Judge: Gail Killefer, Case: 22STCV24754, Date: 2023-11-30 Tentative Ruling
Case Number: 22STCV24754 Hearing Date: November 30, 2023 Dept: 37
HEARING DATE: Thursday, November 30, 2023
CASE NUMBER: 22STCV24754
CASE NAME: Moin Rastegar v. Young’s Market Company, LLC, et al.
MOVING PARTY: Defendants Young’s Market
Company, LLC and Republic National Distributing Company, LLC.
OPPOSING PARTY: Plaintiff Moin Rastegar
TRIAL DATE: Not Set
PROOF OF SERVICE: OK
PROCEEDING: Motion to Compel
Arbitration
OPPOSITION: 16 May 2023
Supp. Opposition 21 November 2023
REPLY: 22
May 2023
Supp.
Reply: 21 November
2023
TENTATIVE: Defendants’ Motion to Compel Arbitration is
granted.
Background
This action arises out the employment of Moin Rastegar
(“Plaintiff”) with Defendants, Young’s Market Company, LLC. (“YMC”) and
Republic National Distributing Company, LLC (“RNDC”) (collectively
“Defendants”). YMC hired Plaintiff in
2008 as an Account Manager for the Pasadena territory and promoted him to House
Account Specialist in 2010. In May 2020, Plaintiff was furloughed from his
position due to the COVID-19 pandemic. The Complaint alleges that while other
employees were allowed to return before December 2020, he was not. In December
2020, Plaintiff alleges he was terminated. According to the Complaint, many
younger employees were hired or rehired, while many older employees of
Defendants were terminated.
Plaintiff’s Complaint alleges eight causes of action: (1)
discrimination in employment in violation of the Fair Housing Employment Act
(“FEHA”), (2) harassment in employment in violation of FEHA, (3)
actual/perceived retaliation in employment in violation of FEHA, (4) failure to
prevent or remedy discrimination, harassment, and/or retaliation in violation
of FEHA, (5) whistleblower retaliation in violation of Labor Code section
1102.5, (6) failure to hire in violation of FEHA and Labor Code section 1102.5,
(7) wrongful discharge in violation of public policy, and (8) intentional
infliction of emotional distress.
Defendants now move to compel arbitration and for a stay of
this action pending completion of arbitration. Plaintiff opposes the
motion.
On
May 30, 2023, the court continued the motion to allow Plaintiff to conduct
discovery regarding whether Plaintiff validly signed the Arbitration Agreement
dated December 23, 2013. The matter is now before the court.
I. Legal Standard
“California law reflects a strong
public policy in favor of arbitration as a relatively quick and inexpensive
method for resolving disputes. To further that policy, Code of Civil
Procedure, section 1281.2 requires a trial court to enforce a written
arbitration agreement unless one of three limited exceptions applies.
Those statutory exceptions arise where (1) a party waives the right to
arbitration; (2) grounds exist for revoking the arbitration agreement; and (3)
pending litigation with a third party creates the possibility of conflicting
rulings on common factual or legal issues.”
(CCP, § 1281.2; Acquire II, Ltd. v. Colton Real Estate Group (2013) 213
Cal.App.4th 959, 967.) Similarly, public policy under federal law favors
arbitration and the fundamental principle that arbitration is a matter of
contract and that courts must place arbitration agreements on an equal footing
with other contracts and enforce them according to their terms. (AT&T
Mobility LLC v. Concepcion (2011) 563 U.S. 333, 339.)
In deciding a motion or petition
to compel arbitration, trial courts must first decide whether an enforceable
arbitration agreement exists between the parties and then determine whether the
claims are covered within the scope of the agreement. (Omar v. Ralphs
Grocery Co. (2004) 118 Cal.App.4th 955, 961.) The opposing party has
the burden to establish any defense to enforcement. (Gatton v.
T-Mobile USA, Inc. (2007) 152 Cal.App.4th 571, 579 [“The petitioner ...
bears the burden of proving the existence of a valid arbitration agreement and
the opposing party, plaintiffs here, bears the burden of proving any fact
necessary to its defense.”].)
