Judge: Joel L. Lofton, Case: 22AHCV01148, Date: 2023-04-12 Tentative Ruling
Case Number: 22AHCV01148 Hearing Date: April 12, 2023 Dept: X
Tentative Ruling
Judge Joel L. Lofton,
Department X
HEARING DATE: April
12, 2023 TRIAL DATE: No date set.
CASE: CHLOE CHOU, an
individual, v. ACCO ENGINEERED SYSTEMS, INC. a California corporation; and DOES
1-99, inclusive.
CASE NO.: 22AHCV01148
MOTION
TO COMPEL ARBITRATION
MOVING PARTY: Defendant Acco Engineered Systems,
Inc.
RESPONDING PARTY: Plaintiff
Chloe Chou
SERVICE: Filed March 17, 2023
OPPOSITION: Filed March 29, 2023
REPLY: Filed April 5, 2023
RELIEF
REQUESTED
Defendant petitions for
an order compelling Plaintiff to submit this case to binding arbitration.
BACKGROUND
This case arises from Plaintiff Chloe Chou’s
(“Plaintiff”) claim that she was discriminated against during her employment
with Defendant Acco Engineered Systems, Inc. (“Defendant”). Plaintiff alleges
she began her employment on March 2, 2020, as a senior programmer analyst. She
also alleges she was subject to discriminatory or harassing behavior. Plaintiff
alleges she was wrongfully terminated on or about December 16, 2021.
Plaintiff filed this complaint on
November 21, 2022, alleging nine causes of action for (1) Labor Code section
1102.5 retaliation, (2) FEHA discrimination: disparate treatment, (3) FEHA
harassment: work environment harassment, (4) FEHA retaliation, (5) FEHA failure
to prevent harassment, discrimination, or retaliation, (6) wrongful discharge
in violation of public policy, (7) FEHA discrimination: failure to provide a
reasonable accommodation, (8) FEHA discrimination: failure to engage in
interactive process, and (9) violation of CFRA Rights.
TENTATIVE RULING
Defendants’ petition to compel
arbitration is granted.
Defendant’s request to stay the
proceedings pursuant to Code of Civil Procedure section 1281.4 is granted.
OBJECTION TO EVIDENCE
Plaintiff’s
objections are overruled.
REQUEST FOR JUDICIAL NOTICE
Defendant’s
request for judicial notice of a copy of Plaintiff’s complaint is granted
pursuant to Evidence Code section 452, subdivision (d).
LEGAL STANDARD
“California
and federal law both favor enforcement of valid arbitration agreements.” (Aanderud
v. Superior Court (2017) 13 Cal.App.5th 880, 889.) “A party who files
a motion to compel arbitration ‘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.’’ (Cisnero Alverez v. Altamed
Health Services Corporation (2021) 60 Cal.App.5th 572, 580.)
DISCUSSION
Whether a Valid Arbitration
Agreement Exists
The preliminary issue is whether
Defendant has met its burden of establishing a written agreement to arbitrate.
The party moving to compel
arbitration “bears the burden of producing ‘prima facie evidence of a written
agreement to arbitrate the controversy.’ ” (Gamboa v. Northeast Community
Clinic (2021) 72 Cal.App.5th 158, 165 (“Gamboa”).) The moving party
“can meet its initial burden by attaching to the petition a copy of the
arbitration agreement purporting to bear the respondent's signature.” (Bannister
v. Marinidence Opco, LLC (2021) 64 Cal.App.5th 541, 543-44.) “If the moving
party meets its initial prima facie burden and the opposing party disputes the
agreement, then in the second step, the opposing party bears the burden of
producing evidence to challenge the authenticity of the agreement.” (Gamboa,
supra, 72 Cal.App.5th at p. 165.)
Defendant
provides the declaration of Melanie Sowell, its Human Resources Director.
(Sowell ¶ 1.) Sowell provides that
Defendant uses an electronic system for certain employment documents, including
arbitration agreement. (Id. ¶ 3.) Sowell provides that the arbitration
agreements are true and correct copies and are kept in the regular course of
business. (Id. ¶ 10.) Additionally, Defendant submits a “Non-Signatory
Employee Arbitration Agreement” (“Agreement”) with an electronic signature
bearing Plaintiff’s name and dated September 21, 2021. (Bernard Decl. ¶ 4,
Exhibit B.)
The Agreement provides, in part: “This
agreement to arbitrate all disputes arising from employment (the ‘Agreement’)
is entered into by the employee identified below (‘Employee’) and ACCO
Engineered Systems, Inc. and its subsidiaries and affiliated companies
(collectively, the ‘Company’). (Bernard
Decl. ¶ 4, Exhibit B at p. 1.) Further, the Agreement provides:
This
Agreement applies to any and all claims or disputes that a court
or jury otherwise would be authorized by law to resolve related to or arising
out of Employee’s application, employment with Company and/or the termination
of employment with Company. . . BOTH PARTIES ACKNOWLEDGE THAT THEY ARE GIVING
UP THEIR RIGHT TO A JURY TRIAL IN CIVIL COURT. THE PARTIES FURTHER UNDERSTAND
AND AGREE CLAIMS MUST BE BROUGHT IN AN INDIVIDUAL CAPACITY AND NOT AS A
PURPORTED CLASS MEMBER. EACH PARTY THEREFORE WAIVES ANY RIGHT TO PARTICIPATE IN
A CLASS OR COLLECTIVE ACTION.
