Judge: Gary I. Micon, Case: 24CHCV02172, Date: 2025-02-25 Tentative Ruling
Case Number: 24CHCV02172 Hearing Date: February 25, 2025 Dept: F43
Dept. F43
Date: 02-25-25
Case # 24CHCV02172, Barragan v. Kohl’s,
Inc.
Trial Date: None set.
PETITION TO COMPEL
ARBITRATION
MOVING PARTY: Defendant Kohl’s Inc.
RESPONDING PARTY: Plaintiff Vanessa Barragan
RELIEF REQUESTED
Order compelling arbitration and staying this
action.
RULING: Motion
is granted.
SUMMARY OF ACTION
Plaintiff Vanessa Barragan (Plaintiff) sued
defendant Kohl’s, Inc. (Defendant) on June 12, 2023, alleging causes of action
for (1) disability discrimination; (2) sex/gender discrimination; (3) pregnancy
discrimination; (4) harassment – hostile work environment; (5) intentional
infliction of emotional distress; (6) negligent hiring, supervision, retention;
(7) failure to prevent discriminatory practices; (8) FEHA retaliation; (9)
Labor Code § 1102.5 retaliation; (10) wrongful termination; and (11) Unlawful business
Practices.
Plaintiff alleges that she was employed with
Defendant from October 2023 until December 29, 2023 when Defendant terminated
her employment. On November 27, 2023,
Plaintiff woke up feeling sick, went to urgent care where she found out she was
pregnant, went home to get rest as instructed, and informed her supervisor
about the pregnancy. Two days later, Plaintiff
suffered a miscarriage and texted her supervisory about the miscarriage. After Plaintiff inquired about sick leave,
her supervisor told her to get a doctor’s note excusing her absence from
work. Plaintiff procured a doctor’s note
placing her off work from November 27, 2023 through December 1, 2023. After Plaintiff returned to work on December
4, 2023, Defendant’s employees displayed hostility towards her.
On July 26, 2024, Defendant filed a petition
to compel arbitration of Plaintiff’s claims according to an arbitration
agreement Plaintiff signed on November 2, 2023.
Plaintiff filed an opposition contending that
Plaintiff did not knowingly agree to arbitrate claims against Defendant because
Plaintiff was never informed that she was signing a document which waived her
legal rights and access to the courts as a condition of employment and does not
recall signing the agreement. The
arbitration agreement is procedurally unconscionable because Defendant presents
no evidence that Plaintiff could have negotiated the terms of the agreement or
that the opt-out provision was considered an actual option. Plaintiff was required to sign all documents
in less than 45 minutes to proceed with training without being given an
opportunity to ask any questions prior to signing the documents, and Defendant
did not give Plaintiff a copy of the arbitration rules. The agreement is substantively unconscionable
because it requires the parties to share the cost of arbitration in violation
of Armendariz. Further, the terms
of the arbitration agreement are unfairly biased towards Defendant because the
agreement prevents Plaintiff from seeking relief through a judge, jury, or in a
class action lawsuit. The arbitration
agreement is invalid even if the numerous unconscionable terms are severed.
Defendant replies contending that the
arbitration agreement is valid and that opposing counsel purposefully
mischaracterizes Melissa Fimrite’s declaration regarding Defendant’s onboarding
process for new hires after April 2021. Defendant’s
supplemental reply, filed February 11, 2025, contends that Plaintiff
contradicts herself by stating she does not recall signing the arbitration
agreement while also stating she signed a packet of documents she received
electronically. Plaintiff fails to
establish unconscionability because the arbitration agreement allowed Plaintiff
to choose her arbitration provider and rules.
The arbitration agreement contains a provision stating how an individual
may opt-out of the agreement and includes a provision stating which procedures
would be used and linked to the relevant websites containing the procedures. Failing to attach or incorporate rules to the
agreement is insufficient to find procedural unconscionability. Further, the arbitration agreement states
that the parties share the costs of arbitration unless binding precedent
requires one party to bear all or the greater share of the arbitration
costs. Armendariz’s holding
regarding arbitration fees applies only in cases where the employer imposes
mandatory arbitration as a condition of employment. Arbitration was never a condition of
Plaintiff’s employment because, as the arbitration agreement states, she could
have opted out of the agreement.
