Judge Bruce G. Iwasaki, Case 22STCV17223 2023-04-17 Tentative Ruling

Tentative Ruling: The Motion to Compel Arbitration is granted.

In this employment action, Plaintiff Leticia Blanco sues Defendants DLF Logistics LLC (DLF) and its employees Joeana Lugo (Lugo) and Devan Carez (Carez) for sexual harassment, sex/gender discrimination, disability discrimination (including failure to provide reasonable accommodations and failure to engage in an interactive process), failure to prevent harassment and discrimination, negligent hiring and retention, retaliation under the FEHA, wrongful termination in violation of public policy, various Labor Code violations, and declaratory and injunctive relief.

As alleged, Plaintiff Blanco began working for DLF in December 2019. Early in her tenure at DLF, Blanco briefly dated Carez, whom she later discovered was the son of DLF’s president. After she broke up with Carez, Plaintiff discovered that Carez and other workers, including Lugo, had begun referring to her with derogatory and sexualized terms behind her back. She complained to DLF’s president; he allegedly ignored her complaint.

Plaintiff was involved in a car accident in April 2020 while driving a company van. She experienced back pain and requested time off, which DLF denied. Finally, Plaintiff alleges that in May 2020, she complained to DLF that it was not complying with CDC guidelines to prevent the spread of COVID and protect employees from infection. Toward the end of May, Plaintiff became ill with a respiratory infection and missed several days of work. On June 2, 2020, DLF fired her.

On April 25, 2022, Plaintiff sued on the grounds set forth above. Defendant DLF moved to compel arbitration of all her claims. Plaintiff opposed the motion, claiming (1) DLF has not proven the existence of an arbitration agreement, (2) the arbitration agreement is procedurally and substantively unconscionable, and (3) the arbitration agreement cannot be enforced because her sexual harassment claims[1] fall outside its scope and/or because she has also named Carez and Lugo, who are not parties to the arbitration agreement, as defendants.

Code of Civil Procedure section 1281.2 authorizes a court to order parties to arbitrate a controversy if it finds they have made a prior agreement to do so. An action to compel¿arbitration under the California Arbitration Act¿is, in essence, an action to compel specific performance of a contractual agreement to arbitrate. (Meyer v. Carnow¿(1986) 185 Cal.App.3d 169, 174.) A petition to compel arbitration must allege both (1) a “written agreement to arbitrate” the controversy, and (2) that a party to that agreement “refuses to arbitrate” the controversy. (Code Civ. Proc., § 1281.2.) Because the obligation to arbitrate arises from contract, the court may compel arbitration only if the specific dispute in question is one in which the parties have agreed to arbitrate. (Weeks v. Crow (1980) 113 Cal.App.3d 350, 352.)

In deciding the motion, the court must first decide whether an enforceable arbitration agreement between the parties exists, and then determine whether the claims are covered within the scope of the agreement. (See Omar v. Ralphs Grocery Co. (2004) 118 Cal.App.4th 955, 961.) “The petitioner bears the burden of proving the existence of a valid arbitration agreement by the preponderance of the evidence, and a party opposing the petition bears the burden of proving by a preponderance of the evidence any fact necessary to its defense. [Citation] In these summary proceedings, the trial court sits as a trier of fact, weighing all the affidavits, declarations, and other documentary evidence, as well as oral testimony received at the court’s discretion, to reach a final determination.” (Engalla v. Permanente Medical Group, Inc. (1997) 15 Cal.4th 951, 972.)

Because arbitration is a favored method of dispute resolution, arbitration agreements should be liberally interpreted, and arbitration should be ordered unless the agreement clearly does not apply to the dispute in question. (Id. at p. 353; Segal v. Silberstein (2007) 156 Cal.App.4th 627, 633.) However, there is no policy compelling persons to accept arbitration of controversies which they have not agreed to arbitrate. (Weeks, supra, 113 Cal.App.3d at 353.)

