Judge: Bruce G. Iwasaki, Case: 24STCV08121, Date: 2024-07-31 Tentative Ruling
Case Number: 24STCV08121 Hearing Date: July 31, 2024 Dept: 58
Judge Bruce Iwasaki
Hearing Date: July 31, 2024
Case Name: Larry Schwartz v. OTTera,
Inc.
Case
No.: 24STCV08121
Motion: Motion
to Compel Arbitration
Moving
Party: Defendant TriNet Group,
Inc. (“TriNet”)
Joined
by: Defendants OTTera,
Inc., Stephen L. Hodge, Steve Rifkin and Craig McEldowney (“Joinder
Defendants”)
Responding Party: Plaintiff Larry Schwartz
Tentative Ruling:
Defendant
TriNet Group, Inc.’s Motion to Compel Arbitration is granted. The action is stayed pending completion of
arbitration pursuant to Code of Civil Procedure, section 1281.4.
Joinder
Defendants’ request for joinder is granted.
Plaintiff’s claims against Joinder Defendants are also ordered to
arbitration.
I. Background
Plaintiff
served as the Chief Revenue Officer of OTTera, Inc. pursuant to a four year
written employment agreement. Plaintiff
alleges he suffered age discrimination while he was employed at OTTera, Inc. Despite positive comments on his performance
and a merit bonus in June 2023, Plaintiff was terminated on November 17, 2023. Plaintiff alleges he was terminated without
cause and he was entitled to receive those benefits applicable to termination
without cause. Approximately one month
after his termination, Defendants moved to classify his termination as with-cause,
which substantially changed the benefits to which Plaintiff was entitled to
upon termination.
On March
29, 2024, Plaintiff filed a complaint against Defendants OTTera, Inc., TriNet
Group, Inc., Stephen L. Hodge, Steve Rifkin and Craig McEldowney alleging (1)
breach of contract and breach of the covenant of good faith and fair dealing;
(2) harassment in violation of Government Code section 12940(j); (3) age
discrimination in violation of Government Code section 12940(a); (4) failure to
take steps necessary to prevent harassment and discrimination in violation of
Government code section 12940(k); (5) wrongful termination in violation of
public policy; (6) intentional misrepresentation; (7) failure to pay all wages
due upon separation. (Lab. Code, §§ 201, 203).
II. Discussion
A. Legal Standard
i.
Federal Arbitration Act (“FAA”)
“The FAA
applies to contracts that involve interstate commerce (9 U.S.C. §§ 1, 2), but
since arbitration is a matter of contract, the FAA also applies if it is so
stated in the agreement.” (Davis v.
Shiekh Shoes, LLC (2022) 84 Cal.App.5th 956, 963.) In addition, the express incorporation of the
FAA for the enforcement of this arbitration agreement incorporates the
procedural provisions of the FAA. Under Victrola 89, LLC v. Jaman Properties
8 LLC (2020) 46 Cal.App.5th 337, the language regarding enforcement of the
arbitration agreement under the FAA incorporates the FAA’s procedural
requirements and renders CCP §1281.2(c) inapplicable. (Victrola 89, LLC, supra, 46
Cal.App.5th at 344-345 (arbitration provision providing that “enforcement [of
the arbitration agreement] shall be governed by the [FAA]” incorporated
procedural provisions of the FAA and trial court erred when it denied the
motion to compel per Code of Civ. Proc., section 1281.2, subd. (c).)
Under
California and federal law, public policy favors arbitration as an efficient
and less expensive means of resolving private disputes. (Moncharsh v. Heily
& Blasé (1992) 3 Cal.4th 1, 8-9; AT&T Mobility LLC v. Concepcion
(2011) 563 U.S. 333, 339.) Accordingly, whether an agreement is governed by the
California Arbitration Act or the Federal Arbitration Act, courts resolve doubt
about an arbitration agreement’s scope in favor of arbitration. (Moncharsh,
supra, 3 Cal.4th at p. 9; Comedy Club, Inc. v. Improv West Associates
(9th Cir. 2009) 553 F.3d 1277, 1284; see also Engalla v. Permanente Med.
