Judge: Gary Y. Tanaka, Case: 22TRCV00410, Date: 2022-12-05 Tentative Ruling
Case Number: 22TRCV00410 Hearing Date: December 5, 2022 Dept: B
LOS ANGELES SUPERIOR COURT –
SOUTHWEST DISTRICT
Honorable Gary Y. Tanaka Monday,
December 5, 2022
Department B Calendar
No. 6
PROCEEDINGS
Bernard Grisez v. Mattel, Inc., et al.
22TRCV00410
1. Mattel, Inc., et al.’s Motion to Compel Arbitration
2. Guidesoft, Inc.’s dba Knowledge Services Joinder to
Motion to Compel Arbitration
TENTATIVE RULING
Mattel, Inc., et al.’s Motion to
Compel Arbitration and Guidesoft, Inc.’s dba Knowledge Services Joinder to
Motion to Compel Arbitration are granted.
Background
Plaintiff filed the Complaint on May
24, 2022. Plaintiff alleges the
following facts. Plaintiff is a former employee of Defendants. Plaintiff
alleges that he was subjected to discriminatory and harassing conduct based on
age. Plaintiff did not receive an offer
of permanent employment while younger individuals did obtain permanent
employment. Plaintiff alleges the
following causes of action: 1. Discrimination on the Basis of Age (Cal. Gov’t
Code § 12900, et seq.) 2. Harassment on the Basis of Age (Cal. Gov’t Code
§12900, et seq.) 3. Failure to Prevent Harassment and Discrimination (Cal.
Gov’t Code § 12900, et seq.) 4. Retaliation (FEHA) 5. Retaliation in Violation
of Labor Code Section 1102.5(b) 6. Wrongful Termination in Violation of Public
Policy 7. Constructive Discharge 8. IIED.
Objections
Defendants’ objections 1 to 3 are
sustained.
Motion to Compel Arbitration
“California law reflects a strong
public policy in favor of arbitration as a relatively quick and inexpensive
method for resolving disputes.
[Citation.] 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. [Citation.]
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.
(§ 1281.2, subds. (a)–(c).)” Acquire
II, Ltd. v. Colton Real Estate Group (2013) 213 Cal.App.4th 959, 967.
“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.” Giuliano v. Inland Empire Personnel, Inc.
(2007) 149 Cal.App.4th 1276, 1284.
“The party opposing arbitration has the burden of demonstrating that an
arbitration clause cannot be interpreted to require arbitration of the dispute. Nonetheless, this policy does not override
ordinary principles of contract interpretation. [T]he contractual terms themselves must be
carefully examined before the parties to the contract can be ordered to
arbitration: Although [t]he law favors
contracts for arbitration of disputes between parties, there is no policy
compelling persons to accept arbitration of controversies which they have not
agreed to arbitrate.” Rice v. Downs
(2016) 247 Cal.App.4th 1213, 1223 (internal citations and quotations omitted).
In Rowe v. Exline (2007) 153
Cal.App.4th 1276, 1286, the Court of Appeal found that “a nonsignatory sued as
an agent of a signatory may enforce an arbitration agreement.” Id.
at 1286. In addition, “a nonsignatory
who is the agent of a signatory can even be compelled to arbitrate claims
against his will.” Id. at 1285, citing Harris v. Superior Court (1986) 188
Cal.App.3d 475, 477–78. Further, “in
many cases, nonparties to arbitration agreements are allowed to enforce those
agreements where there is sufficient identity of parties.” Valley
Casework, Inc. v. Comfort Construction, Inc. (1999) 76 Cal.App.4th 1013,
1021. This includes nonparties as agents
of a party as well as “a third party beneficiary of an arbitration
agreement.” Ibid.
Defendants move for an order compelling arbitration of Plaintiff’s
claims, and for an order to stay the action pending completion of arbitration. The motion is made pursuant to Code of Civil
Procedure §1281 et seq. and the FAA, on the grounds Plaintiff is bound by a
written agreement to arbitrate the subject matter of the Complaint.
Code Civ. Proc., § 1281.2 states, in relevant part: “On petition of a
party to an arbitration agreement alleging the existence of a written agreement
to arbitrate a controversy and that a party to the agreement refuses to
arbitrate that controversy, the court shall order the petitioner and the
respondent to arbitrate the controversy if it determines that an agreement to
arbitrate the controversy exists[. . .]” “Generally, an arbitration agreement
must be memorialized in writing. A party's acceptance of an agreement to
arbitrate may be express, as where a party signs the agreement. A signed
agreement is not necessary, however, and a party's acceptance may be implied in
fact or be effectuated by delegated consent. An arbitration clause within a
contract may be binding on a party even if the party never actually read the
clause.” Pinnacle Museum Tower Assn. v. Pinnacle Market Development (US),
LLC (2012) 55 Cal.4th 223, 236 (internal citations omitted). It is not
an adequate defense to enforcement that Plaintiff failed to read and understand
the agreement before signing the agreement. Caballero v. Premier Care Simi
Valley LLC (2021) 69 Cal.App.5th 512, 519.
