Judge: Gary I. Micon, Case: 24CHCV02706, Date: 2024-12-16 Tentative Ruling
Case Number: 24CHCV02706 Hearing Date: December 16, 2024 Dept: F43
Dept.
F43
Date:
12-16-24
Case
# 24CHCV02706, McGrath v. Regal Medical Group, Inc., et al.
Trial
Date: None set.
MOTION TO COMPEL ARBITRATION
MOVING
PARTY: Defendant Regal Medical Group, Inc.
RESPONDING
PARTY: Plaintiff Rebecca McGrath
RELIEF
REQUESTED
Order
compelling the case to arbitration and stay the action.
RULING: Motion granted,
pursuant to the arbitration agreement’s delegation clause delegating threshold
issues to the arbitrator.
SUMMARY
OF ACTION
On
July 29, 2024, Plaintiff Rebecca McGrath (Plaintiff) filed their complaint
against Defendants Regal Medical Group, Inc. (Defendant) and Sofia Pecina. The complaint alleges causes of action for
FEHA disability discrimination and retaliation; failure to prevent
discrimination, harassment, and retaliation; constructive termination;
violation of the California Family Rights Act; violation of the federal Family
and Medical Leave Act; and Intentional Infliction of Emotional Distress.
Plaintiff
alleges she was employed as Prior Authorization Coordinator by Defendant from
August 21, 2017 until February 11, 2022.
Defendant is a healthcare network that contracts with doctors and
medical facilities to provide medical care and wellness programs. Defendant is an affiliate of Heritage
Provider Network, Inc. (Heritage) and has common ownership with Heritage. In 2019, Plaintiff sustained a back injury—a
pinched sciatica nerve and two bulged discs.
Plaintiff was forced to attend several medical appointments and sought accommodations. Defendant placed Plaintiff on medical leave, allowing
Plaintiff to leave work early, arrive to work late, and take days off as
needed. Employees made negative comments
about Plaintiff, her medical condition, and her need for accommodations. Defendants harassed and discriminated against
Plaintiff based on her medical condition, forcing her to quit. Prior to filing this case, Plaintiff filed
complaints with the California Civil Rights Department and received a Notice of
Right to Sue.
On
September 25, 2024, Defendant filed this motion to compel arbitration of claims
in the complaint.
Summary
of Arguments
Defendant
argues that the Court should compel arbitration based upon the disposition of a
related case Plaintiff and Defendant and based upon an arbitration agreement
between Plaintiff and Heritage. In the
related case, Plaintiff and Defendant stipulated to arbitrating all claims—some
employment-related—in that case pursuant to an arbitration agreement between
Plaintiff and Heritage. Plaintiff is
estopped from pursuing her FEHA, federal, and intentional infliction of
emotional distress claims in court because she has already affirmed that her
employment-based claims against Defendant are subject to the arbitration
agreement. Although Defendant was not a
signatory to the arbitration agreement, it is well-settled that non-signatory
beneficiaries of an agreement may be bound by it. Because Defendant is a Heritage affiliate,
the arbitration agreement covers claims with HPN affiliates, and Defendant was
Plaintiff’s direct employer, Defendant is included in the agreement. The arbitration agreement also requires
Plaintiff to arbitrate her employment-related claims.
In
opposition, Plaintiff argues she did not enter into an arbitration agreement
with Defendant. Defendant did not sign the alleged arbitration
agreement, Defendant has not demonstrated a valid arbitration agreement exists,
and the agreement Defendant presents is procedurally and substantially
unconscionable. Additionally, the
stipulated agreement to arbitrate applied only to those claims in the related
case.
In
reply, Defendant argues that Plaintiff fails to explain why she refuses to
arbitrate the claims in this case under the same arbitration agreement against
the same defendant as the related case. In
the related case, Plaintiff stated she submitted her claims to arbitration pursuant
to the arbitration agreement she now claims is unconscionable. Regardless, equitable estoppel and the
third-party beneficiary doctrine still apply.
Plaintiff disputes Defendant’s equitable estoppel argument and argues
that Defendant is not a beneficiary of the arbitration agreement governing the
employment relationship between Plaintiff and Defendant.