Defendant, the moving party, offers the declaration of its executive director, Sonya White, in support of its motion. White testifies to the authenticity of the parties’ purported “Mutual Agreement to Individually Arbitrate Disputes” (arbitration agreement). The agreement states in material part:

“MANDATORY ARBITRATION. THE EMPLOYEE AND COMPANY AGREE THAT ANY COVERED CLAIM . . ., WHETHER BASED IN CONTRACT, TORT, STATUTE, COMMON LAW, FRAUD, MISREPRESENTATION OR ANY OTHER LEGAL OR EQUITABLE THEORY, SHALL BE SUBMITTED TO INDIVIDUAL BINDING ARBITRATION.”

Later portions of the agreement define “covered claims” and outline the parameters of the arbitration, among other terms.

Plaintiff claims she does not recall signing the agreement, and she argues DLF has not properly authenticated her electronic signature on the document. DLF claims Plaintiff signed the agreement, and White’s declaration authenticates her signature.

The parties’ contrary positions depend on the standard for authenticating electronic signatures.

In establishing the existence of an agreement to arbitrate, it is generally sufficient for defendant to simply provide a copy of the arbitration agreement. (Baker v. Italian Maple Holdings, LLC (2017) 13 Cal.App.5th 1152, 1160.) “For purposes of a petition to compel arbitration, it is not necessary to follow the normal procedures of document authentication.” (Condee v. Longwood Management Corp. (2001) 88 Cal.App.4th 215, 218.) Accordingly, “[a] petitioner is not required to authenticate an opposing party’s signature on an arbitration agreement as a preliminary matter in moving for arbitration or in the event the authenticity of the signature is not challenged.” (Ruiz v. Moss Bros. Auto Group, Inc. (2014) 232 Cal.App.4th 836, 846, italics in original (“Ruiz”).)

However, where a party resisting arbitration raises a dispute over the authenticity of her signature on an agreement to arbitrate, the moving party must do more than merely recite the terms of the governing provision in their contract. (See Sprunk v. Prisma LLC (2017) 14 Cal.App.5th 785, 793.) If the resisting party denies signing, the movant must prove by a preponderance of the evidence that the resistor’s signature on the agreement is authentic. (Ruiz, supra, 232 Cal.App.4th at p. 846.)

“[T]he burden of authenticating an electronic signature is not great.” (Ruiz, supra, 232 Cal.App.4^th at p. 844.) Defendant’s evidentiary burden remains the same whether the signature is inked or electronic. “An electronic record or electronic signature is attributable to a person if it was the act of the person.” (Civ. Code., § 1633.9, subd. (a).) Thus, in order to authenticate plaintiff’s electronic signature and establish the existence of the agreement in question, defendant must show by a preponderance of the evidence that the electronic signature in question “was the act of” plaintiff. Civil Code section 1633.9 further provides that: “The act of the person may be shown in any manner, including a showing of the efficacy of any security procedure applied to determine the person to which the electronic record or electronic signature was attributable.”

Defendant DLF relies on the details of its onboarding process and the security procedures involved to show Blanco’s signature is authentic. Executive Director White states that DLF provides the arbitration agreement to every new employee in the process of onboarding. (White Decl., ¶ 14.) There is no signature line on the agreement; instead, the agreement contains a box at the bottom that must be checked, marked “I Agree and Accept.” (Id., ¶¶ 13, 16.) An employee cannot complete the onboarding process (and begin work) without “accepting and agreeing.” (Id., ¶ 17.)

According to White, when DLF hires a new employee, the Executive Director creates a profile for the new hire on Amazon’s Delivery Service Provider (DSP) platform, the system that handles delivery personnel. (Id., ¶¶ 4-5.) The DSP platform then sends the new hire an automated email with a link permitting her to create an account. (Id., ¶¶ 7-8.)

After clicking the DSP platform’s emailed link, the new hire must choose and submit a personal email address, to which the platform then emails a one-time-use numerical code. (Id., ¶¶ 8-9.) The new hire enters the one-time code into Amazon, which then permits her to create a unique username and password. (Ibid.) The hire then downloads an app called “Amazon Flex” through which she completes further onboarding paperwork, including the arbitration agreement. (Ibid.)

