Judge: Daniel S. Murphy, Case: 22STCV29569, Date: 2022-12-16 Tentative Ruling

Case Number: 22STCV29569    Hearing Date: December 16, 2022    Dept: 32

BACKGROUND

            On September 12, 2022, Plaintiff Anielka Luvianka Lopez Telleria filed this action against Defendant DTF Prep LLC, alleging discrimination, wrongful termination, failure to accommodate, and retaliation. Plaintiff was working for Din Tai Fung restaurant (DTF) as a cook when she became pregnant. Plaintiff alleges that instead of accommodating her, Defendant terminated her employment. Plaintiff worked for Defendant from December 2021 to August 2022.

On November 9, 2022, Defendant filed the instant motion to compel arbitration based on an arbitration agreement that Plaintiff electronically signed on February 17, 2022.

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.) 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

            Both parties’ objections are overruled.

DISCUSSION

I. Evidence of Valid Arbitration Agreement

“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.) An electronic signature has the same legal effect as a handwritten signature. (Civ. Code, § 1633.7(a).) An “electronic signature is attributable to a person if it was the act of the 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.” (Id., § 1633.9(a).) “[T]he burden of authenticating an electronic signature is not great.” (Ruiz v. Moss Bros. Auto Group, Inc. (2014) 232 Cal.App.4th 836, 844.) “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.)

Defendant presents an agreement titled “Notice to Employees About Our Mutual Arbitration Policy,” which covers “all disputes, unless otherwise prohibited by law, relating to or arising out of an employee's employment with Din Tai Fung or the termination of that employment.” (Chung Decl., Ex. A, p. 1.) It is undisputed that Plaintiff’s claims fall within the terms of this agreement.

Plaintiff electronically signed the agreement on February 17, 2022. (Chung Decl., Ex. A, p. 3.) Defendant’s Director of Human Resources, Vicky Chung, explains that all employees were notified of the arbitration agreement at the beginning of 2022 and given the option to sign it. (Id., ¶ 7.) Ms. Chung avers that the arbitration documents are accessed using an online portal secured by a multi-factor validation process. (Id., ¶ 9.) Employees, including Plaintiff, must log in to the system using a username and password, which Plaintiff was required to change before moving forward. (Ibid.) Plaintiff also had to enter the last four digits of her social security number, which ensured that no one besides Plaintiff could access her account and related documents. (Id., ¶¶ 10-11.)

Plaintiff denies signing the agreement and claims that the signature is not hers. (Telleria Decl. ¶¶ 3, 7, 10.) However, Plaintiff’s only evidence of forgery is her declaration stating, “I believe based on the above that it was put there by Defendant without my knowledge after I told them they could sign the declination of insurance coverage.” (Id., ¶ 10.) Plaintiff’s speculation is insufficient to overcome Defendant’s evidentiary showing. Plaintiff does not dispute the security procedures that ensured she was the only one who could have accessed and signed the arbitration agreement. The Court finds that Defendant has sufficiently proven Plaintiff’s signature.

Plaintiff also argues that there was no meeting of the minds because she can only read and speak Spanish, while the agreement is in English. (Opp. 3:22-4:2; Telleria Decl. ¶ 4.) However, “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.) “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.) As discussed above, the evidence proves that Plaintiff signed the agreement. Plaintiff’s failure to read the agreement or notify Defendant of her inability to read it does not allow her to avoid the binding effect of the contract.

In Randas v. YMCA of Metropolitan Los Angeles (1993) 17 Cal.App.4th 158, 163, the plaintiff was charged with signing a waiver and release despite only being literate in Greek. The court held that “in the absence of fraud, overreaching or excusable neglect, that one who signs an instrument may not avoid the impact of its terms on the ground that he failed to read the instrument before signing it.” (Ibid.) Similarly, even if Plaintiff is only fluent in Spanish, there is no evidence of fraud or bad faith. As discussed above, Plaintiff’s own speculation regarding forgery is insufficient.

In sum, the Court finds that Defendant has proven the existence of a valid arbitration agreement by a preponderance of the evidence. (See Engalla, supra, 15 Cal.4th 951 at p. 972.) The burden thus shifts to Plaintiff to articulate a defense against enforcement. (Pinnacle, supra, 55 Cal.4th at p. 236.)

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. (Opp. 5:14-20.) However, the agreement plainly states that “Din Tai Fung has adopted and implemented this voluntary Mutual Arbitration Policy (‘MAP’). It is not a condition of employment.” (Chung Decl., Ex. A, p. 1, emphasis added.) In any case, the mere fact that a contract is adhesive, absent evidence of oppression or surprise, only constitutes a minimal degree of procedural unconscionability. (Serpa v. California Surety Investigations, Inc. (2013) 215 Cal.App.4th 695, 704.)

The Court finds that there is no 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.)

Plaintiff argues that “[e]nforcing the Arbitration Agreement would prejudice [her] claims, as any potential award she receives will likely be reduced simply because she was forced to sign a form advantageous to Defendant.” (Opp. 5:26-28.) Plaintiff cites no authority for the proposition that speculation on the potential award in arbitration justifies nonenforcement of a signed contract. The agreement expressly provides that “[a]ny substantive rights that you would have had in court if the dispute were decided there rather than Arbitration remain.” (Chung Decl., Ex. A, p. 1.) The agreement further states, “[n]o remedies that otherwise would be available to you individually or to Din Tai Fung in a court of law, however, will be forfeited by virtue of this agreement to use and be bound by the MAP.” (Ibid.) The agreement applies to Defendant equally and is not one-sided.

The Court finds that there is no substantive unconscionability. Without either procedural or substantive unconscionability, the agreement remains enforceable. (See Aron, supra, 143 Cal.App.4th at p. 808 [both procedural and substantive unconscionability must be present to invalidate an agreement].)

CONCLUSION

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