Judge: Jon R. Takasugi, Case: 22STCV16900, Date: 2023-05-23 Tentative Ruling

Case Number: 22STCV16900    Hearing Date: May 23, 2023    Dept: 17

Superior Court of California

County of Los Angeles

DEPARTMENT 17

TENTATIVE RULING

Defendant’s motion to compel arbitration is CONTINUED to allow supplemental briefing.

            On 5/20/2022, Plaintiffs Tamara Brock, Wesley Benton, Natalie Haena, Mark Hall, John Hersh, Mark Larsen, Lindy Martin, Elizabeth Repesa, and Mercedes Taketa filed suit against Westlake Services, LLC, alleging: (1) expense reimbursement; (2) commission forfeiture; (3) unpaid overtime wages; (4) unpaid wages and civil penalties; (5) waiting time penalties; (6) unfair business practices; (7) employment discrimination on the basis of disability; and (8) retaliation.

            Now, Defendant moves to compel Plaintiffs to individually arbitrate all of their claims against Defendant.

Legal Standard

Where the Court has determined that an agreement to arbitrate a controversy exists, the Court shall order the petitioner and the respondent to arbitrate the controversy …unless it determines that…  grounds exist for rescission of the agreement.” (Code Civ. Proc., § 1281.2.) Among the grounds which can support rescission are fraud, duress, and unconscionability. (Tiri v. Lucky Chances, Inc. (2014) 226 Cal.App.4th 231, 239.) The Court may also decline to compel arbitration wherein there is possibility of conflicting rulings on a common issue of law or fact. (Code Civ. Proc., § 1281.2 (c).)

Discussion

The party moving to compel arbitration “bears the burden of proving [the] existence [of an arbitration agreement] by a preponderance of the evidence.” (Rosenthal v. Great Western Fin. Securities Corp. (1996) 14 Cal.4th 394, 413.) The moving party also bears the burden of demonstrating that the claims fall within the scope of the arbitration agreement. (Omar v. Ralphs Grocery Co. (2004) 118 Cal.App.4th 955, 961.)

A.    Existing Agreement

Discussion

            Defendant is an automobile financing business. Defendant submitted evidence that Plaintiffs each voluntarily entered into arbitration agreements with Defendant near the beginning of their respective employment periods, and also at various times throughout their employment periods.

            More specifically, Defendant submitted evidence that:

-          Larsen, Brock, and Repesa applied for employment and signed the Employment Application Arbitration Agreement-Version 1, on or around January 6, 2013, July 14, 2013, and October 16, 2014, respectively where they agreed to arbitrate all claims arising out of their employment. (Feldmeth Decl., ¶¶ 6, 8, 10 Exs. C, E, G.)

-         Benton applied for employment with Westlake on or around May 13, 2019, around which time he executed the Employment Application Arbitration Agreement-Version 2, where he agreed to arbitrate all claims arising out of her employment with Westlake. (Feldmeth Decl., ¶ 13, Ex. J.) After a voluntary break in his employment, Larsen resumed his employment on or around June 6, 2019. Then, he executed the Employment Application Arbitration Agreement-Version 2 and agreed to arbitrate all claims arising out of his employment with Westlake. (Feldmeth Decl., ¶ 7, Ex. D).

-         Repesa, Benton, and Larsen signed the Applicant’s Statement and Agreement on or around November 3, 2014, May 13, 2019, and June 6, 2019. They agreed to arbitrate all claims arising out of or related to their employment with Westlake. (Feldmeth Decl., ¶¶ 7, 11, 13, Exs. D, H, J.)

-         Taketa’s employment with Westlake began on or around May 1, 2007. (Feldmeth Decl., ¶ 4.) Taketa, Larsen, and Brock signed the January 2007 Arbitration Agreement on or around May 1, 2007, January 6, 2013, and August 12, 2013, respectively, where they agreed to arbitrate all claims arising out of or related to their employment with Westlake. (Feldmeth Decl., ¶¶, 4, 5, 9, Exs. A, B, F.)

-         Repesa signed the July 2014 Arbitration Agreement on or around November 3, 2014, where she agreed to arbitrate all claims arising out of or related to her employment with Westlake. Id.

-         On April 25, 2019, consistent with Westlake’s standard procedure of communicating policy changes to its employees through the UKG Pro application, a new Westlake Employer-Employee Dispute Resolution Agreement was distributed to all California-based Westlake employees. (Feldmeth Decl., ¶ 16, Ex. K) The April 2019 Agreement stated employees could opt-out of it by emailing Human Resources no later than May 15, 2019. Id. Brock, Larsen, Repesa, Taketa, and Hersh each received the April 25, 2019 Agreement. (Feldmeth Decl., ¶ 16.) None of them opted out of the agreement. Id.

-         Benton began his employment on or around May 28, 2019. Benton signed the April 2019 Arbitration Agreement as part of his new hire paperwork. (Feldmeth Decl., ¶ 17, Ex. N.)

-         On August 1, 2019, consistent with Westlake’s standard procedure of communicating policy changes to its employees through the UKG Pro application, a new Westlake Employer-Employee Dispute Resolution Agreement was distributed to all California-based Westlake employees, effective August 15, 2019. (Feldmeth Decl., ¶ 18, Ex. O.) All employees, including Benton, Repesa, and Taketa were reminded to review the new policy each and every time they launched or accessed UKG Pro. Id. Benton, Repesa, and Taketa did not signal any objection to the August 2019 Agreement. Id. Benton, Repesa, and Taketa continued their employment with Westlake after the August 15, 2019 deadline to acknowledge receipt of the August 2019 Agreement. Id.

