Judge: Colin Leis, Case: 23STCV31211, Date: 2024-12-18 Tentative Ruling
Case Number: 23STCV31211 Hearing Date: December 18, 2024 Dept: 74
Williams v.
Betty M. Goodman & Gertrude T. Pomish Trust et al.
Defendant Home Management Care’s Motion
to Compel Arbitration
BACKGROUND
This
motion arises from an employment dispute.
On
December 21, 2023, plaintiff Myrtle Marjorie Williams filed a complaint for
violations of the Labor Code, Business and Professions Code, and Intentional
and Negligent Infliction of Emotional Distress against defendants Betty M.
Goodman & Gertrude T. Pomish Trust; Gertrude T. Pomish Living Trust; Home
Management Care; Gertrude T. Pomish; Anthony Kornarens, as trustee; Tom Rhoads,
as former trustee; and Lawrence Appel.
Defendant
Home Management Care moves to compel arbitration.
The
Court disregards defendant Anthony Kornaren’s brief filed on December 10, 2024,
supporting Home Care Management’s motion to compel arbitration.
LEGAL STANDARD
Under
both the Federal Arbitration Act and 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.) This is usually done by presenting a copy of
the signed, written agreement to the court. “A petition to compel arbitration or to stay
proceedings pursuant to Code of Civil Procedure sections 1281.2 and 1281.4 must
state, in addition to other required allegations, the provisions of the written
agreement and the paragraph that provides for arbitration. The provisions must be stated verbatim, or a
copy must be physically or electronically attached to the petition and
incorporated by reference.” (Cal. Rules
of Court, rule 3.1330.) The moving party
must also establish the other party’s refusal to arbitrate the controversy. (Code of Civ. Proc. § 1281.2.)
The
Court shall order arbitration unless it determines that grounds exist for the
revocation of the agreement. (Code Civ.
Proc. § 1281.2.) Under California law,
and the Federal Arbitration Act, an arbitration agreement may be invalid based
upon grounds applicable to any contract, including unconscionability, fraud,
duress, and public policy, which would be matters for the court to decide. (Sanchez v. Western Pizza Enterprises, Inc.
(2009) 172 Cal.App.4th 154, 165-166.)
DISCUSSION
The
parties entered into the Arbitration Agreement on October 31, 2021, as
evidenced by Plaintiff’s signature on the agreement’s final page. (Farkas
Decl., ¶ 3, Ex. “A”.) The agreement
states, in pertinent part:
Before invoking the arbitration procedures described below,
the parties shall first participate in mediation of any dispute arising out of
the parties’ business relationship…
If the parties are unable to resolve a dispute relating to
the Referral Agreement or otherwise arising out of their working relationship
or the termination thereof informally or through mediation, they shall submit
such dispute, whether based on contract, tort or statute, or any other issue to
the extent legally permitted, to binding/nonbinding arbitration in accordance
with the then current, applicable AAA Arbitration Rules. Either party may enforce the arbitrator’s
award under Code of Civil Procedure section 1285. The parties understand that they are
waiving their rights to a jury trial.
(Farkas Decl., ¶ 3, Ex. “A”.) Defendants allege that the Agreement
encompasses all claims made in the complaint. Defendant has met its burden establishing that
an Arbitration Agreement exists.
Plaintiff
contends that the Arbitration Agreement is unconscionable.
Substantively Unconscionable
For
an arbitration agreement to be unenforceable as unconscionable, there must be
both procedural and substantive unconscionability. (Armendariz v. Foundation Health Psychcare
Services, Inc. (Armendariz) (2000) 24 Cal.4th 83, 114.)
Under
Armendariz, an arbitration agreement must (1) not limit the employee’s
statutory remedies, (3) provide for adequate discovery, (3) provide a written
award, (4) not require the employee to pay the arbitrators’ fees, or other
costs which would not be incurred if the employee could bring the action in
court; and (5) provide for a neutral arbitrator. (24 Cal.4th at pp. 103-113.)
Plaintiff
alleges that the Agreement fails to meet Armendariz standards because it
(1) limits the available discovery and (2) requires the employee to pay
arbitration fees. Plaintiff also raises
that Defendant requires the use of a single arbitration company which Plaintiff
fears creates the risk of the arbitrator favoring a “repeat player” employer
such as Defendant.
Discovery
The
Agreement states that “each party shall be entitled to essential documents and
witnesses, as determined by the arbitrator. All discovery rules and deadlines
shall be determined by the arbitrator.”
(Farkas Decl., ¶ 3, Ex. “A”.) Where
an arbitration provision is susceptible to interpretation that the arbitrator
has authority to order additional discovery to allow fair arbitration of the
claim, then the provision is not unconscionable. (Ramirez
v. Charter Commc'ns, Inc. (2024) 16 Cal.5th 478, 540.) Here, the agreement empowers the arbitrator
to order discovery necessary to fair arbitration, therefore, the discovery
provision is not unconscionable.
