Judge: George F. Bird, Jr., Case: 22CMCV00376, Date: 2023-02-15 Tentative Ruling

“INSTRUCTIONS:
If the parties wish to submit on the tentative ruling and avoid a court
appearance on the matter, the moving party must:

1. Contact the opposing party and all other
parties who have appeared in the action and confirm that each will submit on the
tentative ruling.

2. No later than 4:00 p.m. on the court day
before the hearing, call the Courtroom (310-761-4302) advising that all parties
will submit on the tentative ruling and waive hearing; and

3. Serve notice of the Court's ruling on all
parties entitled to receive service.

If this procedure is followed, when the case is
called the Court will enter its ruling on the motion in accordance with its
tentative ruling. If any party declines to submit on the tentative ruling, then
no telephone call is necessary, and all parties should appear at the hearing.
If there is neither a telephone call nor an appearance, then the matter may
either be taken off calendar or ruled on. 

Case Number: 22CMCV00376    Hearing Date: February 15, 2023    Dept: B

SUPERIOR COURT OF THE STATE OF CALIFORNIA

FOR THE COUNTY OF LOS ANGELES – SOUTH CENTRAL DISTRICT

I.       BACKGROUND

             Plaintiff Marco Corral (“Plaintiff”) filed the Complaint on October 14, 2022, alleging seven causes of action against Defendant La Bodega Latina Corporation, doing business as El Super (“Defendant”). Plaintiff alleges that he was an employee of Defendant since 2014. (Complaint (“Compl.”), ¶ 15.) Plaintiff was transferred to Defendant’s Lawndale store as a Store Director in 2019 where he remained until his termination. (Compl., ¶ 16.) Plaintiff alleges that he was wrongfully terminated in 2020 after Defendant failed to engage in discussions or provide reasonable accommodations for Plaintiff when he suffered injuries to his back, neck, shoulder, and foot while attempting to lift a heavy box at work. (Compl., ¶¶ 25, 28, 29.) Plaintiff also alleges that his termination was based on his engagement in protected activities of reporting inappropriate conduct and sexual harassment of a female employee by another male employee. (Compl., ¶ 33.)

II.       MOTION TO COMPEL ARBITRATION AND STAY THE ACTION

A.    Defendant’s Motions.

            Defendant originally filed a motion to compel arbitration on December 19, 2022. After the parties agreed to move the hearing date, Defendant refiled the present Motion to Compel Arbitration and Stay the Action on January 13, 2023. The Court will only consider the re-filed Motion to Compel Arbitration and Stay the Action.

            Defendant alleges that Plaintiff entered into a written arbitration agreement in 2014 when Plaintiff began his employment with Defendant. Defendant states that the arbitration agreement requires Plaintiff and Defendant to arbitrate employment-related disputes such as the claims made here. Defendant argues that the agreement is not unconscionable substantively or procedurally and should be enforced.

B.     Plaintiff’s Oppositions.

            Plaintiff submitted an opposition to the original motion to compel arbitration on January 12, 2023. After Defendant re-submitted the motion, Plaintiff refiled an opposition on February 1, 2023. The Court will only consider the re-filed Opposition.

            Plaintiff contests the arbitration agreement presented between Plaintiff and Defendant as inadmissible due to a lack of proper foundation. Plaintiff also argues that the agreement is substantively and procedurally unconscionable based on undue influence and because the agreement allegedly contains unlawful provisions. Plaintiff also states that Defendant failed to demonstrate compliance with the American Arbitration Association’s rules for compelling arbitration.

C.     Defendant’s Reply.

            Defendant filed the Reply on February 7, 2023. Defendant argues that they satisfied their evidentiary burden by attaching a copy of the arbitration agreement to the motion. Plaintiff argues that there is no proof of undue influence. Plaintiff also argues that the agreement is not procedurally or substantively unconscionable.

III.       LEGAL STANDARDS

A written arbitration agreement is “valid, enforceable and irrevocable” unless grounds for revocation of any contract exist. (Code Civ. Proc., § 1281.) The court shall order the parties to arbitrate the controversy if it determines that an agreement to arbitrate the controversy exists, unless grounds exist for rescission of the agreement. (Code Civ. Proc., § 1281.2, subd. (b).) If the court orders arbitration, the court shall stay the action or proceeding. (Code Civ. Proc., § 1281.4.)

