Judge: Armen Tamzarian, Case: 24STCV02799, Date: 2024-07-11 Tentative Ruling

Case Number: 24STCV02799    Hearing Date: July 11, 2024    Dept: 52

Defendants Rose Hills Company and Mishelle Lin’s Petition to Compel Arbitration and Stay Action

Defendants Rose Hills Company a/k/a Rose Hills Memorial Park & Mortuary and Mishelle Lin move to compel arbitration and stay this action by plaintiff Jae W. Lee. 

Plaintiff opposes the motion solely by arguing the arbitration agreement is unconscionable.  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.)

A. Procedural Unconscionability

Plaintiff shows some 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.)  Plaintiff establishes this agreement was an adhesion contract.  He provides evidence he was provided with many documents to sign along with the agreement.  (Lee Decl., ¶ 4.)  On the other hand, the agreement itself was not surprising or hidden.  It is a single page titled, “Rose Hills Arbitration Agreement.”  (Castro Decl., Ex. A.)  Its terms are relatively straightforward.  A reasonable person who signed this agreement would not be surprised that it required him to arbitrate claims arising out of his employment.

B. Substantive Unconscionability

Plaintiff argues the agreement is substantively unconscionable because it “does not state anything about the arbitrator being neutral or mutually selected by the parties” and “fails to address discovery.”  (Opp., p. 13.)  Generally, an agreement’s silence about certain requirements does not make it substantively unconscionable.  Instead, those requirements are implied by law.  (Sanchez v. Western Pizza Enterprises, Inc. (2009) 172 Cal.App.4th 154, 177 [“the absence of express provisions …  allowing discovery does not render the arbitration agreement unconscionable.  Rather, those terms are implied as a matter of law as part of the agreement”]; Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83, 113.)

The arbitration agreement provides that controversies “shall be submitted to arbitration in Los Angeles, California, before a sole arbitrator selected from” JAMS, “or if JAMS is no longer able to supply the arbitrator, such arbitrator shall be selected from the American Arbitration Association, and shall be conducted in accordance with the provisions of California Code of Civil Procedure §§ 1280 et seq.”  (Castro Decl., Ex. A.)  JAMS and AAA both provide dispute resolution services using neutral arbitrators.  The agreement does not provide that the employer may unilaterally select the arbitrator.  The agreement also does not limit discovery.  Lacking express provisions on these subjects does not make the agreement unconscionable. 

Plaintiff further argues the agreement is unfair because it waives his right to an administrative proceeding before the Civil Rights Department or Equal Opportunity Employment Commission.  Rather than expressly providing for such a waiver, the agreement is silent about that.  “When an arbitration provision is ambiguous, [courts] will interpret that provision, if reasonable, in a manner that renders it lawful, both because of our public policy in favor of arbitration as a speedy and relatively inexpensive means of dispute resolution, and because of the general principle that we interpret a contractual provision in a manner that renders it enforceable rather than void.”  (Pearson Dental Supplies, Inc. v. Superior Court (2010) 48 Cal.4th 665, 682.)  The court therefore interprets the agreement as not limiting the employee’s ability to initiate administrative proceedings.  Even if it did, “the inclusion of a provision limiting resort to an administrative forum does not render the arbitration agreement unconscionable or unenforceable.”  (Ibid.)  The agreement is not substantively unconscionable for this reason.

Finally, plaintiff argues the agreement is substantively unconscionable because it provides that plaintiff must pay his employer’s attorney fees if it prevails.  (Opp., p. 14.)  The agreement provides, “Employee and Rose Hills further agree that in any proceeding to enforce the terms of this Agreement, the prevailing party shall be entitled to its or his reasonable attorneys’ fees and costs (other than forum costs associated with the arbitration) incurred by it or him in connection with resolution of the dispute in addition to any other relief granted.”  (Castro Decl., Ex. A.)  Defendants argue this provision applies only to a proceeding to enforce the arbitration agreement, not the underlying dispute.  Either way, it is substantively unconscionable.  A provision requiring “the party that resisted arbitration” to pay the other party’s fees “incur[red] in compelling arbitration” is substantively unconscionable and unenforceable because it violates “the FEHA asymmetrical rule of attorney fees.”  (Ramirez v. Charter Communications, Inc. (2022) 75 Cal.App.5th 365, 377, review granted June 1, 2022, S273802.)

The court will sever this provision of the agreement.  “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.)  Unconscionability does not permeate the agreement.  It contains only one unconscionable provision.  Moreover, as defendants argue, they have not sought attorney fees incurred making this motion.  The court will therefore sever this provision and preclude defendants from recovering attorney fees except under FEHA’s asymmetrical fee standard.

Disposition

            Defendants Rose Hills Company a/k/a Rose Hills Memorial Park & Mortuary and Mishelle Lin’s motion to compel arbitration and stay proceedings is granted. 

The court hereby severs the following provision of the arbitration agreement: “Employee and Rose Hills further agree that in any proceeding to enforce the terms of this Agreement, the prevailing party shall be entitled to its or his reasonable attorneys’ fees and costs (other than forum costs associated with the arbitration) incurred by it or him in connection with resolution of the dispute in addition to any other relief granted.”  (Castro Decl., Ex. A.) 

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