Judge: Anne Richardson, Case: 22STCV23617, Date: 2023-03-01 Tentative Ruling
Case Number: 22STCV23617 Hearing Date: March 1, 2023 Dept: 40
Case
No.: 22STCV23617
[TENTATIVE] RULING RE:
MOTION TO COMPEL ARBITRATION AND
STAY PROCEEDINGS
Plaintiff Juliana
Mejia alleges that during her employment with Contract Services Group, Inc.,
her direct supervisor Rudy Gonzalez sexually harassed her and retaliated
against her when she refused his advances.
Plaintiff claims he denied sick leave benefits and changed her work
schedule punitively. Plaintiff claims
she reported the harassment to CSGI’s Vice President of Operations Jorge
Caprio, but he failed to take any action concerning the sexual harassment and
placed her again under the direct supervision of Mr. Gonzalez.
Based on
these facts, Plaintiff brought this action, alleging claims of (1) sex
discrimination; (2) failure to take steps to prevent sex discrimination; (3)
sexual harassment; (4) failure to take steps to prevent sexual harassment; (5)
national origin and race harassment; (6) failure to take steps to prevent
national origin and race harassment; (7) retaliation for opposing unlawful
harassment and discrimination; (8) failure to take steps to prevent unlawful
harassment and discrimination; (9) wrongful constructive discharge in violation
of public policy; and (10) negligent hiring and retention.
The
instant Motion to Compel Arbitration was brought by Defendant.
In deciding a motion to compel arbitration, trial courts
must first decide whether an enforceable arbitration agreement exists between
the parties, and then determine the second gateway issue of whether the claims
are covered within the scope of the agreement.
(See Omar v. Ralphs Grocery Co. (2004) 118 Cal.App.4th 955, 961.) “The petitioner bears the burden of proving
the existence of a valid arbitration agreement by the preponderance of the
evidence, and a party opposing the petition bears the burden of proving by a
preponderance of the evidence any fact necessary to its defense. [Citation] In these summary proceedings, the
trial court sits as a trier of fact, weighing all the affidavits, declarations,
and other documentary evidence, as well as oral testimony received at the
court’s discretion, to reach a final determination. [Citation] No jury trial is available for a
petition to compel arbitration. [Citation]”
(Engalla v. Permanente Medical
Group, Inc. (1997) 15 Cal.4th 951, 972; see
also Chiron Corp. v. Ortho Diagnostic
Systems, Inc. (9th Cir. 2000) 207 F. 3d 1126, 1130 (“The court’s role under
the [FAA] is therefore limited to determining (1) whether a valid agreement to
arbitrate exists and, if it does, (2) whether the agreement encompasses the
dispute at issue. [Citations]”). The
party opposing the petition to compel arbitration bears the burden of proving
by a preponderance of the evidence any fact necessary to its defense. (Giuliano
v. Inland Empire Personnel, Inc.
(2007) 149 Cal.App.4th 1276, 1284.)
Defendant
attaches a copy of the Spanish language At-Will Employment and Arbitration
Agreement as well as the English-version to prove the existence of an
arbitration agreement with Plaintiff. (Pearce
Decl. ¶¶ 2-4, Exhibs. A, B.) Defendant
claims that Plaintiff executed these agreements on August 25, 2021 upon hire
that contained a valid and enforceable arbitration clause. The Arbitration Agreement provides:
I further agree and acknowledge and the Company and I will utilize
binding individual arbitration as the sole and exclusive means to resolve all
disputes that may arise out of or be related in any way to my employment. Except as it otherwise provides, this
agreement requires arbitration of all claims or disputes between or among myself
and the Company, and also requires arbitration of all claims or disputes between
or among my and the Company’s clients or customers for whose benefit I perform services.
It is understood and agreed by the
Company and I that clients and customers of the Company, including without
limitation their officers, agents, employees, successors, assigns and
affiliates. are intended to be third party beneficiaries to this Arbitration Agreement
and are entitled to enforce this arbitration agreement accordingly. I and the Company each specifically waive and
relinquish our respective rights to bring a claim against the other in a court
of law and to have a trial by jury. Both
I and the Company agree that any claim, dispute, and/or controversy that I may have
against the Company (or its owners, directors, officers, managers, employees, or
agents), or the Company may have against me, shall be submitted to and determined
exclusively by binding arbitration under the Federal Arbitration Act (the “FAA”),
in conformity with the procedures of the California Arbitration Act. Codified at
California Code of Civil Procedure Section 1280 et seq. (the “Act”). The FAA applies to this Agreement because the Company’s
business involves interstate commerce. Included
within the scope of this Agreement are all disputes, whether based on tort,
negligence, contract, statute (including, but not limited to, any claims of discrimination,
harassment and/or retaliation, whether they be based on the California Fair
Employment and Housing Act, Title VII of the Civil Rights Act of 1964, as
amended, or any other state or federal law or regulation), equitable law, or
otherwise. The only exceptions to binding
arbitration shall be for claims arising under the National Labor Relations Act
which arc brought before the National Labor Relations Board, claims for medical
and disability benefits under the California Workers’ Compensation Act, Employment
Development Department claims, or other claims that are not subject to
arbitration under current law. I and the
Company acknowledge that by signing or refusing to sign this Agreement, I make no
representation or demonstration of support 0< rejection of concerted activity. Moreover, nothing herein shall prevent me from
filing and pursuing proceedings before the California Department of Fair Employment
and Housing or the United States Equal Employment Opportunity Commission (although
if I choose to pursue a claim following the exhaustion of such administrative
remedies, that claim would be subject to the provisions of this Agreement).
