Judge: Anne Richardson, Case: 24STCV06812, Date: 2024-07-18 Tentative Ruling

DEPARTMENT 40 - JUDGE ANNE RICHARDSON - LAW AND MOTION RULINGS
The Court issues tentative rulings on certain motions.The tentative ruling will not become the final ruling until the hearing [see CRC 3.1308(a)(2)]. If the parties wish to submit on the tentative ruling and avoid a court appearance, all counsel must agree and choose which counsel will give notice. That counsel must 1) email Dept 40 by 8:30 a.m. on the day of the hearing (smcdept40@lacourt.org) with a copy to the other party(ies) and state that all parties will submit on the tentative ruling, and 2) serve notice of the ruling on all parties. If any party declines to submit on the tentative ruling, then no email is necessary and all parties should appear at the hearing in person or by Court Call. 

Case Number: 24STCV06812    Hearing Date: July 18, 2024    Dept: 40

Superior Court of California

County of Los Angeles

Department 40

I. Background

A. Pleadings

Plaintiff Sammetra Daniels initiated this action on March 19, 2024 against Defendants California Institute of Arts & Technology (CIAT) and Flavio De Oliveira (collectively Defendants) alleging the following claims: (1) Discrimination on the Basis of Sex/Gender, Including Pregnancy, in Violation of FEHA; (2) Harassment on the Basis of Sex/Gender, Including Pregnancy, in Violation of FEHA; (3) Retaliation for Complaining of Discrimination and/or Harassment on the Basis of Sex/Gender, Including Pregnancy, in Violation of FEHA; (4) Failure to Provide Reasonable Accommodations in Violation of FEHA; (5) Failure to Engage in the Interactive Process; (6) Failure to Prevent Discrimination, Harassment, and Retaliation in Violation of FEHA; (7) Failure to Grant Pregnancy Disability Leave in Violation of Pregnancy Disability Leave Law; (8) Failure to Provide Reasonable Accommodations in Violation of the Pregnancy Disability Leave Law; (9) Interference with Restraint, and Denial of Pregnancy Disability Leave in Violation of the Pregnancy Disability Leave Law; (10) Retaliation in Violation of the Pregnancy Disability Leave Law; (11) Violation of Labor Code § 1102.5; (12) Wrongful Termination of Employment in Violation of Public Policy (Labor Code § 1102.5, FEHA); (13) Intentional Infliction of Emotional Distress.

The Complaint alleges that Plaintiff was employed by CIAT on July 10, 2023 as an Admissions Advisor where she worked remotely. Prior to starting her employment, Plaintiff learned that she was pregnant in January 2023 and would be due in September 2023. Plaintiff disclosed that she was pregnant on July 17, 2023 with her direct supervisor during a one-on-one meeting. Because there was uncertainty surrounding her leave, Plaintiff was allegedly stressed during the process. During her maternity leave, Plaintiff’s doctor completed the Certification of Health Care Provider for Employee Return to Work indicating that Plaintiff was unable to work from September 6, 2023 to January 3, 2023. However, this certificate had yet to be approved by the hospital’s disability office. Unbeknownst to Plaintiff, the certificate was completed by November 20, 2023 but had yet to be uploaded. Plaintiff discovered this on December 4, 2024 and instructed the hospital to fax the certificate to CIAT. Thereafter, Defendants demanded Plaintiff to return to work by December 11, 2023 based on the claim that Plaintiff was no longer disabled. Ultimately, Plaintiff was terminated on December 14, 2023.

B. Motion Before the Court

On June 24, 2024, Defendants filed their notice of motion to compel arbitration of Plaintiff’s claims and to stay this action pending the outcome of arbitration. Thereafter, on July 2, 2024, Defendants filed their moving papers. Defendants bring their motion pursuant to the Federal Arbitration Act (FAA) or to the California Arbitration Act (CAA), and pursuant to an alleged agreement between Plaintiff and CIAT, allowing Defendants to invoke the purported arbitration clause.

On July 4, 2024, Plaintiff filed an opposition to the instant motion.

On July 12, 2024, Defendants filed a reply to Plaintiffs’ opposition.

Defendants’ motion is now before the Court.

II. Motion to Compel Arbitration: GRANTED.

A. 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 (Southland Corp.); 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., 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 (Valencia).)

 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]; see Omar v. Ralphs Grocery Co. (2004) 118 Cal.App.4th 955, 961 [In determining the enforceability of an arbitration agreement, the court first 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”] Lacayo v. Cataline Restaurant Group Inc. (2019) 38 Cal.App.5th 244, 257 (Lacayo) [Where moving party meets initial burden, “the party opposing arbitration must prove by a preponderance of the evidence any defense to the petition”].)

