Judge Holly J. Fujie, Case 21STCV01118 2022-11-14 Tentative Ruling

DEPARTMENT 56 JUDGE HOLLY J. FUJIE, LAW AND MOTION RULINGS. The court makes every effort to post tentative rulings by 5.00 pm of the court day before the hearing. The tentative ruling will not become the final ruling until the hearing [see CRC 3.1308(a)(2)], and are also available in the courtroom on the day of the hearing [see CRC 3.1308(b)]. If the parties wish to submit on the tentative ruling and avoid a court appearance, all counsel must agree and choose which counsel will give notice. That counsel must 1) call Dept 56 by 8:30 a.m. on the day of the hearing (213/633-0656) and state that all parties will submit on the tentative ruling, and 2) serve notice of the ruling on all parties. If any party declines to submit on the tentative ruling, then no telephone call is necessary and all parties should appear at the hearing in person or by Court Call. Court reporters are not provided, and parties who want a record of motions and other proceedings must hire a privately retained certified court reporter.

This action arises out of an employment relationship. The currently operative first amended complaint (the “FAC”) alleges: (1) violations of the Unfair Competition Law (“UCL”).[1]

On October 20, 2022, Moving Defendant filed: (1) a motion to compel arbitration (the “Arbitration Motion”); and (2) a motion for judgment on the pleadings (the “MJOP”) (collectively, the “Motions”).[2]

The purpose of the Federal Arbitration Act (“FAA”) is to move the parties in an arbitrable dispute out of court and into arbitration as quickly and easily as possible. (Moses H. Cone Memorial Hosp. v. Mercury Constr. Corp. (1983) 460 U.S. 1, 23.) The FAA is consistent with the federal policy to ensure the enforceability, according to their terms, of private agreements to arbitrate. (Mastrobuono v. Shearson Lehman Hutton, Inc. (1995) 514 U.S. 52, 57.) Under California Code of Civil Procedure (“CCP”) section 1281, a written agreement to submit to arbitration an existing controversy or a controversy thereafter arising is valid, enforceable, and irrevocable, save upon such grounds as exist for the revocation of any contract. (CCP § 1281.) California law, like federal law, favors enforcement of valid arbitration agreements. (Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83, 97.) 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 unless grounds exist not to compel arbitration. (CCP § 1281.2.) Under California law, the burden of persuasion is always on the moving party to prove the existence of an arbitration agreement with the opposing party by a preponderance of the evidence. (Gamboa v. Northeast Community Clinic (2021) 72 Cal.App.5th 158, 169.)

Moving Defendant argues that this matter should be ordered to arbitration and stayed pending the conclusion of arbitration proceedings because upon accepting employment, Plaintiff signed an agreement (the “Arbitration Agreement”) that requires that his claims be decided in binding arbitration.

In support of the Motion, Moving Defendant provides evidence of the Arbitration Agreement, which is a document entitled “Mutual Arbitration Agreement.” (See Declaration of John Fries (“Fries Decl.”) ¶ 15, Exhibit C.)

“You and Charter mutually agree that, as a condition of Charter considering your application for employment and/or your employment with Charter, any dispute arising out of or relating to your preemployment application and/or employment with Charter or the termination of that relationship, except as specifically excluded below, must be resolved through binding arbitration by a private and neutral arbitrator, to be jointly chosen by you and Charter.”

Plaintiff does not dispute the existence of the Arbitration Agreement. Instead, Plaintiff argues that his UCL claim does not fall within the scope of the arbitrable claims as defined by the Arbitration Agreement.

Courts presume that the parties intend courts, not arbitrators, to decide disputes about arbitrability, such as whether the parties are bound by a given arbitration clause, or whether an arbitration clause in a concededly binding contract applies to a particular type of controversy. (Aanderud v. Superior Court (2017) 13 Cal.App.5th 880, 891.) Parties can, however, agree to arbitrate “gateway” questions of arbitrability, such as whether the parties have agreed to arbitrate or whether their agreement covers a particular controversy. (Id.) The examination of who has the primary power to determine arbitrability is conducted, at least initially, through the prism of state law. (Sandquist v. Lebo Automotive, Inc. (2016) 1 Cal.5th 233, 243-44.)

There are two prerequisites for a delegation clause to be effective. (Tiri v. Lucky Chances, Inc. (2014) 226 Cal.App.4th 231, 242.) First, the language of the clause must be clear and unmistakable. (Id.) Second, the delegation must not be revocable under state contract defenses such as fraud, duress, or unconscionability. (Id.) The “clear and unmistakable” test reflects a “heightened standard of proof” that reverses the typical presumption in favor of the arbitration of disputes. (Aanderud v. Superior Court, supra, 13 Cal.App.5th at 892 (emphasis in original).)

Moving Defendant argues that the threshold question of the arbitrability of Plaintiff’s UCL claim should be decided by the arbitrator. The Arbitration Agreement contains a section that defines the types of claims it encompasses that are subject to arbitration. (See Fries Decl., Exhibit C at § B.) Among the claims encompassed by the Arbitration Agreement are “all disputes related to the arbitrability of any claim or controversy.” (Fries Decl., Exhibit C at § B.3.)

In the opposition (the “Arbitration Opposition”), Plaintiff primarily argues that his UCL claim is not arbitrable based on an interpretation of the provision of the Arbitration Agreement that excludes claims “for injunctive or other equitable relief related to unfair competition and the taking, use or unauthorized disclosure of trade secrets or confidential information.” (See Fries Dec., Exhibit C at § C.6.)[3] Plaintiff does not, however, respond to Moving Defendant’s argument regarding the Arbitration Agreement’s delegation of authority to decide the threshold issue about the arbitrability of a particular claim to the arbitrator. The Court finds that Plaintiff has conceded this issue to Moving Defendant. (See Nelson v. Pearson Ford Co. (2010) 186 Cal.App.4th 983, 1021 (2010) (issues not addressed in opposition briefs are conceded to the moving party).)

Since the language of the Arbitration Agreement confers the authority to determine the arbitrability of a particular claim to the arbitrator and Plaintiff has not provided any evidence or argument regarding the enforceability of the delegation provision, the Court finds that the Arbitration Opposition’s arguments regarding the arbitrability of his UCL claim are appropriately decided by an arbitrator. The Court therefore GRANTS the Arbitration Motion and orders that this matter be STAYED pending the conclusion of arbitration proceedings. The Court sets a status conference on May 30, 2023 at 8:30 a.m. in this department. The parties are ordered to file a joint status report by May 23, 2023. The parties may schedule a status conference at an earlier date should the arbitrator decide that the cause of action in Plaintiff’s FAC is not subject to arbitration.

In light of the Court’s ruling on the Arbitration Motion and the resulting stay, the MJOP is MOOT.

Parties who intend to submit on this tentative must send an email to the Court at SMC_DEPT56@lacourt.org as directed by the instructions provided on the court website at www.lacourt.org. If the department does not receive an email and there are no appearances at the hearing, the motion will be placed off calendar.

[1] On November 4, 2022, Plaintiff’s Private Attorneys General Act (“PAGA”) cause of action was dismissed pursuant to a stipulation entered into by Plaintiff and Moving Defendant.

[2] The Motions were jointly filed in one document. The caption and Notice of Motion specify the independent bases for the relief requested. Plaintiff opposed both the Arbitration Motion and the MJOP.

[3] Moving Defendant disputes Plaintiff’s interpretation of the provision.