II. Evidentiary Objections
Plaintiff’s Evidentiary
Objections to the Supplemental Declaration of Amanda Flanagan filed on November
21, 2023:
Objections Nos. 1 to 3 are
sustained as the court agrees that the 2008 Arbitration Agreement is not at
issue. Defendants waited until its sur-reply and after Plaintiff had submitted
its supplemental opposition to raise the argument that Plaintiff should be
compelled to arbitrate his claims pursuant to the 2008 Agreement. (See Malmstrom v. Kaiser
Aluminum & Chemical Corp. (1986) 187 Cal.App.3d 299, 320 [“Points
raised for the first time in a reply brief will not be considered.”].)
Objection Nos. 4 to 5 are overruled.
The court finds the declarant has personal knowledge and foundation to speak to
the login procedures the Workday website.
II. Discussion
A. Existence
of an Arbitration Agreement
A motion to compel arbitration or stay proceedings
must state verbatim the provisions providing for arbitration or must have a
copy of them attached. (CRC, rule
3.1330.) A party may demonstrate express acceptance of the arbitration
agreement in order to be bound (e.g., Mago
v. Shearson Lehman Hutton Inc. (9th Cir. 1992) 956 F.2d 932 [agreement to
arbitrate included in job application]; Nghiem
v. NEC Electronic, Inc. (9th Cir. 1994) 25 F.3d 1437 [agreement to
arbitrate included in handbook executed by employee]; Lagatree v. Luce, Forward, Hamilton & Scripps (1999) 74 Cal.
App. 4th 1105 [employer may terminate employee who refuses to sign agreement to
arbitrate]) or implied-in-fact in fact acceptance (Asmus v. Pacific Bell (2000) 23 Cal. 4th 1, 11 [implied acceptance
of changed rules regarding job security]; DiGiacinto
v. Ameriko-Omserv Corp. (1997) 59 Cal. App. 4th 629, 635 [implied
acceptance of changed compensation rules]).
(Craig v. Brown & Root (2000)
84 Cal.App.4th 416, 420.)
“A signed agreement is not necessary, however, and
a party’s acceptance [of an agreement to arbitrate] may be implied in
fact….” (Pinnacle Museum Tower Ass’n v. Pinnacle Market Dev. (US), LLC
(2012) 55 Cal.4th 223, 23 (Pinnacle),
6.) “An arbitration clause within a
contract may be binding on a party even if the party never actually read the
clause.” (Ibid.)
Moving Defendants contend that
Plaintiff must be ordered to arbitrate his claims against them because
Plaintiff entered into an agreement to arbitrate all disputes arising out of
his employment with Defendants (the “Arbitration Agreement”). (Motion, 6-7;
Declaration of Amanda Flanagan (“Flanagan Decl.”) ¶3-15.) Defendants assert
Plaintiff signed the Arbitration Agreement in December 2013 through an online
Workday portal, where Plaintiff acknowledged that he agreed to the Arbitration
Agreement. (Id.) The Arbitration Agreement provides in pertinent part as
follows:
The Company
and you (“Employee”, collectively “the Parties”), mutually agree to arbitrate
before a neutral arbitrator (the “Arbitrator”) any and all disputes or claims
by and between the Parties including, but not limited to, claims arising from
or relating to Employee’s recruitment, hiring, and employment with the Company,
the termination of that employment, and any claims arising post-employment,
including claims against any current or former agent or employee of the
Company, whether the disputes or claims arise in tort, contract, or pursuant to
a law, statute, regulation, or ordinance now in existence or which may in the
future be enacted or recognized, including, but not limited to, the following
claims:
...
