Judge: Barbara M. Scheper, Case: 24STCV15373, Date: 2024-11-19 Tentative Ruling

Case Number: 24STCV15373    Hearing Date: November 19, 2024    Dept: 30

Dept. 30

Calendar No.

Soto vs. BF Ford Long Beach, et. al., Case No. 24STCV15373

Tentative Ruling re:  Defendant’s Motion to Compel Arbitration

Defendant moves for an order compelling Plaintiff to submit to binding arbitration and stay this action pending resolution of the arbitration. The motion is granted.

“On petition of a party to an arbitration agreement alleging the existence of a written agreement to arbitrate a controversy and that a party thereto refuses to arbitrate such controversy, the court shall order the petitioner and the respondent to arbitrate the controversy if it determines that an agreement to arbitrate the controversy exists, unless it determines that: (a) The right to compel arbitration has been waived by the petitioner; or (b) Grounds exist for the revocation of the agreement.” (Code Civ. Proc. § 1281.2, subds. (a), (b).)

A proceeding to compel arbitration is in essence a suit in equity to compel specific performance of a contract. (Freeman v. State Farm Mutual Auto Insurance Co. (1975) 14 Cal.3d 473, 479.) Such enforcement may be sought by a party to the arbitration agreement. (Code Civ. Proc., § 1280, subd. (e)(1).)

            A motion to compel arbitration requires the facts to be proven by affidavit or declaration and documentary evidence with oral testimony taken only in the court’s discretion. (Code Civ. Proc., §1290.2; Rosenthal v. Great Western Fin. Securities Corp. (1996) 14 Cal.4th 394, 413–414.) The motion must set forth the provisions of the written agreement and the arbitration clause verbatim, or such provisions must be attached and incorporated by reference. (Cal. Rules of Court, rule 3.1330; see Condee v. Longwood Mgmt. Corp. (2001) 88 Cal.App.4th 215, 218.) 

Once the moving party alleges that an arbitration agreement exists, the burden shifts to the responding party to prove the falsity of the purported agreement, and no evidence or authentication is required to find the arbitration agreement exists. (See Condee, supra, 88 Cal.App.4th at p. 219.) However, if the existence of the agreement is challenged, “[movant] bears the burden of proving [the arbitration agreement’s] existence by a preponderance of the evidence.” (Rosenthal, supra, p. 413; see also Espejo v. Southern California Permanente Medical Group (2016) 246 Cal.App.4th 1047, 1058–1060.)

Defendant argues that a valid arbitration agreement exists. A party moving to compel arbitration may meet its initial burden by providing a copy of the arbitration agreement. (Gamboa v. Northeast Community Clinic (2021) 72 Cal.App.5th 158, 165–166 (Gamboa).) The opposing party may produce evidence to challenge the agreement in response. (Ibid.) Then, the moving party must use admissible evidence to show a valid agreement. (Ibid.)

Here, Defendant alleges that Plaintiff signed a valid arbitration agreement on February 19, 2023. (Lusikyan Decl. ¶ 10.) Defendant has provided a copy of the arbitration agreement (Agreement). (Id., Ex. A.) The Agreement states that the employee “understand[s] that this agreement requires me to pursue all claims I bring against the Company (and any third-party beneficiaries) through binding arbitration and requires that the Company submit any claims it has against me to binding arbitration.” (Ibid.) Further, it specifically includes all claims arising out of the employment context. (Ibid.) Plaintiff’s electronic signature appears on the Agreement. (Ibid.)

Plaintiff offers evidence challenging the arbitration agreement. Plaintiff received instructions from Defendant to submit for a drug test and background check, and signed documentation which he believed authorized a background check. (Soto Decl. ¶ 3.) Plaintiff alleges that the Agreement was never mentioned, and that he did not sign it. (Ibid.) Under Gamboa, Plaintiff has met its burden of producing evidence to challenge the existence of the Agreement. Thus, Defendant must use admissible evidence to show a valid agreement to arbitrate.

Defendant offers sworn declarations from its human resources manager. (Lusikyan Decl. ¶ 1.) She has access to all employee records and is familiar with Defendant’s arbitration agreements, and how they are maintained and stored. (Id. ¶ 2.) She explains that no other individuals besides Plaintiff have access to the account on which he submitted paperwork, including the alleged arbitration agreement. (Id. ¶¶ 5–6.) She asserts that Plaintiff signed the arbitration agreement on February 19, 2023. (Id. ¶ 10.) This is sufficient to authenticate an electronic signature under Fabian v. Renovate America, Inc. (2019) 42 Cal.App.5th 1062 (Fabian).