Employment arbitration agreements with class waivers such as the one in
Section 11 of the Agreement are enforceable in California.
ANALYSIS
Evidentiary
Objections to the Declaration of Melisa Fimreite: Overruled.
Legal
Standard
Civil Procedure Code section 1281.2 empowers
the Court to compel parties to arbitrate disputes pursuant to an agreement to
do so. “The court shall order the
petitioner and the respondent to arbitrate the controversy if it determines
that an agreement to arbitrate the controversy exists, unless it determines
that: (a) The right to compel arbitration has been waived by the
petitioner; or (b) Grounds exist for the revocation of the
agreement.” (Code Civ. Proc., § 1281.2,
subds. (a), (b).)
California law incorporates many of the basic
policy objectives contained in the Federal Arbitration Act, including a
presumption in favor of arbitrability. (Engalla
v. Permanente Medical Group, Inc. (1997) 15 Cal.4th 951, 971-972.) The petitioner bears the burden of proving
the existence of a valid arbitration agreement by the preponderance of the
evidence, the party opposing the petition then bears the burden of proving by a
preponderance of the evidence any fact necessary to demonstrate that there
should be no enforcement of the agreement, and the trial court sits as a trier
of fact to reach a final determination on the issue. (Rosenthal v. Great Western Financial
Securities Corp. (1996) 14 Cal.4th 394, 413.)
Under both the Federal Arbitration Act and
California law, arbitration agreements are valid, irrevocable, and enforceable,
except on such grounds that exist at law or equity for voiding a contract. (Winter
v. Window Fashions Professions, Inc. (2008) 166 Cal.App.4th 943, 947.) The party moving to compel arbitration must
establish the existence of a written arbitration agreement between the
parties. (Code Civ. Proc., §
1281.2.) This is usually done by
presenting a copy of the signed, written agreement to the court and by
including the provisions of the arbitration agreement that provide for
arbitration in the petition. (Cal. Rules
of Court, rule 3.1330.) The moving party
must also establish the other party’s refusal to arbitrate the
controversy. (Code Civ. Proc., § 1281.2;
Espejo v. Southern California Permanente Medical Group (2016) 246
Cal.App.4th 1047, 1060; see also Bannister v. Marinidence Opco, LLC (2021)
64 Cal.App.5th 541; Hyundai Amco America,
Inc. v. S3H, Inc. (2014) 232 Cal.App.4th 572, 577 [filing a lawsuit against
the moving party for claims within the scope of the arbitration agreement].)
Defendant asserts that Plaintiff acknowledged
Defendant’s Dispute Resolution Policy (DRP) and electronically signed a copy of
the policy titled AR236 - Kohl’s Dispute Resolution Policy (Arbitration
Agreement) on November 2, 2023 during Plaintiff’s new employee onboarding
process. (Declaration of Melisa
Fimreite, ¶ 14, p. 18.) To support this
assertion, Defendant presents the declaration of Melisa Fimreite, Manager in
the Human Resources Compliance department for Defendant. (Fimreite Dec., ¶ 1.) Ms. Fimreite has
worked for Defendant since February 2009 and has held her current position
since January 2023. (Ibid.)
Ms. Fimreite is responsible for creating,
implementing, and maintaining the electronic system used to provide new
employees with documents and trainings during the orientation and onboarding
process through the human resource information system called CIC+. (Fimreite Dec., ¶ 4.) The CIC+ system allows Defendant’s employees
to electronically manage certain personnel matters during onboarding for their
employment, including distribution of certain workplace policies such as the
DRP. (Fimreite Dec., ¶ 6.) An employee’s record of forms completed
through CIC+ is accessible by the employee and certain Human Resources
personnel, such as Ms. Fimreite, through Workday and CIC+. (Fimreite Dec., ¶ 8.) The documents and records maintained in CIC+
are maintained in the ordinary course of Defendant’s business and reflect true
and correct copies of documents created or acknowledged by employees with a
duty to do so. (Fimreite Dec., ¶ 9.)
