Department 58

Hearing Date: January 31, 2024

Case Name: Bailey v. Universal Protection Service, LP

Case No.: 23STCV06389

Matter: Motion to Compel Arbitration

Moving Party: Defendant Universal Protection Service, LP

Responding Party: Plaintiff Tehra Bailey

Tentative Ruling: The Motion to Compel Arbitration is granted; the matter is stayed pending resolution of arbitration.

In this employment action, Plaintiff Tehra Bailey (Plaintiff) filed a Complaint on March 22, 2023, alleging FEHA claims for discrimination, failure to prevent discrimination, retaliation, harassment, as well as wrongful termination in violation of public policy, and negligent supervision and hiring, and retaliation pursuant to Labor Code section against her former employer, Defendant Universal Protection Service, LP doing business as Allied Universal Security Services (Defendant).

On December 1, 2023, Defendant filed a motion to compel arbitration pursuant to the parties’ arbitration agreement. In opposition, Plaintiff argues the arbitration agreement is unenforceable based on unconscionability. A reply was filed.

The motion to compel arbitration is granted. The matter is stayed pending the outcome of arbitration.

Legal Standard

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.)

Analysis

Defendant moves to compel arbitration of Plaintiff’s claims and stay the matter while the arbitration is pending.

Existence of Arbitration Agreement:

Defendant seeks to compel arbitration based on an arbitration agreement between the parties. In support of the existence of an arbitration agreement, Defendant submits evidence that Plaintiff was employed by Defendant as a security guard from March 26, 2020 to August 5, 2021. (Bhangoo Decl., ¶ 16.) Defendant further submits evidence that, on March 26, 2020, Plaintiff electronically executed an agreement – the Arbitration Policy and Agreement (Agreement) – with Defendant as part of her onboarding process. (Bhangoo Decl., ¶ 15, Ex. A [Agreement].)

The Agreement states that “the Parties mutually agree to the resolution by binding arbitration of all claims or causes of action that the Employee may have against the Company, or the Company against Employee, which could be brought in a court of law . . ..” (Bhangoo Decl., ¶ 15, Ex. A, ¶ 4.) The Agreement further provides:

“[C]laims covered by this Arbitration Policy and Agreement specifically include, but are not limited to, . . . claims for breach of contract (written or oral, express or implied); . . . tort claim; claims for discrimination and/or harassment; claims for wrongful termination; . . . claims for retaliation; . . . claims for wages or other compensation, penalties or reimbursement of expenses; breaks and rest period claims; . . . claims for violation of any law, statute, regulation, ordinance or common law, including, but not limited to, all claims arising under . . . the Americans with Disabilities Act; the Family and Medical Leave Act; … and any other applicable federal, state, or local laws relating to discrimination in employment, leave, and/or wage and hour laws . . ..” (Bhangoo Decl., ¶ 15, Ex. A, ¶ 4.)

Lastly, the Agreement provides, “Covered claims include any claim arising from incidents, facts, or circumstances occurring prior to the Effective Date of this Agreement; [and] any claims that arise thereafter . . ..” (Bhangoo Decl., ¶ 15, Ex. A, ¶ 4.)

In opposition, Plaintiff disputes signing any orientation forms electronically and specifically states she did not sign the Agreement. (Bailey Decl., ¶ 4.) She further states that, at the time of her orientation, there were no computers in the room and instead she was presented with a large stack of forms to sign for her employment. (Bailey Decl., ¶ 3.)

The Court finds Defendant has met its burden of authenticating the electronic signature. Here, Defendant submits adequate evidence of the process by which Plaintiff applied for employment with Defendant and by which she received and signed the Agreement.

Defendant’s evidence shows that Defendant employed iCIMS to manage its electronic onboarding system. (Bhangoo Decl., ¶ 9.) iCIMS is a password protected online platform that allows Defendant’s applicants to securely complete and execute onboarding forms and documents prior to commencing their employment with Defendant. (Bhangoo Decl., ¶ 9.) As part of Defendant’s onboarding process, Defendant emails a link from iCIMS to the potential new employee’s designated email address provided to Defendant’s Human Resources Coordinator by the potential new employee. (Bhangoo Decl., ¶ 10, subd. (a).) In order to complete onboarding, a potential new employee, like Plaintiff, must use their correct username and unique password to electronically access and sign onboarding documents with their electronic signature. (Bhangoo Decl., ¶ 10, subd. (b).)

Lastly, Defendant’s evidence shows that “[a]lthough a limited number of [Defendant’s] employees . . . have the ability to view iCIMS’ documents, no employee is able to alter or edit any iCIMS documents [without the system recording the name of the person initiating the system change].” (Bhangoo Decl., ¶ 10, subd. (i).) Defendant reviewed Plaintiff’s iCIMS electronic forms – specifically, Arbitration Agreement – and found no revisions or changes to Plaintiff’s Agreement at any point by anyone after Plaintiff executed the Arbitration Agreement on March 26, 2021. (Bhangoo Decl., ¶ 17.)

