Judge: David B. Gelfound, Case: 25CHCP00116, Date: 2025-05-20 Tentative Ruling

Case Number: 25CHCP00116    Hearing Date: May 20, 2025    Dept: F49

LOS ANGELES SUPERIOR COURT

NORTH VALLEY DISTRICT

DEPARTMENT F49

MOTION TO COMPEL ARBITRATION

Motion filed: 5/20/24

MOVING PARTY: Petitioner Thomas Zack Cooper, Sr. 

RESPONDING PARTY: Respondent M&O California Insurance Services, Inc.

NOTICE: OK¿¿ 

RELIEF REQUESTED: An order from this Court ordering this matter be arbitrated pursuant to JAMS Employment Arbitration Rules & Procedures and subject to all conditions and safeguards as set forth in Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83.

TENTATIVE RULING: The motion is GRANTED IN PART.

BACKGROUND

This civil petition arises from an alleged employment-related dispute.

On March 21, 2025, Petitioner Thomas Zack Cooper, Sr. (“Petitioner” or “Cooper”) filed a Petition to Compel Arbitration (the “Petition”) as to Respondent M&O California Insurance Services, Inc. (“Respondent” or “M&O.”)

On March 25, 2025, Petitioner filed a notice of hearing on the Petition. Subsequently, on April 25, 2025, M&O filed an Opposition, and on May 12, 2025, Cooper filed a Reply.

ANALYSIS

Under Code of Civil Procedure section 1281.2, “On petition of a party to an arbitration agreement alleging the existence of a written agreement to arbitrate a 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,” unless the court finds that the right to compel arbitration has been “waived by the petitioner,” or that “grounds exist for rescission” of the arbitration agreement. (Code Civ. Proc., § 1281.2, subds. (a) & (b).)

When seeking to compel arbitration of a plaintiff’s claims, the petitioner must allege the existence of an agreement to arbitrate.  (Condee v. Longwood Management Corp. (2001) 88 Cal.App.4th 215, 219 (Condee).)  The burden then shifts to the respondent to prove the falsity of the agreement.  (Ibid.)  After the Court determines that an agreement to arbitrate exists, it then considers objections to its enforceability.  (Ibid.)  The Court must grant a motion to compel arbitration unless the petitioner has waived the right to compel arbitration or if there are grounds to revoke the arbitration agreement.  (Ibid.; Code Civ. Proc., § 1281.2.)

A.    Existence of a Valid Arbitration Agreement

California law favors arbitration but requires a voluntary agreement. (Avery v. Integrated Healthcare Holdings, Inc., (2013) 218 Cal.App.4th 50.) The court will first determine whether an agreement exists, applying ordinary contract principles. (Pinnacle Museum Tower Assn. v. Pinnacle Market Development (US), LLC (2012) 55 Cal.4th 223.)

Cooper asserts that a written arbitration agreement was entered into between the parties on April 10, 2019 (the “2019 Arbitration Agreement”), as evidenced by its attachment to the Levinson Declaration (Levinson Decl. Ex. “C.”). Cooper argues that the 2019 Arbitration Agreement is binding, maintaining that a signature is not required for an arbitration agreement to be enforceable if there is evidence of mutual assent. (Mot. at p. 6.) Cooper cites Serafin v. Balco Properties Ltd., LLC (2015) 235 Cal.App.4th 165 (Serafin) in support of his position, asserting that M&O drafted the 2019 Arbitration Agreement and required him to sign it as a condition of employment, demonstrating M&O’s intent to be bound. (Ibid.)

M&O opposes the Petition, arguing that no valid arbitration agreement existed because it did not sign the 2019 Arbitration Agreement, lacking objective manifestation of its consent to be bound by any mutual obligations. (Opp’n. at p. 9.) M&O further distinguishes Serafin, noting that unlike the employer in that case, M&O did not initiate arbitration or file a motion to compel in 2021 or 2025. Instead, the 2021 arbitration proceeded under a stipulation with terms insisted upon by Cooper, not the 2019 Arbitration Agreement. (McGeorge Decl. ¶¶ 4-6.)

The Court finds Cooper’s argument persuasive – supporting a finding that a valid arbitration agreement exists – for the following reasons.

(1)   Signature Requirement

Serafin clarifies that a signature is not dispositive; mutual assent can be shown through conduct or circumstances (Serafin, supra, 235 Cal.App.4th at p. 176. [“[I]t is not the presence or absence of a signature [on an agreement] which is dispositive; it is the presence or absence of evidence of an agreement to arbitrate which matters.”])

