Judge Bruce G. Iwasaki, Case Number: 24STCV03213, Date: 2024-05-09 Tentative Ruling

Ruling: The Motion to Compel Arbitration is granted as to Defendant Partners Personnel-Management Services, LLC and Defendant WePackitAll, LLC; the matter is stayed pending resolution of arbitration.

In this employment action, Plaintiff Elia Herrera (Plaintiff) filed a Complaint on February 7, 2024, alleging disability discrimination, failure to provide reasonable accommodations, failure to engage in the interactive process, and retaliation, as well as wrongful termination in violation of public policy, and other claims against her former employers, Defendants WePackitAll, LLC and Partners Personnel-Management Services, LLC.

On April 2, 2024, Defendant Partners Personnel-Management Services, LLC moved to compel arbitration pursuant to the parties’ arbitration agreement. On April 4, 2024, Defendant WePackitAll, LLC joined the motion to compel arbitration. In opposition, Plaintiff argues Defendants failed to establish the existence of a valid arbitration agreement and that the arbitration agreement is unenforceable based on unconscionability.

Plaintiff’s objection to the declaration of the Jennifer Rivas is overruled. Plaintiff’s objections to the declaration of the Kyla Buenaventura is ruled as follows: Nos. 1-2 are overruled.[1]

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.)

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

Defendants seek to compel arbitration based on an arbitration agreement between the parties. In support of the existence of an arbitration agreement, Defendants submit evidence that, on October 15, 2020, Defendant Partners Personnel-Management Services, LLC (PPMS) provided Plaintiff with its Onboarding Packet, which includes a “Mutual Agreement For Individual Arbitration”, through its Tempworks Enterprise software program (Tempworks). (Danley Decl., ¶¶ 4-5, Ex. A; Bautista Decl., ¶¶ 2-4; Rivas Decl., ¶¶ 4-14.) The Mutual Agreement For Individual Arbitration (Arbitration Agreement) was presented to Plaintiff in Spanish. (Danley Decl., ¶ 4, Ex. A.) Specifically, the Arbitration Agreement stated: “Employee and Company agree to resolve by binding arbitration all disputes, claims, causes of action, lawsuits, proceedings, and/or controversies (“Claims”), past present, or future, relating to or arising out of Employee’s employment relationship or the cessation of said relationship with the Company . . ..” (Danley Decl., Ex. A.)

Defendants’ evidence shows that Plaintiff accepted the terms of employment that same day, by electronically signing the Arbitration Agreement. (Danley Decl., ¶¶ 4-5, Ex. A; Rivas Decl., ¶¶ 4-14).

In opposition, Plaintiff argues that Defendants failed to meet their burden to show the existence of a valid arbitration agreement because Plaintiff denies signing the arbitration agreement. (Herrera Decl., ¶¶ 7-14.) Here, Plaintiff states that she filled out a questionnaire but she never created an account or password to complete her questionnaire or to apply to work with Defendants. (Herrera Decl., ¶ 11.) Moreover, although her name is on the Arbitration Agreement, she states that she does not recall signing it or putting her name on the document “in any way.” (Herrera Decl., ¶ 14.)

Additionally, Plaintiff argues that Defendants have not demonstrated that the “signature” on the arbitration agreement must have been an act of Plaintiff, through sufficient security measures or other means. In particular, Plaintiff notes that the Tempworks account is created using the employee/applicant’s last name and the last four digits of their social security number; Plaintiff notes that if both “match Defendant PPMS’ employee’s information, then the account will get created with the email address that the user entered and a unique, secure password that the user set.” (Rivas Decl., ¶ 7 [emphasis added].) Thus, Plaintiff argues that “[a]t no point in the process does the person who created the account need access to something only Plaintiff would have access to.” (Opp., 5:8-9 [emphasis added].)

Lastly, in opposition, Plaintiff argues that the Arbitration Agreement is suspect based on the multiple versions, suggesting that the Arbitration Agreement may have been altered. IN contrast to the versions attached to the declarations in the moving papers, Plaintiff’s counsel states she received a copy of the Arbitration Agreement with additional writings on the bottom left of the first page stating:

Plaintiff’s counsel further reports that when she accessed the Arbitration Agreement copy she received on March 18, 2024, the document states “at least one signature has problems.” (Decl. Scalia ¶ 7, Ex. 3) The document additionally states “Signature Validity is UNKNOWN.” (Decl. Scalia ¶ 8, Ex. 4)

Civil Code section 1633.9, subdivision (a), governs the authentication of electronic signatures. It provides that an electronic signature may be attributed to a person if “it was the act of the person.” (Civ. Code, § 1633.9, subd. (a).) Further, “[t]he act of the person may be shown 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.” (Ibid.)

