Judge: Gail Killefer, Case: 23STCV19398, Date: 2024-05-08 Tentative Ruling
Case Number: 23STCV19398 Hearing Date: May 8, 2024 Dept: 37
HEARING DATE: Wednesday, May 8, 2024
CASE NUMBER: 23STCV19398
CASE NAME: Arcenia Mejia v.
Laurel Pointe Apartments
MOVING PARTY: Defendant Laurel Pointe
Apartments
OPPOSING PARTY: Plaintiff Arcenia Mejia
TRIAL DATE: Not Set.
PROOF OF SERVICE: OK
PROCEEDING: Motion to Compel
Arbitration
OPPOSITION: 04 April 2024
REPLY: 10
April 2024
TENTATIVE: Defendant’s
Motion to compel arbitration is denied. Defendant to give notice.
Background
On August 14, 2023, Arcenia Mejia (“Plaintiff”) filed a Complaint
against Laurel Pointe Apartments (“Defendant”) and Does 1 to 25.
The First Amended
Complaint (“FAC”) alleges nine causes of action:
1)
Violation of Lab. Code §
1102.5;
2)
Wrongful Termination in
Violation of Public Policy;
3)
Minimum Wage/Overtime
Violations;
4)
Meal Period Violations;
5)
Rest Period Violations;
6)
Violation of Lab. Code §
226 (Unlawful Wage Statements);
7)
Lab. Code § 2023 (Waiting
Time Penalties);
8)
Failure to Reimburse
Necessary Business Expenses (Lab. Code § 2802); and
9)
Unfair Business Practices.
On February 7,
2023, Defendant moved to compel arbitration and dismiss or stay the action
pending arbitration. Plaintiff opposes the Motion. 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
Defendant’s objection to the
Declaration of Arcenia Mejia:
Defendant objects to Plaintiff’s
declaration on the grounds that the declaration is a translation and there is
no declaration from the translator showing compliance with Evid. Code § 750.
Plaintiff subsequently submitted a corrected translation with the translator’s
information. (Amed. Mejia Decl. 04/15/24.) Accordingly, the court denies the
Defendant’s request to strike the declaration.
III. Discussion
Defendant requests
an order compelling Plaintiff to submit her claims to arbitration and
dismissing the action without prejudice or, in the alternative, staying the
action in its entirety pending arbitration.
A. Existence of an Agreement to Arbitrate
“The
petitioner bears the burden of proving the existence of a valid arbitration
agreement by the preponderance of the evidence, and a party opposing the
petition bears the burden of proving by a preponderance of the evidence any
fact necessary to its defense. In these summary proceedings, the trial court
sits as a 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. No jury trial is available for a
petition to compel arbitration.” (Engalla v. Permanente Medical Group, Inc.
(1997) 15 Cal.4th 951, 972 [Citations Omitted].)
Defendant
moves to compel arbitration of this action on the basis that Plaintiff signed a
June 19, 2020, Offer Letter (the “Letter”) on June 22, 2020, that contained an
arbitration provision wherein Plaintiff agreed to arbitrate all her claims
against Defendant. Defendant asserts that as part of the onboarding process for
new hires, on June 19, 2020, Plaintiff was presented with, “among other
things”, the Letter that contained the following relevant provisions:
Arbitration
In the event of any dispute in
connection with this Agreement or the Exhibits, the parties agree to resolve
the dispute by binding arbitration in San Diego, California, under the
Commercial Arbitration Rules of the American Arbitration Association (“AAA”),
with a single arbitrator familiar with employment and technology agreements
appointed by the AAA. In the event of any dispute, the prevailing party shall
be entitled to its reasonable attorneys’ fees and costs from the other party,
whether or not the matter is litigated or arbitrated to a final judgment or
award. The arbitrator’s decision shall be final and binding on all parties, and
may be entered in any court having competent jurisdiction.
Severability
If any provisions of this
Agreement or the Exhibits is determined to be invalid or unenforceable, the
remainer shall be unaffected and shall be enforceable against both the Company
and you.
Employee Review and Receipt of
Agreement
You acknowledge that you have
fully read and considered all provisions of this Agreement and the Exhibits and
agree that all of the restrictions set forth herein are fair and reasonably
required to protect the Company’s interest. You acknowledge that you have
received a copy of this Agreement and Exhibits as signed by you. You
acknowledge that prior, to signing this Agreement; you have had an opportunity
to seek the advice of independent counsel of your choice relating to the terms
of this Agreement.
(Abbot
Decl. ¶ 7, Ex. A [bold original].)
Despite the Letter
referencing Exhibits, the only exhibit attached to the Letter is Exhibit A
entitled “DESCRIPTION OF DUTIES” which does not refer to arbitration.
