Judge: Bruce G. Iwasaki, Case: 23STCV18327, Date: 2025-03-27 Tentative Ruling

Case Number: 23STCV18327    Hearing Date: March 27, 2025    Dept: 58

Judge Bruce G. Iwasaki

Department 58

Hearing Date:             March 27, 2025

Case Name:                Budar-Turner v. University of Southern California

Case No.:                   23STCV18327

Matter:                        Motion to Compel Arbitration

Moving Party:             Plaintiff Donna Budar-Turner

Responding Party:      Defendant University of Southern California

In this employment action, Plaintiff Donna Budar-Turner (Plaintiff) filed a Complaint, on August 2, 2023, against her former employer, Defendant University of Southern California (Defendant), alleging causes of action for (1.) Violation of Labor Code section 1102.5, (2.) Failure to Accommodate under FEHA, (3.) Failure to Engage in the Interactive Process under FEHA, (4.) Failure to Prevent Harassment, Discrimination and Retaliation under FEHA, (5.) Relation under FEHA, (6.) Age Discrimination under FEHA, (7.) Violation of the Equal Pay Act, (8.) Retaliation in violation of the Equal Pay Act, and (9.) Wrongful Termination.

            On September 25, 2023, Defendant filed a motion to compel arbitration pursuant to the parties’ arbitration agreement. No opposition was filed. Instead, on November 6, 2023, Plaintiff and Defendant filed a joint stipulation agreeing to submit the entire action to final and binding arbitration pursuant to the Agreement and the JAMS Employment Arbitration Rules and Procedures.  The Court signed the stipulated order.

            On February 4, 2025, Plaintiff moved to vacate its previous order compelling arbitration, pursuant to Code of Civil Procedure section 1286.2, subdivision (a)(4). Defendant opposes the motion.

            The motion is denied.

Analysis

            Plaintiff moves for an order vacating the arbitration order on the grounds that the arbitration agreement between Plaintiff and Defendant is unenforceable on unconscionability grounds, as determined in Cook v. University of Southern California (2024) 102 Cal.App.5th 312 and People v. Wilson (2024) 16 Cal.5th 874, 933.[1]

            In opposition, Defendant argues that Plaintiff waived her right to challenge the unconscionability of the arbitration agreement and Defendant would suffer prejudice if this motion were granted. Defendant also argues there is no basis to reconsider the Court Order.  

            The grounds upon which Plaintiff seeks relief is unclear. Plaintiff invokes Code of Civil Procedure section 1286.2, subdivision (a)(4), but that provision has no bearing here. The reply does explain that Plaintiff is not seeking relief under Code of Civil Procedure section 473. (Reply, 4:19-20.)

            Rather, the moving papers suggest that Plaintiff is seeking reconsideration based on the Court’s inherent authority to reconsider its prior rulings.[2]

            The Court, however, finds no grounds to reconsider its “ruling.”

            As our Supreme Court explained in Le Francois v. Goel (2005) 35 Cal.4th 1094, a trial court has inherent authority to reconsider its prior interim rulings on its own motion, even in the absence of new facts or law, if it determines a prior ruling was erroneous. (Id. at p. 1107.) Moreover, “it should not matter whether the ‘judge has an unprovoked flash of understanding in the middle of the night’ [citation] or acts in response to a party's suggestion. If a court believes one of its prior interim orders was erroneous, it should be able to correct that error no matter how it came to acquire that belief.” (Id. at p. 1108.) “ ‘ “ ‘Miscarriage of justice results where a court is unable to correct its own perceived legal errors.’ ” ’ (Phillips v. Sprint PCS (2012) 209 Cal.App.4th 758, 768.)

Here, though, the Court made no findings on the enforceability of the arbitration agreement. It has no ruling to reconsider. The Court did not review or consider the validity or enforceability of the arbitration in enforcing the parties’ stipulation. In fact, the Court made no factual or legal findings at all and did not compel the parties to arbitration. As such, the Court’s order entering the party’s stipulation was not an error and there is nothing to “correct.”

That is, the parties – on their own – agreed to arbitration by stipulation. Indeed, Plaintiff could have stipulated to arbitration in the absence of any agreement to arbitrate at all. Thus, reconsideration of the stipulation is unwarranted.