As part of her duties, Ms. Fimreite regularly
accesses employee records that were submitted as part of the onboarding process
in CIC+. (Fimreite Dec., ¶ 5.) Ms. Fimreite is also responsible for administering
the DRP to new employees during the onboarding process. (Fimreite Dec., ¶ 6.) Defendant implemented this DRP in September
2020 to all onboarding employees through its CIC+ program, and Defendant has
not amended or modified the DRP since April 2021. (Fimreite Dec., ¶ 6.)
When a new employee is hired, they are
required to participate in an orientation session, also referred to as
onboarding.” (Fimreite Dec., ¶ 7.) Defendant uses the Workday system to
facilitate the onboarding process. (Fimreite Dec., ¶ 7.) Prior to the orientation session, every
employee is assigned a unique Workday profile that can only be accessed with a
username and password assigned to that individual. (Fimreite Dec., ¶ 7.) At orientation, a new employee populates
their Workday profile with certain required demographic and payroll information
and is presented with a “Compliance EForm” section prompt in Workday. (Fimreite Dec., ¶¶ 7-8.) Clicking on the Compliance EForm tab sends
the employee to Defendant’s CIC+ system to review, acknowledge, and execute
certain online employee company policies, including the DRP which is labeled as
AR256 - Kohl’s Dispute Resolution Policy.
(Fimreite Dec., ¶¶ 8, 10.)
At orientation, the employee is required to
click on the DRP which presents the employee with a copy of the DRP. (Fimreite Dec., ¶ 10.) Employees are required to acknowledge and
review the DRP but not as a condition of employment with Defendant because the
DRP contains a provision giving employees 30 calendars from the day they
received notice of the DRP to elect not to be bound by the DRP or its choice of
law provision. (Fimreite Dec., ¶
16.) The DRP also states how to opt out
of the DRP. (Fimreite Dec., ¶ 16, Exh.
A, p. 15.) After the employee reviews
the DRP, they must “acknowledge” and click a box stating they “received, read,
and understood the DRP” and that “By selecting ‘Submit to Employer’ you agree
that your completed form will be electronically signed and submitted to your
employer.” (Fimreite Dec., ¶ 11.) The employee then clicks “Submit to
Employer.” (Fimreite Dec., ¶ 11.) Once the employee clicks the box to “consent”
to the DRP, their signature is electronically affixed to the document, and CIC+
captures the exact time and date the employee clicked the consent box and
affirmatively consented to the DRP.
(Fimreite Dec., ¶ 12.)
Ms. Fimreite accessed Plaintiff’s records in
Workday and CIC+, and the records reflect that the DRP Compliance EForm was
accessed, reviewed, acknowledged, and executed on November 2, 2023, at 4:31
P.M. Eastern Standard Time. (Fimreite
Dec., ¶¶ 13-14, Exh. A., p. 18.) Only
Plaintiff could have accessed the screens she viewed to electronically acknowledge
the DRP by first logging into Workday using her unique log-in credential. (Fimreite Dec., ¶ 15.)
The Arbitration Agreement states in relevant
part:
1. [M]andatory final and binding individual arbitration . .
. or a Small Claims Court action, as applicable, are the sole and exclusive
remedies for formal resolution of all unresolved Covered Disputes . . . .