REQUEST
FOR JUDICIAL NOTICE
Defendant
requests that the Court take judicial notice of the following documents:
·
Exhibit
A - Plaintiff’s complaint filed against Defendant on January 9, 2023, in Los
Angeles Superior Court case no. 23CHCV00055.
·
Exhibit
B - Defendant’s Joint Stipulation to Arbitrate All Claims and Order, filed
February 2, 2023, in Los Angeles Superior Court case no. 23CHCV00055.
·
Exhibit
C – Defendant’s Notice of Related Cases, filed on September 25, 2024, in Los
Angeles Superior Court case no. 23CHCV00055.
The
Court takes judicial notice of these documents.
ANALYSIS
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.) 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).)
“A
party to the arbitration agreement is also a party to a pending court action or
special proceeding with a third party, arising out of the same transaction or
series of related transactions and there is a possibility of conflicting
rulings on a common issue of law or fact. For purposes of this section, a pending court
action or special proceeding includes an action or proceeding initiated by the
party refusing to arbitrate after the petition to compel arbitration has been
filed, but on or before the date of the hearing on the petition.” (Code Civ. Proc. § 1281.2, subd. (c).)
As
an initial matter the Court finds that the stipulated arbitration agreement
made in related case number 23CHCV00055 is not relevant here. The stipulation explicitly states that
Plaintiff agreed to arbitrate all claims in the complaint for that case.
Existence of Arbitration
Agreement
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.
“A petition to compel arbitration or to stay proceedings pursuant to
Code of Civil Procedure sections 1281.2 and 1281.4 must state, in addition to
other required allegations, the provisions of the written agreement and the
paragraph that provides for arbitration. The provisions must be stated verbatim or a
copy must be physically or electronically attached to the petition and
incorporated by reference.” (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.) The filing of a
lawsuit against the moving party for a controversy clearly within the scope of
the arbitration agreement affirmatively establishes the other party’s refusal
to arbitrate the controversy. (Hyundai Amco America, Inc. v. S3H, Inc.
(2014) 232 Cal.App.4th 572, 577.)
Defendant
asserts that Plaintiff executed an enforceable Mutual Arbitration Agreement
(MAA) on August 9, 2017 during Plaintiff’s new employee onboarding
process. (Declaration of Teresa Sanchez
Lugo, ¶ 4, Exh. A.) To support this
assertion, Defendant presents the declaration of Teresa Sanchez Lugo, a
Director, Employee Services for Defendant.
(Lugo Dec., ¶ 1.) Ms. Lugo has worked in Defendant’s Human
Resources department since 2009. (Lugo
Dec., ¶¶ 2-3.)
Ms. Lugo states that Defendant is
an affiliate of Heritage, and as a Heritage affiliate, Defendant utilizes
certain human resources and personnel management tools including the MAA. (Lugo Dec., ¶ 2.) Heritage and its affiliates introduced the
MAA in 2017 and required all its employees to submit to binding
arbitration. (Ibid.)
Ms.
Luco has access to Defendant’s personnel records and is familiar with the
onboarding process for new employees.
(Lugo Dec., ¶¶ 2-4.) In 2017,
Defendant conducted its onboarding process in person. (Lugo Dec., ¶ 3.) Prior to the onboarding meeting, Defendant
sends new employees documents to review and sign, including the MAA. (Ibid.) During the onboarding meeting, a member of
the Human Resources team walks new employees through and reviews the onboarding
documents, including the MAA, and asks if the new employees has any
questions. (Ibid.) The HR team member also lets the new employee
know they can follow up later with questions as well. (Ibid.) New employees were required to sign the MAA
in order to work with Defendant. (Ibid.) The new employee may review and sign the
documents before, during, or after the onboarding meeting. (Ibid.)
Ms. Lugo reviewed
Plaintiff’s personnel file, which contains a signed copy of the MAA agreement
with what appears to be Plaintiff’s signature, dated August 9, 2017. (Lugo Dec., ¶ 4, Exh. A, at p. 5.)
