weighing all the affidavits, declarations, and other documentary evidence, and any oral testimony the court may receive at its discretion, to reach a final determination.” (Ruiz v. Moss Bros. Auto Group, Inc., supra, at p. 842.) 

On a petition to compel arbitration, the court must grant the petition unless it finds (1) no written agreement to arbitrate exists, (2) the right to compel arbitration has been waived, (3) grounds exist for revocation of the agreement, or (4) litigation is pending that may render the arbitration unnecessary or create conflicting rulings on common issues. (Code Civ. Proc., § 1281.2; see Condee v. Longwood Management Corp. (2001) 88 Cal.App.4th 215, 218-219.)

In determining the enforceability of an arbitration agreement, the court considers “two ‘gateway issues’ of arbitrability: (1) whether there was an agreement to arbitrate between the parties, and (2) whether the agreement covered the dispute at issue.” (Omar v. Ralphs Grocery Co. (2004) 118 Cal.App.4th 955, 961.) If these issues are satisfied in favor of the movant, (3) the party opposing arbitration must prove by a preponderance of the evidence any defense to the petition. (Lacayo v. Cataline Restaurant Group Inc., supra, 38 Cal.App.5th at p. 257.)

I. Whether Arbitration Agreement Exists

“Parties are not required to arbitrate their disagreements unless they have agreed to do so. [Citation.] A contract to arbitrate will not be inferred absent a ‘clear agreement.’ [Citation.] When determining whether a valid contract to arbitrate exists, we apply ordinary state law principles that govern contract formation. [Citation] In California, a ’clear agreement’ to arbitrate may be either express or implied in fact. [Citation.]” (Davis v. Nordstrom, Inc. (9th Cir. 2014) 755 F.3d 1089, 1092-1093 [applying California law].) The court is only required to make a finding of the agreement’s existence, not an evidentiary determination of its validity. (Condee v. Longwood Management Corp., supra, 88 Cal.App.4th at p. 219.)

Defendants argue that arbitration should be ordered in this action because a valid agreement to arbitrate exists between the parties, as shown by declaration and evidence attached to the motion to compel arbitration. (Mot., pp. 6-7, 10.) Specifically, the declaration of Christine Rhan provides a copy of an arbitration agreement alleged to have been signed by Plaintiff Cook as a condition of her employment with USC. (Mot., Rhan Decl., ¶¶ 3, 4, Exs. A-B.)

In opposition, Plaintiff argues that Defendants have provided insufficient evidence for the Court to determine that the signature on the arbitration agreement allegedly signed by Plaintiff on May 7, 2021 was in fact signed by Plaintiff because a copy of the electronically signed arbitration agreement alone is insufficient to establish an agreement to arbitrate and because Plaintiff has strong evidence showing that she did not agree to arbitration. (Opp’n, pp. 3-7.)

In reply, Defendants argue that they have established Plaintiff signed the arbitration agreement based on the principles established by California law for the authentication of electronic signatures, providing the declaration of Saloni Vachhani in support. (Reply, pp. 2:1-4:3.)

The Court agrees with Defendants.

California case law has held that an electronic signature was properly authenticated when a declarant “detailed [the company’s] security precautions regarding transmission and use of an applicant’s unique username and password, as well as the steps an applicant would have to take to place his or her name on the signature line of the employment agreement …,” such that, “[b]ased on this procedure, [the declarant] concluded that the ‘name [of the employee] could have only been placed on the signature pages of the employment agreement … by someone using [the employee’s] unique user name and password,’” and that “ [g]iven this process for signing documents and protecting the privacy of the information with unique and private user names and passwords, the electronic signature was made by [the employee] on the employment agreement … at the date, time, and IP address listed on the documents.” (Espejo v. Southern California Permanente Medical Group (2016) 246 Cal.App.4th 1047, 1062.)

On the other end, California case law has held that an electronic signature was not verified when the “[declarant] only offered her unsupported assertion that [employee] was the person who electronically signed the 2011 agreement” instead of explaining how “an electronic signature in the name of ‘[the employee]’ could only have been placed on the 2011 agreement (i.e., on the employee acknowledgement form) by a person using [the employees]’s ‘unique login ID and password,’” with “the date and time printed next to the electronic signature indicat[ing] the date and time the electronic signature was made,” and where “all … employees were required to use their unique login ID and password when they logged into the HR system and signed electronic forms and agreements,” such that “the electronic signature on the … agreement was, therefore, apparently made by [the employee] on [the specified time and date].” (Ruiz v. Moss Bros. Auto Group, Inc., supra, 232 Cal.App.4th at p. 844.)

