Judge: Daniel S. Murphy, Case: 23STCV19669, Date: 2024-02-16 Tentative Ruling

Case Number: 23STCV19669    Hearing Date: February 16, 2024    Dept: 32

BACKGROUND

            On August 16, 2023, Plaintiff Angelica Castaneda filed this action against Defendants 5648 East Gotham Street, LLC dba Briarcrest Nursing Center, Win Win Enterprises, LLC, Ira Smedra, and Jacob Winter. The complaint asserts claims arising from discrimination, retaliation, and wage violations.

            On November 3, 2023, Defendants filed the instant motion to compel arbitration. Plaintiff filed her opposition on February 2, 2024. Defendants filed their reply on February 8, 2024.

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.)

“On 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:

• Declaration of Angelica Castaneda
• The following objections are sustained: 1, 3-7.
• The following objections are overruled: 2.
• Declaration of Shelly McMillan
• Defendants’ objection is overruled.

DISCUSSION

I. Proving an Agreement to Arbitrate

“As to the existence of an agreement, [the moving party bears] the ultimate burden of proof, but the court [is] obliged to resolve the dispute using a three-step burden-shifting process.” (Iyere v. Wise Auto Group (2023) 87 Cal.App.5th 747, 755.)  

a. Defendants’ Initial Burden

“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.) “At this step, a movant need not ‘follow the normal procedures of document authentication’ and need only ‘allege the existence of an agreement and support the allegation.’” (Iyere, supra, 87 Cal.App.5th at p. 755.) 

Here, Defendants present two acknowledgments purportedly signed by Plaintiff on October 22, 2015 and May 14, 2021. (Powell Decl., Ex. A, B.) The acknowledgments contain a hand signature directly below the following provision: “I KNOWINGLY AND VOLUNTARILY AGREE TO SUBMIT AND SETTLE ANY DISPUTE, CONTROVERSY OR CLAIM ARISING OUT OF OR RELATING TO MY EMPLOYMENT RELATIONSHIP WITH BRIARCREST NURSING CENTER TO ARBITRATION AS DESCRIBED IN THE ‘ARBITRATION AGREEMENT’ SECTION OF THIS HANDBOOK.” (Ibid.) The employee handbook contains an arbitration provision covering “any dispute including without limitation, contract claims, tort claims, breach of duty claims, wrongful termination claims, wage claims, claims of discrimination or harassment (whether in the hiring process or after employment) and all other common law and statutory claims, including all claims based upon federal or state civil rights laws.” (Id., Ex. C.) This is sufficient to meet Defendants’ initial burden.

b. Plaintiff’s Burden to Raise a Factual Dispute

“If the movant bears its initial burden, the burden shifts to the party opposing arbitration to identify a factual dispute as to the agreement's existence—in this instance, by disputing the authenticity of their signatures. To bear this burden, the arbitration opponent must offer admissible evidence creating a factual dispute as to the authenticity of their signatures. The opponent need not prove that his or her purported signature is not authentic, but must submit sufficient evidence to create a factual dispute and shift the burden back to the arbitration proponent, who retains the ultimate burden of proving, by a preponderance of the evidence, the authenticity of the signature.” (Iyere, supra, 87 Cal.App.5th at p. 755.)

The plaintiffs in Iyere failed to meet their opposing burden because “no plaintiff declared that he had not signed the agreement, or that his physical signature was forged or inauthentic.” (Iyere, supra, 87 Cal.App.5th at p. 756.) Instead, the plaintiffs actually admitted that they signed a stack of documents, though they did not “recall” specifically signing an arbitration agreement. (Ibid.) Of course, mere failure to recall or read the arbitration agreement was not a sufficient excuse to escape its enforcement. (Id. at pp. 758-59.)

