Judge: Joel R Wohlfeil, Case: 37-2023-00016246-CU-OE-CTL, Date: 2023-08-18 Tentative Ruling

SUPERIOR COURT OF CALIFORNIA,

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HALL OF JUSTICE

TENTATIVE RULINGS - August 17, 2023

08/18/2023  09:00:00 AM  C-73 COUNTY OF SAN DIEGO

JUDICIAL OFFICER:Joel R. Wohlfeil

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Civil - Unlimited  Other employment Motion Hearing (Civil) 37-2023-00016246-CU-OE-CTL ABASTA VS HEALTHPRO HERITAGE LLC [IMAGED] CAUSAL DOCUMENT/DATE FILED: Motion - Other, 06/12/2023

The Motion (ROA # 13) of Defendants Healthpro Heritage, LLC, Healthpro Heritage At Home, LLC, New Life Physical Therapy Services, P.C., and New Life Physical Therapy Services San Diego, Inc.

('Defendants') for an order (1) compelling arbitration of the individual PAGA claims by Plaintiff Geraldine Abasta ('Plaintiff') and (2) dismissing non-individual PAGA claims, is GRANTED IN PART and DENIED IN PART.

The Motion to compel arbitration of Plaintiff's individual PAGA claim is granted.

The Motion to dismiss Plaintiff's non-individual PAGA claims is denied. The representative action is stayed pending completion of arbitration.

Plaintiff's Request (ROA # 18) for judicial notice is GRANTED IN PART and DENIED IN PART. The Court takes judicial notice of Exh. '2' and the date only on which Exh. '1' was filed with the Court; otherwise, the Request is DENIED.

The Court can order the parties to arbitrate a controversy if it determines an agreement to arbitrate the controversy exists, unless it determines that the right to compel arbitration has been waived or grounds exist for rescission. Code Civ. Proc. 1281.2(a).

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. Engalla v. Permanente Medical Group, Inc. (1997) 15 Cal. 4th 951, 972.

Individual PAGA Claims 'The plain language of section 2699(c) has only two requirements for PAGA standing. The plaintiff must be an aggrieved employee, that is, someone 'who was employed by the alleged violator' and 'against whom one or more of the alleged violations was committed.'' Kim v. Reins Int'l California, Inc. (2020) 9 Cal. 5th 73, 83, 84 (quoting Cal. Labor Code 2699(c)).

Here, Defendants were Plaintiff's employers or persons acting on behalf Plaintiff's employer. (Compl. ¶ 12 & 13).

Plaintiff is one of the victims of the alleged violations. (Compl. ¶ 19 - 51).

Calendar No.: Event ID:  TENTATIVE RULINGS

2984684  9 CASE NUMBER: CASE TITLE:  ABASTA VS HEALTHPRO HERITAGE LLC [IMAGED]  37-2023-00016246-CU-OE-CTL Plaintiff satisfies the requirements and therefore has standing to bring a PAGA claim against Defendants. However, Plaintiff signed an arbitration agreement with Defendants agreeing to arbitrate all disputes between employee and employer, subject to the agreement's subsequent provisions. See Rickert Decl. at Exhibit 1.

Unconscionability Unconscionability 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.

Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal. 4th 83, 114.

Procedural and substantive unconscionability must both be present for the Court to exercise its discretion to refuse to enforce a contract or clause under the doctrine of unconscionability. Id. But they need not be present in the same degree. Id. A sliding scale is utilized: the more substantively oppressive the contract term, the less evidence of procedural unconscionability is required to conclude that the term is unenforceable, and vice versa. Id. Generally, an arbitration agreement is lawful if it: (1) provides for neutral arbitrators, (2) provides for more than minimal discovery, (3) requires a written award, (4) provides for all of the types of relief that would otherwise be available in court, and (5) does not require employees to pay either unreasonable costs or any arbitrators' fees or expenses as a condition of access to the arbitration forum. Id. at 102.

'If the court as a matter of law finds the contract or any clause of the contract to have been unconscionable at the time it was made the court may refuse to enforce the contract, or it may enforce the remainder of the contract without the unconscionable clause, or it may so limit the application of any unconscionable clause as to avoid any unconscionable result.' Civ. Code 1670.5(a).

