Judge Holly J. Fujie, Case Number: 23STCV29875, Date: 2024-06-04 Tentative Ruling

On December 7, 2023, Plaintiff Adela Juarez (“Plaintiff”) filed a Complaint against Defendants Larchmont Taco Shop 26, Inc. and Tacos Tu Madre (collectively “Defendants”) alleging ten causes of action for (1) Wrongful Termination in Violation of Public Policy; (2) Retaliation in Violation of Gov’t code § 12940(h); (3) Employment Discrimination Based on Disability in Violation of Gov’t Code § 12940(a); (4) Employment Discrimination Based Upon Race and Nationality Gov’t Code § 12940(a); (5) Hostile Work Environment and Harassment in the Work Place; (6) Intentional Infliction of Emotional Distress; (7) Failure to Accommodate Disability in Violation of Gov’t Code §§ 12940(m) and 12926(p); (8) Failure to Engage in the Interactive Process in Violation of Gov’t Code § 12940(n); (9) Violation of labor Code § 1102.5(b); and (10) Violation of Labor Code § 1102.5(c).

On February 20, 2024, Plaintiff filed the operative First Amended Complaint alleging the same 10 causes of action in addition to thirteen new causes of actions for (11) Violation of Labor Code § 1102.5(d); (12) Breach of Implied Covenant of Good Faith and Fair Dealing; (13) Negligent Supervision and Retention (14) Failure to Pay Minimum Wages in Violation of Violation of Labor Code §§ 1182.12, 1194, 1194.2 and 1197; (15) Failure to Pay Overtime in Violation of Labor Code §§ 510 and 1194; (16) Failure to Pay Meal Period in Violation of Labor Code §§ 226.7 and 512; (17) Failure to Pay Rest Period Compensation in Violation of Labor Code § 226.7 and IWC Wage Order No. 4-200; (18) Failure to Pay Wages in a Timely Manner in Violation of Labor Code § 204; (19) Failure to Pay Earned Wages in violation of Labor Code §§ 204, 206, and 210; (20) Failure to Pay Earned Wages Due in Violation of Labor Code §§ 226 and 558; (21) Waiting Times and Penalties in violation of California Labor Code §§ 201, 202, and 203; Failure to Furnish Timely and Accurate Wage Statements in Violation of labor Code § 226; and (23) Unfair Business Practices in Violation of Business and Professions Code §§ 17200, et seq.

On February 20, 2024, Defendants filed the instant motion to compel arbitration (the “Motion”). Plaintiff filed an opposition to the Motion on February 21, 2024 and Defendants filed a reply.

Defendants specially appear and pray for an order compelling Plaintiff to submit to binding arbitration pursuant to the parties' written contract, which expressly provides that all complaints or disputes between the parties are to be arbitrated.

California law incorporates many of the basic policy objectives contained in the Federal Arbitration Act, including a presumption in favor of arbitrability. (See Engalla v. Permanente Medical Group, Inc. (1997) 15 Cal.4th 951, 971-72.) Under Code of Civil Procedure 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.”

“On petition of a party to an arbitration agreement alleging the existence of a written agreement to arbitrate a controversy and that a party thereto refuses to arbitrate such 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:

(c) 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. . . .” (CCP §1281.2.)

The right to arbitration depends upon contract; a petition to compel arbitration is simply a suit in equity seeking specific performance of that contract. (Marcus & Millichap Real Estate Inv. Brokerage Co. v. Hock Inv. Co. (1998) 68 Cal.App.4th 83, 88.) When presented with a petition to compel arbitration, the trial court's first task is to determine whether the parties have in fact agreed to arbitrate the dispute. (Id.)