To authenticate plaintiffs’ signature, White also offers as an exhibit “a copy of the on-line record showing the company name, employee name, unique transporter identification number, and date and time Plaintiff accepted the agreement.” (Id., ¶ 19.) The exhibit is two lines of typewritten text:

“company name employee name unique transporter id arbitration agreement completed date pst [¶]

White concludes: “Given the process for signing the Agreement and protecting the privacy of the information with unique and private user names, the electronic signature could only have been made by Plaintiff.” (Id., ¶ 19.)

Plaintiff attests to only a vague recollection of this process. “I recall my onboarding process with DLF LOGISTICS LLC being very minimal. I vaguely recall a requirement that I create an Amazon account as part of the onboarding process. My understanding was that I needed to complete my account registration before I could start working for the Company.” (Declaration of Leticia Blanco (Blanco Decl.) ¶ 5.) She also acknowledges DLF “sent [her] a link on or about December 4, 2019, which [she] clicked and followed the same day to begin creating [her] Amazon account”, that she “was prompted to download a mobile app, ‘Amazon Flex’, on [her] cell phone to complete the registration process”, and that she “completed the registration of [her] Amazon account through said mobile app . . . .” (Ibid.)

However, Plaintiff claims she has “no recollection of ever receiving, seeing or reviewing the [arbitration agreement], no recollection of ever typing or signing the name ‘Leticia Blanco’ on this document, and . . . no knowledge of how the printed name ‘Leticia Blanco’ appears on this document . . . .” (Id., ¶ 6.) Plaintiff claims she does not recall “ever electronically signing any documents at any time before or during [her] employment with Defendants,” but regularly signed documents physically. (Id., ¶¶ 6-7.) She offers two physically signed employment documents, not directly related to this dispute, as evidence that DLF generally had her sign agreements in person, not electronically.

Finally, Plaintiff attacks the security of the Amazon Flex app. She claims she used the same app throughout her employment with DLF and “recall[s] there being a custom and practice within the Company where . . . employees used each other[s’] ‘unique usernames’ and ‘unique passwords’ for purposes of picking up shifts[, and] supervisors granted access to ‘unique’ employee accounts to drivers who were seeking to cover other ‘routes’ that belonged to drivers that called off.” (Id., ¶ 13.)

Plaintiff relies entirely on Ruiz v. Moss Bros. Auto Group, supra, 232 Cal.App.4th 836, which she characterizes as “a roadmap for the authentication of an electronic signature.” (Opp., 4:9-10.)

In Ruiz, the employer seeking to compel arbitration offered scant evidence supporting the authenticity of the employee’s signature on the arbitration agreement. The court referred twice, disapprovingly, to the witness manager’s “summarily assert[ing]” that her employee electronically signed an arbitration agreement. (Ruiz, supra, 232 Cal.App.4th at p. 839.) The court observed that the bare assertion that “the same agreement was presented to ‘all persons who [sought] . . . employment” with the plaintiff’s employer was insufficient to show that the plaintiff had actually signed the specific agreement in question. (Ibid.)

Here, DLF offers more than such summary assertions. Sonya White submitted a detailed declaration explaining the onboarding process and the reasons Blanco’s sigature is authentic. She also submitted a signature certificate as an exhibit. The employer in Ruiz offered no such corroborating details. The burden for authenticating a document is relatively low. (See Evid. Code § 1400 [authentication satisfied by “evidence sufficient to sustain a finding” that a writing is what the proponent says it is]; see also Palm Finance Corp. v. Parallel Media, LLC (2019) 38 Cal.App.5th 516, 519.) White also details the security procedures that safeguarded plaintiff’s identity when she accessed the onboarding system. The statute makes clear that “[t]he act of the person [who e-signed a document] may be shown [by] the efficacy of any security procedure” used to verify the person’s identity. (Civ. Code, § 1633.9, subd. (a).)

Plaintiff, however, points out that unlike this case, in Ruiz, the employee met with company personnel as part of the process. Plaintiff argues that “[i]n Ruiz, it was documented that the employee had actually met in person with company personnel as part of . . . electronically signing, [h]ere, there is no evidence that any of Defendant’s representatives met with Blanco in person” or witnessed any part of the signature process. (Opp., 5:6-10.) The Court is not convinced this is “a ‘critical gap’ ” in DLF’s evidence, as Plaintiff claims. No authority, including Ruiz, holds that authenticity of an electronic signature requires a contemporaneous in-person interaction.

