Judge: Daniel S. Murphy, Case: 23STCV29780, Date: 2024-04-10 Tentative Ruling

Case Number: 23STCV29780    Hearing Date: April 10, 2024    Dept: 32

BACKGROUND

            On December 6, 2023, Plaintiff Edward Casillas filed this employment discrimination action against Defendants Liberty Life National Insurance Company, Globe Life and Accident Insurance Company, Globe Life Liberty National Division, and The Green Agencies. Plaintiff has since passed away, and his mother (Terry Casillas) currently pursues the action as Plaintiff’s successor-in-interest.  

            On January 8, 2024, Defendant Liberty Life National Insurance Company filed the instant motion to compel arbitration. Plaintiff filed his opposition on March 27, 2024. Defendant filed its reply on April 3, 2024.

LEGAL STANDARD

“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 are 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. Defendant’s 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, Plaintiff signed an Independent Agent’s Contract with Defendant on August 22, 2023. (Gilliam Decl., Ex. A.) The contract contains an arbitration provision covering “[a]ll disputes, claims, questions and controversies of any kind or nature arising out of or relating to this Contract,” including “any alleged violation of any state or federal statute, regulation, law or order of any kind” and “claims for misclassification, wrongful termination, discrimination, wage-and-hour violations, or any other claim based on an alleged employment relationship.” (Ibid.) The claims asserted in the complaint clearly fall under this broad coverage. Plaintiff’s signature appears at the bottom of the contract. Therefore, Defendant has satisfied its initial burden of proving that Plaintiff agreed to arbitrate the claims at issue.  

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.)

 Plaintiff argues that Defendant has not properly authenticated his signature. However, Defendant’s initial burden does not require authentication of the document. (Iyere, supra, 87 Cal.App.5th at p. 755.) “[A] petitioner is not required to authenticate an opposing party's signature on an arbitration agreement as a preliminary matter in moving for arbitration or in the event the authenticity of the signature is not challenged.” (Ruiz v. Moss Bros. Auto Group, Inc. (2014) 232 Cal.App.4th 836, 846, emphasis in original.) Plaintiff does not deny that the signature is his, nor does he deny signing the agreement. In fact, Plaintiff includes no evidence at all as part of his opposition. Therefore, Plaintiff has failed to meet his burden to “offer admissible evidence creating a factual dispute as to the authenticity of [his] signature[].” (See Iyere, supra, 87 Cal.App.5th at p. 755.)

Because the authenticity of the agreement has not been challenged, the Court finds that an agreement to arbitrate exists regardless of whether Defendant has authenticated the document. (See Molecular Analytical Systems v. Ciphergen Biosystems, Inc. (2010) 186 Cal.App.4th 696, 710 [“as a preliminary matter the court is only required to make a finding of the agreement's existence, not an evidentiary determination of its validity”]; Condee v. Longwood Management Corp. (2001) 88 Cal.App.4th 215, 218 [“although no evidence was ever introduced to verify the signature's authenticity, it was never challenged”].)  

            c. Defendant’s Ultimate Burden

Even if Plaintiff raised a factual dispute, Defendant satisfies its ultimate burden because it has presented sufficient evidence to authenticate the agreement. “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.)

In this case, Defendant relies on the declaration of its Senior Vice President of Sales, who has experience supervising the onboarding process and is familiar with the records maintained by Defendant relating to agent applications and contracts. (Gilliam Decl. ¶ 1.) Mr. Gilliam personally reviewed the file maintained by Defendant in the usual course of business pertaining to Plaintiff. (Ibid.) This sufficiently lays a foundation for Mr. Gilliam’s knowledge even if he did not personally observe Plaintiff signing the agreement. Mr. Gilliam avers that Exhibit A is a true and correct copy of the Agent Contract between Plaintiff and Defendant. (Id., ¶ 4.) Plaintiff does not dispute this. Therefore, Defendant has satisfied its ultimate burden of proving an agreement to arbitrate by a preponderance of the evidence.  

