Department 58

Hearing Date: January 28, 2025

Case Name: Noor. v. Diamond Environmental Services, LP

Case No.: 24STCV30954

Matter: Motion to Compel Arbitration

Moving Party: Defendant Diamond Environmental Services, LP

Responding Party: Plaintiff Dillon Noor

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

This is a wrongful termination and retaliation action filed by Plaintiff Dillon Noor (Plaintiff) against his former employer, Defendant Diamond Environmental Services, LP. On November 22, 2024, Plaintiff initiated this action by filing a Complaint asserting claims for: (1.) Wrongful Termination in Violation of Public Policy; (2.) Whistleblower Retaliation pursuant to Labor Code §§ 1102.5 and 1102.6; (3.) Disability Discrimination pursuant to Govt. Code § 12940(a); (4.) Retaliation for Requesting and Using Accommodations for Disabilities pursuant to Govt. Code § 12940(m); (5.) Failure to Engage in the Interactive Process to Determine Reasonable Accommodation pursuant to Govt. Code § 12940(n); (6.) Failure to Reasonably Accommodate Disabilities pursuant to Govt. Code § 12940(m); (7.) Retaliation for Opposing Violations of FEHA pursuant to Govt. Code § 12900; (8.) Failure to Prevent and Stop Discrimination and Retaliation pursuant to Govt. Code §§ 12940(j) and (k); (9.) Failure to Pay Wages Due Upon Termination pursuant to Labor Code §§ 202-203, 218, and 233; and (10.) Failure to Pay Wages Due Upon Termination-Sick Pay pursuant to Labor Code §§ 202-203, 218, and 233.

On December 26, 2024, Defendant filed a motion to compel arbitration pursuant to the parties’ arbitration agreement. In opposition, Plaintiff argues the arbitration agreement is unconscionable.

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

Existence of a Valid Agreement

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 October 18, 2023, Plaintiff was hired as a commercial driver at Defendant’s facility in Los Angeles County, where he worked until the date of his termination on September 27, 2024. (Campos Decl., ¶¶ 3, 7.) As part of his onboarding process, Plaintiff digitally signed a “Voluntary Agreement for Binding Arbitration” on October 18, 2023, through Defendant’s secure HRIS system (Inova). (Campos Decl., ¶¶ 4-6, Ex. 1, 2.)

Under the Agreement, “[t]he Parties hereby voluntarily agree that any disputes or claims arising out of or relating to employee’s employment with Employer, or the termination of such employment, including any claims brought against the company or any of its past, present, and/or future officers, directors, employees, or agents, shall be submitted to and resolved through binding arbitration.” (Campos Decl., Ex. 1.)

In opposition, Plaintiff does not dispute the existence of the Agreement or, otherwise, dispute signing this Agreement.

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.

The Court next considers the enforceability of this Agreement.

Contract Enforceability

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.)

Here, Plaintiff argues the Arbitration Agreement is procedurally unconscionable because the Agreement was offered on a take it or leave it basis. Specifically, he argues that he was not given a chance to opt out of the Agreement, was not permitted to consult with an attorney prior to signing the Agreement, or to, otherwise, negotiate it terms. However, Plaintiff submits zero evidence to support these arguments. He filed no declaration. As noted above, it is Plaintiff’s burden to show the contract was unenforceable and, by failing to submit evidence, he has failed to do so. (Trend Homes, Inc. v. Superior Court (2005) 131 Cal.App.4th 950, 958 [finding no procedural unconscionability where “[r]eal parties offered no evidence that they attempted to negotiate the provision and were rebuffed, or they had no meaningful choice but to agree to the provision”].)

Accordingly, contrary to the argument in the opposition, there is not a high degree of procedural unconscionability. Rather, Plaintiff has not identified any procedural unconscionability in the Agreement and Plaintiff’s entire 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.

With respect to substantive unconscionability, Plaintiff first argues the Agreement was substantively unconscionable because it does not allow Plaintiff to collect attorney fees under FEHA.

The Agreement states in relevant part: “Employer will pay the arbitrator's expenses and all costs unique to arbitration, and the parties shall otherwise bear their own legal fees and costs for any claims.” (Campos Decl., Ex. 1.)

Under FEHA, a prevailing plaintiff is ordinarily entitled to an award of attorney fees, another statutorily authorized remedy. (Gov. Code, § 12965, subd. (b); Wherry v. Award, Inc. (2011) 192 Cal.App.4th 1242, 1249.) Here, the parties’ arbitration clause impermissibly provides that each party shall recover its own attorney fees. (Wherry, at p. 1249; Armendariz, supra, 24 Cal.4th at pp. 103–104.)

Defendant’s reply argument is unpersuasive. Defendant argues that the Agreement – in the proceeding paragraphs – provides: “The arbitrator is empowered to award all remedies that would be available in a court of competent jurisdiction”. (Campos Decl., Ex. 1 [Arbitration Agreement, p. 2, ¶ 1].) However, this more general provision does not defeat the more specific provision limiting attorney fees. Thus, this provision is substantively unconscionable.