Here, M&O’s drafting of the 2019 Arbitration Agreement and requirement for Cooper to sign as a condition of employment strongly suggest M&O’s intent to be bound. This is further supported by the agreement’s mutual language – specifically, “the company agrees that … any dispute … will be submitted to binding arbitration under the terms of this Agreement.” (Levinson Decl. Ex. “C,” at p. 78.) M&O has not submitted evidence directly refuting Cooper’s allegations.

(2)   Prior Conduct

The Court further finds that M&O’s 2021 demand for arbitration (Levinson Decl., Ex. “A.”) is compelling evidence of its prior reliance on the 2019 Arbitration Agreement, undermining M&O’s current claim of no assent. In Serafin, the employer’s initiation of arbitration and motion to compel were key indicators of assent. (Serafin, supra, 235 Cal.App.4th at pp. 176-177.) While M&O did not file a motion in 2021, its demand letter explicitly reference the 2019 Arbitration Agreement, indicating that it viewed the agreement as binding.

(3)   Stipulation in 2021

M&O argues that the 2021 arbitration proceeded under a stipulation, not the 2019 Arbitration Agreement. However, the stipulation expressly acknowledged that “[o]n April 10, 2019, Plaintiff [Cooper] signed and entered into an agreement to resolve employment-related claims against Defendant M&O California Insurance Services, Inc…. through arbitration (‘The Agreement.’)” (McGeorge Decl., Ex. “4,” ¶ 2.) This indicates the agreement formed the basis for arbitration, even if the terms were modified by the stipulation.

Accordingly, the Court finds that Cooper, as the moving party, has met his burden in proving the existence of a valid arbitration agreement.

B.     Enforceability of the 2019 Arbitration Agreement

Cooper acknowledges that the 2019 Arbitration Agreement contains illegal provisions violating Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 21 Cal.4th 83 (Armendariz). However, he argues that these illegal provisions can be severed, as done in the 2021 stipulation, and the agreement enforced under JAMS Employment Arbitration Rules, which comply with Armendariz, allows courts to sever unconscionable clauses. (Mot. at p. 7.)

In contrast, M&O contends that Cooper himself deems the agreement “invalid,” “corrupt,” and “illegal,” citing his 2021 and 2025 claims for declaratory relief to void it. It argues that Cooper cannot now enforce an agreement he argues is unenforceable. (Opp’n. at p. 11.) Additionally, M&O argues that Cooper’s request to use JAMS rules requires impermissible reformation and augmentation, not just severance, which Armendariz prohibits. The 2019 Arbitration Agreement mandates Federal Rules of Evidence and Civil Procedure, and the non-initiating party, M&O, selects the forum if parties disagree, conflicting with Cooper’s proposal. (Id. at pp. 13-14.)

In his Reply, Cooper clarifies that he does not seek to abandon the 2019 Arbitration Agreement but to enforce it under lawful rules, as permitted by the agreement’s JAMS option, arguing that M&O’s claim that agreement is void contradicts its 2021 stipulation to sever the illegal provisions. (Reply at pp. 5-6.)

Under Armendariz, arbitration agreements in employment contexts must meet certain minimum requirements, including a neutral arbitrator, adequate discovery, all remedies available in court, a written award, and no unreasonable costs to the employee (Armendariz, supra, 24 Cal.4th at p. 83). If an agreement is unconscionable, courts may sever offending provisions or void the agreement if illegality permeates its purpose (Id. at pp. 121-122). Armendariz allows severance unless the agreement is “permeated” by unconscionability, indicated by multiple unlawful provisions suggesting an intent to impose an inferior forum (Id. at p. 124; Lange v. Monster Energy Company (2020) 46 Cal.App.5th 436, 454 (Lange) [“[T]he dispositive question is whether ‘the central purpose of the contract’ is so tainted with illegality that there is no lawful object of the contract to enforce.”]).

Here, the parties agree that the agreement contains problematic provisions; however, its central purpose—arbitration of employment disputes—is not inherently illegal and remains a lawful object of the agreement to enforce. The 2021 stipulation, where M&O agreed to sever these provisions and arbitrate under Armendariz-compliant rules, suggests severance is feasible without undermining the agreement’s purpose. (Farrar v. Direct Commerce, Inc., (2017) 9 Cal.App.5th 1257, 1273 (Farrar)).