Grp., Inc. (1997) 15 Cal.4th 951, 971-72 (“California law incorporates many
of the basic policy objectives contained in the Federal Arbitration Act,
including a presumption in favor of arbitrability [citation] and a requirement
that an arbitration agreement must be enforced on the basis of state law
standards that apply to contracts in general.”).) “[U]nder both the FAA and California law,
‘arbitration agreements are valid, irrevocable, and enforceable, save upon such
grounds as exist at law or in equity for the revocation of any contract.’” (Higgins
v. Superior Court (2006) 140 Cal.App.4th 1238, 1247.)
ii.
California Arbitration Act (“CAA”)
“On petition of a party to an arbitration
agreement alleging the existence of a written agreement to arbitrate a
controversy and that a party to the agreement refuses to arbitrate that
controversy, the court shall order the petitioner and the respondent to
arbitrate the controversy if it determines that an agreement to arbitrate the
controversy exists, unless it determines that:
(a) The right to compel arbitration has been waived by the
petitioner; or
(b) Grounds exist for rescission of the agreement.
(c) A party to the arbitration agreement is also a party to
a pending court action or special proceeding with a third party, arising out of
the same transaction or series of related transactions and there is a
possibility of conflicting rulings on a common issue of law or fact.” (Code of Civ. Proc., section 1281.2.)
“The trial
court may resolve motions to compel arbitration in summary proceedings, in
which the trial court sits as a trier of fact, weighing all the affidavits,
declarations, and other documentary evidence, as well as oral testimony
received at the court's discretion, to reach a final determination. The party seeking arbitration bears the
burden of proving the existence of a valid arbitration agreement by a
preponderance of the evidence, and the party opposing arbitration bears the
burden of proving any defense, such as unconscionability by a preponderance of
the evidence.” (Mendoza v. Trans
Valley Transport (2022) 75 Cal.App.5th 748, 718 (trial court properly
decided plaintiff’s challenge to arbitration agreement despite delegation
clause where plaintiff attacked contract formation and very existence of
agreement to arbitrate).)
“If a court
of competent jurisdiction, whether in this State or not, has ordered
arbitration of a controversy which is an issue involved in an action or
proceeding pending before a court of this State, the court in which such action
or proceeding is pending shall, upon motion of a party to such action or
proceeding, stay the action or proceeding until an arbitration is had in
accordance with the order to arbitrate or until such earlier time as the court
specifies.” (Code of Civ. Proc, section
1281.4, para. 1).)
B.
Evidentiary Objections
Plaintiff’s
objections to evidence submitted by Defendants are overruled.
Defendant
TriNet’s objections to the Schwartz Declaration are overruled. No declaration by Joshua Boxer was
filed. The objection to any reliance on
such a declaration is sustained.
C. Defendant TriNet establishes an
applicable arbitration agreement
i. Defendant TriNet establishes an arbitration
agreement subject to the FAA between itself and Schwartz that applies to the
claims alleged against it
Defendant
TriNet HR III, Inc. began providing human resources services to OTTera, Inc. on
October 1, 2023. (M. Ycasas Dec.,
¶6.) Defendant TriNet Group, Inc., the
parent company of TriNet HR III, moves to compel arbitration of Plaintiff Schwartz’s
claims pursuant to the “Dispute Resolution Protocol” (“DRP”) contained in the
Terms and Conditions Agreement (“TCA”) executed by Plaintiff as part of his
employment with OTTera, Inc. (C.
Thompson Dec., ¶2.) The DRP provides in
bold type as follows:
“Subject to and
without superseding the specific terms in subsections (a) through (f) below,
the DRP expressly requires that arbitration will be used instead of going
before a court (for a judge or a jury trial) and that NO JURY TRIAL WILL BE
PERMITTED (unless applicable law does not allow enforcement of a pre-dispute
jury trial waiver in the particular circumstances presented) for any dispute
arising out of or relating to your co-employment with TriNet and/or arising out
of or relating to your employment with your company, and for any dispute with
an employee, officer, or director of TriNet or a TriNet customer.”
(C. Thompson Dec., ¶10, Ex. A, Section 8, p. 5 of 8 (bold
type removed).)
