Judge Daniel M. Crowley, Case Number: 23STCV01560, Date: 2023-12-08 Tentative Ruling

Defendant The Estate of Legacy EJY, Inc. f/k/a Enjoy Technology Inc. by and through Alan D. Halperin as Plan Administrator’s motion to compel arbitration is granted. The case is stayed pending arbitration.

The Court sets a non-appearance case review for December 9, 2024, at 8:30 a.m. The parties are directed to submit a joint statement five calendar days in advance, apprising the Court of the status of the arbitration.

Defendant The Estate of Legacy EJY, Inc. f/k/a Enjoy Technology Inc. by and through Alan D. Halperin as Plan Administrator (“ETI”) (“Defendant”) moves to compel Plaintiff Hashani Pipersburgh (“Pipersburgh”) (“Plaintiff”) to arbitrate her claims and for an order dismissing this action, or in the alternative, staying all proceedings in this action pending completion of arbitration. (Notice Compel Arbitration, pg. 1; C.C.P. §§1281.2 et seq.; 9 U.S.C. §§1 et seq.)

Defendant’s 12/1/23 evidentiary objections to the Declaration of Angel J. Horacek (“Horacek”) is sustained as to Nos. 1 and 2.

On January 24, 2023, Plaintiff filed her operative complaint in the instant action against Defendant alleging nine causes of action: (1) Unlawful Discrimination (Gov. Code §12940(a)); (2) Failure to Reasonably Accommodate (Gov. Code §12940(m)(1)); (3) Failure to Engage in the Interactive Process (Gov. Code §12940(n)); (4) Retaliation (Gov. Code §12940(h)); (5) Retaliation (Lab. Code §1102.5); (6) Retaliation (Gov. Code §12940(m)(2); (7) Unlawful Harassment (Gov. Code §12940(j); (8) Failure to Prevent Discrimination or Harassment (Gov. Code §12940(k); and (9) Unfair Business Practices (Bus. & Prof. Code §17200). Plaintiff’s causes of action stem from Plaintiff’s employment by Defendant as a Market Captain providing retail technology to technology retailers. (Complaint ¶11.)

On March 21, 2023, Defendant filed the instant motion. Plaintiff filed an opposition to the motion on November 27, 2023. Defendant filed its reply December 1, 2023.

Federal law provides for enforcement of this Arbitration Agreement. The Federal Arbitration Act, 9 U.S.C. §1, et seq. (“FAA”), establishes a strong federal policy in favor of arbitration of disputes where a written arbitration agreement exists. Section 2 of the FAA provides, in pertinent part that “[a] written provision . . . to settle by arbitration a controversy thereafter arising out of such contract . . . shall be valid, irrevocable, and enforceable.” (9 U.S.C. §2.) The purpose of the FAA is to “reverse the longstanding judicial hostility to arbitration agreements.” (Gilmer v. Interstate/Johnson Lane Corp. (1991) 500 U.S. 20, 24.) The FAA places arbitration agreements “on an equal footing with other contracts and [requires courts] to enforce them according to their terms.” (AT&T Mobility, LLC v. Concepcion (2011) 563 U.S. 333, 339; see also Rent-A-Center West, Inc. v. Jackson (2010) 561 U.S. 63, 67 [“The FAA reflects the fundamental principle that arbitration is a matter of contract.”].) The FAA will preempt not only a state law that “discriminat[es] on its face against arbitration,” but also a state law that “covertly accomplishes the same objective by disfavoring contracts that (oh so coincidentally) have the defining features of arbitration agreements.” (Kindred Nursing Centers Limited Partnership v. Clark (2017) 137 S.Ct. 1421, 1426.)

The United States Supreme Court has specifically held that the FAA applies to employment contracts: “[A]s a matter of law the answer is clear. In the Federal Arbitration Act, Congress has instructed federal courts to enforce arbitration agreements according to their terms.” (Epic Systems Corp. v. Lewis (2018) 138 S.Ct. 1612, 1619, [holding that employees must submit to arbitration agreements including those with collective action waivers].)