In Rosenthal v. Great Western Fin. Securities Corp. (1996) 14 Cal.4th 394, the California Supreme Court explained: ‘[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. If the party opposing the petition raises a defense to enforcement—either fraud in the execution voiding the agreement, or a statutory defense of waiver or revocation (see §1281.2(a), (b))—that party bears the burden of producing evidence of, and proving by a preponderance of the evidence, any fact necessary to the defense.’ (Id. at 413.) According to Rosenthal, facts relevant to enforcement of the arbitration agreement must be determined ‘in the manner . . . provided by law for the . . . hearing of motions.’ (Id., at 413, quoting §1290.2.) This ‘ordinarily mean[s] the facts are to be proven by affidavit or declaration and documentary evidence, with oral testimony taken only in the court’s discretion.’ (Id. at 413–414; . . .).” (See also, Hotels Nevada v. L.A. Pacific Center, Inc. (2006) 144 Cal.App.4th 754, 761-62.)

Under both the Federal Arbitration Act and California law, 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.) In ruling on a motion to compel arbitration, the court must first determine whether the parties actually agreed to arbitrate the dispute, and general principles of California contract law help guide the court in making this determination. (Mendez v. Mid-Wilshire Health Care Center (2013) 220 Cal.App.4th 534, 541.) “With respect to the moving party’s burden to provide evidence of the existence of an agreement to arbitrate, it is generally sufficient for that party to present a copy of the contract to the court.” (Baker v. Italian Maple Holdings, LLC (2017) 13 Cal.App.5th 1152, 1160.)

Defendants provide a copy of the Arbitration Agreement which provides that Plaintiff and Larchmont Taco agreed to arbitrate:

all disputes, past, present or future," that may arise between Plaintiff and Defendants, including without limitation any dispute arising out of o related to Plaintiffs application, employment and/or separation of employment with Defendant Plaintiff specifically agreed to arbitrate "claims based upon or related to the application for employment, background checks, privacy, the employment relationship, discrimination harassment, retaliation, defamation (including claims of post-employment defamation o retaliation), breach of a contract or covenant, fraud, negligence, emotional distress, breach o fiduciary duty, trade secrets, unfair competition, wages, minimum wage and overtime or other compensation claimed to be owed, breaks and rest periods, expense reimbursement, seating termination, tort claims, equitable claims, and all statutory and common law claims.... claim arising under the Fair Credit Reporting Act, Defend Trade Secrets Act, Title VII of the Civil Rights Act of 1964, 42 U.S.C. f 1981, the America With Disabilities Act, the Ag Discrimination in Employment Act, the Family Medical Leave Act, the Fair Labor Standards Act, Rehabilitation Act, the Civil Rights Act of 1866 and 1871, the Civil Rights Act of 1991, 8 U.S.C. $ 1324 (unfair immigration related policies), the Pregnancy Discrimination Act, the Equal Pay Act, the Genetic Information Non-Discrimination Act,... Affordable Care Act, Uniformed Services Employment and Reemployment Rights Act, Worker Adjustment and Retraining Notification Act,... Occupational Safety and Health Act,... and state statues or regulations, if any, addressing the same or similar subject matters, and all other federal or state legal claims arising out of [Plaintiff's] employment or the termination of employment.

"YOUR RIGHT TO OPT OUT OF ARBITRATION. Arbitration is not a mandatory condition of your employment at the COMPANY, and therefore, you may submit a statement notifying the COMPANY that you wish to opt-out and not be subject to this Agreement In order to opt-out, you must notify the COMPANY of your intention to opt-out by submitting a signed and dated statement on a Mutual Arbitration Agreement Opt- Out Form that can be obtained and returned to Joshua Pourgol at 2146 San Ysidro Drive, Beverly Hills, CA 90210. In order to be effective, your written opt-out notice must be provided to the COMPANY within 30 days of your receipt of this Agreement. If you opt-out as provided in this paragraph, you will not be subject to any adverse employment action as a consequence of that decision and may pursue available legal remedies without regard to this Agreement. If you do not opt-out within 30 days of your receipt of this Agreement, continuing your employment with the COMPANY constitutes mutual acceptance of the terms of this Agreement by you and the company. You have the right to consult with counsel of your choice concerning this Agreement."

(Id.; See also Pourgol Suppl. Decl. ¶ 3.) The declarations of both Mr. Pourgol and Ms. Denova indicate that Plaintiff signed the Arbitration Agreement. (Pourgol Decl. ¶ 4., See also Denova Decl. ¶4.) The agreement bears the Plaintiff’s signature. (Pourgol Decl; Exh. A.) Plaintiff does not dispute that she signed the Arbitration Agreement.

