Judge Christopher K. Lui, Case Number: 23STCV04703, Date: 2023-09-13 Tentative Ruling

Pursuant to California Rule of Court 3.1308(a)(1), the Court does not desire oral argument on the motion addressed herein. Counsel must contact the staff in Department 76 to inform the Court whether they wish to submit on the tentative, or to argue the matter. As required by Rule 3.1308(a), any party seeking oral argument must notify ALL OTHER PARTIES and the staff of Department 76 of their intent to appear and argue.

Notice to Department 76 may be sent by email to smcdept76@lacourt.org or telephonically at 213-830-0776.

Per Rule of Court 3.1308, if notice of intention to appear is not given, the Court may adopt the tentative ruling as the final ruling. If all parties submit on the tentative, the Court will vacate the September 13, 2023 Case Management Conference and set a post-arbitration status conference in 12 months.

Plaintiff alleges that he experienced retaliation for taking medical leave and requesting accommodations, culminating in Plaintiff’s termination.

Defendants K-1 Packaging Group, LLC and Mike Tsai move to compel arbitration and stay this litigation.

Defendants K-1 Packaging Group, LLC and Mike Tsai’s motion to compel arbitration is GRANTED.

The litigation is ordered stayed pending arbitration. (Code Civ. Proc., § 1281.4.)

Defendants K-1 Packaging Group, LLC and Mike Tsai move to compel arbitration and stay this litigation.

California favors arbitration. (Haworth v. Superior Court (2010) 50 Cal.4^th 372, 380.) Civ. Proc. Code, §1281.2 provides:

On petition of a party to an arbitration agreement alleging the existence of a written agreement to arbitrate a controversy and that a party thereto refuses to arbitrate such 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 the revocation of the agreement.

Under 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. (Cable Connection, Inc. v. DIRECTV, Inc. (2008) 44 Cal.4th 1334, 1343; Code Civ. Proc., § 1281.) A party petitioning to compel arbitration has the burden of establishing the existence of a valid agreement to arbitrate and the party opposing the petition has the burden of proving by a preponderance of evidence any fact necessary to its defense. (Banner Entertainment, Inc. v. Superior Court (1998) 62 Cal.App.4th 348, 356.) The court may weigh the evidence by considering affidavits, declarations, documents and oral testimony. (Id. at 357.)

Defendants rely upon the Agreement to Arbitrate signed by Plaintiff on July 30, 2012. (See Declaration of Claudia Amaya, ¶ 5, Exh. A.) Plaintiff admits that he signed the agreement. The applicable language provides as follows:

and Employee agree to final and binding arbitration of any and all claims or disputes between Employer and Employee, whether or not relating to the employment relationship, including but not limited to, common law disputes, state and/or federal discrimination claims, claims for wrongful termination, claims for violation of any agreements, claims based on contract and/or tort theories of recovery, and/or any claims based on violations of state and/or federal laws, including but not limited to wage and hour laws that Employee may assert against Employer, except as to any workers' compensation claim, other than a workers' compensation claim for discrimination and/or serious and willful misconduct claims because of applicable provisions of California law. Employer and Employee knowingly agree to waive the right to have any and all claims or disputes between Employer and Employee decided by the courts and instead

agree to have any and all claims or disputes between them decided by an Arbitrator. Employee knowingly waives the right to be a party in or to any class action federal and/or state lawsuit against Employer. Nothing herein, shall deprive Employee of the right to file a claim for discrimination and/or retaliation with the Equal Employment Opportunity Commission ("EEOC") and/or the California state agency that investigates and determines claims of discrimination, the Department of Fair Employment and Housing ("DFEH") or any other federal and/or state administrative agency. Nothing herein, shall deprive the EEOC and/or DFEH and/or any other federal and/or state administrative agency of the right to engage in litigation on behalf of Employee to secure remedies under Title VII and/or California law before an administrative body and/or in a Court. Nothing herein, shall deprive Employee of the right to file an unfair labor practice claim

with the National Labor Relations Board ("NLRB") and/or the California state agency that investigates and determines unfair labor practice claims or any other federal and/or state administrative agency. Nothing herein, shall deprive the NLRB and/or California state agency that investigates and determines unfair labor practice claims of the right to engage in litigation on behalf of Employee to secure remedies under the National Labor Relations Act and/or California law before an administrative body and/or in a Court.

officer, manager, director, supervisor, benefit plan administrator, sponsor, and/or fiduciary in their capacity as benefit plan administrators or as individuals, and/or any other authorized agent of Employer. The term "Employer" shall be further defined to include any parent, subsidiary, affiliated and/or successor company that is a part of, related to, and/or associated with Employer.

