Judge: Armen Tamzarian, Case: 23STCV27549, Date: 2024-08-06 Tentative Ruling

Case Number: 23STCV27549    Hearing Date: August 6, 2024    Dept: 52

Defendant’s Motion to Compel Arbitration and Stay Action

Defendant Inter-Con Security Systems, Inc. moves to compel arbitration of this action by plaintiff Pollette Reyes.

Evidentiary Objections

            Plaintiff makes eight objections to defendant’s evidence.  All eight objections are overruled.

            Defendant makes five objections to plaintiff’s evidence.  All five objections are overruled.

Existence of Agreement

            Plaintiff argues defendant did not meet its burden of proving plaintiff signed the purported arbitration agreement.  The party moving to compel arbitration must establish the existence of a written arbitration agreement between the parties.  (CCP § 1281.2.)  It 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.”  (Espejo v. Southern California Permanente Medical Group (2016) 246 Cal.App.4th 1047, 1060 (Espejo).)  After the opposing party “challenge[s] the validity of that signature” must the moving party “establish by a preponderance of the evidence that the signature was authentic.”  (Ibid.) 

An employer can meet its burden of proving the employee signed an arbitration agreement using “a declaration from [its] custodian of records.”  (Gamboa v. Northeast Community Clinic (2021) 72 Cal.App.5th 158, 286 Cal.Rptr.3d 891, 901.)  “[T]he custodian of a document need not have been present or employed when the document was created or signed to authenticate a document in a company’s files.”  (Iyere v. Wise Auto Group (2023) 87 Cal.App.5th 747, 758.)

Plaintiff’s opposition incorrectly asserts the employer must prove 10 different facts.  (Opp., pp. 5-6.)  Plaintiff cites Fabian v. Renovate America, Inc. (2019) 42 Cal.App.5th 1062 (Fabian), which explains: “ ‘[T]he burden of authenticating an electronic signature is not great.’ ”  (Id. at p. 1067.)  “The party seeking authentication may carry its burden ‘in any manner,’ including by presenting evidence of the contents of the contract in question and the circumstances surrounding the contract’s execution.”  (Id. at p. 1068.)  The court noted the defendant “offered no evidence” about the six facts plaintiff lists.  (Id. at p. 1069.)  That does not mean proving those six items is necessary.  The same is true of the four purported elements discussed in Espejo. 

Defendant meets its burden of proving, by a preponderance of the evidence, that plaintiff electronically signed the arbitration agreement.  Defendant presents testimony by defendant’s assistant general counsel, Caitlin R. Johnson.  Johnson testifies, “I am familiar with the personnel matters of Inter-Con, including its arbitration agreement.  In this capacity, I am familiar with the business operations of Inter-Con.  I am also familiar with and responsible for maintaining personnel records.  I am a custodian of records for the personnel files and, as such, I am familiar with and maintain the correspondence informing employees of the arbitration agreement, and mailing lists containing employees’ home and e-mail addresses to which correspondence about the arbitration agreement have been sent.”  (Johnson Decl., ¶ 1.)  She states, “For purposes of making this Declaration, I reviewed documents contained in Plaintiff’s personnel file, I reviewed documents contained in Plaintiff’s personnel file, which Inter-Con made in the regular course of its business, at or near the time of the act or event recorded in the document, by persons with knowledge of those events, and it maintains in the regular course of business.”  (¶ 5.) 

Johnson testifies she has “working knowledge of the process by which candidates for employment, including Plaintiff, applied for the position she held with Inter-Con and thereafter proceeded through the onboarding process.  This also includes the onboarding process via Taleo, a third party cloud-based service through which Plaintiff completed her onboarding.”  (¶ 9.)  “In order to complete her onboarding as an Inter-Con employee, Plaintiff set-up an account by creating a username and a private password via Taleo’s secure website.  Taleo did not provide login credentials to Inter-Con and Inter-Con could not and cannot log into Plaintiff’s account.”  (¶ 10.) 

