Judge David S. Cunningham, Case Number: 24STCV11436, Date: 2025-04-01 Tentative Ruling

Judge: David S. Cunningham, Case: 24STCV11436, Date: 2025-04-01 Tentative Ruling

Case Number: 24STCV11436 Hearing Date: April 1, 2025 Dept: 11

Rodas (24STCV11436)

Tentative Ruling Re: Motion to Compel Arbitration

Date: 4/1/25

Time: 10:00 am

Moving Party: California Transit, Inc. (“CTI” or “Defendant”)

Opposing Party: Rudy Rodas (“Plaintiff”)

Department: 11

Judge: David S. Cunningham III

________________________________________________________________________

TENTATIVE RULING

The hearing on Defendant’s motion to compel arbitration is continued.

The Court intends to allow discovery and to hold an evidentiary hearing with live testimony regarding the transportation-worker exemption.

BACKGROUND

Plaintiff used to work for CFI. He alleges that CFI subjected him and other current and former non-exempt employees to numerous wage-and-hour violations.

Here, CFI moves to compel arbitration of Plaintiff’s claims.

DISCUSSION

Existence and Assent

“[W]hen a petition to compel arbitration is filed and accompanied by prima facie evidence of a written agreement to arbitrate the controversy, the court itself must determine whether the agreement exists and, if any defense to its enforcement is raised, whether it is enforceable.” (Rosenthal v. Great Western Fin. Securities Corp. (1996) 14 Cal.4^th 394, 413.)

“Under ‘both federal and state law, the threshold question . . . is whether there is an agreement to arbitrate.’” (Cruise v. Kroger Co. (2015) 233 Cal.App.4^th 390, 396, emphasis in original.)

The burden of proof rests with the petitioner. (See Rosenthal, supra, 14 Cal.4^th at 413 [requiring the petitioner to prove the existence of the agreement “by a preponderance of the evidence”].) To meet the burden, “the provisions of the written agreement and the paragraph that provides for arbitration . . . must be stated verbatim or a copy must be physically or electronically attached to the petition and incorporated by reference.” (Cal. Rules of Court, rule 3.1330; see also Condee v. Longwood Management Corp. (2001) 88 Cal.App.4^th 215, 218 [same].)

“Competent evidence is required to establish both the existence of the arbitration agreement and any ground for denial.” (Knight, et al., Cal. Practice Guide: Alternative Dispute Resolution (The Rutter Group December 2023 Update) ¶ 5:321.) “The verified petition (and attached copy of the agreement) normally proves the existence of the arbitration agreement. Affidavits or declarations may be necessary when factual issues are tendered.” (Ibid.)

Defendant claims Plaintiff signed Defendant’s arbitration agreement in April 2015. (See Fricke Decl., ¶ 8). The agreement states:

AGREEMENT TO ARBITRATE

1. Consideration. This agreement is entered into between Rudy Rodas (Employee) and California Transit, Inc. (hereinafter "the Company''). In consideration f the Compa y's offer of employment and/or continued employment with the Company and Employee's agreement to enter into employment and/or continue employment with the Company, and the parties' mutual desire to resolve any claims or disputes in a timely and cost effective manner, the Company and the Employee agree as follows:

2. Coverage of Agreement. This Agreement covers all claims, controversies or disputes between Employee and the Company that may currently exist or may occur in the future. Included are all claims arising out of employment, including, but not limited to, breach of contract, personal injury, wrongful termination, wages, compensation, benefits, violation of trade secret/confidentiality, violation of any federal, state and city or county laws, statutes, regulations or ordinances, and any claims or controversies arising out of this Agreement. The claims covered by this Agreement include claims by Employee against the Company's officers, directors, employees or agents, or claims by the Company and its officers, directors, employees or agents against employee. The parties' intent is for all claims between them to be subject to this Agreement to the fullest extent allowable under law.

3. Exclusions. This Agreement shall not cover any claims for compensation for work related injuries brought before the California Workers' Compensation Appeals Board or claims for unemployment compensation. This Agreement shall not preclude Employee from pursuing administrative claims with the the Equal Employment Opportunity Commission, National Labor Relations Board, or the California Department of Fair Employment and Housing.