The TCA,
including the DRP, is between “TriNet” and the acknowledging employee. (C. Thompson Dec., ¶10, Ex. A, Sections 1 and
9, p. 1 of 8.) “TriNet” is defined to
include Defendant TriNet Group, Inc., “all of its direct and indirect
subsidiaries (including, but not limited to your TriNet co-employer, as defined
below), whether doing business in their own name or otherwise.” (Id. at Section 1, p. 1.) The “co-employer” is the company that the
acknowledging employee works for and “is a TriNet Customer” and whose name
appears on the employee’s wage statements.
(Id. at Section 1, p. 2.)
The DRP
“covers any dispute arising out of or relating to our co-employment with TriNet,
including your TriNet co-employer, and/or arising out of or relating to your
employment with your company, as well as any dispute with an employee, officer,
or director TriNet or of a TriNet customer (all of whom, in addition to TriNet
customers, are intended to be beneficiaries of this DRP, including but not
limited to, all claims whether arising in tort or contract and whether arising
under statute or common law including, but not limited to, any claim of breach
of contract, discrimination or harassment of any kind.” (C. Thompson Dec., Ex. A, Section 8(a), p.
5.)
The DRP
also expressly states that the FAA applies to the agreement: “The Federal Arbitration Act (“FAA”) applies
to this DRP.” (C. Thompson Dec., Ex. A,
Section 8(a), p. 5 of 8.) “The FAA
applies to contracts that involve interstate commerce (9 U.S.C. §§ 1, 2), but
since arbitration is a matter of contract, the FAA also applies if it is so
stated in the agreement.” (Davis v.
Shiekh Shoes, LLC (2022) 84 Cal.App.5th 956, 963.) The FAA therefore applies to the DRP.
TriNet
establishes that the DRP applies to Plaintiff’s claims against it, which
include statutory and tort claims for discrimination, harassment and failure to
prevent discrimination and harassment in violation of the Fair Employment and
Housing Act, wrongful termination in violation of public policy and violations
of the Labor Code. (Complaint, Second
through Seventh Causes of action.) The Complaint
alleges causes of action arising out of and relating to Plaintiff’s
co-employment with Defendant TriNet Group, Inc. and OTTera, Inc. (Complaint, ¶¶16-37.)
ii. Defendant establishes that Plaintiff
acknowledged and accepted the terms of the TCA
“A
record or signature may not be denied legal effect or enforceability solely
because it is in electronic form.” (Civ,
Code, section 1633.7, subdiv. (a).) “A
contract may not be denied legal effect or enforceability solely because an
electronic record was used in its formation.”
(Civ. Code, section 1633.7, subdiv. (b).) “If a law requires a record to be in writing,
an electronic record satisfies the law.”
(Civ. Code, section 1633.7, subdiv. (c).)
“An
electronic record or electronic signature is attributable to a person if it was
the act of the person. The 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.” (Civ. Code, section
1633.9, subdiv. (a).) “The effect of an
electronic record or electronic signature attributed to a person under
subdivision (a) is determined from the context and surrounding circumstances at
the time of its creation, execution, or adoption, including the parties'
agreement, if any, and otherwise as provided by law.” (Civ. Code, section 1633.9, subdiv.
(a).)
TriNet
establishes that Plaintiff acknowledged and accepted the terms of the TCA
electronically. TriNet maintains a
password-protected online platform that provides clients and worksite employees
(“WSEs”) access to certain employment policies, employee records and
forms. (C. Thompson Dec., ¶4.) TriNet’s platform can only be accessed by a
unique Login ID and password that each employee creates when he or she first
accesses the platform. (C. Thompson
Dec., ¶¶7-9.) Based on a review of TriNet’s
date regarding the TriNet platform, Schwartz acknowledged and accepted the
terms of the TCA through his individual TriNet platform on September 18, 2023. (Id. at ¶10; M. Ycasas Dec., ¶7.)
Schwartz’s
acknowledgment and acceptance of the TCA’s terms is also evidenced by the
confirmation email sent to Schwartz’s email account on September 18, 2023. (M. Ycasas Dec., ¶8, Ex. A.) The email attaches a copy of the TCA and
confirms that Schwartz accepted the terms of the TCA. (Id.)