II. Successor-in-Interest

            “A person who acts as a decedent's successor in interest, ‘step[s] into [the decedent's] position,’ as to a particular action.” (Exarhos v. Exarhos (2008) 159 Cal.App.4th 898, 905.) “Thus, where [a decedent's successor in interest] asserts a claim on behalf of the estate, he or she must also abide by the terms of any valid agreement, including an arbitration agreement, entered into by the decedent.” (Thomas v. Westlake (2012) 204 Cal.App.4th 605, 613, fn. 5.) Therefore, Plaintiff’s mother, acting as his successor-in-interest, is equally bound by the arbitration agreement.

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 omitted.)

Plaintiff argues that the agreement is procedurally unconscionable because he had to sign it as a condition of employment and had no opportunity to negotiate its terms or opt out of the arbitration provision. First, Plaintiff has no evidence to support any of these assertions, thus failing to satisfy his burden of proving unconscionability. (See Pinnacle, supra, 55 Cal.4th at p. 236.) Moreover, 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 next argues that the arbitration provision is buried in an eight-page employment contract with many terms unrelated to arbitration. The Court disagrees. The arbitration provision is not “buried,” but is instead clearly labeled on the sixth page of the contract. At eight pages long, the contract is hardly dense or difficult to read, and includes a standard number of provisions. The agreement is not “visually impenetrable,” nor does it “challenge the limits of legibility.” (See OTO, L.L.C. v. Kho (2019) 8 Cal.5th 111, 128.) Ultimately, Plaintiff signed the agreement and is responsible for reading it. (See 24 Hour Fitness, Inc. v. Superior Ct. (1998) 66 Cal.App.4th 1199, 1215 [“A party cannot use his own lack of diligence to avoid an arbitration agreement”].)  

Lastly, Plaintiff argues that the agreement fails to attach the arbitration rules. However, the arbitration provision clearly states that the arbitration is “to be administered by the American Arbitration Association (‘AAA’) in accordance with its Commercial Rules then in effect.” (Gilliam Decl., Ex. A.) “[T]he failure to attach the [arbitration] rules, standing alone, is insufficient grounds to support a finding of procedural unconscionability.” (Peng v. First Republic Bank (2013) 219 Cal.App.4th 1462, 1472.) The failure to attach the rules to the agreement does not make the agreement unconscionable unless the rules themselves are arguably unconscionable or result in surprise. (See Baltazar v. Forever 21 (2016) 62 Cal.4th 1237, 1246; Lane v. Francis Capital Mgmt. LLC (2014) 224 Cal.App.4th 676, 691-92.) Plaintiff does not contend that AAA rules are unconscionable or surprising, nor does he contend that he is unable to access the rules.  

In sum, the Court finds 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.) An agreement “lacks basic fairness and mutuality if it requires one contracting party, but not the other, to arbitrate all claims arising out of the same transaction or occurrence or series of transactions or occurrences.” (Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83, 120.)

Plaintiff argues that the agreement lacks mutuality because it exempts Defendant from arbitrating the claims it is most likely to bring against employees, while forcing employees to arbitrate the claims they are most likely to bring against Defendant. (See Mercuro v. Superior Court (2002) 96 Cal.App.4th 167, 176.) However, the arbitration provision does no such thing. Instead, the provision clearly applies to “all” claims or disputes “regardless of whether they are brought by or against the Company or Independent Agent.” (Gilliam Decl., Ex. A.) Therefore, both parties are equally bound to arbitration. The arbitration provision does not exempt any claims brought by Defendant. To the extent Plaintiff is contending that other portions of the employment contract are unlawful, that constitutes a dispute “arising out of or relating to this Contract,” which is itself subject to arbitration under the plain terms of the arbitration provision. (See Gilliam Decl., Ex. A; Moncharsh v. Heily & Blase (1992) 3 Cal.4th 1, 29-30.) As specified in Moncharsh, only the enforceability of the arbitration provision is at issue on a motion to compel arbitration.

