Judge: Jon R. Takasugi, Case: 24STCV16493, Date: 2024-10-29 Tentative Ruling

Case Number: 24STCV16493    Hearing Date: October 29, 2024    Dept: 17

Superior Court of California

County of Los Angeles

DEPARTMENT 17

TENTATIVE RULING

            Defendant’s motion to compel arbitration is GRANTED. This action is stayed pending the completion of arbitration.

            On 7/2/2024, Plaintiff Maria Mercedes Fajardo (Plaintiff) filed suit against ALAL, LLC d/b/a KEI-AI Los Angeles Healthcare Center (Defendant), alleging: (1) disability discrimination; (2) failure to accommodate; (3) failure to engage in interactive process; (4) retaliation in violation of FEHA; (5) age discrimination; (6) failure to prevent discrimination and retaliation; and (7) wrongful termination in violation of public policy.

            On 8/30/2024, Defendant moved to compel Plaintiff to arbitrate her Complaint, and stay this action.

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

1.      Defendants’ Burden

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

Defendant submitted evidence that Plaintiff entered into an Arbitration Agreement with Defendant on 4/292/2024. (Flores Decl., Exh. A.)

In opposition, Plaintiff argues that at the time the agreement was presented to her, she was unable to fully comprehend a contract presented only in English.

However, Defendant submitted evidence that because Plaintiff’s role is client-facing, the job description for Certified Nursing Assistant (Plaintiff’s position) specifically required as an essential function of her job, that the person “must be able to read, write, speak and understand English language.” (Flores Decl., ¶ 9, Ex. D.) Relatedly, Plaintiff signed a “Languages in the Workplace Acknowledgement” that similarly confirmed, as follows: “I understand that for the respect of our patients/residents, efficiency of communication, and the inclusion of colleagues while clocked in for work and in the common or patient areas of the facility, English is the language that must be spoken.” (Flores Decl., ¶ 9, Ex. E.)

As such, the preponderance of evidence does not support a conclusion that Plaintiff was unable to comprehend the English-language contract. Moreover, Defendant submitted evidence that a Spanish version of the arbitration agreement was also available for any employees who requested or preferred to review it in Spanish. (Flores Decl., ¶ 5.)

There was no deadline associated with the signing of the agreement, and thus Plaintiff had the opportunity to ask for clarification if there were aspects of the Agreement she was unfamiliar with, or was confused by. Plaintiff does not indicate that she ever availed herself of this opportunity.

Given that Defendant has established by a preponderance of the evidence that an arbitration agreement exists, and that Plaintiff’s claims are covered by that agreement, the burden shifts to the Plaintiff to establish that the arbitration clause should not be enforced. (Pinnacle Museum Tower Assn. v. Pinnacle Market Development (US), LLC (2012) 55 Cal.4th 223, 236. (Pinnacle).)

2.      Plaintiff’s Burden

The party opposing arbitration bears the burden of proving, by a preponderance of the evidence any defense, such as unconscionability or duress. (Pinnacle, supra, 55 Cal.4th at p. 236.)

“Unconscionability has both procedural and substantive elements. Although both must appear for a court to invalidate a contract or one of its individual terms, they need not be present in the same degree: ‘[T]he 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.’”  (Roman v. Superior Court (2009) 172 Cal.App.4th 1462, 1469. (“Roman”).) Where the degree of procedural unconscionability is low, “the agreement will be enforceable unless the degree of substantive unconscionability is high.” (Ajamian v. CantorCO2e (2012) 203 Cal.App.4th 771, 796 (Ajamian).)

A.    Procedural Unconscionability

“Procedural unconscionability focuses on the elements of oppression and surprise. ‘Oppression arises from an inequality of bargaining power which results in no real negotiation and an absence of meaningful choice … Surprise involves the extent to which the terms of the bargain are hidden in a ‘prolix printed form’ drafted by a party in a superior bargaining position.’ ” (Roman, supra, 172 Cal.App.4th at p. 1469.)

Plaintiff argues that the agreement is procedurally unconscionable because (1) it is a contract of adhesion, and (2) a copy of the applicable AAA rules were not attached to the agreement.

I.       Adhesion Contract

Where pre-employment adhesion contracts are involved, a degree of procedural unconscionability is always present. This is because, “the arbitration agreement stands between the employee and necessary employment, and few employees are in a position to refuse a job because of an arbitration agreement.” (Little v. Auto Stiegler, Inc. (2003) 29 Cal.4th 1064, 1071 (Little).)  However, where “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.” (Ajamian, supra, 203 Cal.App.4th at p. 796.)

Therefore, while Plaintiff is correct that including the arbitration clause within a contract of adhesion indicates a degree of procedural unconscionability, there must be other indications of oppression or surprise to render the agreement unenforceable. (Little, supra, 29 Cal.4th at p.1071; Ajamian, supra, 203 Cal.App.4th at p. 796.)

II.               Copy of AAA-Rules

As additional evidence of procedural unconscionability, Plaintiff points to Defendant’s failure to attach a copy of the applicable JAMS-rules to the Arbitration Agreement. However, courts have held that a failure to attach arbitration rules is insufficient, by itself, to sustain a finding of procedural unconscionability. (Peng v. First Republic Bank (2013) 219 Cal.App.4th 1462, 1469.) Furthermore, the applicable rules are available online.