Here, the declaration of Christine Rahn attached to the motion to compel arbitration does not properly authenticate Plaintiff’s signature on the May 7, 2021 arbitration agreement because its barebones indication that Plaintiff signed the agreement is more skin to Ruiz than to Espejo. (Mot., Rahn Decl., ¶¶ 3-4.) However, the Saloni Vachhani declaration attached to the reply properly authenticates the May 7, 2021 signature as Plaintiff’s through a declaration meeting the requirements for authentication established by Ruiz and Espejo. (Reply, Vachhani Decl., ¶¶ 1-11.) It is true that courts generally need not accept arguments raised for the first time on reply without good cause explanation as to why points were not raised earlier. (Nordstrom Com. Cases (2010) 186 Cal.App.4th 576, 583.) Such a rule could undercut the Vachhani declaration. However, the Court finds that a review of the opposition by Plaintiff shows that she presented more than ample grounds to rebut the substance of the Vachhani Declaration, i.e., Plaintiff Cook’s own declaration stating that she has been clear and consistent in arguing that she did not sign an agreement to arbitrate ever, electronically or otherwise, that she was never presented with an agreement to arbitrate, that she never signed the arbitration agreement on May 7, 2021, and that to the extent the petition for arbitration is based on USC’s offer letter for employment, the offer letter is deficient as a ground to compel arbitration. (Opp’n, pp. 5-7, Cook Decl., ¶¶ 2-13.)

Under these circumstances, the Court accepts the Vacchani declaration and finds that it sufficiently authenticates the signature of Plaintiff Cook in the May 7, 2021 arbitration agreement.

The Court also concludes that a review of the agreement shows that it is limited to USC and Plaintiff Cook. (Mot., Rhan Decl., Ex. B, p. 1 [Plaintiff agreed to submit to arbitration claims against USC or its related entities and that USC agreed to submit to arbitration any claims it may have against Plaintiff].)

However, though not raised by the parties, the Court notes that Defendants Manuao and Lorena may also invoke the arbitration agreement through the doctrine of equitable estoppel. (See Mot., pp. 10-11 [arguing the arbitration agreement covers all Defendants rather than just USC].) A nonsignatory defendant may invoke an arbitration clause to compel a signatory plaintiff to arbitrate its claims when the causes of action against the nonsignatory are “intimately founded in and intertwined” with the underlying contract obligations such that, by relying on contract terms in a claim against a nonsignatory, defendant a plaintiff may be equitably estopped from repudiating the arbitration clause contained in that agreement. (JSM Tuscany, LLC v. Superior Court (2011) 193 Cal.App.4th 1222, 1237.) Again, a review of the arbitration agreement shows that Plaintiff agreed to submit to arbitration claims against USC or its related entities and that USC agreed to submit to arbitration any claims it may have against Plaintiff. (Mot., Rahn Decl., Ex. B, p. 1.) Such language does not explicitly state that USC employees may themselves invoke the arbitration agreement if sued by Plaintiff. Nevertheless, the Complaint’s claims against Defendants Manuao and Lorena are intimately intertwined with Plaintiff’s employment contract and arbitration agreement because the Complaint’s causes of action for FEHA Harassment and IIED are alleged against all Defendants in this action and the Complaint’s Failure to Pay Wages and Failure to Provide Correct Itemized Wage Statements claims are alleged against Defendants USC, Manuao, and Does 1-100 (excluding only Defendant Lorena). (Complaint, pp. 28, 38, 45, 74.) As such, Defendants Manuao and Lorena may invoke the arbitration agreement through the doctrine of equitable estoppel.