Plaintiff next argues that the agreement unlawfully seeks to waive representative PAGA claims. The agreement provides that “[a]rbitration shall be on an individual basis, and not a class, collective, representative, or private attorney general basis.” (Gilliam Decl., Ex. A.) This is not a waiver of representative PAGA claims because it does not preclude Plaintiff from bringing such claims. The provision merely governs the forum in which individual and representative claims are brought. Specifically, representative claims “must proceed in court, and must be stayed while any remaining claims are arbitrated on an individual basis.” (Ibid.) The U.S. Supreme Court has expressly held that individual PAGA claims may be compelled to arbitration apart from the representative claims. (Viking River Cruises, Inc. v. Moriana (2022) 142 S.Ct. 1906.) 

Plaintiff also argues that the agreement fails to provide for discovery rules. However, as discussed above, the arbitration provision clearly identifies the AAA Commercial Rules, which provide for discovery. The agreement does not violate Armendariz merely because it does not spell out the discovery rules in the agreement itself. (See Ramos v. Superior Court (2018) 28 Cal.App.5th 1042, 1062 [“we do not conclude the lack of express language in the arbitration provision regarding discovery renders the agreement unconscionable”].) Plaintiff does not contend that the AAA rules provide for inadequate discovery.  

In sum, the Court finds no substantial unconscionability. With no procedural or substantive unconscionability, the arbitration provision remains valid and enforceable.

III. Stay

            “If a court . . . has ordered arbitration of a controversy which is an issue involved in an action or proceeding pending before a court . . . the court in which such action or proceeding is pending shall, upon motion of a party to such action or proceeding, stay the action or proceeding until an arbitration is had in accordance with the order to arbitrate or until such earlier time as the court specifies.” (Code Civ. Proc., § 1281.4.) “[T]he trial court may exercise its discretion to stay . . . claims pending the outcome of the arbitration.” (Adolph v. Uber Technologies, Inc. (2023) 14 Cal.5th 1104, 1123.) “Because the issues subject to litigation . . . might overlap those that are subject to arbitration . . ., the trial court must order an appropriate stay of trial court proceedings.” (Franco v. Arakelian Enterprises, Inc. (2015) 234 Cal.App.4th 947, 966.) “The stay's purpose is to preserve the status quo until the arbitration is resolved, preventing any continuing trial court proceedings from disrupting and rendering ineffective the arbitrator's jurisdiction to decide the issues that are subject to arbitration.” (Ibid.)

            Plaintiff argues that the case cannot be stayed because the other defendants are non-signatories who cannot enforce the arbitration agreement. However, those other defendants have not moved to compel arbitration, thus their ability to enforce the agreement is not at issue. The Court retains discretion to stay the case for the sake of judicial economy regardless of whether the other defendants can enforce the arbitration agreement.

CONCLUSION

            Defendant Liberty Life National Insurance Company’s motion to compel arbitration is GRANTED. The case is stayed in its entirety pending the outcome of arbitration.

BACKGROUND

            On December 6, 2023, Plaintiff Edward Casillas filed this employment discrimination action against Defendants Liberty Life National Insurance Company, Globe Life and Accident Insurance Company, Globe Life Liberty National Division, and The Green Agencies.

            On January 8, 2024, Defendant Globe Life and Accident Insurance Company filed the instant motion to quash service of summons. Plaintiff filed his opposition on March 27, 2024. Defendant filed its reply on April 3, 2024.

LEGAL STANDARD

“[T]he court in which an action is pending has jurisdiction over a party from the time summons is served on him as provided by Chapter 4 (commencing with Section 413.10).” (Code Civ. Proc, § 410.50(a).) “[A] court acquires jurisdiction over a party by proper service of process or by that party's general appearance.” (In re Jennifer O. (2010) 184 Cal.App.4th 539, 547.) Actual notice of a lawsuit is not a substitute for proper service of process. (Abers v. Rohrs (2013) 217 Cal.App.4th 1199, 1206.) Additionally, when the defendant is a nonresident, the following legal principles apply.