In opposition,
Plaintiff does not dispute that she signed the Letter but argues that the
arbitration provision is unconscionable. While Plaintiff has placed the
enforceability of the arbitration provision at issue, the court finds that
Defendants have proven that Plaintiff signed the Letter with an agreement to
arbitrate.
B. The Validity of Arbitration Provision and Claims of
Unconscionability
Plaintiff argues that the arbitration provision is unconscionable.
“The burden of proving unconscionability
rests upon the party asserting it.” (OTO,
L.L.C. v. Kho (2019) 8 Cal.5th 111,
126.) Plaintiff submits a declaration attesting that she is a native Spanish
speaker with a limited ability to speak, read, and write in English. (Amed.
Mejia Decl. ¶ 2.) Plaintiff states that Defendants knew she had a limited
ability to speak, read, and write English when they hired her because
Defendants helped her fill out her job application. (Id. ¶ 4.) When
Plaintiff went to Defendants in person on June 22, 2022, it was the same day
she was provided with the offer letter and signed it. (Id. ¶ 5.) When
she arrived at the office on that day, “Defendants only
explained my pay rate and that I was allowed some vacation days, and then
Defendants showed me where to sign on the offer letter.” (Id. ¶ 6.) No
Spanish version of the Letter was provided to Plaintiff nor was a Spanish
version of the arbitration provision. (Id. ¶ 7.) Nor did Defendant explain what arbitration
was or what an arbitration agreement was. (Id. ¶ 8.) Plaintiff asserts
that she was never told that the terms in the Letter were negotiable and that
she would not have signed the Letter had she known what an arbitration
provision was. (Id. ¶¶ 8, 9.)
A showing of
unconscionability requires procedural and substantive unconscionability.
Procedural unconscionability asks whether there is oppression from unequal
bargaining power or surprise from buried terms.¿¿(Armendariz v. Foundation
Health¿(2000) 24 Cal.4th 83, 114 (Armendariz).) Substantive
unconscionability asks whether there are overly harsh, one-sided terms.¿(Ibid.)
Both are required to be proven to find unconscionability.¿However, there is a
sliding scale; if an agreement is particularly substantively unconscionable,
the petitioner need not show a large amount of procedural unconscionability,
and vice versa. (Ibid.) “The party resisting arbitration bears the
burden of proving unconscionability.” (Pinnacle Museum Tower Assn. v.
Pinnacle Market Development (US), LLC¿(2012) 55 Cal.4th 223, 236.)
i. Procedural Unconscionability
“Oppression arises from an inequality of bargaining power, when
one party has no real power to negotiate or a meaningful choice. Surprise
occurs when the allegedly unconscionable provision is hidden.” (Carmona v. Lincoln Millennium Car Wash, Inc. (2014) 226
Cal.App.4th 74, 84 (Carmona).)
Here, Plaintiff asserts that the content of the Letter was
explained to her, but that Defendant omitted that the Letter contained an
arbitration provision and only explained to her the rate of pay and vacation
days. (Amed. Mejia Decl. ¶ 6.) Like the plaintiffs in Carmona, who were
also native Spanish speakers who could not read English and to whom “no one explained the arbitration agreement ”,
Plaintiff was also not told what arbitration was and what it would entail,
despite Defendant being purportedly aware that Plaintiff’s English proficiency
was limited. (Carmona, supra, 226 Cal.App.4th at pp. 84-85.) “Procedural
unconscionability arises when an
arbitration agreement ‘was neither provided in a
Spanish-language copy nor explained to respondents who did not understand
written English.’ ” (Nunez
v. Cycad Management LLC (2022) 77 Cal.App.5th 276,
284 (Nunez).) “The circumstances here demonstrate significant
oppression. The agreement was presented to Kho in his workspace, along with
other employment-related documents. Neither its contents nor its significance
was explained.” (OTO, L.L.C. v. Kho (2019) 8 Cal.5th 111, 127 (Kho).)
Plaintiff’s testimony supports that
finding that the arbitration provision in the Letter was hidden by Defendant who
failed to explain the provision to Plaintiff despite knowing she had a limited
ability to read and understand English.
“A nonnegotiable contract of
adhesion in the employment context is procedurally unconscionable.” (Ajamian v. CantorCO2e, L.P. (2012) 203 Cal.App.4th 771, 796.) “When arbitration is a condition of employment,
there is inherently economic pressure on the employee to accept arbitration.
This alone is a fairly low level of procedural unconscionability.” (Cisneros Alvarez v. Altamed Health Services Corporation
(2021) 60 Cal.App.5th 572, 591 (Cisneros).) The Letter contains as a
signature from Defendants “RPM”, presumably that of Shannon Abbott, Defendant’s
Reginal Portfolio Manager.” While Ms. Abbot did submit a rebuttal declaration,
she fails to state that Plaintiff did not receive assistance with her job
application or that the Letter was never explained to Plaintiff because
Plaintiff did not request assistance with the Letter or that if the Letter was
explained to Plaintiff, the arbitration provision was also fully explained to
Plaintiff.
