Judge: Carolyn M. Caietti, Case: 37-2023-00002412-CU-WT-CTL, Date: 2023-11-17 Tentative Ruling

SUPERIOR COURT OF CALIFORNIA,

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HALL OF JUSTICE

TENTATIVE RULINGS - November 16, 2023

11/17/2023  10:30:00 AM  C-70 COUNTY OF SAN DIEGO

JUDICIAL OFFICER:Carolyn Caietti

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Civil - Unlimited  Wrongful Termination Motion Hearing (Civil) 37-2023-00002412-CU-WT-CTL DEBBAGHI VS HCL AMERICA INC [IMAGED] CAUSAL DOCUMENT/DATE FILED: Motion - Other, 04/17/2023

Defendants HCL America Inc. and HCL Technologies Limited's Motion to Compel Arbitration and to Dismiss or Stay Proceedings is GRANTED IN PART AND DENIED IN PART.

The party seeking to compel arbitration bears the burden of proving the existence of an arbitration agreement to arbitrate a controversy and a party to the agreement refuses to arbitrate that controversy.

(C.C.P., § 1281.2; Engalla v. Permanente Medical Group, Inc. (1997) 15 Cal.4th 951, 972.) Once the existence of the arbitration agreement is established, courts may only deny arbitration if the opposing party demonstrates a ground for denial. (C.C.P., § 1281.2) Based on the documents provided, including HCL America Inc. (HCLA)'s June 19, 2019, offer letter to Plaintiff, which includes a dispute resolution agreement (DRA), Defendants proved the existence of an arbitration agreement. (ROA 13 – Declaration of Sunil Khanna, at ¶ 10 & Ex. B.) Plaintiff electronically accepted the terms of the offer letter, including the DRA. (Id., at ¶ 11 & Ex. C.) Plaintiff's argument he did not knowingly enter into an agreement to arbitrate is not persuasive. The offer letter clearly: (i) states the DRA is enclosed with the letter at the beginning of the offer letter (Ex. B, p. 2); (ii) states the DRA on its own page and separate from the other terms (Ex. B, p. 12); and (iii) advises Plaintiff the DRA covers important issues relating to his rights, to read and understand it and to seek assistance if needed (Ex. B, p. 12). Plaintiff's reliance on Sparks and Mitri is misplaced. In Sparks, a boilerplate arbitration clause was buried in a lengthy employee handbook, which stated it was not intended to create a contract, and given to new employees. (Sparks v. Vista Del Mar Child & Family Services (2012) 207 Cal.App.4th 1511, 1522, abrogated on other grounds by Harris v. TAP Worldwide, LLC (2016) 248 Cal.App.4th 373.) Mitri also concerned an arbitration agreement in an employee handbook. (Mitri v. Arnel Management Co. (2007) 157 Cal.App.4th 1164.) That is not the case here as the DRA was contained in a letter specifically and only to Plaintiff and the DRA was called to Plaintiff's attention.

In addition, Plaintiff e-signature states 'yes' in response to the question: 'Do you accept the details contained within the offer letter and attached documents?' Plaintiff does not provide any legal authority requiring an electronic acceptance to expressly refer to the arbitration agreement. Rather, a party's acceptance of an agreement to arbitrate may be express or implied in fact where, like here, the employee's continued employment constitutes acceptance of an agreement proposed by the employer.

(Harris, supra, 248 Cal.App.4th at p. 384.) Plaintiff does not oppose on the basis the dispute is covered by the DRA or that the Federal Arbitration Calendar No.: Event ID:  TENTATIVE RULINGS

2962163  30 CASE NUMBER: CASE TITLE:  DEBBAGHI VS HCL AMERICA INC [IMAGED]  37-2023-00002412-CU-WT-CTL Act and equitable estoppel principles apply.

For these reasons, Defendants met their initial burden and the burden shifts to Plaintiff to prove a ground for denial, which he did not do.

Plaintiff argues the arbitration agreement is unconscionable. Both procedural and substantive unconscionability must be shown for the defense to be established, but they need not be present in the same degree. (OTO, LLC v. Kho (2019) 8 Cal.5th 111, 125-26.) Here, there is a low measure of procedural unconscionability. It is an adhesive contract, presented by Defendant, the party with superior bargaining power, and imposed as a condition of employment. Notably though, the offer letter included a 'DRA Opt-Out Form' (Ex. B, p. 19) and Plaintiff had the option to opt-out but did not.