The
MAA states in relevant part:
As consideration for Employee’s offer of
employment with HPN Provider Network and/or its parents, subsidiaries, or
affiliates (the “Company”), . . . the Company and Employee . . . agree to
participate in this alternative dispute resolution program on the terms and
conditions set forth in this Mutual Arbitration Agreement (“Agreement”):
Except as expressly set forth in the
section entitled “Claims Not Covered by this Agreement,” all disputes,
claims, complaints, or controversies (“Claims”) that Employee now has or in
the future may have against HPN Provider Network and/or any of its parents,
subsidiaries, [and] affiliates . . . arising out of and/or directly
or indirectly relating to . . . Employee’s employment with the Company, any
terms and conditions of Employee's employment with the Company, and/or the
termination of Employee’s employment from the Company (collectively “Covered
Claims”), are subject to arbitration pursuant to the terms of this Agreement
and will be resolved by arbitration and NOT by a court or jury. The parties
hereby forever waive and give up the right to have a judge or jury decide any
Covered Claims.
By Signing Below, Employee Acknowledges
that:
·
Employee has carefully read this Agreement,
w1derstands the terms of this Agreement, and is entering into this Agreement
voluntarily; • Employee is not relying on any promises or representations by
the Company except those contained in this Agreement;
·
Employee is giving up the right to have all
Covered Claims decided by a court or jury;
* * * *
·
Employee was given the opportunity to discuss
this Agreement with his/her own attorney if he/she wishes to do so, and also
has had the opportunity to ask the Company any questions about this Agreement
and request an explanation of any term of this Agreement; and
·
Employee understands that his/her affirmative
signature and/or acknowledgement of this Agreement is not required for the
Agreement to be enforced. lf Employee begins or continues working for the
Company without signing this Agreement, this Agreement will be effective, and
Employee will be deemed to have consented to, ratified and accepted this
Agreement through Employee's knowledge of it and Employee's acceptance of and
continued employment with the Company.
(Lugo
Dec., Exh A, at pp. 1-2, 5 (emphasis added).)
The
agreement appears to bear the signature “Rebecca S. McGrath,” Plaintiff’s name,
in the signature block and with the date “8/9/17.” (Lugo Dec., Exh. A, at p. 5.)
Defendant
has met its initial burden by attaching an arbitration agreement purportedly
bearing Plaintiff’s signature.
In
opposition, Plaintiff states the agreement was with Heritage, Heritage never
hired her, she had no opportunity to read or consider any arbitration
agreement, Defendant did not explain arbitration to her, she was never provided
with a copy of the rules or procedures for arbitration, she was not represented
by an attorney when she allegedly signed the agreement, and she was not
provided with an opt-out form, and no opt-out provision exists in the
arbitration agreement. (Declaration or
Rebecca McGrath, ¶¶ 2-10.)
Plaintiff’s
arguments have no bearing on the existence of an arbitration agreement because
she does not directly challenge the existence of the MAA or dispute that the
signature on the MAA is her own. Further,
the MAA includes a provision stating the parties agree to use the Judicial
Arbitration and Mediation Services (JAMS) rules and procedures. (Lugo Dec., Exh. A, at pp. 2-3.) The MAA also states the signing employee
received a copy of the JAMS rules. (Id.,
Exh. A, at p. 2; Declaration of Ted A. Gehring, Exh. A.)
Accordingly,
the evidence strongly suggests that an arbitration agreement exists and that Plaintiff
signed the agreement on August 9, 2017.
Applicable Law
Defendant
argues the Federal Arbitration Act (FAA) applies the MAA because the parties agreed
to this choice of law in the MAA, and Defendant is engaged in interstate
commerce. Plaintiff does not dispute whether
the FAA or California law applies.
“A
party seeking to enforce an arbitration agreement has the burden of showing FAA
preemption.” (Lane v. Francis Capital Mgmt. LLC (2014) 224 Cal.App.4th 676, 684.) 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). Otherwise, the FAA provides for enforcement of
arbitration provisions in any “‘contract evidencing a transaction
involving commerce.’ (9 U.S.C. § 2.)” (Allied-Bruce Terminix Companies, Inc. v.
Dobson (1995) 513 U.S. 265, 277; Carbajal v. CWPSC, Inc. (2016)
245 Cal.App.4th 227, 234, [requiring evidence establishing contract with the
arbitration provision has a substantial relationship to interstate commerce].)