The FAA restricts a court’s inquiry related to compelling arbitration to two threshold questions: (1) whether there was an agreement to arbitrate between the parties; and (2) whether the agreement covers the dispute. (Howsam v. Dean Witter Reynolds, Inc. (2002) 537 U.S. 79, 84.) Here, both criteria are satisfied. First, Plaintiff agreed to arbitration when she entered into the Arbitration Agreement (“Agreement”) that contained the relevant arbitration clause. (Decl. of Tylki ¶¶6-9, Exh. A.) Second, the Agreement expressly covers “all employment-related disputes, and [Plaintiff’s] receipt of the compensation, pay raises, and other benefits paid to [Plaintiff] by [Defendant] at present and in the future, [Plaintiff] agree[s] that any and all controversies, claims, or disputes with anyone (including [Defendant] and any employee, officer, director, shareholder, or benefit plan of [Defendant], in their capacity as such or otherwise), arising out of, relating to, or resulting from [Plaintiff’s] employment with [Defendant] or the termination of [Plaintiff’s] employment with [Defendant].” (Decl. Tylki ¶¶6-9, Exh. A at §13(A).)

California law also favors arbitration for dispute resolution. The California Arbitration Act (“CAA”), codified at C.C.P. §1281 et seq., provides, “A written agreement to submit to arbitration an existing controversy or a controversy thereafter arising is valid, enforceable and irrevocable, save upon such grounds as exist for the revocation of any contract.” (C.C.P. §1281; see also Grafton Partners L.P. v. Superior Court (2005) 36 Cal.4th 944, 955 [“[U]nlike predispute jury waivers, predispute arbitration agreements are specifically authorized by statute.”].)

“California law, like federal law, favors enforcement of valid arbitration agreements.” (Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83, 97, 99.) The public policy in favor of arbitration is so strong that California courts have held that an employee is “bound by the provisions of the [arbitration] agreement regardless of whether [he] read it or [was] aware of the arbitration clause when [he] signed the document.” (Brookwood v. Bank of America (1996) 45 Cal.App.4th 1667, citing Macaulay v. Norlander (1992) 12 Cal.App.4th 1.) The only prerequisite for a court to order arbitration is a determination that the parties have entered into an agreement to arbitrate the dispute. (United Transportation Union v. Southern California Rapid Transit District (1992) 7 Cal.App.4th 804, 808.) Thus, arbitration must be ordered “unless the agreement clearly does not apply to the dispute in question.” (Vianna v. Doctors’ Management Co. (1994) 27 Cal.App.4th 1186, 1189.)

Defendant proved the existence of an arbitration agreement with Plaintiff. Defendant submitted evidence that on June 8, 2019, at 3:57 PM MDT, Plaintiff signed the Agreement. (See Decl. of Tylki ¶¶9, 12, Exh. A.) Pursuant to C.C.P. §1281.2, Defendant demonstrates it made a formal demand for arbitration on March 9, 2023, via a telephone conversation, and later, on March 16, 2023, via email, in which Plaintiff’s counsel replied that Plaintiff did not intend to stipulate to arbitration. (Decl. of Rastegar ¶¶3-5, Exh. 2.)

Defendant’s objections to the authenticity of Plaintiff’s electronic signature are unavailing. Civil Code §1633.9(a) provides: “[a]n electronic record or electronic signature is attributable to a person if it was the act of that person. The act of the person may be shown in any manner, including a showing of the efficacy of any security procedure applied to determine the person to which the electronic record or electronic signature was attributable.” (Civ. Code §1633.9(a).) “As a preliminary matter the court is only required to make a finding of the agreement’s existence, not an evidentiary determination of its validity.” (Condee v. Longwood Management Corp. (2001) 88 Cal.App.4th 215, 218-219.) “The party seeking authentication may carry its burden ‘in any manner,’ including by presenting evidence of the contents of the contract in question and the circumstances surrounding the contract’s execution.” (Fabian v. Renovate America, Inc. (2019) 42 Cal.App.5th 1062, 1068.) Circumstantial evidence is admissible to authenticate a signature. (Ruiz v. Moss Brothers Auto Group, Inc. (2019) 232 Cal.App.4th 836, 845.)