“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 (Lane); 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.) 

B. Analysis

1. Whether There is An Agreement to Arbitrate Between the Parties

a. Relevant Law

“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. (2001) 88 Cal.App.4th 215, 219.)

b. Court’s Determination

Here, the Court finds in Defendants’ favor on this issue because sufficient evidence has been submitted to show that agreement to arbitrate exists between the parties.

The burden of persuasion is always on the moving party to prove the existence of an arbitration agreement with the opposing party by a preponderance of the evidence. (Gamboa v. Northeast Community Clinic (2021) 72 Cal.App.5th 158, 164-165 (Gamboa), citations omitted.) However, the burden of production may shift in a three-step process. (Id. at p. 165.) First, the moving party bears the burden of producing prima facie evidence of a written agreement to arbitrate the controversy, which can be met by the moving party by attaching a copy of the arbitration agreement purporting to bear the opposing party’s signature. (Ibid., citations omitted.) If this burden is met, the burden shifts to the opposing party to produce evidence to challenge the authenticity of the agreement, which can be met by “testify[ing] under oath or declar[ing] under penalty of perjury that the party never saw or does not remember seeing the agreement, or that the party never signed or does not remember signing the agreement.” (Ibid., citations omitted.) If the opposing party meets its burden of producing evidence, then in the third step, the moving party must establish with admissible evidence a valid arbitration agreement between the parties. (Ibid.) The burden of proving the agreement by a preponderance of the evidence remains with the moving party. (Id. at pp. 165-166, citations omitted.) 

Here, Defendants have met their initial burden of production by producing a copy of the arbitration agreement, as purportedly electronically signed by Plaintiff via DropBox Sign on June 26, 2023. (Mot., de Oliveira Decl. ¶¶ 2-3, Exh. 1.)

In turn, Plaintiff meets her responsive burden of production by proving a sworn declaration indicating that she does not recall signing the June 26, 2023 arbitration agreement during her onboarding process. (Oppn, Daniels Decl. ¶¶ 3-4.)

Thus, Defendants must show by a preponderance of the evidence that a valid arbitration agreement exists between the parties. (Gamboa, supra, 72 Cal.App.5th at pp. 165-166.) 

The primary dispute between the parties is whether the electronic signature attributed to Plaintiff on the June 26, 2023 arbitration agreement is properly verified. 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 (Espejo).)

Here, Defendant’s security precautions for signatures on CIAT’s arbitration agreement are set out in Defendant Flavio De Oliveira’s supplemental declaration. It is stated that CIAT securely transmits new employee onboarding documents, which includes the arbitration agreement, to the prospective employee’s personal email address, and no other individual would have received this email. (Reply, Suppl. De Oliveira Decl. at ¶¶ 2-3.) In this case, Plaintiff’s onboarding documents were sent to her personal email at sd3844@nyu.edu on June 26, 2024 at a.m. PDT. (Ibid., Exhs. A-B.) De Oliveira further states that Plaintiff used the aforementioned email to correspond with CIAT employees prior to her employment with CIAT. (Id. at ¶ 7, Exh. E.) In addition to the arbitration agreement, Plaintiff had been sent nine other onboarding documents via DropBox Sign, and according to DropBox Sign’s Audit Trail, it indicates that Plaintiff viewed the onboarding documents at 10:13 a.m. PDT before executing all the documents at 3:37 p.m. PDT. (Id. at ¶¶ 5-6, Exhs. 5-6.) While Plaintiff contends that she does not recall signing the June 26, 2024, she does not repudiate going through the onboarding process via DropBox Sign. Therefore, the Court finds that these circumstances are different from those in Ruiz v. Moss Bros. Auto Group, Inc. because Defendants have provided sufficient evidence to authenticate Plaintiff’s electronic signature. Moreover, Plaintiff’s contention that anyone could have accessed her email is unsupported by the evidence, as Plaintiff’s declaration is silent on this issue.

Accordingly, the Court finds that an arbitration agreement exists between the parties.