-         Hersh, Brock, and Larsen did affirmatively acknowledge and accept the August 2019 Agreement on August 5, 2019, August 6, 2019, and August 13, 2019, respectively. (Feldmeth Decl., ¶¶ 22-25, Exs. P, Q, and R.) Hersh, Brock, and Larsen executed this agreement by logging-in to UKG Pro and electronically-signing an acknowledgement of the agreement. (Feldmeth Decl., ¶ 22.)

In opposition, Plaintiffs do not dispute signing the arbitration agreements. Rather, they argue that Defendant seeks to compel Plaintiffs to arbitrate under about ten different purported agreements, which contain a multitude of different and conflicting terms, such that they cannot be enforced. For example, Plaintiffs identifies apparent contradictions in the arbitration agreements such as:

-         The arbitration agreements identify different arbitration service provides: “Some arbitration agreements identify the arbitration service provider as AAA, some identify AAA or JAMS, some identify AAA or JAMS or ARS, and some set forth a hodgepodge of different arbitration providers.” (Opp., 11: 14-16.)

-         Some of the arbitration agreements provide for a right to appeal. The Larson Employment Application Arbitration Agreement-Version 2 (Ex. D) and the Repesa Applicant’s Statement And Agreement (Ex. H) provide furthermore for a right to appeal. None of the others do so. (Cordes Decl. ¶ 20.)

-         Some of the arbitration agreements disallow punitive damages and injunctive relief. The Repesa July 2014 Arbitration Agreements (Ex. I) excepts punitive damages and injunctive relief. (Cordes Decl. ¶ 21.)

-         Some arbitration agreements specify a retired Judge as an arbitrator. In addition to the other requirements of arbitration, the Larson Employment Application Arbitration Agreement-Version 2 (Ex. D) and the Repesa Applicant’s Statement And Agreement (Ex. H) provide that any arbitrator must be a retired California judge. These limitations are not stated in any of the other purported agreements. (Cordes Decl. ¶ 18.) Furthermore, the January 2007 Arbitration Agreement (Ex. B), Brock Dispute Resolution Agreement (Ex. F), Repesa July 2014 Arbitration Agreements (Ex. I), and Brock April 2019 Arbitration Agreement (Ex. K) require the arbitrator to be “experienced in employment law” while the other agreements do not. (Cordes Decl. ¶ 19.) As such, there are inconsistencies as to whether any particular arbitrator should be a retired California judge, experienced in employment law, both, or neither.

-         Some of the agreements provide by their terms that they must be named in a signed superseding agreement, and many of the later-dated arbitration agreements neither identify their predecessor by name or contain Plaintiff signatures.

After review, the Court finds that Defendant’s motion is too uncertain to be ruled upon at this time. Defendant presents over 10 agreements to the Court, does not specify which agreement is being enforced against which Plaintiff, and does not address all agreements in its arguments. For example, Defendant argues that the threshold issue of arbitrability is delegated to the arbitrator, citing the fact that the January 2007, July 2014, April 2019, and August 2019 arbitration agreements contain delegation clauses which expressly stated that the arbitrator - and not a court - would decide the gateway issues of applicability under the agreement. However, it entirely ignores the fact that Defendant has also presented a number of additional agreements that do not contain any such provision. Defendant’s motion does not acknowledge this gap, nor does it provide substantive analysis which could show why the delegation clauses in the January 2007, July 2014, April 2019, and August 2019 agreements should delegate threshold arbitrability questions for all agreements to the arbitrator. It is not the responsibility of this Court to cobble together provisions in agreements, or to formulate arguments on behalf of Defendant.

Similarly, Defendant’s motion brushes over additional issues identified by Plaintiff, such as the necessary qualifications of the arbitrator, and the need for signed superseding agreements.

Ultimately, it is not the Court’s onus to impose a sense of order and clarity on Defendant’s motion. Defendant must identify the specific agreements it wishes to enforce, advance arguments for enforceability as to all of those agreements, and must present arguments that either resolve the inconsistencies or which explain those agreements can still be enforced in spite of those inconsistencies.

In reply, Defendant responds to these concerns by stating that only arbitration agreements the Court needs to consider are the January 2007, July 2014, and August 2019 Agreements. However, this argument is not properly raised in reply, especially because this position relies on assertions from Defendant like “Taketa and Respesa did not execute the August 2019 Agreement, but assented to it by their continued employment.” (Reply, 3: fn.2.) Clearly, these are arguments which must be briefed, and which Plaintiffs must be provided an opportunity to respond to.

Based on the foregoing, Defendant’s motion to compel arbitration is continued to allow supplemental briefing. If Defendant contends now that the only relevant agreements are the January 2007, July 2014, and August 2019 Agreements, Defendant must set forth law and facts to show that all Plaintiffs can be compelled to arbitrate under these agreements alone.

It is so ordered.

Dated:  May    , 2023

   Hon. Jon R. Takasugi
   Judge of the Superior Court

Parties who intend to submit on this tentative must send an email to the court at smcdept17@lacourt.org by 4 p.m. the day prior as directed by the instructions provided on the court website at www.lacourt.org.  If a party submits on the tentative, the party’s email must include the case number and must identify the party submitting on the tentative.  If all parties to a motion submit, the court will adopt this tentative as the final order.  If the department does not receive an email indicating the parties are submitting on the tentative and there are no appearances at the hearing, the motion may be placed off calendar. 

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