Defendant met its burden to demonstrate the authenticity of Plaintiff’s signature. At the time of Plaintiff’s employment, Defendant had a pattern and practice of onboarding its new hires, including Plaintiff, using an electronic onboarding system for new hires to review and sign certain onboarding documents. (Evid. Code §1105; Decl. of Tylki ¶6.) Employee onboarding documents included At-Will Employment, Confidential Information, Invention Assignment, and the Arbitration Agreement. (Decl. of Tylki ¶6.) Defendant’s former Vice President, People Success, North America declares, “each user of the [onboarding] Platform was required to create a personal account that was unique to the individual user. Each user would have created this account by validating their last name and 9-digit social security number. Once the user entered this information, the account was created with the email address that the user entered and a unique, secure password that the user set. [Defendant] was never able to retrieve the unique password used by employees to access their Platform, which remains true as of the date of this Declaration. Further, [Defendant] could not access employees’ accounts to manipulate logins or change other information. Once logged into the Platform, the Arbitration Agreement appeared on the screen before the employee, who would then click “accepts” to indicate their agreement. Employees affirmatively agreed to use an electronic signature when signing the document electronically. The date, time of day, name of employee, email address, and where the employee electronically signed the agreement was then recorded.” (Decl. of Tylki ¶8.) Defendant submitted the digital certificate confirming Plaintiff’s signature, email address, and her IP address. (Decl. of Tylki ¶¶9, 12, Exh. A.)

Here, in light of Defendant’s pattern and practice of electronically onboarding employees and providing them with an arbitration agreement and other onboarding documents as a condition of employment, Plaintiff’s continued employment demonstrates that she assented to the documents. (Evid. Code §1105; see also Diaz v. Sohnen Enterprises (2019) 34 Cal.App.5th 126, 130.)

Based on the foregoing, Defendant proved the existence of a valid Agreement that is enforceable by Defendant.

IN CONSIDERATION OF MY EMPLOYMENT WITH THE COMPANY, ITS PROMISE TO ARBITRATE ALL EMPLOYMENT-RELATED DISPUTES, AND MY RECEIPT OF THE COMPENSATION, PAY RAISES, AND OTHER BENEFITS PAID TO ME BY THE COMPANY, AT PRESENT AND IN THE FUTURE, I AGREE THAT ANY AND ALL CONTROVERSIES, CLAIMS, OR DISPUTES WITH ANYONE (INCLUDING THE COMPANY AND ANY EMPLOYEE, OFFICER, DIRECTOR, SHAREHOLDER, OR BENEFIT PLAN OF THE COMPANY, IN THEIR CAPACITY AS SUCH OR OTHERWISE), ARISING OUT OF, RELATING TO, OR RESULTING FROM MY EMPLOYMENT WITH THE COMPANY OR THE TERMINATION OF MY EMPLOYMENT WITH THE COMPANY, INCLUDING ANY BREACH OF THIS AGREEMENT, SHALL BE SUBJECT TO BINDING ARBITRATION UNDER THE ARBITRATION PROVISIONS SET FORTH IN CALIFORNIA CODE OF CIVIL PROCEDURE SECTIONS 1280 THROUGH 1294.2 (THE "CCP ACT"), AND PURSUANT TO CALIFORNIA LAW. THE FEDERAL ARBITRATION ACT SHALL CONTINUE TO APPLY WITH FULL FORCE AND EFFECT NOTWITHSTANDING THE APPLICATION OF PROCEDURAL RULES SET FORTH IN THE CCP ACT. DISPUTES THAT I AGREE TO ARBITRATE, AND THEREBY AGREE TO WAIVE ANY RIGHT TO A TRIAL BY JURY, INCLUDE ANY STATUTORY CLAIMS UNDER LOCAL, STATE, OR FEDERAL LAW, INCLUDING, BUT NOT LIMITED TO, CLAIMS UNDER TITLE VII OF THE CIVIL RIGHTS ACT OF 1964, THE AMERICANS WITH DISABILITIES ACT OF 1990, THE AGE DISCRIMINATION IN EMPLOYMENT ACT OF 1967, THE OLDER WORKERS BENEFIT PROTECTION ACT, THE SARBANES-OXLEY ACT, THE WORKER ADJUSTMENT AND RETRAINING NOTIFICATION ACT, THE FAIR LABOR STANDARDS ACT, THE CALIFORNIA FAIR EMPLOYMENT AND HOUSING ACT, THE FAMILY AND MEDICAL LEAVE ACT, THE CALIFORNIA FAMILY RIGHTS ACT, THE CALIFORNIA LABOR CODE, CLAIMS OF HARASSMENT, DISCRIMINATION, AND WRONGFUL TERMINATION, AND ANY OTHER STATUTORY OR COMMON LAW CLAIMS. NOTWITHSTANDING THE FOREGOING, I UNDERSTAND THAT NOTHING IN THIS AGREEMENT CONSTITUTES A WAIVER OF MY RIGHTS UNDER SECTION 7 OF THE NATIONAL LABOR RELATIONS ACT. I FURTHER UNDERSTAND THAT THIS AGREEMENT TO ARBITRATE ALSO APPLIES TO ANY DISPUTES THAT THE COMPANY MAY HAVE WITH ME.