A more compelling precedent is Espejo v. Southern California Permanente Medical Group (2016) 246 Cal.App.4th 1047, 1062 (Espejo). There, the Court of Appeal reversed an order denying the defendant’s motion to compel arbitration of an employment suit brought by Dr. Espejo, one of its physician employees. Espejo summarized Ruiz at length and then specified “the critical factual connection that the declarations in Ruiz lacked.” (Espejo, supra, at p. 1062.) The Espejo court was satisfied with the authenticity of the plaintiff’s e-signature because the employer “detailed [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 employment agreement . . . .” The appellate court concluded that “[t]hese details satisfactorily meet the requirements articulated in Ruiz and establish that the electronic signature . . . was ‘the act of’ Espejo. (Civ. Code, § 1633.9, subd. (a)), and therefore provide the necessary factual details to properly authenticate the document.” (Ibid.) Distinguishing this showing by the employer from the “summary assertions” in Ruiz, the Espejo court reversed denial of the motion to compel arbitration.

Plaintiff fails to cite Espejo. Therefore, she does not discuss how DLF’s procedures are similar to those endorsed in that case, as opposed to the thin record presented in Ruiz.

DLF has satisfied the standard in Espejo because, unlike the employer in Ruiz, its officer testified to the numerous procedures it uses to ensure that the person who “accepts and agrees to” the arbitration agreement is the employee who completes the onboarding process. White also authenticated a certificate that states the precise date and time when Plaintiff signed the agreement. Plaintiff’s assertions about how usernames and passwords were later exchanged during her employment are unpersuasive because they do not apply to the onboarding procedure. She does not suggest anyone else had access to her personal profile, the unique one-time numerical code she was sent, or at the time of onboarding, her personally created username and password.

The court finds DLF has established that Plaintiff Blanco’s electronic signature was placed on the arbitration agreement through the act of Plaintiff. DLF has established an agreement to arbitrate exists as required by Code of Civil Procedure section 1281.2.

California law demands “five minimum requirements [be met] for . . . lawful arbitration . . . pursuant to a mandatory employment arbitration agreement.” (Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83, 102.) Such an agreement is lawful if it “(1) provides for neutral arbitrators, (2) provides for more than minimal discovery, (3) requires a written award, (4) provides for all of the types of relief that would otherwise be available in court, and (5) does not require employees to pay either unreasonable costs or any arbitrators’ fees or expenses as a condition of access to the arbitration forum. (Ibid.)

The arbitration agreement here meets the Armendariz requirements. The agreement provides for an “independent and neutral arbitrator from the American Arbitration Association (“AAA”) . . . .” (Id., p. 2.) The agreement incorporates the Employment Arbitration Rules and Mediation Procedures used by the AAA. (Ibid.) AAA Rule 39(c) requires an award under those rules be rendered in writing unless otherwise agreed by the parties. Subdivision (d) of the same rule empowers the arbitrator to “grant any remedy or relief that would have been available to the parties had the matter been heard in court . . . .” And the arbitration agreement only requires an employee to pay $200 toward any arbitration filing fee, after which the employer will pay all other fees unless otherwise agreed or modified in an arbitration award. (White Decl., Ex. A, p. 2.)

“The procedural element of the unconscionability analysis concerns the manner in which the contract was negotiated and the circumstances of the parties at that time. [Citation.] The element focuses on oppression or surprise. [Citation.] ‘Oppression arises from an inequality of bargaining power that results in no real negotiation and an absence of meaningful choice.’ [Citation.] Surprise is defined as ‘“the extent to which the supposedly agreed-upon terms of the bargain are hidden in the prolix printed form drafted by the party seeking to enforce the disputed terms.”’ [Citation.]” (Gatton v. T-Mobile USA, Inc. (2007) 152 Cal.App.4th 571, 581.) The analysis “focuses on the unequal bargaining positions and hidden terms common in the context of adhesion contracts.” (24 Hour Fitness, Inc. v. Superior Court (1998) 66 Cal.App.4th 1199, 1212-1213.)