The Federal Arbitration Act (“FAA”) governs the alleged agreement. (Declaration of Maria Garcia, Exhibit A ¶ D.) If the parties specifically contract to designate that the FAA controls the arbitration agreement, then the FAA governs rather than state procedural law. (Rodriguez v. American Technologies, Inc. (2006) 136 Cal.App.4th 1110, 1115.)

Under Section 2 of the FAA and state law, written arbitration agreements are valid, irrevocable, and enforceable “save upon such grounds as exist at law or in equity for the revocation of a contract.” (Arthur Andersen LLP v. Carlisle (2009) 556 U.S. 624, 629–630; Bickel v. Sunrise Assisted Living (2012) 206 Cal.App.4th 1, 8; Code Civ. Proc., § 1281.) However, state law is applicable to determine which contracts are binding under Section 2 and enforceable under Section 3. (Arthur Andersen LLP v. Carlisle, supra.,  556 U.S. at pp. 630-631.)

If the court compels arbitration, Section 3 of the FAA "requires the court, ‘on application of one of the parties,’ to stay the action if it involves an ‘issue referable to arbitration under an agreement in writing.’ 9 U.S.C. § 3.” (Arthur Andersen LLP v. Carlisle, supra., 556 U.S. at p.  630.)

California Labor Code section 432.6, which prohibits requiring an employee to sign an arbitration agreement as a condition of employment, is inapplicable here as the section only applies to contracts entered into, modified, or extended on or after January 1, 2020. (Lab. Code, § 432.6, subd. (h).)

IV.       EVIDENTIARY OBJECTIONS

            Plaintiff objects to the declaration of Maria Garcia arguing that Exhibit A of the declaration lacks foundation. The Court will not rule on this objection as, addressed below, the objection is irrelevant to this motion.

            Defendant objects to the declaration of Plaintiff, Marco Corral, for allegedly violating California Rules of Court rule 2.257, subdivision (b), which states “When a document to be filed electronically provides for a signature under penalty of perjury of any person, the document is deemed to have been signed by that person if filed electronically provided that either of the following conditions is satisfied: (1) The declarant has signed the document using an electronic signature and declares under penalty of perjury under the laws of the state of California that the information submitted is true and correct. If the declarant is not the electronic filer, the electronic signature must be unique to the declarant, capable of verification, under the sole control of the declarant, and linked to data in such a manner that if the data are changed, the electronic signature is invalidated; or (2) The declarant, before filing, has physically signed a printed form of the document….”

            The Court finds that the declaration of Plaintiff complies with California Rules of Court rule 2.257, subdivision (b)(1). Marco Corral, the declarant, electronically signed the document and declared the information was true and correct under penalty of perjury. Declarant, Plaintiff, electronically filed the document so the second half of the requirements under California Rules of Court rule 2.257, subdivision (b)(1), is inapplicable as it only applies if the declarant is not the electronic filer.

V.       DISCUSSION

A.    Authentication of the alleged arbitration agreement.

            Plaintiff objects to the alleged arbitration agreement presented by Defendant arguing that it is unauthenticated. While Maria Garcia, Vice President of Human Resources for Defendant, declared that the presented arbitration agreement was made by Plaintiff, a separate declaration by Maria Garcia declared that the same agreement was that of Elia Ponce de Gomez who is not a party to this action. (See Declaration of Maria Garcia filed December 19, 2022, and Declaration of Maria Garcia filed January 13, 2023.)

            Defendant argues that, to meet their burden for a motion to compel arbitration, authentication is not required. Only attaching the agreement to the motion is necessary to shift the burden to Plaintiff to demonstrate that the presented arbitration agreement is not what it is represented to be.

