Judge: H. Jay Ford, III, Case: 23SMCV05023, Date: 2024-07-02 Tentative Ruling

Case Number: 23SMCV05023    Hearing Date: July 2, 2024    Dept: O

  Case Name:  Alberton v. N Vision Management, LLC

SUBJECT:                 MOTION TO COMPEL ARBITRATION

MOVING PARTY:   Defendants N Vision Management, LLC, Dar Mahboubi and Manijeh Messa

RESP. PARTY:         Plaintiff Jeunique Alberton

TENTATIVE RULING

            Defendants N Vision Management, LLC, Dar Mahboubi and Manijeh Messas’ Motion to Compel Arbitration is GRANTED. The action is stayed pending resolution of arbitration pursuant to CCP §1281.4. Defendants proved the existence of a valid arbitration agreement. Plaintiff did not meet their burden to prove a defense to its enforcement.

            The Court DENIES Plaintiff’s request to consider evidence of Alberton’s ability to pay, and order NVM Defendants to pay Alberton’s share or waive the right to arbitrate. The Arbitration Agreement provides for the upfront costs, if any, to be paid for by the Defendants.

Findings and Reasoning

            Under both the Title 9 section 2 of the United States Code (known as the Federal Arbitration Act, hereinafter “FAA”) and the Title 9 of Part III of the California Code of Civil Procedure commencing at section 1281 (known as the California Arbitration Act, hereinafter “CAA”), 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 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.” (Rice v. Downs (2016) 247 Cal.App.4th 1213, 1223, citing Coast Plaza Doctors Hospital v. Blue Cross of California (2000) 83 Cal.App.4th 677, 686-87.)   “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, unless it determines that: (a) The right to compel arbitration has been waived by the petitioner…”  (Code Civ. Proc., § 1281.2.)

            “A party opposing the petition bears the burden of proving by a preponderance of evidence any fact necessary to its defense.” (Olvera v. El Pollo Loco, Inc. (2009) 173 Cal.App.4th 447, 453.) CCP §1281.2 only allows the Court to deny enforcement of an applicable arbitration agreement where the party resisting arbitration demonstrates (1) waiver; (2) grounds for rescission of the agreement; or (3) subsection (c) grounds involving third parties to the arbitration agreement and potential for inconsistent rulings of fact or law. (See Code Civ. Proc., § 1281.2.)

I.      Petitioner Meets its Burden to Prove the Existence of Valid Arbitration Agreement

Defendants N Vision Management, LLC, Dar Mahboubi and Manijeh Messa (“NVM Defendants”) move to compel arbitration based on stand-alone Arbitration Agreement within the Defendant N Vision Management LLC’s (“NVM”) employment onboarding documents executed and agreed upon by Plaintiff Jeunique Alberton (“Alberton”) upon her hiring on 11-1-22. (Wall Decl., ¶¶ 5–7, Ex. A (“Arbitration Agreement”).) The relevant portions of the Arbitration Agreement state as follows:

1.     Duty to Arbitrate.

By signing this Agreement, YOU and the Company each agree that all Claims between YOU and the Company shall be exclusively decided by arbitration governed by the Federal Arbitration Act, 9 U.S.C § et seq., if applicable, or of Title 9 of Part III of the California Code of Civil Procedure, sections 1280 et seq., or corresponding Nevada State Laws, should these apply, before a NEUTRAL ARBITRATOR AND NOT BY A COURT OR A JURY. In all cases, such arbitration shall be final and binding and conducted under the most current version of the JAMS Employment Rules and Procedures, and/or such other procedures as the Parties both agree in writing. THE NEUTRAL ARBITRATOR shall be selected through JAMS, or as otherwise agreed to by the Parties in writing.

