Judge: Joseph Lipner, Case: 23STCV06079, Date: 2023-09-19 Tentative Ruling

Case Number: 23STCV06079    Hearing Date: September 19, 2023    Dept: 72

SUPERIOR COURT OF CALIFORNIA

COUNTY OF LOS ANGELES

DEPARTMENT 72

TENTATIVE RULING

Defendant Thorson GMC Truck-Buick Motor Co. d/b/a Thorson Motor Center (“Thorson”) moves to compel arbitration of Plaintiff Cristal L. Moran’s claims against it.  Thorson also asks that the action be stayed pending arbitration. 

Defendants Angel Salcido, Karina Patlan, Allynn Magnolia, Hector Melendes and Jose Alberto Loreto (“Individual Defendants”) filed a Joinder to Thorson’s Motion to Compel Arbitration. 

Defendant Thorson’s Motion to Compel Arbitration is granted.  Defendant Thorson’s request to stay this action pending completion of arbitration is granted. The action is stayed pending completion of arbitration. 

Individual Defendants’ Request for Joinder is granted.  The petition to compel arbitration is granted as to Individual Defendants.    

The Court sets a status conference regarding status of arbitration for May 6, 2024 at 8:30 a.m.  The case management conference on today’s calendar shall go off calendar.

Background

          Plaintiff Cristal L. Moran filed a complaint on March 20, 2023 alleging employment law claims.  Plaintiff filed a First Amended Complaint on June 27, 2023 alleging:  (1) disability discrimination in violation of FEHA; (2) sex discrimination in violation of FEHA; (3) hostile work environment – sexual harassment in violation of FHEA; (4) hostile work environment – disability harassment in violation of FEHA; (5) retaliation in violation of FEHA; (6) failure to prevent discrimination, harassment and/or retaliation in violation of FEHA; (7) negligent hiring, retention, and/or supervision; (8) failure to provide reasonable accommodations in violation of FEHA; (9) failure to engage in interactive process in violation of FEHA: (10) wrongful termination in violation of public policy; (11) retaliation in violation of Labor Code §§1102.5 and 98.6; (12) IIED; (13) failure to provide meal breaks in violation of Labor Code §226.7; (14) failure to provide rest breaks in violation of Labor Code §226.7; (15) failure to provide accurate wage statements in violation of Labor Code §226; (16) failure to pay vested vacation pay; (17) waiting time penalties pursuant to Labor Code §§201 and 203; (18) unlawful, unfair and fraudulent business practices in violation B&PC §17200.

          Plaintiff filed the complaint against (1) Defendant Thorson GMC Truck Buick Motor Co., her employer; (2) Defendants Hector Melendes and Jose Loreto, the co-workers who alleged sexually harassed her; (3) Defendants Angel Salcido and Karina Patlan, her direct supervisors; and (4) Defendant Allyn Magnolia, her Human Resources representative.  Plaintiff was employed as a cashier and alleges she was sexually harassed while employed by Thorson.  Plaintiff also alleges she was disabled due to a wrist injury and Defendants discriminated against her based on her disability. 

Legal Standard

          Federal Arbitration Act

          “A written provision in any [] contract evidencing a transaction involving commerce to settle by arbitration a controversy thereafter arising out of such contract or transaction, or the refusal to perform the whole or any part thereof, or an agreement in writing to submit to arbitration an existing controversy arising out of such a contract, transaction, or refusal, shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.”  (9 U.S.C. § 2.)

          “If any suit or proceeding be brought in any of the courts of the United States upon any issue referable to arbitration under an agreement in writing for such arbitration, the court in which such suit is pending, upon being satisfied that the issue involved in such suit or proceeding is referable to arbitration under such an agreement, shall on application of one of the parties stay the trial of the action until such arbitration has been had in accordance with the terms of the agreement, providing the applicant for the stay is not in default in proceeding with such arbitration.”  (9 U.S.C. §3.)

          “[T]he United States Supreme Court has identified three categories of activity that Congress may regulate under the commerce power: (1) the channels of interstate commerce, (2) the instrumentalities of interstate commerce and persons or things in interstate commerce, and (3) those activities having a substantial relation to interstate commerce. The party asserting FAA preemption bears the burden to present evidence establishing a contract with the arbitration provision affects one of these three categories of activity, and failure to do so renders the FAA inapplicable.”  (Carbajal v. CWPSC, Inc. (2016) 245 Cal.App.4th 227, 238.)