II. Scope of the Arbitration Agreement

“[T]he decision as to whether a contractual arbitration clause covers a particular dispute rests substantially on whether the clause in question is ‘broad’ or ‘narrow.’” (Bono v. David (2007) 147 Cal.App.4th 1055, 1067.) “‘A “broad” clause includes those using language such as “any claim arising from or related to this agreement”‘ [Citation] or ‘arising in connection with the [a]greement’ [Citation.]” (Rice v. Downs (2016) 248 Cal.App.4th 175, 186 [italics omitted].) “But clauses requiring arbitration of a claim, dispute, or controversy ‘arising from’ or ‘arising out of’ an agreement, i.e., excluding language such as ‘relating to this agreement’ or ‘in connection with this agreement,’ are ‘generally considered to be more limited in scope than would be, for example, a clause agreeing to arbitrate “‘any controversy … arising out of or relating to this agreement[.]’” [Citations.]” (Id. at pp. 186-187 [italics omitted].) “Several Ninth Circuit cases have held that agreements requiring arbitration of ‘any dispute,’ ‘controversy,’ or ‘claim’ ‘arising under’ or ‘arising out of’ the agreement are intended to encompass only disputes relating to the interpretation and performance of the agreement.” (Id. at p. 187.)

Though not directly addressed therein, the motion to compel arbitration by Defendants argues that “Plaintiff and [USC] ‘agree[d] to the resolution by arbitration of all claims,’ including any claim Plaintiff may have against [USC] or its ‘officers, trustees, administrators, employees or agents …,” regardless of whether the claims arise out of Plaintiff’s employment. (Mot., Rahn Decl., Ex. B, p. 1.)

In opposition, Plaintiff argues that several of her claims are beyond the scope of the arbitration agreement, including those related to Title VII and claims prohibited from arbitration under Labor Code section 229. (Opp’n, pp. 7-11.)

The Court finds that the arbitration agreement is extremely broad in scope because it widely encompasses any claims against USC and its related entities and by USC against Plaintiff, regardless of whether they arise from Plaintiff’s employment. (See Mot., Rahn Decl., Ex. B, p. 1 [USC and Plaintiff “agree to the resolution by arbitration of all claims, whether or not arising out of Employee’s University employment, remuneration or termination, that Employee may have against the University or any of its related entities, including but not limited to faculty practice plans, or its or their officers, trustees, administrators, employees or agents, in their capacity as such or otherwise; and all claims that the University may have against Employee,” including, “but are not limited to, claims for wages or other compensation due; claims for breach of any contract or covenant (express or implied); claims for personal, physical, or emotional injury, or for any tort; claims for discrimination or harassment (including, but not limited to, race, sex, religion, national origin, age, marital status, sexual orientation, gender identity or expression, military and veteran status, or medical condition or disability); claims for ‘whistleblowing’ or retaliation; and claims for violation of any federal, state or other governmental law, statute, regulation, or ordinance “].)

All eighteen causes of action arise from or are related to Plaintiff’s employment with USC as the claims allege (1)-(6) five FEHA claims related to the workplace, (7)-(13) seven claims related to Labor Code violations or related issues, (14) wrongful termination, (15)-(16) torts of Negligent Hiring and Retention and IIED based on harms suffered by Plaintiff during her employment, (17) Labor Code whistleblower retaliation related to the workplace, and (18) Violation of Business and Professions Code § 17200, et seq. based on the grounds underlying the foregoing claims. (See Complaint.) The eighteen causes of action pleaded in the Complaint are thus, at a glance, within the scope of the arbitration agreement.

However, the Court also recognizes that Plaintiff is correct in arguing that some claims, by the arbitration agreement’s very language, are outside of its scope, e.g., Title VII claims, tort claims related to sexual assault or sexual harassment, and claims that as a matter of law may not be subject to a pre-dispute agreement to arbitrate. (See Mot., Rahn Decl., Ex. B, p. 1.) The court analyzes each of these arguments below.

A. Title VII

In opposition, Plaintiff Cook argues that her 14th to 18th causes of action cannot be arbitrated because, as Title VII claims, they are specifically beyond the scope of the arbitration agreement. (Opp’n, pp. 7-10.) Plaintiff Cook argues that the 14th cause of action for Wrongful Termination arises from Title VII because Title VII is the policy that was violated when Plaintiff was wrongfully discharged from employment with USC. (Opp’n, p. 9.) Plaintiff Cook also argues that the Negligent Hiring and Retention claim and IIED claims (15th and 16th causes of action), the Whistleblower Retaliation claim (17th cause of action), and Unfair Business Practices claim (18th cause of action) must be premised in some law prohibiting such conduct, that Title VII could be that law, and that Title VII is in fact the law supporting such claims. (Opp’n, p. 10.)