The 2019 Arbitration Agreement permits arbitration under AAA, JAMS, or another service by mutual agreement, with the non-initiating party (M&O) choosing if no agreement is reached (Levinson Decl., Exhibit C, ¶ 5). While Cooper’s request for JAMS Employment Arbitration Rules could appear to augment the agreement, given its mandate for Federal Rules of Evidence and Civil Procedure, JAMS is expressly allowed, and its rules align with Armendariz. Therefore, Cooper’s proposal fits within the agreement’s framework and Armendariz requirements, not constituting impermissible reformation.

Accordingly, the Court finds that the agreement may be enforceable upon severing its illegal provisions.

C.    Scope of Covered Claims

Cooper asserts claims related to unpaid final wages, penalties, attorney fees, and potentially accounting, and argues that these claims arise from his employment and fall within the 2019 Arbitration Agreement’s broad scope, which covers “any and all claims arising out of an employee’s employment or separation of employment. “ (Levinson Decl. Ex. “C,” ¶ 3.)

M&O contends that Cooper fails to prove all claims are covered. Specifically, the 2025 JAMS Complaint includes an “Accounting” claim seeking financial documents, akin to injunctive relief, and a “Declaratory Relief” claim asserting the agreement’s illegality, which are not arbitrable. (Opp’n. at p. 15.) M&O notes that Cooper’s counsel claims the declaratory relief claim was “dropped,” but the operative JAMS Complaint includes it. (Ibid.)

The Court notes that the 2019 Arbitration Agreement’s scope is broad, covering “all claims for wages and other compensation due” and claims related to “the termination of employment.” (Levinson Decl., Ex. “C,” ¶ 3.) As such, Cooper’s core claim for unpaid final wages clearly falls within the scope.

Additionally, the “Accounting” claim seeks financial documents to calculate commission and wages. (McGeorge Decl., Ex. “8,” ¶¶ 22-24.) While this claim resembles a discovery request or injunctive relief, the Court finds it ancillary to the core claim for unpaid wages and thus arbitrable under the agreement’s broad arbitration clause. (Pinnacle, supra, 55 Cal.4th at p. 236.)

As to the “Declaratory Relief” claim, the 2025 JAMS Complaint seeks a judicial declaration that the 2019 Arbitration Agreement is illegal and an injunction against its use. (McGeorge Decl., Ex. “8,” ¶ 37.) The 2019 Arbitration Agreement explicitly excludes “claims for declaratory or injunctive relief relating to unfair competition” from its scope. (Levinson Decl. Ex. “C,” ¶ 3.) Consequently, this claim is not subject to arbitration under the agreement’s terms.

However, M&O notes that Cooper’s counsel has represented that the Declaratory Relief claim was “dropped” though no amended complaint has been filed to reflect this change. Given the absence of evidence supporting this modification, the Court need not determine whether the claim remains viable or affects the arbitrability of other claims, as the original complaint governs the present analysis.

D.    Severance of Unconscionable Provisions - Choice of Arbitration Forum

Civil Code section 1670.5, subdivision (a), provides: “If the court as a matter of law finds the contract or any clause of the contract to have been unconscionable at the time it was made the court may refuse to enforce the contract, or it may enforce the remainder of the contract without the unconscionable clause, or it may so limit the application of any unconscionable clause as to avoid any unconscionable result.”

Cooper seeks arbitration under JAMS Employment Arbitration Rules, which the 2019 Arbitration Agreement permits. (Levinson Decl., Ex. “C,” ¶ 5.) He argues that JAMS rules ensure Armendariz compliance, remedying the agreement’s illegal provisions. (Reply at p. 6.)

M&O argues that the 2019 Arbitration Agreement allows JAMS only by mutual agreement, and if the parties cannot agree, the non-initiating party, M&O, selects between AAA or JAMS. (Levinson Decl. Ex. “C,” ¶ 5.)

The 2019 Arbitration Agreement contains both arbitrator selection and forum selection provisions. (See Levinson Decl. Ex. “C,” ¶ 5.)

The arbitrator selection provision provides: “The party that did not request arbitration shall have the first strike.” (Levinson Decl. Ex. “C,” ¶ 5.) Similarly, the forum selection provision sets forth: “If the parties cannot agree, then the designation of the rules or arbitration service to be used, either AAA or JAMS, will be made by the party who did not initiate the claim.” (Ibid.) Both provisions grant M&O, as the non-initiating party in this dispute, the initial advantage in selecting the arbitrator and the service.

The Court finds these provisions unconscionable and are subject to severance under Armendariz, supra.