Ms. Abbot’s declaration confirms that Ms.
Abbot knew English was not Plaintiff’s first language but asserts “I never had
a problem communicating with [Plaintiff] in English and she never indicated
that she did not sufficiently understand English.” (Supp. Abbot Decl. ¶ 3.) Ms.
Abbot further contents that Plaintiff never told her or anyone else that she
could not read or understand English and that she had observed Plaintiff talk
with other co-workers in English. (Supp. Abbot Decl. ¶ 3, 5, 6.) Ms. Abbot’s
declaration fails to show that Plaintiff has sufficient English proficiency to
understand what she was signing, and that Plaintiff was not misled about the
nature of the Letter when it was explained to her as explanation about the
Letter included an explanation about the arbitration provision and what that
entailed was omitted from the explanation. (Amed. Mejia Decl. ¶ 6.)
In Cisneros, the appellate
court found no Spanish translation was required because the plaintiff’s own
declaration attested to “a much higher level of English fluency” despite
Spanish being the plaintiff’s preferred language for legal terms and concepts.
(Cisneros, supra, 60 Cal.Ap.5th at p. 589.) In Nguyen v. Applied Medical Resources Corp. (2016) 4
Cal.App.5th 232, the appellate court did not disturb the trial court’s findings
that the plaintiff was fluent in speaking or reading English, because the
plaintiff’s job application “attest[ed] to the fact that he has English as a
special skill or talent. He checked the appropriate boxes on the application
which require such an understanding, and as he is a civil engineer trained in
Australia.” (Id. at p. 250.)
Here, the only evidence offered to rebut
Plaintiff’s assertion that her ability to speak, read, and write English was
limited was Ms. Abbott’s observation that she had observed Plaintiff talk with
co-workers in English and Ms. Abbot’s assertion that she had no problem
communicating with Plaintiff in English. (Supp. Abbott Decl. ¶¶ 4-6.) But such
observations fail to show that Plaintiff had the requisite English skill to
understand what she was signing and that no one misled Plaintiff about the
nature of the Letter by failing to explain to her that it contained an
arbitration provision. (Supp. Abbott Decl. ¶¶ 4-6.) Defendants provide evidence
that a copy of the Letter was emailed to Plaintiff on June 19, 2020, but the
email fails to show that the content of the Letter was fully explained to
Plaintiff and that Plaintiff knew enough English to understand the content of
the email, the Letter, and the arbitration provision. (Supp. Abbott Decl. ¶ 2,
Ex. 1.)
Moreover, although the Letter contains an
arbitration provision and makes references to exhibits, no exhibit is attached as
to the applicable arbitration rules or where Plaintiff may obtain said copy. “Although the agreement referenced the
employment dispute rules of the AAA, the car wash companies did not provide
those rules. Failure to provide the applicable arbitration rules is another
factor that supports procedural unconscionability.” (Carmona, supra,
226 Cal.App.4th at pp. 84.) “Failure to provide documentation of
arbitration fees supports a finding of unconscionability
because it causes surprise.” (Nunez, supra, 77 Cal.App.5th at p.
284.) “[T]he arbitration clause referred to the American Arbitration Association
but did not clearly state what rules would govern arbitration, nor was
respondent provided with a copy of the governing rules.” (Subcontracting Concepts (CT), LLC v. De Melo (2019) 34
Cal.App.5th 201, 211.)
Based on the above, the court finds that
Plaintiff has shown the existence of procedural unconscionability regarding the
agreement to arbitrate in the Letter.
ii. Substantive Unconscionability
Substantive unconscionability focuses on the terms of the
agreement and whether those terms are “so one sided as to ’shock the
conscience.’ ” (Kinney v. United Healthcare Services, Inc. (1999) 70
Cal. App.4th 1329, 1330.) “Unconscionable terms ‘impair the
integrity of the bargaining process or otherwise contravene the public interest
or public policy’ or attempt to impermissibly alter fundamental legal duties.
[Citation.] They may include fine-print terms, unreasonably or unexpectedly harsh
terms regarding price or other central aspects of the transaction, and terms
that undermine the nondrafting party's reasonable expectations.” (Kho, supra,
8 Cal.5th at p. 130.)
Plaintiff asserts that the arbitration
provision calling for attorney’s fees to the prevailing party is contrary to
FEHA’s statutory scheme and is evidence of substantive unconscionability. In Kho,
the California Supreme Court reiterated that arbitration costs should be borne
by the employer as it would be unfair to expect “employees [to] bear costs of a procedure to which
they were required to agree.”