Thus, the evidence shows that this was not a case in which Plaintiff presented evidence that another person caused her electronic signature to appear on the Agreement.

For instance, in Bannister v. Marinidence Opco, LLC (2021) 64 Cal.App.5th 541, 544–545 —a case that also involved an online onboarding process—plaintiff Bannister submitted evidence that a human resources manager Matson visited the facility where Bannister worked and completed the onboarding process and arbitration agreement for her by asking for the necessary information without showing Bannister what was on the computer. (Id. at pp. 546–547.) Bannister also presented evidence that Matson completed the onboarding process for other employees remotely and without their participation. (Id. at p. 547.)

In affirming the denial of the motion to compel arbitration, the court of appeal concluded that this was “a classic example of a trial court drawing a conclusion from conflicting evidence.” (Id. at p. 545.) That is, the trial court disbelieved Matson's account of the onboarding process and instead credited Bannister's evidence that Matson completed the onboarding process for her. (Id. at p. 548.)

There is no persuasive evidentiary conflict in the record here. The Court has only Plaintiff’s bare denial that she signed the Agreement. However, unlike Bannister, Plaintiff's declaration contains no suggestion that any other human resources personnel completed her onboarding documents (or the onboarding documents for other employees without their knowing participation). Rather, Plaintiff only speculates that it is theoretically possible someone could have signed for her.

Instead, the more persuasive evidence shows the document was emailed to Plaintiff and she had to enter a correct username and password to sign the document. By statute, an electronic signature may be authenticated “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.” (Civ. Code, § 1633.9, subd. (a) [italics added].) This showing of the efficacy of document security protocols is one way of demonstrating authentication.

Further, as discussed above, the evidence here shows that only a limited number of people have access to the potential applicant’s iCIMS’s forms – which is sufficient to show “the efficacy of any security procedure applied to determine the person to which the electronic record or electronic signature was attributable.”

Thus, the Court finds that Defendant’s evidence is sufficient to authenticate the electronic signature as “the act of” Plaintiff. Accordingly, Defendant has carried its burden of demonstrating the existence of a valid arbitration agreement between the parties.

Enforceability of the Arbitration Agreement:

In opposition, Plaintiff argues that the Agreement is both procedurally and substantively unconscionable.

If a court finds as a matter of law that a contract or any clause of a contract is unconscionable, the court may refuse to enforce the contract or clause, or it may limit the application of any unconscionable clause so as to avoid any unconscionable result. (Civ. Code, § 1670.5, subd. (a).) “An agreement to arbitrate, like any other contract, is subject to revocation if the agreement is unconscionable.” (Carmona v. Lincoln Millennium Car Wash, Inc. (2014) 226 Cal.App.4th 74, 83 [citing Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83, 98].)

“The general principles of unconscionability are well established. A contract is unconscionable if one of the parties lacked a meaningful choice in deciding whether to agree and the contract contains terms that are unreasonably favorable to the other party. [Citation.] Under this standard, the unconscionability doctrine ‘ “has both a procedural and a substantive element.” ’ [Citation.] ‘The procedural element addresses the circumstances of contract negotiation and formation, focusing on oppression or surprise due to unequal bargaining power. [Citations.] Substantive unconscionability pertains to the fairness of an agreement's actual terms and to assessments of whether they are overly harsh or one-sided.’ [Citation.] [¶] Both procedural and substantive unconscionability must be shown for the defense to be established, but ‘they need not be present in the same degree.’ [Citation.] Instead, they are evaluated on ‘ “sliding scale.” ’ [Citation.] ‘[T]he more substantively oppressive the contract term, the less evidence of procedural unconscionability is required to’ conclude that the term is unenforceable. [Citation.] Conversely, the more deceptive or coercive the bargaining tactics employed, the less substantive unfairness is required. [Citations.] A contract's substantive fairness ‘must be considered in light of any procedural unconscionability’ in its making. [Citation.] ‘The ultimate issue in every case is whether the terms of the contract are sufficiently unfair, in view of all relevant circumstances, that a court should withhold enforcement.’ ” (OTO, L.L.C. v. Kho (2019) 8 Cal.5th 111, 125–126.) “The burden of proving unconscionability rests upon the party asserting it.” (OTO, supra, 8 Cal.5th at p. 126.)

Plaintiff first argues the Agreement is procedurally unconscionable because the Agreement was a condition of employment and offered on a take-it-or leave it basis. That is, Plaintiff had no ability to negotiate the terms of the Agreement, and Defendant made no effort to provide an explanation of its terms to Plaintiff. (Bailey Decl., ¶¶ 3, 5, 7.)

Plaintiff also challenges the purportedly small font size and claims the Agreement was “filled with complex sentences referencing statutes and legal jargon.” (Opp., 10:13-11:2.)