4. Arbitration. The parties mutually agree to submit all claims, controversies or disputes covered by this Agreement, to binding arbitration before an impartial arbitrator in accordance with the American Arbitration Association ("AAA") Employment Arbitration Rules, except as modified by this Agreement. A copy of these rules can be found at www.adr.org. The venue for arbitration shall be Los Angeles County. Both the Company and employee acknowledge that each is knowingly and voluntarily waiving any right to pursue such claims in court before a judge or jury, including bringing or participating in class action claims, and instead will pursue such claims exclusively through binding arbitration, except for the aforementioned administrative claims. Both the Company and employee acknowledge and agree that only individual claims, and not any claims on behalf of a group or class, can be subject to arbitration under this Agreement.

5. Time Limits. The Company and employee agree to file a demand for arbitration within the time limit established by the applicable statute of limitations that would apply to the filing of a civil complaint in court for the asserted claims. Failure to demand arbitration within the prescribed time period shall result in waiver of, and shall bar any action on, the claims. The Company and employee are not required to process the claim under the Complaint and Dispute Resolution Policy in the Employee Handbook before requesting arbitration under this Agreement.

6. Selection of Arbitrator. In accordance with the AAA Employment Arbitration Rules, a list of qualified, impartial arbitrators shall be provided to both parties by the AAA. If the parties cannot mutually agree on selection of an arbitrator from the list, each party may strike names from the list and rank the remaining names by preference. The AAA will select the arbitrator based on each party's submitted preferences.

7. Discovery. Prior to the arbitration hearing, the Arbitrator shall have the authority to order discovery upon request by either party in accordance with the AAA Employment Arbitration Rules. Discovery ordered by the Arbitrator may include, but is not limited to, depositions, subpoenas, production of documents, interrogatories, and production of witness lists.

8. Hearing procedures. The employee and the Company will have the right to present his or her case to the impartial arbitrator, including presenting witnesses, cross-examining witnesses, and introducing documents and other evidence. Either party may choose to be represented by an attorney or any other representative of their choosing at the arbitration hearing.

9. Decision of Arbitrator. The arbitrator will have the authority to decide the matter and award all types of legal or equitable relief that would be available in a court of law, including attorneys' fees. The arbitrator shall issue a written opinion stating the essential findings and conclusions upon which the award is based. The arbitrator shall apply applicable federal and/or California state law. The arbitrator's decision shall be final and binding upon the employee and the Company, its officers, directors, employees or agents, and may be entered as a judgment in any court of competent jurisdiction. Appeal of the arbitrator's decision is permitted only in certain very limited circumstances in accordance with applicable law.

10. Costs. The fees and costs for the arbitrator and administrative fees charged by the AAA will be paid by the Company. Each party shall pay for its own costs and attorneys' fees, unless otherwise ordered by the arbitrator.

11. General Provisions. This Agreement is the entire agreement and understanding between the parties regarding the subject matter of this Agreement. It supersedes and replaces all prior agreements on this subject matter, whether oral or written. This Agreement does not modify the at-will nature of Employee's employment. Employee may terminate his or her employment at any time and for any reason, and the Company may terminate Employee's employment at any time and for any reason. Any changes to this Agreement must be in writing and signed by the Employee and the President of the Company, and will only apply prospectively to claims that have not accrued at the time the Agreement is changed. If any provision(s) of this Agreement is (are) held to be invalid, all other provisions or applications of this Agreement shall remain in full force and effect to the fullest extent permitted by law. The provisions of this Agreement are severable. All provisions of this Agreement shall be given the greatest effect permitted by law. The laws of the State of California shall govern this Agreement.

12. Term of Agreement. This Agreement shall remain in force and effect both during and subsequent to Employee's employment with California Transit, Inc. This Agreement may only be terminated by mutual written agreement, signed by both the Employee and the President of the Company. Termination of the Agreement shall not preclude the arbitration of claims covered under this Agreement that accrued prior to the effective date of termination.

13. Opportunity to Review. Before signing this Agreement, each party has been given a full opportunity to review and analyze the terms herein. Each party understands and acknowledges that by entering into this Agreement, they waive their right to have any claim arising under this Agreement adjudicated in a court of law and/or by jury trial. Both parties fully and completely understand all of the terms of this Agreement and are signing it voluntarily, freely and knowingly.