(Kho, supra, 8 Cal.5th at p. 135.) “When
employment is conditioned on mandatory arbitration, the employee cannot be
forced to pay costs that would not be incurred if the case were litigated in
court.” (Nunez, supra, 77
Cal.App.5th at p. 285.) In Ajamian, the appellate court
held that an attorney’s fee provision awarding fees to the employer was unconscionable
because it imposed on the employee “the obligation to pay CantorCO2e's attorney fees
where she would have no such obligation under at least one of her California
statutory claims: a plaintiff employee is not responsible for the employer's
attorney fees if the employer prevails on her overtime claim.” (Ajamian,
supra, 203 Cal.App.4th at p. 800.) Similar to the provision in Wherry
v. Award, Inc. (2011) 192 Cal.App.4th 1242, “the agreements provide that
the prevailing party is entitled to attorney fees, without any limitation for a
frivolous action or one brought in bad faith. This violates Armendariz.” (Id. at 1249.)
Therefore, the court agrees that the
attorney fee provision in the arbitration provision is substantively
unconscionable.
Plaintiff further maintains that the
arbitration provision is unconscionable because it fails to provide for a
neutral arbitrator, there is no discussion of discovery, there is a requirement
for a written decision by the arbitrator, and requires that Plaintiff litigate
her claims in San Diego despite Plaintiff working and residing in Los Angeles,
CA. (See Armendariz, supra, 24 Cal.4th at pp. 102-103.) Defendant maintains that the arbitration
provision complies with the Armendariz requirements because the AAA
Employment Rule 39(d) grants
the arbitrator the power to award “any remedy or relief that would have been
available to the parties had the matter been heard in court, including awards
for attorney’s fees and costs, in accordance with appliable laws.” (Yates Decl.
Ex. B.) AAA Employment Rule 9 allows the arbitrator “to order such discovery,
by way of deposition, interrogatory, document production, or otherwise, as the
arbitrator considers necessary to a full and fair exploration of the issues in
dispute, consistent with the expedited nature of arbitration.” (Yates Decl. Ex.
B.) Rule 39(c) requires an arbitration award be in writing and the AAA
Employment/Workplace fee schedule provides that cases filed by individuals
incur a filing fee capped at $350 and that “all expenses of the arbitrator,
required travel and other expenses, and any AAA expenses, as well as the costs
relating to proof and witnesses produced at the direction of the arbitrator,
shall be borne by the company.” (Yates Dec. Ex. C at #1, 6.)
The Letter does not indicate as
to where the Plaintiff may obtain a copy of the AAA Rules nor instructions on
how she should initiate arbitration. “One Toyota's agreement does not mention how to
bring a dispute to arbitration, nor does it suggest where that information
might be found.” (Kho, supra, 8 Cal.5th
at p. 131.) More importantly, the arbitration provision states that the
applicable rules that apply are the “Commercial Arbitration Rules of the
American Arbitration Association (“AAA”)”
and not the AAA Employment Rules and Mediation Procedures. Without the
assistance of counsel, Plaintiff would not know that her arbitration fees are
capped and that she is not required to arbitrate under the Commercial
Arbitration Rules of the AAA. Accordingly, Plaintiff’s “signature
attesting to have read and understood the agreement appears formulaic rather
than informed.” (Kho, supra, 8 Cal.5th at p. 129.)
Based on the above, the court finds sufficient evidence of substantive
unconscionability. Accordingly, the court need not decide if the forum
selection clause is unconscionable.
A court may sever unconscionable provisions and enforce the remainder of
the agreement, or it may ‘refuse to enforce the contract.’ ” (Nunez, supra,
77 Cal.App.5th at p. 286 citing Civ.
Code, § 1670.4(a).) The court finds that “‘when the agreement is rife with unconscionability, as here, the overriding
policy requires that the arbitration be rejected [citation]. ’” (Id. at
p. 286 [internal citation omitted].) “A trial court has the discretion to
refuse to enforce an agreement as a whole if it is permeated by the
unconscionability.” (Carmona, 226 Cal.App.4th at p. 90.) The court
declines to sever the unconscionable provisions from the Letter because even if
said provisions were severed, the arbitration provision would be too uncertain
to be enforceable and require the court to add terms neither party agreed to.
(See Dameron Hospital Assn. v. AAA Northern California, Nevada &
Utah Ins. Exchange (2014) 229 Cal.App.4th 549, 569 [“ ‘[C]ourts cannot
make better agreements for parties than they themselves have been satisfied to
enter into or rewrite contracts because they
operate harshly or inequitably’ ”].)
As Defendant failed to show
that a valid and enforceable agreement to arbitrate exists, Defendant’s motion
is denied.
Conclusion
Defendant’s
Motion to compel arbitration is denied. Defendant to give notice.