Superior Court of California 

County of Los Angeles – West District  

Beverly Hills Courthouse / Department 205 

 

 

BACKGROUND 

This case arises from an employment dispute.  Defendant TDPV, LP operates a restaurant called Angelini Restaurant & Bar.  Plaintiff Leal Juan was employed there as a line cook from January 2022 to September 2023.  Plaintiff claims he requested medical leave for an alleged disability as well as complained about health and safety issues.  In response, Defendant terminated him on September 7, 2023.    

The operative first amended complaint (“FAC”) alleges eleven claims for (1) disability discrimination, (2) failure to accommodate, (3) failure to engage in an interactive process, (4) retaliation under Labor Code Section 1102.5, (5) wrongful termination in violation of public policy, (6) failure to provide meal breaks, (7) failure to provide rest breaks, (8) waiting time penalties, (9) failure to provide accurate wage statements, (10) failure to timely produce wage statements, and (11) violations of the California Private Attorneys General Act (“PAGA”).  

This hearing is on Defendant’s second motion to compel arbitration.  Defendant filed a first motion to compel arbitration, after which Plaintiff filed a first amended complaint alleging a PAGA claim.  Defendant argues that a valid arbitration agreement exists which requires arbitration of Plaintiff’s employment claims, including his newly asserted individual PAGA claim.  There was no opposition filed as of the posting of this tentative ruling. 

LEGAL STANDARD 

The Federal Arbitration Act (“FAA”) applies to contracts that involve interstate commerce (9 U.S.C. §§ 1, 2), but since arbitration is a matter of contract, the FAA also applies if it is so stated in the agreement.  (See Victrola 89, LLC v. Jaman Properties 8 LLC (2020) 46 Cal.App.5th 337, 355 (“[T]he presence of interstate commerce is not the only manner under which the FAA may apply. … [T]he parties may also voluntarily elect to have the FAA govern enforcement of the Agreement”].)   

Here, the arbitration agreement states: “The arbitrability of any Dispute under this Agreement shall be determined by application of the substantive provisions of the Federal Arbitration Act (9 U.S.C. Sections 1 and 2) (“FAA”).”  (Ex. D to Skinner Decl. at p. 82.)  The language of this provision is unambiguous: the parties specified that the FAA governs the arbitration agreement. (Cf. Victrola 89, LLC, 46 Cal.App.5th at pp. 343, 348 (contracting parties’ explicit “reference to ‘enforcement’ under the FAA required the court to consider the [defendants’] motion to compel arbitration under the FAA.”).) 

Under the FAA, “any doubts concerning the scope of arbitrable issues should be resolved in favor of arbitration …”.  Moses H. Cone Memorial Hospital v. Mercury Constr. Corp. (1983) 460 U.S. 1, 24–25.  This federal policy favoring arbitration preempts any state law impediments to the policy’s fulfillment.  If a state law interferes with the FAA’s purpose of enforcing arbitration agreements according to their terms, the FAA preempts the state law provision, no matter how laudable the state law’s objectives. (AT&T Mobility LLC v. Concepcion (2011) 563 U.S. 333, 352.)  Under the supremacy clause of the United States Constitution (art. VI, cl. 2), the FAA requires any conflicting state law to give way. (Nitro-Lift Technologies, L. L. C. v. Howard (2012) 133 S.Ct. 500, 504). 

However, while the arbitration agreement here is governed by the FAA, the agreement may be enforced via the summary procedures provided by California arbitration law.  (Rosenthal v. Great Western Financial Securities Corp. (1996) 14 Cal. 4th 394, 409-410.)  It is a “general and unassailable proposition . . . that States may establish the rules of procedure governing litigation in their own courts,” even though the controversy is governed by substantive federal law.  (Felder v. Casey (1988) 487 U.S. 131, 138.)  By the same token, however, a state procedural rule must give way “if it impedes the uniform application of the federal statute essential to effectuate its purpose, even though the procedure would apply to similar actions arising under state law.” (McCarroll v. L.A. County etc. Carpenters (1957) 49 Cal. 2d 45, 61, 62.)   

“We think it plain the California procedures for a summary determination of the petition to compel arbitration serve to further, rather than defeat, the enforceability policy of the [FAA.]”  (Rosenthal, 14 Cal. 4th at 409.)  Code Civ. Proc. § 1281.2 and 1290.2 are neutral as between state and federal law claims for enforcement of arbitration agreements.  (Id.)  “They display no hostility to arbitration as an alternative to litigation; to the contrary, the summary procedure provided, in which the existence and validity of the arbitration agreement is decided by the court in the manner of a motion, is designed to further the use of private arbitration as a means of resolving disputes more quickly and less expensively than through litigation.”  (Id.) 