claims for
wrongful termination of employment, violation of public policy, whistle
blowing, constructive termination, infliction of emotional distress,
interference with contract, economic relations or prospective economic
advantage, defamation, invasion of privacy, unfair business practices, and any
other personal injury, tort or tort-like causes of action relating to or
arising from the employment relationship or the formation or termination
thereof;
claims for
discrimination, harassment, or retaliation under any federal, state, or
municipal law, statute, regulation, or ordinance that prohibits discrimination,
harassment, or retaliation in employment, including but not limited to Title
VII of the Civil Rights Act of 1964, as amended, the Civil Rights Act of 1991,
the Age Discrimination in Employment Act of 1967, as amended, the Americans
with Disabilities Act of 1990, as amended, the Family and Medical Leave Act of
1993, the Uniformed Service Employment and Reemployment Rights Act of 1994, as
amended, the California Constitution, the California Fair Employment and
Housing Act, the California Family Rights Act, the California Labor Code, the
Fair Labor Standards Act, and any other state antidiscrimination, harassment
and retaliation laws, state labor codes and wage and hour laws, state leave
laws, as well as claims for violation of any other federal, state, or municipal
law, statute, regulation, or ordinance, except as expressly set forth herein;
claims for
non-payment or incorrect payment of wages, commissions, bonuses, severance,
employee fringe benefits, stock options and any other forms of compensation or
remuneration, whether such claims be pursuant to alleged express or implied
contract or other obligation, equity, state law, the Fair Labor Standards Act,
the Employee Retirement Income Security Act of 1974, the California Labor Code,
the California wage orders and any other federal, state, or municipal laws,
statutes, regulations or ordinances relating to wages, compensation or employee
benefits;
...
The Parties
agree that arbitration of the disputes and claims covered by this Agreement
shall be the sole and exclusive method of resolving any and all existing and
future disputes or claims arising between the Parties. The Parties further
agree that the following disputes and claims are not covered by this Agreement
and shall therefore be resolved in any appropriate forum, including courts of
law, as required by the laws then in effect: claims for workers’ compensation
benefits; unemployment insurance compensation benefits; state or federal
disability insurance benefits and unfair labor practices.
The Parties
agree that nothing in this Agreement should be interpreted as restricting or
prohibiting the Parties from filing a charge or complaint with a federal,
state, or local administrative agency charged with investigating or prosecuting
complaints under any applicable federal, state or municipal law, statute,
regulation or ordinance, including, but not limited to, the Equal Employment
Opportunity Commission, the California Department of Fair Employment and
Housing, any other state or local fair employment agency and the National Labor
Relations Board. Any dispute or claim that is not resolved through the federal,
state, or local agency must be submitted to arbitration in accordance with this
Agreement.
...
Final
and Binding Arbitration
The Parties
agree that the arbitration of disputes and claims under this Agreement shall be
final and binding and take the place of a trial before a court or jury. The
Parties understand that they are expressly waiving any and all rights to a
trial before a court or jury regarding any disputes and claims which they now
have or which they may have in the future that are subject to arbitration under
this Agreement; provided, however, nothing in this Agreement prohibits either
Party from seeking provisional remedies in court in aid of arbitration
including temporary restraining orders, preliminary injunctions and other
provisional remedies.
Arbitration
Procedures
The Parties
agree that this Agreement shall be governed by and construed and enforced
pursuant to the Federal Arbitration Act, 9 U.S.C. §§1-16, and not individual
state laws regarding enforcement of arbitration agreements. The Parties further
agree that the arbitration of any dispute shall be conducted in accordance with
the then-current Employment Arbitration Rules and Mediation Procedures of the
American Arbitration Association (available at
http://www.adr.org/aaa/faces/rules); provided, however, that the Arbitrator
shall allow reasonable discovery, including depositions, to prepare for
arbitration of any claims. At a minimum, without adopting or incorporating the
state law into this Agreement, the Arbitrator shall allow at least that
discovery that is authorized or permitted by California Code of Civil Procedure
§1282, et seq., and any other discovery required by law in arbitration
proceedings. The Parties also agree that nothing in this Agreement relieves
either of them from any obligation they may have to exhaust all administrative
remedies before arbitrating any claims or disputes under this Agreement. The
Arbitrator shall issue a written award that sets forth the essential findings
and conclusions on which the award is based. The Arbitrator shall have the
authority to award any relief authorized by law in connection with the asserted
claims or disputes. The Arbitrator’s award shall be subject to correction,
confirmation, or vacation, as provided by any applicable law setting forth the
standard of judicial review of arbitration awards. The Arbitrator shall have no
power to commit an error of law or legal reasoning. Except as otherwise
required under applicable law, the Parties agree that (1) class action and
representative action procedures shall not be asserted, nor will they apply, in
any arbitration pursuant to this Agreement; (2) neither Employee nor the
Company will assert any class action or representative action claims; and (3)
the Parties shall only submit their own, individual claims in arbitration and
will not seek to represent the interests of any other person.