In reply, Defendants argue several points. First, they argue that state law creates the claim for wrongful discharge in violation of public policy, not federal law, referring to Ninth Circuit precedent for this argument. (Reply, p. 4.) Second, Defendants argue that Title VII cannot have supported these five claims as pleaded because Plaintiff has not shown an exhaustion of administrative remedies that must precede the filing of a Title VII claim insofar as Plaintiff fails to show she made a complaint with the EEOC before filing this action. (Reply, pp. 4-5.) Third, Defendant argues that Negligent Hiring and Retention and IIED are claims created by state law. (Reply, p. 5.) Last, Defendants argue that the Whistleblower Retaliation and Unfair Business Practices claims are violations of California statutes, not claims brought under Title VII. (Reply, p. 5.)

The Court agrees with Defendants. First, there is no showing that administrative remedies were exhausted by Plaintiff. (See Complaint [no EEOC charge shown].) Second, a review of the Complaint shows Title VII is mentioned only twice but only in relation to wrongful termination and only as a possible ground for such a claim. (See FAC, ¶ 292, 303.)

Under these circumstances, the Court finds that Plaintiff’s arguments that the 14th to 18th causes of action arise from Title VII do not remove these claims from the scope of the arbitration agreement.

B. Labor Code, § 229

In opposition, Plaintiff Cook argues that her seventh to 13th causes of action cannot be arbitrated because, as Labor Code claims that must be adjudicated in state court, they are specifically beyond the scope of the arbitration agreement. (Opp’n, p. 11.) For this proposition, Plaintiff relies on the language of Labor Code section 229 and precedent in Hoover v. Am. Income Life Ins. Co., supra, 206 Cal.App.4th at p. 1207 stating that the intent of section 229 is to ensure that there is judicial forum to dispute wages, notwithstanding the strong public policy in favor of arbitration. (Opp’n, p. 11.)

In reply, Defendants argue that section 229 of the labor code is preempted by the FAA pursuant to the court of appeal’s decision in Performance Team Freight Sys., Inc. v. Aleman (2015) 241 Cal.App.4th 1233, 1240. (Reply, pp. 5-6.) Defendants also rely on non-binding district court decision generally interpreting a preemption decision by the United States Supreme Court. (Reply, p. 6.)

The Court agrees with Defendants.

“In matters in which the FAA applies, it preempts Labor Code section 229, requiring arbitration of claims that otherwise could be resolved in court.” (Performance Team Freight Sys., Inc. v. Aleman, supra, 241 Cal.App.4th at p. 1240.) Here, the arbitration agreement is governed by the FAA (see Mot., Rahn Decl., Ex. B, p. 2), thus preempting section 229 of the Labor Code as to the seventh to 13th causes of action pleaded in the Complaint.

C. Scope of the Arbitration Agreement Conclusion

The Court determines that because none of the eighteen claims alleged in the Complaint are shown by Plaintiff to either lie outside of the scope of the arbitration agreement or within the exceptions listed in the arbitration agreement, the arbitration agreement encompasses all eighteen claims advanced by Plaintiff Cook.

III. Interstate Commerce

In their motion, Defendants argue that the FAA indisputably applies to this action because “[USC] and Keck engage in interstate commerce as a world-renowned private research university that serves a student body of more than 48,000 undergraduate and graduate students from all over the United States and the world,” “[USC] maintains an educational program in Washington, D.C. and fellowship opportunities throughout the United States,” “[USC] offers a wide variety of online courses for students throughout the United States,” and “[o]ver 7,000 graduate students take at least some portion of their courses online, with most of those students pursuing degrees exclusively through distance education.” (Mot., p. 9; see Mot., RJN, Ex. E, ¶¶ 2-4.)

Plaintiff’s opposition fails to address the interstate commerce issue. (See Opp’n.)

Defendants’ reply limits its focus to arguing the scope of arbitration and defenses to arbitration raised by Plaintiff Cook. (See Reply.)

