Judge Curtis A. Kin, Case 22STCV32480 2023-03-28 Tentative Ruling

Judge: Curtis A. Kin, Case: 22STCV32480, Date: 2023-03-28 Tentative Ruling

Case Number: 22STCV32480 Hearing Date: March 28, 2023 Dept: 72

MOTION TO COMPEL ARBITRATION

Date: 3/28/23 (8:30 AM)

Case: Lorna Pounds v. Security Industry Specialists, Inc. (22STCV32480)

TENTATIVE RULING:

Defendant Security Industry Specialists, Inc.’s Motion to Compel Arbitration is GRANTED.

Defendant Security Industry Specialists, Inc. seek to compel arbitration of plaintiff Lorna Pounds’ claims against it.

The Court finds that plaintiff agreed to arbitration of the causes of action asserted in this action by electronically signing the Agreement on Alternative Dispute Resolution, which incorporates the Employment Dispute Arbitration Procedure. (Prybyla Decl. ¶ 13 & Ex. A.) Plaintiff does not deny signing the Agreement. Rather, plaintiff opposes the motion on the ground that she believes the Agreement is procedurally and substantively unconscionable. (See Civ. Code § 1670.5(a).) An arbitration agreement must be both procedurally and substantively unconscionable to be unenforceable. (Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83, 114; Mission Viejo Emergency Med. Assocs. v. Beta Healthcare Group (2011) 197 Cal.App.4th 1146, 1159 [unnecessary to decide whether insurance policy was adhesion contract and procedurally unconscionable because it was not substantively unconscionable].)

With respect to procedural unconscionability, plaintiff contends that, under Labor Code § 432.6, California employers cannot condition employment on an agreement to arbitrate. However, this statute is unavailing to plaintiff because the statute “does not make invalid or unenforceable any agreement to arbitrate, even if such agreement is consummated in violation of the statute.” (Chamber of Commerce of United States v. Bonta (9th Cir. 2021) 13 F.4th 766, 776.) Even if the Agreement were a condition of employment, nothing in Labor Code § 432.6 “is intended to invalidate a written arbitration agreement that is otherwise enforceable under the Federal Arbitration Act (9 U.S.C. Sec. 1 et seq.).” (Lab. Code § 432.6(f).)

With respect to 9 U.S.C. § 2, the term “evidencing a transaction involving commerce” does not mean that the parties must have contemplated substantial interstate activity at the time they entered into the agreement; rather, the transaction must merely turn out, in fact, to have involved interstate commerce. (Shepard v. Edward Mackay Enterprises, Inc. (2007) 148 Cal.App.4th 1092, 1097; see also Allied Bruce Terminix Companies, Inc. v. Dobson (1995) 513 U.S. 265, 281-82.) Director of Human Resources Julia Prybyla avers that defendant, based in California, provides security services to clients outside of California, including in Florida, New York, Texas, and Washington. (Prybyla Decl. ¶ 2.) Plaintiff disputes that the Federal Arbitration Agreement applies because she worked in California. (Opp. at 4:12-13.) However, defendant demonstrates that plaintiff’s employment involved interstate commerce. (See Prybyla Reply Decl. ¶¶ 4, 5 & Exs. 2-4 [evidencing that plaintiff made interstate travel arrangements].) This is all that is required under the FAA. Accordingly, under Labor Code § 432.6(f), the Agreement is enforceable.

With respect to substantive unconscionability, plaintiff contends that the confidentiality provision set forth in section 16.1 of the Agreement renders the agreement to arbitrate unenforceable. Section 16.1 states: “All aspects of the arbitration, including without limitation the record of the proceeding as defined in paragraph 18.3, are confidential and shall not be open to the public, except (a) to the extent both Parties agree otherwise, (b) as may be appropriate in any subsequent proceedings between the Parties, or (c) as may be required in response to a formal request of a governmental agency or legal process….” (Prybyla Decl. ¶ 13 & Ex. A.) The California Court of Appeal found that a similar provision contained in an arbitration agreement does not render the agreement substantively unconscionable. (Sanchez v. Carmax Auto Superstores California, LLC (2014) 224 Cal.App.4th 398, 408 [finding provision requiring that the “arbitration…be confidential and not open to the public unless the parties agree otherwise, or as appropriate in any subsequent proceeding between the parties, or as otherwise may be appropriate in response to governmental or legal process” not unconscionable]; see also Poublon v. C.H. Robinson Company (9th Cir. 2017) 846 F.3d 1251, 1267 [finding opposite holding in Ting v. AT&T (9th Cir. 2003) 319 F.3d 1126 inapplicable in light of ruling in Sanchez v. Carmax Auto Superstores California, LLC.)