Johnson testifies, “Inter-Con delivered the Agreement to Plaintiff through the Taleo platform. Plaintiff then logged into her password-protected account to review and electronically sign it by entering her first and last name, username, password, and date of signing, and then clicking a button that labeled ‘e-Sign it!’  In conjunction with this process, the Taleo website provided the following alert: ‘Filling in the following information will constitute your e-Signature and will have the same legal impact as signing a printed version of this document.’  The Taleo system created a unique ‘Esign ID’ for Plaintiff’s electronic signature and appended an ‘Electronic Signature’ page to each document electronically signed, which includes in the Agreement in this case.  The Taleo system also added a header to each page of the electronically signed Agreement identifying the employee’s name, Esign ID, and date of signing.  In Plaintiff’s case, it is 64WR766OG-2HRSJ2OVA.  The electronic signature page also includes password verification for the Agreement electronically executed by Plaintiff.”  (¶ 11.) 

Plaintiff does not sufficiently rebut this evidence.  Plaintiff states, “The new hire documents I remember signing were provided to me via Paycom.  I do not recall signing any documents via the Taleo platform which Defendant cites in its Motion.  I do not know what Taleo is and I don’t remember using it.  I do not recall signing any arbitration agreement with Defendant whether on Taleo or Paycom and if one had been presented to me I would not have signed it.”  (Reyes Decl., ¶ 3.)  She further testifies, “I do not remember seeing or reading” the arbitration agreement, “I do not recall signing” it, and “I do not recognize the e-signature” on it.  (Reyes Decl., ¶ 4.) 

As in Espejo, defendant presented detailed evidence from a custodian of records explaining 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 of the” agreement.  (Espejo, supra, 246 Cal.App.4th at p. 1062.)  Unlike Fabian, defendant’s supporting declaration does not “only ‘summarily assert[]’ that Fabian ‘entered into’ the Contract on” a specific date.  (Fabian, supra, 42 Cal.App.5th at p. 1069.)  Johnson’s declaration (¶¶ 10-11) attests to the precise details lacking in Fabian. 

Plaintiff, meanwhile, makes conclusory statements about not remembering signing the document.  That plaintiff signed some documents using “Paycom” instead of “Taleo” and does not remember signing anything via Taleo does not rebut defendant’s evidence showing she did sign the arbitration agreement using Taleo.

Plaintiff also argues there is no agreement because the contract does not define “I” or “Me” and instead says “Employee” by her signature.  “A fundamental rule of contract formation and interpretation is that the terms of a contract are determined by the parties’ objective manifestations of consent.”  (Tufeld Corporation v. Beverly Hills Gateway, L.P. (2022) 86 Cal.App.5th 12, 30.)  The agreement begins, “I recognize that differences may arise between Inter-Con Security Systems, Inc. (‘the Company’) and me during or following my employment with the Company.”  (Johnson Decl., Ex. A.)  The only reasonable interpretation of an agreement to arbitrate disputes about “my employment with the Company” is that “I” and “Me” means the employee who signs it.  By electronically signing it, plaintiff manifested consent to its terms. 

Finally, plaintiff argues there is no valid agreement because defendant did not sign it.  It is well established that the drafting party can enforce an arbitration agreement it did not sign.  (See, e.g., Cruise v. Kroger Co. (2015) 233 Cal.App.4th 390, 398.)  The issue is whether the employer intended to be bound, not whether it signed the document.  (Ibid.) 

Unconscionability

            Plaintiff argues the agreement is unconscionable.  Unconscionability 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.)

A. Procedural Unconscionability 

Plaintiff shows a low 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.)  She shows nothing oppressive or surprising other than adhesion.

            Plaintiff argues the agreement was inconspicuous because it was in the middle of over 100 pages of onboarding documents.  That does not make the agreement surprising or oppressive.  Though included with other agreements, it is a discrete, five-page document.  At the top of all five pages, the document is labeled “Mutual Agreement to Arbitrate Claims.”  The agreement is in legible print in a normal size. 

            Plaintiff also argues the agreement is procedurally unconscionable because it does not attach the applicable arbitration rules.  “[A] viable claim of procedural unconscionability for failure to identify the particular version of the applicable arbitral rules—like a claim for failure to attach the rules themselves—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.)  “That is, if the unidentified rules are not themselves substantively unfair, then the employer cannot be faulted for vaguely referring to such rules.”  (Ibid.)  As discussed below, the only substantively unfair provisions in the rules are provided in the arbitration agreement itself, not in an arbitration provider’s rules. 

B. Substantive Unconscionability

Plaintiff shows two moderately substantively unconscionable provisions.  First, the agreement unfairly limits discovery.  “In striking the appropriate balance between the desired simplicity of limited discovery and an employee’s statutory rights, courts assess the amount of default discovery permitted under the arbitration agreement, the standard for obtaining additional discovery, and whether the plaintiffs have demonstrated that the discovery limitations will prevent them from adequately arbitrating their statutory claims.”  (Davis, supra, 53 Cal.App.5th at pp. 910-911.)