* * * *
3. WHAT TYPES OF DISPUTES ARE COVERED BY THE DRP? This DRP applies only to “Covered Disputes,” which are
defined to mean any and all claims, causes of action, or other disputes or
controversies that have already accrued, now exist, or arise in the future
between a Covered Individual and Company and/or between Covered Individuals
based on any legal, equitable, or other ground or theory (including whether any
such ground or theory constitutes an unwaivable statutory right) and would be
cognizable and could be properly brought in a federal, state, or local court or
agency under applicable laws. Unless falling within the definition of Excluded
Disputes, below, Covered Disputes include those arising out of or related to
(i) a Covered Individual’s employment with or work for Company, applying for or
seeking or being denied such employment or work, the termination of such
employment or work, and/or any of the terms, conditions, or benefits of such
employment or work (including any wage and hour issues), (ii) issues of
arbitrability (such as the formation, interpretation, applicability or
enforceability of this DRP, except to the extent they are Excluded Disputes),
(iii) the procedures to be followed in the arbitration proceedings other than
any that would allow a Representative Action, Mass Arbitrations or a PAGA
Action (all as defined below), (iv) allegations of delay and waiver, (v)
whether prerequisites such as time limits, notice, laches, estoppel, and other
conditions precedent to an obligation to arbitrate have been met, and (vi) any
disputes over the payment and/or apportionment of the arbitration forum costs
(including arbitrator fees), including as to whether the arbitration forum
costs provisions of this DRP are unconscionable under applicable law. Subject
to the provisions of Sections 11, 12 and 26 of this DRP, Covered Disputes
include those that (a) arose or accrued before and/or arise or accrue after the
date of becoming bound by this DRP, including those that are the subject of or
asserted in a previously-threatened or filed and/or currently-pending Representative
Action or PAGA Action (both as defined below) in which no class or collective
certification has been granted or no trial has been commenced by the court as
of the date of becoming bound by this DRP,2 and/or in any
subsequently-threatened or filed Representative Action or PAGA Action (both as
defined below), (b) arise or accrue before, upon, or after a Covered
Individual’s employment with or work for Company terminates or his/her
application for employment or work is denied, and/or (c) concern or relate to
whether a Covered Individual has suffered and/or is suffering or was and/or is
subjected to any violation(s) or breach(es) of any legal obligations, including
declaratory relief to resolve that issue. Covered Disputes must only be heard
and decided by the appointed arbitrator.
4. WHAT TYPES OF DISPUTES ARE NOT COVERED BY THE DRP? This DRP does not apply to “Excluded Disputes,” which
are defined to mean: (i) claims for workers’ compensation benefits under state
law; (ii) claims for unemployment or disability insurance or other health or
welfare benefits under government-administered programs; (iii) claims arising
under a pension, retirement, or other health and welfare benefit plan that
contains an arbitration or other dispute resolution procedure; (iv) claims
within the jurisdiction of the National Labor Relations Board; (v) claims
arising or regulated under federal law for which there is an unwaivable
specific statutory or regulatory enactment making such claims not arbitrable;
(vi) exhausting administrative remedies or notice requirements, and/or
participating in government proceedings, as provided in Sections 16 and 25 of
this DRP; (vii) claims for temporary or provisional equitable relief in aid of
arbitration under this DRP, as permitted under applicable law, which may be
brought either before the appointed arbitrator or a court of competent
jurisdiction; (viii) disputes regarding the applicability, interpretation,
enforceability, and/or severability of the provisions of Sections 11, 12 and 26
of this DRP, including whether such provisions are governed by the Federal
Arbitration Act, which must be decided only by a court of competent
jurisdiction; (ix) disputes as to whether Company and any Covered Individual
agreed to allow any Representative Action, PAGA Action or alleged Mass
Arbitrations (all as defined below) to be arbitrated under this DRP, which must
be decided only by a court of competent jurisdiction; (x) claims or disputes
required to be grieved and/or arbitrated under the terms of an applicable
collective bargaining agreement, if any; and (xi) any disputes as to whether
any claims or disputes are Excluded Disputes, which must be decided only by a
court of competent jurisdiction.
* * * *
7. The
Parties waive any and all rights to a judge or jury trial and/or administrative
hearing of their own Covered Disputes and agree to their resolution exclusively
by final and binding individual arbitration . . . , whether initiated by any
Covered Individual or by Company . . . .
10. WHAT ARBITRATION RULES AND PROCEDURES
WILL APPLY? The Federal Rules of Civil Procedure (the “FRCP”) and the
Federal Rules of Evidence (“FRE”) (both of which are accessible via links at
http://www.uscourts.gov/RulesAndPolicies/rules/current-rules.aspx), are
incorporated into this DRP and will apply to and must be followed and enforced
by the appointed arbitrator in any arbitration proceedings. The Parties will have the right to make offers
of judgment . . . .
* * * *
13. HOW DOES THE ARBITRATOR DECIDE COVERED
DISPUTES? . . . . The arbitrator will be empowered to award either Party .