The Court finds that Defendants are engaged in interstate commerce and that Plaintiff’s employment related thereto, particularly where Plaintiff’s opposition failed to argue otherwise.

IV. Defenses to the Arbitration Agreement

A “party opposing arbitration must prove by a preponderance of the evidence any defense to the petition” to compel arbitration in the matter. (Lacayo v. Cataline Restaurant Group Inc., supra, 38 Cal.App.5th at p. 257.)

Plaintiff makes a variety of arguments to argue that the arbitration agreement is not enforceable, which are analyzed below. (Opp’n, pp. 7-15.)

A. Title VII

The Court adopts its reasoning above to find that Plaintiff’s Title VII opposition arguments are not a defense to arbitration of the 14th to 18th causes of action. (See § II.A., Scope of the Arbitration Agreement discussion supra.)

B. Labor Code, § 229

The Court adopts its reasoning above to find that Plaintiff’s Labor Code section 229 opposition argument is not a defense to arbitration of the seventh to 13th causes of action. (See § II.A., Scope of the Arbitration Agreement discussion supra.)

C. Unconscionability

Last, Plaintiff Cook argues that the arbitration agreement is procedurally and substantively unconscionable and therefore cannot be enforced. (Opp’n, pp. 11-15.) The court analyzes each type of unconscionabilityw separately.

1. Unconscionability Generally

“Both procedural unconscionability and substantive unconscionability must be shown [for a finding of unconscionability to exist], but ‘they need not be present in the same degree’ and are evaluated on a ‘sliding scale.’ [Citation.] ‘[T]he more substantively oppressive the contract term, the less evidence of procedural unconscionability is required to come to the conclusion that the term is unenforceable, and vice versa.” (Pinnacle Museum Tower Assn. v. Pinnacle Market Dev. (US), LLC (2017) 55 Cal.4th 223, 247.)

Whether an arbitration provision is unconscionable is a question of law. (Suh v. Superior Court (2010) 181 Cal.App.4th 1504, 1511-1512.)

2. Procedural Unconscionability

Procedural unconscionability “addresses the circumstances of contract negotiation and formation, focusing on oppression or surprise due to unequal bargaining power.” (Pinnacle Museum Tower Assn., supra, 55 Cal.4th at p. 246.) Established case law explains that “‘[o]ppression’ arises from an inequality of bargaining power which results in no real negotiation and ‘an absence of meaningful choice’ [and] ‘[s]urprise’ involves the extent to which the supposedly agreed-upon terms of the bargain are hidden [in the agreement] by the party seeking to enforce the disputed terms.” (Zullo v. Superior Court (2011) 197 Cal.App.4th 477, 484.)

In opposition, Plaintiff argues that the arbitration agreement is procedurally unconscionable because it is a contract of adhesion executed as a condition of employment, because the agreement was non-negotiable, and because the agreement was solely drafted by USC. (Opp’n, pp. 13-14.)

In reply, Defendants argue that mere adhesion does not equal procedural unconscionability, for which reason she cannot prove procedural unconscionability. (Reply, p. 7.)

The Court finds that the arbitration agreement exhibits some procedural unconscionability.

The adhesive and non-negotiable nature of the arbitration agreement as a condition of employment with USC connotes some procedural unconscionability. (See Subcontracting Concepts (CT), LLC v. De Melo (2019) 34 Cal.App.5th 201, 211 [“[A]rbitration clause was procedurally unconscionable” where “the [a]greement containing that clause was adhesive in that it was imposed on respondent ‘as a condition of employment’ and with ‘no opportunity to negotiate’” (citation omitted)]; see Armendariz v. Foundation Health Psycare Servs., Inc. (2000) 24 Cal.4th 83, 115 [“[I]n the case of preemployment arbitration contracts, the economic pressure exerted by employers on all but the most sought-after employees may be particularly acute, for the arbitration agreement stands between the employee and necessary employment, and few employees are in a position to refuse a job because of an arbitration requirement”].)