However, the copy of the email attached as evidence to the Ycasas
declaration does not include a copy of the attachment. (Id.)
On reply, TriNet submits additional evidence establishing that the TCA
attached to Thompson’s declaration is the TCA that was in effect on September
18, 2023 and acknowledged and accepted by Schwartz on that date. (E. Weiss, ¶¶4-6.)
In
response, Schwartz testifies that (1) he does not recall ever seeing the TCA
before; (2) that when he visited the website on July 17, 2024, the TCA was not
among the list of policies acknowledged and accepted by him; and (3) he found
the TCA under the “Benefits Guide” with a note indicating that he had
previously acknowledged the TCA or a version thereof. (L. Schwartz Dec., ¶¶16, 18.)
Schwartz’s
inability to recall the TCA does not rebut TriNet’s evidence that Schwartz
accessed his individual employee portal with his unique Login ID and password
and acknowledged and accepted the TCA on September 18, 2023. Schwartz’s screenshot of his employee portal lists
the TriNet Terms and Conditions with a note stating, “Please note that you have
already acknowledged these Terms and Conditions (or a version thereof) on 9/18/2023.” (Schwartz, Dec., Ex. D.) Schwartz therefore submits no evidence refuting
TriNet’s showing that he acknowledged and accepted the TriNet’s TCA on
September 18, 2023.
Based on
the evidence presented, Schwartz acknowledged and accepted the TriNet TCA on
September 18, 2023. The TCA applies to Schwartz’s
claims against TriNet.
D. Schwartz fails to establish that the
agreement is unconscionable
A written
agreement to submit a controversy to arbitration is valid, enforceable, and
irrevocable, “save upon such grounds as exist at law or in equity for the
revocation of any contract.” (9 U.S.C. §
2; see also Code of Civ. Proc., § 1281.)
“Unconscionability provides such grounds.” (Ramirez v. Charter Communications, Inc.
(July 15, 2024, No. S273802) __ Cal.5th __ [2024 WL 3405593, at *3] (“Ramirez”).)
As our
Supreme Court recently summarized: “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.
Unconscionability has both a procedural and a substantive element. The party resisting enforcement of an
arbitration agreement has the burden to establish unconscionability.” (Ramirez, supra, at p. *3.)
“Procedural
unconscionability ‘addresses the circumstances of contract negotiation and
formation, focusing on oppression or surprise due to unequal bargaining power.’ This element is generally established by
showing the agreement is a contract of adhesion, i.e., a standardized contract
which, imposed and drafted by the party of superior bargaining strength,
relegates to the subscribing party only the opportunity to adhere to the
contract or reject it. Adhesion
contracts are subject to scrutiny because they are “not the result of freedom
or equality of bargaining.” (Ibid.) However, they remain valid and enforceable
unless the resisting party can also show that one or more of the contract's
terms is substantively unconscionable or otherwise invalid.” (Ibid.)
“Substantive
unconscionability looks beyond the circumstances of contract formation and
considers the fairness of an agreement's actual terms, focusing on whether the
contract will create unfair or one-sided results. Substantively unconscionable
contractual clauses reallocate risks in an objectively unreasonable or
unexpected manner.” (Ibid.)
“Both
procedural and substantive elements must be present to conclude a term is
unconscionable, but these required elements need not be present to the same
degree. Courts apply a sliding scale analysis under which the more
substantively oppressive a term, the less evidence of procedural
unconscionability is require to come to the conclusion that the term is
unenforceable, and vice versa. Whether a
contract is fair or works unconscionable hardship is determined with reference
to the time when the contract was made and cannot be resolved by hindsight by
considering circumstances of which the contracting parties were unaware.” (Ibid (citations omitted).)
i. Low degree of procedural unconscionability
established
“Ordinary
contracts of adhesion, although they are indispensable facts of modern life
that are generally enforced, contain a degree of procedural unconscionability
even without any notable surprises, and bear within them the clear danger of
oppression and overreaching. Courts must
be particularly attuned to this danger in the employment setting, where
economic pressure exerted by employers on all but the most sought-after
employees may be particularly acute. Thus, although adhesion alone generally
indicates only a low degree of procedural unconscionability, the potential for
overreaching in the employment context warrants close scrutiny of the
contract's terms.” (Ramirez, supra,
at p. *4].)