Governing
Law
The Parties
agree that this Agreement and its validity, construction and performance shall
be governed solely by the Federal Arbitration Act and cases decided thereunder.
The disputes and claims arising out of the Employee’s employment will be
governed by the laws of the state where the Employee primarily worked or
federal law. If both federal and state law apply to any given dispute or claim,
the Party initiating arbitration will have the right to elect the applicable
law.
Costs
of Arbitration
The Parties
agree that the Company will bear the Arbitrator’s fee, all other forum costs
unique to arbitration and any other type of expense or cost that Employee would
not be required to bear if he or she were free to bring the dispute or claim in
court. The Parties shall each pay their own attorneys’ fees and costs incurred
in connection with the arbitration not otherwise covered by this paragraph, and
the Arbitrator will not have authority to award attorneys’ fees unless a
statute or contract at issue in the dispute authorizes the award of attorneys’
fees to the prevailing party, in which case the Arbitrator shall have the
authority to make an award of attorneys’ fees as required or permitted by
applicable law. If there is a dispute as to whether the Company or Employee is
the prevailing party in the arbitration, the Arbitrator will decide this issue.
Complete
Agreement
The Parties
agree that this Agreement contains the complete agreement between the Company
and Employee regarding the subjects covered in it; that it supersedes all prior
representations and agreements between them, if any; and that it may be
modified only in a writing, expressly referencing this Agreement and signed by
the Chief Executive Officer of the Company, or his/her authorized designee, and
the Employee.
ACKNOWLEDGMENT
AND AGREEMENT TO ARBITRATE CLAIMS
I
acknowledge that I have received, read and agree to this Agreement. I
UNDERSTAND THAT THE COMPANY AND I ARE WAIVING ALL RIGHTS TO A TRIAL OR HEARING
BEFORE A COURT OR JURY OF ANY AND ALL DISPUTES AND CLAIMS SUBJECT TO
ARBITRATION UNDER THIS AGREEMENT. I agree that the Company’s agreement to
arbitrate all disputes and claims and my new or continued employment is
sufficient consideration for me to enter into this Agreement. I further
understand and agree that nothing contained in this Agreement alters the “at-will”
nature of my employment with the Company. I understand and agree that the
Agreement shall immediately apply to me and the Company upon the earlier of the
Company’s receipt of my electronic signature agreement, or acceptance of
employment or other benefits from the Company.
(Flanagan Decl., ¶ 17, Exh. B.) The American
Arbitration Association’s Employment Arbitration Rules and Mediation Procedures
is attached to the back of the Arbitration Agreement.
The
Flanagan Declaration also attests that the Defendants used the online Workday
portal for employees, and Plaintiff launched his Workday portal and
acknowledged the Arbitration Agreement on December 23, 2013. (Flanagan Decl. ¶
16.) Flanagan attests that, in her role as Senior Director, she has reviewed
the books and records at issue in this action and has had access to personnel
files maintained by Defendants for its employees. (Flanagan Decl. ¶ 4.)
Flanagan attests “Mr. Rastegar logged into the Workday portal at 4:19 p.m. on
December 23, 2013. It also shows Mr. Rastegar accessed and accepted the
Arbitration Agreement from the IP address 70.197.86.64.” (Flanagan Decl. ¶19,
Exh. A.) Further, Christopher C. Underwood, Defendants’ then Chief Executive
Officer, signed the Arbitration Agreement on behalf of Defendants. (Flanagan
Decl., Exh. B.)
In opposition, Plaintiff first explains that
Plaintiff and his counsel communicated with Defendants, and their General
Counsel, in 2021, and
“[t]here
were several communications, and Defendants produced what they said was a
complete production of Plaintiff’s personnel file, payroll records, and any
documents he signed. Plaintiff’s counsel followed up in June 2022, before
filing the lawsuit, again asking if everything had been produced. Ms. Mahapatra
confirmed everything was previously produced (in 2021) and nothing else
existed.” (Opposition, 3-4.)