In Fabian, the court held that a summary assertion from a manager attesting to an electronic signature by an employee was insufficient authentication, affirming the trial court’s denial of the employer’s petition to compel arbitration. Here, unlike in Fabian, Defendant asserts that Plaintiff signed the contract on a certain date, rather than simply asserting that Plaintiff entered the contract. (Fabian, supra, 42 Cal.App.5th at 1069; Lusikyan Decl. ¶ 10.) Additionally, Defendant offers evidence explaining how Plaintiff could be the only possible signor of the Agreement, unlike the employer in Fabian. (Fabian, supra, at p. 1070.)

Moreover, Defendant offers Plaintiff’s job application as evidence rebutting Plaintiff’s claim that he did not know what he was signing. (Lusikyan Supp. Decl., Ex. C.) The application contains information only known to Plaintiff, showing that he read and signed the document. (Ibid.) Directly under the information entered by Plaintiff, the application includes an “Applicant Statement and Agreement.” (Ibid.) This document includes, in all capital letters, a warning that says “IMPORTANT — READ CAREFULLY CONTAINS A BINDING ARBITRATION AGREEMENT.” (Ibid.) Plaintiff’s digital signature appears after the Agreement. (Ibid.) Even if Defendant never explicitly told Plaintiff that the application included an arbitration agreement, the application itself properly identifies the Agreement and its importance. Thus, Defendant has proven the existence of an arbitration agreement, signed by Plaintiff, by a preponderance of the evidence.

The arbitration agreement is not unconscionable.

Plaintiff argues that the arbitration agreement is unconscionable and thus unenforceable. Unconscionability generally requires a finding of both procedural and substantive unconscionability. (Stirlen v. Supercuts, Inc. (1997) 51 Cal.App.4th 1519, 1533.) They need not be present to the same degree: a sliding scale is used such that the greater the procedural or substantive unconscionability present, the less that is required of the other. (Gentry v. Superior Court (2007) 42 Cal.4th 443, 469 (Gentry).)

“Procedural unconscionability turns on adhesiveness — a set of circumstances in which the weaker or ‘adhering’ party is presented with a contract drafted by the stronger party on a take it or leave it basis.” (Mercuro v. Superior Court (2002) 96 Cal.App.4th 167, 174.) Arbitration agreements as a condition of employment are procedurally unconscionable, though this is not an automatic bar to their enforcement. (McManus v. CIBC World Markets Corp. (2003) 109 Cal.App.4th 76, 101.) Agreements which fail to explain the advantages or disadvantages of arbitration are procedurally unconscionable as well. (Gentry, supra, 42 Cal.4th at p. 470–73.)

Here, the arbitration agreement is mildly procedurally unconscionable. The Agreement is an adhesion contract, in that Defendant required Plaintiff to accept the agreement as a condition of employment. However, most employment agreements are adhesion contracts, and this factor alone does not make an arbitration agreement highly procedurally unconscionable. (Lange v. Monster Energy Co. (2020) 46 Cal.App.5th 436, 446 (Lange).) Additionally, Plaintiff argues that the Agreement failed to explain the advantages or disadvantages of arbitration as required by Gentry. But the Agreement specifically explains, in all capital letters, that the signor gives up the right to a trial by jury or judge and any right to an administrative process. (Lusikyan Decl., Ex. A. ¶ 14.) Thus, as in Lange, the Agreement only represents a low degree of procedural unconscionability as an adhesion contract.

With the Court having found a low degree of procedural unconscionability in the Agreement, Plaintiff must demonstrate a high degree of substantive unconscionability to render it unenforceable. (Gentry, supra, 42 Cal.4th at p. 469.) Plaintiff argues that the Agreement is substantively unconscionable because it fails to provide for a neutral arbitrator or for all types of relief otherwise available in court. Plaintiff is incorrect. The Agreement provides for a neutral arbitrator in the form of a retired Superior Court or Federal District Court judge. (Lusikyan Decl., Ex. A. ¶ 7.) Additionally, the Agreement allows the arbitrator to “fashion the . . . award to preserve any special protections afforded by the laws governing the claims.” (Id., Ex. A. ¶ 7.) Thus, the Agreement provides for a neutral arbitrator and the full range of remedies available at law and is not substantively unconscionable. Accordingly, Defendant’s motion to compel arbitration is granted.

Proceedings are stayed pending completion of arbitration and Defendant is awarded costs for filing the present motion.

Defendant additionally requests that the present proceedings be stayed pending the outcome of arbitration. If a court orders arbitration of a controversy, the court shall stay the action or proceeding until arbitration is complete on motion by a party. (Code Civ. Proc., § 1281.4.) Here, the Court has ordered arbitration. Accordingly, the proceedings are stayed pending the outcome of that arbitration.

Additionally, Defendant requests reimbursement for the cost of filing the present motion. The court shall award costs upon any proceeding to compel arbitration. (Id., § 1293.2.) Defendant has prevailed in the present proceeding, necessitated by Plaintiff’s refusal to submit to arbitration. Accordingly, Defendant is awarded $495 in costs for bringing the present motion. (Russel Decl. ¶ 3.)