2 Arbitration and Dispute Resolution.

(a) As used above, “Claims” means all disputes arising out of or related to YOUR application for employment, YOUR employment by the Company, or YOUR separation from employment with the Company. The term “Claims” includes, but is not limited to the following: (i) alleged violations of federal, state and/or local institutions, statutes such as Title VII of the Civil Rights Act of 1964, the California Fair Employment and Housing Act, and corresponding Nevada State laws, regulations or ordinances and/or violations of common law (including, but not limited to, ANY CLAIM OF DISCRIMINATION, HARRASSMENT OR RETALIATION); (ii) claims based on any purported breach of contractual obligations, including breach of the covenant of good faith and fair dealing, wrongful termination or constructive termination; (ili) violations of public policy; (iv) violations of intellectual property laws and other business protection claims, including breach of confidential agreements, unauthorized use of trade secrets, and breach of covenants not to compete; and (v) claims arising under or involving any provision or breach of a provision of this Agreement.

 . . . .

“PLEASE READ THIS AGREEMENT CAREFULLY. THIS AGREEMENT TO ARBITRATE IS A WAIVER AND RELEASES ALL RIGHTS TO PURSUE COVERED CLAIMS IN A COURT BY A JUDGE OR A JURY AND PROVIDES FOR RESOLUTION OF CLAIMS PURSUANT TO BINDING ARBITRATION. BY SIGNING BELOW, EACH PARTY ACKNOWLEDGES AND AGREES THAT HE/SHE HAS READ, UNDERSTANDS, AND AGREES TO ABIDE BY THE ARBITRATION AND DISPUTE RESOLUTION PROVISIONS STATED ABOVE

(Arbitration Agreement, ¶¶ 1, 2, 4.)

            NVM Defendants provide a declaration from Ronald Wall (“Wall”) the CFO for NVM who has access to “the  personnel records created and maintained by NVM,” and is “familiar with NVM’s policies and practices for creating and maintaining personnel files.” (Wall Decl., ¶ 1.) Wall declares that Alberton “did not contact Defendant to ask about, question, or take issue with Defendant’s onboarding documents or the Agreement (nor did she seek to negotiate any of its terms before voluntarily signing it).” (Id., ¶ 9.)  Wall declares that Alberton signed the agreement which “affirmatively represented that she read and fully understood the agreement and that she voluntarily agreed to all of its terms.” (Ibid.) Wall declares that Alberton “did not contact NVM to complain about anyone falsifying her signatures during the onboarding process, including her signature on the Agreement. (Id., ¶ 10.) Wall declares that NVM has a contract with Bijan Holdings LLC to provide Bijan Holdings LLC with business management services for its House of Bijan locations in California and Nevada. (Id., ¶ 11.) Wall declares Alberton was assigned to work at the House of Bijan’s Rodeo Drive Beverly Hills Store as an administrative assistant. (Id., ¶ 12.)

            Thus, the Court finds that NVM Defendants have met their burden to prove the existence of a valid arbitration agreement. The burden now shifts to Alberton to prove a defense to enforcement of the arbitration agreement.

II.   Unconscionability

            Alberton argues the arbitration agreement is procedurally and substantively unconscionable, thus grounds for rescission of the agreement under CCP § 1281.2(b). (See Oppo., 3–5.)

            “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.” (Baltazar v. Forever 21, Inc. (2016) 62 Cal.4th 1237, 1243–1244, quoting Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4^th 83, 114).

a.     Procedural Unconscionability

            “The procedural element addresses the circumstances of contract negotiation and formation, focusing on oppression or surprise due to unequal bargaining power.  Oppression occurs where a contract involves lack of negotiation and meaningful choice, surprise where the allegedly unconscionable provision is hidden within a prolix printed form.  When the contract is a contract of adhesion imposed and drafted by the party with superior bargaining power, the adhesive nature of the contract is evidence of some degree of procedural unconscionability. However, the fact that an agreement is adhesive is not, alone, sufficient to render it unconscionable.”  (Malone v. Superior Court (2014) 226 Cal.App.4th 1551, 1561.)