Moreover, Plaintiff waived her right to raise the unconscionability argument.[3]  

The party challenging the arbitration agreement bears the burden to prove its unconscionability. (OTO, L.L.C. v. Kho (2019) 8 Cal.5th 111, 126.) “Normally, the question of the enforceability of an arbitration clause must be raised before the parties proceed to arbitration. The parties cannot . . . willingly accede to and participate in the arbitration process without even raising the public policy issue, only to raise the question before the trial court later.” (Reed v. Mutual Service Corp. (2003) 106 Cal.App.4th 1359, 1372; Bayscene Resident Negotiators v. Bayscene Mobilehome Park (1993) 15 Cal.App.4th 119, 129 [“[A] party who questions the validity of the arbitration agreement may not proceed with arbitration and preserve the issue for later consideration by the court after being unsuccessful in the arbitration.”].)

“[I]f a party believes the entire contractual agreement or a provision for arbitration is illegal, it must oppose arbitration on this basis before participating in the process or forfeit the claim.’’ (Cummings v. Future Nissan (2005) 128 Cal.App.4th 321, 328 [quoting Moncharsh v. Heily & Blase (1992) 3 Cal.4th 1, 31]; Mastick v. TD Ameritrade, Inc. (2012) 209 Cal.App.4th 1258, 1266–1267; Koehl v. Verio, Inc. (2006) 142 Cal.App.4th 1313, 1339 [issue of unconscionability must be put before the trial court or it will be waived].)

As noted above, on September 25, 2023, Defendant USC filed its Motion to Compel Arbitration, with a hearing set for November 7, 2023. (Von Eschen Decl., ¶ 5.) On October 23, 2023, Plaintiff filed an Ex-Parte Application to Continue Defendant’s Motion to Compel Arbitration to Permit Plaintiff to Conduct Discovery in Support of Opposition (“Ex-Parte”). (Von Eschen Decl., ¶ 6, Ex. B.) Plaintiff argued that she “believe[d] there are additional documents, which may assist the court in determining whether the arbitration agreement was unconscionable under California law.” (Von Eschen Decl., ¶ 6, Ex. B, 3:10-13.) After the Court denied the Ex Parte, Plaintiff’s counsel called Defendant’s counsel that same day and stated that Plaintiff would stipulate to arbitration. (Von Eschen Decl., ¶¶ 8-9.)

Plaintiff never filed an opposition to Defendant’s Motion to Compel Arbitration. Instead, on November 1, 2023, the Parties filed a Joint Stipulation for Binding Arbitration and Stay of Action; (Proposed) Order (Stipulation). (Von Eschen Decl., ¶¶ 9-10, Ex. C-F.) On November 6, 2023, this Court, “PURSUANT TO THE STIPULATION,” ordered that “[t]he parties shall arbitrate any and all controversies arising out of or in connection with Plaintiff’s employment, including the claims set forth in this Action.” (Von Eschen Decl., ¶ 10, Ex. E.) Thereafter, on December 6, 2023, Plaintiff filed her demand for arbitration with JAMS. (Von Eschen Decl., ¶ 11.)

Plaintiff made no argument that the Arbitration Agreement was unconscionable when the matter was before this Court. Not until this motion was filed – on February 4, 2025, nearly a year and half after the motion to compel arbitration as filed – did Plaintiff affirmatively raise this contractual defense. Plaintiff’s actions demonstrate a waiver of the unconscionability argument and consent to the arbitration forum. (See e.g., Douglass v. Serenivision, Inc. (2018) 20 Cal.App.5th 376, 388 [discussing factors showing consent.)

Further, Defendant persuasively argues prejudice will result from this motion. Defendant submitted its responsive pleading and statement of affirmative defenses and has otherwise been fully participating in the arbitration forum. (Von Eschen Decl., ¶ 11.) Further, an arbitrator has been selected and this arbitrator, Arbitrator Gordon, made initial and supplemental disclosures and issued his (Proposed) Report of Preliminary Hearing and Scheduling Order No. 1. (Von Eschen Decl., ¶¶ 13-14, 18, 20.) In addition to the time expended by the parties pursuing the claims within the arbitration forum, Defendant asserts its expended $14,600 to JAMS in arbitration fees. (Von Eschen Decl., ¶¶ 15-16.)[4]

            Plaintiff argues that Code of Civil Procedure section 1286.2, subdivision (a)(4), and Williams v. West Coast Hospitals, Inc. (2022) 86 Cal.App.5th 1054 together stand for the proposition that “courts have inherent authority to reconsider and vacate prior orders compelling arbitration when new legal developments render the arbitration agreement unenforceable. (Mot., 1:19-22.)