As with federal law, under California law, public policy favors arbitration as an efficient and less expensive means of resolving private disputes.  (Moncharsh v. Heily & Blase (1992) 3 Cal.4th 1, 8-9; AT&T Mobility LLC v. Concepcion, 563 U.S. at 339.)  To further that policy, Code Civ. Proc. §1281.2 requires a trial court to enforce a written arbitration agreement unless it finds (1) no written agreement to arbitrate exists, (2) the right to compel arbitration has been waived, (3) grounds exist for rescission of the agreement or (4) litigation is pending that may render the arbitration unnecessary or create conflicting rulings on common issues.    

When seeking to compel arbitration, the initial burden lies with the moving party to demonstrate the existence of a valid arbitration agreement by a preponderance of evidence.  (Ruiz v. Moss Bros. Auto Group (2014) 232 Cal.App.4th 836, 841-42; Gamboa v. Northeast Community Clinic (2021), 72 Cal.App.5th 158, 164-65.)  It is sufficient for the moving party to produce a copy of the arbitration agreement or set forth the agreement’s provisions.  (Gamboa, 72 Cal.App.5th at 165.)  The burden then shifts to the opposing party to prove by a preponderance of evidence any defense to enforcement of the contract or the arbitration clause.  (Ruiz, 232 Cal.App.4th at 842; Gamboa, 72 Cal.App.5th at 165.)  The trial court then weighs all the evidence submitted and uses its discretion to make a final determination.  (Id.)   

If the court orders arbitration, then the court shall stay the action until arbitration is completed.  (See Code Civ. Proc., § 1281.4.) 

DISCUSSION 

Existence of Arbitration Agreement 

In ruling on a motion to compel arbitration, the Court must first determine whether the parties actually agreed to arbitrate the dispute, and general principles of California contract law  help guide the court in making this determination. (Mendez v. Mid-Wilshire Health Care Center (2013) 220 Cal.App.4th 534, 541; Victoria v. Superior Court (1985) 40 Cal. 3d 734, 835.)  Even when the FAA applies, “interpretation of the arbitration agreement is governed by state law principles.”  (Hotels Nevada, LLC v. Bridge Banc, LLC (2005) 130 Cal.App.4th 1431, 1435.) 

Although “[t]he law favors contracts for arbitration of disputes between parties” (Player v. Geo. M. Brewster & Son, Inc. (1971) 18 Cal.App.3d 526, 534), “there is no policy compelling persons to accept arbitration of controversies which they have not agreed to arbitrate[.]” (Weeks v. Crow (1980) 113 Cal. App. 3d 350, 353..)¿ “[A]rbitration is a matter of contract and a party cannot be required to submit to arbitration any dispute which he has not agreed so to submit.” (AT&T Technologies v. Communications Workers (1986) 475 U.S. 643, 648 (citations and internal quotations omitted); see also Sparks v. Vista Del Mar Child & Family Services (2012) 207 Cal.App.4th 1511, 1518¿ (“Because arbitration is a contractual matter, a party that has not agreed to arbitrate a controversy cannot be compelled to do so.”).)¿¿¿¿¿¿¿  

Here, Plaintiff was provided a handbook which states it “contains an arbitration agreement that applies to both you and the employer that waives your and the employer’s right to a trial by jury and also results in a waiver of your right to represent a class in litigation or to participate in a class action against the employer.”  (Ex. C to Second Supp. Silvestri Decl.)   

The handbook sets forth the binding arbitration agreement on pages 82-86 (English) and 86-90 (Spanish), with a “2022 Employee Acknowledgement and Receipt of Employee Handbook, Including Binding Arbitration Policy” on page 91 (English) and page 92 (Spanish.)  (Id.)  Plaintiff signed the Agreement.  (Ex. D to Second Supp. Silvestri Decl.)  By signing the Agreement, Plaintiff acknowledged that he had read and understood the Agreement and that he entered into the Agreement voluntarily.  (Id.)    

