Judge: Armen Tamzarian, Case: 22STCV24177, Date: 2022-12-08 Tentative Ruling

Case Number: 22STCV24177    Hearing Date: December 8, 2022    Dept: 52

Defendants Greystar Management Services, LP and Alliance Residential, LLC’s Motion to Compel Arbitration

Greystar Management Services, LP and Alliance Residential, LLC move to compel arbitration of the complaint by plaintiff Deondre Chisholm.

Evidentiary Objections

            Defendants make three objections to the declaration of Deondre Chisholm.  All three objections are overruled.

Existence of Agreement

            Defendants present sufficient evidence that plaintiff entered the arbitration agreement.  The moving party can meet its ultimate burden of the preponderance of the evidence by showing the “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.”  (Espejo v. Southern California Permanente Medical Group (2016) 246 Cal.App.4th 1047, 1062 (Espejo).)

Defendants’ evidence explains the security precautions taken to ensure only plaintiff could sign the agreement.  Stephanie Adams works for defendant Greystar Management Services, LP as a senior analyst for human resources information systems.  (Adams Decl., ¶ 2.)  She “participated in the design, development and implementation of the electronic systems used by job applicants and newly hired Greystar employees.”  (Id., ¶ 4.) 

Adams states, “In July 2020, Plaintiff used an electronic system called Workday to onboard, including to electronically sign the Arbitration Agreement on July 14, 2020.”   (Adams Decl., ¶ 5.)  “[T]he Workday system created an individual account, using the individual’s automatically generated employee ID and by generating a unique password.  Upon the first sign-in to Workday to complete onboarding documents, the individual was required to change the randomly generated system password to a unique password they created.”  (Id., ¶ 6.)  That “unique password … was known only to the applicant or new hire and was fully secure.”  (Id., ¶ 7.)  “In order to have viewed and signed the Arbitration Agreement, Plaintiff had to have logged in to his Workday account using his unique password and corresponding unique employee ID and, on July 14, 2020, Plaintiff clicked to electronically sign on the signature line.”  (Id., ¶ 11.)  “DocuSign records reflect the exact date and time on which Plaintiff” signed the agreement “and confirm the personal email address and IP address used by Plaintiff.”  (Id., ¶ 12.)

Plaintiff fails to adequately rebut this evidence.  Plaintiff states he does not recall seeing or signing the agreement (Chisholm Decl., ¶¶ 8-9) and explains he “thoroughly searched [his] personal email account for an email from Workday regarding the setup of a Workday account” but could not find that or any other email from Workday.  (Id., ¶ 12.)  He states he does “not delete emails unless they are spam.”  (Id., ¶ 13.) 

If plaintiff did have an email from Workday in his personal email account, that would provide strong evidence showing he signed the agreement.  The absence of any emails from Workday, however, is not enough to show his signature is not authentic.  Though Adams states the Workday system creates an individual account using the employee’s personal email address as the username, she does not state Workday sends confirmation emails to that account.  Moreover, plaintiff does not dispute creating a unique password to use the Workday system.  As in Espejo, defendants’ evidence “offered the critical factual connection” by explaining the “security precautions regarding transmission and use of an applicant’s unique username and password.”  (246 Cal.App.4th at p. 1062.) 

Unconscionability

            The agreement has one unconscionable provision—but it is severable. 

Unconscionability requires both procedural and substantive unconscionability using a sliding scale.  (Serafin v. Balco Properties Ltd., LLC (2015) 235 Cal.App.4th 165, 185.)  “Procedural unconscionability focuses on the elements of oppression and surprise.”  (Id. at p. 177.)  “Substantive unconscionability focuses on the actual terms of the agreement and evaluates whether they create overly harsh or one-sided results.  (Ibid., internal quotes omitted.)

Plaintiff shows some procedural unconscionability.  Procedural unconscionability occurs when the stronger party drafts the contract and presents it to the weaker party on a ‘take it or leave it basis.’ ”  (Trivedi v. Curexo Technology Corp. (2010) 189 Cal.App.4th 387, 393, disapproved of on other grounds by Baltazar v. Forever 21, Inc. (2016) 62 Cal.4th 1237.) 

Plaintiff contends the agreement is substantively unconscionable for three reasons. 

First, he argues it is not mutual because it does not “prohibit or limit the Parties from seeking injunctive relief in lie of or in addition to arbitration at any time directly from a court of competent jurisdiction.”  (Adams Decl., Ex. A, § D.)  An agreement is substantively unconscionable when it “compels arbitration of the claims employees are most likely to bring against [the employer]” but “exempts from arbitration the claims [employer] is most likely to bring against its employees.”  (Mercuro v. Superior Court (2002) 96 Cal.App.4th 167, 176 (Mercuro).)   “ ‘[I]t is far more likely’ the employer will seek injunctive relief in court to stop an employee from breaching a nondisclosure or noncompetition agreement than the employee will seek injunctive relief in aid of his or her claims for wrongful termination, illegal discrimination, or unpaid wages.”  (Carbajal v. CWPSC, Inc. (2016) 245 Cal.App.4th 227, 249 (Carbajal).)

