Judge: Elaine W. Mandel, Case: 24SMCV03596, Date: 2024-12-09 Tentative Ruling

Case Number: 24SMCV03596    Hearing Date: December 9, 2024    Dept: P

Tentative Ruling

Scotto v. The Adelaide Company, LLC, Case no. 24SMCV03596

Hearing date December 9, 2024

Defendant’s Adelaide’s Motion to Compel Arbitration

Plaintiff Scotta sues defendants Matt Groening, trustee of the A&J Trust, the Adelaide Company, LLC, Matthew A. Groening and Augustina Picasso for sexual assault, harassment, wage and hour claims and unfair business practices arising from plaintiff’s employment as defendants’ house manager.

Plaintiff alleges her employment began in 2019 and she began to be sexually harassed and abused by a male coworker shortly thereafter. Plaintiff and defendant Adelaide Company entered into an arbitration agreement in October 2021. The federal Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act (“EFAA”) was enacted March 2022. Plaintiff’s employment was terminated June 2022, following which plaintiff filed the instant action.

Defendant Adelaide Company moves to compel arbitration and stay the instant action. Plaintiff opposes, arguing (1) the EFAA prevents arbitration and (2) the arbitration provision is unconscionable.

California public policy strongly favors arbitration as an efficient alternative to litigation. Code of Civ. Proc. §1280 et seq., Madden v. Kaiser Found. Hosps. (1976) 17 Cal.3d 699, 706. Under the CAA, where there is a valid written agreement to arbitrate a controversy, arbitration is mandatory. Civ. Proc. Code § 1281.2. The opposing party bears the burden of proving any defense to arbitrability, including unconscionability or applicability of the EFAA. See Pinnacle Museum Tower Ass’n v. Pinnacle Mkt. Dev. (US), LLC (2012) 55 Cal.4th 223, 236. “[T]he doctrine of unconscionability has both a procedural and substantive element, the former focusing on oppression or surprise due to unequal bargaining power, the latter on overly harsh or one-sided results.” See Sanchez v. Valencia Holding Co., LLC (2015) 61 Cal. 4th 899, 910.

The parties signed an arbitration agreement. Knight decl., exh. 1. Plaintiff argues her sexual assault and harassment claims are precluded from arbitration by the EFAA, and her employment claims should not be arbitrated because the arbitration agreement is unconscionable and unenforceable.

Defendant Adelaide argues plaintiff’s claims arise from conduct that began in 2019, meaning those claims accrued prior to enactment of the EFAA. “The EFAA does not apply to any claims that arise or accrue before March 3, 2022, the date of the statute’s enactment.” See Arouh v. GAN Limited 2024 WL 3469032, at *6 (C.D. Cal., Mar. 22, 2024, No. 8:23-CV-02001-FWS). Plaintiff alleges the harassment began in 2019 and continued through the end of her employment in June 2022, meaning her claims did not finish accruing until after the EFAA was enacted.

Defendant argues the EFAA only applies to pre-dispute arbitration agreements. The EFAA defines “pre-dispute” arbitration agreements as “agreements to arbitrate a dispute that had not yet arisen at the time the agreement was made.” 9 U.S.C. §§401, 402. Plaintiff alleges she complained to defendants about the alleged harassment before she signed the arbitration agreement in 2021. Compl. para. 25; Decl. Knight exh. 1. Defendant argues because plaintiff’s allegations of sexual harassment arose and were presented prior to signing the arbitration agreement, the agreement is a post-dispute agreement, not subject to the EFAA.

The alleged sexual harassment is alleged to have been perpetrated by a male employee of defendants. Compl. paras. 22-25. Plaintiff’s claims for sexual harassment arise from the same set of facts which began in 2019.

As a practical matter, it would be impossible to split plaintiff’s claims into pre- and post-EFAA claims, as all such claims share a core nucleus and perpetrator. Additionally, plaintiff does not allege the dates of any of the harassment. Comp., paras. 22-24. It appears most of the alleged harassment occurred prior to enactment of the EFAA. Finally, plaintiff complained of the harassment prior to enactment of the EFAA and prior to signing the arbitration agreement. Comp., para. 25. Plaintiff’s claims for sexual harassment arose, and she agreed to arbitrate those claims, before enactment of the EFAA. The EFAA does not apply.

Secondly, plaintiff argues the arbitration agreement is unconscionable, so unenforceable. She argues the arbitration agreement was an adhesion contract and procedurally unconscionable.

Defendant argues all employment contracts with arbitration agreements contain a degree of procedural unconscionability, but that is not dispositive, absent substantive unconscionability. See Serpa v. California Sur. Investigations, Inc. (2013) 215 Cal. App. 4th 695, 704. Defendant argues the arbitration agreement was three pages long, and plaintiff had the opportunity to consult counsel before deciding whether to sign, making any procedural unconscionability minimal. Decl. Knight exh. 1.

Plaintiff argues the arbitration agreement lacked mutuality, so is substantively unconscionable. Plaintiff argues the arbitration agreement applies to numerous parties, including all defendants and family members, agents, contractors and assignees. Plaintiff argues the arbitration agreement primarily convers claims likely to be brought by plaintiff and other employees, and not those likely to be brought by defendants or other hiring parties. Defendant Adelaide argues the arbitration agreement is not exhaustive, does not preclude bringing claims against any listed party and subjects all parties to arbitration, regardless of who brings a claim. Decl. Knight exh. 1. Defendant argues this mutuality defeats the claims of substantive unconscionability.

California law is clear that when an employee continues employment after notification that an agreement to arbitrate is a condition of continued employment, that employee impliedly consents to the arbitration agreement. See Diaz v. Sohnen Ent. (2019) 34 Cal. App. 5th 126, 130. Plaintiff’s employment continued for a year after signing the arbitration agreement, demonstrating her implied consent to be bound. Plaintiff failed to show procedural or substantive unconscionability such that the arbitration agreement should not be enforced on those grounds.

Defendant Adelaide’s motion to compel arbitration is GRANTED. The action is stayed as to Adelaide pending arbitration.