The TCA is
a contract of adhesion. TriNet provides
the TCA to the worksite employee, who may review and accept the TCA and agree
to abide by it. (C. Thompson Dec.,
¶5.) The employee is not allowed to
negotiate and the agreement it is presented on a take it or leave it
basis. (Id.; Ycasas Dec., ¶7; Schwartz
Dec., ¶10.) However, the employee,
including Schwartz, did not have to review or execute it by any deadline and he
could return to the TCA to review it at any time. (C. Thompson Dec., ¶11.)
Schwartz
testifies he did not consult an attorney prior to executing the TCA, nor was he
advised to do so. The failure to advise Schwartz
to consult an attorney does not qualify as procedural unconscionability. Schwartz
was not discouraged or prevented from consulting an attorney and he had time to
consult one. (C. Thompson Dec.,
¶11.)
Schwartz
fails to substantiate his claim of “surprise.” Schwartz argues the TCA was
“buried within a totally different agreement.”
(Opposition, 15:4.) The manner in
which the TCA is presented to employees is described by TriNet’s Director of
Global Security, Thompson. After
completing the security profile, the employee “is next presented with the full
text of the TCA for the WSE’s review and acceptance. Prior to acceptance, each WSE is given the
option to enter a personal email address if he/she wants a copy of the TCA to
also be sent to his/her personal email in addition to his/her work email, which
is entered into the TriNet Platform by the client at the time the employee is
hired by the worksite employer (here OTTera). Also prior to acceptance, the WSE
is provided with acknowledgement language in bold wherein by his/her acceptance
the WSE confirms that he/she has read and understands the content of the TCA,
including, but not limited to, the DRP.”
(C. Thompson Dec., ¶9.)
Nothing in
the process described by Thompson would support a finding of surprise. Schwartz fails to submit any evidence
refuting Thompson’s description of how the TCA was presented to him.
In
addition, although the TCA is an employment agreement and Schwartz was an
employee, he was a highly “sought after employee,” who was actively recruited
to be the Chief Revenue Officer at OTTera, Inc., an executive (Complaint, ¶17.) Thus, the imbalance of power that ordinarily
exists between an employer and employee and the economic pressure that an
employer can exert on an employee are less of a concern here. (Ramirez, supra, at p. *4].)
There is
therefore a low degree of procedural unconscionability based on Defendant
TriNet’s use of a contract of adhesion.
There must therefore be a high degree of substantive unconscionability to
deny enforcement of the TCA.
ii.
TCA is not substantively unconscionable
Substantive
unconscionability is considered only after evaluating procedural
unconscionability. (Ramirez, supra,
at p.*4].) The focus of the analysis is
whether the agreement imposes terms that are overly harsh, unduly oppressive,
so one-sided as to shock the conscience, or unfairly one-sided. (Id.at *5.) “A party cannot avoid a contractual
obligation merely by complaining that the deal, in retrospect, was unfair or a
bad bargain. Not all one-sided contract
provisions are unconscionable…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.” (Id.)
Schwartz
argues the TCA is substantively unconscionable on the following grounds: (1) the agreement is unconscionably broad in
scope; (2) the agreement is unconscionably broad in duration; (3) the agreement
lacks mutuality as it requires the employee to arbitrate any claims against an
employee, officer or director of TriNet or of a TriNet customer but it does not
require any of these intended beneficiaries to arbitrate their claims against
the employee; and (4) the TCA contains an unenforceable PAGA waiver.
The
agreement is not impermissibly broad in scope. Schwartz relies on Cook v. University of
Southern California (2024) 102 Cal.App.5th 312 to support his
claim that the TCA is overly broad.
However, the arbitration provision in Cook is
distinguishable. In Cook, the
arbitration agreement encompassed “all claims, whether or not arising out of
Employee’s University employment, remuneration or termination….” (Cook, supra, 102 Cal.App.5th
at 321.) The defendant in Cook
also conceded that “the scope of the agreement—as written—is unconscionably
broad and must be construed to mean other than what it plainly states to avoid
unreasonable results.” (Id.)
