Judge: Gail Killefer, Case: 24STCV10116, Date: 2025-02-06 Tentative Ruling
Case Number: 24STCV10116 Hearing Date: February 6, 2025 Dept: 37
HEARING DATE: Thursday, February 6, 2025
CASE NUMBER: 24STCV10116
CASE NAME: Bryan Perez, et al. v. Calima Electric Inc.
MOVING PARTY: Defendant Calima Electric, Inc.
OPPOSING PARTY: Plaintiff Bryan Perez
TRIAL DATE: Not set.
PROOF OF SERVICE: OK
PROCEEDING: Motion to Compel
Arbitration
OPPOSITION: 24 January 2025
REPLY: 30
January 2025
TENTATIVE: Defendant’s
motion to compel arbitration is denied.
Background
On April 22, 2024, Bryan Perez
(“Plaintiff”) individually and on behalf of other aggrieved employees and the
State of California filed this action against Calima Electric Inc.
(“Defendant”) and Does 1 to 50. The Complaint alleges nine causes of action for:
1)
Failure to Pay All Wages;
2)
Failure to Provide Meal Periods or
Compensation;
3)
Failure to Permit Rest Periods or
Provide Compensation;
4)
Failure to Provide Accurate
Itemized Wage Statements;
5)
Waiting Time Penalties;
6)
Failure to Reimburse Business Expenses;
7)
Failure to Provide Timely Access to
Employee Payroll and Personnel Records;
8)
Violation of the Unfair Competition
Law; and
9)
Violation of the Private Attorneys
General Act of 2004
Defendant now moves to compel arbitration of this action and stay
Plaintiff’s non-individual representative claim. 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 Objections to the Declaration of Bryan Perez
Objection Nos. 1 to 6 are
overruled.
Defendant’s Objections to the Declaration of Bryan Perez
Objection Nos. 1 to 2 are
overruled.
III. Discussion
Defendant states that on July 29, 2023, Plaintiff signed a voluntary
arbitration agreement (the “Agreement’ wherein he agreed that “any controversy, dispute, or claim between” between him and Defendant would be settled by binding arbitration.
(Ayala Decl., ¶ 5, Ex. A [italics original].) The Agreement further stated that
its substantive provisions would be governed by the Federal Arbitration Act and the California Arbitration Act would
apply to the procedural provisions. (Ibid.) Arbitration would be
pursuant to the rules of the Judicial Arbitration and Mediation Service
(“JAMS”) available at http://www.jamsadr.com/. (Id.)
A. Fraud
in the Inducement
In his opposition, Plaintiff does not deny that he signed the Agreement
but asserts the agreement is void because there is no meeting of the minds due
to fraud in the inducement. (Opposition at p. 2:19-20 [“Therefore, Plaintiff
could not have assented to the arbitration agreement, since he was not informed
as to the true nature of the Agreement.”].) Fraud in the inducement “occurs
when ‘the promisor knows what he is signing but his consent is induced
by fraud, mutual assent is present and a contract is formed, which, by reason
of the fraud, is voidable. In order to escape from its obligations the
aggrieved party must rescind....’ [Citation.] ” (Rosenthal
v. Great Western Fin. Securities Corp. (1996) 14 Cal.4th 394, 415 [internal
quotations omitted]; see also Duffens v. Valenti (2008) 161 Cal.App.4th
434, 450 [“However, they claim their consent was induced by fraud, so
that even though there was mutual assent and a contract, the contract, by
reason of the fraud, is voidable.”][italics original].) In other words,
the fact Plaintiff was misled about the nature of the agreement does not mean
there was no mutual assent, just that the Agreement is voidable.
Plaintiff asserts that he signed the agreement on Saturday, July 29,
2023, at an off-the-clock company picnic at its worksite for which he was not
compensated. (Perez Decl., ¶ 3.) Plaintiff cites no authority to show the fact
that an arbitration agreement is provided during off-the-clock and/or not
signed off-the-clock renders the agreement void or unconscionable. (See Dougherty
v. Roseville Heritage Partners (2020) 47 Cal.App.5th 93, 103–104 [“Although
being pressed for sufficient time to thoroughly
read and understand an arbitration agreement is not, standing alone, an
indicator of procedural unconscionability”].) What matters is under what
conditions was the Agreement signed.