The Agreement states that arbitration will be the exclusive method to resolve “ANY DISPUTES OR CONTROVERIES THAT THE COMPANY OR I MAY HAVE, WHETHER OR NOT ARISING OUT OF MY EMPLOYMENT OR TERMINATION OF THAT EMPLOYMENT WITH THE COMPANY.”  (Ex. C to Second Supp. Silvestri Decl.)  The Agreement further states that the disputes that are to be arbitrated include “claims for violation of public policy, wrongful termination … claims for unlawful discrimination and/or harassment (including but not limited to …. physical disability) … and claims for violation of any federal, state or other government law, statute, regulation or ordinance.”  (Id.)   

Accordingly, Defendant has met its burden to establish the existence of an arbitration agreement.   

Unconscionability  

The Court must next consider whether the arbitration agreement is unconscionable.  Unconscionability generally includes the absence of meaningful choice on the part of one of the parties together with contract terms that unreasonably favor the other party. (Carboni v. Arrospide (1991) 2 Cal.App.4th 76, 82-83.)  Unconscionability has both a “procedural” and a “substantive” element.  (A & M Produce Co. v. FMC Corp. (1982) 135 Cal.App.3d 473, 486.)  An agreement to arbitrate is unenforceable only if both procedural and substantive unconscionability is shown. (Stirlen v. Supercuts, Inc. (1997) 51 Cal.App.4th 1519, 1533.)   

Procedural unconscionability focuses on whether there is “oppression” arising from an inequality of bargaining power or “surprise” arising from buried terms in a complex printed form. (Id. at 1280.)  Substantive unconscionability addresses the existence of overly harsh or one-sided terms.  (Id.)   

Plaintiff has the burden of proving both procedural and substantive unconscionability. (Crippen v. Central Valley RV Outlet. Inc. (2004) 124 Cal.App.4th 1159, 1165).  Both, however, need not be present to the same degree.  A sliding scale is applied so that 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.” (Morris v. Redwood Empire Bancorp (2005) 128 Cal.App.4th 1305, 1317; see also A & M Produce Co., 135 Cal.App.3d at 486.)   
Here, while there is unequal bargaining power between the parties, there is no lack of disclosure of the arbitration agreement.  (Robinson v. City of Mateca (2000) 78 Cal.App.4th 452, 459 (“Procedural unconscionability requires an inequality in bargaining power accompanied by lack of disclosure of material provisions.”)  The arbitration agreement was a stand alone document with a prominent heading of “BINDING ARBITRATION”.  (Ex. D to Skinner Decl.)   

Plaintiff was provided with as much time as he needed to review and sign the agreement.  (Silvestri Decl. ¶ 8.)  Plaintiff was provided the opportunity to ask questions.  (Id.)  Plaintiff signed the agreement.  (Ex. C to Skinner Decl.)  By signing the agreement, Plaintiff acknowledged that he had read and understood the Agreement.  Immediately above the signature line, the following paragraph is in capital letters:  “I HEREBY ACKNOWLEDGE THAT I HAVE RECEIVED, REVIEWED AND AGREED TO THE BINDING ARBITRATION AGREEMENT … AND THAT I HAVE WAIVED ANY RIGHT TO A TRIAL BEFORE A JUDGE OR JURY IN ALL DISPUTES WITH THE COMPANY.”  (Ex. C to Skinner Decl.) 

In any event, “a finding of procedural unconscionability does not mean that a contract will not be enforced, but rather that courts will scrutinize the substantive terms of the contract to ensure they are not manifestly unfair or one-sided.” (Gentry v. Superior Court (2007) 42 Cal.4th 443, 469; see also Serpa v. Cal. Sur. Investigations, Inc. (2013) 215 Cal.App.4th 695, 704 (in the employment context, if an employee must sign a non-negotiable employment agreement as a condition of employment but “there is no other indication of oppression or surprise,”¿then “the agreement will be enforceable unless the degree of substantive unconscionability is high”).)   We now address whether the Agreement is substantively unconscionable. 

“Substantive unconscionability focuses on the one-sidedness or overly harsh effect of the contract term or clause.”  (Harper, 113 Cal.App.4th at 1406-1407.)  Pursuant to Armendariz v. Found. Health Psychcare Svcs., Inc. (2000) 24 Cal.4th 83, 101, a mandatory employment arbitration agreement must: (1) provide for neutral arbitrators; (2) provide adequate discovery; (3) provide for a written award; (4) provide for relief that would otherwise be available in court, and (5) require no unreasonable costs and arbitration fees to be paid by the employee.  (Id. at 102.)   