The DRP is
limited to “any dispute arising out of or relating to your co-employment with
TriNet and/or arising out of or relating to your employment with your company,
and for any dispute with an employee, officer, or director of TriNet or a
TriNet customer.” (C. Thompson Dec.,
¶10, Ex. A, Section 8, p. 5 of 8.) The
DRP is therefore not impermissibly broad in scope and is reasonably limited to
disputes arising out of Schwartz’s employment relationship with OTTera, Inc.
and Trinet Group, Inc. Defendant TriNet
Group also does not concede that the DRP as written would be unreasonable.
The
agreement is not unreasonable in duration.
Again, Schwartz relies on Cook to support his position that the
duration of the agreement is unreasonable.
However, Cook is distinguishable for several reasons. In Cook, the defendant made no
arguments that could be considered for the first time on appeal as to the issue
of unreasonable duration. (Cook, supra,
102 Cal.App.5th at 325.)
Substantively,
the Court of Appeal rejected the defendant’s argument. The arbitration agreement in Cook would
survive the employee’s termination and could “only be revoked or modified in a
written document that expressly refers to the ‘Agreement to Arbitrate Claims’
and is signed by the President of the University.” (Cook, supra, 102 Cal.App.5th
at 325.) In finding the arbitration
agreement was not terminable at will within a reasonable time, Cook
focused on the arbitration agreement’s requirement that the parties’ enter into
a new written agreement expressly revoking the arbitration agreement signed by
the President of the University. “[T[he
inclusion of this language…shows the parties did not contemplate that the
arbitration agreement would be terminable at will.” (Cook, supra, 102 Cal.App.5th
at 326.)
Although
the DRP states it “will survive the termination of the employment
relationship,” there is no provision that it will endure until the parties
agree formally to its revocation or modification. Moreover, because the DRP is limited to
claims arising out of the employment relationship, the duration of the DRP is also
limited by virtue of applicable statutes of limitation and the conclusion of
the employment relationship. Cook
is therefore factually distinguishable.
The agreement does not lack mutuality. Schwartz argues the DRP does not require the
third-party beneficiaries to arbitrate their disputes with employees arising
from the employment relationship. However,
TriNet is not a third party beneficiary but a named signatory to the agreement
and based on the language of Section 8 of the TCA, the arbitration agreement is
not limited to an employee’s claims against TriNet. The agreement applies to any and all claims
arising from the employment relationship and its scope is not limited to claim
brought by the employee against either employer. (C. Thompson Dec., Ex. 1, Section 8.) The agreement therefore does not lack
mutuality as between Schwartz and moving party TriNet.
As to third
party beneficiaries identified in the agreement (TriNet’s subsidiaries, the
Tri-Net co-employer, an employee, officer, or director of TriNet or of a TriNet
customer), the agreement does not lack mutuality due to existing law. “A nonsignatory can be compelled to arbitrate
when a preexisting relationship existed between the nonsignatory and one of the
parties to the arbitration agreement, making it equitable to compel the
nonsignatory to arbitrate as well.
Additionally, a nonsignatory can be compelled to arbitrate when it is
suing as a third-party beneficiary of the contract containing the arbitration
clause.” (JSM Tuscany, LLC v.
Superior Court (2011) 193 Cal.App.4th 1222, 1240.)
The named
third parties here are the TriNet customer or co-employer (OTTera, Inc.) and an
employee, officer or director of TriNet or of a TriNet customer (employees of
TriNet or OTTera, Inc.). A preexisting
relationship existed between signatory TriNet and the named third party
beneficiaries: OTTera, Inc., the
employees of TriNet and the employees of OTTera, Inc. TriNet HR III, the company hired by OTTera,
Inc. for human resources services, is a subsidiary of TriNet. (C. Thompson Dec., ¶2; Ycasas Dec., ¶6.) If any of these third party beneficiaries
sued Schwartz for claims arising from the employment relationship, Schwartz
could compel them to arbitrate those claims pursuant to the DRP based on
equitable estoppel.