- Procedural Unconscionability Regarding procedural unconscionability, the Armendariz Court noted that the employment agreement was adhesive and plaintiff employee was in no position to refuse to accept the terms of the agreement.

Armendariz, 24 Cal.4th at 114, 115.

'Use of a contract of adhesion establishes a minimal degree of procedural unconscionability notwithstanding the availability of market alternatives.' Gatton v. T-Mobile USA, Inc. (2007) 152 Cal. App. 4th 571, 585.

Procedural unconscionability focuses on oppression or surprise due to unequal bargaining power.

Gentry v. Superior Court (2007) 42 Cal. 4th 443, 468.

'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 Sur. Investigations, Inc. (2013) 215 Cal. App. 4th 695, 704.

Plaintiff argues the arbitration agreement is adhesive because she was only able to view the agreement but not make any changes. Plaintiff further argues, the level of procedural unconscionability is amplified by the surprising way she received the agreement and by her employment being conditioned upon signing the agreement.

Procedural unconscionability from surprise is found from 'hiding a clause in a mass of fine print or phrasing a clause in language that is incomprehensible to a layperson.' Penilla v. Westmont (2016) 3 Calendar No.: Event ID:  TENTATIVE RULINGS

2984684  9 CASE NUMBER: CASE TITLE:  ABASTA VS HEALTHPRO HERITAGE LLC [IMAGED]  37-2023-00016246-CU-OE-CTL Cal. App. 5th 205, 216.

However, no authority was cited for Plaintiff's proposition that she needs to be 'mentally prepared' for an arbitration agreement to be presented at the outset of employment. The arbitration agreement was not hidden or tactically written as to conceal its purpose or Plaintiff's agreement to it. The agreement is a stand-alone agreement with prominent headings and subheadings. (See Rickert Decl. at Exhibit 1). The fact that Plaintiff did not expect the arbitration agreement is not sufficient to increase the level of procedural unconscionability.

The agreement was a non-negotiable condition of employment, making it adhesive. Contracts of adhesion carry only a minimal level of procedural unconscionability. See Wheeler v. St. Joseph Hospital (1976) 63 Cal. App. 3d 345, 356. Therefore, a low-level of procedural unconscionability exists.

- 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 1322, 1330.

'Substantively unconscionable terms may take various forms, but may generally be described as unfairly one-sided.' Little v. Auto Stiegler, Inc. (2003) 29 Cal. 4th 1064, 1071.

The substantive element of the unconscionability analysis focuses on overly harsh or one-sided results.

Walnut Producers of California v. Diamond Foods, Inc. (2010) 187 Cal. App. 4th 634, 647, 648.

Requiring an employee to share the unique costs of arbitration is substantively unconscionable.

Armendariz, 24 Cal. 4th at 110, 111.

Plaintiff argues that the agreement is substantively unconscionable for two reasons. First, that the agreement is illusory and one-sided, and second, that the agreement impermissibly limits discovery.

As to the discovery limitations, Plaintiff argues the agreement unfairly and unreasonably favors Defendants because Plaintiff is only allowed one deposition of a non-expert witness. However, this is not an accurate characterization of the agreement. In fact, the agreement provides that one deposition is guaranteed and either party can request further depositions by asking the arbitrator. This mimics the JAMS discovery rule on arbitration, which has been approved by several district courts. See Kim v. CashCall, 2017 WL 8186683, at *5 (C. D. Cal. June 8, 2017); Sanchez v. Gruma, 2019 WL 1545186, at *8 (N. D. Cal. Apr. 9, 2019); Pope v. Sonatype, 2015 WL 2174033, at *5 (N. D. Cal. May 8, 2015); Saline v. Northrop, 2009 WL 10674037, at *6 (C. D. Cal. Feb. 9, 2009). Therefore, this discovery limitation does not render the agreement substantively unconscionable.