The agreement permits “Depositions upon oral examination [of] three fact witnesses and one expert witness per side as of right, with more permitted if leave is obtained from the Arbitrator.”  (Johnson Decl., Ex. A, p. 2.)  It permits a maximum of 20 interrogatories and unlimited requests for production of documents.  (Ibid.)  Plaintiff shows that, under the circumstances, these limits are likely to prevent her from adequately vindicating her rights. 

Plaintiff alleges 19 causes of action.  Despite significant overlapping issues, her claims raise five categories of complaints that will require different evidence: (1) sex or gender discrimination in the terms or conditions of her employment; (2) disability discrimination and failure to accommodate disability or provide leave under the California Family Rights Act; (3) hostile work environment harassment; (4) retaliation; and (5) wage and hour claims.  Plaintiff will likely need to depose more than 3 witnesses.  Limiting her to 20 interrogatories could also unfairly interfere with her ability to prove her claims.

Though the arbitrator may be authorized to permit additional discovery, “the default level of discovery provided for in the arbitration agreement appear to be inadequate to vindicate her rights.”  (Murrey v. Superior Court (2023) 87 Cal.App.5th 1223, 1250 (Murrey).)  The discovery limits are not as great as in Murrey, where “each party was restricted to 15 requests for documents.”  (Id. at pp. 1248-1249.)  Regardless, these “superficially neutral … discovery restrictions only favor” the employer.  (Id. at p. 1249.)   

Second, the agreement includes an unconscionable waiver of the right to bring PAGA claims.  It is substantively unconscionable to require employees “to waive any right to bring a representative action under the Labor Code Private Attorneys General Act of 2004 … despite the fact that ‘an employee’s right to bring a PAGA action is unwaivable.’ ”  (Najarro v. Superior Court (2021) 70 Cal.App.5th 871, 882.)  The agreement provides, “[N]either the Company nor I will have the right to participate in a class, representative or collective action, as a class representative, class member or an opt-in party, act as a private attorney general, or join or consolidate claims with claims of any other person or entity, against me or the Company.”  (Johnson Decl., Ex. A, p. 4.)  Waiving this unwaivable right is substantively unconscionable.

Defendant argues this provision is not unconscionable because under Viking River Cruises, Inc. v. Moriana (2022) 596 U.S. 639, an employee can be required to arbitrate her individual or non-representative PAGA claims.  There, the Supreme Court held that “the FAA preempts the rule of Iskanian insofar as it precludes division of PAGA actions into individual and non-individual claims through an agreement to arbitrate.”  (Id. at p. 662.)  But the agreement’s terms do not merely limit the forum in which plaintiff must bring PAGA claims.  Agreeing she will not “have the right to … act as a private attorney general” purports to prohibit her from bringing any PAGA claim in any forum.  That right is unwaivable.      

Plaintiff also argues the agreement is not mutual because defendant did not sign it.   “In assessing substantive unconscionability, the paramount consideration is mutuality.”  (Pinela v. Neiman Marcus Group, Inc. (2015) 238 Cal.App.4th 227, 241, internal quotes and citations omitted.)  As discussed above, the drafting party is not required to sign the agreement.  Defendant objectively manifested consent to be bound to arbitrate its own disputes with plaintiff.  The agreement is titled “Mutual Agreement to Arbitrate Claims.”  It provides, “The Company and I mutually consent to” arbitrate claims “that the Company may have against me or that I may have against” the Company.  (Johnson Decl., Ex. A, p. 1.)  The agreement is bilateral. 

C. Severance of Unconscionable Terms

The two unconscionable provisions discussed above 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 two unconscionable provisions can be severed by striking limited text in the agreement.  When considering the low degree of procedural unconscionability, the limited number of substantively unconscionable terms, and the moderate unfairness of those unconscionable terms, the court cannot conclude that the agreement “indicate[s] a concerted effort to impose on an employee a forum with distinct advantages for the employer.”  (Murrey, supra, 87 Cal.App.5th at p. 1256.)  Despite the limits on discovery and the PAGA waiver, under the totality of circumstances the agreement indicates a reasonable and fair effort to mutually require binding arbitration as an expeditious means of resolving disputes by either party.

Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act (EFAA)

            Plaintiff argues the agreement is unenforceable under the EFAA.  The EFAA “voids predispute arbitration clauses in cases … involving sexual harassment allegations.”  (Murrey, supra, 87 Cal.App.5th at p. 1230.)  The law “does not apply retroactively.”  (Ibid.)  It only applies if the “sexual harassment dispute” arose after the law took effect on March 3, 2022.  “[T]he date that a dispute has arisen for purposes of the Act is a fact-specific inquiry in each case, but a dispute does not arise solely from the alleged sexual conduct.  A dispute arises when one party asserts a right, claim, or demand, and the other side expresses disagreement or takes an adversarial posture.”  (Kader v. Southern California Medical Center, Inc. (2024) 99 Cal.App.5th 214, 222 (Kader).)  “Unlike a claim, however, a dispute does not arise simply because the plaintiff suffers an injury; it additionally requires a disagreement or controversy.”  (Id. at p. 223.) 

            Plaintiff’s first amended complaint establishes the sexual harassment dispute arose before March 3, 2022.  It alleges, “[F]rom August to September 2021, Plaintiff complained repeatedly to multiple of Defendant’s managers and supervisors including Chavez himself, and Miguel Quintanilla, regarding the unlawful treatment she was being subjected to and requested to be transferred from Chavez due to the unlawful discrimination, harassment, and hostile work environment fostered and encouraged by Chavez, which was ratified by Quintanilla.”  (FAC, ¶ 21.)  It further alleges, “In response, Plaintiff’s repeated complaints were ignored or minimized by Defendant Inter-Con.  For example, rather than disciplining Chavez or investigating Plaintiff’s complaints, Quintanilla told Plaintiff to just ignore him.  When Plaintiff persisted with her complaints, she was asked for additional proof of her allegations because it seemed like simple ‘bickering’ between co-workers.  Finally, when Plaintiff escalated her complaints, Miguel asked Plaintiff to omit any references of her prior complaints to him about Chavez for fear it would jeopardize his employment due to his lack of remediation after Plaintiff’s initial complaints to him.”  (¶ 22.)  Plaintiff alleges she “was forced … to resign” on March 30, 2022.  (¶ 23.) 

            These allegations show a disagreement or controversy arose between “August to September 2021” when “Plaintiff “complained repeatedly” about “unlawful treatment.”  (FAC, ¶ 21.)  Complaining about unlawful treatment constitutes asserting a right, claim, or demand.  Defendant expressed disagreement or took an adversarial posture by not “disciplining Chavez or investigating Plaintiff’s complaints” and instead telling Plaintiff “to just ignore” Chavez.  (¶ 22.)  That defendant “asked for additional proof of her allegations because it seemed like simple ‘bickering’ between co-workers” (ibid.) further establishes defendant disputed and disagreed with plaintiff’s repeated complaints that she was being sexually harassed.  In contrast, in Kader the employee’s “attorney conceded that [employee] never complained to anyone at” her employer about the alleged harassment until she filed an administrative complaint.  (Kader, supra, 99 Cal.App.5th at p. 224.) 

            Plaintiff argues defendant cannot rely on her first amended complaint because defendant’s answer denied these allegations.  Plaintiff provides no authority supporting this argument.  “ ‘ “[A] pleader cannot blow hot and cold as to the facts positively stated.” ’ ”  (Myers v. Trendwest Resorts, Inc. (2009) 178 Cal.App.4th 735, 746.)  Plaintiff’s first amended complaint makes detailed factual allegations showing her sexual harassment dispute arose in 2021.  That defendant’s answer makes a conclusory denial of all allegations does not show the dispute arose after March 3, 2022. 

Disposition

            Defendant’s motion to compel arbitration is granted.  The court hereby severs the following text in the arbitration agreement: (a) “three fact witnesses and one expert witness per side as of right, with more permitted if leave is obtained from the Arbitrator” (Johnson Decl., Ex. A, p. 2, ¶ A.1); (b) “up to a maximum combined total of twenty (20)” (id., ¶ A.2); (c) “or in a representative or private attorney general capacity on behalf of a class of persons or the general public” (id., p. 4); and (d) “act as a private attorney general.” 

Plaintiff Polette Reyes is ordered to arbitrate this action against defendant Inter-Con Security Systems, Inc.  The court hereby stays the entire action pending resolution of the arbitration proceeding.