The Court concludes that Defendants’ failure to directly attach a copy of the applicable JAMS rules does not amount to procedural unconscionability. Because Plaintiff has shown no other indication of oppression or surprise outside of the existence of an employment adhesion agreement, the agreement will be enforceable unless Plaintiff can demonstrate a high degree of substantive unconscionability. (Ajamian, supra, Cal.App.4th at p. 796.)

B.    Substantive Unconscionability

Plaintiff argues the Arbitration Agreement is substantively unconscionable because (1) it has a carve-out for preliminary/injunctive relief; (2) fails to guarantee an award of attorney fees to the Plaintiff if she is the prevailing party; (3) it has non-mutual provisions; and (4) it prohibits representative PAGA actions.

“Substantive unconscionability focuses on the actual terms of the agreement and evaluates whether they create ‘overly harsh’ or ‘‘one-sided’ results,’ that is, whether contractual provisions reallocate risks in an objectively unreasonable or unexpected manner.” (Roman, supra, 172 Cal.App.4th at pp. 1469-1470.) Substantive unconscionability ‘may take various forms,’ but typically is found in the employment context when the arbitration agreement is ‘one-sided,’ in favor of the employer without sufficient justification. (Ibid.) Common examples of substantive unconscionability include “when ‘the employee's claims against the employer, but not the employer's claims against the employee, are subject to arbitration’” (Ibid.), or when employees are required to pay excessive fees to gain access to the administrative forum. (Armendariz, supra, 24 Cal.4th at p. 90-91.)

“Where appropriate, courts have discretion to sever or limit the application of unconscionable provisions and enforce the remainder of an arbitration agreement under Civil Code section 1670.5, subdivision (a).” (Ramos, supra, 28 Cal.App.5th at p. 1065.) Circumstances in which severability can be appropriate include where the unconscionability can be cured by striking the offending clause or clauses. (Id. at p. 1069.)

As for the first contention, the carve-out for preliminary and/or injunctive relief applies equally to employer and employee. Thus, while Plaintiff may contend that Defendant is more likely to avail itself of this provision, there are a number of injunctive relief claims an employee may pursue. As such, the Court is unpersuaded that this is an indication of substantive unconscionability.

As for the second contention, the agreement provides that “[i]f any party prevails on a statutory claim that affords the prevailing party attorneys’ fees and costs . . . the Arbitrator may award reasonable attorneys’ fees and costs to the prevailing party.” (Flores Decl., Exh. A.) As such, the Agreement does not limit the ability to recover attorney fees or any type of relief otherwise available in court because the Arbitration Agreement states that the Arbitrator “has the authority to award the Parties all form[s] of relief that would otherwise be available to the Parties in a court of law …” (Id.) As such, the Court interprets the Agreement’s use of “may award” as affirming the arbitrator’s ability to award any fees and costs Plaintiff would otherwise be entitled to as prevailing party. The Court is therefore unpersuaded that this is an indication of substantive unconscionability.

As for the third contention, Plaintiff argues that there is non-mutuality as to the confidentiality provision and the covered parties impacted by the Arbitration Agreement. However, Plaintiff offers no substantive explanation as to how the provision “JAMS and the Arbitrator shall maintain the confidential nature of the Arbitration proceeding and the Award, including the Hearing, . . . .” is nonmutual, nor did Plaintiff submit any caselaw which could show a similar provision has been found to be substantively unconscionable. As to coverage scope, Plaintiff argues that:

The Agreement required Ms. Fajardo to arbitrate any claims she “may have against the Company or against its officers, directors, supervisors, managers, employees, or agents in their capacity as such . . . .” Thus, while the Agreement requires Ms. Fajardo to arbitrate her claims against anyone affiliated with Defendant,” it only requires “the Company” (defined narrowly as Kei-Ai) to arbitrate its claims against Ms. Fajardo.

            (Opp., 14: 6-9.)

            However, tellingly, Plaintiff did not cite any analogous caselaw which could show that Defendant’s inclusion of its officers, directors, supervisors, managers, employees, or agents was overly broad or an indication of unconscionability.

Finally, Section 5(b) of the Agreement purports to waive the employee’s right to bring or participate in any representative action “in arbitration or otherwise.” Here, Plaintiff’s Complaint does not contain a representative PAGA action. Therefore, while the arbitration agreement’s PAGA waiver is unenforceable as a matter of law, it can easily be severed from the Complaint without fundamentally altering the parties’ agreement regarding the scope of arbitration and the powers of the arbitrators to provide relief. (Ramos, supra, 28 Cal.App.5th at p. 1065.)

The Court concludes that Plaintiff has failed to show any evidence of substantive unconscionability. While Plaintiff has demonstrated a degree of procedural unconscionability, he has not demonstrated any degree of substantive unconscionability. As a result, the Court finds that the arbitration agreement is enforceable. (Ajamian, supra, Cal.App.4th at p. 796.)

Based on the foregoing, Defendant’s motion to compel arbitration is granted. This action is stayed pending the completion of arbitration.

It is so ordered.

Dated:  October    , 2024

   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.  For more information, please contact the court clerk at (213) 633-0517.