Armendariz establishes that employment arbitration agreements must ensure fairness, including a neutral arbitrator, adequate discovery, all remedies available in court, a written award, and no unreasonable costs to the employee (24 Cal.4th at 102-03). Unconscionable provisions may render an agreement unenforceable, but courts may sever such provisions unless the agreement is “permeated” by illegality, indicating a systematic effort to disadvantage the employee (Armendariz, 24 Cal.4th at 122-24; Lange v. Monster Energy Co., 46 Cal.App.5th 436, 454 (2020)). Cal. Civ. Code § 1670.5(a) allows courts to sever or limit unconscionable clauses to avoid unfair results. Severance is favored when the agreement’s central purpose (e.g., arbitration) is not tainted and a severability clause exists. (Farrar, supra, 9 Cal.App.5th at p. 1273.)

(1)   Procedural Unconscionability

Here, the procedural unconscionability is established as the 2019 Arbitration Agreement was a condition of employment, a hallmark of adhesion contracts. (Serafin, supra, 235 Cal.App.4th at p. 179.)

Although M&O argues that Cooper does not provide direct evidence to demonstrate that the 2019 Arbitration Agreement is required for his employment, its reliance on the agreement’s “free will” clauses is unpersuasive. (Opp’n. at p. 10.) Courts consistently infer oppression in employment arbitration agreements due to the employer’s superior bargaining power, requiring minimal evidence of coercion. (Armendariz, supra, 24 Cal.4th at p. 115. [instructing that courts must be “particularly attuned” to this danger in the employment setting, where “economic pressure exerted by employers on all but the most sought-after employee may be particularly acute”])

The ”free will” clause, which M&O relies on, is a standardized term in a pre-printed agreement, drafted by M&O, and does not indicate that Cooper had meaningful negotiation power or could refuse to accept without risking his job. By contrast, in 2021, M&O demanded arbitration based on the agreement (Levinson Decl., Ex. “A”), suggesting that it viewed it as a binding employment term. This undermines M&O’s current claim that the agreement was not mandatory, as their prior reliance implies it was a standard condition for employees like Cooper.

Therefore, the Court finds that the record demonstrates moderate procedural unconscionability, as Cooper had little bargaining power.

(2)   Substantive Unconscionability

Significantly, Armendariz requires a “neutral arbitrator,” meaning the selection process must be impartial (Armendariz, supra, 24 Cal.4th at p. 103 [“the neutral arbitrator requirement, which we have held is essential to ensuring the integrity of the arbitration process…”]). In employment disputes, the employee, like Cooper in the present case, is typically the initiating party, filing claims for wages, discrimination, or other violations. The employer - M&O – is usually the non-initiating party, responding to the employee’s demand. As a result, the "non-initiating party" provision effectively grants M&O the "first strike" in most cases, creating a structural bias in their favor. Consequently, a provision that consistently advantages the employer, even if worded neutrally, undermines this requirement by giving M&O greater control over the arbitrator pool. (See, e.g., Ramirez v. Charter Communications, Inc. (2024) 16 Cal.5th 478, 495. [lack of mutuality found where an agreement compelled arbitration of claims more likely to be brought by an employee and excluded claims more likely to be brought by the employer])

Therefore, the Court finds that substantive unconscionability is also established because the provisions disrupt the mutuality in arbitration agreement and benefit M&O disproportionately. (Armendariz, supra, 24 Cal.4th at pp. 117-118).

Accordingly, the Court concludes that both the arbitrator selection and forum selection provisions are subject to severance, pursuant to Civil Code section 1670.5, subdivision (a). The Court’s conclusion is further supported by the precedent of the 2021 stipulation, approved by the court, demonstrating that severance is appropriate and effective as the arbitration proceeded without the unconscionable clauses. M&O’s agreement to this severance further undermines their current claim that the 2019 Arbitration Agreement is unenforceable.

Based on the foregoing, the Court GRANTS IN PART the Petition, ordering arbitration under JAMS Employment Arbitration Rules & Procedures and subject to all conditions and safeguards as set forth in Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83. However, the Fifth Claim for Declaratory Relief is excluded from arbitration.

CONCLUSION

Petitioner Thomas Zack Cooper, Sr.’s Petition to Compel Arbitration is GRANTED IN PART.

The Court orders this matter to be arbitrated pursuant to JAMS Employment Arbitration Rules & Procedures, subject to all conditions and safeguards as set forth in Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83. The Fifth Claim for Declaratory Relief is excluded from arbitration, consistent with the above ruling.

Moving party to provide notice.