(Notice of Errata Re: Manvelyan Decl., Ex. A, pp. 1-2, bold in original, italics added.)[1]

Facts and terms like these usually suffice to establish an agreement to arbitrate; however, Plaintiff raises an assent challenge. He contends the motion to compel should be denied because Defendant fails to show that he signed the agreement. Specifically, he claims:

* Spanish is his native language;

* his understanding of English is limited to basic words and phrases;

* he has never seen the agreement;

* he does not recall signing it;

* he was not allowed to take it home to review it prior to signing; and

* no one explained arbitration to him. (See Opposition, pp. 4-9; see also Rodas Decl., ¶¶ 5-24.)

Lack of memory is not a defense. Nor is failure to read and understand. (See Ramos v. Westlake Services LLC (2015) 242 Cal.App.4^th 674, 687 [“[T]he fact that [the plaintiff] signed a contract in a language he may not have completely understood would not bar enforcement of the arbitration agreement. If [the plaintiff] did not speak or understand English sufficiently to comprehend the English Contract, he should have had it read or explained to him.”].)

Moreover, the plain language of section 13 contradicts Plaintiff’s claim:

(Notice of Errata Re: Manvelyan Decl., Ex. A, pp. 1-2, bold in original.)

The key point is this: Plaintiff does not dispute that it is his signature on the agreement; he merely asserts that he cannot remember signing it, which is inadequate.

The Court finds Defendant’s burden satisfied.

Federal Arbitration Act (“FAA”)

The FAA governs if the arbitration agreement says it applies or if “the underlying contract facilitates interstate commercial transactions or directly or indirectly affects commerce between states.” (Knight, supra, at ¶ 5:50.2, emphasis in original.)

In Evenskaas v. California Transit Inc. (2022) 81 Cal.App.5th 285, the Second District Court of Appeal considered Defendant’s agreement – the same one at issue here with the same “California law” wording – and found the FAA applicable. The justices determined that Defendant’s paratransit services “involve interstate commerce for purposes of the FAA[.]” (Evenskaas, supra, 81 Cal.App.5^th at 289; see also Lebow Decl., ¶¶ 2, 4, Ex. 1 to Ex. B.)

Despite Evenskaas, Plaintiff contends the Court should find the FAA inapplicable, and apply the California Arbitration Act instead, due to an exemption. He asserts that the FAA does not apply to transportation workers. (See Opposition, pp. 10-14.)

It is true that section 1 of the FAA “exempts . . . ‘contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce[]’” – i.e., transportation workers – “from the statute’s ambit[.]” (Southwest Airlines Co. v. Saxon (2022) 596 U.S. 450, 454 (“Southwest”).) “The party opposing arbitration bears the burden of demonstrating that the exemption applies.” (Performance Team Freight Systems, Inc. v. Aleman (2015) 241 Cal.App.4^th 1233, 1241.) To establish the exemption, the opposing party must show that the agreement is “both a ‘contract of employment’ and one entered into with a ‘worker’ of the type described in” section 1. (Amos v. Amazon Logistics, Inc. (4^th Cir. 2023) 74 F.4^th 591, 596.)

Plaintiff fails to prove the first element. The agreement is titled “AGREEMENT TO ARBITRATE[.]” (Notice of Errata Re: Manvelyan Decl., Ex. A, p. 1, bold in original.) It is the only document in the record. Plaintiff does not demonstrate that it constitutes an employment contract as opposed to a standalone agreement or is part of an employment contract. (See Opposition, pp. 11-14 [failing to even mention the first element].)

Plaintiff also fails to prove the second element. He cites Ortiz v. Randstad Inhouse Services, LLC (9^th Cir. 2024) 95 F.4^th 1152 and Mendoza v. Domino’s Pizza, LLC (9^th Cir. 2023) 73 F.4^th 1135 as support, but they are distinguishable. The Ortiz and Mendoza plaintiffs participated in the movement of goods. Plaintiff’s case is about drivers who transport disabled passengers to local destinations.

Some cases hold that the exemption can “extend[] to both transportation workers who transport goods as well as those who transport passengers.” (Singh v. Uber Technologies Inc. (3^rd Cir. 2019) 939 F.3d 210, 222, emphasis added; see also Waithaka v. Amazon.com, Inc. (1^st Cir. 2020) 966 F.3d 10, 13; In re Grice (9^th Cir. 2020) 974 F.3d 950, 955; Craft v. Campbell Soup Co. (9^th Cir. 1999) 177 F.3d 1083, 1085; Edmon & Karnow, supra, at ¶ 5:58.1.) In Singh, for example, the Third Circuit held that the district court should have allowed the plaintiff to conduct discovery on whether the rideshare drivers engaged in interstate commerce. (See Singh, supra, 939 F.3d at 226-228.) In In re Grice, the district court decided that the rideshare drivers were not exempt from the FAA, and the Ninth Circuit held that the decision was not clearly erroneous. (See In re Grice, supra, 974 F.3d at 956-959.)

