Judge Holly J. Fujie, Case 22STCV14700 2022-08-16 Tentative Ruling

MOVING PARTY: Defendant Charles R. Drew University of Medicine and Science (“Moving Defendant”)

This action arises out of an employment relationship. Plaintiff’s complaint (the “Complaint”) alleges: (1) race discrimination – disparate impact; (2) race discrimination – disparate treatment; (3) gender discrimination – disparate impact; (4) gender discrimination – disparate treatment; (5) failure to prevent discrimination; (6) violation of Labor Code section 1102.5; and (7) adverse employment action in violation of public policy.

Moving Defendant filed a motion to compel arbitration and stay proceedings (the “Motion”) on the grounds that when Plaintiff began her employment, she signed a binding arbitration agreement that requires that her claims be adjudicated in arbitration proceedings.

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.) 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 (“Armendariz”).) 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.)

In support of the Motion, Moving Defendant provides evidence of a portion of the paperwork Plaintiff signed when she commenced her employment on October 7, 2019 (the “Agreement”).

“This Policy applies to any claim or dispute arising out of or relating to EMPLOYEE’S hiring by, employment with or separation from the UNIVERSITY of one of its affiliates, subsidiaries or parent corporations or entities, and their successors and assigns.” (Declaration of Charles A. Nagao-Bugarin (“Bugarin Decl.”), Exhibit A at ¶ 1.);

“This Policy is binding on EMPLOYEE and the UNIVERSITY regardless of whether EMPLOYEE signs the acknowledgement of receipt (below) and without the need for the UNIVERSITY to sign this Policy. Your employment with the UNIVERSITY and/or your continuing employment with the UNIVERSITY constitutes your acceptance of and your agreement to each of the terms of this Policy, which are binding on you and the UNIVERSITY.” (Bugarin Decl., Exhibit A at ¶ 8.); and

“EMPLOYEE may opt out of this Policy (and thus will not be bound to arbitrate any claims or disputes under this Policy) by delivering a letter, memorandum or other tangible document to the UNIVERSITY’S Director of Human Resources within thirty (30) calendar days of EMPLOYEE’S receipt of this Policy (as determined by the University’s records).” (Bugarin Decl., Exhibit A at ¶ 9 (emphasis in original).)

Moving Defendant has satisfied its burden of demonstrating the existence of an agreement to arbitrate. Plaintiff argues that the Agreement is unenforceable because it is both procedurally and substantively unconscionable.

Unconscionability has both a procedural and a substantive element, with the former focusing on oppression or surprise due to unequal bargaining power and the latter on overly harsh or one-sided results. (Sanchez v. Valencia Holding Company, LLC (2015) 61 Cal.4th 899, 910.) Though both procedural and substantive unconscionability need to be shown, they need not be present to the same degree; 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. (Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83, 114.)

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 1322, 1330.) Substantive unconscionability considers whether the agreement reallocates the risks of the bargain in an objectively unreasonable or unexpected manner. (Id.) Arbitration agreements intended to apply to FEHA claims must: (1) provide for neutral arbitrators; (2) provide for more than minimal discovery; (3) require a written award; (4) provide for all of the types of relief that would otherwise be available in court; and (5) not require employees to pay either unreasonable costs or any arbitrators' fees or expenses as a condition of access to the arbitration forum. (Armendariz, supra, 24 Cal.4th at 102.) These requirements may apply to non-FEHA employment claims. (See Pinela v. Neiman Marcus Group, Inc. (2015) 238 Cal.App.4th 227, 254 (applying the Armendariz factors in the context of claims under the Labor Code).)

Plaintiff argues that the Agreement is substantively unconscionable because it requires Plaintiff and Moving Defendant to pay arbitration fees in equal amounts. The Agreement states: “The costs of arbitration, including the arbitrator’s fees, shall be allocated in accordance with then-applicable law,” and specifies that if allowed by applicable law, arbitration fees are to be allocated between the parties to the arbitration. (See Bugarin Decl., Exhibit A at ¶ 5.) The Court finds that because the Agreement provides that fees are to be allocated in accordance with applicable law, its fee allocation provision does not contravene Armindarez. The Court therefore finds that the Agreement is not substantively unconscionable.^{^[2]}

Due to the lack of substantive unconscionability, the Court need not analyze procedural unconscionability.

Based on the foregoing, the Court GRANTS the Motion. The Court sets a status conference on February 16, 2023 at 8:30 a.m. in this department. The parties are ordered to file a joint status report by February 9, 2023. This action is STAYED pending the conclusion of the arbitration proceedings.

In consideration of the current COVID-19 pandemic situation, the Court strongly encourages that appearances on all proceedings, including this one, be made by LACourtConnect if the parties do not submit on the tentative. If you instead intend to make an appearance in person at Court on this matter, you must send an email by 2 p.m. on the last Court day before the scheduled date of the hearing to SMC_DEPT56@lacourt.org stating your intention to appear in person. The Court will then inform you by close of business that day of the time your hearing will be held. The time set for the hearing may be at any time during that scheduled hearing day, or it may be necessary to schedule the hearing for another date if the Court is unable to accommodate all personal appearances set on that date. This rule is necessary to ensure that adequate precautions can be taken for proper social distancing.

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.

Hon. Holly J. Fujie

Judge of the Superior Court

[1] The Court exercises its discretion and has considered Plaintiff’s opposition papers despite their late filing.

[2] In addition, the Court notes that the arbitration provision in the Executive Employment Agreement that was also provided to Plaintiff when she received her employment offer incorporates the terms of the Agreement and does not otherwise contradict its terms. (See Declaration of Syreeta N. Greene (“Greene Decl.”) ¶ 6, Exhibit B at ¶ 22.)