Judge Daniel M. Crowley, Case Number: 24STCV06443, Date: 2024-11-05 Tentative Ruling

Defendants Mattel, Inc.’s and Steve Werner’s motion to compel arbitration of Plaintiff Robert Delgadillo’s claims in this action is granted. This case is stayed pending the arbitration.

Defendants Mattel, Inc. (“Mattel”) and Steve Werner (“Werner”) (collectively, “Defendants”) move for an order compelling arbitration of all claims asserted by Plaintiff Robert Delgadillo (“Delgadillo”) (“Plaintiff”) and to stay the action pending arbitration. (Notice of Motion, pg. 2; C.C.P. §§1281.2 et seq., 1281.4; 9 U.S.C. §§1 et seq.)

On March 14, 2024, Plaintiff filed his operative complaint (“Complaint”) against Defendants alleging four causes of action: (1) Whistleblower Retaliation in Violation of Labor Code §1102.5 [against Mattel]; (2) retaliation in violation of Whistleblower Statutes in violation of Labor Code §§6310 and 6311 [against Mattel]; (3) wrongful termination [against Mattel]; and (4) intentional infliction of emotional distress [against Defendants].

Defendants filed the instant motion on July 30, 2024. Plaintiff filed his opposition on October 23, 2024. Defendants filed their reply on October 29, 2024.

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 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 on January 28, 2022, when he signed an arbitration agreement with Mattel (“Arbitration Agreement”). (Decl. of Burton ¶10, Exh. C.) Second, the Arbitration Agreement expressly covers “all disputes or claims past, present, or future, that otherwise would be resolved in a court of law, by final and binding arbitration,” notwithstanding enumerated non-applicable exceptions, between Plaintiff and Defendants, including:

[W]ithout limitation, disputes and claims based upon or related to discrimination, harassment, retaliation, [. . .] termination of the employment relationship, tort claims, common law claims, equitable claims, claims for penalties, claims arising out of or related to any Employee Confidentiality and Inventions Agreement (ECIA), Addendum to ECIA, and any other agreement (regardless of its name or title) between Employee and Company (collectively “Employee Agreements”), and any and all claims for violation of any federal, state or other governmental law, statute, regulation, or ordinance.

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.)

Defendants proved the existence of an arbitration agreement with Plaintiff. Defendants submitted evidence that on January 28, 2022, Plaintiff executed the Arbitration Agreement with Mattel. (Decl. of Burton ¶10, Exh. C.)

Plaintiff argues in opposition that he did not personally sign the Arbitration Agreement on January 28, 2022. (Opposition, pg. 4.) Plaintiff argues at on January 28, 2022, he attended an onboarding session with other new employees at Mattel, wherein Mattel provided a company-issued laptop for employees to complete necessary onboarding documents, including the Arbitration Agreement, which Mattel alleges was a condition of employment. (See Decl. of Delgadillo ¶3.) Plaintiff argues that due to technical issues with the laptop, Plaintiff was unable to access or review the Arbitration Agreement. (Decl. of Delgadillo ¶3.) Plaintiff argues that when he reported the malfunction to HR, an HR representative by the name of Judy took control of the laptop, navigated through the documents, and completed them without Plaintiff’s involvement. (Decl. of Delgadillo ¶¶4-6.) Plaintiff argues Judy assured Plaintiff he could review the documents later, but by then the system had already marked the agreement as completed. (Decl. of Delgadillo ¶6.) Plaintiff argues he never personally signed or agreed to the Arbitration Agreement and that any electronic signature recorded on January 28, 2022, was not made by him. (See Decl. of Delgadillo ¶¶7-8.)

Once a plaintiff challenges the validity of his signature in his opposition, the defendants are then required to establish by a preponderance of the evidence that the signature was authentic. (Espejo v. Southern California Permanente Medical Group (2016) 246 Cal.App.4th 1047, 1059.)

Here, Defendants met their burden to establish by a preponderance of the evidence that Plaintiff’s signature was authentic. First, Defendants’ reply provided the declaration of Judy Sosebee (“Sosebee”), Mattel’s Senior Executive Assistant, wherein Sosebee declares:

Mr. Delgadillo’s statements in his declaration regarding my alleged involvement with clicking through his onboarding documents on January 28, 2022 are not true. As part of my job duties as Senior Executive Assistant, I am sometimes asked by Mattel’s Human Resources department to assist with onboarding new hires at Mattel’s El Segundo, California location. My role in assisting to onboard new hires is very limited, and does not include using a new hire’s work computer to apply their signature to Mattel’s employment agreements and policies. While I would try to help as best as I could to respond to an employee’s request for technical assistance to access Mattel’s employment agreement and policies, I would not and have not used a new hire’s work computer to apply their signature to any Mattel agreement. I also would not and have not used my computer, or the computer of any other person, to apply an employee’s signature to any Mattel agreement. I am aware that as of January 28, 2022, Mattel requires all employees to sign its Arbitration Agreement as a condition of employment. As such, I understand it is against Mattel policy for any individual to sign any Mattel document on behalf of a Mattel employee. Accordingly, it has never been my practice to access Mattel’s online handbooks and agreements “dashboard,” which is where Mattel’s Arbitration Agreement can be found, through another employee’s computer or using another employee’s unique credentials. I have also never accessed Mattel’s Arbitration Agreement through another employee’s computer or using another employee’s unique credentials and applied their signature.