On balance, the Court believes the hearing should be continued. Paratransit drivers are a unique class of drivers. Whether and how they compare to typical rideshare drivers in terms of engaging in interstate commerce should be fleshed out via discovery. Ultimately, the Court is inclined to hold an evidentiary hearing with live testimony.

Unconscionability and Enforcement

Unconscionability is a contract defense that can be utilized to “invalidate [an] arbitration agreement[].” (Torrecillas v. Fitness International, LLC (2020) 52 Cal.App.5^th 485, 492.) Under the FAA, unconscionability can be utilized to “invalidate [an] arbitration agreement[].” (Ibid.) Courts apply state law to test whether the agreement is unconscionable. (See, e.g., Lagatree v. Luce, Forward, Hamilton & Scripps (1999) 74 Cal.App.4^th 1105, 1119.)

“[U]nconscionability has both a procedural and a substantive element, the former focusing on oppression or surprise due to unequal bargaining power, the latter on overly harsh or one-sided results.” (Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83, 114, internal quotation marks omitted.) “The prevailing view is that [procedural and substantive unconscionability] must both be present in order for a court to exercise its discretion to refuse to enforce a contract or clause under the doctrine of unconscionability.” (Ibid.) “But they need not be present in the same degree.” (Ibid.) “Essentially a sliding scale is invoked which disregards the regularity of the procedural process of the contract formation, that creates the terms, in proportion to the greater harshness or unreasonableness of the substantive terms themselves.” (Ibid.) “In other words, the more substantively oppressive the contract term, the less evidence of procedural unconscionability is required to come to the conclusion that the term is unenforceable, and vice versa.” (Ibid.)

The party opposing arbitration bears the burden to prove unconscionability. (See Ajamian v. CantorCO2e, L.P. (2012) 203 Cal.App.4^th 771, 795.)

For procedural unconscionability, Plaintiff claims there was unequal bargaining power, he “could not understand the agreement because it was not in his native language[,]” and “no one explained . . . what arbitration meant.” (Opposition, p. 15.)

“[A] predispute arbitration agreement is not invalid merely because it is imposed as a condition of employment.” (Lagatree v. Luce, Forward, Hamilton & Scripps (1999) 74 Cal.App.4th 1105, 1122–1123.) Stated another way, “the mandatory nature of an arbitration agreement does not, by itself, render the agreement unenforceable.” (Ibid.; see also Knight, supra, at ¶ 5:146 [“The mere fact an adhesion contract is involved does not per se render the arbitration clause unenforceable. Rationale: Such contracts are ‘an inevitable fact of life for all citizens – businessman and consumer alike.’”], emphasis in original.)

Two more points. One, to reiterate, failure to read and understand is not a defense. (See Ramos, supra, 242 Cal.App.4^th at 687.) Two, the agreement states:

(Notice of Errata Re: Manvelyan Decl., Ex. A, pp. 1-2, bold in original.)

For substantive unconscionability, Plaintiff contends the agreement “fails to guarantee attorneys’ fees and costs to the prevailing party.” (Opposition, p. 15.)

The Court disagrees. The agreement gives the arbitrator authority to award fees and costs. (See Notice of Errata Re: Manvelyan Decl., Ex. A, p. 2, § 9.) Similarly, the incorporated AAA rules allow fees and costs to be awarded. (See id. at Ex. A, p. 1, § 4; see also chrome-extension://efaidnbmnnnibpcajpcglclefindmkaj/https://www.adr.org/sites/default/files/EmploymentRules_Web_3.pdf.) This is sufficient.

The Court finds that the agreement covers Plaintiff’s claims and is enforceable.

Class Waiver

The ruling on the class-waiver issue is deferred. The transportation-worker-exemption issue needs to be decided first.

[1] The Court italicized Plaintiff’s name in section 1 of the agreement to signify that it is handwritten.