Both Mercuro and Carbajal are distinguishable.  In Carbajal, the agreement required plaintiff “to arbitrate ‘any and all disputes’ she has with [her employer], but it authorizes [her employer] to ‘obtain an injunction from a court of competent jurisdiction’ to restrain [plaintiff] from breaching the Agreement’s nondisclosure and exclusive use provisions.”  (245 Cal.App.4th at p. 249.)  Similarly, in Mercuro, the “agreement specifically exclude[d] ‘claims for injunctive and/or other equitable relief for intellectual property violations, unfair competition and/or the use and/or unauthorized disclosure of trade secrets or confidential information.’ ”  (96 Cal.App.4th at p. 176.) 

Here, by contrast, the carveout for injunctive relief is mutual.  The agreement states, “Nothing in this paragraph shall prohibit or limit the Parties from seeking injunctive relief in lie of or in addition to arbitration at any time directly from a court of competent jurisdiction.”  (Adams Decl., Ex. A, § D.)  The carveout applies to injunctive relief for any claim by either side, not just for the sorts of claims typically brought by employers and against employees. 

Second, plaintiff argues the agreement does not permit adequate discovery.  “The denial of adequate discovery in arbitration proceedings leads to the de facto frustration of the employee’s statutory rights.”  (Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83, 104.) 

The parties’ agreement provides, “Discovery shall be permitted in the arbitration that would otherwise be available in court and shall be conducted in accordance with the Federal Rules of Civil Procedure, including but not limited to depositions, interrogatories, requests for documents and request for admissions.  The arbitrator shall have the authority to limit the discovery but must allow discovery sufficient for the parties to adequately arbitrate their claims.”  (Adams Decl., Ex. A, § D.)  This provision permits sufficient discovery.

By contrast, in Davis v. Kozak the agreement permitted “each party to take a maximum of two depositions” and did not entitle “the parties to propound interrogatories, requests for admission, or demands for production of all relevant documents.”  (53 Cal.App.5th 897, 911.)  The arbitrator could only “order additional discovery on a showing of ‘sufficient cause.’ ”  (Ibid.)

Here, the parties’ agreement permits greater discovery and does not impose a “sufficient cause” or “good cause” requirement before the arbitrator can allow extra discovery.  It incorporates the Federal Rules of Civil Procedure, which permit written discovery.  Moreover, it states the arbitrator “must allow discovery sufficient for the parties to adequately arbitrate their claims.”  (Adams Decl., Ex. A, § d.)  Courts “assume that the arbitrator will operate in a reasonable manner in conformity with the law.”  (Dotson v. Amgen, Inc. (2010) 181 Cal.App.4th 975, 988.)  The court therefore assumes the arbitrator will reasonably interpret that provision to allow plaintiff to conduct appropriate discovery.

Finally, plaintiff argues the agreement is substantively unconscionable because it includes an unenforceable confidentiality provision.  It states, “Neither the Parties nor the arbitrator may disclose the existence, content, or results of any arbitration without the prior written consent of the Parties.”  (Adams Decl., Ex. A, § D.) 

This provision is substantively unconscionable.  A “provision requiring all aspects of the arbitration be maintained in strict confidence is substantively unconscionable.”  (Ramos v. Superior Court (2018) 28 Cal.App.5th 1042, 1067.)  Such a provision limits employees’ “ability to pursue [their] claims” because they “would be in violation if [they] attempted to informally contact or interview any witnesses outside the formal discovery process.”  (Id. at p. 1066.) 

            Defendants argue that this agreement’s confidentiality provision is not as broad as the one in Ramos and “focuses on the ‘result’ of the arbitration.”  (Reply, p. 12.)  But the provision also prohibits disclosing “the existence” or “content” of the arbitration.  Informally contacting witnesses may require disclosing that. 

            This unconscionable provision, however, is severable.  The strong legislative and judicial preference is to sever the offending term and enforce the balance of the agreement” unless the agreement is “permeated by unconscionability.”  (Lange v. Monster Energy Company (2020) 46 Cal.App.5th 436, 453, internal quotes, citations, and alterations omitted.)  The agreement has only one substantively unconscionable provision.  It is not permeated by unconscionability and does not lack mutuality.  The court will therefore sever the confidentiality provision and enforce the remainder of the agreement.

Disposition

The court hereby severs the following provision of the arbitration agreement: “Neither the Parties nor the arbitrator may disclose the existence, content, or results of any arbitration without the prior written consent of the Parties.”  (Adams Decl., Ex. A, § D.) 

            Defendants Greystar Management Services, LP and Alliance Residential, LLC’s motion to compel arbitration is granted.  Plaintiff Deondre Chisholm is ordered to arbitrate his claims against defendants Greystar Management Services, LP and Alliance Residential, LLC.  The court hereby stays the entire action pending resolution of the arbitration proceeding.