Defendant Tsai allegedly owned and/or controlled the business operated by K-1 and allegedly exercised control over the labor practices of each of the employees, including Plaintiff. (1AC, ¶ 9.)

As such, the arbitration agreement purports to cover all claims asserted against both Defendants in the 1AC.

Where a party seeks to arbitrate nonwaivable statutory civil rights in the workplace (Fitz v. NCR Corp. (2004) 118 Cal.App.4th 702, 711-12), such as the FEHA claims involved here, there are:

five minimum requirements for the lawful arbitration of such rights pursuant to a mandatory employment arbitration agreement. Such an arbitration agreement is lawful if it "(1) provides for neutral arbitrators, (2) provides for more than minimal discovery, (3) requires a written award, (4) provides for all of the types of relief that would otherwise be available in court, and (5) does not require employees to pay either unreasonable costs or any arbitrators' fees or expenses as a condition of access to the arbitration forum. Thus, an employee who is made to use arbitration as a condition of employment 'effectively may vindicate [his or her] statutory cause of action in the arbitral forum.' " (Citation omitted.)

(Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83, 102.)

Initially, we see no reason why Armendariz's "particular scrutiny" of arbitration agreements should be confined to claims under FEHA. Rather, under the Supreme Court's analysis, such scrutiny should apply to the enforcement of rights under any statute enacted "for a public reason."

(Mercuro v. Superior Court (2002) 96 Cal. App. 4th 167, 180 [bold emphasis added].)

Armendariz held that to the extent that the arbitration agreement was silent on these issues, these requirements must be implied as a matter of law. (Armendariz, supra, 24 Cal.4th at pp. 106, 107, 113 [interpreted the agreement to provide for adequate discovery, a written arbitration award, and the employer's payment of arbitration costs].) To the extent that the agreement expressly limited these rights, Armendariz held that the agreement was contrary to public policy and unenforceable. (Id. at p. 104 [stated that a provision limiting damages was unlawful].)

(Sanchez v. Western Pizza Enterprises, Inc. (2009) 172 Cal.App.4th 154, 176 [bold emphasis added].)

The agreement specifies that it will be heard by a neutral arbitrator, and sets forth a process whereby the parties will agree upon an arbitrator from a list of nine arbitrators from the American Arbitrator Association. (Arbitration Agreement, ¶ 5.) Plaintiff does not argue that his will fail to provide for selection of a neutral arbitrator.

“Adequate discovery is indispensable for the vindication of statutory claims. (Citation omitted.) “ ‘[A]dequate’ discovery does not mean unfettered discovery … .” (Citation omitted.) And parties may “agree to something less than the full panoply of discovery provided in Code of Civil Procedure section 1283.05.” (Citation omitted.) However, arbitration agreements must “ensure minimum standards of fairness” so employees can vindicate their public rights. (Citation omitted).” (Fitz v. NCR Corp. (2004) 118 Cal.App.4th 702, 715-16 [bold emphasis added].)

However, regardless of any EARMP rules to the contrary, Employer and Employee shall have the same discovery rights they would have if Employee had filed a claim in a California Superior Court to request the production of documents and items; responses to interrogatories and/or the depositions of witnesses. The Arbitrator is empowered to enforce the rights of Employer and Employee to secure discovery to the same extent that the parties would be able to secure discovery under the California Discovery Act and to secure their rights to enforce discovery in a California Superior Court. Employer and Employee are entitled to such pre-trial discovery as the Arbitrator deems just and proper to reach a fair resolution of the dispute and shall be guided by California law applicable to discovery in civil cases before the courts of California. The Arbitrator shall exercise the power to render interim decisions prior to trial on matters of pre-trial discovery; . . .