Since it appears that the arbitration agreement offered to plaintiff was mandatory, the Court agrees there is some level of procedural unconscionability here. (Mills v. Facility Solutions Group, Inc. (2022) 84 Cal.App.5th 1035, 1051 [“It is undisputed the arbitration agreement is an adhesive contract because it was imposed as a condition of employment”]; Ajamian v. CantorCO2e, L.P. (2012) 203 Cal.App.4th 771, 796 [“The finding that the arbitration provision was part of a nonnegotiated employment agreement establishes, by itself, some degree of procedural unconscionability”].) But the level of unconscionability is minimal. “ ‘[A]bsent unusual circumstances, use of a contract of adhesion establishes a minimal degree of procedural unconscionability notwithstanding the availability of market alternatives.’ ” (Walnut Producers of California (2010) 187 Cal.App.4th 634, 646, original italics.) Plaintiff offers no other reason as to why an adhesion contract alone establishes more than minimal procedural unconscionability.

Plaintiff has offered no evidence of oppression in the sense of unequal bargaining power. She testifies no one offered to negotiate the terms of the contract – but she also does not testify she ever asked. In fact, because plaintiff did not attempt to negotiate the terms of the contract, she cannot say with certainty whether she had bargaining power or not.

There is also nothing to suggest the arbitration term here was “hidden.” Ms. White has testified, and plaintiff does not dispute, that DLF’s onboarding system conspicuously set the arbitration agreement apart from other forms. The agreement announces its legal effect and significance in capitalized, bolded, underlined font in its second paragraph. And the agreement, even if signed on a mobile app, required an employee to scroll through six or seven screens of text before finally accepting its terms. (See White Decl., ¶ 13.) Plaintiff cannot argue DLF slipped the agreement into an unrelated contract or disguised it within a prolix provision.

Plaintiff also contends that she was not provided a copy of the AAA rules, but this is not required nor was it hidden from her. The hyperlink to the rules was embedded in the Agreement itself and she accessed the form electronically, so she knew how to click on the link. “[T]he failure to attach a copy of the AAA rules [does] not render [an] agreement procedurally unconscionable.” (Lane v. Francis Capital Management LLC (2014) 224 Cal.App.4th 676, 691.)

Plaintiff argues the arbitration agreement is substantively unconscionable on five grounds: that (1) “it compels arbitration agreements that employees are more likely to bring” (Opp., 11:23-25); (2) it contains a class-action waiver; (3) the AAA rules are illegal; (4) AAA arbitrators are biased toward employers; and (5) the agreement does not permit sufficient discovery.

Plaintiff’s first, third, and fourth arguments are unpersuasive. The fact that the employer-employee arbitration agreement covers only some labor claims, but not declaratory and injunctive relief, does not establish it is “indisputably one-sided” (Opp., 12:7-8). Plaintiff also offers no authority to support of her contention that arbitration pursuant to the AAA Rules is unenforceable because they contain a written notice provision. Finally, plaintiff suggests that the AAA cannot fairly arbitrate any employment disputes at all, assertedly because all of its arbitrators are biased. The “repeat player” phenomenon is a real concern in arbitration, but Plaintiff has offered no evidence of systemic bias as to all AAA arbitrators or with employment arbitration in particular, and the Court declines to assume that all AAA arbitration agreements and awards in employment disputes are invalid.

As for the class action waiver: “ ‘[a] provision is substantively unconscionable if it “involves contract terms that are so one-sided as to ‘shock the conscience,’ or that impose harsh or oppressive terms.” [Citation.] The phrases ‘harsh,’ ‘oppressive,’ and ‘shock the conscience’ are not synonymous with “unreasonable.” Basing an unconscionability determination on the reasonableness of a contract provision would inject an inappropriate level of judicial subjectivity into the analysis. “With a concept as nebulous as ‘unconscionability’ it is important that courts not be thrust in the paternalistic role of intervening to change contractual terms that the parties have agreed to merely because the court believes the terms are unreasonable. The terms must shock the conscience.” [Citations.]’ ” (Walnut Producers of California, supra, 187 Cal.App.4th at pp. 647-648.)