The agreement here fully complies with each of the Armendariz factors.  First, the agreement requires the use of a neutral arbitrator.  The agreement specifically provides: “The parties shall meet and confer to select a specific arbitrator or reputable dispute resolution agreement by mutual agreement.  If the parties are unable to agree on a neutral arbitrator or dispute resolution organization, any party may elect to obtain a list of arbitrators from one of the following dispute resolution organizations: Judicial Arbitration and Mediation Service (“JAMS”), Alternative Dispute Resolution (“ADR”), or Signature Resolution Group (“SRG”)..”  (Ex. D to Skinner Decl. at p. 83.)   

Second, the agreement provides for adequate discovery: “The parties shall be entitled to conduct all discovery to which they would have been entitled had the parties’ controversy been filed in court, provided, however, that the arbitrator shall have the discretion to issue protective orders or otherwise limit discovery where reasonably necessary, taking into account the parties’ mutual desire to have a speedy, less-formal, cost-effective dispute resolution mechanism.”  (Ex. D to Skinner Decl. at p. 84.) 

Third, the agreement provides for a written award: “Following the hearing and the submission of the matter to the arbitrator, the arbitrator shall issue a signed and dated written decision and award.”  (Ex. D to Skinner Decl. at p. 84)  “The arbitrator shall prepare in writing and provide to the parties a decision and award which includes factual findings and the reasons upon which the decision is based.”  (Id.)   

Fourth, Plaintiff will not be required to pay unreasonable costs or the arbitrator’s fees: “The cost of the arbitrator and other incidental costs of arbitration that would not be incurred in a court proceeding shall be borne by the Company; provided, however, that if you are the party initiating the claim, you will contribute an amount equal to the filing fee to initiate a claim in the court of general jurisdiction in the state in which you were last employed by the Company.”  (Ex. D to Skinner Decl. at p. 85.)    

Fifth, the agreement provides for all types of relief otherwise available to Plaintiff in this litigation: “The arbitrator selected by the parties shall apply the substantive law (and the law of remedies, if applicable) of the state in which the claim arose, or federal law, or both, as applicable to the claim(s) asserted.  The arbitrator is without jurisdiction to apply any different substantive law or law of remedies.”  (Ex. D to Skinner Decl. at p. 84.) 

Finally, the agreement is bilateral.  It applies equally to Defendant and Plaintiff.  “An arbitration 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.”  (Mercuro v. Sup. Ct. (2002) 96 Cal.App.4th 167, 176-177.)  Here, the arbitration agreement requires both parties to arbitrate disputes relating in any manner to Plaintiff’s employment or associated with his termination.  (Ex. D to Skinner Decl. at p. 82.)  The Agreement states, in all uppercase: “BOTH THE COMPANY AND YOU UNDERSTAND THAT BY USING ARBITRATION TO RESOLVE DISPUTES, WE ARE BOTH GIVING UP ANY RIGHT THAT WE MAY HAVE TO A JUDGE OR JURY TRIAL.”  (Ex. B to Silvestri Decl. at p. 2.) 

In sum, the Court finds that there is some procedural unconscionability but there is no substantive unconscionability.   

Stay of Proceedings 

Section 3 of the FAA requires the Court, upon application of a party, to stay any action involving arbitrable issues until arbitration is completed.  Code Civ. Proc. § 1281.4 contains a similar requirement.   

Here, all of Plaintiff’s claims are arbitrable, except for his non-individual PAGA claims.  The parties agreed that any non-individual PAGA claims would not be subject to arbitration.  In light of this, the question is what happens to Plaintiff’s non-individual PAGA claims.  This question was answered by the California Supreme Court in Adolph v. Uber Technologies (2023) 14 Cal.5th 1104.  The Court held that the normal course would be to stay the non-individual PAGA claims to allow arbitration of the individual PAGA claims.  (Id. at 1124-1125.)       

CONCLUSION 

Based on the foregoing, the Court GRANTS Defendant’s second motion to compel arbitration and stay of proceedings.  The Court (1) compels Plaintiff’s individual claims, including his individual PAGA claims to arbitration and (2) stays the non-individual PAGA claims and remainder of the action pending completion of the arbitration proceedings.  The Court sets a status conference on the progress of the arbitration proceedings for September 27, 2024 at 9:00 a.m. 

 

IT IS SO ORDERED. 

 

DATED: March 27, 2024 ___________________________ 

Edward B. Moreton, Jr. 

Judge of the Superior Court