Judge: Colin Leis, Case: 22STCV10538, Date: 2023-02-21 Tentative Ruling

Case Number: 22STCV10538    Hearing Date: February 21, 2023    Dept: 74

Superior Court of California

County of Los Angeles – CENTRAL District

Department 74

MOVING PARTY:                Defendants AG Seal Beach, LLC dba Seal Beach Health and Rehabilitation and Alvaro Esparza

RESPONDING PARTY:       Plaintiff Jacky R.

Defendants’ Motion to Compel Arbitration and Motion to Stay Proceedings

The court considered the moving papers, opposition, and reply filed in connection with this motion.

BACKGROUND

            Plaintiff Jacky R. filed this action on March 28, 2022, against Defendants AG Seal Beach, LLC dba Seal Beach Health and Rehabilitation (“AG Seal Beach”) and Alvaro Esparza (“Esparza”) (collectively, “Defendants”) arising from her employment with AG Seal Beach. The complaint alleges the following causes of action: (1) sexual battery; (2) hostile work environment sexual harassment in violation of Gov’t Code § 12940(j); (3) constructive discharge in violation of public policy; (4) failure to prevent harassment in violation of Gov’t Code § 12940(k); and (5) battery.

            Defendants move to compel arbitration of all of Plaintiff’s claims and to stay the action pending completion of arbitration. Plaintiff opposes.

LEGAL STANDARD

In a motion to compel arbitration, the moving party must prove by a preponderance of evidence the existence of the arbitration agreement and that the dispute is covered by the agreement.  The burden then shifts to the resisting party to prove by a preponderance of evidence a ground for denial (e.g., fraud, unconscionability, etc.). (Rosenthal v. Great Western Fin. Securities Corp. (1996) 14 Cal.4th 394, 413-414; Hotels Nevada v. L.A. Pacific Center, Inc. (2006) 144 Cal.App.4th 754, 758.)

Generally, on a petition to compel arbitration, the court must grant the petition unless it finds either (1) no written agreement to arbitrate exists; (2) the right to compel arbitration has been waived; (3) grounds exist for revocation of the agreement; or (4) litigation is pending that may render the arbitration unnecessary or create conflicting rulings on common issues. (Code Civ. Proc., § 1281.2; Condee v. Longwood Management Corp. (2001) 88 Cal.App.4th 215, 218-219.)

“California has a strong public policy in favor of arbitration and any doubts regarding the arbitrability of a dispute are resolved in favor of arbitration.” (Coast Plaza Doctors Hospital v. Blue Cross of California (2000) 83 Cal.App.4th 677, 686.) “This strong policy has resulted in the general rule that arbitration should be upheld unless it can be said with assurance that an arbitration clause is not susceptible to an interpretation covering the asserted dispute.” (Ibid. [internal quotations omitted].) This is in accord with the liberal federal policy favoring arbitration agreements under the Federal Arbitration Act (“FAA”), which governs all agreements to arbitrate in contracts “involving interstate commerce.” (9 U.S.C. § 2, et seq.; Higgins v. Superior Court (2006) 140 Cal.App.4th 1238, 1247.)

DISCUSSION

A.    Existence of an Agreement

Under California law, arbitration agreements are valid, irrevocable, and enforceable, except on such grounds that exist at law or equity for voiding a contract. (Winter v. Window Fashions Professions, Inc. (2008) 166 Cal.App.4th 943, 947.) The party moving to compel arbitration must establish the existence of a written arbitration agreement between the parties. (Code of Civ. Proc. § 1281.2.) In ruling on a motion to compel arbitration, the court must first determine whether the parties actually agreed to arbitrate the dispute, and general principles of California contract law help guide the court in making this determination. (Mendez v. Mid-Wilshire Health Care Center (2013) 220 Cal.App.4th 534, 541.)

Here, Defendants submit evidence that Plaintiff signed an Acknowledgement of Policies, Rules and Agreement for At-Will Employment and Arbitration (“Acknowledgment”). (Forouzan Decl. ¶ 6, Ex. A; Condee v. Longwood Management Corp. (2001) 88 Cal.App.4th 215, 218 [“With respect to the moving party's burden to provide evidence of the existence of an agreement to arbitrate, it is generally sufficient for that party to present a copy of the contract to the court.”].) 