Plaintiff further explains that Plaintiff has
propounded discovery to address the formation of this Arbitration Agreement,
and “has started the meet and confer process and suggested an IDC...” (Id.)
Plaintiff then contends he does not recall ever
signing or seeing the Arbitration Agreement in 2013, and “it was not impossible
for someone else to access Plaintiff’s account.” (Opp., 4.)
Plaintiff also requests from this court:
“If the
Court is inclined to do anything other than deny the motion, it must first
allow Plaintiff the opportunity to conduct relevant discovery into key issues
of contract formation. Defendants’ moving papers, along with the personnel
records previously produced to Plaintiff and his counsel, all leave a slew of
unanswered questions surrounding contract formation. The papers simply ignore
the first five (5) years of Mr. Rastegar’s employment where he signed several
other documents which could be (and likely are) relevant to deciding this
motion (for example, if one of them contained modification language preventing
the current agreement from going into effect). Defendants have also failed
without any justification to provide the evidence referenced in their moving
papers.” (Opp., 5.)
Plaintiff further specifically denies ever
receiving, reviewing, or signing the Arbitration Agreement. (Opp., 7.)
Therefore, the court notes Plaintiff’s direct challenging of the authenticity
of the alleged signature. (Ruiz v. Moss Bros. Auto Group, Inc. (2014)
232 Cal.App.4th 836, 845-846.) Plaintiff also points to an earlier
arbitration agreement between Plaintiff and Defendants, from 2008, as further
questioning of the legitimacy of this Arbitration Agreement; however, given
this Arbitration Agreement’s language regarding the superseding of prior
agreements, the court finds this argument unavailing. (Opp., 8.)
Further, alternatively, Plaintiff requests “the
ability both to conduct discovery on the matters set forth in the accompanying
declaration of Peter Javanmardi, and to present oral testimony at a hearing
before this Court. (CRC, rule 3.1306.)” (Opp., 14-15; citing Rosenthal v.
Great Western Financial Securities Corp. (1996) 14 Cal.4th 394, 414.)
Plaintiff argues such discovery and testimony is necessary given the
“significant disputes” and “countering declarations”
In reply, Moving Defendants contend that a valid
arbitration agreement exists because Plaintiff does not dispute that she signed
the Arbitration Agreement. (Reply, 3-4.) According to Moving Defendants,
Plaintiff’s declaration in support of her opposition is insufficient to counter
her express acknowledgement that by signing the Arbitration Agreement, that she
received a copy of the ADR Policy. (Id.)
The
court granted Plaintiff’s request to conduct additional discovery and depose
Amanda Flanagan regarding the Workday portal and Plaintiff’s acknowledgment of
the Arbitration Agreement dated December 23, 2023. (Javanmardi Supp. Decl. ¶ 5,
Exh. 11.) In considering a motion to compel arbitration, the trial court sits
as the trier of fact “weighing
all the affidavits, declarations, and other documentary evidence, as well as
oral testimony received at the court's discretion, to reach a final
determination.” (Engalla v. Permanente Medical Group, Inc. (1997) 15
Cal.4th 951, 972 [citations omitted].) Plaintiff’s
supplemental declaration failed to outline what conclusions it wanted the court
to draw from Ms. Flanagan’s deposition. However, in examining the relevant
experts of Ms. Flanagan’s deposition, the court found that it was unchallenged
that Plaintiff’s Workday credentials were used on December 23, 2023, to sign
the 2013 Arbitration Agreement.
Plaintiff failed to submit evidence to show that
someone else has access to her Workday credentials or knew the challenge
questions to reset Plaintiff’s password and gain access to Workday. The fact
that Plaintiff does not recall signing the 2013 Agreement is not evidence that she
did not sign the agreement and is insufficient to rebut Defendants’ evidence
that someone using Plaintiff’s username and unique password logged into Workday
at 4:19 p.m. on December 23, 2013, and signed the Arbitration Agreement. (Flanagan
Decl. ¶ 19, Exh. A.) Plaintiff’s allegation that someone else may have used her
username and password to log into Workday remains mere speculation because
Plaintiff failed to submit a declaration or other evidence to show that
Plaintiff shared her credentials with other individuals or that others knew and
had access to her Workday credentials.