Further, the fact that USC alone drafted the arbitration agreement connotes some procedural unconscionability. (Fisher v. MoneyGram Intern., Inc. (2021) 66 Cal.App.5th 1084, 1097 [“[E]vidence that one party has overwhelming bargaining power, drafts the contract, and presents it on a take-it-or-leave-it basis is sufficient to demonstrate procedural unconscionability and require the court to reach the question of substantive unconscionability, even if the other party has market alternatives” (citations omitted)]; see Mot., Rahn Decl., ¶¶ 3-4 [arbitration agreement sent by USC to Plaintiff as condition of employment].)

3. Substantive Unconscionability

Substantive unconscionability focuses on the terms of the agreement and whether those terms are so one-sided as to shock the conscience.” (Kinney v. United HealthCare Servs., Inc. (1999) 70 Cal.App.4th 1322, 1330.)

In opposition, Plaintiff argues that the scope of the arbitration agreement is infinite in scope and duration and is therefore unenforceable. (Opp’n, pp. 11-13, 14-15.) More specifically, Plaintiff argues that because the arbitration agreement involves “all claims, whether or not arising out of [Plaintiff’s] employment, renumeration or termination,” and because the agreement “shall survive the termination of [Plaintiff’s] employment and may only be revoked in a written document … expressly refer[ing] to [the agreement] and … signed by the [Plaintiff] and the President of [USC],” it is infinite in scope and duration. (Opp’n, p. 11.) Plaintiff provides a hypothetical that if she is struck by a USC vehicle in ten years, given false football tickets by USC in five years, or is the victim of a botched surgery in a USC hospital in 15 years, her claims could be subject to the arbitration agreement. (Opp’n, pp. 11-12.)

In reply, Defendants argue that no substantive unconscionability arises from the scope of the arbitration agreement because Plaintiff’s claims are only employment related, because the cases cited by Plaintiff are not binding on this Court or are distinguishable, because “multiple courts” have found that similar arbitration clauses are enforceable but only citing to one United States Supreme Court case and an unpublished District Court case for this proposition, and because the arbitration agreement is bidirectionally mutual, i.e., it is equally enforceable as to all claims made by Defendants, as well as Plaintiff. (Reply, pp. 6-7.)

The Court finds that the arbitration agreement exhibits substantive unconscionability based on its one sidedness.

The Court adopts Plaintiff’s hypotheticals in concluding the arbitration agreements overbreadth is inherently unfair as to scope and duration. Indeed, for the rest of her life, if Plaintiff were to suffer an injury related to USC or its related entities, Plaintiff could be ordered to arbitrate such claims if USC requests that a California court order arbitration as to those claims. While the Court recognizes that the sole case cited by Defendants to support infinite scope in arbitration agreements resulted in the upholding of the arbitration agreement, the Court distinguishes that case because there, the United States Supreme Court was addressing the question whether the Federal Arbitration Act preempted California’s judicial rule regarding the unconscionability of class arbitration waivers in consumer contracts. (AT&T Mobility LLC v. Concepcion (2011) 563 U.S. 333, 336 [description of arbitration agreement encompassing “all disputes between the parties”], 347-352 [class arbitration waivers analysis]; Reply, p. 7 [cite to AT&T Mobility LLC v. Concepcion].)

Moreover, the arbitration agreement is unfair because it lacks mutuality as to claims the parties can move to arbitrate. An arbitration clause in an employment agreement satisfies the requirement of mutuality, where it applies to any dispute involving the performance, interpretation or breach of agreement or the relationship created, including without limitation, disputes involving laws against discrimination and other rights and protections afforded by law, the provision binds both parties, and nothing in it gives one party greater rights or protections than those provided to the other. (Jones v. Humanscale Corp. (2005) 130 Cal.App.4th 401, 415-416.) Here, the arbitration agreement encompasses in arbitration “all claims, whether or not arising out of [Plaintiff Cook’s] employment, remuneration or termination, that Employee may have against the University or any of its related entities, including but not limited to faculty practice plans, or its or their officers, trustees, administrators, employees or agents, in their capacity as such or otherwise” but only “all claims that the University [USC] may have against [Plaintiff Cook].” (Mot., Rahn Decl., Ex. B, p. 1.) Such a restriction belies Defendants’ argument that the arbitration agreement is bidirectional in scope because the quoted language could result in Plaintiff Cook being ordered by a court to arbitrate her claims against USC and its related entities as defined in the arbitration agreement, but only requires that USC arbitrate its own claims—not its related entities’ claims—against Plaintiff Cook. (Mot., Rahn Decl., Ex. B, p. 1.) This lack of mutuality renders the arbitration agreement substantively unconscionable because it provides the employer more rights and greater remedies than would otherwise be available and concomitantly deprives Plaintiff of significant rights and remedies that she would normally enjoy, for example, in a judicial forum. (See Stirlen v. Supercuts, Inc. (1997) 51 Cal.App.4th 1519, 1537-1539, 1542.)

