Judge: H. Jay Ford, III, Case: 24SMCV01910, Date: 2024-09-24 Tentative Ruling

Case Number: 24SMCV01910    Hearing Date: September 24, 2024    Dept: O

 Case Name:  Lopez v. Gavrieli Brands, LLC

SUBJECT:                 MOTION TO COMPEL ARBITRATION

MOVING PARTY:   Defendant Gavrieli Brands, LLC

RESP. PARTY:         Plaintiff Lesbia Rebeca Sandoval Lopez

TENTATIVE RULING

            Defendant Gavrieli Brands, LLC’s Motion to Compel Arbitration is GRANTED. Defendant provides the existence of a valid arbitration agreement entered into by the Plaintiff on 2-22-22. Plaintiff does not meet their burden to prove a defense by a preponderance of evidence.  The action is stayed pending resolution of arbitration pursuant to CCP §1281.4.

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.)

"[W]hen a petition to compel arbitration is filed and accompanied by prima facie evidence of a written agreement to arbitrate the controversy, the court itself must determine whether the agreement exists and, if any defense to its enforcement is raised, whether it is enforceable. Because the existence of the agreement is a statutory prerequisite to granting the petition, the petitioner bears the burden of proving its existence by a preponderance of the evidence." (Rosenthal v. Great Western Fin. Securities Corp. (1996) 14 Cal.4th 394, 413.)

“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.                Defendant establishes the existence of an applicable arbitration agreement 

Defendant Gavrieli Brands, LLC (“Defendant”) submits a copy of the Employment and Confidentiality Agreement (“Employment Agreement”) containing the arbitration agreement, entered into between Defendant and Plaintiff Lesbia Rebeca Sandoval Lopez (“Plaintiff”) on 2-22-22. (Hinton Decl., ¶ 5, Ex. A.) Defendant provides a declaration from Samantha Hinton, the Vice President of Operations for Defendant, who declares she has personal knowledge of the facts and “responsible for overseeing the daily functioning of the Company’s operations, ensuring efficiency, productivity, and quality across all departments.” (Id., ¶ 1.)  Defendant moves to compel arbitration pursuant to ¶ 13 on pages 4 and 5 of the Employment Agreement which states in relevant part:

13. Dispute Resolution.  In the event there a dispute between the Company and Employee arising out of or otherwise relating to the relationship between the Company the Employee or the termination of the relationship . . . . Employee and Company agree to submit all such controversies, claims or disputes to be resolved by final and binding arbitration . . . .

Said disputes may include, but are not limited to, any and all claims under federal, state, or local law arising in contract, tort, or under any statute, regulation or ordinance of any kind or under common law (including, but not limited to, claims for breach of contract or covenant (express or implied), tort claims, claims under the California Fair Employment and Housing Act (which includes claims for discrimination and harassment on the basis of age, race, color, ancestry, national origin, disability, medical condition, marital status, religious creed, sex, pregnancy, and sexual orientation), claims under the California Labor code, the Federal Fair Labor Standards Act, claims for benefits, claims for violation of common law or federal, state, or other governmental law, statute, regulation or ordinance).

(Hinton Decl., ¶ 5, Ex. A, ¶ 13 at pp. 4–5.)

            The arbitration provision is signed by both Defendant sand Plaintiff. (Id., ¶¶ 5,  Ex. A.) The arbitration provision is broad and applies to a dispute “arising out of or otherwise relating to the relationship between the Company the Employee or the termination of the relationship . . .” (Id.)  The language of the arbitration clause is considered “very broad.” (See Larkin v. Williams, Woolley, Cogswell, Nakazawa & Russell (1999) 76 Cal.App.4^th 227, 230 (arbitration clause applicable to “any controversy or claim arising out of or relating to any provision” of partnership agreement was “very broad” and applied to plaintiff’s complaint for breach of partnership agreement, dissolution and accounting); Ramos v. Supr. Ct. (2018) 28 Cal.App.5^th 1042, 1052 (arbitration clauses using the phrase “arising out of or related to” are construed more broadly than arbitration clauses only using “arising from” or “arising out of an agreement”); Berman v. Dean Witter & Co., Inc.  (1975) 44 Cal.App.3d 999, 1003 (arbitration agreement applying to “any controversy arising out of or relating to this contract” was “certainly broad enough to embrace tort as well as contractual liabilities so long as they have their roots in the relationship between the parties which was created by the contract”).   

            Defendants argue the broad arbitration clause applies to the Plaintiff’s Complaint.