            The Court of Appeal addressed this issue directly in January of 2023 and stated “The arbitration proponent must first recite verbatim, or provide a copy of, the alleged agreement. (Cal. Rules of Court, rule 3.1330; Condee v. Longwood Management Corp. (2001) 88 Cal.App.4th 215, 219, 105 Cal.Rptr.2d 597.) A movant can bear this initial burden ‘by attaching a copy of the arbitration agreement purportedly bearing the opposing party's signature.’ (Espejo, supra, 246 Cal.App.4th at p. 1060, 201 Cal.Rptr.3d 318.) At this step, a movant need not ‘follow the normal procedures of document authentication’ and need only ‘allege the existence of an agreement and support the allegation as provided in rule [3.1330].’ (Condee, supra, at pp. 218–219, 105 Cal.Rptr.2d 597.) If the movant bears its initial burden, the burden shifts to the party opposing arbitration to identify a factual dispute as to the agreement's existence….” (Iyere v. Wise Auto Group (Cal. Ct. App., Jan. 19, 2023, No. A163967) 2023 WL 314122, at *4.)

            Here, Defendant has attached a copy of the alleged agreement containing the signature of Plaintiff. The declarations of Maria Garcia are not required to authenticate the presented agreement. Plaintiff does not dispute the authenticity of the signature on the document and Plaintiff declared that he did sign an arbitration agreement with Defendant. (Declaration of Marco Corral, ¶ 2.) The Court finds that Defendant has properly alleged an arbitration agreement between the parties by presenting the agreement and Plaintiff has failed to identify a factual dispute as to the agreement’s existence.

B.     Consent to the agreement.

            Plaintiff argues that consent to the agreement was obtained by undue influence and unless the consent was freely given, the contract cannot be formed. (Civ. Code, § 1565; Civ. Code, § 1567.) Undue influence consists “(1) In the use, by one in whom a confidence is reposed by another, or who holds a real or apparent authority over him, of such confidence or authority for the purpose of obtaining an unfair advantage over him; (2) In taking an unfair advantage of another's weakness of mind; or, (3) In taking a grossly oppressive and unfair advantage of another's necessities or distress.” (Civ. Code, § 1575.) To demonstrate undue influence, “the plaintiff must ordinarily allege that the party against whom rescission is sought took some advantage of the mental weakness or incapacity of the other party.” (Das v. Bank of America, N.A. (2010) 186 Cal.App.4th 727, 743 [112 Cal.Rptr.3d 439, 453].) The elements of a claim of undue influence are (1) undue susceptibility in the servient person and (2) excessive pressure by the dominant person. (Martinez-Gonzalez v. Elkhorn Packing Co. LLC (9th Cir. 2022) 25 F.4th 613, 625.)

            Here, Plaintiff was in the servient position as the party seeking employment and the Defendant is in the dominant position as the party potentially hiring Plaintiff. Plaintiff does not plead any susceptibility to pressure beyond needing to obtain and maintain employment. Susceptibility “may consist of wholesale mental incapacitation, but also extends to ‘a lack of full vigor due to age, physical condition, emotional anguish, or a combination of such factors.’” (Martinez-Gonzalez v. Elkhorn Packing Co. LLC, supra., 25 F.4th at p. 626.) Plaintiff does not assert a severe ‘emotional anguish’ due to his need to obtain employment that was so severe he was unduly susceptible to pressure. Plaintiff merely argues that he was in need of employment to support himself. The Court does not find this to amount to undue susceptibility.

            Assuming Plaintiff was unduly susceptible purely based on his need to obtain employment, there must be excessive pressure asserted by Defendant. Excessive pressure can be demonstrated by (1) the discussion of the transaction at an unusual or inappropriate time; (2) consummation of the transaction in an unusual place; (3) insistent demand that the business be finished at once; (4) extreme emphasis on untoward consequences of delay; (5) the use of multiple persuaders by the dominant side against a single servient party; (6) absence of third-party advisors to the servient party; and (7) statements that there is no time to consult advisers. (Martinez-Gonzalez v. Elkhorn Packing Co. LLC, supra., 25 F.4th at pp. 626–27.) The transaction is alleged to have happened on Plaintiff’s first day of work in the Human Resources Department. These are traditional times and places to have a new employee complete hiring paperwork such as an arbitration agreement. Plaintiff was allegedly asked to sign the paperwork “on the spot” and was consistently told that failure to sign the paperwork would forfeit the position. Employment arbitration agreements are often contracts of adhesion. Plaintiff only spoke to one representative of Defendant and was not subject to persuasion by multiple representatives of Defendant. Though Plaintiff was informed that refusal to sign would forfeit his position, he was never specifically denied the opportunity or time to consult an advisor.