(Pearce
Decl. ¶ 4, Exhib. B ¶ 2.)
Plaintiff
disputes that she signed the Arbitration Agreement, that the agreement is unconscionable,
and that the agreement is unenforceable under the recent amendment to the FAA invalidating
pre-dispute arbitration agreements the claims alleging a sexual harassment
dispute. Plaintiff argues that Defendant
fails to authenticate Plaintiff’s signature and that the declaration
The Court finds
Plaintiff’s argument to have merit. The
Pearce declaration is insufficient to prove the existence of an arbitration
agreement with Plaintiff. While Pearce
explains the hiring and onboarding process and how all employees review and
sign the Arbitration Agreements in an electronic format, he fails to claim that
he was involved in Plaintiff’s hiring or onboarding process or that he has
personal knowledge to support the claim that the electronic signature is
attributable to Plaintiff. The
declaration neither identifies who provided Plaintiff with the agreement and
reviewed the terms as well as answered any of her questions. (See Ruiz v. Moss Bros Auto Group, Inc. (2014)
232 Cal.App.4th 836, 842.) Defendant
largely repeats its arguments in its reply and fails to address Plaintiff’s
claims.
Moreover, even
if Defendant were able to provide sufficient evidence for the existence of the
arbitration agreement, the Court finds the agreement to be procedurally and
substantively unconscionable. An
arbitration agreement that is a non-negotiable condition of employment is
generally procedurally unconscionable, at least in the context in which an
employee is not in a position to refuse a job because of an arbitration
requirement. (Armendariz v. Found.
Health Psychcare Services, Inc. (2000) 24 Cal.4th 83, 115.) It is also substantively unconscionable in that
it makes no reference to discovery allowed for the arbitration; although there
is a laundry list of rights preserved, such as pleading rights, rules of evidence,
and disqualification of a judge, there is no mention of any discovery nor are
any rules incorporated by reference which might include such discovery. (Exhibit B to Pearce Declaration, ¶ 4.) Failure to provide for “more than minimal discovery”
results in a procedurally unconscionable agreement. (Murrey v. Superior Court of Orange County
(2023) 87 Cal.App.5th 1223, *13; Armendariz, supra, 24 Cal.4th at p.
102.)
Because
the Court finds this Agreement unenforceable for the above two reasons, it is
not necessary to resolve the question whether the recent amendment to the FAA
applies retroactively to cases that were filed after the Act, but where
the cause of action arises before the Act. Plaintiff argues the Ending Forced
Arbitration of Sexual Assault and Sexual Harassment Act (9 U.S.C. § 401 et
seq.) applies such that the arbitration agreement is not valid or enforceable
since the action was filed on July 21, 2022, after the enactment of the Act was
in March 2022.
In reply,
Defendant argues that it does not apply because the underlying alleged sexual
harassment occurred prior to the enactment of the Act. In support, Defendant points to Steinberg
v. Capgemeni Am., Inc., 2022 WL 3371323, pp. 2-3, an unpublished federal case
from the Eastern District of Pennsylvania which resolved the question in favor
of the employer, holding that the dispute or claim must arise after March 3,
2022 (the date of the Act’s enactment). However,
the California courts have yet to adopt that reasoning and as yet there appears
to be no decision binding on this court either way. (Murrey, supra, 87 Cal.App.4th at p. *4
(citing Steinberg, supra, as well other authority, and concluding that “the
Act is only applicable to cases filed after its enactment.”) No ruling has yet made as to cases in which
the acts arose before filing, but before the date of the amendment’s enactment.
This is an
argument best reserved for another day with more complete briefing. The Court need not address this alternative
ground, because of its ruling on plaintiff’s first two arguments.
In light of the
foregoing, the Court DENIES Defendant’s Motion to Compel Arbitration.