Overall, the Court thus finds that the wide scope of the arbitration agreement (all claims between the parties), its duration (surviving termination of employment and applicable unless rescinded by both parties), and its lack of mutuality (claims that can be petitioned for arbitration) support a finding that substantial substantive unconscionability exists in the terms of the arbitration agreement.

4. Unconscionability Conclusion

The Court finds that given the substantial amount of substantive unconscionability in the arbitration agreement’s terms related to scope, duration, and mutuality (see §§ 4.C.II. discussion supra), and given the additional procedural unconscionability connoted by circumstances surrounding the execution of the arbitration agreement (see §§ 4.C.I. discussion supra), the arbitration agreement is prima facie unenforceable based on the ground of unconscionability.

The Court next discusses whether severance of the substantively unconscionable terms in the arbitration agreement save it by limiting unconscionability to procedural unconscionability.

5. Severance

As a matter of substantive federal law, an arbitration provision is severable from the remainder of the contract. (Mendoza v. Trans Valley Transport (2022) 75 Cal.App.5th 748, 767.) California law also provides that where the court as a matter of law finds the contract or any clause of the contract to have been unconscionable at the time it was made, the court may refuse to enforce the contract, or it may enforce the remainder of the contract without the unconscionable clause, or it may so limit the application of any unconscionable clause as to avoid any unconscionable result. (Code Civ. Proc., § 1670.5, subd. (a), limited on preemption grounds in AT&T Mobility LLC v. Concepcion, supra, 563 U.S. at pp. 340-352 [limitation as to class-action waivers in arbitration agreements].) When it is claimed or appears to the court that the contract or any clause thereof may be unconscionable, the parties shall be afforded a reasonable opportunity to present evidence as to its commercial setting, purpose, and effect to aid the court in making the determination. (Code Civ. Proc., § 1670.5, subd. (b).)

In opposition, Plaintiff argues that severance is not appropriate because it would allow Defendants to benefit from the unconscionable agreement they imposed and because severance is disfavored when severance cannot be effected without rewriting the agreement. (Opp’n, p. 15.)

In reply, Defendants fail to address severance of the arbitration agreement. (See Reply.)

A review of the arbitration agreement shows that it contains a severability clause, stating: “If any provision of this Agreement is determined to be void or otherwise unenforceable, this determination shall not affect the validity of the remainder of the Agreement.” (Mot., Rahn Decl., Ex. B, p. 2.)

“A trial court has the discretion to refuse to enforce an agreement as a whole if it is permeated by … unconscionability.” (Carmona v. Lincoln Millennium Car Wash, Inc. (2014) 226 Cal.App.4th 74, 90, citing Armendariz v. Foundation Health Psycare Servs., Inc., supra, 24 Cal.4th at p. 122.) “‘The overarching inquiry is whether “‘the interests of justice … would be furthered’” by severance.’” (Carmona v. Lincoln Millennium Car Wash, Inc., supra, at p. 90.) If the central purpose of a contractual provision, such as an arbitration agreement, is tainted with illegality, then the provision as a whole cannot be enforced. (Ibid.) If the illegality is collateral to the main purpose of the contractual provision, and can be severed or restricted from the rest, then severance is appropriate. (Ibid.)

An agreement to arbitrate is considered “permeated” by unconscionability where, for example, it contains more than one unconscionable provision. (Magno v. The College Network, Inc. (2016) 1 Cal.App.5th 277, 292.) This is because such multiple defects indicate a systematic effort to impose arbitration on an employee not simply as an alternative to litigation but as an inferior forum that works to the employer’s advantage. (Carbajal v. CWPSC, Inc. (2016) 245 Cal. App. 4th 227, 254.)

Here, the Court finds that the arbitration agreement between the parties is permeated by unconscionability and cannot, in the interests of justice, be severed.