            Based on the foregoing, the Court finds there was no undue influence presented here which prevented Plaintiff from freely consenting to the arbitration agreement.

C.     Unconscionability.

            Because Defendant has demonstrated there is a written arbitration agreement between the parties, the court shall order arbitration unless grounds for recission of the contract exist. An arbitration agreement may be unenforceable if the agreement is found to be unconscionable. (Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83, 113 [99 Cal.Rptr.2d 745, 766, 6 P.3d 669, 689].) To find an agreement unconscionable, the court must find both procedural and substantive unconscionability. (Nyulassy v. Lockheed Martin Corp. (2004) 120 Cal.App.4th 1267, 1280–1281 [16 Cal.Rptr.3d 296, 305–306].) Though both types of unconscionability must be present, they do not need to be present in equal amounts. The Supreme Court of California expressed that procedural and substantive unconscionability work as a sliding scale, so “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.” (Armendariz v. Foundation Health Psychcare Services, Inc., supra.,  24 Cal.4th at p. 114.)

D.    Procedural unconscionability.

            Procedural unconscionability focuses on the oppression or surprise due to unequal bargaining power between the parties generally demonstrated by a contract of adhesion which is “imposed and drafted by the party of superior bargaining strength, relegates to the subscribing party only the opportunity to adhere to the contract or reject it. [Citations.]” (Internal quotations omitted.) (Nyulassy v. Lockheed Martin Corp., supra., 120 Cal.App.4th at pp. 1280–1281.)

            Plaintiff argues that the agreement is one of adhesion because it was drafted and presented by Defendant, the employer, who had the superior bargaining power over Plaintiff, the employee, and Defendant allegedly required Plaintiff to sign the agreement as a condition of his employment. (Declaration of Marco Corral, ¶ 2.) Defendant does not argue that the agreement is not an adhesion contract. Defendant instead argues that the agreement has low procedural unconscionability which requires a high demonstration of substantive unconscionability to find the agreement unenforceable.

            Courts have recognized that employment arbitration agreements are typically adhesion contracts and that further analysis of the surrounding circumstances determines the level of procedural unconscionability. (Cisneros Alvarez v. Altamed Health Services Corporation (2021) 60 Cal.App.5th 572, 590–591 [274 Cal.Rptr.3d 802, 817, 60 Cal.App.5th 572, 590–591], as modified (Mar. 4, 2021).) “The circumstances relevant to establishing oppression include, but are not limited to (1) the amount of time the party is given to consider the proposed contract; (2) the amount and type of pressure exerted on the party to sign the proposed contract; (3) the length of the proposed contract and the length and complexity of the challenged provision; (4) the education and experience of the party; and (5) whether the party's review of the proposed contract was aided by an attorney.” (Ibid.)

            Here, the arbitration agreement is a stand-alone agreement from the other employment agreements, one page in length, clearly labeled “MUTUAL ARBITRATION AGREEMENT,” and the paragraph just before the signature in capital type and bold succinctly expresses that by signing the party will give up their right to trial by jury or judge and that they are advised to seek legal advice about the agreement. (Declaration of Maria Garcia, Exhibit A.) These factors weigh in favor of minimal procedural unconscionability.

            Plaintiff declares that he was given the agreement and required to sign “on the spot” and that refusing to sign was refusal that would forfeit the position. (Declaration of Marco Corral, ¶ 2.) Plaintiff states that he informed the representative that he “did not understand the agreement and did not want to sign the agreement,” but once he was faced with the prospect of forfeiting the position, he reluctantly signed. (Ibid.)

            Based on the foregoing, the Court finds substantial procedural unconscionability. While the agreement was a traditional employment arbitration agreement which is often one of adhesion, Plaintiff was significantly pressured by the representative who required Plaintiff to sign “on the spot” and affirmed that any refusal to sign would forfeit the position after Plaintiff expressed he did not understand the agreement. (Declaration of Marco Corral, ¶ 2.)