Plaintiff’s claims arise from her employment relationship with Defendant and are therefore governed by the Agreement. Based on the foregoing, Defendant met its burden to establish the Agreement covers the causes of action asserted in Plaintiff’s complaint.

“[P]rocedural and substantive unconscionability must both be present in order for a court to exercise its discretion to refuse to enforce a contract or clause under the doctrine of unconscionability.” (Armendariz, 24 Cal.4th at pg. 102.) Courts invoke a sliding scale which disregards the regularity of the procedural process of the contract formation, that creates the terms, in proportion to the greater harshness or unreasonableness of the substantive terms themselves, i.e., the more substantively oppressive the contract term, the less evidence of procedural unconscionability is required to conclude that the term is unenforceable, and vice versa. (Id., at pg. 114.) Plaintiff bears the burden of proving that the provision at issue is both procedurally and substantively unconscionable.

Plaintiff argues the Arbitration Agreement is procedurally unconscionable because the Agreement was presented to Plaintiff as a condition of her employment on “on a take-it-or-leave-it basis,” and Plaintiff was unable to review the arbitration rules because Defendant provided the rules via a link, but the link to arbitration rules was broken. (Opposition, pgs. 11-12.)

“Procedural unconscionability focuses on the elements of oppression and surprise. [Citations] ‘Oppression arises from an inequality of bargaining power which results in no real negotiation and an absence of meaningful choice . . . Surprise involves the extent to which the terms of the bargain are hidden in a ‘prolix printed form’ drafted by a party in a superior bargaining position.’ [Citations.]” (Roman v. Superior Court (2009) 172 Cal.App.4th 1462, 1469.)

Procedural unconscionability “focuses on the unequal bargaining positions and hidden terms common in the context of adhesion contracts.” (24 Hour Fitness, Inc. v. Superior Court (1998) 66 Cal.App.4th 1199, 1212-1213.) Although standard employment agreements offered on a “take it or leave it” basis are generally considered contracts of adhesion, this alone is not enough to equate to unconscionability. (See Graham v. Scissor-Tail, Inc. (1981) 28 Cal.3d 807, 817-819 [“To describe a contract as adhesive in character is not to indicate its legal effect. It is, rather, ‘the beginning and not the end of the analysis insofar as enforceability of its terms are concerned.’”].) Adhesion contracts are “fully enforceable . . . unless certain other factors are present which under established legal rules—legislative or judicial—operate to render it otherwise.” (Id. at pgs. 819-820; Harper v. Ultimo (2003) 113 Cal.App.4th 1402, 1409 [adhesion alone does not render arbitration agreements unconscionable]; see also Armendariz, 24 Cal.4th at 114; Lagatree v. Luce, Forward, Hamilton & Scripps, LLP (1999) 74 Cal.App.4th 1105 [discussing many authorities upholding arbitration agreements contained in adhesion contracts].)

