Judge: Daniel S. Murphy, Case: 22STCV00517, Date: 2022-10-31 Tentative Ruling

Case Number: 22STCV00517    Hearing Date: October 31, 2022    Dept: 32

BACKGROUND

            On January 6, 2022, Plaintiff Hermenegildo Ahumada-Burgara filed this employment discrimination action against Defendants M.S. Aerospace Inc. and Harry Smith. Plaintiff alleges that he is a disabled Latino male over 40 years old who was terminated while on medical leave and replaced by a younger, less qualified employee. Defendant M.S. Aerospace was allegedly Plaintiff’s employer, and Defendant Smith is allegedly a manager of M.S. Aerospace.

            On August 22, 2022, Defendants filed the instant motion to compel arbitration based on an arbitration agreement Plaintiff signed in February 2009. Plaintiff denies signing the agreement.

LEGAL STANDARD

The Federal Arbitration Act (“FAA”) states that “[a] written provision in any . . . contract evidencing a transaction involving commerce to settle by arbitration a controversy thereafter arising out of such contract or transaction . . . shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.” (9 U.S.C. § 2.) The term “involving commerce” is interpreted to mean simply “affecting commerce” to give the FAA the broadest reach possible, and does not require a transaction that is actually “within the flow of interstate commerce.” (See Allied-Bruce Terminix Co. v. Dobson (1995) 513 U.S. 265, 273-74; Citizens Bank v. Alafabco, Inc. (2003) 539 U.S. 52, 56.)

California law incorporates many of the basic policy objectives contained in the Federal Arbitration Act, including a presumption in favor of arbitrability. (Engalla v. Permanente Medical Group, Inc. (1997) 15 Cal.4th 951, 971-72.) California law states that “[o]n petition of a party to an arbitration agreement alleging the existence of a written agreement to arbitrate a controversy and that a party to the agreement refuses to arbitrate that controversy, the court shall order the petitioner and the respondent to arbitrate the controversy if it determines that an agreement to arbitrate the controversy exists….” (Code Civ. Proc, § 1281.2.) “The party seeking arbitration bears the burden of proving the existence of an arbitration agreement, and the party opposing arbitration bears the burden of proving any defense, such as unconscionability.” (Pinnacle Museum Tower Assn. v. Pinnacle Market Development (US), LLC (2012) 55 Cal.4th 223, 236.)

EVIDENTIARY OBJECTIONS

Plaintiff’s Objections to Defendants’ Evidence:           

• Plaintiff’s objections are overruled.

Defendants’ Objections to Plaintiff’s Evidence:

• The following objections are sustained: 2-6, 8-11, 13.
• The following objections are overruled: 1, 7, 12.

DISCUSSION

I. Existence of Valid Agreement

            a. Defendants’ Prima Facie Proof

“The moving party ‘can meet its initial burden by attaching to the motion or petition a copy of the arbitration agreement purporting to bear the opposing party's signature.’” (Gamboa v. Northeast Community Clinic (2021) 72 Cal.App.5th 158, 165, quoting Bannister v. Marinidence Opco, LLC (2021) 64 Cal.App.5th 541, 543-44.)

Plaintiff’s handwritten signature appears on an agreement titled “BINDING ARBITRATION AGREEMENT AND WAIVER OF JURY TRIAL (EMPLOYEE),” dated February 5, 2009. (Salan Decl., Ex. A.) The arbitration agreement covers all claims “which relate in any manner whatsoever as to Employee’s employment . . . [including] all related claims against managers . . . .” (Ibid.) Employment-related disputes are defined as “claims or charges based upon federal or state statutes, including, but not limited to, the Age Discrimination in Employment Act, Title VII of the Civil Rights Act of 1964, as amended, and any other civil rights statute, the Americans with Disabilities Act, the Family and Medical Leave Act, the Fair Labor Standards Act or other wage statutes, the WARN Act, claims based upon tort or contract laws or common law or any other federal or state or local law affecting employment in any manner whatsoever.” (Ibid.)

The agreement expressly provides: “EMPLOYEE AND COMPANY UNDERSTAND THAT, ABSENT THIS AGREEMENT, THEY WOULD HAVE THE RIGHT TO SUE EACH OTHER IN COURT, TO INITIATE OR BE A PARTY TO A GROUP OR CLASS ACTION CLAIM, AND THE RIGHT TO A JURY TRIAL, BUT, BY EXECUTING THIS AGREEMENT, BOTH PARTIES GIVE UP THOSE RIGHTS AND AGREE TO HAVE ALL EMPLOYMENT DISPUTES BETWEEN THEM RESOLVED BY MANDATORY, FINAL AND BINDING ARBITRATION.” (Salan Decl., Ex. A.)

