Judge Bruce G. Iwasaki, Case Number: 23STCV27518, Date: 2024-04-24 Tentative Ruling

In this employment action filed on November 9, 2023, Plaintiff Anibal Eleno Ramirez Estrada (Plaintiff) filed a complaint against his former employer, Defendant T&R Painting and Drywall (Defendant). The Complaint seeks relief on fifteen causes of action including discrimination, retaliation and wrongful termination.

On March 5, 2023, Defendant filed a motion to compel arbitration pursuant to the parties’ arbitration agreement. In opposition, Plaintiff argues Defendant failed to carry its burden of showing the existence of a valid arbitration agreement and that the arbitration agreement is unconscionable.

Plaintiff’s objections to Defendant’s evidence are ruled as follows: No. 1 is overruled, and Nos. 2-3 are sustained.

Defendant’s objection to Plaintiff’s evidence is ruled as follows: No. 1 is sustained.

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.)

In ruling on a motion to compel arbitration, a court must determine two threshold matters: first, whether a valid agreement to arbitrate exists; and second, whether that agreement encompasses the dispute at issue. (See Code Civ. Proc. § 1281.2.)

By way of background, on January 1, 2013, Plaintiff was hired by Defendant to work as a painter. (Compl., ¶ 17.) On June 19, 2019, Plaintiff completed an employment application, and signed an arbitration agreement (Agreement). (Rapaport Decl., ¶ 3.)

Pursuant to the Agreement, Plaintiff agreed to arbitrate any dispute arising out of his employment with Defendant. Specifically, the Agreement provides in relevant part:

“Employee and Company agree that if any dispute arises from Employee's application or candidacy for employment, employment and/or cessation of employment with Company, it will be submitted to final and binding arbitration. Except for workers' compensation and unemployment insurance claims, the term "dispute" includes every kind or type of claim or controversy, but not limited to, any allegation of failure to pay wages owed, wrongful discharge, discrimination, or any injury to Employee's physical, mental or economic interests not covered by workers' compensation ... This means that a neutral arbitrator, rather than a court, jury, or commission, will decide the dispute.” (Rapaport Decl., ¶ 3, Ex. 1.)

In opposition, Plaintiff argues that Defendant has failed to present any admissible evidence authenticating the Agreement and thus failed to carry its initial burden on this motion to compel arbitration.

As noted above, Plaintiff’s evidentiary objections to the declaration of Adam Rapaport are well taken. Specifically, the Court sustained Plaintiff’s objections to Attorney Rapaport’s declaration declaring that Plaintiff signed the Agreement and authenticating the attached Agreement. The Rapaport declaration is devoid of any representations that would lay a foundation based on personal knowledge to assert what Plaintiff signed the Agreement in 2019 or Agreement is a true and correct copy of Plaintiff’s signed agreement. Moreover, even in the face of these evidentiary objections, Defendant does not submit any supplemental evidence in reply.

Nevertheless, on meeting its initial burden, Defendant is not required to authenticate the Agreement. Although Plaintiff submits a thorough analysis regarding the admissibility of the evidence, Plaintiff does not address what evidentiary burden is required of a party moving to compel arbitration on its initial burden.

At the first step, the moving party bears the burden of producing prima facie evidence of a written agreement to arbitrate, either by stating the provisions verbatim, or “by attaching a copy of the arbitration agreement purportedly bearing the opposing party's signature.” (Espejo v. Southern California Permanente Medical Group (2016) 246 Cal.App.4th 1047, 1060 (Espejo).) The moving party, however, “is not required to authenticate an opposing party's signature on an arbitration agreement as a preliminary matter” (Ruiz v. Moss Bros. Auto Group, Inc. (2014) 232 Cal.App.4th 836, 846), and “the court is only required to make a finding of the agreement's existence, not an evidentiary determination of its validity” (Condee v. Longwood Management Corp. (2001) 88 Cal.App.4th 215, 219). If the moving party meets its initial burden of production, the burden shifts to the party opposing arbitration to produce evidence challenging the authenticity of the agreement. (Gamboa, at p. 165.) If that burden is met, “the moving party must establish with admissible evidence a valid arbitration agreement between the parties.” (Ibid.)

For example, in Espejo v. Southern California Permanente Medical Group (2016) 246 Cal.App.4th 1047, the court – relying on Condee v. Longwood Management Corp. (2001) 88 Cal.App.4th 215 – concluded “that defendants here met their initial burden [to show an agreement to arbitrate] by attaching to their petition a copy of the purported arbitration agreement bearing Espejo's electronic signature.” (Id. at p. 1060.) Only because Dr. Espejo “challenged the validity of that signature in his opposition, defendants were then required to establish by a preponderance of the evidence that the signature was authentic.” (Ibid.)

Importantly, here, Plaintiff does not submit any evidence that he did not sign the Agreement submitted in moving papers. In fact, Plaintiff submits no declaration at all in opposition.

Moreover, Plaintiff’s reliance on Ruiz v. Moss Bros. Auto Group, Inc. (2014) 232 Cal.App.4th 836 is not well taken as this case is distinguishable. As expressed in Ruiz, “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., supra, 232 Cal.App.4th at 846.) The moving party’s authentication burden only arose after Ruiz claimed he did not recall signing the agreement. (Ibid.)

Based on the foregoing, Defendant has carried its initial burden of demonstrating the existence of a valid, binding arbitration agreements and that Plaintiff’s claims fall within the scope of the Agreement.

In opposition, Plaintiff argues the contract is unenforceable because it 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 argues the Arbitration Agreement is procedurally unconscionable because the Agreement did not attach the applicable rules referred to in the agreement.