“Due process permits the exercise of personal jurisdiction over a nonresident defendant in the following four situations: (1) where the defendant is domiciled in the forum state when the lawsuit is commenced; (2) where the defendant is personally served with process while he or she is physically present in the forum state; (3) where the defendant consents to jurisdiction; and (4) where the defendant has sufficient ‘minimum contacts’ with the forum state, such that the exercise of jurisdiction would not offend ‘traditional notions of fair play and substantial justice.’” (Muckle v. Superior Court (2002) 102 Cal.App.4th 218, 226.)

A defendant may establish sufficient minimum contacts with the forum state in one of two ways. For a court to exercise general jurisdiction, the defendant must have contact with the forum state that is substantial, continuous, and systematic. (Vons Companies, Inc. v. Seabest Foods, Inc. (1996) 14 Cal.4th 434, 445.) In such a case, the cause of action need not be related to the defendant’s contact with the forum state. (Id. at p. 446.) For a court to exercise specific jurisdiction, the following elements must be met: (1) the defendant has purposefully availed themselves of forum benefits; (2) the controversy is related to or arises out of the defendant’s contacts with the forum; and (3) the assertion of personal jurisdiction would comport with fair play and substantial justice. (Snowney v. Harrah’s Entertainment, Inc. (2005) 35 Cal.4th 1054, 1062.)

When personal jurisdiction is challenged by a nonresident defendant, the burden of proof is upon the plaintiff to demonstrate by a preponderance of the evidence that minimum contacts exist between the defendant and the forum state to justify imposition of personal jurisdiction. (Mihlon v. Sup. Ct. (1985) 169 Cal. App. 3d 703, 710.) Once facts showing minimum contacts with the forum state are established, it becomes the defendant’s burden to demonstrate that the exercise of jurisdiction would be unreasonable. (Vons, supra, 14 Cal. 4th at p. 447.)

REQUEST FOR JUDICIAL NOTICE

            Plaintiff’s request for judicial notice is granted as to Exhibit A and denied as to Exhibits B and C. (Evid. Code, §§ 451-453.)

DISCUSSION

            “For a corporation, its domicile, place of incorporation, and principal place of business within a state constitute the paradigm bases for establishing general jurisdiction.” (Strasner v. Touchstone Wireless Repair & Logistics, LP (2016) 5 Cal.App.5th 215, 222.) Defendant Globe Life and Accident Insurance Company is a Nebraska company with its principal place of business in Texas. (Harvey Decl. ¶ 2.) Therefore, there is no basis for general jurisdiction.

Defendant’s evidence also shows that: (i) Defendant does not control and is not controlled by Liberty Life National Insurance Company; and (ii) Defendant did not employ, contract with, or have any relationship with Plaintiff. (Harvey Decl. ¶¶ 4-5.) Therefore, Defendant did not purposefully avail itself of California for purposes of specific jurisdiction.

            In opposition, Plaintiff argues that this Court has jurisdiction over Defendant because Defendant is affiliated with California entities and has an agent for service of process in California. However, courts have expressly rejected both of these as bases for jurisdiction. First, “neither ownership nor control of a subsidiary corporation by a foreign parent corporation, without more, subjects the parent to the jurisdiction of the state where the subsidiary does business.” (DVI, Inc. v. Superior Court (2002) 104 Cal.App.4th 1080, 1092.) “[N]or does jurisdiction over a parent corporation automatically establish jurisdiction over a wholly owned subsidiary.” (Keeton v. Hustler Magazine, Inc. (1984) 465 U.S. 770, 781, fn. 13.) Second, “designation of an agent for service of process and qualification to do business in California alone are insufficient to permit general jurisdiction.” (Thomson v. Anderson (2003) 113 Cal.App.4th 258, 267.)

            Plaintiff has failed to satisfy her burden of presenting evidence that Defendant has minimum contacts with California. (See Strasner, supra, 5 Cal.App.5th at p. 222.) Therefore, the Court lacks personal jurisdiction over Defendant.

CONCLUSION

            Defendant Globe Life and Accident Insurance Company’s motion to quash service of summons is GRANTED.