In Naranjo v. Superior Court (2021) 70 Cal.App.5th 871, the Appeal
Court found that a plaintiff’s arbitration agreement showed a lack of mutual
assent because although the plaintiff did not describe any difficulty
understanding Spanish, she informed the defendant that she “did not understand
some of the documents” she was signing, and nobody attempted to explain the
documents to her. (Id. at p. 887.) “Defendants just flipped to the
signature page, put their hand over the document and had me sign, stating,¿‘it's
just a requirement to work for the company,’ and did not permit me to read it.”
(Id.) In Naranjo Court found fraud in the execution of the
agreement because the Plaintiff could not understand the arbitration agreement,
communicated that fact to the defendant but no explanation was provided, was
told the agreement was a requirement to work for the defendant and was
prevented from reading the agreement. (Id.)
However, a party’s limited ability to understand English may warrant a
different result when the plaintiff relies on the defendant’s representations
as to what the “terms of the agreements” are such that “plaintiffs would not
have been negligent in relying on the [defendants’] representatives instead of
reading the agreements themselves.” (Naranjo, supra, 70
Cal.App.5th at p. 428; see also C.I.T. Corp. v. Panac¿(1944) 25 Cal.2d
547, 560 [plaintiff’s illiteracy and their reliance on the representations
regarding the character of the contract was sufficient to support a finding of
fraud in the execution.].)
Plaintiff alleges that during the Saturday barbeque, he and other
employees were called into the office. (Perez Decl., ¶ 4.) “When I went to the
office, Defendant’s Human Resources Representative (“HR Rep”) gave me a stack
of documents and told me to quickly sign several pages from the documents so
that I could get out of there.” (Id.) “At no point during the meeting
did Defendant’s HR Rep or anyone else provide me with time to review the stack
of documents, explain the contents of the documents and the purpose of the
documents to me, provide me with copies of the documents, or provide me with
time to consult an attorney.” (Id. ¶ 5.)
Unlike the plaintiff in Naranjo, Plaintiff does not allege he does
not speak English fluently and could not read and understand the Agreement when
it was presented to him. Plaintiff does not allege that Defendant physically
prevented him from reading the Agreement. Plaintiff fails to allege that he
requested time to read the Agreement and was denied the opportunity. Plaintiff
does not allege that he requested that the Agreement and other documents be
explained to him and that the request was denied. Plaintiff fails to show that
the fact the fact HR told him to
“quickly sign several pages” effectively deprived Plaintiff of the opportunity
to read the documents and this constituted fraud in the inducement. Lastly,
Plaintiff does not allege that Defendant misrepresented what the Agreement was
or what he was signing.
The fact that Plaintiff did not read the document or was told to sign
quickly does not mean the Agreement was procured by fraud. “Generally, it is not
reasonable to fail to read a contract; this is true even if the plaintiff
relied on the defendant's assertion that it was not necessary to read the
contract.” (Brown v. Wells Fargo Bank, N.A. (2008) 168 Cal.App.4th 938,
959.) “Reasonable diligence requires a party to read a contract before signing
it.” (Id. at p. 959.) “Further, ‘one who accepts or signs an instrument,
which on its face is a contract, is deemed to assent to all its terms, and
cannot escape liability on the ground that he has not read it. If he cannot
read, he should have it read or explained to him.’ [Citations.]” (Ramos v.
Westlake Services LLC (2015) 242 Cal.App.4th 674, 686.)Plaintiff fails to
explain how the fact he signed the Agreement quickly resulting in him
misunderstanding what he was signing. “ ‘A party cannot use his own lack of
diligence to avoid an arbitration agreement.’ ” (Brookwood v. Bank of
America (1996) 45 Cal.App.4th 1667, 1674.)
Defendant further asserts they had no obligation to explain the Agreement
to Plaintiff. “The party who drafts an agreement is ‘under no obligation to
highlight the arbitration clause of its contract, nor [i]s it required to
specifically call that clause to [a counter-party]’s attention. Any state law
imposing such an obligation would be preempted by the FAA.’ ” (Lim v. TForce
Logistics, LLC (9th Cir. 2021) 8 F.4th 992, 1001 citing Sanchez v.
Valencia Holding Co., LLC (2015) 61 Cal.4th 899, 914.)
