Judge: Armen Tamzarian, Case: 23STCV14467, Date: 2023-09-21 Tentative Ruling

Case Number: 23STCV14467    Hearing Date: September 21, 2023    Dept: 52

Defendants KHRG La Peer LLC, Karina Celis, and Felipe Cucalon’s Motion to Compel Arbitration and Stay of the Action

Defendants KHRG La Peer LLC, Karina Celis, and Felipe Cucalon move to compel arbitration of this action by plaintiff Cynthia Sandoval.

Evidentiary Objections

Defendants make 12 objections to plaintiff’s declaration.  All 12 objections are overruled.

Federal Arbitration Act (FAA)

            Plaintiff disputes whether the FAA applies.  The court declines to reach the issue because the result would be the same under either the FAA or the California Arbitration Act.

Existence of Agreement

Defendants present sufficient evidence that plaintiff electronically signed the purported arbitration agreement.  A motion to compel arbitration is “a summary proceeding.”  (Espejo v. Southern California Permanente Medical Group (2016) 246 Cal.App.4th 1047, 1057.)  The moving party can meet the “initial burden to show an agreement to arbitrate by attaching a copy of the arbitration agreement purportedly bearing the opposing party’s signature.”  (Id. at p. 1060.)  After the opposing party “challenge[s] the validity of that signature,” the moving party must “establish by a preponderance of the evidence that the signature was authentic.”  (Id. at p. 1058.)  The moving party can meet its ultimate burden 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.”  (Id. at p. 1062.)

Defendants present evidence that plaintiff electronically signed an arbitration agreement (Campbell Decl., Ex. 5) on November 14, 2022 (id., ¶¶ 12-14, Exs. 4-5).  Defendants also submit evidence explaining the security precautions taken to ensure only plaintiff could sign the agreement.  (Id., ¶¶ 4-12, Ex. 2.)  Employees were required to create an “ADP account” using “personal identifying information,” including their date of birth and partial Social Security number.  (Id., ¶ 8.)  Employees “must input a unique user name and password created by them.”  (Ibid.)  Plaintiff admits she created an “ADP account” to access payroll documents.  (Sandoval Decl., ¶ 4.)

To sign a document, employees must “scroll through the entire document,” then “type in their first and last name and either click I DECLINE or I ACCEPT.”  (Campbell Decl., ¶ 9.)  Afterward, “ADP creates a document verifying the electronic signature of the Electronic Agreement.”  (Ibid.)  “Once completed, neither the employee, KHRG nor ADP had, or has, the ability to modify an employee’s Electronic Agreement selection choice.”  (Ibid.)  Defendants submit a document from the ADP software showing plaintiff electronically signed the arbitration agreement on November 14, 2022, at 2:15 p.m. EST.  (Id., Ex. 5.)

Plaintiff does not effectively rebut that evidence.  When she was hired in December 2021, plaintiff expressly opted out of an arbitration agreement presented to her on paper.  (Campbell Decl., ¶¶ 4-6, Ex. 1; Sandoval Decl., ¶ 3, Ex. A.)  Plaintiff states her supervisors “made multiple efforts to convince [her] to sign the company’s arbitration agreement.”  (Id., ¶ 5.)  They did so “at least four or five times.”  (Ibid.)  Plaintiff “stood by [her] initial decision and refused to sign any arbitration agreement.”  (Ibid.)  Plaintiff further states, “Human Resources Director [Krystopher] Campbell and Defendant Karina Celis were much more aggressive about their efforts to have me execute an arbitration agreement after I began disclosing my work restrictions and complaining about ongoing harassment by Defendant Karina Celis.”  (Id., ¶ 6.)