(Bernard Decl. ¶ 4, Exhibit B at pp. 1-2.)
Defendant has met
its prima facie burden of establishing a valid agreement to arbitrate the
claims exist.
Whether the
FAA Applies
The next issue is
whether the FAA applies.
The FAA
applies “applies
when a contract involves interstate commerce.” (Nixon v. AmeriHome Mortgage
Company, LLC (2021) 67 Cal.App.5th 934, 945.) “The party seeking to enforce
the arbitration agreement also bears the burden of establishing the FAA applies
and preempts otherwise governing provisions of state law or the parties’
agreement.” (Id. at p. 946.) “ ‘[T]he phrase “ ‘involving commerce’ ” in
the FAA is the functional equivalent of the term “ ‘affecting commerce,’ ”
which is a term of art that ordinarily signals the broadest permissible
exercise of Congress's commerce clause power.’ ” (Carbajal v. CWPSC, Inc.
(2016) 245 Cal.App.4th 227, 238.)
“The FAA— which covers all
‘[e]mployment contracts, except for those covering workers engaged in
transportation’ [Citation.] ‘ “declare[s] a national policy favoring
arbitration” of claims that parties contract to settle in that manner’ ”. (Crestwood
Behavior Health, Inc. v. Lacy (2021) 70 Cal.App.5th 560, 580.)
Sowell provides that Defendant transcripts throughout the
western United States, has employees and offices in Idaho, Arizona, Nevada, and
Washington, and purchases materials and
equipment from outside of California. (Sowell Decl. ¶ 16.) Defendant’s
business involves interstate commerce, and the Agreement is part of an
employment contract. Therefore, the FAA applies.
Mutual Assent
Plaintiff first argues that the
Agreement should not apply because there was no mutual assent because she does
not recall signing the agreement.
“Under Civil Code section 1633.7 . . . an electronic
signature has the same legal effect as a handwritten signature”. (Ruiz v.
Moss Bros. Auto Group, Inc. (2014) 232 Cal.App.4th 836, 843.) “An electronic
record or electronic signature is attributable to a person if it was the act of
the person. The act of the person may be shown in any manner, including a
showing of the efficacy of any security procedure applied to determine the
person to which the electronic record or electronic signature was
attributable.” (Civ. Code section 1633.9, subd. (a).)
“The
petitioner bears the burden of proving the existence of a valid arbitration
agreement by a preponderance of the evidence, while a party opposing the
petition bears the burden of proving by a preponderance of the evidence any
fact necessary to its defense.” (Ruiz, supra, 232 Cal.App.4th at p.
842.)
Sowell
provides that Defendant uses Oracle Cloud HCM, which delivers electronically
delivers documents to employees. (Sowell Decl. ¶ 3.) Sowell provides that Defendant used
Oracle Cloud HCM to send its arbitration agreement to Plaintiff at her email. (Id. ¶ 4.) Sowell provides that to use
the system, Plaintiff was assigned her own unique log-in credentials for Oracle
Cloud HCM. (Ibid.) Sowell provides that Plaintiff is the only one who
knows her unique log-in credentials, and Plaintiff must use her unique credentials
to access the arbitration agreement. (Ibid.) Sowell also provides that Plaintiff
used DocuSign, a digital signing tool, to electronically sign the agreement. (Id.
¶ 5.)
In opposition, Plaintiff asserts that she does not recall
signing the arbitration agreement. (Chou Decl. ¶ 7.)
Defendant has shown that it has measures in place to
allow for the electronic delivery of the agreement to Plaintiff and that
Plaintiff is required to use her unique log-in credentials needed to access the
agreement. Defendant has established by a preponderance of the evidence that
Plaintiff signed the document. Plaintiff’s primary rebuttal argument is that
she does not recall doing so, which is insufficient here.
Unconscionability
Plaintiff next argues that the
Agreement should not be enforced because it is unconscionable.
“ ‘[U]nconscionability has both a
“procedural” and a “substantive” element,’ the former focusing on ‘oppression’
or ‘surprise’ due to unequal bargaining power, the latter on “overly harsh” or
“one-sided” results. [citation.] ‘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.’ ” (Armendariz v. Foundation Health Psychare
Services, Inc. (2000) 24 Cal.4th 83, 114.)
Procedural Unconscionability
“Procedural unconscionability
‘addresses the circumstances of contract negotiation and formation, focusing on
oppression or surprise due to unequal bargaining power.’ ” (Carbajal v.