            Plaintiff argues there is additional procedural unconscionability because Defendant did not provide a copy of the American Arbitration Association’s (“AAA”) rules with the proposed arbitration agreement. The Court of Appeal in Cisneros Alvarez states “the failure to provide a copy of the arbitration rules generally raises procedural unconscionability concerns only if there is a substantively unconscionable provision in the omitted rules.” (Cisneros Alvarez v. Altamed Health Services Corporation, supra., 60 Cal.App.5th at p. 590.) Plaintiff does not argue that any of the provisions of the AAA’s rules are unconscionable. There is no added procedural unconscionability for failure to provide the AAA’s rules to Plaintiff with the arbitration agreement.

E.     Substantive unconscionability.

            Because there is more than minimal procedural unconscionability presented, Plaintiff need only present minimal substantive unconscionability to demonstrate that the agreement is unconscionable. Substantive unconscionability determines if the terms of the agreement are so one-sided as to “shock the conscience.” (Kinney v. United HealthCare Services, Inc. (1999) 70 Cal.App.4th 1322, 1330, 83 Cal.Rptr.2d 348.)

            The California Supreme Court identified six elements of an employment arbitration agreement that demonstrate terms that are not substantively unconscionable: (1) provides for neutral arbitrators; (2) provides for more than minimal discovery; (3) provides for a written award; (4) provides for all of the types of relief that would otherwise be available in court; (5) does not require employees to bear unreasonable expenses, arbitration forum costs, or expenses they would not be required to bear if they brought their action in court; and (6) provides a “modicum of bilaterality” between employee and employer. (Armendariz v. Foundation Health Psychcare Services, Inc., supra., 24 Cal.4th at p. 102.) While the parties agree these are the relevant elements for determining the level of substantive unconscionability in this matter, the parties disagree about which elements are present in the agreement and the ultimate balance of the elements.

            The agreement calls for a “single, neutral arbitrator” and if the parties cannot agree on an arbitrator, the AAA rules will govern selection. (Declaration of Maria Garcia, Exhibit A ¶¶ A, B.)  The AAA rules for selecting an arbitrator call for the selection of a ‘neutral arbitrator.’ (See American Arbitration Association Rules and Mediation Procedures, Rule 12.) Though Plaintiff argues that employee plaintiffs do not often obtain favorable judgments in arbitration, such statistics do not demonstrate that the terms of the present agreement are unconscionable. The agreement calls for a neutral arbitrator or the selection of a neutral arbitrator in compliance with the AAA rules. There is no substantive unconscionability in the selection of the arbitrator.

            In Armendariz, the Supreme Court of California determined that adequate discovery provisions were provided for “by incorporating by reference all the rules set forth in the CAA” which can provide for less than the full range of discovery but “they are at least entitled to discovery sufficient to adequately arbitrate their statutory claim, including access to essential documents and witnesses, as determined by the arbitrator(s).” (Armendariz v. Foundation Health Psychcare Services, Inc., supra., 24 Cal.4th at p. 105.) Here, Plaintiff argues that the AAA rules leave discovery up to the arbitrator's discretion, and as such, more than minimal discovery is not guaranteed. The AAA rules allow the arbitrator to determine the proper scope of discovery considering the present controversy. Plaintiff is not so limited in their discovery by the agreement that they are unable to “access a fair and simple method of obtaining the necessary information to present their claim,” which is the harm contemplated by this requirement. (Id. at 104.) There is no substantive unconscionability in the discovery procedures presented in the agreement.

            Plaintiff does not challenge that the agreement calls for a written award. Plaintiff also does not challenge that the agreement provides for all the types of relief that would otherwise be available in court. The agreement explicitly states, “The arbitrator can order the same individual remedies that a judge could in a court of law.” (Declaration of Maria Garcia, Exhibit A ¶ B.) There is no substantive unconscionability in the form of judgment or available remedies in the agreement.

            Plaintiff argues that the agreement is highly substantively unconscionable because it impermissibly splits costs and is ambiguous as to attorney’s fees. An employee who is subject to a mandatory arbitration agreement as a condition of employment cannot be made to “bear unreasonable expenses, arbitration forum costs, or expenses they would not be required to bear if they brought their action in court.” (Martinez v. Master Protection Corp. (2004) 118 Cal.App.4th107, 115-116.) Plaintiff argues that the AAA rules state that costs must be split equally which unreasonably burdens Plaintiff. Additionally, Plaintiff argues that the agreement improperly gives the arbitrator discretion to award attorney fees while, under applicable state law, a prevailing employee is entitled to attorney’s fees and a prevailing employer is limited to collect attorney’s fees when the action is determined to be frivolous, unreasonable, or groundless. (Cummings v. Benco Building Services (1992) 11 Cal.App.4th 1383, 1388 [15 Cal.Rptr.2d 53, 56].)