Defendant does not dispute that the Agreement may contain some degree of procedural unconscionability as a contract of adhesion provided in this employment context. Nonetheless, Defendant argues that courts regularly uphold arbitration agreements even where they are presented to employees on a “take it or leave it basis.” (See e.g., Little v. Auto Stiegler, Inc. (2003) 29 Cal.4th 1064, 1071; Lagatree v. Luce, Forward, Hamilton & Scripps (1999) 74 Cal.App.4th 1105, 1123.)

Moreover, Plaintiff’s procedural unconscionability argument is seriously undermined by the clear language of the Agreement which contains an opt-out provision; this provision unambiguously states: “Arbitration is not a mandatory condition of employment with the Company. You have 30 calendar days after receiving this Agreement to opt out of arbitration (the “Deadline”).” (Bhangoo Decl., Ex. A, ¶ 3.) Plaintiff never opted out of the Agreement, despite her ability to do so without repercussions. (Bhangoo Decl., ¶ 16.) Under these circumstances, the degree of procedural unconscionability is minimal.

Plaintiff next argues that the Agreement is substantively unconscionable.

Plaintiff contends that the Agreement contradicts itself by stating that her claims for retaliation under Labor Code section 1102.5 are subject to arbitration but then states that claims within the jurisdiction of the California Labor Commissioner are not subject to arbitration under this Agreement.

There is no inconsistency in the Agreement regarding covered claims. As noted above, the Agreement pertains to an extensive list of covered claims. (Bhangoo Decl., ¶ 15, Ex. A, ¶ 4.) The Agreement also contains an exception for “claims the Employee may have for workers’ compensation, unemployment compensation benefits, medical or other employee welfare or pension benefits under the Employee Retirement Income Security Act (ERISA), claims brought under the National Labor Relations Act, claims covered by an applicable collective bargaining agreement, or any other claims found not subject to mandatory arbitration by governing law.” (Bhangoo Decl., ¶ 15, Ex. A, ¶ 8.) The language in the Agreement applies broadly to claims identified except those claims that fall within the exception. Plaintiff fails to provide any explanation as to how the claim for Labor Code section 1102.5 falls within this exception.

Plaintiff also argues that the Agreement fails to attach the arbitration rules, fails to describe to Plaintiff how she might initiate arbitration, and fails to provide the rules on discovery limitations. (Opp., 12:7-9.)

Plaintiff provides no legal authority to support finding that any of these issues indicate the Agreement’s substantive unconscionability.

In fact, the failure to include arbitration rules alone does not evince either procedural or substantive unconscionability. First, the Agreement signed by Plaintiff states that a copy of the Employment Arbitration Rules and Procedures can be found at www.jamsadr.com. California courts have consistently found that when the agreement cites to the applicable arbitration rules but does not attach those rules the agreement is not necessarily rendered procedurally unconscionable as matter of law. (Lane v. Francis Capital Management LLC (2014) 224 Cal.App.4th 676, 690 [incorporation of AAA rules by reference without attaching them could be a small factor in support of a finding of procedural unconscionability; standing alone, or even in the context of an adhesion contract, without more, it is not enough to support a finding of procedural unconscionability]; accord, Peng v. First Republic Bank (2013) 219 Cal.App.4th 1462, 1472.)

Moreover, the failure to attach arbitration rules does not add to the Agreement’s unconscionability as a contract of adhesion where Plaintiff’s unconscionability claim is not based on the substance of the arbitration rules themselves. (Baltazar v. Forever 21, Inc. (2016) 62 Cal.4^th 1237, 1246.) As our Supreme Court explained, absent some claim that a rule was artfully hidden through incorporation by reference, the failure to attach arbitration rules does not make the agreement either procedurally or substantively unconscionable. (Id. at pp. 1246–1247.)

Additionally, contrary to the Opposition argument, the Agreement does provide rules on discovery limitations. (Bhangoo Decl., ¶ 15, Ex. A, ¶ 11(c).)[1]

Finally, Defendant points out that Plaintiff ignores the section that directs the reader to the JAMS Rules website, outlines the process for selecting a neutral arbitrator, specifies Discovery parameters, guarantees a written opinion, and details arbitration fees. Plaintiff has not identified any substantive unconscionability on this ground.

Thus, Plaintiff has not demonstrated any substantive unconscionability. Therefore, even if the Agreement contains some degree of procedural unconscionability, the absence of substantive unconscionability is fatal Plaintiff’s unconscionability argument. Defendant has met its burden of demonstrating the existence of a valid, enforceable Arbitration Agreement.

CONCLUSION

Accordingly, the Court grants Defendant’s motion to compel arbitration; the matter will be stayed pending the outcome of arbitration. At the hearing, the Court will set the date for a post-arbitration status conference.

[1] Plaintiff does not challenge the substance of these discovery limitations.