Plaintiff also contends that the Agreement lacks mutuality because section 2.6 of the Agreement allows any party to seek an injunction to enforce the Employment Dispute Arbitration Procedure or to seek a temporary restraining order, preliminary injunction, or other provisional relief to enforce the Employment Dispute Arbitration Procedure. Plaintiff contends that the Agreement is unconscionably one-sided because employers are more likely to seek injunctive relief. However, section 2.6, on its face, allows both plaintiff and defendant to seek injunctive relief to enforce the Employment Dispute Arbitration Procedure in court. Further, section 1.2 of the Agreement provides that all employment-related claims, whether the employee is asserting the claim against the employer, or vice versa, must be resolved in arbitration, except for worker’s compensation and unemployment insurance claims (claims more likely to be brought by employees) or other claims that must be arbitrated under statute or other rules. Plaintiff’s citations to Mercuro v. Superior Court (2002) 96 Cal.App.4th 167 and Carlson v. Home Team Pest Defense, Inc. (2015) 239 Cal.App.4th 619 are unavailing because the injunctive relief reserved for the employer was related to intellectual property and trade secret claims that employers were far more likely to bring than the employees. (Mercuro, 96 Cal.App.4th at 176; Carlson, 239 Cal.App.4th at 634-35.)

Plaintiff also contends the agreement to arbitrate is substantively unconscionable because the Agreement is phrased in terms of plaintiff’s agreements but contains no agreements from defendant. (Prybyla Decl. ¶ 13 & Ex. A [“I understand…. I agree…. I acknowledge….”].) However, defendant also signed the Agreement, which states: “I agree to submit for final and binding resolution pursuant to the Employment Dispute Arbitration Procedure any employment-related dispute….” (Ibid.) Under sections 1.1 and 1.2 of the Agreement, defendant agreed to resolution of claims that it may have against plaintiff as the employee in arbitration. The terms of the Agreement thus apply equally to both plaintiff and defendant.

Plaintiff also argues the Agreement unconscionably limits plaintiff’s discovery to one deposition and that additional discovery beyond what the Agreement provides as a matter of right requires a showing of good cause before the arbitrator. (Prybyla Decl. ¶ 13 & Ex. A at 11.3, 11.4, 11.7.) However, plaintiff is not limited to one deposition; plaintiff just must show good cause for additional depositions. (See Mercuro, 96 Cal.App.4th at 183-84 [approving of “good cause” requirement for additional discovery - “Ultimately it is up to the arbitrator and the reviewing court to balance the need for simplicity in arbitration with the discovery needs of the parties”].) To the extent the arbitrator may allow less discovery than plaintiff would have in a court action, parties agreeing to arbitration are allowed “to agree to something less than the full panoply of discovery provided in section 1283.05.” (Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83, 105-06.) “Adequate discovery does not mean unfettered discovery.” (Fitz v. NCR Corp. (2004) 118 Cal.App.4th 702, 715.)

Plaintiff also contends the arbitration agreement is not mutual because defendant has the option to unilaterally change the terms of the arbitration agreement. (Prybyla Decl. ¶ 13 & Ex. A at § 4.2 [“Any termination or modification of this Employment Dispute Arbitration Procedure will be effective no less than one hundred and twenty (120) days following written notice”].) Binding state law has held that unilateral modification provisions are not substantively unconscionable because such modifications are governed by the implied covenant of good faith and fair dealing. (Peng v. First Republic Bank (2013) 219 Cal.App.4th 1462, 1473; Casas v. Carmax Auto Superstores California LLC (2014) 224 Cal.App.4th 1233, 1237 [“Under California law, however, even a modification clause not providing for advance notice does not render an agreement illusory, because the agreement also contains an implied covenant of good faith and fair dealing”].)

Plaintiff contends that the Agreement is unfair or one-sided because the arbitration provision requires each party to bear their own attorney fees. However, section 14.1 of the Agreement states: “The principles of applicable substantive common, decisional and statutory law shall control the disposition of each dispute.” Thus, for example, Civil Code § 1794(d) allows a prevailing plaintiff to recover costs and fees, which means Section 14.1 allows the arbitrator to award fees to prevailing plaintiffs under Civil Code § 1794(d) and any other statutes. Section 17.2, cited by plaintiff, states that plaintiff shall pay the expenses of the arbitration, including the arbitrator’s fees, up to an amount of a court filing fee in federal court. Section 17.2 does not preclude plaintiff from recovering attorney’s fees should she prevail in the arbitration.

Because plaintiff fails to show that the arbitration provisions in the Agreement are unconscionable, the claims in this action are arbitrable.

For the foregoing reasons, the motion to compel arbitration of plaintiff’s claims against defendant is GRANTED. This action is STAYED pending completion of arbitration between the parties.