Plaintiff also challenges the Agreement’s requirement that “all claims that relate to a sexual harassment or sexual assault dispute, as defined in the Federal Arbitration Act, shall be filed as (or if not filed as, severed into) a separate case from all other claims; and (b) those claims that do not relate to a sexual harassment or sexual assault dispute and are subject to arbitration under this Agreement shall be governed by and proceed with individual arbitration.” (Campos Decl., Ex. 1.) Plaintiff argues that this provision conflicts with the EFAA, which requires that “when a plaintiff’s lawsuit contains at least one claim that falls within the scope of the act, the arbitration agreement is unenforceable as to all claims asserted in the lawsuit.” (Liu v. Miniso Depot CA, Inc. (2024) 105 Cal.App.5th 791, 800.)

But Plaintiff has not alleged any sexual harassment or sexual assault claims. Moreover, the provision in the arbitration agreement severing such claims is not substantively unconscionable as to Plaintiff because it does not limit any statutory remedy. That is, the arbitration agreement is consistent with the EFAA language that requires all claims that “relate” to sexual harassment and sexual assault claims be exempt from arbitration.

Plaintiff reads Liu v. Miniso Depot CA, Inc. (2024) 105 Cal.App.5th 791 too narrowly. As explained in Doe v. Second Street Corp. (2024) 105 Cal.App.5th 552, “the statute does not require that the pendant claims arise out of the sexual assault or sexual harassment dispute; it is enough that the case relates to the sexual assault or sexual harassment claims.” (Doe v. Second Street Corp., supra, 105 Cal.App.5th at 577.) In Doe v. Second Street Corp., the court explained “relates to” as follows: “although not all of plaintiff's causes of action arise out of her sexual harassment allegations, the “case” unquestionably “relates to” the sexual harassment dispute because all of the causes of action are asserted by the same plaintiff, against the same defendants, and arise out of plaintiff's employment by the hotel. Accordingly, the arbitration agreement is unenforceable as to each cause of action alleged in plaintiff's FAC.” (Ibid.)

Thus, it is only Plaintiff’s misinterpretation of that provision that runs afoul of the EFAA -- not the plain language of the provision itself. This provision is not substantively unconscionable.

Finally, Plaintiff argues the Agreement impermissibly limits discovery.

The Agreement states that “if 20 or more demands for arbitration involving substantially similar claims are filed against employer and remain pending” then “any party shall be authorized to designate and rely on written discovery responses or deposition testimony from one such proceeding in other such proceedings in lieu of responding to substantially similar discovery requests in substantially similar proceedings.” (Campos Decl., Ex. 1.)

“[A] limitation on discovery is an important component of the ‘simplicity, informality, and expedition of arbitration.’ ” (Armendariz, supra, 24 Cal.4th at p. 106, fn. 11.) Admittedly, however, courts must balance the desire for simple discovery with an employee's need for discovery “sufficient to adequately arbitrate their statutory claim;” still, parties are “permitted to agree to something less than the full panoply of discovery provided in [the] Code of Civil Procedure.” (Id. at pp. 106, 105.)

Like the EFAA provision, this provision is not at issue as only Plaintiff’s case is before this Court. Moreover, this provision is also not substantively unconscionable.

Plaintiff argues that “[d]ue to the fact intensive nature of employment discrimination lawsuits, full discovery often requires taking over 10 depositions.” (Opp. 7:27-28.)

However, the limitation on discovery does not fail to “ensure that employees are entitled to discovery sufficient to adequately arbitrate their claims.” (Fitz v. NCR Corp. (2004) 118 Cal.App.4th 702, 721.) In fact, the provision does not limit the right to take discovery at all but merely “allows a party to designate responses and records from one action for use in other actions (so the party would not need to produce the same responses and records in each case).” (Reply, 8:1-3.)

As the reply also notes, the Agreement specifically states that “[t]he arbitrator shall permit adequate discovery in accordance with the California Code of Civil Procedure section 1283.05...” (Campos Decl., Ex. 1.) Section 1283.05, in turn, provides that “the parties to the arbitration shall have the right to take depositions and to obtain discovery regarding the subject matter of the arbitration, and, to that end, to use and exercise all of the same rights, remedies, and procedures, and be subject to all of the same duties, liabilities, and obligations in the arbitration with respect to the subject matter thereof ... as if the subject matter of the arbitration were pending before a superior court in this state...” (Code of Civ. Proc., § 1283.05.)

Thus, only the attorney fee provision is substantively unconscionable. Contrary to the opposition, this substantively unconscionable provision can easily be severed from the Agreement. That is, the Court orders arbitration, but strikes the attorney fee provision in the arbitration agreement to the extent it purports to depart from the attorney’s fees remedies under FEHA.

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

CONCLUSION

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. Nothing in the Arbitration Agreement may be applied in the arbitration to limit any party’s right to attorney’s fees as set forth in FEHA.