Judge: Daniel S. Murphy, Case: 22STCV16578, Date: 2023-03-29 Tentative Ruling

Case Number: 22STCV16578    Hearing Date: March 29, 2023    Dept: 32

BACKGROUND

            On May 29, 2022, Plaintiff Margarita Cifuentes initiated this action against Defendant 99 Cents Only Stores, LLC, asserting causes of action based on employment discrimination. On March 3, 2023, Defendant filed the instant motion to compel arbitration based on an agreement signed by Plaintiff at the outset of her employment.

LEGAL STANDARD

The California Arbitration Act (CAA) 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.)

DISCUSSION

I. Existence of Valid Agreement

            On December 28, 2005, Plaintiff signed an agreement titled “Arbitration of Disputes” covering all disputes “that may arise from or in connection with Employee’s employment with the Company or the termination of Employee’s employment with the Company . . . .” (Delgado Decl., Ex. 1.) Under the agreement, “the Company and the undersigned Employee are waiving the right to a jury trial for all employment-related disputes.” (Ibid.) Plaintiff’s signature appears under a bold and capitalized acknowledgement stating that Plaintiff carefully read the agreement, understood its terms, and had the opportunity to consult counsel prior to signing. (Ibid.) Plaintiff acknowledges that she signed the agreement and does not dispute that the terms of the agreement cover the claims at issue in this case.

Plaintiff argues that the agreement is unenforceable because it does not specifically name the parties, instead referring to “Company” and “Employee.” Plaintiff relies on Flores v. Nature's Best Distribution, LLC (2016) 7 Cal.App.5th 1, 9, which involved an arbitration agreement that similarly referenced the company and employee without defining either term. However, this was not the basis of the court’s holding that the agreement was unenforceable, because the issue was “not specifically raised by the parties.” (Ibid.) Furthermore, in Flores, “[t]he signature block for the employer [was] not filled in, dated, or signed under the heading “‘Authorized Employer Signature.’” (Ibid.)

By contrast, the agreement here was signed by Christopher Evans on behalf of the company. (Delgado Decl., Ex. 1.) Plaintiff acknowledges that Christopher Evans was her manager. (Cifuentes Decl. ¶ 3.) Plaintiff does not dispute that the agreement was retrieved from Defendant’s personnel files. (See Delgado Decl. ¶¶ 3-4.) Plaintiff signed the arbitration agreement as part of a series of documents she signed when onboarding with Defendant. (Berry Decl., Ex. 1-4.) Flores does not stand for the proposition that the parties to a written contract must be specifically named in the text, nor does Plaintiff cite any other authority for that proposition. The law is in fact the opposite, requiring only that it be “possible to identify” the parties to a contract. (See Civ. Code, § 1558.) The contract here adequately identifies the parties as Plaintiff and Defendant, and it is at the very least “possible to identify” the parties based on the surrounding facts.   

In sum, the Court finds by a preponderance of the evidence that the parties agreed to arbitrate the claims at issue. The burden thus shifts to Plaintiff to articulate a defense against enforcement.

II. 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 and was presented in English even though Plaintiff is only fluent in Spanish.

However, an adhesion contract, by itself, presents only a minimal degree of procedural unconscionability. (Serpa v. California Surety Investigations, Inc. (2013) 215 Cal.App.4th 695, 704.) “[T]he compulsory nature of a predispute arbitration agreement does not render the agreement unenforceable on grounds of coercion or for lack of voluntariness.” (Lagatree v. Luce, Forward, Hamilton & Scripps (1999) 74 Cal.App.4th 1105, 1129.)

Furthermore, “one who signs an instrument which on its face is a contract is deemed to assent to all its terms.” (Marin Storage & Trucking, Inc. v. Benco Contracting & Engineering, Inc. (2001) 89 Cal.App.4th 1042, 1049.) “No law requires that parties dealing at arm's length have a duty to explain to each other the terms of a written contract, particularly where, as here, the language of the contract expressly and plainly provides for the arbitration of disputes arising out of the contractual relationship.” (Brookwood v. Bank of America (1996) 45 Cal.App.4th 1667, 1674.) “Reasonable diligence requires the reading of a contract before signing it. A party cannot use his own lack of diligence to avoid an arbitration agreement.” (Ibid.) “Generally, a party may not avoid enforcement of an arbitration provision because the party has limited proficiency in the English language.” (Caballero v. Premier Care Simi Valley LLC (2021) 69 Cal.App.5th 512, 518.)         

In sum, 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.) The agreement in this case satisfies the Armendariz factors. (See Delgado Decl., Ex. 1.) Plaintiff does not challenge this aspect of the agreement.

Instead, Plaintiff argues that the agreement only binds Plaintiff to arbitration while allowing Defendant to sue in court. The agreement does no such thing. It expressly states that both “the Company and the undersigned Employee are waiving the right to a jury trial for all employment-related disputes.” (Delgado Decl., Ex. 1.) Therefore, the agreement applies equally to both parties. Also, the fact that Defendant is moving to compel arbitration clearly indicates its intent to be bound by the agreement.

Plaintiff also argues that “[t]he document left an employee like Plaintiff completely in the dark as to where, how, or with whom she could invoke this purported right to arbitrate.” (Opp. 4:27-28.) This ignores the entire third paragraph of the agreement, which sets forth the terms of the arbitration. (See Delgado Decl., Ex. 1.) An arbitration agreement does not need to provide instructions for initiating arbitration on its face; it is sufficient to incorporate the rules of the arbitration provider. (See Alvarez v. Altamed Health Services Corp. (2021) 60 Cal.App.5th 572, 590.)  

In sum, the Court finds no substantive unconscionability.

CONCLUSION

            Defendant’s motion to compel arbitration is GRANTED. The Court hereby stays the case in its entirety.