Plaintiff
alleges that since the Arbitration Agreement also requires that the parties
attend mandatory mediation, the discovery provision is insufficient because
there is no discovery prior to mediation.
The Court may not order the parties to attend and pay for private
mediation over any party’s objection. (Jeld-Wen,
Inc. v. Superior Court (2007) 146 Cal.App.4th 536, 543.) Additionally, mediation is voluntary, even if
ordered by a judge, and a party may withdraw at any time. (Cal. Rules of Court, rule 3.832.) The Court does not find the Mediation
requirement makes the rest of the arbitration provision unconscionable. Moreover, the Mediation requirement is easily
severable from the rest of the Arbitration agreement. (Fittante
v. Palm Springs Motors, Inc. (2003) 105 Cal.App.4th 708, 726.)
Fees
The
Agreement states: “Home Management Care, Inc. shall pay the arbitrator’s
expenses and fees, to the extent such fees and expenses would not have been
incurred if the case had been litigated in the judicial forum….” The agreement continues that “The arbitrator
may order otherwise if he or she deems appropriate… [t]he arbitrator may award
the prevailing party [] its expenses and fees of arbitration, including
reasonable attorney’s fees and costs, in such proportion as the arbitrator may
decide.”
Generally,
arbitration agreements cannot require an employee to bear arbitration expenses
exceeding those associated with bringing a case in court. (McManus
v. CIBC World Markets Corp. (2003) 109 Cal.App.4th 76, 93.) Armendariz specifically considers the
“risk that the claimant may have to bear substantial costs that deters
the exercise of the constitutional right of due process.” (24 Cal.4th at pp. 110 (citing California
Teachers Assn. (1999) 20 Cal.4th 327, 357-358).) Here, the Arbitration Agreement provisions
that allow the arbitrator to impose costs on Plaintiff greater than the costs
Plaintiff would have incurred in court violates Armendariz. Therefore, the Plaintiff has shown the
Agreement is somewhat substantively unconscionable, but that unconscionability
may be cured by severing the fee-shifting provisions from the Arbitration
Agreement
Procedurally Unconscionable
“‘[T]he
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.’” (Gatton
v. T-Mobile USA, Inc. (2007) 152 Cal.App.4th 571, 579 (quoting Armendariz, supra, 24 Cal.4th at pp. 114).)
Procedural
unconscionability includes oppression arising from unequal bargaining power
causing an absence of meaningful choice and real negotiating, and surprise due
to hidden terms. (Gatton v. T-Mobile
USC, Inc. (2007) 152 Cal.App.4th 571, 581.)
Plaintiff
alleges that the agreement is procedurally unconscionable because the Defendant
(1) offered the contract on a take-it-or-leave-it basis and (2) failed to
provide a copy of the applicable arbitration rules.
Contract
of Adhesion
"[A]
compulsory predispute arbitration agreement is not rendered unenforceable just
because it is required as a condition of employment or offered on a 'take it or
leave it' basis." (Lagatree v. Luce,
Forward, Hamilton & Scripps (1999) 74 Cal.App.4th 1105, 1127; accord Giuliano v. Inland Empire Personnel, Inc.
(2007) 149 Cal.App.4th 1276, 1292.)
In
the moving papers, Plaintiff allege that the Agreement was required to be
considered for employment. Plaintiff
does not provide any evidence supporting the allegation that she was required
to sign the Arbitration agreement.
Failure
to Provide Applicable Rules
“Numerous
cases have held that the failure to provide a copy of the arbitration rules to
which the employee would be bound, supported a finding of procedural
unconscionability.” Trivedi v. Curexo
Technology Corp. (2010) 189 Cal.App.4th 387, 393, disapproved on other grounds by Baltazar v. Forever 21, Inc. (2016)
62 Cal.4th 1237, 1248.) But a failure to
attach the rules alone is insufficient to support a finding of procedural
unconscionability. (Peng v. First Republic Bank (2013) 219 Cal.App.4th 1462, 1472 (“the
failure to attach the AAA rules, standing alone, is insufficient grounds to
support a finding of procedural unconscionability.”) Here, there are no other aspects of
procedural unconscionability; therefore, the failure to attach a copy of the
AAA rules is not sufficient to support a finding of procedural
unconscionability.
The
Plaintiff has failed to show both procedural and substantive unconscionability.
CONCLUSION
The
Court grants Defendant’s Motion to Compel Arbitration.
The
Court stays Plaintiff’s claims against only Home Management Care.
The
Court denies Home Management Care’s request to recover the fees and costs it
incurred in bringing this motion.
Defendant
to give notice.