Plaintiff asserts defendant Karina Celis accepted the agreement on her behalf without her consent.  She states, “On or about November 2022, I was approached by Defendant Karina Celis and Human Resources Assistant Kimberly Friedman.  They escorted me to an office and sat me in front of a computer and ordered me to login into my ADP account in order to process documents, which they both identified as ‘payroll records.’  After I provided login information to both of them, Defendant Karina Celis proceeded to take control and click some buttons on the screen and subsequently logged out of the account.  When I asked them what they were doing, Defendant Celis replied by again telling me that it was just ‘payroll records’ that needed to be processed for the company.  …  The whole process with Defendant Celis and Human Resources Assistant Kimberly Friedman took no more than three to four minutes, and I was rushed out of the office and told to return to cleaning rooms.”  (Sandoval Decl., ¶ 7.)

Plaintiff states she requested paper copies of the documents, but defendants would not provide them.  (Sandoval Decl., ¶¶ 7-8.)  She further states, “Had I received hard copies or been instructed how to access digital copies of the records, I would have immediately opted out … as I had done so at the beginning of my tenure when I was presented with a paper copy of the agreement.”  (Id., ¶ 9.)  Plaintiff concludes, “[A]s I began complaining about her conduct, Defendant Karina Celis took it upon herself to digitally process the agreement by taking over my ADP account under the false pretense that she was managing my ‘payroll records.’ ”  (Id., ¶ 11.) 

Defendant Karina Celis directly disputes plaintiff’s statements.  Celis states, “I have never communicated with Sandoval regarding the execution of the Electronic Agreement.  I never took control of Sandoval’s ADP account, let alone forced or coerced Sandoval to electronically sign her Electronic Agreement.”  (Celis Decl., ¶ 6.) 

Celis submits strong corroborating evidence.  She presents evidence she did not start working for KHRG La Peer LLC until November 16, 2022—two days after plaintiff signed the arbitration agreement.  (Celis Decl., ¶¶ 2-6.)  Celis presents documentary evidence showing she started working for KHRG La Peer LLC on November 16, 2022, including internal emails from before she started (id., Ex. 1) and “on boarding documents executed on [her] first day of work,” which are signed by hand and dated November 16, 2022 (id., ¶ 5, Ex. 3).  Moreover, Celis states. “[F]or the first 45 days of my employment with KHRG I was in an observation period” and “was simply observing the company’s operations and I did not have authority to make decisions nor give directives to employees, including Sandoval.”  (Id., ¶ 6.)  It therefore was “impossible for [Celis] to have executed Sandoval’s Electronic Agreement on her behalf.”  (Ibid.)

A simple mistake in who accepted the agreement on plaintiff’s behalf does not explain this discrepancy.  Though plaintiff states another employee, Kimberly Friedman, was present when the agreement was electronically signed (Sandoval Decl., ¶¶ 7, 9), plaintiff specifically asserts Celis was the one who took “control” and pressed the buttons to indicate accepting the agreement (id., ¶¶ 7, 11).  Moreover, plaintiff states defendants became “much more aggressive about their efforts to have [her] execute an arbitration agreement after [she] began disclosing [her] work restrictions and complaining about ongoing harassment by Defendant Karina Celis.”  (Id., ¶ 6.)  Plaintiff also states Karina Celis accepted the agreement for plaintiff “as [plaintiff] began complaining about [Celis’s] conduct.”  (Id., ¶ 11.)  Plaintiff could not have complained about Celis’s conduct before Celis started her job. 

Defendants thus present evidence impeaching plaintiff’s testimony and rebutting her account of how the agreement was electronically signed.  Defendants meet their burden of showing by a preponderance of the evidence that plaintiff manifested her consent to the electronic arbitration agreement.

Unconscionability

            Plaintiff argues the agreement is unconscionable and therefore unenforceable.  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.)  “Generally, the burden is on the party opposing arbitration to show an arbitration agreement is unconscionable.”  (Saheli v. White Memorial Medical Center (2018) 21 Cal.App.5th 308, 330.)