Defendant has provided the existence of a valid arbitration agreement which encompasses the causes of action within Plaintiff’s complaint, as the Complaint generally alleges causes of action surrounding the termination of her employment. Termination of employment is covered by the broad arbitration agreement submitted by Defendant. (See Hinton Decl., ¶ 5, Ex. A, ¶ 13 at pp. 4–5.)

II.   Plaintiff argues the Arbitration Agreement is Unconscionable

            Plaintiff argues the arbitration agreement is procedurally and substantively unconscionable, thus grounds for rescission of the agreement under CCP § 1281.2(b). (See Oppo., 6–9.)  Plaintiff does not argue that the signature on the arbitration agreement is not hers, nor that she did not sign the agreement

            “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.)

            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.’ ” ’ (Pinnacle, supra, 55 Cal.4th at p. 247, italics added; see De La Torre v. CashCall, Inc. (2018) 5 Cal.5th 966, 983.)” (OTO, L.L.C. v. Kho (2019) 8 Cal.5th 111, 126, italics by OTO Court.)

            Plaintiff argues the Arbitration Agreement is procedurally unconscionable because Defendant relies on an English only arbitration agreement, and Plaintiff’s primary and first language in Spanish. (Oppo., p 3:14–20.) Plaintiff argues Defendant provides no evidence that Plaintiff understood the arbitration agreement due to the arbitration agreement’s lack of a Spanish translation. (Ibid.) Plaintiff does not provide any declaration or other evidence that Plaintiff’s primary language is Spanish, nor that Plaintiff does not read, speak or understand English. Plaintiff additionally does not provide any evidence that Defendant knew Plaintiff was not proficient in English. Without any admissible evidence to support the argument the Court cannot find the agreement to be procedurally unconscionable based on a language barrier, or lack of understanding the agreement.

            The Court agrees proof a party to an arbitration agreement could not read or write English could cause a high degree of procedural unconscionability. However, in Esteban H. Carmona et al. v. Lincoln Millennium Car Wash Inc. et al. (2014) 226 Cal.App.4th 74, there was persuasive evidence the Plaintiff there could not read or write English, that Spanish was his native language, and that the managers never explained the document to Plaintiff. (See Carmona, supra,  226 Cal.App.4th at p. 80.) Plaintiff also cites to Nunez v Cycad Mgmt. (2022) 77 Cal.App.5th 276 which states that there was procedural unconscionability because it was undisputed that Plaintiff here could not read English and that Defendant “did not provide a Spanish version of the Agreement.” (Nunez, supra 77 Cal.App.5^th at p. 284.) Here it is not undisputed that Plaintiff could not read or understand English. Indeed, Plaintiff does not provide any evidence the Plaintiff does not read or understand English.

            Plaintiff argues there is procedural unconscionability due to the arbitration agreement being buried within the Employment Agreement, but they do not provide any argument nor authority. The arbitration agreement is underneath a section titled “Dispute Resolution,” and the word arbitration does not appear within this paragraph until the fifth line. The paragraph is written in dense legal language, and arbitration is not highlighted or bolded within the paragraph. Additionally, the arbitration agreement is on page four through five of the employment agreement, in paragraph 13. The placement of the agreement and lack of clear visibility leads to a low level of procedural unconscionability for oppression. However, procedural unconscionability alone is not enough for a finding of unconscionability, as substantive unconscionability must be present as well.

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.)

Plaintiff argues the arbitration agreement is substantively unconscionable because the agreement is overbroad based on Plaintiff’s responsibilities of maintaining the cleanliness and hygiene of the warehouse and office. Additionally, Plaintiff argues the agreement is:

1.     Overly broad confidentiality agreement that seeks to maintain her confidentiality in perpetuity

2.     An overly broad photography and model release in perpetuity that does not allow Plaintiff to rescind her release

3.     An unlawful Inventions Assignment

4.     Provision that the prevailing party shall have the right to collect attorney fees and costs

(Oppo., p. 5:2–11.)

            The Court may, and does, “disregard conclusory arguments that are not supported by pertinent legal authority or fail to disclose the reasoning by which the appellant reached the conclusions he wants us to adopt.” (United Grand Corp. v. Malibu Hillbillies, LLC (2019) 36 Cal.App.5th 142, 153.)

            The Court cannot find any degree of substantive unconscionability exists due to the lack of evidence provided by the Plaintiff, and Plaintiff’s unsupported arguments. A small degree of procedural unconscionability alone is not sufficient for the Court to find the agreement was unconscionable. Thus, Plaintiff does not establish a defense to arbitrability.

Defendant’s Motion to Compel Arbitration is GRANTED.

III.           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.