Judge Colin Leis, Case Number: 23STCV08548, Date: 2024-04-17 Tentative Ruling

On April 17, 2023, Plaintiff Tanya Zamora-Nerio (Plaintiff) filed a complaint against Defendants Glenhaven Healthcare, LLC, Glenhaven Healthcare, Marco Garay, and Carrie Marks (Defendants).

The complaint alleges the following causes of action: (1) discrimination; (2) hostile work environment; (3) retaliation in violation of FEHA; (4) failure to provide reasonable accommodation; (5) failure to engage in the interactive process; (6) failure to prevent discrimination, harassment, and retaliation; (7) negligent hiring, supervision, and retention; (8) wrongful termination in violation of public policy; (9) breach of express oral contract; (10) breach of implied-in-fact contract; (11) retaliation in violation of Labor Code section 1102.5; and (12) intentional infliction of emotional distress.

In support of their motion to compel arbitration, Defendants provide a copy of the arbitration agreement, which Plaintiff signed. (Garay Decl., ¶ 9; Ex. 1.) Plaintiff does not dispute that she signed the agreement. Thus, an agreement is in place between the parties.

In her opposition, Plaintiff argues that the court should not enforce the arbitration agreement because it is unconscionable. California courts analyze unconscionability as having a procedural and a substantive element. (Stirlen v. Supercuts, Inc. (1997) 51 Cal.App.4th 1519, 1531–1533.) Although both elements must be present before a contract or contract provision is rendered unenforceable on grounds of unconscionability, they are reviewed in tandem such that “the greater the degree of substantive unconscionability, the less the degree of procedural unconscionability that is required to annul the contract or clause.” (Carboni v. Arrospide (1991) 2 Cal.App.4th 76, 83.)

“Procedural unconscionability” concerns the manner in which the contract was negotiated and the circumstances of the parties at that time. (A & M Produce Co. v. FMC Corp. (1982) 135 Cal.App.3d 473, 486.) It focuses on factors of oppression and surprise. (Ibid.) The oppression component arises from an absence of real negotiation or a meaningful choice on the part of the weaker party. (Ibid.)

Plaintiff contends the arbitration agreement is procedurally unconscionable for several reasons. First, Plaintiff claims the agreement was presented to her on a take-it-or-leave-it basis. (Martinez v. Master Protection Corp. (2004) 118 Cal.App.4th 107, 114; Zamora-Nerio Decl., ¶¶ 5-7.) According to Defendants, though, Plaintiff had ample time to review and sign the agreement. (Garay Decl., ¶ 6.) By providing her signature, Plaintiff acknowledged that the agreement was not a condition of her employment. (Garay Decl., ¶ 9; Ex. 1, p. 4.) Second, Plaintiff asserts she did not have time to review the agreement herself or with an attorney. (Zamora-Nerio Decl., ¶¶ 7, 9.) Defendants in turn argue Plaintiff was not rushed or pressured to sign the agreement. Rather, Defendants reviewed the agreement with Plaintiff and asked her if she had any questions. When Plaintiff stated she had no questions, Defendants asked her to further review the agreement and sign it. (Garay Decl., ¶ 6.) Moreover, by providing her signature, Plaintiff indicated that she had carefully read the agreement and had had the opportunity to discuss it with private legal counsel. (Garay Decl., ¶ 9; Ex. 1, pp. 4-5.)[1]

Third, Plaintiff argues Defendants failed to explain the significance of the agreement, provide Plaintiff with a copy of the signed agreement, and provide Plaintiff with the laws referenced in the agreement. (Zamora-Nerio Decl., ¶¶ 3, 8, 9.) Defendants, for their part, contend they explained the agreement to Plaintiff, who had no questions. (Garay Decl., ¶ 6.) By providing her signature, Plaintiff acknowledged that she carefully read and understood the agreement, which explains the arbitration process, covered claims, and the legal consequences of the agreement. (Garay Decl., ¶ 9; Ex. 1.) However, Defendants do not offer evidence that they ever gave Plaintiff copies of the agreement or provided the laws referenced therein. Fourth, Plaintiff argues that language in the agreement does not satisfy the “clear and unmistakable standard.” But Plaintiff does not articulate how this standard supports a finding of procedural unconscionability.

Given the foregoing, the court finds a minimal degree of procedural unconscionability.

“Substantive unconscionability” focuses on the terms of the agreement and whether those terms are so one-sided as to shock the conscience.” (American Software, Inc. v. Ali 46 Cal.App.4th (1996) 1386, 1391.) “Where […] arbitration provisions undermine statutory protections, courts have readily found unconscionability.” (Samaniego v. Empire Today LLC (2012) 205 Cal.App.4th 1138, 1147, citing Nyulassy v. Lockheed Martin Corp. (2004) 120 Cal.App.4th 1267, 1283.)

