Judge: Gregory Keosian, Case: 22STCV35676, Date: 2023-11-17 Tentative Ruling

Case Number: 22STCV35676    Hearing Date: November 17, 2023    Dept: 61

Defendants Automobile Club of Southern California and ACSC Management Services, Inc.’s Motion to Compel Arbitration is GRANTED.

Defendants to provide notice.

I.                   MOTION TO COMPEL ARBITRATION

On petition of a party to an arbitration agreement to arbitrate a controversy, a court must order the petitioner and respondent to arbitrate the controversy if it determines the arbitration agreement exists, unless (1) the petitioner has waived its right to arbitrate; (2) grounds exist for the revocation of the agreement; or (3) “[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.” (Code Civ. Proc., § 1281.2.)

“[T]he party moving to compel arbitration bears the burden of establishing the existence of a valid agreement to arbitrate, and the party opposing arbitration bears the burden of proving by a preponderance of the evidence any fact necessary to its defense. The role of the trial court is to sit as a trier of fact, weighing any affidavits, declarations, and other documentary evidence, together with oral testimony received at the court’s discretion, to reach a determination on the issue of arbitrability.” (Hotels Nevada v. L.A. Pacific Center, Inc. (2006) 144 Cal.App.4^th 754, 758.)

Defendants Automobile Club of Southern California and ACSC Management Services, Inc. (Defendants) move to compel arbitration based on an arbitration agreement signed by Plaintiff Marisen Munoz (Plaintiff) when she commenced employment with Automobile Club of Southern California in January 2019. (Fermin Decl. Exh. 1.) The agreement applies to “all claims of any nature or kind arising out of, relating to, or connected with this Arbitration Agreement or your employment with the Club.” (Id. at p. 2.)

Plaintiff in opposition argues only that the agreement is unconscionable because of its limitation on discovery. “Unconscionability requires a showing of both procedural unconscionability and substantive unconscionability.” (Ajamian v. CantorCO2e, L.P. (2012) 203 Cal.App.4th 771, 795.) Arbitration contracts presented to employees on a take-it-or-leave-it basis are at least minimally procedurally unconscionable. (See Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83, 113.) The agreement here is drafted by Defendants and presented to Plaintiff on a take-it-or-leave-it basis, satisfying this minimum element of unconscionability.

The agreement allows the following discovery:

In any arbitration proceeding under this Arbitration Agreement, you and the Club each have the right to take the depositions of up to three individuals and any expert witness(es) designated by the other party, and to serve document requests and up to 35 special interrogatories. The arbitrator has the authority to allow additional discovery, including the issuance of subpoenas, that he or she deems appropriate based upon a showing of “good cause,” taking into account the parties’ mutual desire to have a simple, informal, fast, and cost-effective dispute resolution mechanism.

(Fermin Decl. Exh. 1 at p. 6.) Plaintiff analogizes this discovery provision with that held unconscionable in Fitz v. NCR Corp. (2004) 118 Cal.App.4^th 702. (Opposition at pp. 5–8.)

Plaintiff’s authority is inapposite. Fitz involved an arbitration agreement that “limit[ed] discovery to two depositions and then permit[ted] the arbitrator to grant additional discovery only if a compelling need is shown.” (Fitz, supra, 118 Cal.App.4^th at p. 720.) The agreement here allows for written discovery and does not require a showing of “compelling need” for the authorization of any additional discovery, but allows for further discovery upon a showing of good cause. Courts have upheld similar or more restrictive discovery provisions against challenges based on unconscionability. (See Torrecillas v. Fitness International, LLC (2020) 52 Cal.App.5^th 485, 497 [upholding discovery provision in arbitration agreement that required parties to swap “any and all documents relevant to any claim or defense,” allowed for “30 interrogatories and five depositions,” and permitted additional discovery “after a showing of substantial need”]; Mercuro v. Superior Court (2002) 96 Cal.App.4^th 167, 182–183 [upholding discovery provision in arbitration agreement that allowed “three depositions and an aggregate of 30 discovery requests of any kind,” with depositions of corporate representatives “limited to no more than four designated subjects,” with additional discovery subject to “a presumption against increasing the aggregate limit on requests,” subject to rebuttal “only upon a showing of good cause”].) Plaintiff has made no “factual showing that the discovery limitations would as a practical matter thwart the employee's ability to prove his or her particular claims.” (Baxter v. Genworth North America Corp. (2017) 16 Cal.App.5th 713, 729.) Moreover, the court cannot presume that the arbitrator will exercise their discretion to unreasonably disallow Plaintiff’s discovery; rather, “[w]e assume that the arbitrator will operate in a reasonable manner in conformity with the law.” (Dotson v. Amgen, Inc. (2010) 181 Cal.App.4th 975, 984.)

Plaintiff further argues that the arbitration agreement has modified the underlying AAA rules for discovery. (Opposition at pp. 7–8.) This argument is inapposite, as the arbitration provision permits more discovery as a matter of right than the underlying rules, which guarantees no discovery but what “the arbitrator considers necessary to a full and fair exploration of the issues in dispute, consistent with the expedited nature of arbitration.” (AAA Employment Rule 9; Opposition at p. 7.) Plaintiff has not shown that the discovery provisions are substantively unconscionable.

Plaintiff further argues that the agreement is unconscionable because it includes a provision allowing for unilateral modification, and further contains a class action waiver. (Opposition at pp. 12–13.)

Neither provision is unconscionable. Unilateral modification provisions have been upheld against unconscionability challenges, as they must be exercised within the confines of the covenant of good faith and fair dealing applicable to all contracts. (See Serpa v. California Surety Investigations, Inc. (2013) 215 Cal.App.4th 695, 706.) The class action waiver is likewise enforceable, as the agreement is explicitly covered by the Federal Arbitration Act. “Class action waivers-even waivers that are obtained as a condition of employment and that limit employees' ability to vindicate statutory employee protections-are not categorically invalid or unenforceable.” (Franco v. Arakelian Enterprises, Inc. (2015) 234 Cal.App.4th 947, 956.)

The motion to compel arbitration is therefore GRANTED.