Defendants established the existence of a valid arbitration agreement between
Plaintiff and Defendants Mattel and Guidesoft, Inc. (“Guidesoft” or “KSI”). (Decl., Meaghan Emery, ¶¶ 5-7, Ex. A.) The agreement states that it is enforceable
under the FAA and requires KSI, Mattel, and Plaintiff to “resolve all disputes
or claims, past, present or future, that otherwise would be resolved in a court
of law, by final and binding arbitration.” (Id.) The
agreement covers disputes that KSI or Mattel may have against Plaintiff, or
that Plaintiff may have against KSI or Mattel (defined as “Companies” in the
Agreement), including “officers, directors, employees, or agents.” (Id.) The
agreement delegates questions of enforceability to an arbitrator. (Id.) The
agreement covers “disputes and claims based upon or related to discrimination,
harassment, retaliation … and any and all claims for violation of any federal,
state or other governmental law, statute, regulation, or ordinance.” (Id.)
Therefore, the burden shifts to Plaintiff to show that the arbitration
clause should not be enforced. Rice,
supra, 247 Cal.App.4th at 1223. Plaintiff
did not meet his burden to show that the arbitration agreement should not be
enforced.
Plaintiff argues that the arbitration clause is both procedurally and
substantively unconscionable. A court
can invalidate an arbitration agreement when it is unconscionable or against
public policy. See, Armendariz v. Foundation Health Psychcare Services, Inc.
(2000) 24 Cal.4th 83, 99.
Unconscionability contains two elements:
procedural unconscionability and substantive unconscionability.
“[U]nconscionability has both a procedural and a substantive' element,
the former focusing on ‘oppression' or 'surprise' due to unequal bargaining
power, the latter on 'overly harsh' or 'one-sided' results. The prevailing view is that [procedural and
substantive unconscionability] must both be present in order for a court to
exercise its discretion to refuse to enforce a contract or clause under the
doctrine of unconscionability." But they need not be present in the same
degree. Essentially a sliding scale is invoked which disregards the regularity
of the procedural process of the contract formation, that creates the terms, in
proportion to the greater harshness or unreasonableness of the substantive
terms themselves. In other words, the
more substantively oppressive the contract term, the less evidence of
procedural unconscionability is required to come to the conclusion that the
term is unenforceable, and vice versa.” See Armendariz, 24 Cal.4th at
114.
“The traditional standard of unconscionability . . . is that the
inequality amounting to fraud must be so strong and manifest as to shock the
conscience and confound the judgment of any man of common sense. Subsequent decisions have defined an
unconscionable contract in varying but similar terms, such as a contract that
no man in his senses and not under delusion would make on the one hand, and as
no honest and fair man would accept on the other.” See
California Grocers Assn. v. Bank of America (1994) 22 Cal.App.4th
205, 214-15 (internal citations omitted).
Procedural unconscionability may be established by showing oppression and
surprise. Oppression occurs where the
parties have unequal bargaining power and the contract is not the result of
meaningful negotiations. Surprise
recognizes the extent to which the agreed upon terms were hidden.
“In many cases of adhesion
contracts, the weaker party lacks not only the opportunity to bargain but also
any realistic opportunity to look elsewhere for a more favorable contract; he
must either adhere to the standardized agreement or forego the needed
service.” Madden v. Kaiser Foundation
Hospitals (1976) 17 Cal.3d 699, 711. Simply because a contract may have
elements of an adhesion contract does not render the agreement procedurally
unconscionable. “The ultimate issue in
every case is whether the terms of the contract are sufficiently unfair, in
view of all relevant circumstances, that a court should withhold
enforcement.” Sanchez v. Valencia Holding (2015) 61 Cal.4th 899,
912.
To support his procedural unconscionability argument, Plaintiff states
that he was sent emails regarding the need to sign the arbitration clause, did
not understand the agreement, was not given an explanation of what the
agreement entailed, was not given sufficient time to review and contemplate the
agreement, but nonetheless signed the agreement because he felt pressured to do
so as he did not want to lose his job. (Decl.,
Bernard Grisez, ¶¶ 3-14.)