Plaintiff shows moderate 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 on other grounds by Baltazar v. Forever 21, Inc. (2016) 62 Cal.4th 1237.)  “ ‘Arbitration contracts imposed as a condition of employment are typically adhesive.’ ” (Davis v. Kozak (2020) 53 Cal.App.5th 897, 906 (Davis).)  “By itself, however, adhesion establishes only a ‘low’ degree of procedural unconscionability.”  (Id. at p. 907.)

Plaintiff presents evidence of surprise or oppression.  In November 2022, defendants asked her to electronically sign an arbitration agreement during her workday.  (Sandoval Decl., ¶ 7.)  She had no opportunity to negotiate the contract and was given little time to review it.  (Ibid.)  Plaintiff states, “I neither speak nor write English” (id., ¶ 3), but the electronic interface for signing the agreement is “primarily in English” (id., ¶ 4).  Plaintiff also asked for paper copies of the digital documents, but defendants refused to provide them.  (Id., ¶¶ 7-9.) 

Plaintiff does not, however, show any substantive unconscionability as required.  She argues the agreement is substantively unconscionable because it includes a provision waiving her right to bring representative claims under the Private Attorneys General Act (PAGA).  The agreement provides, “Unless prohibited by applicable law,” plaintiff may not “participate in any representative action.”  (Campbell Decl., Ex. 5, p. 2.)  It further states, “Individual claims under the Private Attorneys General Act based on alleged individual Labor Code violations shall be resolved on an individual basis only, and unless prohibited by applicable law, there will be no right or authority to pursue non-individual claims as a private attorney representative involving Labor Code violations affecting other individuals.”  (Ibid.)  This provision does not apply because such a waiver is “prohibited by applicable law.”  (See Iskanian v. CLS Transportation Los Angeles, LLC (2014) 59 Cal.4th 348, 384 (Iskanian).) 

Plaintiff provides no authority that including a void provision waiving the right to bring representative PAGA claims makes an agreement unenforceable.  In Iskanian, the California Supreme Court held the employer “cannot compel the waiver of [the employee’s] representative PAGA claim but that the agreement is otherwise enforceable.”  (59 Cal.4th at p. 391.)  Furthermore, any unconscionability arising from this provision is irrelevant because plaintiff does not bring any PAGA claims.

Plaintiff also argues the agreement is substantively unconscionable because it requires her to pay the costs of arbitration.  The agreement provides, “Unless otherwise provided by law, I understand that the Company and I shall be responsible for our own attorney’s fees and costs, except that I shall be required to pay the case filing fee charged by JAMS/AAA or the filing fee had I filed a complaint in state court, whichever is less.”  (Campbell Decl., Ex. 5, p. 2.) 

As with the PAGA waiver, plaintiff will not be required to pay costs unique to arbitration under this provision because doing so is prohibited as “otherwise provided by law.”  (See, e.g., Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83, 110-111.)  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, 984.)  California law requires defendants to pay all costs unique to this arbitration.  The court assumes the arbitrator will follow that requirement.

Assuming these two provisions are unconscionable, they are 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 includes a severability clause: “If any provision of this Agreement is held to be invalid or unenforceable, in whole or in part, the remaining provisions shall continue to be valid and any unenforceable or conflicting provision shall be automatically severed.”  (Campbell Decl., Ex. 5, p. 3.)  The court will therefore sever the PAGA waiver and the fee provision and require defendant KHRG La Peer LLC to pay plaintiff’s arbitration fees.

Disposition

            Defendants KHRG La Peer LLC, Karina Celis, and Felipe Cucalon’s motion to compel arbitration and stay the action is granted. 

The court hereby severs the agreement’s “Waiver of Representative Claims” (Campbell Decl., Ex. 5, p. 2) and the agreement’s provision that “the Company and I shall be responsible for our own attorney's fees and costs” (ibid.).  As required by Armendariz v. Foundation Health Psychcare Services, Inc., defendant KHRG La Peer LLC must pay all of plaintiff’s costs that are unique to arbitration.

Plaintiff Cynthia Sandoval is ordered to arbitrate this action against defendants.  The court hereby stays the entire action pending resolution of the arbitration proceeding.