The Court is not convinced by Plaintiff’s argument that she was unable to find the rules about arbitration because the link provided to her was broken, and she was not provided with any copies of the arbitration rules. (Opposition, pg. 12.) The URL to the JAMS rules was provided in Exhibit E to the Arbitration Agreement, and while the hyperlink does not properly direct to the JAMS Rules, the URL itself is clear as to what link should be typed in to access the JAMS rules. (Decl. of Tylki, Exh. A at Exh. E.)

Plaintiff’s argument in opposition that her requirement to sign the Arbitration Agreement as a condition of her employment and is therefore procedurally unconscionable is unavailing and is unsupported by case law. The adhesive nature of arbitration agreements in the employment context does not render an agreement unenforceable. (Lagatree, 74 Cal.App.4th at pg. 1127 [“[C]ases uniformly agree that 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.”]; Armendariz, 24 Cal. 4th at pg. 113 [holding that the requirement that the employee sign an arbitration agreement may contain some elements of procedural unconscionability, but that, in itself, does not invalidate the arbitration agreement]; Ajamian v. CantorCO2e, LP (2012) 203 Cal.App.4th 771, 796 [“Where there is no other indication of oppression or surprise, the degree of procedural unconscionability of an adhesion agreement is low[.]”].)

Here, the terms of the Arbitration Agreement do not appear hidden or obscure: the section labeled “Arbitration and Equitable Relief” is bolded and underlined, with italicized subsections for “Arbitration,” followed by “Procedure,” “Remedy,” “Administrative Relief,” and “Voluntary Nature of Agreement.” (Decl. of Tylki, Exh. A.). The last subsection of the Arbitration Agreement states: “I ACKNOWLEDGE AND AGREE THAT I AM EXECUTING THIS AGREEMENT VOLUNTARILY AND WITHOUT ANY DURESS OR UNDUE INFLUENCE BY THE COMPANY OR ANYONE ELSE. I ACKNOWLEDGE AND AGREE THAT I HAVE RECEIVED A COPY OF THE TEXT OF CALIFORNIA LABOR CODE SECTION 2870 IN EXHIBIT B. I FURTHER ACKNOWLEDGE AND AGREE THAT I HAVE CAREFULLY READ THIS AGREEMENT AND THAT I HAVE ASKED ANY QUESTIONS NEEDED FOR ME TO UNDERSTAND THE TERMS, CONSEQUENCES, AND BINDING EFFECT OF THIS AGREEMENT AND FULLY UNDERSTAND IT, INCLUDING THAT I AM WAIVING MY RIGHT TO A JURY TRIAL. FINALLY, I AGREE THAT I HAVE BEEN PROVIDED AN OPPORTUNITY TO SEEK THE ADVICE OF AN ATTORNEY OF MY CHOICE BEFORE SIGNING THIS AGREEMENT.” (Decl. of Tylki, Exh. A, emphasis added.) Accordingly, the Arbitration Agreement’s duty to arbitrate was not hidden from Plaintiff in a manner as to make her unaware of the agreement to arbitrate.

Based on the foregoing, the Court finds the Arbitration Agreement is at the most minimally procedurally unconscionable. However, as discussed below, the Court finds the arbitration agreement is not substantively unconscionable.

Plaintiff argues the Arbitration Agreement is substantively unconscionable because the agreement was presented as “take it or leave it” to the party with lesser bargaining power without opportunity to negotiate or discuss. (Opposition, pg. 13.)