            “The term contract of adhesion signifies a standardized contract, which, 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.”  (Armendariz, supra, 24 Cal.4th at p. 113.)  Thus, a form agreement presented on a preprinted form and offered on a take-it-or-leave-it-basis would render it a contract of adhesion.  (Baltazar, supra, 62 Cal.4^th at p. 1245.)  Where a contract of adhesion is presented but there is no element of surprise or oppression, the Court must be “particularly attuned” to a claim of unconscionability, but the agreement is “not subject[ed] to the same degree of scrutiny as contracts of adhesion that involve surprise or other sharp practices.”  (Ibid.) 

            “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.”  (OTO, L.L.C. v. Kho (2019) 8 Cal.5th 111, 126–127.)

            Alberton argues the agreement is procedurally unconscionable claiming Plaintiff was given “no opportunity to negotiate, opt out, let alone learn of the nature of the procedure, before being bound to it as a requisite to her being hired.” (Oppo., p. 5:18–21.) The Court is not persuaded. Procedural unconscionability occurs when there is an element of surprise and oppression, and in this instance there was very little to none of either. The Arbitration agreement was a succinct stand-alone document, in which the agreement stated Alberton could seek legal advice before signing the agreement, and included warnings to reach carefully in bold and all caps. (See e.g. Roman v. Superior Court (2009) 172 Cal. App. 4th 1462, 1470-71 [minimal procedural unconscionability when employment arbitration agreement was beneath the heading “Please Read Carefully, Initial Each Paragraph and Sign Below.”]; Sanchez v. Carmax Auto Superstores Cal., LLC (2014) 224 Cal. App. 4th 398, 403 [minimal procedural unconscionability when “[t]he stand-alone arbitration agreement was not hidden, but prominently featured as part of the employment application, and there are no ‘other indicia of procedural unconscionability.”].)

            At most, this type of employment contract including a stand-alone arbitration agreement, would create a minimal degree of procedural unconscionability, thus substantive unconscionability must be present to “render an agreement unenforceable”. (Roman, supra, 172 Cal.App.4th at p. 1471 [“whatever measure of procedural unconscionability may be present in this case involving an adhesive employment agreement between parties with unequal bargaining power, procedural unconscionability alone does not render an agreement unenforceable. There must also be some measure of substantive unconscionability.”].)        

b.     Substantive Unconscionability

Substantive unconscionability focuses on the terms of the agreement and whether those terms are “so one sided as to “’shock the conscience.’” (Kinney v. United Healthcare Services, Inc. (1999) 70 Cal. App.4th 1329, 1330.)  “To reiterate, we assess unconscionability with a sliding scale approach. [Citation] In light of the high degree of procedural unconscionability, even a low degree of substantive unconscionability could render the arbitration agreement unconscionable.” (Carmona v. Lincoln Millennium Car Wash, Inc. (2014) 226 Cal.App.4th 74, 85.)

            Alberton argues the Arbitration Agreement is substantively unconscionable because “the respective rights of the parties are disparate,” the “terms of the agreement are deficient,” the “rules and impacts of arbitration are not explained,” and the claims brought by Alberton are not covered by the Arbitration Agreement. Again, the Court is not persuaded.

            The first argument regarding the respective rights of the parties is answered within the procedural unconscionability analysis above, and at most creates a minimal level of procedural unconscionability. Alberton’s second argument fails because the terms of the Arbitration Agreement are not deficient, and additionally Alberton provides no authority for this argument.

            An arbitration agreement is not rendered substantively unconscionable because the agreement fails to provide the rules and impacts of arbitration. (See Baltazar v. Forever 21, Inc. (2016) 62 Cal.4th 1237, 1246 [“failure to attach the AAA rules therefore does not affect our consideration of [plaintiff’s] claims of substantive unconscionability.”].) Furthermore, the Arbitration Agreement specifies that the JAMS rules will apply to the arbitration, and these rules are readily available on the internet. (See Arbitration Agreement, ¶ 2(e); see also Bigler v. Harker School (2013) 213 Cal.App.4th 727, 737 [“the absence of the AAA rules is of minor significance to our analysis.”]; Boghos v. Certain Underwriters at Lloyd’s of London (2005) 36 Cal.4th 495, 505, fn. 6 [full, up-to-date text of AAA rules was available on AAA’s Internet site].)