Plaintiff freely admits that he was provided the emails with the
arbitration clause, which he ultimately signed. It is not an adequate defense to enforcement
that Plaintiff failed to read and understand the agreement before signing the
agreement. Caballero v. Premier Care
Simi Valley LLC (2021) 69 Cal.App.5th 512, 519. In addition, Defendant has no obligation to
highlight, explain, or discuss the terms of the arbitration agreement as any
such requirement would be contrary to the FAA. Sanchez v. Valencia Holding Co., LLC
(2015) 61 Cal. 4th 899, 914-15. Merely because an arbitration agreement was
signed as a condition of continued employment does not establish procedural
unconscionability.
“[C]ourts, including ours, have used various nonexclusive formulations to
capture the notion that unconscionability requires a substantial degree of
unfairness beyond a simple old-fashioned bad bargain. This
latter qualification is important. Commerce depends on the enforceability, in
most instances, of a duly executed written contract. A party cannot avoid a contractual
obligation merely by complaining that the deal, in retrospect, was unfair or a
bad bargain. Not all one-sided contract provisions are unconscionable; hence
the various intensifiers in our formulations: ‘overly harsh,’ ‘unduly oppressive,’
‘unreasonably favorable.’ The ultimate issue in every case is
whether the terms of the contract are sufficiently unfair, in view of all
relevant circumstances, that a court should withhold enforcement.” Baltazar
v. Forever 21, Inc. (2016) 62 Cal.4th 1237, 1245 (internal citations
and quotations omitted; emphasis in original). Plaintiff acknowledges receiving
emails explaining that an employee may reach out for explanations to any
questions that they may have about the agreement. Plaintiff freely signed the agreement
eleven days after receiving the email which appears to be an adequate amount of
time to review and consider the agreement. The required level of surprise is
lacking here. The Court does acknowledge, however, that this the agreement does
mirror a contract of adhesion, and, therefore, contains the slightest indicia
of procedural unconscionability. Therefore, the Court will analyze the
agreement to determine whether the agreement is substantively unconscionable.
As noted above, both procedural and substantive unconscionability must
exist for the Court to exercise its discretion to refuse to enforce the
arbitration provision. First, Plaintiff contends that the class action waiver
clause is substantively unconscionable. However, the U.S. Supreme Court has struck
down California Courts’ refusal to enforce class action waivers in arbitration
agreements on the ground that the state law is preempted by the Federal
Arbitration Act. AT&T Mobility LLC v. Concepcion, 563 U.S.
333 (2011). In addition, Plaintiff has asserted no class claims.
Plaintiff also argues that the arbitration clause severely limits his
ability to conduct discovery by providing Plaintiff the right to only depose
three fact witnesses. However, the
agreement also specifies: “Additional discovery may be conducted by mutual
stipulation, and the Arbitrator has the exclusive authority to grant requests
for additional discovery, based on the Arbitrator’s determination that
additional discovery is warranted.” (Defendants’
Ex. A.) Thus, procedural safeguards are
in place to allow for additional discovery as needed.
Plaintiff argues that the delegation clause is unconscionable. However, in agreements governed by the FAA, it
is proper for the arbitrator to decide whether the arbitration clause covers a
parties’ claims and whether the agreement is unconscionable. Rent-A-Ctr., W., Inc. v. Jackson, 561
U.S. 63, 68-69 (2010). “[W]hen a party is claiming that an arbitration agreement is unenforceable,
it is important to determine whether the party is making a specific challenge
to the enforceability of the delegation clause or is simply arguing that the
agreement as a whole is unenforceable. If the party's challenge is directed to
the agreement as a whole--even if it applies equally to the delegation
clause--the delegation clause is severed out and enforced; thus, the
arbitrator, not the court, will determine whether the agreement is enforceable.
In contrast, if the party is making a specific challenge to the delegation
clause, the court must determine whether the delegation clause itself may be
enforced (and can only delegate the general issue of enforceability to the
arbitrator if it first determines the delegation clause is enforceable).” Malone
v. Superior Court (2014) 226 Cal.App.4th 1551, 1559–60. Here, Plaintiff fails to establish that the
delegation clause is, itself, unconscionable. Plaintiff merely mirrors arguments made above
regarding the oppression and surprise that he encountered when being confronted
with the agreement. These arguments do not establish that the delegation clause
itself contains the requisite level of substantive unconscionability.
Plaintiff argues that the individual Defendants cannot be subject to
arbitration. However, Plaintiff’s own
Complaint specifically alleges that these individuals were agents of Mattel.
(Complaint, ¶¶ 12-13.) Thus, these
individuals may enforce the arbitration clause. As to joining party, Guidesoft, this party is
specifically outlined as a party to the arbitration agreement. (Defendants Ex.
A, page 1.)
Therefore, the Motion to Compel Arbitration is granted. The Court action
is ordered stayed pending completion of arbitration. An OSC re: status of arbitration is set for
_________.
Defendants are ordered to give notice of this ruling.