The MAA states that FAA and the laws of the state govern the
agreement to the extent that states laws are preempted by the FAA and that the
Company’s business and Employee’s employment affect interstate commerce. (Lugo Dec., Exh. A, at p. 4.) Further, Defendant employs several
out-of-state employees, utilizes an out-of-state payroll provider, and procures
its supplies from other states. (Lugo
Dec., ¶ 5 [stating that in her role with Defendant, Plaintiff utilized software
from out-of-state and Defendant receives compensation from a New Jersey
company]; see also Bhan v. NME Hospitals (E.D. Cal. 1987) 669 F.Supp.
998, 1011 [finding a hospital’s activities were interstate commerce where
hospital purchased and shipped supplies from out-of-state].)
Accordingly, the FAA applies to the MAA.
Delegation Clause and Enforceability
Defendant
argues that only the arbitrator has the authority to resolve disputes about the
enforceability of the MAA because the MAA contains a delegation clause granting
the arbitrator authority to resolve disputes relating to the MAA’s
enforceability. Plaintiff does not
directly oppose the delegation argument but does challenge the agreement as
unconscionable.
Under
the FAA, when the arbitration agreement delegates the question of arbitrability
to the arbitrator, courts must respect the parties’ decision as embodied in the
contract. (Henry Schein, Inc. v.
Archer and White Sales, Inc. (2019)
586 U.S. 63, 65; see also 9 U.S.C. § 1.)
Parties may delegate threshold questions to the arbitrator as long as
the agreement is “clear and unmistakable.”
(Ibid.)
“Unless
the parties clearly and unmistakably provide otherwise, the question of whether
the parties agreed to arbitrate is to be decided by the court, not the
arbitrator.” (AT & T
Technologies, Inc. v. Communications Workers of America (1986) 475 U.S.
643, 649; see also Freeman v. State Farm Mutual Auto. Ins. Co. (1975)
14 Cal.3d 473, 480.) “[I]t should not be
assumed the parties intended the arbitrator to decide whether their dispute was
arbitrable unless there is clear and unmistakable evidence that they did
so.” (Dream Theater, Inc. v. Dream
Theater (2004) 124 Cal.App.4th 547, 552 [citing First Options of
Chicago, Inc. v. Kaplan (1995) 514 U.S. 938, 944]; AT & T
Technologies, Inc. v. Communications Workers of America (1986) 475 U.S.
643, 649; see also Freeman v. State Farm Mutual Auto. Ins. Co. (1975)
14 Cal.3d 473, 480.) “[W]here the
agreement is silent or ambiguous on that question, the court and not the
arbitrator should decide arbitrability so as not to force unwilling parties to
arbitrate a matter they reasonably thought a judge, not an arbitrator, would
decide.” (Ibid.)
The
MAA states: “Subject only to the express language in the section entitled ‘Class
Action Waiver,’ the arbitrator shall have the sole and exclusive authority
to resolve any dispute relating to the scope, interpretation, applicability,
enforceability or formation of this Agreement, including but not limited to
any assertion that all or any part of this Agreement is void or voidable or is
unconscionable and the sole authority to resolve any Covered Claim.” (Lugo Dec., Exh. A, at p. 3 [emphasis added].) This language is clear and unmistakable in
that it expressly delegates authority to decide the MAA’s scope and enforceability
to the arbitrator.
Once
the court determines the delegation clause is clear and unmistakable, the court
must determine whether the assertion of arbitrability is wholly groundless,
unless the agreement is governed by the FAA.
(Cf. Henry Schein, Inc. v. Archer & White Sales, Inc. (2019)
586 U.S. 63, 68 [holding the “wholly groundless” exception does not apply to
arbitration agreements governed by the FAA if the agreements contain a “clear
and unmistakable” delegation clause]; but see Smythe v. Uber Technologies,
Inc. (2018) 24 Cal.App.5th 327, 332.)
Accordingly,
the MAA contains a valid delegation clause that gives the arbitrator authority
to decide the threshold issues of the enforceability and scope, including whether
the equitable estoppel doctrine allows Plaintiff and Defendant to arbitrate the
alleged claims under the MAA.
ORDER
The
Court orders the parties to submit the issues in Plaintiff’s complaint to an
arbitrator to determine the enforceability of the arbitration of Plaintiff’s
claims against Defendant.
The
case is stayed pending the arbitrator’s decision.
Defendant to give notice.