2. FAA Applies

            The Court notes that the applicable legal standards are those related to the Federal Arbitration Act, as provided by the June 26, 2024, arbitration agreement. (Mot., De Oliveira Decl., Exh. 1.) Plaintiff challenge the interstate commerce arguments in the moving papers on the ground that she completed work for CIAT only in California. (Oppn. at 10; Daniels Decl. ¶¶ 2, 5.) However, this argument is not persuasive. As indicated by Defendants’ moving papers, CIAT’s business affects interstate commerce because (1) it has students throughout the United States; (2) faculty, employees, and students use U.S. Mail, the internet and other modes of interstate commerce to correspond with CIAT; and (3) students pay fees with checks in the mail and through electronic payments. (Mot. at pp. 3-4; Park Decl. ¶ 2.) Regardless, even if the FAA did not apply, California law has a strong policy towards arbitration. (Pac. Invest. Co. v. Townsend (1976) 58 Cal. App. 3d 1, 9.) The California Arbitration Act would still apply.

                        3. Whether the Arbitration Agreement is Unconscionable

                        a. Relevant Law

In Armendariz, the California Supreme Court stated that when determining whether an arbitration agreement was unconscionable, there is both a procedural and a substantive element. (Armendariz v. Foundation Health Psychcare Service, Inc. (2000) 24 Cal.4th 82, 114 (Armendariz)).¿¿ “The party resisting arbitration bears the burden of proving unconscionability.”   (Pinnacle Museum Tower Assn. v. Pinnacle Market Dev. (US), LLC (2012) 55 Cal.4th 223, 247.)

“Procedural unconscionability pertains to the making of the agreement; it focuses on the oppression that arises from unequal bargaining power and the surprise to the weaker party that results from hidden terms or the lack of informed choice.”  (Ajamian v. CantorCO2e, L.P. (2012) 203 Cal.App.4th 771, 795.) Oppression is an “inequality of bargaining power, when one party has no real power to negotiate or a meaningful choice. Surprise occurs when the allegedly unconscionable provision is hidden.” (Carmona v. Lincoln Millennium Car Wash, Inc.¿(2014) 226 Cal.App.4th 74, 84 (Carmona).) Arbitration clauses are often found in adhesion contracts (standardized contracts drafted by a party of superior bargaining power and presented to the weaker party on a take-it-or-leave-it basis).  (See, e.g., Armendariz, supra, 24 Cal.4th at 113-114.)

“Substantive unconscionability pertains to the fairness of an agreement's actual terms and to assessments of whether they are overly harsh or one-sided.” (Carmona, supra, at p. 85). There are five minimum substantive requirements to an enforceable arbitration agreement: (1) neutral arbitrators, (2) more than minimal discovery, (3) written award sufficient for judicial review, (4) all types of relief otherwise available in court, and (5) no unreasonable costs or fees as a condition of access. (Armendariz, supra, at p.102.) When there is little procedural unconscionability, a party opposing arbitration must show substantial substantive unconscionability. (Id. at 114.) 

                        b. Court’s Determination

            Here, the Court finds in Defendants’ favor on this issue because the arbitration agreement is not unconscionable.

            Plaintiff first argues that the arbitration agreement is procedurally unconscionable because it is an adhesion contract. (Oppn. at pg. 8.) However, the fact an adhesion contract is involved does not per se render the arbitration provision unenforceable because such contracts are “an inevitable fact of life for all citizens—businessman and consumer alike.” (Graham v. Scissor-Tail, Inc.¿(1981) 28 Cal.3d 807, 817.) Therefore, the agreement is minimally procedurally unconscionable as an adhesion contract.

            Second, Plaintiff argues that the arbitration agreement is substantively unconscionable because it lacks mutuality as it does not include what claims are covered by the employer against the employee. (Oppn. at pp. 8-9.) However, this argument is not persuasive because the arbitration agreement expressly states that “[t]he Company and I each specifically waive and relinquish our respective rights to bring a claim against the other in court, and this waiver will be equally binding on any person who represents or seeks to represent me or the Company in a lawsuit against the other in court. (See Mot., De Oliveira Decl., Ex. 1.) Also, the scope of the arbitration agreement covers any claims or disputes either party has against the other that arises from or related to Plaintiff’s employment. (Ibid.) The contract does not, for example, exclude from arbitration the kinds of claims that would likely be brought by an employer, while including claims that would likely be brought by an employee. (Cf. Mercuro v. Superior Court (2002) 96 Cal.App.4th 167, 176.) As such, the arbitration clause here does not lack mutuality.

            No other arguments for substantive unconscionability have been made.

            Therefore, the Court finds that Plaintiff has failed to meet her burden in establishing that the arbitration agreement is unconscionable.

III. Conclusion

Based on the foregoing, Defendants California Institute Of Arts & Technology, Inc. and Flavio De Oliveira’s Motion to Compel Arbitration and Stay Proceedings is GRANTED.