Judge: Anne Richardson, Case: 23STCV06628, Date: 2023-11-21 Tentative Ruling

Case Number: 23STCV06628    Hearing Date: January 2, 2024    Dept: 40

Superior Court of California

County of Los Angeles

Department 40

Background

Plaintiff Chelsea Eckland sues Defendants LaserAway LLC and Does 1 to 50 pursuant to a March 24, 2023 Complaint alleging claims of (1) Violation of Labor Code § 1102.5, (2) Harassment, (4) Retaliation, (4) Failure to Prevent Harassment, Discrimination, and/or Retaliation, (5) Failure to Pay Minimum or Contractual Wages, (6) Failure to Provide Accurate Wage Statement, and (7) Adverse Action in Violation of Public Policy.

The claims arise from allegations that during Plaintiff’s employment with LaserAway—an aesthetic dermatology company offering cosmetic medical services such as tattoo removal, hair removal, skin rejuvenation services, and skincare products—LaserAway CEO, Scott Heckman, LaserAway Vice President of Human Resources, Shannon Young, and other LaserAway employees engaged in conduct that amount to violations of the Fair Employment and Housing Act, the Labor Code, and public policy. That conduct included use of discriminatory and harassing language—e.g., slurs related to black people and women—and retaliation against Plaintiff based on her complaints of the constant and derogatory comments and demeaning treatment of employees by Defendants’ management, involving the HR Department in particular. The adverse actions alleged in the Complaint are retaliation in the form of Plaintiff’s ostracization from company events and socialization, LaserAway’s refusal to give Plaintiff an annual pay raise and bonus that had been awarded to Plaintiff every year prior to 2022, and a demotion in duties and position for Plaintiff.

On September 19, 2023, LaserAway filed a motion to compel arbitration based on agreement to arbitrate allegedly executed by the parties.

On November 7, 2023, Plaintiff opposed LaserAway’s motion.

On November 14, 2023, LaserAway replied to the opposition.

On November 21, 2023, the Court requested further briefing as to how the delegation clause in the December 11, 2018 agreement to arbitrate affected a determination on LaserAway’s motion.

On December 15, 2023, LaserAway filed its supplemental briefing.

Later that day, Plaintiff Eckland filed her supplemental briefing.

LaserAway’s motion is now before the Court.

Evidentiary Objections

Opposition Objections by Plaintiff Eckland to LaserAway’s Motion

Objection Nos. 1-6: OVERRULED.

Dec. 15, 2023 Objections by Plaintiff Eckland

Objection Nos. 1-5: OVERRULED.

Motion to Compel Arbitration

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.)

Order Compelling Arbitration: DENIED.

I.

Delegation

When arbitrability is clearly and unmistakably delegated to the arbitrator, a court must enforce that delegation “in the absence of some other generally applicable contract defense, such as fraud, duress, or unconscionability.” (Mohamed v. Uber Techs., Inc. (9th Cir. 2016) 848 F.3d 1201, 1209. Therefore, unless the Court finds that the delegation clause is unconscionable, or “in the absence of some other generally applicable contract defense, such as fraud [or] duress,” the Court must enforce the delegation clause. (Ibid.) The party resisting arbitration bears the burden of demonstrating unconscionability. (Pinnacle Museum Tower Assn v. Pinnacle Mkt. Dev. (US), LLC (2012) 55 Cal. 4th 223, 246-247.)

On November 21, 2023, the Court requested further briefing as to the effect of the delegation clause that exists on the face of the December 11, 2018 agreement.

In response, LaserAway argues that the December 10 and 11, 2018 agreements to arbitrate include a delegation clause that this Court may enforce, either without reaching questions of contract formation, scope of claims, and defenses, or by making a determination that an agreement to arbitrate exists between the parties and delegating remaining questions of scope and defenses to the arbitrator. LaserAway also argues that the December 18, 2018 agreement incorporates the JAMS rules, which contain a delegation provision, and can serve as a further basis to compel arbitration. (12/15/23 LaserAway Brief, pp. 2-6.)

In turn, Plaintiff Eckland argues, among other things, that LaserAway waived its right to invoke the delegation clause because such a right is waivable and was waived when LaserAway filed its September 19, 2023 motion and November 14, 2023 reply without mentioning or invoking the delegation clause. (12/15/23 Eckland Brief, pp. 3-4.)

The Court finds in favor of Plaintiff Eckland as to this issue.