“Substantive unconscionability focuses on the actual terms of the agreement and evaluates whether they create ‘overly harsh’ or ‘‘one-sided’ results’ [Citations] that is, whether contractual provisions reallocate risks in an objectively unreasonable or unexpected manner. [Citation] Substantive unconscionability ‘may take various forms,’ but typically is found in the employment context when the arbitration agreement is ‘one-sided’ in favor of the employer without sufficient justification, for example, when ‘the employee’s claims against the employer, but not the employer’s claims against the employee, are subject to arbitration.’ [Citations].” (Roman, 172 Cal.App.4th at pgs. 1469-1470.) In determining whether an arbitration agreement is unconscionable, the Court considers whether the agreement: (1) provides for a neutral arbitrator; (2) provides for reasonable discovery; (3) requires a written award; (4) provides for the same remedies that otherwise would be available in court; and (5) does not require employees to bear costs unique to arbitration. (See Armendariz, 24 Cal.4th at pgs. 102-103.)

The Arbitration Agreement satisfies the requisite elements set forth in Armendariz to determine the Agreement is not substantively unconscionable. First, the Arbitration Agreement provides the arbitration will apply the rules and procedures of the Employment Arbitration Rules and Procedures set forth by Judicial Arbitration and Mediation Services, Inc. (the “JAMS Rules”). By incorporating the JAMS Rules, the Agreement provides for the selection of a mutually agreed to neutral arbitrator. (See JAMS Employment Arbitration Rules & Procedures (“JAMS Rules”), Rules 7 and 15.) The Agreement provides the parties with the opportunity of selecting an arbitrator. (See JAMS Rules, Rule 15, “Arbitrator Selection, Disclosures, and Replacement”.)

Second, the court in Armendariz explicitly acknowledged an arbitrator’s authority to determine what constitutes sufficient discovery adequate to arbitrate an employee’s claims. (Armendariz, 24 Cal.4th at pg. 106 [employees are “entitled to discovery sufficient to adequately arbitrate their statutory claim, including access to essential documents and witnesses, as determined by the arbitrator.”].) Here, the JAMS Rules provide for adequate discovery, allowing an exchange of documents, interrogatories, and depositions. (See JAMS Rules, Rule 17, “Exchange of Information”.) The Agreement contains no actual limitation on discovery and therefore does not limit Plaintiff’s discovery rights in any way.

Third, The JAMS Rules provide for a written award with essential findings of fact and conclusions of law on which the Award is based. (See JAMS Rules, Rule 24, “Award.”)

Fourth, the Agreement provides for all relief that would be available in court, stating: “The arbitrator shall have the power to award any remedies available under applicable law.” (Decl. of Tylki ¶9, Exh. A at ¶13B.)

Fifth, under Armendariz, an employee cannot be required to pay any type of expense that the employee would not be required to bear if he or she were free to bring the action in court. (Armendariz, 24 Cal.4th at pgs. 110-111.) Here, the Agreement places no obligations on Plaintiff to pay for or to contribute towards the fees for the arbitrator and the use of the arbitration forum. The Agreement requires Defendant to pay for the costs of arbitration, stating, “[t]he company will pay for any administrative or hearing fees charged by the arbitrator or JAMS.” (Decl. of Tylki, ¶9, Exh. A at ¶13B.)

Based on the evidence before the Court, the terms of the Arbitration Agreement do not create overly harsh or one-sided results, satisfying the requirements for a substantively conscionable agreement.

Based on the foregoing, the Court finds the Arbitration Agreement is not substantively unconscionable.

Pursuant to C.C.P. §1281.4, if an application has been made to a court involving order to arbitrate a controversy and such application is undetermined, the court where the application is pending shall, upon motion of a party to the action, stay the action until the application for an order to arbitrate is determined. (C.C.P. §1281.4.)

Defendant’s motion to compel arbitration is granted. The case is stayed pending arbitration. The Court sets a non-appearance case review for December 9, 2024, at 8:30 a.m. The parties are directed to submit a joint statement five calendar days in advance, apprising the Court of the status of the arbitration.

Hon. Daniel M. Crowley

Judge of the Superior Court