The Acknowledgement states:

Agreement for Binding Arbitration:

“I KNOWINGLY AND VOLUNTARILY AGREE TO SUBMIT AND SETTLE ANY DISPUTE, CONTROVERSY OR CLAIM ARISING OUT OF OR RELATING TO MY EMPLOYMENT RELATIONSHIP WITH SEAL BEACH HEALTH AND REHABILITATION CENTER TO ARBITRATION AS DESCRIBED IN THE “ARBITRATION AGREEMENT” SECTION OF THIS HANDBOOK. I AGREE THAT THE ARBITRATION OF SUCH ISSUES, INCLUDING THE DETERMINATION OF ANY AMOUNT OF DAMAGES SUFFERED, SHALL BE FINAL AND BINDING UPON ME AND ALL PARTIES TO THE MAXIMUM EXTENT PERMITTED BY LAW. I REALIZE BY AGREEING TO ARBITRATION, I WILL HAVE WAIVED MY RIGHT TO TRIAL BY JURY. THIS POLICY CANNOT CHANGE EXCEPT BY WRITTEN AGREEMENT BETWEEN MYSELF AND SEAL BEACH HEALTH AND REHABILITATION CENTER. THIS POLICY DOES NOT PERTAIN TO CLAIMS PROCESSED THROUGH THE NLRB.”

(See Forouzan Decl. ¶ 6, Exh. A, Seal Beach Health and Rehabilitation Center Employee Handbook rev. September 2020 (“Employee Handbook”), Employee Acknowledgment, p. 47. [Emphasis in original].)

            As provided in the Employee Handbook, the Arbitration Agreement states:

This binding arbitration shall be conducted by a retired judge or other such person as agreed to, jointly selected by the parties, and the procedure governed by the Federal Arbitration Act. Both parties shall have all rights of discovery and remedies as he or she would in a state court civil action. The arbitration of all issues, including the determination of any amount of damages suffered, shall be final and binding upon the employee and employer to the maximum extent permitted by law. Judgment upon the award rendered by the arbitrator may be entered by any court having jurisdiction. The parties shall each initially bear their own costs and attorney’s fees. The employer shall pay for the arbitrator’s fees and any out-of-pocket costs required for the administration of the arbitration (such as room rental charges). The arbitrator shall issue a written decision explaining the reasons for the decision. The arbitrator shall follow the applicable law in determining whether to award attorneys’ fees and costs to the prevailing party. The arbitrator shall follow California law in respects of his/her award.”

(See Forouzan Decl. ¶ 10, Exh. B, Employee Handbook, Arbitration Agreement, p. 11.)

Based on this evidence, the court finds that Defendants have met their initial burden. Also, Plaintiff’s causes of action fall within the broad scope of this arbitration provision because the causes of action relate to her employment. (See Vianna v. Doctors’ Management Co. (1994) 27 Cal.App.4th 1186, 1189 (noting that “arbitration agreements should be liberally interpreted, and arbitration should be ordered unless the agreement clearly does not apply to the dispute in question”).) Because Defendants have proven the existence of the arbitration agreement, the court proceeds to analyze whether the arbitration agreement is enforceable.

B.    The Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021 (“The Act”)

Plaintiff argues that the arbitration agreement is unenforceable under The Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021 (9 U.S.C. §§ 401, 402). She is correct.

When interpreting a statute, one starts with the statute’s language. Here, the act’s definitions cover the conduct plaintiff alleges in her complaint. First, the act states “The term ‘sexual assault dispute’ means a dispute involving a nonconsensual sexual act or sexual contact.” (§401, subd. (3)). Second, the act states “The term ‘sexual harassment dispute’ means a dispute relating to conduct that is alleged to constitute sexual harassment under applicable . . . State law.” (§ 401, subd. (4)). Next, the act defines as a “predispute arbitration agreement” the type of arbitration agreement at issue here: “The term ‘predispute arbitration agreement’ means any agreement to arbitrate a dispute that had not yet arisen at the time of the making of the agreement.” (§ 401, subd. (1)). And finally, and outcome determinative here, the act makes the type of arbitration agreement in this lawsuit unenforceable beginning March 3, 2022. The act’s central operative provision states: “at the election of the person alleging conduct constituting a sexual harassment dispute or sexual assault dispute . . . no predispute arbitration agreement . . . shall be valid or enforceable with respect to a case which is filed under . . . State law and relates to the sexual assault dispute or the sexual harassment dispute.” (§ 402, subd. (a)). Thus ends the analysis. The agreement is unenforceable.

Murrey v. Superior Court (Cal. Ct. App. Jan 30, 2023) observed that a debate existed about what significance to attach to the date(s) the offending conduct took place. Murrey expressly declined, however, to resolve that debate because the debate was of no consequence to the issues Murrey needed to decide. And in any event, when interpreting a statute, one starts with the statute’s language. And here the act’s language tells us that the predispute arbitration agreement at issue here is unenforceable against sexual assault and sexual harassment claims. As a consequence, the court declines to follow the district court decisions that Defendants cite from New York and Pennsylvania that went beyond the act’s plain text.

CONCLUSION

Based on the foregoing, the court denies Defendants’ motion to compel arbitration.

Defendants are ordered to give notice of this ruling.

IT IS SO ORDERED.

DATED:  February 21, 2023

_____________________________

Colin Leis

Judge of the Superior Court