            These legal authorities stand for no such thing. Code of Civil Procedure section 1286.2, subdivision (a)(4), pertains to vacating arbitration awards because arbitrators have exceeded their powers. This statute is not cited by Williams v. West Coast Hospitals, Inc. (2022) 86 Cal.App.5th 1054. Further, Williams stands for the unrelated proposition that a party that was compelled to arbitrate a claim can withdraw from arbitration where the other party had not timely paid its share of arbitration fees under section 1281.98, resulting in material breach. (Williams, at p. 1063.)

            Finally, although Plaintiff has failed to discuss such authority, the Court addresses the law on setting aside a party’s stipulation.

            “ ‘A stipulation is an agreement between counsel with respect to business before a court, and is not one of the usual pleadings, but is a proceeding in the cause and as such is under the supervision of the court, and has been compared to, and distinguished from, a contract.’ “ (Harris v. Spinali Auto Sales, Inc. (1966) 240 Cal.App.2d 447, 452.) “A stipulation is conclusive with respect to the matters covered by it, unless the court, for good cause shown, later permits its abandonment or withdrawal.” (Ibid.) “[A] court should not set aside a stipulation regularly made except after a clear showing of error or unfairness.” (Id. at p. 453.)

“Either party may move the court to be relieved from the binding effect of a stipulation previously entered into, and it is within the sound discretion of the trial court whether or not such relief should be granted; in this regard the decision of the trial court will not be disturbed by an appellate court absent an abuse of discretion. [Citations.] The grounds upon which the trial court may exercise its discretion are that the stipulation was entered into as the result of fraud, misrepresentation, mistake of fact, or excusable neglect  ... that the facts have changed, or that there is some other special circumstance rendering it unjust to enforce the stipulation.” (People v. Trujillo (1977) 67 Cal.App.3d 547, 554-555.)

This set aside stipulation procedure is now codified by section 473 of the Code of Civil Procedure. (Roth v. Morton's Chefs Services, Inc. (1985) 173 Cal.App.3d 380, 386.) Section 473 of the Code of Civil Procedure provides in part:

“The court may, upon such terms as may be just, relieve a party or his or her legal representative from a judgment, order, or other proceeding taken against him or her through his or her mistake, inadvertence, surprise or excusable neglect.”[5]

            As disused above, Plaintiff explicitly states she is not seeking relief through this statute. Further, Plaintiff does not argue the stipulation was entered into as result of fraud, misrepresentation, surprise, mistake of fact or excusable neglect. Plaintiff submits no evidence to support relief on these grounds, either.  

Moreover, no circumstances render enforcement of the stipulation unjust.

Defendant does not dispute that the arbitration agreement it sought to enforce in its motion to compel arbitration suffers from the same defects as the arbitration found to be unconscionable in Cook v. University of Southern California (2024) 102 Cal.App.5th 312. In Cook, the court found that there was a lack of mutuality in the arbitration agreement that rendered it substantively unconscionable. (Id. at 319.) Had the issue of unconscionability been raised to this Court at the outset, the one-sided and overreaching features of USC’s arbitration agreement would have been viewed under a skeptical light.

But as the opposition notes, Plaintiff’s case does not implicate any of the arbitration provisions that the Cook court found to be objectionable; Plaintiff’s claims are employment claims, are asserted against USC itself (not a third-party beneficiary), and the conduct at issue all arose during Plaintiff’s employment. (Opp., 12, fn. 2.) While these facts do not diminish a finding of substantive unconscionability, the fact that Plaintiff will not be affected by these substantively unconscionable provisions is pertinent in determining whether to vacate the parties’ stipulation.

Finally, Plaintiff argues that had she “been aware of the unenforceability of the arbitration agreement at the time of the stipulation, Plaintiff unquestionably would have opposed defendant’s motion to compel arbitration.” (Reply 5:5-10.) This argument is also unpersuasive. Although Plaintiff did not have the Court of Appeal opinion directly addressing the substantive unconscionability provisions in this agreement “point by point” at the time the opposition to the motion to compel was due, there was no change in the law that prevented Plaintiff from making the same unconscionability arguments addressed in Cook.[6]

CONCLUSION

            Accordingly, the Motion to Vacate Order Compelling Arbitration is denied.