However, Plaintiff here specifically denies signing the arbitration agreement. (Castaneda Decl. ¶¶ 4-6.) Plaintiff does not merely fail to “recall” signing the agreement; she unequivocally declares that she in fact did not sign it and attests that the signature is not hers. Under Iyere, this is sufficient to raise a factual dispute. Plaintiff need not specifically prove that her signature was forged. Her denial is admissible evidence against the authenticity of the signature. Therefore, the burden returns to Defendants to ultimately prove, by a preponderance of the evidence, that Plaintiff signed the arbitration agreement.

c. Defendants’ Ultimate Burden

“All that is required to authenticate a writing is that there be ‘evidence sufficient to sustain a finding that it is the writing that the proponent of the evidence claims it is.’” (Landale-Cameron Court, Inc. v. Ahonen (2007) 155 Cal.App.4th 1401, 1409; Evid. Code, § 1400.) “A qualified witness need not be the custodian, the person who created the record, or one with personal knowledge in order for a business record to be admissible under the hearsay exception.” (Unifund CCR, LLC v. Dear (2015) 243 Cal.App.4th Supp. 1, 8.) A “witness need not have been present at every transaction to establish the business records exception; he or she need only be familiar with the procedures followed.” (Jazayeri v. Mao (2009) 174 Cal.App.4th 301, 325.)

Here, Bradley Powell is the administrator of Defendant 5648 East Gotham Street, LLC who also serves as its custodian of records. (Powell Decl. ¶¶ 2-3.) Mr. Powell is responsible for the maintenance of personnel files, including arbitration agreements. (Id., ¶ 3.) In that capacity, he is personally aware that the records in question were prepared by Defendant and kept in the ordinary course of business. (Ibid.) Mr. Powell avers that Exhibit A is a true and correct copy of Plaintiff’s acknowledgment. (Id., ¶ 4.) This is sufficient to authenticate the document.

Additionally, Defendants present further employment documents signed by Plaintiff with the same signature. (Powell Reply Decl., Ex. E.) Plaintiff’s signature on the arbitration acknowledgment also matches the signature she provided in her declaration submitted for this motion. Therefore, the Court finds that Defendants have satisfied their ultimate burden of proving an arbitration agreement by a preponderance of the evidence.  

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 she had no opportunity to negotiate its terms. 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.) 

Plaintiff also argues that she could not have known what entity she was entering the agreement with because “Briarcrest Nursing Center” is a fictitious business name which was not officially registered until shortly before Defendants filed this motion. However, there is no dispute that Briarcrest Nursing Center is the same entity as 5648 East Gotham Street, LLC, and Plaintiff avers in her declaration that she was employed by Briarcrest. (See Castaneda Decl. ¶ 2.) Plaintiff knows that Briarcrest was her employer, and the agreement accurately identifies Briarcrest. Therefore, Plaintiff knew that she was agreeing with her employer to arbitrate all claims arising from her employment. The agreement is not surprising.

Plaintiff argues that the agreement only explains the benefits of arbitration rather than the negatives. However, Plaintiff cites no authority for the proposition that an arbitration agreement must equally list the pros and cons of arbitration. The acknowledgment accurately explains that Plaintiff was agreeing to arbitration as set forth in the handbook and was waiving her right to a jury trial. Therefore, the essential terms of the agreement were set forth. The Court finds 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.)

Plaintiff argues that the agreement is substantively unconscionable because it only requires employees, not the employer, to arbitrate covered claims. Plaintiff points to the sentence in the Handbook that reads: “Such arbitration shall include any Claims you have against the Facility or any of its officers, managers, employees, supervisors, agents or owners.” (Powell Decl., Ex. C.) Plaintiff argues that there is no reciprocal provision applying to Briarcrest or its officers, managers, etc.

However, Plaintiff’s narrow focus on one sentence is misplaced because the arbitration provision as a whole clearly applies to both parties. First, the provision states that “if any disputes between employer and employee cannot be resolved, then we will require that such disputes be resolved in binding arbitration.” (Powell Decl., Ex. C.) Next, the definition of a covered “claim” includes “any dispute including without limitation . . . .” (Ibid.) Lastly, the provision states that “All Claims, at the request of either the employee or the Facility, should be submitted and settled by binding arbitration.” (Ibid.) The agreement makes clear that any and all claims related to Plaintiff’s employment must be arbitrated. This means claims brought by either Plaintiff or Defendants. The agreement further authorizes either Plaintiff or Defendants to demand arbitration. Therefore, Defendants are equally bound by the arbitration agreement. The Court finds no substantive unconscionability.    

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CONCLUSION

            Defendants’ motion to compel arbitration is GRANTED. The case is stayed in its entirety pending the outcome of arbitration.