Judge: Glenda Sanders, Case: 2022-01274235, Date: 2022-12-22 Tentative Ruling
Defendant TKS Restaurants, LLC seeks to compel Plaintiff Lamonte Thomas to arbitrate his individual PAGA claims, and to dismiss the non-individual PAGA claims, or in the alternative, to stay the action pending completion of arbitration.
Requests for Judicial Notice. Defendant’s request for judicial notice (ROA 117) is GRANTED only as to the filing of the Complaint in this action and the allegations in the Complaint. The remainder of Defendant’s request judicial notice is DENIED because Defendant fails to specify the other matters of which it seeks judicial notice.
Plaintiff’s request for judicial notice (ROA 158) is DENIED because the arbitration agreement in Viking River Cruises, Inc. v. Moriana (2022) 142 S. Ct. 1906 is not relevant to the Court’s ruling.
Objections. Plaintiff’s Objections (ROA 166) to the ROA 119, Nazihi Declaration are SUSTAINED as to Nos. 1, 3, 4 and 6 and OVERRULED as to Nos. 2 and 5.
Defendant’s Objections (ROA 177) as to the ROA 162, Thomas Declaration are SUSTAINED as to No. 2, and otherwise OVERRULED. The Court declines to rule on Defendant’s Objections to the ROA 164, Sweeny Declaration as they are not relevant to the Court’s ruling.
Relevant Law. “The threshold question presented by every petition to compel arbitration is whether an agreement to arbitrate exists. The party seeking to compel arbitration bears the burden of proving by a preponderance of the evidence an agreement to arbitrate a dispute exists.” (Trinity v. Life Ins. Co. of N. Am. (2022) 78 Cal. App. 5th 1111, 1120, citations omitted; Code Civ. Proc. § 1281.2.)
While the burden of persuasion is always on the moving party, the burden of production may shift in a three-step process. First, the moving party must present “prima facie evidence of a written agreement to arbitrate the controversy”, which is satisfied by attaching a copy of the arbitration agreement purporting to bear the opposing party's signature. (Gamboa v. Ne. Cmty. Clinic (2021) 72 Cal. App. 5th 158, 164–67 (Gamboa).)
If the moving party meets its initial prima facie burden, and the opposing party disputes the agreement, then the burden shifts to the opposing party to challenge the authenticity of the agreement. The opposing party may satisfy this burden by testifying that the party never saw or does not remember seeing the agreement, or that the party never signed or does not remember signing the agreement. (Espejo v. Southern California Permanente Medical Group (2016) 246 Cal.App.4th 1047, 1054 (Espejo) [did not recall seeing or signing document]; Ruiz v. Moss Bros. Auto Group, Inc. (2014) 232 Cal.App.4th 836, 846 (Ruiz) [did not recall signing agreement].)
Finally, in the third step, the moving party must present admissible evidence of a valid arbitration agreement between the parties by a preponderance of the evidence. (Gamboa, supra, 72 Cal. App. 5th at 164–67.)
Defendant Has Not Met Its Burden of Authenticating Plaintiff’s Electronic Signature.
Plaintiff Lamonte Thomas (Plaintiff) filed this PAGA-only action against Defendant, seeking to recover civil penalties for a number of Labor Code violations allegedly committed against Defendant’s non-exempt employees. ROA 2, Complaint.
Defendant presents a document dated December 17, 2018 entitled “Mutual Agreement to Arbitrate All Claims” (Arbitration Agreement) bearing Plaintiff’s purported electronic signature. ROA 119, Nazihi Decl., ¶¶6-7 and Ex. A. The Arbitration Agreement applies to “all disputes which may arise out of or be related in any way to my application for employment and/or employment, including but not limited to the termination of my employment and my compensation.” ROA 119, Ex. A, Arbitration Agreement, ¶1. As such, the claims here are encompassed in the Arbitration Agreement and Defendant has met its initial prima facie burden.