This gives Plaintiff the same discovery rights as in court. Plaintiff’s argument that this does not give Plaintiff adequate discovery for the vindication of his statutory claims is not persuasive. Plaintiff argues that he cannot propound requests for admission—but this is just a mechanism to streamline issue to be tried[1], and the parties may agree to something less than the full panoply of discovery. (Fitz, supra, 118 Cal.App.4^th at 715-16.) The arbitrator’s discretion to compel pre-trial discovery as the arbitrator deems just and proper does not unfairly curtail discovery rights.

The Arbitrator shall have the power to award damages, and attorneys' fees if applicable under California and federal law, against Employer and Employee, and to make an award granting such further relief as he/she deems just, proper, equitable, and otherwise to the extent permitted by law. The Arbitrator is required by this Agreement to use the standards set forth in applicable California statutory and case law. in determining whether Employer and/or Employee has met his, hers or its burden of proof.

(5) Does not require employee to pay unreasonable costs or any arbitrator’s fees or expenses as a condition to access to arbitration:

the AAA shall be solely paid for by the Employer. Employer and Employee shall bear

their own attorneys fees, witness fees, and other costs separately incurred by the

Plaintiff argues that he would be entitled to attorney’s fees, costs and expert witness fees if he prevails on the FEHA claims.

Because an award of attorney’s fees under the FEHA is within the Court’s discretion, the foregoing language which gives the Court the power to award attorneys’ fees and such further relief as is proper to the extent permitted by law is sufficient to meet this prong of the Armendariz analysis.

(6) In civil actions brought under this section, the court, in its discretion, may award to the prevailing party, including the department, reasonable attorney’s fees and costs, including expert witness fees, except that, notwithstanding Section 998 of the Code of Civil Procedure, a prevailing defendant shall not be awarded fees and costs unless the court finds the action was frivolous, unreasonable, or groundless when brought, or the plaintiff continued to litigate after it clearly became so.

A trial court has discretion to award attorney's fees and costs to the party prevailing in a FEHA action. "In actions brought under this section, the court, in its discretion may award to the prevailing party reasonable attorney fees and costs . . . ." ( Gov. Code, § 12965, subd. (b)[2].) We review the trial court's failure to award attorney's fees under an abuse of discretion standard. In FEHA actions, "the 'discretion to deny a fee award to a prevailing plaintiff is narrow' [Citation.] A prevailing plaintiff 'should ordinarily recover an attorney's fee unless special circumstances would render such an award unjust.' " ( Stephens v. Coldwell Banker Commercial Group, Inc. (1988) 199 Cal. App. 3d 1394, 1405 [245 Cal. Rptr. 606].)

The Court finds that Defendants have demonstrated that they are entitled to enforce the Arbitration Agreement against Plaintiff. The burden shifts to Plaintiff to demonstrate why the Agreement should not be enforced against him.

Plaintiff argues that he did not consent to the Agreement because he did not understand the document he was signing and it was not explained to him. This is insufficient to avoid formation of an Agreement:

Moreover, as indicated above, plaintiffs acknowledged that although they did not read the papers, they did sign those included in the “stack of documents” with which they were presented. It is hornbook law that failing to read an agreement before signing it does not prevent formation of a contract. (Upton, Assignee v. Tribilcock (1875) 91 U.S. 45, 50 [23 L.Ed. 203] [“It will not do for a [person] to enter into a contract, and, when called upon to respond to its obligations, to say that [they] did not read it when [they] signed it, or did not know what it contained.”]; Hawkins v. Hawkins (1875) 50 Cal. 558, 560 [similar]; 1 Williston on Contracts (4th ed. 2007) § 4:19.) That settled rule cannot be evaded by adding, “and if I had read the contract, I wouldn't've signed it.” Plaintiffs' allegation as to why they did not read the contract before signing it—i.e., that they were pressured to sign it quickly and not given time to read it—is material only to whether enforcement of the agreement is barred by the defense of unconscionability, to which we now turn.