“For example, a party may establish that the electronic signature was “the act of the person” by presenting evidence that a unique login and password known only to that person was required to affix the electronic signature, along with evidence detailing the procedures the person had to follow to electronically sign the document and the accompanying security precautions.” (Bannister v. Marinidence Opco, LLC (2021) 64 Cal.App.5th 541, 545.)

The Court finds Defendants have met their burden of authenticating the electronic signature.

The Court will first address the electronic signature, which bears on the credibility of Plaintiff’s denial that she signed any Arbitration Agreement. Here, Defendant submits adequate evidence of the process by which Plaintiff applied for employment with Defendant and received and signed the Arbitration Agreement. Defendant’s evidence shows that Defendant employed Tempworks Enterprise, an applicant tracking software program where applicants and/or employees could remotely, digitally sign employment documents. (Rivas Decl., ¶ 3.) Each user of Tempworks was required to create a personal account that was unique to the individual user. (Rivas Decl., ¶ 7.) Each user would create this account by validating their last name and last four digits of their social security number. (Rivas Decl., ¶ 7.) If both values matched Defendant’s records then the account would get created with the email address that the user entered and a unique, secure password that the user set. (Rivas Decl., ¶ 7.) Defendant has never been able to retrieve the unique password used by employees to access Tempworks. (Rivas Decl., ¶ 7.)

After creating this user account, the applicant can then click on a signing location and enter their name as their signature. (Rivas Decl., ¶ 10.) The applicant must click each signing location to place his or her name or signature in that spot. (Rivas Decl., ¶ 10.) The time and date the document was electronically signed is automatically recorded and stored. (Rivas Decl., ¶ 10.) Once the applicant signs the documents in the Onboarding Packet, including Arbitration Agreement, the applicant must click on the review and submit tab to submit the signed documents. (Rivas Decl., ¶ 11.)

According to the records stored on Tempworks, Plaintiff electronically signed and completed the Arbitration Agreement on October 15, 2020 at 12:02 p.m. (PST) after accessing Tempworks by inputting her unique username and password. (Danley Decl., ¶¶ 4-5; Rivas Decl., ¶ 13, Ex. A; Buenaventura Decl., ¶ 5, Ex. D.) Defendants contend that the only way the signature and date shown could appear on the Arbitration Agreement is if Plaintiff clicked on the signing location to insert her electronic signature, and submitted the signed document. Similarly, the date and time stamp recorded by Tempworks could have only been recorded after Plaintiff electronically signed the documents. (Rivas Decl., ¶ 14.)

Significantly, even if the last name and social security number were accessible to Defendant PPMS, the “account will get created with the email address that the user entered….” and metadata here shows that the email address used was Bikinga30@outlook.com. (Rivas Decl., ¶ 7; Buenaventura Decl., ¶ Ex. D; Rivas Reply Decl., ¶ 4.) Plaintiff does not address this security feature or argue that that the email address is not hers.

Plaintiff has offered no evidence that another person could have caused his electronic signature to appear on the arbitration 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 similar conflict in the record here. 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.

Further, as discussed above, the evidence here shows that only an applicant has access to the Tempworks’ user account using the applicant’s email address and the unique password the applicant set – 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.”

Lastly, Plaintiff does not dispute signing the Arbitration Agreement; she only states she does not “recall” signing it. (Herrera Decl., ¶ 14.)

With respect to Plaintiff’s argument that there are different versions and the additional information on the copy produced to Plaintiff’s counsel on March 18, 2024, proves this fact – this argument is unpersuasive.

As a preliminary matter, the reply evidence adequately explains the discrepancy between “versions.” Specifically, Defendant submits the declaration of Monine Zerby, a secretary at Plaintiff’s counsel’s law firm, who states that at the time of she filed the motion and supporting declarations, she did not reprint the arbitration agreement as a PDF, which sometimes prevents the signature from remaining on the documents. (Zerby Decl., ¶¶ 2-3.)

Further, Plaintiff fails to demonstrate any significance derived from the additional information contained in the March 18, 2024 Arbitration Agreement copy. In fact, the reply adequately addresses and explains each new line of information. (Reply, 2:17-3:22 [Rivas Reply Decl., ¶¶ 2-8].)

Thus, the Court finds that Defendants’ evidence is sufficient to authenticate the electronic signature as “the act of” Plaintiff. Plaintiff submits no conflicting evidence. Defendants have carried their burden of demonstrating the existence of a valid arbitration agreement between the parties.

In opposition, Plaintiff also 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 Arbitration Agreement is procedurally unconscionable because the arbitration provision 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 Arbitration Agreement, and Defendant made no effort to explain its terms to Plaintiff. (Herrera Dec., ¶¶ 15-18.) In sum, Plaintiff could either sign the Agreement or find another job.