The burden then shifted to Plaintiff to challenge the authenticity of the Arbitration Agreement. Plaintiff has expressly denied signing the Arbitration Agreement and that he ever saw the Arbitration Agreement until his counsel showed it to him in this litigation. ROA 162, Thomas Decl., ¶¶3-4, 7. Plaintiff expressly states that he can state “with certainty” that he “did not place or type [his] name” on the Arbitration Agreement and he “did not place, type, or ‘digitally sign’ it”. ROA 162, Thomas Decl., ¶4, emphasis in original. Further, Plaintiff explains “there is no way [he] would have forgotten having seen [the Arbitration Agreement] before, and [he] did not see it at any time during [his] employment.” ROA 162, Thomas Decl., ¶7. Plaintiff explains he has a “habit and practice of not signing anything that has language that [he does] not understand”, that he did not know what arbitration meant until recently and learned what it meant after commencement of this litigation, and based on these “consistent habits”, he knows he did not sign the Arbitration Agreement. ROA 162, Thomas Decl., ¶7. Moreover, Plaintiff represents that he “would never agree to give up the right to bring a lawsuit against Defendant in Court and he [does not] agree to give up that right.” ROA 162, Thomas Decl., ¶6. Thus, Plaintiff’s detailed denials go further than the plaintiffs in Ruiz, Espejo or Gamboa.
Plaintiff has satisfied his burden of proof. As such, the burden shifted to Defendant to properly authenticate Plaintiff’s electronic signature. (Espejo v. Southern California Permanente Medical Group (2016) 246 Cal.App.4th 1047, 1060.) Defendant did not submit any supplemental declarations or evidence with its reply in response to Plaintiff’s Declaration and relies on ROA 119, the Nazihi Declaration, to authenticate Plaintiff’s digital signature.
Civil Code § 163319(a) provides:
An electronic record or electronic signature is attributable to a person if it was the act of the person. The act of the person may be shown in any manner, including a showing of the efficacy of any security procedure applied to determine the person to which the electronic record or electronic signature was attributable.
In Espejo, the court analyzed Ruiz to determine when a digital signature has been properly authenticated:
As discussed above, in Ruiz the court considered two declarations submitted by defendant's business manager, Mary Main, purporting to authenticate Ruiz's electronic signature on an arbitration agreement. (Ruiz, supra, 232 Cal.App.4th at pp. 840-841, 181 Cal.Rptr.3d 781.) As detailed by the Ruiz court, in the first declaration, Main “summarily asserted ... that Ruiz was the person who electronically signed the 2011 agreement ..., but she did not explain how she arrived at that conclusion.” (Id. at p. 843, 181 Cal.Rptr.3d 781.) In other words, Main “never explained how Ruiz's printed electronic signature, or the date and time printed next to the signature, came to be placed on the 2011 agreement. More specifically, Main did not explain how she ascertained that the electronic signature on the 2011 agreement was ‘the act of’ Ruiz” as required by Civil Code section 1633.9. (Id. at pp. 843-844, 181 Cal.Rptr.3d 781.) The court then explained why Main's second declaration, offered to rebut Ruiz's assertion that he did not recall signing the agreement, did not provide the necessary authentication: “... Main explained in her reply declaration that the 2011 agreement was part of an employee acknowledgment form that ‘is’ presented to all Moss Bros. Employees ..., and each employee is required to log into the company's HR system, using his or her ‘unique login ID and password,’ to review and sign the employee acknowledgment form. Again, however, Main did not explain how, or upon what basis, she inferred that the electronic signature on the 2011 agreement was ‘the act of’ Ruiz. (Civ.Code, § 1633.9, subd. (a).) This left a critical gap in the evidence supporting the petition.
“Indeed, Main did not explain that an electronic signature in the name of ‘Ernesto Zamora Ruiz’ could only have been placed on the 2011 agreement ... by a person using Ruiz's ‘unique login ID and password’; that the date and time printed next to the electronic signature indicated the date and time the electronic signature was made; that all Moss Bros. employees were required to use their unique login ID and password when they logged into the HR system and signed electronic forms and agreements; and the electronic signature on the 2011 agreement was, therefore, apparently made by Ruiz on September 21, 2011, at 11:47 a.m. Rather than offer this or any other explanation of how she inferred the electronic signature on the 2011 agreement was the act of Ruiz, Main only offered her unsupported assertion that Ruiz was the person who electronically signed the 2011 agreement. In the face of Ruiz's failure to recall electronically signing the 2011 agreement, the fact the 2011 agreement had an electronic signature on it in the name of Ruiz, and a date and time stamp for the signature, was insufficient to support a finding that the electronic signature was, in fact, ‘the act of’ Ruiz.” (Ruiz, supra, 232 Cal.App.4th at p. 844, 181 Cal.Rptr.3d 781.)
(Espejo, supra, 246 Cal. App. 4th at 1061–62.)