However, substantive unconscionability is also required and not present. Although a wide variety of factors may contribute to making an arbitration provision substantively unconscionable, the primary factor is lack of mutuality, and the key question is whether the contract terms are so one-sided or harsh as to lack basic fairness. (Malone v. Superior Court (2014) 226 Cal.App.4th 1551, 1570; see also, Armendariz v. Foundation Health Psychcare Service, Inc. (2000) 24 Cal.4th 83, 102.) The Court disagrees with Plaintiff that the DRA's 'carve out for injunctive relief for the employer is unilateral...' (Opp., at p. 7:7-8.) This position disregards the language at page 14 of the DRA that states, 'A party may apply to a court of competent jurisdiction for temporary or preliminary injunctive relief in connection with an arbitrable controversy...' (Ex. B, at p. 14.) Plaintiff also argues the confidentiality provision in the DRA is substantively unconscionable. Provisions requiring all aspects of an arbitration to be maintained in strict confidence are substantively unconscionable. (Ramos v. Superior Court (2018) 28 Cal.App.5th 1042, 1067.) Here, the DRA states 'Except as may be permitted or required by law, as determined by the Arbitrator, neither a party nor an Arbitrator may disclose the existence, content, or results of any arbitration hereunder without the prior written consent of all parties.' (Ex. B., at p. 16 and § 7.) This would significantly limit Plaintiff's ability to investigate and conduct discovery, making the clause substantively unconscionable. (See also, Murrey v. Superior Court (2023) 87 Cal.App.5th 1223, 1254 ['[t]he notion that courts should condone requirements keeping the outcome of forced arbitration proceedings confidential is out of step with federal and sister state case authority. The Ninth Circuit recognized that although confidentiality provisions are facially neutral, they usually favor companies over individuals'].) However, it does not taint the entire contract with illegality and is merely collateral to the main purpose of the agreement to compel arbitration. (Ramos, supra, 28 Cal.App.5th at p. 1068.) The Court will sever the confidentiality clause.

The 'internal procedure' language is not substantively unconscionable. The DRA does not contain any prerequisites to invoking arbitration and Plaintiff points to none.

The 'choice of law' provision is outside the DRA. Notwithstanding, employees who primarily work and reside in California may unilaterally void choice of law provisions in mandatory arbitration agreements if the provision would deprive the employee of the substantive protections of California law regarding a controversy arising in California. (Lab. Code, § 925.) Plaintiff does not provide any legal authority that this choice of law provision makes the arbitration agreement substantively unconscionable. (Opp., at .

9:23-10:5.) Even if it does, to the extent the choice of law provision applies to the DRA, it can be severed.

Contrary to Plaintiff's argument, the DRA provides the employer is required to pay for the arbitrator's fees: 'However, in all cases where required by law, the Company will pay the Arbitrator's and arbitration fees.' Defendants concede they bear 'all costs unique to arbitration.' (Reply, at p. 14:19-20.) The DRA also does not impermissibly require Plaintiff to pay his own attorney fees if successful on a Calendar No.: Event ID:  TENTATIVE RULINGS

2962163  30 CASE NUMBER: CASE TITLE:  DEBBAGHI VS HCL AMERICA INC [IMAGED]  37-2023-00002412-CU-WT-CTL FEHA claim. The DRA states, 'Each party will pay the fees for his, her or its own attorneys, subject to any remedies to which the party may later be entitled under applicable law.' (Ex. B, at p. 16 (emphasis added).) Plaintiff argues the 'Limitation on FEHA Remedies Cannot be Severed.' (Opp., at p. 12:9.) But there is no citation to the DRA limiting FEHA remedies.

Finally, the jury waiver is inherent in an arbitration agreement (Jaramillo v. JH Real Estate Partners, Inc.

(2003) 111 Cal.App.4th 394, 401.) So, while the agreement has a low degree of procedural unconscionability, there is no substantive unconscionability that cannot be severed from the agreement. Thus, Plaintiff did not meet his burden of proving a ground for denial.

To the extent the motion asks for the case to be dismissed, the motion is denied. The appropriate course is to order a stay of proceedings. (C.C.P., § 1281.4.) For these reasons, the motion is GRANTED IN PART as to ordering arbitration and staying this proceeding, and DENIED IN PART as to the request for dismissal.

Concluding Orders The confidentiality clause of the arbitration agreement is severed. (Ex. B., at p. 16 and § 7 ['Except as may be permitted or required by law, as determined by the Arbitrator, neither a party nor an Arbitrator may disclose the existence, content, or results of any arbitration hereunder without the prior written consent of all parties.'].) To the extent the choice of law provision is part of the DRA, it is severed. (Ex. B., at p. 5 ['Governing Law: This Agreement shall be governed by and construed and interpreted in accordance with the laws of North Carolina without reference to principles of conflict of laws.'].) The parties are ordered to arbitrate his claims. The case is stayed pending the arbitration.

The Court sets a Status Conference on May 17, 2024, at 9:30 a.m. in Department 70.

If the tentative ruling is confirmed without modification, the minute order will be the Court's final ruling.

Defendants are ordered to serve written notice of the Court's final ruling on all appearing parties by November 21, 2023.

The parties are reminded to comply with Department 70's Policies and Procedures and to provide courtesy copies of all motion paperwork.

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