            Lastly, the claims brought by Alberton are in fact covered by the Arbitration Agreement, as the claims are related to her employment, or the termination of the employment. (See Arbitration Agreement, first paragrah [“This Agreement requires YOU to arbitrate any legal dispute related to YOUR application for employment or YOUR employment or the termination of YOUR employment with the Company.”].)

            The Arbitration is not substantively unconscionable, and thus the Arbitration Agreement is not unconscionable.

III.           Plaintiff’s Fails to Show the Agreement is Illegal.

            Alberton argues the Arbitration Agreement is subject to recission because the agreement had an illegal purpose, citing to Abramson v. Juniper Networks, Inc. (2004) 115 Cal.App.4th 638. Abramson deals with severing of unconscionable arbitration agreement sections, or sections of arbitration agreements that violate public policy. (See Abramson, supra, 115 Cal.App.4th at pp. 658–660.) As stated above, the Arbitration Agreement is not unconscionable, nor does the agreement appear to violate public policy, as it is a straightforward and concise arbitration agreement. Public policy favors the enforcement of arbitration agreements. (See Mendoza v. Trans Valley Transport (2022) 75 Cal.App.5th 748, 764[“California has a strong public policy in favor of arbitration and any doubts regarding the arbitrability of a dispute are resolved in favor of arbitration”].)

            Additionally, Alberton does not argue that certain sections of the Arbitration Agreement violate public policy in order to sever those specific sections, instead conclusively arguing the entire arbitration agreement violates public policy because of alleged separate illegal acts committed by the NVM Defendants. This argument will not suffice however. As stated above, arbitration agreements inherently do not violate public policy, and without providing specific sections of the agreement that allegedly violate public policy the Court cannot find the agreement subject to recission or severance as against public policy.

IV.           Evidence of the Plaintiff’s Ability to Pay for Arbitration

            Alberton asks the Court to “estimate the anticipated cost of the arbitration proceeding ordered, and then determine whether Ms. Alberton is financially able to pay any share of that cost,” declaring that she does “not have the ability to advance arbitration costs, whatsoever.” (Oppo., p. 7:3–11; Alberton Decl., ¶ 6.) Alberton cites to Roldan v. Callahan (2013) 219 Cal.App.4th 87 to support this argument. However, the Arbitration Agreement states:

In the event that an Arbitrator requests reasonable compensation for serving as such, the Parties agree that the Company shall initially pay all of the costs of the Arbitrator, subject to the right of the Arbitrator to transfer the burden of compensation to either party in any award rendered . . .

(Arbitration Agreement, ¶ 2(g).)

            The Arbitration Agreement does not require Alberton to pay any upfront costs as contemplated in Roldan. The issue in Roldan involved an arbitration clause that did not provide for upfront costs to be paid for by the Defendant. (See Roldan, supra, 219 Cal.App.4th at p. 94 [“the arbitration provision drafted by [Defendant] reflects no effort to ensure that clients of limited means would have equal access to the alternative forum it mandates.”] The Arbitration Agreement in this instance provides for upfront costs to be paid for by the NVM Defendants, and thus Alberton has equal access to the arbitration forum despite not have the ability to advance arbitration costs.

V.              Stay pending resolution of arbitration pursuant to CCP §1281.4 

            “If a court of competent jurisdiction, whether in this State or not, has ordered arbitration of a controversy which is an issue involved in an action or proceeding pending before a court of this State, the court in which such action or proceeding is pending shall, upon motion of a party to such action or proceeding, stay the action or proceeding until an arbitration is had in accordance with the order to arbitrate or until such earlier time as the court specifies.” (Code Civ. Proc., § 1281.4.)

The action is stayed pending resolution of arbitration pursuant to CCP §1281.4.