In contrast to the defendant in Ruiz, the defendant in Espejo offered “the critical factual connection that the declarations in Ruiz lacked”, i.e. explanation of the “security precautions regarding transmission and use of an applicant’s unique username and password, as well as the steps an applicant would have to take to place his or her name on the signature line of the employment agreement and the DRP”. (Espejo, supra, 246 Cal.App.4th at 1062.) Specifically, the defendant in Espejo explained that the arbitration agreement was included in the packet of documents that were provided to the plaintiff as part of his offer of employment; that plaintiff was sent an email with a hyperlink to the Applicant Home Page and employment contract, which included the arbitration agreement; that the Applicant Home Page requires the use of a private and unique username and password to which only plaintiff had access; that the username and password were “directly and orally” given to plaintiff and then when plaintiff logged in for the first time, he had to change his password before he could do anything else on the Applicant Home Page; that plaintiff had to log in and use his unique user name and password to access the hyperlinks to each document; that plaintiff was prompted to electronically sign the arbitration agreement by typing in his name, which would then populate the signature line on the contract; and that then plaintiff’s name, date, time and IP address where the agreement was electronically signed would be inputted into the contract. (Espejo, supra, 246 Cal.App.4th at 1054-1054.)
Here, the Nazihi Declaration states that in 2018, to apply for a position with Defendant, applicants were required to set up a personal account in an applicant tracking system “which was maintained by a third-party software provided, talentReef at that time”, that used the applicant’s personal email address and “confidential” password of his choosing. If the applicant was hired, he or she would receive an email at his or her personal address directing them to their online account, where he or she had to log in with their personal email address and confidential password and then sign the suite of onboarding documents, including the Arbitration Agreement. The delivery and signing of the onboarding documents were all handled by talentReef, who had a duty to “completely take, make and maintain such records and documents.” ROA 119, Nazihi Decl., ¶¶3-5. Then the onboarding documents would be provided to Defendant by talentReef. ROA 119, Nazihi Decl., ¶3. Nazihi then concludes that Plaintiff electronically signed the Arbitration Agreement on December 17, 2018 along with other onboarding documents and that these documents must be completed before beginning employment. ROA 119, Nazihi Decl., ¶¶6-7.
However, like the Main declarations in Ruiz, the Nazihi Declaration fails to explain how, or on what basis, he obtained this knowledge and inferred that the electronic signature on the Arbitration Agreement was the act of Plaintiff. Although Nazihi explains he is the VP of Operations (ROA 119, Nazihi Decl., ¶1), he provides no explanation of his duties, nor does he state whether he is involved in the application and hiring process, onboarding process, or human resources, or otherwise, how he is familiar with and has knowledge of any of those practices and procedures, and in particular, how he has knowledge of Plaintiff’s hiring and onboarding. Indeed, as explained, the Nazihi Declaration makes it clear he and Defendant were not personally involved in Plaintiff’s onboarding, or with taking, making and maintain the records and documents, or with ensuring the documents were signed by Plaintiff, since that was all handled by talentReef. The Nazihi Declaration does not explain how, or provide on what basis, he is familiar with and has personal knowledge of any of talentReef’s practices and procedures for these tasks.
Although Plaintiff apparently used a confidential password to log in to his personal account, the Nazihi Declaration provides no information on who had access to Plaintiff’s log-in information, his personal account, or the onboarding documents. There is no information on the security precautions taken, if any, to ensure that Plaintiff alone had access to his personal account. As with the Main declarations in Ruiz, the Nazihi Declaration provides no information on how Plaintiff accessed the onboarding documents, such as hyperlinks to the specific documents, or what steps had to be taken to electronically sign Plaintiff’s name on the onboarding documents or show consent to the Arbitration Agreement, e.g. clicking a box, typing in his name, or inputting his log-in information and password again in order to affix his name. ROA 119, Nazihi Decl., ¶3.
Additionally, there is no information about how talentReef was notified that the documents were electronically signed, how talentReef maintained the documents, how talentReef transmitted the documents to Defendant, or when those electronically signed documents are transmitted to Defendant. ROA 119, Nazihi Decl., ¶¶2, 3, 7. The Nazihi Declaration also makes no mention of what the time and date below the electronic signature actually signify. There is also no information on whether talentReef collects the IP address of the location where the documents were signed.
Given Plaintiff’s emphatic denials that he signed the Arbitration Agreement, and the gaps in the Nazihi Declaration, the Court finds the facts in this case are more similar to Ruiz than Espejo. Defendant has not satisfied its burden to properly authenticate the electronic signature and show it was an act by Plaintiff.
The Motion to Compel Arbitration is DENIED.
The stay previously imposed is lifted in all respects.
The status conference is continued to March 24, 2023 at 9 AM, and the parties are ordered to file a joint status report not later than March 17, 2023.
Defendant is ordered to give notice.