To accomplish proper severance in the arbitration agreement, the Court would need to do several things. First, the Court would need to rein in the infinite scope of the arbitration agreement from all disputes between the parties to a reasonable scope, such as claims arising from or related to Plaintiff’s employment, discipline, and termination from employment with USC. The Court cannot simply sever this portion of the agreement because it would remove a crucial portion of its text: the scope of arbitration claims at issues in the contract. Next, the Court would need to rein in the infinite duration of the arbitration agreement to a shorter period of time, like the expiration of claims under their relevant statute of limitations or perhaps the end of the employment relationship between the parties. The Court also cannot simply sever this provision because the arbitration agreement requires a temporal period, where silence as to such a period can be interpreted to countenance the filing of claims between the parties up through the expiration of the statute of limitations on Plaintiff’s claims. Last, the Court would need to enlarge the scope of claims that Plaintiff can move to arbitrate to include not just claims against USC but also claims against its related entities or diminish USC’s entitlement to move for arbitration of claims brought by Plaintiff to itself alone and not its related entities, i.e., balance mutuality. This portion of the arbitration agreement might be severable, but such severance would remove or add the related entities from its text, substantially changing the agreement.

Overall, such actions would substantially alter the nature and character of the agreement entered by the parties. Further, as it stands, the arbitration agreement is tainted with unconscionability because its central purpose appears to be the ability for the parties to arbitrate all possible disputes between each other, for an indefinite period of time, with USC able to move for arbitration of claims against it and its related entities, but Plaintiff only able to move for arbitration of claims by USC against her. (See Carmona v. Lincoln Millennium Car Wash, Inc., supra, 226 Cal.App.4th at p. 90.) Further, such lack of mutuality in terms, along with the infinite scope of claims and infinite scope in time contemplated by the arbitration agreement serves to impose on Plaintiff Cook an inferior forum that works to Defendants’ advantage. (Carbajal v. CWPSC, Inc., supra, 245 Cal. App. 4th at p. 254.) Finally, such severance would undoubtedly favor Defendants rather than serve the interests of justice because the multiple unconscionable provisions in the arbitration agreement favor a finding that the entire agreement is permeated with unconscionability, giving USC and Defendants generally the possible windfall of drafting an unconscionable contract but nevertheless still receiving the benefit of arbitration through severance. (Magno v. The College Network, Inc., supra, 1 Cal.App.5th at p. 292.)

Together, these three issues—scope of arbitrable claims generally, scope of duration of agreement, and lack of mutuality—lead the Court to find that the arbitration agreement is so permeated with unconscionability as to render it unenforceable. (See Carmona v. Lincoln Millennium Car Wash, Inc., supra, 226 Cal.App.4th at p. 90 [“The arbitration agreement here suffered from multiple defects demonstrating a systemic lack of mutuality that favored the car wash companies, including the exemption from arbitration of the car wash companies’ confidentiality claims, the attorney fees provision, the ‘free peek’ provision, and the presumption of harm in favor of the car wash companies,” leading to a conclusion that the trial “court did not err in finding the agreement permeated by unconscionability and refusing severance”].)

D. Defenses Conclusion

Plaintiff has successfully raised the defense of unconscionability against enforcement of the arbitration agreement.

Accordingly, Defendants’ motion to compel arbitration is DENIED.

E. Stay of Action Pending Arbitration or Stay of Arbitration Pending Jury Trial

The Court need not reach the question of whether this action should be stayed pending the outcome of arbitration of all the claims raised in the Complaint (Mot., pp. 15-16) or whether arbitration of any of Plaintiff’s claims should be stayed pending a jury trial on the seventh through 18th causes of action pleaded in the Complaint (Opp’n, p. 11) because the Court’s denial of the motion to compel arbitration moots these questions.

Conclusion

Defendants University of Southern California, Fatima Manuao, and Lorena (Last Name Unknown)’s Motion to Compel Arbitration is DENIED because although Defendants show that an arbitration agreement exists between the parties encompassing the claims alleged against them in the Complaint, Plaintiff Cook has shown that the circumstances surrounding the execution of the arbitration agreement and its lopsided terms favor a finding of unconscionability, rending the arbitration agreement unenforceable.