Plaintiff argues that Defendants have failed their burden of proof because the declarant, M.S. Aerospace’s HR Manager, has no personal knowledge of Plaintiff’s employment or his signing of the arbitration agreement. (Opp. 10:9-24.) Plaintiff points out that Ms. Salan has only served as the HR Manager since February 2022, thirteen years after the date of the agreement in 2009. (See Salan Decl. ¶ 2.) However, Ms. Salan has personal knowledge of M.S. Aerospace’s employment forms and policies and the process for maintaining personnel files. (Id., ¶ 3.) Ms. Salan is the custodian of the personnel records of current and former employees. (Ibid.) “Generally, the witness who attempts to lay the foundation is a custodian, but any witness with the requisite firsthand knowledge of the business's recordkeeping procedures may qualify.” (People v. Khaled (2010) 186 Cal.App.4th Supp. 1, 8.)

Therefore, Defendants have satisfied their initial burden of proof that a valid arbitration agreement exists covering the disputes at issue. (See Gamboa, supra, 72 Cal.App.5th at p. 165.)

b. Signatures

Plaintiff argues that his signature “appears to be forged.” (Opp. 9:24-25.) Plaintiff’s counsel avers that Plaintiff’s signature “appears to have been photo shopped onto the document.” (Rand Decl. ¶ 9.) However, this consists of speculation, and there is no indication that the signature has been falsified, nor any foundation for counsel’s ability to detect forgeries. (See Def.’s Objections.) Plaintiff’s assertion that he did not read or sign the agreement is insufficient to rebut Defendants’ prima facie showing. (See Marin Storage & Trucking, Inc. v. Benco Contracting & Engineering, Inc. (2001) 89 Cal.App.4th 1042, 1049 [“one who signs an instrument which on its face is a contract is deemed to assent to all its terms”].)    

Plaintiff also argues that Defendants did not sign the agreement. (Opp. 9:24-26.) However, “the fact that only [the employee] manually signed the employment application is of no moment” where it is apparent that the employer has consented to be bound. (See Cruise v. Kroger Co. (2015) 233 Cal.App.4th 390, 397-98.) The agreement here provides that both “Company and Employee agree to resolve any and all disputes or claims” in arbitration. (Salan Decl., Ex. A.) The agreement further provides: “EMPLOYEE AND COMPANY UNDERSTAND THAT, ABSENT THIS AGREEMENT, THEY WOULD HAVE THE RIGHT TO SUE EACH OTHER IN COURT.” (Ibid.) Defendants have moved to enforce the arbitration agreement, clearly indicating their intent to be bound by it.

c. Translation

Plaintiff argues that Defendants have not provided a certified translation of the agreement. (Opp. 5:17-25.) Plaintiff signed the Spanish version only. (Salan Decl., Ex. A.) However, Plaintiff does not contend that the substantive terms are different between the Spanish and English versions or argue that the English version is mistranslated. Plaintiff’s sole contention is that the Spanish version contains redactions and different signature blocks. (Opp. 6:6-16.) These distinctions do not affect the substantive terms of the agreement. The redactions are Plaintiff’s social security number and other items below the signature block. (Salan Decl., Ex. A.) Plaintiff cites no authority for the proposition that this justifies denying a motion to compel arbitration. Defendants also present a certified translation in response to Plaintiff’s argument. (See Giamela Decl., Ex. A.)

In sum, Defendants have demonstrated the existence of a valid arbitration agreement by a preponderance of the evidence. The burden shifts to Plaintiff to proffer a defense against enforcement.

II. Defendant Smith’s Standing to Enforce Arbitration

            Plaintiff argues that the agreement is between Plaintiff and M.S. Aerospace and therefore Defendant Smith cannot enforce arbitration. (Opp. 12:1-8.) However, the agreement covers “all related claims against managers,” and Smith is allegedly M.S. Aerospace’s manager. (Salan Decl., Ex. A; Compl. ¶ 1.) Additionally, Plaintiff alleges that all of the Defendants are agents of each other and committed the alleged acts in conjunction. (Compl. ¶ 12; see Ronay Family Ltd. Partnership v. Tweed (2013) 216 Cal.App.4th 830, 838 [“an agent may enforce an arbitration agreement to which its principal is a party”]; Thomas v. Westlake (2012) 204 Cal.App.4th 605, 614 [“when a plaintiff alleges a defendant acted as an agent of a party to an arbitration agreement, the defendant may enforce the agreement even though the defendant is not a party thereto”].) Therefore, Smith may enforce the agreement to arbitrate.  