. . any individual remedy that otherwise would have been available to the Party
on an individual basis under applicable law.
* * * *
18. IS THERE A WAY TO OPT-OUT OF THE DRP
OR ITS CHOSEN STATE LAW? Not later
than the 30th calendar day after the date the Covered Individual has received
notice or a copy of this DRP (the “Election Deadline”), the Covered Individual
can elect to not be bound by this DRP or its Chosen State Law provision by
giving Company written notice of such election (an “Election Notice”). Before
deciding whether to give Company an Election Notice, the Covered Individual is
being provided with this 30-day opportunity to consult with an attorney and/or
other advisors of the Covered Individual’s choosing.
* * * *
26. ARE PAGA ACTIONS ALLOWED FOR
CALIFORNIA COVERED INDIVIDUALS? [T]he right for either me or the Company
to pursue Covered Disputes through a judge or jury trial in court and/or on a
class, collective or any other type of representative action basis or as part
of any Mass Arbitrations is otherwise waived.
(Fimreite Dec., Exh.
A, pp. 1-2, 8, ¶¶ 1, 3, 7, 10, 13, 18, 26.)
The Arbitration Agreement appears to bear the
electronic signature “vanessa barragan,” Plaintiff’s name, in the signature
block with the date “11/02/2023” and the time “04:41 PM ET.” (Fimreite Dec., Exh. A, at p. 18.)
Defendant has met its initial burden
by attaching an arbitration agreement purportedly bearing Plaintiff’s electronic
signature.
In opposition, Plaintiff states that she
does not remember signing the arbitration agreement, that she never knowingly
agreed to arbitrate claims against Defendant, Defendant never informed
Plaintiff that signing the Arbitration Agreement was voluntary and that she
could consult with a lawyer, and that Defendant told Plaintiff she had to sign
all paperwork if she wanted her job.
(Declaration of Vanessa Barragan, ¶¶ 2-7.) Plaintiff further contends that the Fimreite
Declaration fails to provide a sufficient foundation for Fimreite’s knowledge
of the procedures in maintaining the electronic system used to provide new
employees with documents and her declarations that Plaintiff’s record reflects
that Plaintiff electronically signed the Arbitration Agreement. Finally, Ms. Fimreite declares she became
manager of the Human Resources Compliance department in January 2023, over two
years after Plaintiff’s onboarding.
Plaintiff’s arguments lack merit
because the Fimreite Declaration states a foundation for explaining how
Defendant maintains its personnel records, how new employees access, review,
and sign company policies and forms, and Ms. Fimreite has been the Manager of
Defendant’s Human Resources Compliance Department since January 2023, over six
months before Plaintiff admits she began working for Defendant. Further, Plaintiff presents no evidence to
support her arguments that she does not remember signing the Arbitration
Agreement and did not know she could consult with a lawyer before signing the
agreement even though the agreement explicitly states as much in paragraph 18’s
opt-out provision and Plaintiff was required to acknowledge reading, reviewing,
and understanding the agreement before submitting her acknowledgment and
signature to Defendant. (Fimreite Dec.,
¶¶ 13-17.) Although new employees were
required to acknowledge the DRP, signing the DRP was not a condition of
employment as evidenced by paragraph 18.
Accordingly, the evidence strongly
suggests that a valid arbitration agreement exists, and that Plaintiff signed
the agreement on November 2, 2023.
Applicable
Law
Defendant argues the Federal Arbitration Act
(FAA) applies to the Arbitration Agreement per the agreement’s terms and
because the “Parties agree that [Defendant] is engaged in transactions
involving interstate commerce.”
(Fimreite Dec., Exh. A, ¶ 17.)
Plaintiff does not dispute whether the FAA or California law
applies. California law provides that
the parties may expressly designate that an arbitration proceeding should move
forward under the FAA’s procedural provisions rather than under state procedural
law. (Cronus Investments, Inc. v. Concierge Services (2005) 35 Cal. 4th
376, 394).
Accordingly, the FAA applies to the
Arbitration Agreement.