Schwartz
fails to establish that the DRP lacks mutuality as to either TriNet or the
named third party beneficiaries. The DRP
is not unconscionable based on lack of mutuality.
The
agreement’s PAGA waiver is unenforceable.
The PAGA waiver located in section 8(d) of the DRP is unenforceable. “Viking River left intact Iskanian’s
principal rule prohibiting employers from imposing a waiver of an employee's
right to bring a ‘representative’ PAGA claim in any forum, either in its
individual or nonindividual sense.” (DeMarinis
v. Heritage Bank of Commerce (2023) 98 Cal.App.5th 776,
787.)
However,
the PAGA waiver can be severed from the rest of the agreement and the remainder
of the DRP enforced. “If the court as a
matter of law finds the contract or any clause of the contract to have been
unconscionable at the time it was made the court may refuse to enforce the
contract, or it may enforce the remainder of the contract without the
unconscionable clause, or it may so limit the application of any unconscionable
clause as to avoid any unconscionable result.”
(Civ. Code, section 1670.5, subd. (a); Adolph v. Uber Technologies (2023)
14 Cal.5th 1104, 1124.) The PAGA
waiver is not grounds to deny the motion to compel arbitration.
E.
Request for Joinder by Defendants OTTera, Inc., Stephen L. Hodge, Steve Rifkin
and Craig McEldowney
Joinder
Defendants join TriNet’s motion.
Defendants argue in their joinder that they are entitled to compel
arbitration of Schwartz’s claims against them pursuant to the DRP based on
their status as third party beneficiaries. Defendant’s request for joinder is
granted.
Defendants
are expressly named third party beneficiaries of the DRP. Defendant OTTera, Inc. is a “co-employer” and
client of TriNet as defined under the TCA.
(C. Thompson Dec., ¶10, Ex. A, Sections 1 and 9, pp. 1 and 2 of 8.) Defendants Hodge, Rifkin and McEldowny are
all being sued for acts carried out as employees of OTTera, Inc. (Complaint,
¶¶7-9.) DRP expressly names co-employers
and clients of TriNet as third party beneficiaries, as well as the employees of
co-employers and clients of TriNet. (C.
Thompson Dec., ¶10, Ex. A, Sections 1 and 9, pp. 1 and 2 of 8.)
Plaintiff
has also alleged that each Defendant is the alter ego of the other
Defendants. “[U]nder equitable estoppel
principles and in appropriate factual circumstances, a signatory to a[n]
agreement containing an arbitration clause may be compelled to arbitrate its
claims against a nonsignatory when the relevant causes of action rely on and
presume the existence of the contract.”
(Boucher v. Alliance Title Co. Inc. (2005) 127 Cal.App.4th 262,
269; see also Rowe v. Exline (2007) 153 Cal.App.4th 1276, 1287
(plaintiff’s claims against nonsignatory directors who were sued as alter egos
of corporation were subject to arbitration based on arbitration provision
contained in plaintiff’s agreement with corporation; plaintiff could not sue
directors as alter egos of corporation then at the same time disclaim their
right to compel arbitration pursuant to arbitration agreement with
corporation.)
Joinder
Defendants therefore establish standing to compel arbitration pursuant to the
DRP and grounds to join TriNet’s Motion to Compel Arbitration. Joinder Defendants’ request for joinder is
granted.
F. Request to stay or dismiss action
TriNet
and Joinder Defendants ask that the Court stay or dismiss the action upon
granting the motion to compel arbitration.
There is no authority to dismiss the action. The action is stayed pending completion of
arbitration pursuant to Code of Civil Procedure, section 1281.4.
III. Conclusion
Defendant
TriNet Group, Inc.’s Motion to Compel Arbitration is granted pursuant to the
TCA and DRP acknowledged and accepted by Plaintiff on September 18, 2023, 9
U.S.C §3 and Code of Civil Procedure, section 1281.2. The action is stayed pending completion of
arbitration pursuant to Code of Civil Procedure, section 1281.4.
Joinder
Defendants’ request for joinder is granted.
Plaintiff’s claims against Joinder Defendants are also ordered to
arbitration.