In support of this argument, Plaintiff cites Harper v. Ultimo (2003) 113 Cal.App.4th 1402, 1405. While a failure to attach incorporated rules to an arbitration agreement may be a factor supporting a finding of unconscionability, it is insufficient to support a finding of unconscionability on its own. (Lane v. Francis Capital Mgmt. LLC (2014) 224 Cal. App. 4th 676, 690.) Rather, such an omission is unconscionable only when “the failure would result in surprise to the party opposing arbitration.” (Id. at 690-91 [collecting cases and distinguishing Harper v. Ultimo (2003) 113 Cal. App. 4th 1402].)

Here, Plaintiff merely argues that the relevant arbitration rules were not attached but does not contend that he was surprised by the selected arbitration rules. Moreover, as was the case in Lane, the arbitration rules incorporated here are easily found on the internet. (Id.) In particular, the American Arbitration Association rules are linked in the text of the Agreement itself. (Rapaport Decl., Ex. 1 [citing “www.adr.org for more information”].)[1] Thus, this factor does not show procedural unconscionability.

Plaintiff also argues that the purported arbitration agreement is procedurally unconscionable because the Agreement was in English, despite Plaintiff’s inability to speak or read English. However, the only evidence as to Plaintiff’s ability to understand English is Plaintiff’s counsel’s declaration, which the Court ruled was inadmissible based on Defendant’s evidentiary objections.

Plaintiff submits no other evidence, including no representation that as the Agreement was made a condition of employment or that he was not offered time to review the agreements or negotiate its terms.

Thus, Plaintiff has not identified any procedural unconscionability in the Agreement and Plaintiff’s unconscionability argument fails for this reason. (Baltazar v. Forever 21, Inc. (2016) 62 Cal.4th 1237, 1243.)

Nonetheless, the Court will address the substantive unconscionability argument, as well.

Here, Plaintiff also argues the Arbitration Agreement contains several substantively unconscionable provisions.

Specifically, Plaintiff argues the Agreement is substantively unconscionable because it “bars the employee’s right to a Berman hearing before the California Labor Commissioner, fails to adequately identify the main contracting parties, and requires the filing fees to be divided among the parties.” Plaintiff does not cite any legal authority in support of these arguments, provide any legal analysis or identify specific provisions with the Agreement.

First, the waiver of a right to a Berman hearing does not necessarily render the Agreement unconscionable. Specifically, California Supreme Court has held that while a waiver of a Berman Hearing indicates potential substantive unconscionability, “the waiver of Berman procedures does not, in itself, render an arbitration agreement unconscionable.” (OTO, L.L.C. v. Kho (2019) 8 Cal.5th 111, 130.) Rather, the substantive unconscionability analysis requires analysis “sensitive to ‘the context of the rights and remedies that otherwise would have been available to the parties’” that requires an examination of “both the features of dispute resolution adopted as well as the features eliminated.” (OTO, L.L.C. v. Kho, supra, 8 Cal.5th at 130.) Here, Plaintiff’s conclusory citation to this analysis is insufficient to carry Plaintiff’s burden of showing substantive unconscionability.

Further, Plaintiff’s characterization of the Agreement as requiring the parties divide the filing fees is misconceived. The Agreement provides:

“The Company will pay the arbitrator’s fees and the cost of the facilities for the arbitration. Filing fees and reporter fees shall be divided among the parties, unless such fees would exceed normal court fees. In such cases, the Company shall, in addition to its own one half of the fees, pay the difference between what the employee would have paid in court as a filing fee or a reporter fee and one half of the actual amount of those fees.” (Rapaport Decl., ¶ 3, Ex. 1.)

Here, the case authority regarding sharing arbitration costs is specific to fees unique to arbitration. In Armendariz, the court held that an employee may not be required to pay fees that are unique to arbitration. (24 Cal.4th at 111 [A predispute arbitration agreement that requires the employee to bear any type of expense that he would not otherwise bear in court is “contrary to public policy, and is therefore grounds for invalidating or revoking an arbitration agreement.”].)

Here, the Agreement only requires that fees be shared for fees that would have been incurred by Plaintiff in a court proceeding as well – that is, fees not unique to arbitration.

Finally, Plaintiff’s challenge that the Agreement does not adequately identify the parties has no merit. The Agreement clearly refers to Plaintiff and Defendant T & R Painting Drywall. There is no claim of confusion and no argument that the Agreement applies to any other party.

Based on the foregoing, Plaintiff has failed to meet his burden of showing the Agreement is unenforceable based on unconscionability.

Accordingly, the Court grants Defendant’s motion to compel arbitration. The motion to compel arbitration is granted; the matter is stayed pending the outcome of arbitration.

[1] Plaintiff also cites Trivedi v. Curexo Technology Corp. (2010) 189 Cal.App.4th 387 for the proposition that “[n]umerous cases have held that the failure to provide a copy of the arbitration rules to which the employee would be bound, supported a finding of procedural unconscionability” and failure to attach employment AAA Rules was “no trifling matter. The rules extend over 26 single-spaced pages” (Id. at 393.) However, in Baltazar v. Forever 21, Inc. (2016) 62 Cal.4th 1237, the California Supreme Court addressed this exact quotation in Trivedi and noted that “in Trivedi itself and in each of the Court of Appeal decisions cited therein, the plaintiff's unconscionability claim depended in some manner on the arbitration rules in question.:” (Baltazar v. Forever 21, Inc. (2016) 62 Cal.4th 1237, 1246.)

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