Defendants also sufficiently authenticated Plaintiff’s electronic signature with the declaration of Corie Burton, Mattel’s Manager for HR Policy and Compliance, whose declaration explains Mattel’s procedures by which Plaintiff created a unique password known only to him to log into Mattel’s online dashboard to apply his electronic signature to the Arbitration Agreement. (Decl. of Burton ¶¶5-10.) Burton’s declaration also explains how Mattel’s systems immediately notified Plaintiff through his unique Mattel email address that he signed the Agreement and provided him with access to the Agreement, which Plaintiff does not deny in his opposition. (Decl. of Burton ¶10.) Finally, Burton’s declaration explains how Mattel stored the relevant data regarding Plaintiff’s signature on the Arbitration Agreement in its ordinary course of business, thus establishing the existence of the Arbitration Agreement in support of this Motion. (Decl. of Burton ¶10.)

Based on the foregoing, Defendants proved the existence of a valid Arbitration Agreement with Plaintiff that is enforceable by Defendants.

The Arbitration Clause states that all disputes or claims past, present, or future, that otherwise would be resolved in a court of law, by final and binding arbitration,” notwithstanding enumerated non-applicable exceptions, between Plaintiff and Defendants, including “disputes and claims based upon or related to discrimination, harassment, retaliation, [. . .] termination of the employment relationship, tort claims, [. . .] , and any other agreement (regardless of its name or title) between Employee and Company (collectively “Employee Agreements”), and any and all claims for violation of any federal, state or other governmental law, statute, regulation, or ordinance.” (Decl. of Burton ¶10, Exh. C at §1, emphasis added.) Plaintiff’s claims arise out of the termination of his employment. (See Complaint.)

Based on the foregoing, Defendants met their burden of establishing the Arbitration 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 (1) the Arbitration Agreement is a contract of adhesion and was presented without an opportunity for meaningful negotiation; (2) the onboarding process undermined any claim of mutual assent; and (3) authentication issues compound the procedural defects. (Opposition, pgs. 6-7.)

“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].)

Plaintiff’s argument in opposition that his requirement to sign the Arbitration Agreement as a condition of his employment is unavailing and is unsupported by case law. The adhesive nature of arbitration agreements in the employment context alone 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 Arbitration Agreement is a stand-alone, two-page document which Plaintiff accessed on his work computer. Defendant notified Plaintiff in clear, bold language about the presence of the Arbitration Agreement and the document is labeled in capital letters, “MUTUAL ARBITRATION AGREEMENT.” The Arbitration Agreement contains short sections with headings describing the contents of each paragraph. (Decl. of Burton, Exh. C.) Further, there is no evidence that Plaintiff was not given an opportunity to read the Arbitration Agreement. On the contrary, Defendants submitted evidence that Mattel provides employees the opportunity to review the signed arbitration agreement at any time be logging into their online dashboard. (Decl. of Burton ¶9.) Therefore, Plaintiff has failed to demonstrate any procedural unconscionability. (Hicks v. Superior Court (2004) 115 Cal.App.4th 77, 91.)

Based on the foregoing, the Court finds the Arbitration Agreement is, at 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 it limits Plaintiff to no more than three depositions, regardless of the number of relevant witnesses or the complexity of the dispute. (Opposition, pgs. 7-8.)

“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.)

Plaintiff’s argument that the discovery permitted under the Arbitration Agreement is inadequate is unavailing. Here, the Arbitration Agreement both Plaintiff and Mattel, as an initial right, with three fact witness deposition. (Decl. of Burton ¶10, Exh. C at §5.) Moreover, “the Arbitrator has the exclusive authority to grant request for additional discovery” by either party. (Decl. of Burton ¶10, Exh. C at §5.) As such, the Arbitrator, not Mattel, has discretion to grant a request for additional discovery. This discovery is adequate, reasonable, and satisfies Armendariz. (Armendariz, 24 Cal. 4th at pg. 106.)

Plaintiff identifies no other issues with the Arbitration Agreement to support his claim that it is substantively unconscionable.

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.)

The case is stayed pending arbitration. The Court sets a non-appearance case review for November 5, 2025, 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