The arbitration agreement here contains a severability clause providing that if any part of the agreement is found to be “void, voidable, or otherwise unenforceable, such a finding will not affect the validity of the remainder of the Agreement, and all other parts and provisions remain in full force and effect.” To the extent the class action waiver is void, the severability clause would operate to remove that waiver and enforce the rest of the agreement. (Id. at p. 1925.) Thus, the waiver itself does not create any substantive unconscionability, particularly where plaintiff has not attempted to bring a class action and therefore the provision does not affect her case at all.

As to discovery, plaintiff offers no argument about a specific deficiency in the AAA Rules, but merely a speculative concern that the arbitrator might unduly limit discovery. Concerns about the scope of discovery based on the nature of the dispute in question may be raised before the arbitrator.

The Court accepts that there is some modicum of procedural unconscionability because of the adhesive contract. But without any substantive unconscionability, there are insufficient grounds to invalidate the arbitration agreement.

Plaintiff argues that defendants Lugo and Carez are not signatories to the Agreement, and therefore DLF cannot compel her to arbitration.

But the agreement applies to DLF and its “former and current officers, directors, managers, employees, owners, attorneys, agents, and vendors”, among other “Covered Parties”. (White Decl., Ex. A, p. 1.) Plaintiff alleges in her complaint that Lugo and Carez “at all times relevant [t]herein, [were each] a manager/supervisor” at DLF. (Compl. ¶¶ 4-5.)

Nonsignatories sued as agents of a signatory may enforce an arbitration agreement. (Rowe v. Exline (2007) 153 Cal.App.4th 1276, 1284.) Plaintiff offers no law to suggest otherwise, or to explain how, where she has sued the individual defendants as employees of DLF, they are not covered by the arbitration agreement. And plaintiff’s claims against the (nominally) non-signatory co-defendants are, in any case, “rooted in [her] employment relationship” with signatory DLF. (Garcia v. Pexco, LLC (2017) 11 Cal.App.5th 782, 787.)

The Court finds that the arbitration agreement applies to defendants Lugo and Carez.

Plaintiff also argues defendant’s entire motion should be denied because plaintiff has brought sexual harassment claims against it. The arbitration agreement excludes sexual harassment claims from its scope: “This Agreement does not apply to . . . (vii) sexual harassment or sexual assault claims, except if the Employee chooses to submit them to arbitration . . . .” (White Decl., Ex. A, p. 2.)

Defendant does not argue the arbitration agreement should be enforced as to plaintiff’s sexual harassment claims. Defendant requests that the harassment claims be stayed while arbitration proceeds as to the others to prevent “piecemeal litigation . . . .” (Reply, 4:17.) “[W]hen there is a severance of arbitrable from inarbitrable claims, the trial court has the discretion to stay proceedings on the inarbitrable claims pending resolution of the arbitration. [Citation.] . . . ‘A stay is appropriate where “[i]n the absence of a stay, the continuation of the proceedings in the trial court disrupts the arbitration proceedings and can render them ineffective.” ’ ” (Cruz v. PacifiCare Health Systems, Inc. (2003) 30 Cal.4th 303, 320.) All of plaintiff’s claims arise from her employment, and their facts and issues are significantly related. Permitting some to proceed in court while others proceed in arbitration poses a significant risk of disruption.

Plaintiff also argues defendant’s motion to arbitrate violates and therefore invalidates their contract because an attempt to arbitrate sexual harassment claims, in contravention of the arbitration agreement, voids the entire agreement. This argument misstates the scope of issues Defendant seeks to arbitrate.

Defendant’s motion to compel arbitration is granted as to all causes of action except for the first for sexual harassment (unless the parties agree to broaden the scope of the arbitration). The action is stayed in its entirety pending the outcome of that arbitration.

[1] In their Reply memorandum, Defendants concede that Blanco’s sexual harassment cause of action is not arbitrable. Accordingly, Plaintiff’s first cause of action is not subject to the motion to compel arbitration.

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