The
court finds that Defendants have shown that a valid Arbitration Agreement exists,
and that Plaintiff failed to show that she did not sign the Agreement. The
court declines to address whether Defendants’ Motion to Compel Arbitration is
enforceable per the terms of the 2008 Agreement because the argument was raised
for the first time in Defendants’ supplemental reply. “Points raised for the first
time in a reply brief will ordinarily not be considered, because such
consideration would deprive the respondent of an opportunity to counter the
argument.” (American Drug Stores, Inc. v. Stroh (1992) 10 Cal.App.4th
1446, 1453.) The court will proceed to analyze the parties’ arguments regarding
defenses to enforcement.
B. Defenses to Enforcement
Pursuant to Armendariz v.
Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83, 114 (Armendariz)
both procedural and substantive unconscionability must be present for a court
to exercise its discretion to refuse to enforce a valid arbitration agreement.
Additionally, in Armendariz, the
California Supreme Court recognized that it is more appropriate to sever and
restrict illegal terms that are collateral to the main purpose of a
contract than to find the entire contract invalid. (Armendariz,
supra, 24 Cal.4th at 124 [“Courts are to look to the various purposes of
the contract. If the central purpose of the contract is tainted with
illegality, then the contract as a whole cannot be enforced. If the
illegality is collateral to the main purpose of the contract, and the illegal
provision can be extirpated from the contract by means of severance or
restriction, then such severance and restriction are appropriate.”].)
Additionally,
“[t]he arbitration must meet certain minimum requirements, including neutrality
of the arbitrator, the provision of adequate discovery, a written decision that
will permit a limited form of judicial review, and limitations on the costs of
arbitration.” (Id. at 90-91.)
i. Injunctive Relief
Plaintiff’s
Complaint pleads for “injunctive relief” against Moving Defendants “to compel
them to investigate and take appropriate remedial action, to stop, prevent a
hostile work environment, and to return Plaintiff back to work, in her prior
position, responsibilities and entitlements, and to compensate her for the harm
she suffered.” (Prayer for Relief, #9.)
Plaintiff
argues that Moving Defendants’ motion must be denied because the Complaint also
seeks injunctive relief, which is a remedy that can only be provided by the
court. (Opposition, 5.) Plaintiff cites Broughton v. Cigna Healthplans
(1999) 21 Cal.4th 1066 (Cigna) in support of this argument.
In
reply, Moving Defendants contend that the Arbitration Agreement is not
substantively unconscionable because the Complaint seeks only private
injunctive relief mandating reinstatement of her employment. (Reply, 4, fn.3.)
According to Moving Defendants, such injunctive relief may be awarded through
the provisions of the Arbitration Agreement. (Id.)
The
court agrees with Moving Defendants that the motion need not be denied because
Plaintiff’s Complaint prays for injunctive relief. Plaintiff’s reliance on Cigna
is misplaced, as Cigna deals with whether claims for an injunction
against “deceptive methods, acts, and practices” under the CLRA are properly
subject to arbitration. (Cigna, supra, 21 Cal.4th at 1072.) The Cigna
court concluded that “[g]iven the strong policy in both federal and state law
for arbitrating private disputes and given the inherent unsuitability of
arbitration as a means of resolving plaintiffs' action for injunctive relief
under the CLRA,” the request for injunctive relief should be decided in a
judicial forum. (Id. at 1087.) Although Plaintiff’s requested relief is
also titled an “injunction,” Plaintiff’s requested injunction differs from the
one discussed in Cigna. Thus, Cigna and its holding is not
applicable in this instance.
ii. Procedural Unconscionability
Plaintiff
contends that the Arbitration Agreement is procedurally unconscionable because
it was presented on a take it or leave it basis. (Opposition, 4-5.) According
to Plaintiff, no one explained to her the meaning of the Arbitration Agreement,
and she was merely required to sign it along with other documents as a
condition of employment. (Id.; Plaintiff Decl. ¶¶ 3-8.)