Enforceability
of the Arbitration Agreement - Unconscionability
Once an arbitration agreement is presented to the Court,
the burden shifts to the opposing party to challenge the agreement’s
enforceability with evidence. (Baker
v. Italian Maple Holdings, LLC (2017) 13 Cal.App.5th 1152, 1160.) Plaintiff argues the Arbitration Agreement is
unconscionable.
“California courts analyze unconscionability as having a
procedural and a substantive element.” (Kinney
v. United Healthcare Services, Inc. (1999) 70 Cal.App.4th 1329.) The doctrine of unconscionability refers to
“an absence of meaningful choice on the part of one of the parties together
with contract terms which are unreasonably favorable to the other party.” (Sonic-Calabasas A, Inc. v. Moreno
(2013) 57 Cal.4th 1109, 1133.) It
consists of procedural and substantive components, “the former focusing on
oppression or surprise due to unequal bargaining power, the latter on overly
harsh or one-sided results.” (Ibid.)
Although both components of
unconscionability must be present to invalidate an arbitration agreement, they
need not be present to the same degree. (Armendariz v. Found Health Psychcare
Servs., Inc. (2000) 24 Cal.4th 83, 114.) “In other words, the more substantively
unconscionable the contract term, the less evidence of procedural
unconscionability is required to come to the conclusion that the term is
unenforceable, and vice versa.” (Ibid.) “The party resisting arbitration bears the
burden of proving unconscionability.” (Pinnacle
Museum Tower Assn. v. Pinnacle Market Dev. (US), LLC (2012) 55 Cal.4th 223,
247.)
1. Procedural Unconscionability
“Procedural unconscionability concerns the manner in
which the contract was negotiated and the circumstances of the parties at that
time. It focuses on factors of
oppression and surprise.” (Pinnacle
Museum Tower Assn. v. Pinnacle Market Dev. (US), LLC (2012) 55 Cal.4th 223,
247.) “Surprise differs from oppression.
Surprise is when a prolix printed form conceals the arbitration provision. [Citation.] Oppression, on the other hand, occurs when
there is a lack of negotiation and meaningful choice. [Citation.] The presence of surprise or oppression
requires higher scrutiny of the contract.” (Torrecillas v. Fitness International, LLC¿(2020)
52 Cal.App.5th 485, 493.)
Plaintiff contends that the Arbitration Agreement is
procedurally unconscionable per se because the Arbitration Agreement was a
contract of adhesion.
“Adhesion contracts are form contracts a party with
superior bargaining power offers on a take-it-or-leave-it basis.” (Torrecillas, supra, 52
Cal.App.5th at p. 493.) Where a contract
of adhesion includes the unequal bargaining power of contracting parties, with
the weaker party’s inability to negotiate, this may indicate procedural
unconscionability in the form of surprise or oppression. (See Thompson v. Toll Dublin, LLC (2008)
165 Cal.App.4th 1360, 1372.) In the
absence of “surprise or other sharp practices,” courts do not recognize that
“adhesive” arbitration agreements establish a high degree of procedural
unconscionability. (Baltazar v.
Forever 21 Inc. (2016) 62 Cal.4th 1237, 1246.)
The Arbitration Agreement is not an adhesion
contract. The Arbitration Agreement
allowed Plaintiff to opt out by mailing or sending an email to Defendant’s
General Counsel at Legal@kohls.com within 30 days of receiving notice of or a
copy of the DRP, which further minimized any degree of procedural
unconscionability. (Fimreite Dec., Exh.
A, ¶ 18.) Further, Defendant contends that
signing the Arbitration Agreement was not a condition of Plaintiff’s
employment, but that Plaintiff was required to acknowledge that she read,
reviewed, and understood Defendant’s DRP, which Plaintiff did.
Plaintiff also contends that she was required to sign all
documents in her Workday account in less than 45 minutes before new employee
orientation and that she was not given an opportunity to ask questions before
signing the documents. (Supplemental
Barragan Dec., ¶ 2.)
