Judge: Armen Tamzarian, Case: 23STCV24128, Date: 2024-10-08 Tentative Ruling

Please notify Department 52 via email at smcdept52@lacourt.org and indicate that the parties are submitting on the tentative ruling. Please provide the attorney's name and represented party. Please notify the opposing side via email if submitting on the Court's tentative ruling.

Case Number: 23STCV24128    Hearing Date: October 8, 2024    Dept: 52

Defendant Ganahl Lumbar Company’s Motion to Compel Arbitration of Plaintiff’s Individual Claims and Stay Plaintiff’s Representative Action

Defendant Ganahl Lumbar Company moves to compel arbitration of plaintiff Veronica Novela’s individual claims and stay the representative claims in this action. 

Evidentiary Objections

            Plaintiff makes two evidentiary objections, numbered 6 and 7.  Both objections are overruled.  

Mutual Assent

            Plaintiff argues “there is no agreement to arbitrate because there was no mutual assent.”  (Opp., p. 2.)  She argues there was no assent because she “had no opportunity to negotiate the terms of the Arbitration Agreement or have a meaningful choice in the matter.”  (Ibid.)  This argument conflates mutual assent with procedural unconscionability.  “ ‘ “[O]ne who accepts or signs an instrument, which on its face is a contract, is deemed to assent to all its terms, and cannot escape liability on the ground that he has not read it.” ’ ”  (Ramos v. Westlake Services LLC (2015) 242 Cal.App.4th 674, 686.)  Plaintiff does not dispute signing the agreement.  That is the quintessential manner of objectively manifesting consent to be bound by a contract. 

Unconscionability

            Plaintiff also argues the agreement is unconscionable.  She does not meet her burden of proving unconscionability.  This defense requires both procedural and substantive unconscionability using a sliding scale.  (OTO, L.L.C. v. Kho (2019) 8 Cal.5th 111, 125.)  “Procedural unconscionability focuses on the elements of oppression and surprise.”  (Serafin v. Balco Properties Ltd., LLC (2015) 235 Cal.App.4th 165, 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 a moderate degree of procedural unconscionability.  “ ‘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.)  “Significant oppression is shown when … an arbitration agreement is presented to an employee while he is working, along with other documents, neither its contents nor its significance are explained, and the employee is told he must sign the agreement to keep his job.”  (Nunez v. Cycad Management LLC (2022) 77 Cal.App.5th 276, 284.) 

The agreement was adhesive.  (Grant Decl., ¶¶ 6-7.)  Defendant’s human resources department manager, Joseph Grant, testifies that, in “January 2022” he gave a presentation to employees at which he “informed each employee that they could take up to 10 days to review the” arbitration agreement.  (Id., ¶ 6.)  But plaintiff signed the agreement in June 2020.  (Id., ¶ 7, Ex. B.) 

Plaintiff, meanwhile, testifies she never attended such a presentation by Grant.  (Novela Decl., ¶ 3.)  She testifies that the person who gave her the agreement was Eugenio Sampayo.  (Id., ¶ 4.)  She states Sampayo “told me that I had to sign the arbitration agreement because of a lawsuit that Defendant was going through” and “never told me that I could take time to review the arbitration agreement or that I was free to seek advice from an attorney before signing the arbitration agreement.”  (Ibid.)  Plaintiff further testifies, “Sampayo passed out the arbitration agreement to me and my coworkers, waited for us to sign the arbitration agreement, and then collected the arbitration agreements from us.”  (Id., ¶ 5.)  The record reflects oppression beyond a typical adhesion contract.  Defendant pressured plaintiff to sign the agreement to keep her job.

Plaintiff does not, however, show any substantive unconscionability.  She argues it is substantive unconscionable for three reasons. 

First, she argues it “does not provide for adequate discovery” because it “is completely silent regarding what discovery, if any, is allowed.”  (Opp., p. 5.)  That is incorrect.  The agreement provides, “Unless otherwise prohibited by the rules of the applicable arbitration association, the Parties agree that the Federal Rules of Civil Procedure and the Federal Rules of Evidence shall apply and be observed by the arbitrator and parties for all pleadings, discovery, the presentation of evidence, all rights to resolution of the dispute by means of motions.”  (Grant Decl., Ex. B, ¶ 6.)  Plaintiff provides no reason why the Federal Rules of Civil Procedure would not permit adequate discovery.

Even if the agreement were silent on discovery, that would not mean it limits discovery.  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.)  It is generally “not sufficient simply to claim that the discovery limitations [are] unconscionable in the abstract.”  (Baxter v. Genworth North America Corp. (2017) 16 Cal.App.5th 713, 729.)  Instead, it is “necessary to make a factual showing that the discovery limitations would as a practical matter thwart the employee’s ability to prove his or her particular claims.”  (Ibid.)  The employees must “establish as a factual matter that the discovery provisions [are] inadequate to vindicate their statutory rights.”  (Ibid.)  Plaintiff makes no such showing. 

Second, plaintiff argues the agreement is unconscionable because it “fails to state that all types of relief are available that would otherwise be available in court.”  (Opp., p. 6.)  Again, that is incorrect.  The agreement provides, “The arbitrator shall, except as otherwise provided by this Agreement, be permitted to grant any remedy that the arbitrator deems just and equitable, including any remedy or relief that would have been available to the Parties had the matter been heard in court.”  (Grant Decl., Ex. B, ¶ 8.) 

Even if the agreement did not include that provision, that would not mean it limits the available remedies.  By default, an arbitrator may award the same remedies as a court.  (See Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83, 103 [“an arbitration agreement may not limit statutorily imposed remedies such as punitive damages and attorney fees”].) 

Finally, plaintiff argues the agreement is substantively unconscionable because it “refers Plaintiff to independently visit J.A.M.S. or IVAMS’ rules for employment disputes to inquire about the applicable state statutes providing for arbitration procedures.”  (Opp., p. 6.) 

  Whether failing to provide the applicable rules is unconscionable “depends in some manner on the substantive unfairness of a term or terms contained within the unidentified version of the rules applicable to the dispute.”  (Davis, supra, 53 Cal.App.5th at p. 909.)  If the rules that are not identified or are incorporated only by reference “are not themselves substantively unfair, then the employer cannot be faulted for vaguely referring to such rules.”  (Ibid.)  The agreement provides the URL for “the JAMS rules governing employment arbitrations.”  (Grant Decl., Ex. B, ¶ 5.)  Plaintiff does not identify anything unfair in the applicable JAMS rules.  There is “a large body of legal authority upholding agreements incorporating by reference AAA or JAMS rules.”  (Murrey v. Superior Court (2023) 87 Cal.App.5th 1223, 1240.)

Dismissal of Individual Claims

Defendant’s papers argue the court should dismiss, rather than stay, plaintiff’s individual claims.  Defendant cites no authority permitting the court to dismiss claims subject to the arbitration agreement.  Both the Federal Arbitration Act (9 U.S.C. § 3) and the California Arbitration Act (Code Civ. Proc., § 1281.4) provide for staying an action pending arbitration, not dismissing the action.

Disposition

            Defendant Ganahl Lumber Company’s motion to compel arbitration of plaintiff’s individual claims and stay plaintiff’s representative claims is granted.  The court hereby orders plaintiff Veronica Novela to arbitrate her individual claims against defendant.  The court hereby stays the entire action pending resolution of the arbitration proceeding.