            Defendant correctly points to the language of the agreement which limits the costs an employee would be responsible for and limits an award of attorney’s fees to those fees which could be awarded under applicable civil law. Section C of the agreement reads, “Except for the equivalent court filing fees, [Defendant] will be responsible for any arbitration fees. Each side shall pay that side’s own costs and attorney fees, if any, unless the Arbitration Panel rules otherwise. If the applicable law affords the prevailing party attorney fees and costs, then the Arbitration Panel shall apply the same standards a court would apply to award such fees and costs.” (Declaration of Maria Garcia, Exhibit A ¶ C.)

            Because the parties have agreed that the arbitrator is to award costs and attorney fees in compliance with the standards of a court, the agreement does not require employees to bear unreasonable expenses, arbitration forum costs, or expenses they would not be required to bear if they brought their action in court. There is no substantive unconscionability in how the agreement allocates costs and attorney’s fees. 

            Finally, Plaintiff argues there is no mutuality or ‘modicum of bilaterality’ in the arbitration agreement because Defendant did not sign the agreement and because the claims the agreement forces arbitration for are those that the weaker party, the employee, would bring. 

            The arbitration agreement states that “… binding arbitration shall be the exclusive remedy for all claims between [the parties].” (Declaration of Maria Garcia, Exhibit A ¶ A.) The presented list of covered claims subject to arbitration is “not limited to” the claims listed. (Ibid.) Even within the list of covered claims, a breach of contract claim is specifically listed which could be brought by either the employer or employee.

While the terms of the agreement seem to enforce arbitration against claims by both parties, the agreement presented is only signed by Plaintiff. (Declaration of Maria Garcia, Exhibit A.) The lack of a signature can indicate a lack of mutuality. (See Carmona v. Lincoln Millennium Car Wash, Inc. (2014) 226 Cal.App.4th 74, 86 [While the arbitration agreement stated that ‘any dispute’ would be resolved in arbitration, only the employee signed. The Court found this indicated a lack of mutuality.].) Defendant argues that the lack of signature is immaterial as Defendant has demonstrated an intent to be bound by the agreement by bringing this motion to enforce the arbitration agreement. (See Serafin v. Balco Properties Ltd., LLC (2015) 235 Cal.App.4th 165, 177 [The Court of Appeal found a mutually binding agreement even though the employer did not sign the agreement.].)

Here, Defendant is demonstrating that they intend to asset to the terms of the agreement by attempting to enforce the agreement between the parties. Though a lack of signature can indicate a lack of mutuality, the express terms of the agreement demonstrate equal applicability and enforceability of the agreement to both parties. Substantive unconscionability is focused on the explicit terms of the agreement and if they “shock the conscience.” (Kinney v. United HealthCare Services, Inc. (1999) 70 Cal.App.4th 1322, 1330, 83 Cal.Rptr.2d 348.) Additionally, Plaintiff, the party this agreement is being enforced against, did sign the agreement. “Just as with any written agreement signed by one party, an arbitration agreement can be specifically enforced against the signing party regardless of whether the party seeking enforcement has also signed, provided that the party seeking enforcement has performed or offered to do so.” (Serafin v. Balco Properties Ltd., LLC (2015) 235 Cal.App.4th 165, 177 [185 Cal.Rptr.3d 151, 159].) There is no substantive unconscionability demonstrated by any non-mutual terms in the agreement.

            Because Plaintiff has failed to demonstrate any substantive unconscionability, the agreement cannot be found unconscionable even if there is some procedural unconscionability present.

F.      AAA Procedure.

            Plaintiff argues that there is no evidence presented that this claim has been submitted to AAA and that AAA may decline to accept the arbitration. The Court fails to see how this impacts the current determination of the validity and enforceability of the alleged arbitration agreement between the parties.

VI.       CONCLUSION

             This Motion to Compel Arbitration and Stay the Action is GRANTED.

Dated: February 15, 2023                                           __________________________________

                                                                                                Judge of the Superior Court