Judge: Craig Griffin, Case: Fleck v. AutoNation Inc., Date: 2023-05-22 Tentative Ruling

The Motion to Compel Arbitration and to Dismiss or Stay Proceedings filed by Defendants Newport Beach Cars, LLC and Teri Gayheart on 12/15/22 is GRANTED.

To compel arbitration, the moving party must prove by a preponderance of the evidence that a written agreement to arbitrate a controversy exists and that a party thereto refuses to arbitrate such controversy. (C.C.P. § 1281.2.) The provisions of the written agreement to arbitrate and the paragraph that provides for arbitration must either be stated verbatim in the petition or attached thereto. (C.R.C. 3.1330.) The burden then shifts to the resisting party “to demonstrate that an arbitration clause cannot be interpreted to require arbitration of the dispute.” (Buckhorn v. St. Judge Heritage Medical Group (2004) 121 Cal.App.4th 1401, 1406.) Any reasonable doubt as to whether a claim falls within the arbitration clause is to be resolved in favor of arbitration. (Villacreses v. Molinari (2005) 132 Cal.App.4th 1223, 1229.)

Here, Defendant has attached a copies of all three versions of the arbitration agreements. Plaintiff does not dispute that she signed each of the agreements or that her claims do not fall within the scope of the agreements. Instead, Plaintiff asserts that the Agreement is unenforceable as it is procedurally and substantively unconscionable.

“The doctrine of unconscionability 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.” (Sonic–Calabasas A, Inc. v. Moreno (2013) 57 Cal.4th 1109, 1133.) “The prevailing view is that [procedural and substantive unconscionability] must both be present to justify the refusal to enforce a contract or clause based on unconscionability.” (Armendariz v Foundation Health Psychare Servs. Inc. (2000) 24 Cal.4th 83, 114.)

There is certainly some degree of procedural unconscionability inherently present in an agreement signed as a condition of employment due to the inherent imbalance of power between the parties. However, it is not on the extreme end of the scale where oppression or sharp tactics would make the agreement so procedurally unconscionable that the barest showing of substantive unconscionability would render the agreement unenforceable. Plaintiff has provided no information indicating the amount of time she was given to sign the documents on any of the three relevant occasions. . Plaintiff quotes extensively to OTA, LLC v. Ken Kho (2019) 8 Cal.5th 111 to support her assertions of procedural unconscionability, however this case is distinguishable. In OTA, the agreement was presented to the employee in his workspace with other documents and any time he spent reviewing would have reduced his pay. The documents were delivered by a porter who waited for the documents which presented the employee with no opportunity to ask questions and an expectation he would sign immediately. That level of unconscionability is not present here.

As to the substantive element, Plaintiff argues the waiver of a Berman hearing. The court in OTA, LLC v. Ken Kho extensively discusses the waiver of the Berman hearing, noting “It is important to stress that the waiver of Berman procedures does not, in itself, render an arbitration agreement unconscionable.” (OTA, LLC v. Ken Kho, supra, 8 Cal.5th 111,130.) The OTA court made it clear that without the exceptionally strong procedural unconscionability in that case, “the same contract terms might pass muster”. (Id. at 136.)

Plaintiff’s claim that the jury trial waiver is substantively unconscionable fails. Per Lange v. Monster Energy Company (2020) 46 Cal.App.5th 436, 452, there are jury trial waivers inherent in arbitration agreements, like here, where the waiver simply clarifies that the parties are agreeing to submit claims to arbitration rather than to a jury. In Lange, that court found the agreement had another jury trial waiver that was preceded by the words “in the event that any controversy or claim is determined in a court of law”, meaning that claims that did not go to arbitration would still waive a jury trial which the court found to be an unconscionable predispute jury trial waiver. (Lange v. Monster Energy, supra, 46 Cal.App.5th 436, 452.) No such clause is present here, and the jury trial waiver is not substantively unconscionable.

Plaintiff asserts the agreement is unconscionable based on a lack of mutuality, based on the inherent employer-employee dynamic, rather than any specific clause, as employees have far more available claims against employers than the other way around. Defendants argue that both parties are bound by the agreement, and any claims Defendants had would be bound by arbitration to the same degree as Plaintiff. To require parties to have equal possible claims to make arbitration agreements substantively fair would invalidate nearly every such agreement. The agreement is mutual as written, and is not one-sided enough to invoke substantive unconscionability.

The PAGA claim waiver is invalid under Iskanian v. CLS Transportation Los Angeles, LLC. (2014) 59 Cal.4th 348, 383. It is irrelevant that Plaintiff did not bring a PAGA action, per Najarro v. Superior Court (2021) 70 Cal.App.5th 871, 882-883. As such, this provision does show substantively unconscionability.

When a court determines that an arbitration agreement contains unconscionable terms, it “must determine whether these terms should be severed, or whether instead the arbitration agreement as a whole should be invalidated.” (Gentry v. Superior Court (2007) 42 Cal.4th 443, 472-473, abrogated on other grounds as recognized in Iskanian v. CLS Transportation Los Angeles, LLC (2014) 59 Cal.4th 348, 360.) The court in Armendariz noted that invalidating the entire agreement is reserved for “when an agreement is ‘permeated’ by unconscionability.” (Armendariz v. Foundation Health Psychcare Service, Inc. (2000) 24 Cal.4th 83, 122.) As discussed above, the only unconscionable provision in the agreement is the PAGA waiver. Particularly as the agreement has a severability clause, and only one term is unenforceable, the PAGA waiver can be severed and the arbitration agreement as a whole left intact.

Accordingly, the Motion to Compel Arbitration is GRANTED and the action is STAYED.

Moving party to give notice.