“California courts undisputedly have jurisdiction to order parties to arbitration in the first instance. (See, e.g., § 1281.2; [citation].) [However,] [w]hile … parties may agree to delegate a dispute within a court's jurisdiction to an arbitrator, the contractual right to an arbitration is waivable—the parties’ agreement does not of itself divest the court of jurisdiction. (See § 1281.2; [citation].) Rather, when the court enforces an agreement to arbitrate, its jurisdiction merely abates. [Citations.] The threshold issue of arbitrability is, in this respect, no different from any other dispute that the parties may agree to send to arbitration—the court has jurisdiction until it decides to defer the issue to the arbitrator pursuant to the parties’ waivable contractual rights; and even then it continues to hold the action in abatement. [Citation.]” (Williams v. West Coast Hospitals, Inc. (2022) 86 Cal.App.5th 1054, 1071.)

Thus, “a contractual right to an arbitral resolution of that issue does not of itself divest the court of jurisdiction: the parties may abandon—or forfeit—the contractual right and submit the matter to the court. (See In re Checking Account Overdraft Litigation MDL No. 2036 (11th Cir. 2012) 672 F.3d 1224, 1228 (Checking Account Overdraft Litigation) [holding that party waived its right to arbitrate the conscionability of the arbitration clause by asking the district court to decide the conscionability challenge, rather than invoking the delegation clause]; Truly Nolen of America v. Superior Court (2012) 208 Cal.App.4th 487, 515, […], fn. omitted (Truly Nolen) [citing Checking Account Overdraft Litigation with approval in holding that party ‘cannot now complain about the court’s authority to rule on [certain] issues’ where the party ‘fail[ed] to ask the court to defer [those issues] to the arbitrator’]; Mendoza v. Trans Valley Transport (2022) 75 Cal.App.5th 748, 771, […] (Mendoza) [holding ‘that Employers forfeited any right to have the arbitrator decide whether the parties have entered into a contract to arbitrate Mendoza's underlying claims by failing to preserve those claims in the trial court. They also waived that right by fully litigating the question there and here.’].)

Here, LaserAway has generally waived its right to invoke the delegation clause in the December 10 and 11, 2018 agreements, as well as any incorporated provision read into the December 18, 2018 agreement through JAMS’ rules.

LaserAway waived such a right by failing to invoke the delegation clauses in the moving papers. A review of LaserAway’s motion shows that it is limited to arguing the existence of an agreement to arbitrate (the December 11, 2018 agreement, with a brief mention of the December 18, 2023 agreement), the inclusion of Plaintiff’s claims within the agreement’s scope, and the lack of viable defenses to the arbitration—all without mention of the delegation clause in the parties’ alleged agreements. (9/19/23 Mot., pp. 1-4, 5-11.) While LaserAway’s December 15, 2023 briefing discusses issues relating to delegation, such briefing (1) was made only in response to a request for further briefing by this Court and (2) does not include an argument explaining why LaserAway did not waive its right to invoke the delegation clauses when it failed to invoke the same in the moving papers.

II.

Whether Arbitration Agreement Exists and Scope of Arbitration

“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, 1092-93 [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.)

“[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 p. 186-87 [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.)

Here, the Court determines that no agreement to arbitrate can be enforced against Plaintiff Eckland.

The December 10, 2018 electronic agreement was mentioned for the first time in LaserAway’s reply, even if the agreement itself was attached to the moving papers. (Compare 9/19/23 Mot., pp. 1-11 [no mention of December 10, 2018 agreement], Bertikian Decl., Ex. C [copy of December 10, 2018 agreement], with 11/14/23 Reply, pp. 3-4.) LaserAway’s reply does not give adequate reasons for why the December 10, 2018 agreement was not mentioned in the moving papers. The Court therefore declines to consider the December 10, 2018 agreement as a basis for compelling arbitration. (Nordstrom Com. Cases (2010) 186 Cal.App.4th 576, 583 [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].)