(Iyere v. Wise Auto Grp. (2023) 87 Cal.App.5th 747, 754-59 [bold emphasis added].)

The doctrine of unconscionability was summarized in Walnut Producers of California v. Diamond Foods, Inc. (2010) 187 Cal.App.4th 634, 645-48 as follows:

“ ‘To briefly recapitulate the principles of unconscionability, the doctrine has “ ‘both a “procedural” and a “substantive” element,’ the former focusing on ‘ “oppression” ’ or ‘ “surprise” ’ due to unequal bargaining power, the latter on ‘ “overly harsh” ’ … or ‘ “one-sided” ’ results.” [Citation.] The procedural element of an unconscionable contract generally takes the form of a contract of adhesion, “ ‘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.’ ” … [¶] Substantively unconscionable terms may take various forms, but may generally be described as unfairly one-sided.’ [Citation.]” (Citation omitted.)

“Under this approach, both the procedural and substantive elements must be met before a contract or term will be deemed unconscionable. Both, however, need not be present to the same degree. A sliding scale is applied so that ‘the more substantively oppressive the contract term, the less evidence of procedural unconscionability is required to come to the conclusion that the term is unenforceable, and vice versa.’ (Citations omitted.)

“The procedural element of the unconscionability analysis concerns the manner in which the contract was negotiated and the circumstances of the parties at that time. [Citation.] The element focuses on oppression or surprise. [Citation.] ‘Oppression arises from an inequality of bargaining power that results in no real negotiation and an absence of meaningful choice.’ [Citation.] 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.” ’ [Citation.]” (Citation omitted.)

Plaintiffs claim the Agreement is procedurally unconscionable because it is an adhesion contract. An adhesion contract is “a standardized contract … imposed upon the subscribing party without an opportunity to negotiate the terms.” (Citation omitted.) “The term signifies 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. [Citation.]” (Citation omitted.)

The California Supreme Court has consistently stated that “ ‘[t]he procedural element of an unconscionable contract generally takes the form of a contract of adhesion … .’ ” (Citations omitted.)

“Whether the challenged provision is within a contract of adhesion pertains to the oppression aspect of procedural unconscionability. A contract of adhesion is ‘ “ ‘ “imposed and drafted by the party of superior bargaining strength” ’ ” ’ and ‘ “ ‘ “relegates to the subscribing party only the opportunity to adhere to the contract or reject it.” ’ ” ’ (Citations omitted.) “[A]bsent unusual circumstances, use of a contract of adhesion establishes a minimal degree of procedural unconscionability notwithstanding the availability of market alternatives.” (Citation omitted.)

(Walnut Producers of California, supra, 187 Cal.App.4^th at 645-46 [bold emphasis added].)

Plaintiff argues that she was not given a meaningful opportunity to opt-out of the agreement and was required to sign the agreement, thereby constituting procedural unconscionability. The Court accepts, for purposes of argument, that the absence of an opt-out procedural presented the arbitration provision on a “take it or leave it” basis, which presents only a modest degree of procedural unconscionability. (Nguyen v. Applied Medical Resources Corp. (2016) 4 Cal.App.5th 232, 248.)

However, the Agreement To Arbitrate is clearly identified as such, and spans 6 full pages, requiring the employee’s signature on the seventh. There was no element of surprise.

Plaintiff also argues that the failure to provide the arbitration rules applies increases procedural unconscionability. Plaintiff argues that he could not have known in June 2016 what the applicable rules where when he filed this action in March 2023.

¶ 6 of the Arbitration Agreement provides in pertinent part: “The Arbitrator shall conduct the arbitration under the Employment Arbitration Rules and Mediation Procedures (hereinafter referred to as EARMP) of the AAA that are in effect at the time of the filing of the Complaint.” It is true that Plaintiff was not directed to how he could access the rules at the time he signed the agreement, or in the future if he were to file a Complaint.