Regardless, the fact that the Arbitration Agreement may
have been presented on a take-it or leave-it basis or that there is unequal
bargaining power only establishes at most a modest degree of procedural
unconscionability, which Plaintiff has not established here. (Torrecillas, supra, 52
Cal.App.5th at p.493; Baltazar v. Forever 21 Inc., supra, 62
Cal.4th at p.1246.) Plaintiff fails to
point to any section of the Arbitration Agreement that was a “surprise.” The agreement specified at the top in capital lettering
that the document contained Defendant’s Dispute Resolution Policy and that the
signing party was bound by the policy unless the party elected not to be bound
by it. (Fimreite Dec., Exh. A, p.
1.) Although Plaintiff alleges she did
not read the Arbitration Agreement, Plaintiff fails to show that Defendant
prevented her from doing so or that Plaintiff even requested assistance with
understanding the Arbitration Agreement.
Finally, Plaintiff contends that Defendant did not give
Plaintiff a copy of the arbitration rules.
Plaintiff cites Trivedi v. Curexo Technology Corp. (2010) which
held that a mandatory arbitration clause that referenced the American
Arbitration Association’s (AAA) rules was procedurally unconscionable because the
rules were not attached to the agreement and that the bound party was required
to find the rules in another source.
(189 Cal.App.4th 387, 393.) Although
failure to attach arbitration rules could factor into finding procedural unconscionability,
this alone is insufficient to sustain a finding of procedural unconscionability
unless it would result in surprise to the opposing party. (Lane v. Francis Capital Management LLC (2014)
224 Cal.App.4th 676, 690.) The
Arbitration Agreement expressly incorporates the Federal Rules of Civil
Procedure and the Federal Rules of Evidence, and the Arbitration Agreement
includes a link to both sets of rules.
(Fimreite Dec., Exh. A, ¶ 10.)
Although the rules are not attached to the Arbitration Agreement, Plaintiff
presents no evidence of surprise or oppression because the rules are stated on
the face of the agreement and the agreement is not one of adhesion.
Given the lack of evidence of procedural
unconscionability, the Court finds that the arbitration agreement has at most a
minimal degree of procedural unconscionability. However, “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.” (Sanchez v. Valencia Holding Co., LLC
(2015) 61 Cal.4th 899, 915.)
2. Substantive Unconscionability
“Substantive unconscionability” focuses on the terms of
the arbitration agreement and whether those terms are “overly harsh or
one-sided.” (Kinney, supra,
70 Cal.App.4th at p. 1330; Carmona v. Lincoln Millennium Car Wash, Inc.¿(2014)
226 Cal.App.4th 74, 85).
“Where a party seeks to arbitrate nonwaivable statutory
civil rights in the workplace, such as the FEHA claims and wrongful termination
claim[s] . . . there are five minimum requirements for the lawful arbitration
of such rights pursuant to a mandatory employment arbitration agreement”:
(1) neutral arbitrators, (2) more than minimal discovery, (3) requires a written
award sufficient for judicial review, (4) provides for all types of relief
otherwise available in court, and (5) does not require employees to pay either
unreasonable costs or arbitrator’s fees or expenses as a condition of access
the arbitration forum. (Armendariz v.
Foundation Health Psychcare Service, Inc. (2000) 24 Cal.4th 82, 102.) When there is little procedural
unconscionability, a party opposing arbitration must show substantial
substantive unconscionability. (Id.
at p. 114.)
Plaintiff contends that the Arbitration Agreement is
substantively unconscionable because it requires the parties to share the cost
of arbitration, and the terms of the arbitration agreement unfairly bias
Defendant regarding waiving class actions and choosing the arbitrator. Defendant opposes contending that the
Arbitration Agreement states that the parties share the costs of arbitration
unless binding precedent requires one party to bear all or the greater share of
the arbitration costs including Armendariz which only applies to
agreements involving mandatory arbitration as a condition of employment, and
the class waiver does not favor Defendant but is enforceable under California
law. The covered disputes require
Plaintiff to arbitrate claims only employees would bring against employers.