          “The FAA applies to contracts that involve interstate commerce (9 U.S.C. §§ 1, 2), but since arbitration is a matter of contract, the FAA also applies if it is so stated in the agreement.”  (Davis v. Shiekh Shoes, LLC (2022) 84 Cal.App.5th 956, 963.)  In addition, the express incorporation of the FAA for the enforcement of this arbitration agreement incorporates the procedural provisions of the FAA. Under Victrola 89, LLC v. Jaman Properties 8 LLC (2020) 46 Cal.App.5th 337, the language regarding enforcement of the arbitration agreement under the FAA incorporates the FAA’s procedural requirements and renders CCP §1281.2(c) inapplicable.  (Victrola 89, LLC v. Jaman Properties 8 LLC (2020) 46 Cal.App.5th 337, 344-345 (arbitration provision providing that “enforcement [of the arbitration agreement] shall be governed by the [FAA]” incorporated procedural provisions of the FAA and trial court erred when it denied the motion to compel per CCP §1281.2(c).)

          California Arbitration Act

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

(a) The right to compel arbitration has been waived by the petitioner; or

(b) Grounds exist for rescission of the agreement.

(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 trial court may resolve motions to compel arbitration in summary proceedings, in which the trial court sits as a trier of fact, weighing all the affidavits, declarations, and other documentary evidence, as well as oral testimony received at the court's discretion, to reach a final determination.  The party seeking arbitration bears the burden of proving the existence of a valid arbitration agreement by a preponderance of the evidence, and the party opposing arbitration bears the burden of proving any defense, such as unconscionability by a preponderance of the evidence.”  (Mendoza v. Trans Valley Transport) (2022) 75 Cal.App.5th 748, 718 (trial court properly decided plaintiff’s challenge to arbitration agreement despite delegation clause where plaintiff attacked contract formation and very existence of agreement to arbitrate). 

          “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.”  (CCP §1281.4 (para. 1).)

Discussion

          Defendant Thorson GMC Truck-Buick Motor Co. (“Thorson”) moves to compel arbitration of Plaintiff’s claims against it pursuant to the Arbitration Agreement executed as part of Plaintiff’s employment application and agreement.  Defendant Thorson argues the arbitration agreement is subject to the FAA, because it has business dealings throughout the United States  and globally.  Defendant Thorson argues Plaintiff signed the arbitration agreement and her current claims are within the scope of the arbitration agreement.  Defendant Thorson argues the arbitration agreement is binding and enforceable and it is not unconscionable.  Defendant Thorson argues it has not waived its right to arbitrate and Plaintiff cannot defeat enforcement of the arbitration agreement.  Defendant Thorson argues the action must be stayed pending arbitration.

          FAA applies

          Defendant Thorson establishes that the agreement involves interstate commerce.  Thorson submits evidence that it is engaged in interstate commerce and Plaintiff’s employment, while located in California, involved services in support of that interstate commerce.  (Magnolia Dec., ¶¶3 and 4.)  Plaintiff’s opposition does not dispute that the FAA applies. 

          In addition, the Arbitration Agreement executed by Plaintiff in 2022 specifically provides, “I acknowledge that the Company’s business and the nature of my employment in that business affect interstate commerce.  Thus, I agree that this agreement and my employment are governed by the Federal Arbitration Act.”  (Magnolia Dec., Ex. C, ¶6.) 

          Existence of enforceable arbitration agreement applicable to subject controversy under 9 U.S.C. §2

          Defendant Thorson establishes the existence of an applicable arbitration agreement pursuant to 9 U.S.C. §2 and CCP §1281.2.  Plaintiff executed arbitration agreements as part of her employment application and upon her hiring.  (Magnolia Dec., ¶¶7-11, Exs. A-C.  The provision of each agreement are as follows:

(1) Exhibit A—Applicant Statement and Agreement. 

“By signing my name below and/or accepting and/or continuing employment with the Company, I agree to pursue any claims I might have against the Company that currently exist or that may arise in the future exclusively through binding arbitration…” (Magnolia Dec., Ex. A, ¶3.)

(2) Exhibit B—Arbitration Agreement executed on April 5, 2021.  Defendant attached a full copy of this arbitration agreement with its Notice of Errata as Exhibit BB. 

“This Arbitration Agreement shall apply to any and all claims I assert against the Company and each of its respective employees, officers, agents, attorneys, owners, directors, or affiliates, and against me by those entities.”  (Notice of Errata, Ex. BB, ¶2.)

(3) Exhibit C—Arbitration Agreement executed in June or July 2022. 