Plaintiff also argues that she did not know what “arbitration” was; that is, she did not realize that agreeing to arbitration meant that she was giving up her right to a jury, and no one explained this to him. (Herrera Decl., ¶ 15.)

Finally, Plaintiff contends the arbitration provision was oppressive because it was a four-page long document in “small text.” (Opp., 7:22-8:13.)

Given the take it or leave it nature of the contract, the arbitration agreement suffers from some minimal degree of procedural unconscionability. It is an adhesive contract, as are most employment agreements; “few employees are in a position to refuse a job because of an arbitration requirement.” (Armendariz, supra, 24 Cal.4th at p. 115.)

However, Plaintiff’s purported failure to understand the terms of the arbitration provision does not add to the procedural unconscionability of the Arbitration Agreement. (Gutierrez v. Autowest, Inc. (2003) 114 Cal.App.4th 77, 88 [“[S]imply because a provision within a contract of adhesion is not read or understood by the nondrafting party does not justify a refusal to enforce it.”].) Further, the Arbitration Agreement was presented as separate document with a bolded and underlined heading at the top that clearly indicated the nature of its terms; the Arbitration Agreement was not buried in a long document, in a smaller font, or otherwise hidden. (Armendariz, at p. 114 [“Surprise” is defined as “the extent to which the supposedly agreed-upon terms of the bargain are hidden in the prolix printed form drafted by the party seeking to enforce the disputed terms.”].)

In short, there is a small degree of procedural unconscionability arising from the inception of the arbitration agreement.

Plaintiff also contends the arbitration agreement is substantively unconscionable because the Arbitration Agreement is not mutual, requires Plaintiff to pay attorney fees, and does not allow for adequate discovery.

With respect to the lack of mutuality claim, Plaintiff argues that the Arbitration Agreement requires all claims likely to be brought by Plaintiff to be sent to arbitration but does not limit Defendants’ ability to “seek restitution for any criminal wrongdoing it may discover against the Employee” through the courts. Plaintiff argues that this provision allows Defendant direct access to the courts but not Plaintiff. But the provision only applies to criminal complaints – not civil claims. The Arbitration Agreement only applies and limits the parties’ right bring civil claims in court. It does not (and could not) limits the government’s ability to address criminal wrongs or limit a parties’ access to criminal remedies.

Additionally, Plaintiff argues that under the Arbitration Agreement’s terms it requires Plaintiff to pay attorney fees and does not limit the employer’s right to recover to instances where the plaintiff’s claims are found to be “frivolous, unreasonable without foundation or brought in bad faith.” Again, this mischaracterizes the specific language in the Arbitration Agreement

As the reply notes, Arbitration Agreement provides that “the Arbitrator shall have the authority to order any party found to have raised any claim or defense without substantial justification to pay the other party's attorney's fees and costs pursuant to applicable rules of law, such as Fed. R. Civ. P. 11 or California Civil Code Proc. 128.7.” (Emphasis added) The Arbitration Agreement also states “The Arbitrator shall have the power to award any legal or equitable relief available in a court of competent Jurisdiction, including, but not limited to, attorneys' fees and costs, to the extent such relief is available at law.” (Emphasis added)

In FEHA cases, the applicable law is that a prevailing plaintiff may ordinarily recover attorney's fees unless special circumstances would render the award unjust, but a prevailing defendant may recover them only if the plaintiff's action was frivolous, unreasonable, without foundation, or brought in bad faith. (Gov. Code, § 12965, subd. (b); see Chavez v. City of Los Angeles (2010) 47 Cal.4th 970, 985.) Under Armendariz, the Court imposed a minimum requirement that “the arbitration agreement ... cannot generally require the employee to bear any type of expense that the employee would not be required to bear if he or she were free to bring the action in court.” (Armendariz, supra, 24 Cal.4th at pp. 110–111.)

Here, however, the qualifying language that limits the Arbitrator’s discretion within the “applicable rules of law” and “to the extent such relief is available at law” keeps the attorney's fees provision from running afoul of Armendariz 's minimum requirement. As such, the challenged attorney's fees provisions satisfy Armendariz 's minimum requirements.[2]

Moreover, not all claims to be arbitrated under the agreement are FEHA claims. As to traditional contractual claims, the attorney fees provision of the agreement is unremarkable, awarding fees to the prevailing party. As noted in Armendariz, where the attorney fees provision of the agreement to arbitrate is reasonable and unremarkable on its face, and, to the extent it may be inconsistent with the FEHA, it is severable and can be stricken. (Id. at p. 124; see also Civ. Code, § 1670.5, subd. (a).)