In
reply, Moving Defendants contend that the fact that an arbitration agreement
may be a contract of adhesion does not render it sufficiently unconscionable to
be unenforceable. (Reply, 5.)
The
court agrees with Moving Defendants. The Arbitration Agreement provides that
Plaintiff’s signature was “IN CONSIDERATION FOR AND AS A MATERIAL CONDITION OF
EMPLOYMENT.” (See Hofman Decl., Exh. A.) Thus, the Arbitration Agreement is
modestly procedurally unconscionable. (See Nguyen v. Applied Medical
Resources Corp. (2016) 4 Cal.App.5th 232, 247-250 [arbitration agreement
modestly unconscionable although presented on take-it-or-leave-it-basis and
arbitration rules not attached].)
Because
Armendariz requires that an arbitration agreement be both procedurally
and substantively unconscionable before the court may refuse to enforce it, the
court will analyze the parties’ arguments regarding substantive
unconscionability.
iii. Substantive Unconscionability
Plaintiff
contends that that Arbitration Agreement is substantively unconscionable
because Plaintiff was not provided the arbitration rules, which constitutes
both procedural and substantively unconscionability. (Opposition, 5.) Plaintiff
cites Harper v. Ultimo (2003) 113 Cal.App.4th 1402, 1406 (Harper)
and Fitz v. NCR Corp. (2004) 118 Cal.App.4th 702, 721 (Fitz)
for this argument. Plaintiff additionally contends that the Arbitration
Agreement fails because it does not provide the minimum protections required by
Armendariz, in that the Arbitration Agreement fails to provide for any
discovery or which rules of discovery are to be followed. (Opposition, 7.)
Plaintiff’s
reliance on Harper and Fitz are misplaced. In Harper, the
Court of Appeal found that referring plaintiffs to the Better Business Bureau’s
(“BBB”) arbitration rules was unconscionable for the following reasons: (1) the
BBB’s rules limited the scope of available relief, (2) the BBB rules were not
attached to the agreement, (3) as written, the arbitration rules applicable may
be subject to change. (Harper, supra, 113 Cal.App.4th at 1406-1407.) In Fitz,
the Court of Appeal found that the arbitration agreement exhibited procedural
unconscionability. (Fitz, supra, 118 Cal.App.4th at 721-722) However,
this finding was based on the fact that plaintiff’s employer enacted a new
arbitration policy and deemed its employees, including plaintiff, to have
agreed to the policy by not signing the new agreement but continuing to work
for the employer for one month. (Id. at 708.) Thus, Fitz is
factually inapposite to this action.
In
reply, Moving Defendants contend that Plaintiff has failed to establish
unconscionability because the Arbitration Agreement does attach a copy of the
ADR Policy, contrary to Plaintiff’s contentions. (Reply, 4-5.) Additionally,
the ADR Policy provides for all the details required in Armendariz
regarding discovery procedures. (Id.)
The
court finds that the Arbitration Agreement is not procedurally unconscionable.
Contrary to Plaintiff’s assertions, the Arbitration Agreement does attach a
copy of the ADR Policy. The ADR Policy provides as follows with regarding to
discovery:
The parties shall cooperate to
the greatest extent practicable in the voluntary exchange of documents and
information to expedite the arbitration. After selection of the arbitrator, the
parties shall have the right to take depositions and to obtain discovery
regarding the subject matter of the action and to use and exercise all of the
same rights, remedies and procedures, and be subject to all of the same duties,
liabilities and objections as provided for in the civil discovery statutes of
the state in which you provide services. The arbitrator shall have the
authority to rule on motions (including the power to issue orders and determine
appropriate remedies) regarding discovery and to issue any protective orders
necessary to protect the privacy and/or rights of parties and/or witnesses.
(Hofman
Decl., Exh. A.) Thus, the ADR Policy complies with the requirements of Armendariz.
Because
both procedural and substantive unconscionability are required for the court to
refuse to enforce a valid arbitration agreement, Moving Defendants’ motion is
granted.
Conclusion
Defendants’ Motion to Compel Arbitration
is granted. Plaintiff is ordered to arbitrate her claims against Moving
Defendants. The action is stayed pending completion of arbitration. Moving
Defendants are to give notice.