Department 58

Hearing Date: January 4, 2024

Case Name: Garcia v. Public Health Foundation Enterprises, Inc.

Case No.: 23STCV22633

Matter: Motion to Compel Arbitration

Moving Party: Defendant Public Health Foundation Enterprises, Inc. dba Heluna Health

Responding Party: Plaintiff Mariela Garcia

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

In this employment action, Plaintiff Mariela Garcia (Plaintiff) filed a Complaint on September 19, 2023, alleging FEHA claims for wrongful termination, disability discrimination, failure to provide reasonable accommodations, failure to engage in the interactive process, and hostile work environment, as well as wrongful termination in violation of public policy, and unfair competition against her former employer, Defendant Public Health Foundation Enterprises, Inc. dba Heluna Health (Defendant).

On November 30, 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. Defendant filed a reply.

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 began working for Defendant in September 2010. (Seifert Decl., ¶ 8.) In 2012, Plaintiff began working as a WIC Nutrition Assistant. (Seifert Decl., ¶ 8.)

On Plaintiff’s first day of work, Plaintiff was provided a copy of Defendant Heluna Health’s then effective Employee Handbook. (Seifert Decl., ¶ 9.) Thereafter, existing WIC employees – like Plaintiff – received an updated Employee Handbook approximately every other year, distributed through Heluna Health’s WICNet intranet system. (Seifert Decl., ¶ 9.)

Relevant to this motion, in May 2019, Defendant Heluna Health updated its Employee Handbook. (Seifert Decl. ¶ 10). This updated Employee Handbook contained a mandatory Arbitration Provision which expressly required that any disputes between Plaintiff and Heluna Health (and its employees) were to be settled by binding arbitration. The 2019 Employee Handbook also included a cover page which advised employees, both in English and Spanish, that “this Handbook contains an arbitration requirement for both you and the employer that waives your and the employer’s right to trial by jury.” (Seifert Decl., ¶ 10, Ex. A.)

On May 14, 2019, Plaintiff electronically signed an Acknowledgment of Receipt form for the 2019 Employee Handbooks, confirming her receipt and acceptance of the Handbook. (Guzman Decl., ¶¶ 16-17, Ex. A; Seifert Decl., ¶ 11, Ex. B.)

In addition to the arbitration provision in the 2019 Employee Handbook, the Acknowledgment of Receipt form, signed by Plaintiff, provided in relevant part that: “This is to acknowledge that I received a copy of the 2019 Heluna Health Employee Handbook. This Handbook sets forth the terms and conditions of my employment as well as rights, duties, responsibilities and obligations of my employment with Heluna Health. I further understand and agree that I am bound by the provisions of the Handbook, particularly the provision relating to the mandatory, binding arbitration of any employment related dispute. I understand that by agreeing to arbitration, I am waiving the right to a trial by jury of the matters covered by the “Arbitration” provisions of the Handbook.” (Seifert Decl., ¶ 11, Ex. B [Emphasis in original].)

Plaintiff does not dispute the existence of the arbitration agreement or otherwise deny signing the Acknowledgment of Receipt form. Thus, there is no factual dispute as to the existence of a valid arbitration agreement between the parties.

Enforceability of the Arbitration Agreement:

Plaintiff argues that the Arbitration 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. (Garcia Dec., ¶¶ 5, 7.) In sum, Plaintiff could either sign the Agreement or find another job.

Plaintiff next argues that the Agreement is substantively unconscionable. Plaintiff identifies three grounds that she contends renders the agreement one-sided and unfair.

First, Plaintiff argue that the Agreement fails to allow for third party discovery. In support of this argument, Plaintiff cites Aixtron, Inc. v. Veeco Instruments Inc. (2020) 52 Cal.App.5th 360; Plaintiff argues that Aixtron held that, under the FAA and the CAA, an arbitrator has no freestanding power to order nonparty or third party discovery, nor do arbitrators have implicit powers to order document discovery from nonparties or third parties prior to a hearing. (Id. at 22.)

As a preliminary matter, the court in Aixtron did not make any findings with respect to whether this fact served as a basis for finding substantive unconscionability. More importantly, the facts here are distinguishable. Specifically, the Arbitration Agreement states:

“The parties shall be entitled to conduct all discovery to which they would have been entitled to had the parties’ controversy been filed in a California Superior Court and the arbitrator shall have the power to limit such discovery pursuant to motions and protective orders under the same rules and limitations as if the arbitrator were a California Superior Court judge.” (Seifert Decl., ¶ 10, Ex. A at p. 66.)

Thus, unlike in Aixtron, the Arbitration Agreement grants the arbitrator broad powers to issue third party discovery in the same manner that discovery would be conducted in California Superior Court.

Plaintiff next argues the Arbitration Agreement is substantively unconscionable because it lacks bilaterality and requires the employee to arbitrate but allows the employer to sue in court. In making this argument, Plaintiff does not cite to any language in the Arbitration Agreement to support this claim.

In reviewing the language of he Arbitration Agreement, the Agreement requires both parties to submit “[a]ny controversy, dispute, or claim between you and Heluna Health . . . [to] binding arbitration . . . .” The Arbitration Agreement concludes with the following: “Even if Heluna Health does not sign for its receipt or acknowledgement of this policy, Heluna Health, like the employee, agrees to be bound by this policy and agrees to arbitrate all disputes with its employees or former employees.” (Seifert Decl., ¶ 10, Ex. A at p. 66.) Plaintiff’s argument that the arbitration obligation is one-sided is mistaken.

Finally, Plaintiff argues the Arbitration Agreement is substantively unconscionable because the terms of the agreement do not give Plaintiff sufficient notice for which claims must be arbitrated. In making this argument, Plaintiff selectively cites from the Arbitration, ignoring the pertinent language.

The Arbitration Agreement requires both parties to submit any and all claims to arbitration with the exceptions of PAGA and Workers’ Compensation claims. Specifically, the Arbitration Agreement states:

“Any controversy, dispute or claim between you and Heluna Health, or its officers, agents or other employees, with the exception of any claim made pursuant to the California Private Attorney General Act, shall be settled by binding arbitration, at the request of either party,… Arbitration shall be the exclusive method for resolving any dispute or claim covered by this Section of the Handbook . . . .

The claims which are to be arbitrated under this policy include, but are not limited to, claims for breach of trade secret law, claims regarding breaches of confidentiality, violation of non-disclosure/nonsolicitation provisions, embezzlement/conversion, employee theft, claims for wages and other compensation, claims for breach of contract (express or implied), claims for violation of public policy, wrongful termination, tort claims, claims for unlawful discrimination, harassment and/or retaliation (including, but not limited to, race, religious creed, color, national origin, ancestry, physical disability, mental disability, gender identity or expression, medical condition, marital status, age, pregnancy, sex or sexual orientation) to the extent allowed by law, and claims for violation of any federal, state, or other government law, statute, regulation, or ordinance, except for claims for workers' compensation, unemployment insurance benefits and petitions or charges that could be brought before the National Labor Relations Board….” (Seifert Decl., ¶ 10, Ex. A at p. 66 [emphasis in original].)

Based on the foregoing language, the Arbitration Agreement is sufficiently clear as to the types of claims subject to the arbitration.

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 motion to compel arbitration is granted as to Plaintiff’s claims; 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.