Plaintiff argues the agreement is substantively unconscionable on multiple grounds. First, Plaintiff contends the agreement limits her right for judicial review of any arbitration award. To that end, Plaintiff points to the following language in the agreement: “The Arbitrator shall have the authority to award all remedies and relief that would otherwise have been available if the claim had been brought by way of a civil complaint in court. The arbitration shall be final and binding upon the parties.” (Garay Decl., ¶ 9; Ex. 1, p. 3.) However, this language alone does not preclude judicial review of any arbitration award. Second, Plaintiff argues the agreement is one-sided because it covers claims Plaintiff is likely to bring but excludes claims for injunctive relief, which Defendants are more likely to bring. (See Mercuro .v Superior Court (2002) 96 Cal.App.4th 167, 175-176; Garay Decl., ¶ 9; Ex. 1, p. 2.) Third, Plaintiff contends the agreement is substantively unconscionable because it prohibits Judicial Arbitration and Mediation Services (JAMS) from administering the arbitration. (Garay Decl., ¶ 9; Ex. 1, p. 3.) In support, though, Plaintiff cites a federal case that is not binding on this court.

Although the court finds the agreement substantively unconscionable to a moderate degree, the agreement is procedurally unconscionable to a minimal degree. Consequently, the arbitration agreement is not unconscionable overall. (Carboni v. Arrospide, supra, 2 Cal.App.4th at p. 83.)

Plaintiff asserts Defendants waived their right to arbitration. To that end, Plaintiff first claims Defendants did not bring their motion to compel arbitration within 30 days of the filing of the complaint, as required under Code of Civil Procedure section 1281.5, subdivision (b). Moreover, according to Plaintiff, Defendants did not file their motion to compel before filing their respective answers, as required by Code of Civil Procedure section 1281.5, subdivision (c). But Code of Civil Procedure section 1281.5 applies to actions to enforce the claim of lien, which is not at issue here.

Alternatively, Plaintiff contends Defendants waived their right to arbitration because they waited seven months to bring this motion. In determining waiver in this context, courts can consider the following factors: (1) whether the party’s actions are inconsistent with the right to arbitrate; (2) whether the litigation machinery has been substantially invoked and the parties were well into the preparation of a lawsuit before the party notified the opposing party of an intent to arbitrate; (3) whether a party either requested arbitration enforcement close to the trial date or delayed for a long period before seeking a stay; (4) whether a defendant seeking arbitration filed a counterclaim without asking for a stay of the proceedings; (5) whether important intervening steps (e.g. taking advantage of judicial discovery procedures not available in arbitration) had taken place; and (6) whether the delay prejudiced the opposing party. (St Agnes Medical Center v. PacifiCare of California (2003) 31 Cal.4th 1187, 1196.)

To begin, the first factor weighs against a finding of waiver. In their respective answers, Defendants assert their right to move to compel arbitration. (Le Decl., ¶ 5.) Moreover, in their case management statement, Defendants made clear that they intend to file a motion to compel arbitration. The court also notes Defendants have not propounded any discovery on Plaintiff or taken any depositions. (Le Decl., ¶ 5.)

Additionally, the second and fifth factors weigh against a finding of waiver. So far, Defendants have only filed their respective answers, case management statement, and this motion to compel arbitration. Although Plaintiff has propounded discovery, Defendants have not provided substantive responses. (Le Decl., ¶ 5.) Plaintiff contends she has drafted motions to compel discovery, but Plaintiff has not provided evidence of her work. Rather, Plaintiff only points to her hearing reservations. (Gilanians Decl., ¶ 13; Ex. 7.)

Likewise, the third factor weighs against a finding of waiver. Defendants filed their motion to compel arbitration over a year before the scheduled trial date. Moreover, Defendants reserved the earliest hearing date available on the court’s calendar. (Le Decl., ¶ 6.) The fourth factor also weighs against a finding of waiver because Defendants have not filed a cross-complaint.

Last, the sixth factor weighs against a finding of waiver. To determine prejudice in this context, courts consider whether the party opposing arbitration has been substantially deprived of the advantages of arbitration as a speedy and relatively inexpensive means of dispute resolution. (St Agnes Medical Center v. PacifiCare of California, supra, 31 Cal.4th at p. 1204.) Here, Plaintiff has not devoted significant time, money, and resources to conducting discovery and case preparation. Rather, Plaintiff has only demonstrated that she propounded discovery on Defendants and reserved hearing dates for motions to compel. Moreover, the parties can still resolve their dispute in arbitration.

In light of the foregoing, Defendants have not waived their right to compel arbitration.

The court grants Defendants’ motion to compel arbitration and stay proceedings.

[1] Plaintiff also argues she had insufficient time to review the agreement because her new employee orientation was shortened. But Plaintiff does not demonstrate that Defendants required her to sign the agreement before the conclusion of the orientation.