Judge Daniel M. Crowley, Case Number: 23STCV03705, Date: 2023-10-19 Tentative Ruling

Defendant Feast Foods, LLC’s motion to compel arbitration is granted. The case is stayed pending arbitration.

The Court sets a non-appearance case review for October 18, 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 Feast Foods, LLC (“Feast Foods”) moves to compel Plaintiff Alejandra Padilla (“Padilla”) (“Plaintiff”) to arbitrate her claims and stay all proceedings in this action pending completion of arbitration. (Notice Compel Arbitration, pg. 1.)

Plaintiff’s 10/17/23 evidentiary objections to the Reply Declaration of Jessica Warne (“Warne”) is sustained as to Nos. 1, 2, 3, 4, and 5.

On February 21, 2023, Plaintiff her operative complaint in the instant action against Defendant alleging five causes of action: (1) retaliation in violation of Labor Code §1102.5 et seq.; (2) unpaid wages (Lab. Code §201); (3) failure to provide rest periods (Lab. Code §226.7); (4) waiting time penalties (Lab. Code §203); and (5) unfair business practices (Bus. & Prof. Code §17200). Plaintiff’s causes of action stem from Plaintiff’s employment by Defendant as a cook earning approximately $13.00 per hour. (Complaint ¶10.)

On September 21, 2023, Defendant filed the instant motion. Plaintiff filed an untimely opposition to the motion on October 6, 2023. Defendant filed its reply October 17, 2023. Plaintiff’s opposition and Defendant’s reply are untimely; however, the Court in its discretion will consider Plaintiff’s untimely opposition and Defendant’s untimely reply.

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 Ayala ¶16, Exhs. A-B.) Second, the Agreement expressly covers all legal claims and disputes between Plaintiff and Defendant, its parent, subsidiary, and affiliated entities, and their officers, directors, agents, and employees (the “Company Parties”), including all claims arising from or relating to Plaintiff’s recruitment, hiring, employment, termination, and any claims arising post-employment. (Decl. of Ayala ¶16, Exh. B at §1.)

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 17, 2019, at 11:32 p.m., Plaintiff signed the Agreement via iSolved Hire. (See Decl. of Ayala ¶¶14, 16, Exh. B.) Pursuant to C.C.P. §1281.2, Defendant demonstrates it made a formal demand for arbitration on May 24, 2023, via email, which Plaintiff rejected. (Decl. of Ramirez ¶5, Exh. A.)

Plaintiff’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 employees electronically, including Plaintiff. (Evid. Code §1105; Decl. of Ayala ¶14.) Employee onboarding documents included the I-9, DE4, W-4, employee handbook, and the arbitration agreement among others, all bearing Plaintiff’s electronic signature. (Decl. of Ayala ¶15.) The company was using a software called iSolved Hire in 2019 when Plaintiff began her employment. (Decl. of Ayala ¶14.) Defendant filed a copy of Plaintiff’s consent to electronic signature with its moving papers. (Decl. of Ayala ¶16, Exh. A.) Plaintiff accepted the Terms of Use and Consent to Electronic signature on June 17, 2019, at 10:23 p.m. (Decl. of Ayala, Exh. A.) Plaintiff electronically signed the Agreement on June 17, 2019, at 11:32 p.m. (Decl. of Ayala, Exh. B.)

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.

We agree to arbitrate before one neutral arbitrator (the “Arbitrator”) all legal claims and disputes between Employee [Plaintiff], on the one hand, and Company [Defendant], its parent, subsidiary, and affiliated entities, and their officers, directors, agents, and employees (the “Company Parties”), on the other hand. This includes all claims arising from or relating to Employee’s [Plaintiff’s] recruitment, hiring, employment, termination, and any claims arising postemployment, whether those claims arise in tort, in contract, or under a statute, regulation, or ordinance now in existence or that may be enacted in the future. Some examples of the claims that must be arbitrated are claims for unlawful discrimination or harassment, wrongful termination, breach of contract, fraud, violation of public policy, breach of confidentiality, and all claims relating to wages, working hours or benefits. We understand and agree that arbitration of the disputes covered by this Agreement is the exclusive method of resolving disputes between the parties.

(Decl. of Ayala ¶16, Exh. B.) 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 or understand the English-only Agreement. (Opposition, pg. 7.)

“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 by relying on her bilingual manager’s assistance who failed to explain an arbitration agreement existed or what arbitration is, she was unfairly surprised to learn there was an arbitration agreement and had no opportunity to review or negotiate any of the terms of the agreement. (Decl. of Padilla ¶2.)[1] Plaintiff’s argument that she did not have sufficient time to review the contract is also unavailing considering the one-hour gap in time between her signature on the terms of use and consent to electronic signature and the Agreement. (Compare Decl. of Ayala, Exh. A with Decl. of Ayala, Exh. B.) Further, Plaintiff’s arguments in her declaration are inconsistent—on the one hand, she was never presented with the Agreement, and on the other, she filled out other necessary employment paperwork that she is unable to identify. (Compare Decl. of Padilla ¶5 with ¶8.)

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: first page of the Agreement states in bold letters “This is an important document. Please read it carefully before signing it.” (Decl. of Ayala, Exh. B.). The last page of the document states: “BY SIGNING BELOW, I ATTEST TO THE FACT THAT I HAVE READ, UNDERSTAND AND AGREE TO BE LEGALLY BOUND TO ALL OF THE ABOVE TERMS. I FURTHER UNDERSTAND THAT THIS AGREEMENT REQUIRES ME TO ARBITRATE ANY AND ALL DISPUTES THAT ARISE OUT OF MY EMPLOYMENT. BY VOLUNTARILY AGREEING TO ARBITRATION, I UNDERSTAND THAT THE COMPANY AND I ARE GIVING UP OUR RIGHT TO A JURY TRIAL.” (Decl. of Ayala Exh. B.) 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 Defendant is the sole drafter of the agreement and she did not agree to waive her right to a jury trial. (Opposition, pg. 10.)

“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 most current rules of the American Arbitration Association (“AAA”), which are not contemplated to be unconscionable under Armendariz. (Decl. of Ayala, Exh. B at §4; see Armendariz, 24 Cal.4th at pg. 112 [discussing AAA rules, stating “there are sufficient institutional safeguards, such as scrutiny by the plaintiff’s bar and appointing agencies like the AAA, to protect against corrupt arbitrators”].)

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 Agreement provides “the Arbitrator must allow at least that discovery that is authorized or permitted by the AAA rules of arbitration and such other discovery required by law in arbitration proceedings,” and under Armendariz, Plaintiff is “at least entitled to discovery sufficient to adequately arbitrate their statutory claim, including access to essential documents and witnesses, as determined by the arbitrator(s) and subject to limited judicial review pursuant to Code of Civil Procedure section 1286.2.” (Id.) Therefore, the parties remain entitled to conduct all relevant discovery.

Third, 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 provides, “If required by applicable law, Company will pay all of the Arbitrator’s fees and the arbitration costs.” (Decl. of Ayala, Exh. B at §10.)

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 October 18, 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

[1] The Court notes Plaintiff’s declaration, like the Agreement, is written wholly in English, does not indicate that the declaration was originally provided to her in Spanish. However, the document is signed by Plaintiff under penalty of perjury. Plaintiff’s argument would carry more weight if her signed declaration was included on a document in Spanish and supported by a translated declaration in English certified by a Spanish language translator.