III. Unconscionability

Unconscionability has both a procedural and a substantive element. (Aron v. U-Haul Co. of California (2006) 143 Cal.App.4th 796, 808.) Both elements must be present for a court to invalidate a contract or clause. (Ibid.) However, the two elements need not be present in the same degree; courts use a sliding scale approach in assessing the two elements. (Carbajal v. CWPSC, Inc. (2016) 245 Cal.App.4th 227, 242.)  

            a. Procedural Unconscionability

            Procedural unconscionability “focuses on two factors: ‘oppression’ and ‘surprise.’ ‘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 supposedly agreed-upon terms of the bargain are hidden in the prolix printed form drafted by the party seeking to enforce the disputed terms.” (Zullo v. Superior Court (2011) 197 Cal.App.4th 477, 484, internal citations and quotations omitted.)   

            Plaintiff argues that the agreement is procedurally unconscionable because it was a condition of employment. (Opp. 13:7-12.) Courts have recognized that adhesion contracts in the employment context always contain some degree of procedural unconscionability. (Serpa v. California Surety Investigations, Inc. (2013) 215 Cal.App.4th 695, 704.) However, the mere fact that an arbitration agreement is a condition of employment is not dispositive. (Ibid.) Absent evidence of oppression or surprise, the degree of procedural unconscionability will be low. (Ibid.)

            Plaintiff also argues that the agreement fails to attach a copy of the rules of arbitration. (Opp. 13:13-21.) However, the failure to attach rules is not dispositive unless the substance of the rules themselves are at issue. (See Baltazar v. Forever 21 (2016) 62 Cal.4th 1237, 1246.) Here, the rules of arbitration are outlined in the agreement itself (see Salan Decl., Ex. A), and Plaintiff does not challenge the substance of the rules. Therefore, there is a minimal degree of procedural unconscionability.

b. Substantive Unconscionability

            Substantive unconscionability focuses on the actual terms of the agreement and evaluates whether they create overly harsh or one-sided results as to shock the conscience. (Suh v. Superior Court (2010) 181 Cal.App.4th 1504, 1515.) With regards to a mandatory employment arbitration agreement, the Supreme Court has imposed the following requirements: (1) the agreement must provide for a neutral arbitrator; (2) the agreement must provide for more than minimal discovery; (3) the arbitration decision must be written and disclose the essential findings and conclusions upon which an award is based; (4) the agreement must provide for all of the types of relief that would otherwise be available in court; and (5) the agreement must not require employees to pay the costs of arbitration. (Armendariz v. Foundation Health Psychare Services, Inc. (2000) 24 Cal.4th 83, 102.)

            Plaintiff argues that the agreement fails to comply with the Armendariz factors because it merely states that “[a]rbitrations pursuant to this Agreement shall be conducted in accordance with the laws of the State of California, and, specifically the Code of Civil Procedure.” (Opp. 14:18-28; Salan Decl., Ex. A.) However, Plaintiff cites no authority for the proposition that each Armendariz factor must be individually specified within the agreement. By expressly adopting California law, the agreement incorporates Armendariz, which is a California Supreme Court decision. Plaintiff does not point to any terms in the agreement that run contrary to Armendariz.

            Lastly, Plaintiff argues that a waiver of his statutory rights is unlawful under public policy. (Opp. 15:2-7.) However, an employee does not waive his statutory rights merely by agreeing to arbitration. “[A] party, in agreeing to arbitrate a statutory claim, does not forgo the substantive rights afforded by the statute [but] only submits to their resolution in an arbitral . . . forum.” (Armendariz, supra, 24 Cal.4th at p. 99, quoting Mitsubishi Motors v. Soler Chrysler-Plymouth (1985) 473 U.S. 614, 628.) The agreement in this case merely reflects the parties’ intent to submit their dispute to an arbitral forum. The agreement does not waive any of Plaintiff’s statutory rights and is not void for violating public policy. Therefore, there is no substantive unconscionability.

IV. Labor Code section 432.6

Plaintiff also argues that Labor Code section 432.6 makes the arbitration agreement illegal. Section 432.6 states: “A person shall not, as a condition of employment, continued employment, or the receipt of any employment-related benefit, require any applicant for employment or any employee to waive any right, forum, or procedure for a violation of any provision of the California Fair Employment and Housing Act or this code . . . .” (Lab. Code, § 432.6(a).)

However, “[n]othing in [Section 432.6] is intended to invalidate a written arbitration agreement that is otherwise enforceable under the Federal Arbitration Act.” (Lab. Code, § 432.6(f).) The FAA applies to this case because M.S. Aerospace conducts interstate business. (See Salan Decl. ¶ 6; Citizens Bank, supra, 539 U.S. at p. 56.) Additionally, Section 432.6 applies only to agreements entered on or after January 2020. (Id., subd. (h).) The agreement in this case was executed in 2009. (Salan Decl., Ex. A.)

CONCLUSION

            Defendants’ motion to compel arbitration is GRANTED. The case is stayed in its entirety.