B. Plaintiff’s
Intoxication
On January 29, 2024, after the opposition papers had been filed,
Plaintiff submitted a supplemental declaration stating for the first time that
“Defendant provided alcohol to me and other employees.” (Perez Supp. Decl., ¶
4.) “By the time Defendant called me into its office, I had drunk three (3)
Modelo beers and felt intoxicated and was under the influence as I had a buzz
from the beers.” (Id.) Ricardo Ayala, the President of Defendant assert
that “[a]t no time on July 29, 2023, did I, or any employee, agent or worker of
Calima ever provide, offer or give Mr. Perez any alcoholic beverage.” (Ayala
Supp. Decl., ¶ 14.) For the first time,
Mr. Ayala assert that he watched Plaintiff walk to the office and “read
and sign the Arbitration Agreement” and that he was unaware Plaintiff was under
the influence or otherwise impaired. (Id. ¶ 14.)
Defendant fails to address the fact that July 29, 2023, was a Saturday.
Defendant does not address Plaintiff’s contention that Defendant had a barbeque
on the day the Agreement was signed. Defendant admits that on July 29, 2023, he
observed Plaintiff bring his minor son with him. (Ayala Supp. Decl., ¶ 12.)
Moreover, while Defendant may assert that he did not provide Plaintiff with
alcohol, Defendant cannot make the same assertion on behalf of other employees.
(Id. ¶ 13.) As the party seeking arbitration, Defendant bears the burden
of presenting declarations from other employees showing that no alcohol was
served and Plaintiff was not intoxicated.
Defendant failed to present a declaration by the “HR Rep” who presented Plaintiff
with the Agreement and who could attest to Plaintiff’s intoxication and mental
capacity.
‘A completely intoxicated person is
generally placed on the same footing as persons of unsound mind. One deprived
of reason and understanding by reason of drunkenness is, for the time, as
unable to consent to the terms of a contract as are persons who lack mental
capacity by reason of insanity or idiocy. A person who at the time of making a
contract is completely intoxicated may avoid his contract notwithstanding the
fact that his intoxicated condition may have been caused by his voluntary act
and not by the contrivance of the other party to the contract.’
(Guidici v. Guidici (1935) 2 Cal.2d 497, 502.) The plaintiff in Guidici
avoided the contract because he provided evidence that he had engaged in
“long and excessive drinking of intoxicating liquor, that he did not know what he was
doing, and that he had no recollection of signing the deed.” (Id. at p.
501; see also Pickett v. Sutter (1855) 5 Cal. 412, 412 [“It is not alone
the influence of liquor which avoids a contract, but it must be shown to exist
to such extent as to seriously impair the reasoning faculties at the time of
the contract.”].)
A contract made by a person who is so drunk he does not know
what he is doing is voidable if the other party has reason to know of the
intoxication. Where there is some understanding of the transaction despite
intoxication, avoidance depends on a showing that the other party induced the
drunkenness or that the consideration was inadequate or that the transaction
departed from the normal pattern of similar transactions; if the particular
transaction in its result is one which a reasonably competent person might have
made, it cannot be avoided even though entirely executory.
(Restatement (Second) of
Contracts § 16 (1981).)
The facts before the
court support the finding that Defendant chose a non-workday to present
Plaintiff and other employees with the Agreement. Defendant appears to have known
there would be a barbeque and that alcohol may be present. Plaintiff asserts it
was Defendant who presented him with alcohol and induced him to drink. (Perez
Supp. Decl., ¶ 4.) Defendant fails to present any testimony to rebut
Plaintiff’s testimony or the circumstances under which Defendant present
Plaintiff with the Agreement. Plaintiff testifies that he “felt intoxicated and
was under the influence[.]” (Ibid.)
These facts support the
finding that there was a significant deviation from the normal worker-employee
relationship because an employee would not be expected to transact with an
employer on a Saturday, during a barbeque, where alcohol is provided. A reasonable
employer should know that asking employees to sign an arbitration agreement
under the above conditions is unreasonable; especially if the employer provided
or encouraged the consumption of alcohol prior to requesting employees sign an
agreement to arbitrate.
The court concludes
that Defendant has failed to meet its
burden of showing that Plaintiff had the capacity to contract, Plaintiff’s
intoxication was entirely voluntary and unknown to Defendant, and that the
intoxication was not induced by Defendant.
The Motion is denied.
Conclusion
Defendant’s motion to compel
arbitration is denied.