Judge: Daniel S. Murphy, Case: 22STCV27167, Date: 2023-02-06 Tentative Ruling

Case Number: 22STCV27167    Hearing Date: February 6, 2023    Dept: 32

BACKGROUND

            On August 19, 2022, Plaintiff Victor Alfonso Salas Viurquiz filed this action against Defendants Citistaff Solutions, Inc. and Golden West Food Group, Inc., alleging (1) discrimination, (2) failure to accommodate, (3) failure to engage, (4) retaliation, (5) violation of CFRA, (6) violation of Family Rights Act, and (7) wrongful termination.

            On November 23, 2022, Defendants filed the instant motion to compel arbitration based on agreements that Plaintiff signed in 2017 and 2020.

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.) Moreover, parties may agree to apply the FAA notwithstanding any effect on interstate commerce. (Victrola 89, LLC v. Jaman Properties 8 LLC (2020) 46 Cal.App.5th 337, 355.)

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.) 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

            According to Defendants, Plaintiff was onboarded twice using two different names and social security numbers, resulting in two signed agreements. The first agreement, written in English, was signed on June 20, 2017 by Victor Salas. (Def.’s Ex. 1.) The second agreement, written in Spanish, was signed by Victor Viurquiz on February 19, 2020. (Def.’s Ex. 2.) Although Plaintiff takes issue with Defendants presenting two agreements, Plaintiff does not dispute that he onboarded twice under two names. Plaintiff does not dispute his handwritten signatures on both agreements. Plaintiff does not dispute the certified translation of the 2020 agreement. (See Def.’s Ex. 3.)

            Under both agreements, the parties agreed to arbitrate all claims between them arising from the employment relationship or termination thereof. (Def.’s Ex. 1, 3.) There is no dispute that all of Plaintiff’s claims arise from his employment relationship or termination thereof. Therefore, Defendants have established by a preponderance of the evidence that Plaintiff 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 agreements were adhesive. 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 complains that the 2017 agreement was not provided in Spanish. However, Plaintiff does not dispute his signature on the agreement. “[O]ne 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.) “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.” (Brookwood v. Bank of America (1996) 45 Cal.App.4th 1667, 1674.) This is why in Randas v. YMCA of Metropolitan Los Angeles (1993) 17 Cal.App.4th 158, 163, the plaintiff was charged with signing an English waiver and release despite only being literate in Greek. Because Plaintiff signed the 2017 agreement, he is deemed to assent to its terms even if he did not actually read it. In any case, Plaintiff also signed the 2020 agreement, which was in Spanish.

Plaintiff then takes issue with the 2020 agreement for failing to provide the arbitration rules in Spanish, because the agreement directs Plaintiff to the arbitration providers’ websites, which are in English. Plaintiff also complains that the rules were not provided to him at all. However, the failure to provide the rules of arbitration is not dispositive unless the substance of the rules themselves are at issue. (See Baltazar v. Forever 21 (2016) 62 Cal.4th 1237, 1246.) Plaintiff does not challenge the substance of the arbitration providers’ rules, nor cite any authority finding JDR, IVAMS, or AAA rules to be unconscionable. Again, Plaintiff signed the agreements, and there is no indication that he expressed any concern about the substance of the rules or his inability to read them.

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 agreements are substantively unconscionable because the right to bring a PAGA action cannot be waived. The agreements provide that the employee agrees to waive their right to bring “any wage and hour, discrimination, Labor Code violation and other types of claims as a class action representative or as a class representative in an action against the Company.” (Def.’s Ex. 2, p. 2; Ex. 3, p. 2.) To the extent that the clause is unconscionable as a waiver of class action claims, it may be severed and the rest of the agreement enforced. (See Viking River Cruises, Inc. v. Moriana (2022) 142 S.Ct. 1906, 1924-25; Armendariz, supra, 24 Cal.4th at p. 124.) Plaintiff has not brought any PAGA or representative claims, and this clause does not affect Plaintiff’s agreement to arbitrate the claims in his complaint.

            Plaintiff next contends that the agreements fail to provide for the same relief as would be available in court because they do not specifically outline the remedies available. However, nothing in the agreements limits the relief available to Plaintiff.

            Plaintiff also argues that in arbitration, he cannot subpoena nonparty witnesses for deposition. There is no indication that the arbitration rules here actually contain such a limit. In any case, the requirement is to provide for “minimal discovery,” not to replicate all discovery methods available in court. The very purpose of arbitration is to serve as a streamlined alternative to litigation. Plaintiff’s signatures on the agreements evidences his consent to this alternative process.

            Plaintiff next contends that the “repeat player” effect gives Defendants an upper hand in the arbitration. “While our Supreme Court has taken notice of the ‘repeat player effect,’ the court has never declared this factor renders the arbitration agreement unconscionable per se.” (Mercuro v. Superior Court (2002) 96 Cal.App.4th 167, 178.) Otherwise, practically every arbitration agreement would be unconscionable, because employers almost always have more familiarity with the arbitration system than individual employees. The arbitration rules provide adequate safeguards to ensure neutrality.

            Plaintiff argues it is unconscionable for the agreement to provide that “each party will bear their own attorney’s fees, legal or preparation costs, and other expenses associated with the arbitration.” (Def.’s Ex. 1, p. 4.) FEHA provides for attorney’s fees to the prevailing party, with an additional burden on a prevailing defendant to show frivolousness. (Gov. Code, § 12965(c)(6).) “[A]n arbitration agreement may not limit statutorily imposed remedies such as punitive damages and attorney fees . . . .” (Armendariz, supra, 24 Cal.4th at p. 103.) To the extent the attorney fees clause is read as a limitation of Plaintiff’s remedies under FEHA, it may be severed and the remainder of the agreement enforced. (Id. at p. 124.)

            The agreements do not otherwise require Plaintiff to pay costs unique to arbitration. The agreements provide that Defendants will pay “the arbitrator's fees and the expenses of the arbitration hearing, that is, the time for the hearing, the pre-Arbitration motion hearing or the discovery dispute, review, investigation of the Arbitration summary, post-hearing evidence review, award preparation, etc.” (Def.’s Ex. 1, p. 4; Ex. 3, p. 3.)

            Lastly, Plaintiff argues that the arbitration location (Costa Mesa or Santa Ana) is unduly burdensome for Plaintiff, who resides in Los Angeles. There is no evidence that traveling from Los Angeles to Costa Mesa or Santa Ana would be unduly burdensome for Plaintiff.

            In conclusion, the arbitration agreements do not exhibit unconscionability to a degree that would render them unenforceable. The class action wavier and attorney fee provisions may be severed as they do not relate to the central purpose of the contract, and the contract is not permeated with unconscionability.

CONCLUSION

            Defendants’ motion to compel arbitration is GRANTED. The class action waiver and attorneys’ fees provisions are stricken. The Court hereby stays the case in its entirety.