CWPSC, Inc., supra, 245 Cal.App.4th at p. 243.) “ ‘It is well settled that
adhesion contracts in the employment context, that is, those contracts offered
to employees on a take-it-or-leave-it basis, typically contain some aspects of
procedural unconscionability.’ ” (Id. at p. 243.) “When . . . there is
no other indication of oppression or surprise, ‘the degree of procedural
unconscionability of an adhesion agreement is low, and the agreement will be
enforceable unless the degree of substantive unconscionability is high.’ ” (Serpa
v. California Surety Investigations, Inc. (2013) 215 Cal.App.4th 695, 704.)
Plaintiff argues that the Agreement is procedurally unconscionable
because she was unable to negotiate the terms and the Agreement was a condition
of her employment. The Agreement expressly stated: “For existing
employees, in consideration for my continuing employment with the Company,
which continuing employment I expressly understand would not be provided
without my consent of this Agreement, I agree to all terms in this Agreement.”
(Bernard Decl. ¶ 4, Exhibit B at
p. 1.) Because the Agreement was presented on a take-it-or-leave-it basis, Plaintiff
has demonstrated some level of procedural unconscionability.
Substantive Unconscionability
Plaintiff also argues that the Agreement is substantively
unconscionable because it fails to provide for adequate discovery and because
Defendant did not include the rules for arbitration.
“Substantive unconscionability pertains to the
fairness of an agreement's actual terms and to assessments of whether they are
overly harsh or one-sided.” (The McCaffrey Group, Inc. v. Superior Court (2014)
224 Cal.App.4th 1330, 1348.) “A contractual provision is not substantively
unconscionable simply because it provides one side a greater benefit.” (Carbajal,
supra, 245 Cal.App.4th at p. 248.)
Plaintiff
first argues that the discovery allowed for in the Agreement is insufficient
and thus substantively unconscionable.
“In striking
the appropriate balance between the desired simplicity of limited
discovery and an employee's statutory rights, courts assess the amount of
default discovery permitted under the arbitration agreement, the standard for
obtaining additional discovery, and whether the plaintiffs have demonstrated
that the discovery limitations will prevent them from adequately arbitrating
their statutory claims.” (Davis v. Kozak (2020) 53 Cal.App.5th 897,
910-11.)
The Agreement provides the following limitations on discovery:
Each Party may draft and serve upon the
other side one set of no more than 20 interrogatories and one set of no more
than 10 requests to produce documents, in a form and in a manner consistent
with the FRCP. Also, each side shall be entitled to take no more than 3
depositions. The arbitrator will have exclusive authority to entertain requests
for additional discovery, and to grant or deny such requests, based on the
arbitrator's determination regarding whether additional discovery is warranted
by the circumstances of a particular case. Each Party also will have the right
to subpoena witnesses and documents for the arbitration, including documents
relevant to the case from third parties in accordance with any applicable state
or federal law.
(Bernard Decl. ¶ 4, Exhibit B at p. 3.)
Although the
Agreement clearly limits discovery available to the parties, Plaintiff has made
no showing or no argument to establish that the limited discovery would prevent
her from adequately arbitrating her claims. In contrast, in Davis, the
Court stated that, “[i]n short, Davis has demonstrated that he has a factually
complex case involving numerous percipient witnesses, executives, and
investigators and that the arbitration
agreement's default limitations on discovery are almost certainly inadequate to
permit his fair pursuit of these claims.” (Davis, supra, 53
Cal.App.5th at pp. 912-13.) Plaintiff has not made a similar showing here, but
rather relies on the fact that the Agreement limits discovery to argue that
therefore the Agreement is unconscionable. Plaintiff’s arguments are not
supported by any evidence and therefore fail.
Plaintiff
also argues that Defendant failed to provide a copy of the arbitration rules. However, a party’s failure to provide a
copy of the rules for arbitration is typically analyzed by courts in the
context of procedural unconscionability. (See Balthazar v. Forever 21, Inc. (2016)
62 Cal.App.1237, 1345-45.) “In Baltazar, the
Supreme Court held that the failure to provide a copy of the arbitral rules,
standing alone, does not heighten the degree of procedural unconscionability.”
(Davis, supra, 53 Cal.App.5th at p. 909.)
Here, the
mere fact that Plaintiff did not receive a copy of the rules is insufficient to
establish the Agreement is substantively unconscionable.
Stay of the Proceedings
“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. section 1281.4, emphasis added.)
Defendants’
request for a stay of the proceedings is granted.
CONCLUSION
Defendants’ petition to compel arbitration is granted. The April 24, 2023
Case Management Conference is taken off calendar and Defendant’s request to
stay the proceedings pursuant to Code of Civil Procedure section 1281.4 is
granted. The court will set a status conference
regarding arbitration on November 14, 2023, at 8:30am.
Moving Party to give notice.
Dated: April 12, 2023 ___________________________________
Joel
L. Lofton
Judge
of the Superior Court
Parties who intend to submit on this tentative must send an email to the court
indicating their
intention to submit.
Parties intending to appear are strongly encouraged to appear remotely. alhdeptx@lacourt.org