Finally, Plaintiff argue that the Arbitration Agreement impermissibly limits discovery. Plaintiff speculates that her ability to conduct several depositions of non-party witnesses prior to the arbitration hearing including former employees is compromised by the Arbitration Agreement.

The Arbitration Agreement states: “The parties hereto shall be entitled to conduct reasonable discovery, which may be limited by the arbitrator, in the form of document requests, interrogations, requests for admissions, physical and/or mental examinations, and depositions, for the purpose of obtaining information to prosecute or defend the claims presented.”

The provision is not substantively unconscionable. Parties may “agree to something less than the full panoply of discovery,” although employees “are at least entitled to discovery sufficient to adequately arbitrate their statutory claim, including access to essential documents and witnesses, as determined by the arbitrator(s) ....” (Armendariz, supra, 24 Cal.4th at pp. 105-106; De Leon v. Pinnacle Property Management Services, LLC (2021) 72 Cal.App.5th 476, 487.)

As the Armendariz court explained with respect to FEHA claims, “We agree that adequate discovery is indispensable for the vindication of FEHA claims.” (Armendariz, at p. 104, 99 Cal.Rptr.2d 745, 6 P.3d 669.) “In striking the appropriate balance between the desired simplicity of limited discovery and an employee's statutory rights, courts assess the amount of default discovery permitted under the arbitration agreement, the standard for obtaining additional discovery, and whether the plaintiffs have demonstrated that the discovery limitations will prevent them from adequately arbitrating their statutory claims.” (Davis v. Kozak (2020) 53 Cal.App.5th 897, 910-911; accord, De Leon, at p. 487, 287 Cal.Rptr.3d 402.) “The denial of adequate discovery in arbitration proceedings leads to the de facto frustration of the employee's statutory rights.” (Armendariz, at p. 104, 99 Cal.Rptr.2d 745, 6 P.3d 669; accord, Dougherty v. Roseville Heritage Partners (2020) 47 Cal.App.5th 93, 106, 260 Cal.Rptr.3d 580.)

Here, the provision does not limit any discovery specifically but allows the arbitrator discretion in determining what is reasonable discovery under the circumstances.

Therefore, even if the Arbitration 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.

Defendant WePackItAll, LLC joins the motion to compel arbitration arguing it is a third party beneficiary.

“[A] third party beneficiary of an arbitration agreement may enforce it. [Citations.]” (Ronay Family Limited Partnership v. Tweed (2013) 216 Cal.App.4th 830, 838; Thomas v. Westlake (2012) 204 Cal. App. 4th 605, 614-615 [“[A] plaintiff's allegations of an agency relationship among defendants is sufficient to allow the alleged agents to invoke the benefit of an arbitration agreement executed by their principal even though the agents are not parties to the agreement.”].)

To invoke the third party beneficiary exception, Defendant WePackItAll, LLC need only show that the arbitration clause was “made expressly for [their] benefit.” (Civ. Code, § 1559.) It is “not necessary that the beneficiary be named and identified as an individual. A third party may enforce a contract where he shows that he is a member of a class of persons for whose benefit it was made.” (Garratt v. Baker (1936) 5 Cal.2d 745, 748; accord, Cargill, Inc. v. Souza (2011) 201 Cal.App.4th 962, 967.)

Pursuant to Section 1 to the Arbitration Agreement, Plaintiff and Defendant Partners Personnel-Management Services, LLC agreed to arbitrate all claims arising out of Plaintiff’s employment with Defendant Partners Personnel-Management Services, LLC including claims Plaintiff may have against “(1) the Company and its affiliated agents, officers, directors or employees and/or (2) customers of the Company or employers as a whole.” Section 8 provides: “Any Client of the Company shall be deemed a third-party beneficiary under this Agreement for purposes of enforcing this Agreement with respect to any claim between me and such Client of the Company.”

Defendant WePackItAll, LLC asserts it is a customer and client of Defendant Partners Personnel-Management Services, LLC.

The opposition does not contend that Defendant WePackItAll, LLC is not a third party beneficiary. In fact, the Complaint alleges they were both Plaintiff’s employers. (Compl., ¶¶ 2-7.)

Accordingly, the Court grants Defendants’ motion to compel arbitration as to Defendant Partners Personnel-Management Services, LLC and Defendant WePackitAll, LLC; the matter will be stayed pending the outcome of arbitration.

[1] The foundation of the first objection is set forth in the reply declaration of Rivas at paragraph 4.

[2] By way of an example of a substantively unconscionable attorney fee provision, in Wherry v. Award, Inc. (2011) 192 Cal.App.4th 1242, the arbitration provision entitled the prevailing party to attorneys’ fees “without any limitation for a frivolous action or one brought in bad faith;” under FEHA, this provision was unlawful under Armendariz. (Id. at 1249.)

Department 58