The December 18, 2018 confidentiality agreement is also not helpful. While LaserAway mentions the December 18, 2018 agreement in the moving papers, LaserAway does not elaborate on this argument other than to briefly advance a cursory position that the December 18, 2018 agreement contains an arbitration clause that encompasses Plaintiff’s claims in this action. (9/19/23 Mot., p. 3:12-13) Critically, the body of LaserAway’s moving papers relies on “the Agreement,” which is specifically identified by the moving papers as the December 11, 2018 agreement, not the December 18, 2018 confidentiality agreement. (9/19/23 Mot., pp. 1 [defining “the Agreement” as the December 11, 2018 agreement], 3 [arguing that Plaintiff’s claims are within the scope of “the Agreement,” thus limiting the argument to the December 11, 2018 agreement], 5-6 [argument that “the Agreement” encompasses Plaintiff’s claims, i.e., limited to the December 11, 2018 agreement], 7-11 [arguments for why “the Agreement” dated December 11, 2018 is not unconscionable and is otherwise proper].) The December 18, 2023 agreement is mentioned only briefly and in passing. (9/19/23 Mot., p. 3:12-13.) Thus, the moving papers insufficiently elaborate on the December 18, 2023 agreement as grounds for compelling arbitration.

Last, the Court finds that the December 11, 2018 agreement does not show an agreement to arbitrate. It is true that the December 11, 2018 agreement contains a section in which Plaintiff Eckland appears to have written her name in print. (9/19/23 Mot., Mault Decl., Ex. A, p. 6.) However, Plaintiff—unlike LaserAway—does not appear, on the face of the document, to have signed the December 11, 2018 agreement. (Ibid.) Plaintiff argues that this lack of signature shows that no agreement was created by the parties and that no mutual assent exists to the December 11, 2018 agreement. (11/7/23 Opp’n, pp. 6-7.) LaserAway responds in two ways: first, by arguing that Plaintiff fails to deny that she affixed her name in print to the December 11, 2018 agreement, which should constitute a signature for this motion’s purposes; and second, that Plaintiff impliedly consented to arbitration by continuing her employment with LaserAway despite receipt of the December 11, 2018 agreement. (11/14/23 Reply, pp. 2-3, 4-5.)

The Court does not consider the latter argument—implied consent through continued employment—because it was raised for the first time on reply. The argument could have been raised in the original moving papers, and no good cause is shown in the reply for raising this argument for the first time on reply. (Nordstrom Com. Cases, supra, 186 Cal.App.4th at p. 583; see 9/19/23 Mot., pp. 1-11.)

As to whether Plaintiff’s printed name on the arbitration agreement constitutes a signature, the Court finds in favor of Plaintiff. “The signature of a party to be bound by a contract ‘need not be manually affixed, but may in some cases be printed, stamped or typewritten.’ [Citation.] However, if there is no manual signature, it must still be shown ‘that the name relied upon as a signature was placed on the document or adopted by the party to be charged with the intention of authenticating the writing. In other words[,] the defendant must intend to appropriate the name as a signature.’ [Citations.]” (Lara v. Onsite Health, Inc. (2012) 896 F.Supp.2d 831, 844.) Plaintiff argues that she did not sign the December 11, 2018 agreement but fails to mention her printed name. (11/7/23 Opp’n, Eckland Decl., ¶ 9.) In reply, LaserAway argues in essence that Plaintiff’s printed name suffices as a signature and that her signature is authenticated by her employment record and a comparison to other signatures. (11/14/23 Reply, pp. 2-3.) However, neither party argues why the printed name on the December 11, 2018 agreement was intended by Plaintiff Eckland to constitute her signature. And while a signature as defined in the Code of Civil Procedure “includes a mark of a person’s name[] if the person cannot write” (Code Civ. Proc., § 17, subd. (b)(11); see 11/14/23 Reply, p. 3 [citing this section]), the issue here is whether the mark on the December 11, 2018 agreement has been shown to have been intended by Plaintiff Eckland to amount to her signature. Neither party has made that showing. Moreover, while LaserAway argues that the December 11, 2018 agreement does not contain a “designated signature line,” for which reason the lack of a signature is not fatal (11/14/23 Reply, p. 3), the Court disagrees. The signatures page of the December 11, 2018 agreement contains a “By” section signed by LaserAway’s authorized signatory, but the “By” line was left blank as to Plaintiff Eckland. (9/19/23 Mot., Mault Decl., Ex. A, p. 6.) While the same page includes a “Name” section, in which Plaintiff Eckland’s name appears in print (ibid.), the Court interprets the printed names there as identification of the intended signatory, not a signature itself.

LaserAway’s motion is thus DENIED.

Conclusion

Defendant LaserAway, LLC’s Motion to Compel Arbitration is DENIED.