In opposition, Plaintiff claims that there is no valid agreement because the agreement lacks mutual consent because she could not speak, read, and write in English, has little education and virtually no computer skills, and moreover, does not read Spanish particularly well. (Opp’n p.5-6.) However, this contradicts the testimony presented by Defendants, which indicates that Plaintiff signed the agreement without asking any questions. (Denova Decl. ¶ 4.) Moreover, based on Defendants’ supporting evidence, Plaintiff was given 30 days to opt out of the Arbitration Agreement. Mr. Pourgol’s supplemental declaration further states that Plaintiff never requested the opt-out form, nor did Larchmont Taco receive an opt-out notice form. (Pourgol Suppl. Decl. ¶ 4.) Thus, this argument fails.

Plaintiff additionally argues that the Arbitration Agreement is superseded by the express terms of the parties’ severance agreement. This severance agreement would not, however, apply in this case as the Defendants correctly point out there was then no pending litigation before the Court. Plaintiff’s claims arise from her employment with Defendant Larchmont Taco. The Court finds that the Arbitration Agreement covers Plaintiff’s claims. Therefore, the Court finds that there exists an agreement to arbitrate.

In opposition, Plaintiff argues that the Arbitration Agreement is unenforceable on unconscionability grounds.

“Unconscionability” is one of the principal defenses to a request for arbitration. It is a generally applicable contract defense under California law (Civ. Code, § 1670.5). Two elements must be shown: (1) “procedural” unconscionability and (2) “substantive” unconscionability. (Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 C4th 83, 113-115.) The issue is reviewed in the context of when the contract was signed. (Bakersfield College v. California Comm. College Athletic Ass'n (2019) 41 CA5th 753, 762.) “The procedural element of unconscionability focuses on whether the contract is one of adhesion. Procedural unconscionability focuses on whether there is “oppression” arising from an inequality of bargaining power or “surprise” arising from buried terms in a complex printed form. The substantive element addresses the existence of overly harsh or one-sided terms. An agreement to arbitrate is unenforceable only if both the procedural and substantive elements are satisfied. However…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.” (McManus v. CIBC World Markets Corp. (2003) 109 Cal.App.4th 76, 87.) (internal quotations and citations omitted).

Plaintiff argues that the Arbitration Agreement is procedurally unconscionable because Plaintiff had no opportunity to review the documents and was physically unable to do so due to the language barrier and lack of any explanation. However, that argument is not persuasive as the Arbitration Agreement allotted Plaintiff 30 days to review and opt out of the agreement if she so chose. Therefore, the Court finds the agreement not to be procedurally unconscionable.

Plaintiff contends that the Arbitration Agreement is substantively unconscionable because the agreement provides for a single deposition of an individual, otherwise limits discovery, and provides for an arduous and circuitous process for selecting an arbitrator. However, the Court notes that these are not adequate bases for finding the Arbitration Agreement to be substantively unconscionable as public policy favors arbitration because it is founded in the notion that arbitration is a “speedy and relatively inexpensive means of dispute resolution.” (Adolph v. Coastal Auto Sales, Inc. (2010) 184 Cal.App.4th 1443, 1452.) Thus, the Court finds that the Agreement is not substantively unconscionable.

Per the Agreement, the American Arbitration Association (“AAA”) will be the arbitration forum. Thus, the Court finds that the parties' dispute can be sufficiently arbitrated under CCP § 1281.6 through the AAA.

The Court further finds that a stay of the action is appropriate in this case once the motion is granted, as Code of Civil Procedure § 1281.4 stipulates that the Court shall stay the action until arbitration is completed. (Code Civ. Proc., § 1281.4.) Therefore, the Court GRANTS the Defendants’ Motion to Compel Arbitration and STAYS the proceeding pending a final resolution of Plaintiff’s claims through arbitration. The Court sets a status conference for February 31, 2025 at 8:30 a.m. The parties are ordered to file a Status Report as to the arbitration at least seven Court days before the status conference.

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