Judge Bruce G. Iwasaki, Case Number: 23STCV05002, Date: 2023-08-04 Tentative Ruling

In this employment action filed on March 7, 2023, Plaintiff Daisy Navia (Plaintiff) filed an eleven-count complaint against her former employer, Defendant Dollar Tree Stores, Inc. (Defendant). The allegations include FEHA violations, wrongful termination claims, an intentional infliction of emotional distress claim, and a Business and Professions Code section 17200 claim.

On July 11, 2023, Defendant filed a motion to compel arbitration pursuant to a 2020 “Mutual Agreement to Arbitrate Claims;” alternatively, Defendant seeks to compel arbitration pursuant to the parties’ 2017 arbitration agreement. In opposition, Plaintiff argues the 2020 arbitration agreement is invalid and the 2017 arbitration agreement is unenforceable based on unconscionability. A reply was filed.[1]

The motion to compel arbitration is granted as to Defendant Dollar Tree Stores, Inc.[2] The matter is stayed pending the outcome of arbitration.

Defendant requests the Court take judicial notice of Exhibit 1-9 under Evidence Code section 452, subdivision (d). While the Court may take judicial of court records, these other court rulings are not relevant to the proceedings here and the Court denies the request for judicial notice. Defendant also requests the Court take judicial notice of Exhibit 10 pursuant to Evidence Code section 452, subdivision (h). The Court will grant Defendant’s unopposed request for judicial notice of Exhibit 10. (De Leon v. Pinnacle Property Management Services, LLC (2021) 72 Cal.App.5th 476, 493, fn. 3.)

Under Code of Civil Procedure section 1281.2, a court may order arbitration of a controversy if it finds that the parties have agreed to arbitrate that dispute. Because the obligation to arbitrate arises from contract, the court may compel arbitration only if the dispute in question is one in which the parties have agreed to arbitrate. (Weeks v. Crow (1980) 113 Cal.App.3d 350, 352.) Since 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.)

Defendant seeks to compel arbitration based on two agreements: a 2017 agreement and a 2020 agreement, which purports to supersede all prior agreements. Defendant contends that if the Court determines the Plaintiff is not bound by the 2020 Agreement, then the 2017 Agreement applies.

In opposition, Plaintiff first argues she never consented to be bound by the 2020 arbitration agreement because she never signed the agreement. She also argues that eighth and tenth causes of action for violation of Labor Code sections 1102.5 and Business and Professions Code 17200 are not subject to arbitration. Finally, she argues that the 2017 arbitration agreement is unenforceable because it suffers from both procedural and substantive unconscionability.

As a preliminary matter, Defendant argues the 2020 Agreement delegates all threshold questions to the arbitrator to resolve.

“There are two prerequisites for a delegation clause to be effective. First, the language of the clause must be clear and unmistakable. [Citation.] Second, the delegation must not be revocable under state contract defenses such as fraud, duress, or unconscionability.” (Tiri v. Lucky Chances, Inc. (2014) 226 Cal.App.4th 231, 242; see Rent-A-Center, West, Inc. v. Jackson (2010) 561 U.S. 63, 68, 69, fn. 1.) The “clear and unmistakable” test reflects a “heightened standard of proof” that reverses the typical presumption in favor of the arbitration of disputes. (Ajamian v. CantorCO2e, L.P. (2012) 203 Cal.App.4th 771, 787.)

Here, the language delegating authority to the arbitrator in the 2020 Agreement is clear and unmistakable. Specifically, the Arbitration Agreement states: “The arbitrator shall have the exclusive authority to resolve any disputes or claims regarding arbitrability or the formation, interpretation, validity, applicability, unconscionability, or enforceability of this Agreement or any provision of this Agreement except as otherwise provided herein.” (DiBianca Aff., Ex. A, p. 8 at ¶ 2.) Based on the foregoing, the parties have clearly agreed to delegate the Court’s responsibility to determine arbitrability to the arbitrator. (See e.g. Tiri v. Lucky Chances, Inc., supra, 226 Cal.App.4th at 242 [determining parties agreed to delegate questions regarding enforceability where agreement provided: “The Arbitrator, and not any federal, state, or local court or agency, shall have the exclusive authority to resolve any dispute relating to the interpretation, applicability, enforceability, or formation of this Agreement, including, but not limited to, any claim that all or any part of this Agreement is void or voidable.”].)

Plaintiff does not address this threshold question of delegation in its opposition.

Instead, as to the 2020 Agreement, Plaintiff challenges the validity of the arbitration agreements as a whole. Plaintiff did not, however, challenge the validity of the delegation provision, which empowers the arbitrator to rule on “formation, interpretation, validity, applicability, unconscionability, or enforceability” of the arbitration agreement. Because Plaintiff did not challenge the delegation provision specifically, the enforceability of the arbitration agreement as a whole must be decided by the arbitrator. (Rent-A-Center, West, Inc. v. Jackson (2010) 561 U.S. 63, 75-76; Luxor Cabs, Inc. v. Applied Underwriters Captive Risk Assurance Co. (2018) 30 Cal.App.5th 970, 979 [ “a delegation clause nested in an arbitration provision is severable from the remainder of the contract and the question of its enforceability is for the court to decide if a challenge is directed specifically at the validity of the delegation clause.”].) “[A] party's challenge to the arbitration agreement [as a whole] does not invalidate the delegation clause, and therefore the arbitrator, and not a court, must consider any challenge to the arbitration agreement as a whole.” (Tiri v. Lucky Chances, Inc., supra, 226 Cal.App.4th at 240.)

Lastly, while Plaintiff does raise issues of unconscionability in opposition, she does so only with respect to the 2017 Agreement. Because no issues of unconscionability were raised with respect to the 2020 Agreement – which contains the delegation provision Defendant seeks to enforce here – Plaintiff’s challenges to the contract’s formation, validity and scope are for the arbitrator to decide pursuant to the terms of the delegation provision.

The Court’s analysis ends here. The matter is delegated to the arbitrator to decide all the issues raised by Plaintiff’s opposition.

[1] In reply, Defendant argues that the opposition was untimely and should be disregarded. (Reply, p. 2, fn. 1.) Defendant has not demonstrated any prejudice from this untimely opposition; instead, Defendant has prepared a fulsome reply despite the shortened time. Thus, the Court declines to disregard the opposition.

[2] Defendant argues “Plaintiff should also be compelled to arbitrate her claims against individual defendants Maria Rojas, Maximilliano Figuroa Hernandez, and Branndi Johnson (collectively, the “Individual Defendants”).” (Mot., 18:6-8.) However, these parties have not moved this Court to compel arbitration; as such, it is unclear under what authority the Court can to compel these parties to arbitrate.

Department 58