Plaintiff argues the agreement is illusory and one-sided because it allows named and unnamed entities to team up against her by combining resources, distributing workload, and spreading out costs and fees, while Plaintiff is forced to fend for herself. This argument is not persuasive. Plaintiff does not cite legal authority supporting this argument. Also, when Plaintiff elects to sue four companies for the same employment claims those entities may properly elect to coordinate a defense. This is neither a sign of a non-mutual agreement nor is it unconscionable. Plaintiff is improperly comparing what is happening here - different parties pursuing a joint defense after being sued for the same claims - with what the agreement expressly prevents - different parties joining an arbitration in the pursuit of different claims.

The arbitration agreement is not illusory nor one-sided and therefore, is not substantively unconscionable.

Non-Individual PAGA Claims In Viking River Cruises, Inc. v. Moriana (2022) 142 S. Ct. 1906, the United States Supreme Court held Calendar No.: Event ID:  TENTATIVE RULINGS

2984684  9 CASE NUMBER: CASE TITLE:  ABASTA VS HEALTHPRO HERITAGE LLC [IMAGED]  37-2023-00016246-CU-OE-CTL that a former employer was entitled to enforce an arbitration agreement insofar as it mandated arbitration of a former employee's individual PAGA claims, and that a former employee lacked statutory standing to maintain her representative PAGA claims. Once the employee's individual PAGA claim was properly sent to arbitration, the lower court would have to dismiss the 'non-individual PAGA claims' because, without her own PAGA claim, 'the employee is no different from a member of the general public, and PAGA does not allow such persons to maintain suit.' Id. However, the recent California Supreme Court decision in Adolph v. Uber Techs., Inc. (2023) 14 Cal. 5th 1104, disagrees with the Viking River holding with regards to statutory standing of non-individual PAGA claims.

'Because '[t]he highest court of each State ... remains 'the final arbiter of what is state law'' (Montana v. Wyoming (2011) 563 U. S. 368, 378, fn. 5, 131 S. Ct. 1765, 179 L. Ed. 2d 799), we are not bound by the high court's interpretation of California law. (See Viking River, 596 U. S. at 1925) (conc. opn. of Sotomayor, J.) ['Of course, if this Court's understanding of state law is wrong, California courts, in an appropriate case, will have the last word.'].)' Adolph, 14 Cal. 5th at 1119.

In Adolph, the California Supreme Court held that, '[w]here a plaintiff has brought a PAGA action comprising individual and non-individual claims, an order compelling arbitration of the individual claims does not strip the plaintiff of standing as an aggrieved employee to litigate claims on behalf of other employees under PAGA.' Id. at 1114.

Five recent California Court of Appeal opinions have reached the same conclusion that Plaintiff has standing to bring non-individual PAGA claims after the individual claims have been compelled to arbitration. See Galarsa v. Dolgen California, LLC (2023) 88 Cal. App. 5th 639, 653; Seifu v. Lyft, Inc.

(2023) 89 Cal. App. 5th 1129, 1133; Piplack v. In-N-Out Burgers (2023) 88 Cal. App. 5th 1281, 1291; Gregg v. Uber Techs., Inc. (2023) 89 Cal. App. 5th 786, 792; Nickson v. Shemran, Inc. (2023) 90 Cal. App. 5th 121, 134.

The arbitration agreement expressly states that class or collective actions under PAGA must be brought in a Court, and not subject to the arbitration agreement, which is exactly what Plaintiff did. See Rickert Decl., Exhibit 1 at 'Mutual Arbitration Agreement' at ¶ 4. This Court's order compelling Plaintiff to arbitrate her individual claim does not strip Plaintiff of standing to litigate her non-individual PAGA claims under Adolph and California Law.

Conclusion The arbitration agreement is adhesive and therefore is procedurally unconscionable to a minimal degree. However, the agreement is mutual and does not limit discovery and is therefore not substantively unconscionable. For this reason, Defendant's Motion to compel arbitration is granted, and Plaintiff will be required to arbitrate her individual PAGA claim against Defendants.

Plaintiff maintains standing to bring non-individual PAGA claims against Defendants after her individual claim is adjudicated through arbitration. Thus, Defendant's motion to dismiss is denied.

The Court sets a Status Conference on Friday June 14, 2024 at 2:30 PM for the limited purpose of tracking the disposition of the arbitration.

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