However, where the rules are available on the internet—and Plaintiff does not demonstrate otherwise—the failure to attach the rules would only constitute slight procedural unconscionability, if at all:

Here, we conclude the failure to attach a copy of the AAA rules did not render the agreement procedurally unconscionable. There could be no surprise, as the arbitration rules referenced in the agreement were easily accessible to the parties—the AAA rules are available on the Internet. (See Boghos v. Certain Underwriters at Lloyd's of London (2005) 36 Cal.4th 495, 505, fn. 6 [30 Cal. Rptr. 3d 787, 115 P.3d 68] [full, up-to-date text of AAA rules is available on AAA's Internet site]). . . . [*692] . . .. Finally, the arbitration agreement at issue clearly specified a particular set of AAA rules, and it did not modify those rules in any manner. In the absence of oppression or surprise, we decline to find the failure to attach a copy of the AAA rules rendered the agreement procedurally unconscionable. (Cf. Dotson v. Amgen, Inc. (2010) 181 Cal.App.4th 975, 981 [104 Cal. Rptr. 3d 341] [“Dotson is not an uneducated, low-wage employee without the ability to understand that he was agreeing to arbitration. He was the opposite—a highly educated attorney, who knowingly entered into a contract containing an arbitration provision in exchange for a generous compensation and benefits package. In such circumstances, the courts have found a minimum degree of procedural unconscionability.”].)

(Lane v. Francis Capital Management LLC (2014) 224 Cal. App. 4th 676, 690-692.)

The Court finds that there is only a slight degree of procedural unconscionability.

Under the sliding scale approach, then, Plaintiffs must demonstrate a substantial degree of substantive unconscionability.

“A provision is substantively unconscionable if it ‘involves contract terms that are so one-sided as to “shock the conscience,” or that impose harsh or oppressive terms.’ [Citation.] The phrases ‘harsh,’ ‘oppressive,’ and ‘shock the conscience’ are not synonymous with ‘unreasonable.’ Basing an unconscionability determination on the reasonableness of a contract provision would inject an inappropriate level of judicial subjectivity into the analysis. ‘With a concept as nebulous as “unconscionability” it is important that courts not be thrust in the paternalistic role of intervening to change contractual terms that the parties have agreed to merely because the court believes the terms are unreasonable. The terms must shock the conscience.’ [Citations.]” (Citation omitted

Plaintiff did not demonstrate that the Agreement is substantively unconscionable. Accordingly, the Agreement will be enforced.

The litigation is ordered stayed pending arbitration. (Code Civ. Proc., § 1281.4.)

[1]

A request for admissions is not a discovery device. (International Harvester Co. v. Superior Court (1969) 273 Cal.App.2d 652, 655 [78 Cal.Rptr. 515].) Requests for admissions are primarily aimed at setting at rest a trial issue so that it will not have to be tried. ( Cembrook v. Superior Court (1961) 56 Cal.2d 423, 429 [15 Cal.Rptr. 127, 364 P.2d 303]; International Harvester Co. v. Superior Court, supra, 273 Cal.App.2d 652, 655.) The most important objective of the request for admissions is to narrow the issues and save the time and expense of preparing unnecessary proof. (Witkin, Cal. Evidence (2d ed. 1966) Discovery and Production of Evidence, § 1004; Hillman v. Stults (1968) 263 Cal.App.2d 848, 885 [70 Cal.Rptr. 295].) Early admissions lead to settlement or dismissal; such result is a positive step in alleviating the heavy case loads in our courts. (Billings v. Edwards 1981) 120 Cal.App.3d 238, 244 [174 Cal.Rptr. 722].) Failure to answer a request for admissions is deemed an admission of matters contained in the request. ( Jack v. Wood (1968) 258 Cal.App.2d 639, 644 [65 Cal.Rptr. 856]; § 2033.) Section 2033 provides for a section 473 hearing within 30 days of default. Thus, adequate relief for a litigant who through mistake, inadvertence or excusable neglect fails to timely answer requests for admissions is provided in the statute. ( Billings v. Edwards, supra, 120 Cal.App.3d at pp. 244-245.)

(Miller v. Marina Mercy Hosp. (1984) 157 Cal.App.3d 765, 769.)

[2] Now Gov. Code, § 12965(c)(6).