Armendariz’s
holding regarding arbitration fees applies only in cases where the employer
imposes mandatory arbitration as a condition of employment which is not the
case here. Arbitration was never a
condition of Plaintiff’s employment because, as the agreement states, Plaintiff
could have opted out of the agreement. Further,
paragraph 9 in the Arbitration Agreement requires Plaintiff and Defendant to
mutually agree on selecting the neutral arbitrator and the rules the arbitrator
may use. (Fimreite Dec., Exh. A, ¶
9.) The only limit is that neither party
can unilaterally choose JAMS or AAA’s rules absent a mutual agreement. (Ibid.) Additionally, paragraph 9, footnote 3 lists
several entities from which the parties can find a neutral arbitrator. (Fimreite Dec., Exh. A, ¶ 9 fn. 3.)
Arbitration agreements which cover only those
disputes an employee may bring against an employer are considered unfairly
“one-sided” and substantively unconscionable. (Navas v. Fresh Venture Foods, LLC
(2022) 85 Cal.App.5th 626, 636.)
However, if the agreement contains broad language that includes any and
all claims arising between the parties, and includes a subset of specific
claims, the agreement is not substantively unconscionable. (Baltazar v. Forever 21, Inc. (2016)
62 Cal.4th 1237, 1248-49; Prostek v. Lincare, Inc. (E.D. Cal. 2023)
662 F.Supp.3d 1100, 1122.)
In Prostek v. Lincare, Inc., the trial
court held that a “covered claims” provision was not “one-sided” because the
provision was broad and expressly contained a non-exclusive and illustrative
list of covered claims. (Prostek,
supra, 662 F.Supp.3d at p. 1120.)
The provision included “all claims and disputes” arising from an
employment relationship and listed a subset of employment claims such as
failure to pay wages and failure to provide rest or meal periods. (Ibid.) The provision also stated that the covered
claims were not limited to this illustrative list of potential employment
disputes. (Ibid.)
Prostek distinguished
the broad language in the arbitration agreement from the agreement at issue in Navas
v. Fresh Venture Foods, basing its reasoning in Baltazar v. Forever 21,
Inc. (2016) 62 Cal.4th 1237. The
“covered disputes” provision in Baltazar arbitration agreement, which is
almost identical to Prostek, covered “any claim or action” arising out
of the employment relationship, was not limited to specific employment claims
only an employee would bring against an employer, and included a non-exhaustive
list of claims only an employee would bring against an employer. (Id. at p. 1248.) The Court of Appeal held the provision was
not unfairly “one-sided” or substantively unconscionable because the provision
covered claims an employer and an employee might bring. (Id. at p. 1249.)
The Arbitration Agreement’s “covered
disputes” provision is broader than the provisions in Baltazar and Prostek. The provision includes “any and all claims,
causes of action, or other disputes or controversies that have already accrued,
now exist, or arise in the future” between Defendant and Plaintiff “based on
any legal, equitable, or other ground or theory.” (Fimreite Dec., Exh. A, ¶ 3.) The provision also expressly lists a subset of
employment related issues, but this list does not limit the covered disputes to
only these issues. (Ibid.) Therefore, the Arbitration Agreement is not
substantively unconscionable because of the covered disputes provision.
Finally, an arbitration agreement may
contain an enforceable waiver that waives the right to initiate or participate
in a class action. (Prostek, supra, 662 F.sSupp.3d at p.
1122 [citing AT&T Mobility v. Concepcion (2011) 563
U.S. 333, 351].) The FAA preempts California law governing when
class action waivers in employment arbitration agreements. (Evenskass
v. California Transit, Inc. (2022) 81 Cal.App.5th 285, 297-298.)
Under the FAA, a party cannot be compelled to submit to class arbitration
unless there is a contractual basis for concluding that the party agreed to
do so. (Viking River Cruises, Inc. v.
Moriana (2022) 596 U.S. 639, 652.) The Arbitration Agreement
waives both Defendant and Plaintiff’s right to bring a class action for any
covered disputes. (Fimreite Dec., Exh. A, ¶ 11.) This waiver does
not contribute to the Arbitration Agreement being unconscionable.
Accordingly, the Arbitration Agreement is not
procedurally or substantively unconscionable, and the Court grants Defendant’s
petition.
CONCLUSION
Defendant’s petition to compel arbitration is granted.
The case is stayed as to all parties, pending arbitration
pursuant to Code of Civil Procedure section 1281.4.
Defendant Kohl’s Inc. to give notice.