“Employee…and the Company (‘Company’ includes Employee’s employer, Company’s affiliates, predecessors and successor, owners, managers and related third parties) together voluntarily agree that any and all claims, disputes and controversies between the Company and Employee shall be resolved by binding arbitration pursuant to the provisions of this Agreement, except as otherwise prohibited by law.”  (Magnolia Dec., Ex. C, ¶1.) 

“To the fullest extent permitted by law, this Agreement applies to all claims, disputes and controversies, of any kind whatsoever, between Employee and Company…These claims include, but are not limited to, claims under the California Fair Employment and Housing Act, and any other applicable state or federal laws and regulations, including claims under tort or contract law, statute or equity.”  (Id., Ex. C, ¶2.)

          Defendant establishes the existence of applicable arbitration agreements.  The arbitration provision contained in the 2022 Arbitration Agreement is broad and explicitly applies to “any and all claims, disputes and controversies between the Company and Employee,”  including FEHA claims and tort claims.  (Id.).  Defendant satisfies its burden of establishing the existence of an applicable arbitration agreement.

          Plaintiff fails to raise any grounds “as exist at law or in equity for the revocation of any contract” under 9 U.S.C. §2

          The burden therefore shifts to Plaintiff to raise a defense to the arbitration agreement in law or equity for revocation of any contract, including waiver or grounds for rescission.  (9 U.S.C. §2; CCP §1281.2(a).)  In opposition, Plaintiff argues that the arbitration agreement cannot be enforced because doing so would force Plaintiff to bear costs she would not otherwise have to bear in a court of law.  Specifically, Plaintiff contends she will have to bear the costs of twice the filing fees if arbitration is compelled, filing fees in civil court and filing fees in arbitration.  Plaintiff does not oppose enforcement of the arbitration agreement on any other ground. 

          Plaintiff relies on Armendariz v. Foundation Health Psychcare Services, Inc. (2008) 24 Cal.4th 83, 110-111.  Armendariz addressed whether the costs imposed on employees pursuant to CCP §1284.2 under the parties’ arbitration agreement were cost prohibitive to a FEHA plaintiff.  Section 1284.2 provides “each party to the arbitration shall pay his pro rata share of the expenses and fees of the neutral arbitrator, together with other expenses of the arbitration incurred or approved by the neutral arbitrator…”  (CCP §1281.4.)

          The California Supreme Court held that “when an employer imposes mandatory arbitration as a condition of employment, the arbitration agreement or arbitration process cannot generally require the employee to bear any type of expense that the employee would not be required to bear if he or she were free to bring the action in court.  This rule will ensure that employees brining FEHA claims will not be deterred by costs greater than the usual costs incurred during litigation, costs that are essentially imposed on an employee by the employer.”  Armendariz, supra, 24 Cal.4^th at 110-111. 

          Thus, “imposition of substantial forum fees is contrary to public policy, and is therefore grounds for invalidating or ‘revoking’ an arbitration agreement and denying a petition o compel arbitration under Code of Civil Procedure sections 1281 and 1281.2.”  Id. at 110.  Such issues should be resolved when a court is petitioned to compel arbitration.  Id.

          Plaintiff fails to identify any section of the arbitration agreement that imposes substantial arbitration fees on her that she would not be required to bear in civil litigation.  Plaintiff argues that she will be required to pay a filing fee in arbitral forum.  However, as she acknowledges, she would have to pay a filing fee in a civil action as well. 

          Plaintiff’s argument that she will now have to pay two filing fees, one for this civil action and one for the compelled arbitration, does not qualify as “substantial forum fees” imposed by the arbitration agreement.  Plaintiff’s payment of both filing fees was the result of her decision to file a civil action despite the existence of a mandatory arbitration provision.  It is not the result of the arbitration agreement, nor is the civil filing fee a cost of the arbitral forum. 

          In addition, the 2022 Arbitration Agreement specifically provides, “The Company will pay for all costs unique to arbitration in accordance with applicable law.”  (Magnolia Dec., Ex. C, ¶3.)  Based on this clause, Plaintiff will not be required to bear any type of expense that the employee would not be required to bear if he or she were free to bring the action in court.”  Armendariz, supra, 24 Cal.4^th at 110. 

          Plaintiff fails to establish that the arbitration agreement is subject to revocation under Armendariz.  Plaintiff does not raise any other ground for revocation or rescission.   Defendant Thorson’s Motion to Compel Arbitration is granted.   

          Request to stay action pending completion of arbitration pursuant to CCP §1281.4

          Defendant’s request to stay the action pending completion of arbitration is granted pursuant to CCP §1281.4. 

          Joinder of Defendants Angel Salcido, Karina Patlan, Allynn Magnolia, Hector Melendes and Jose Alberto Loreto

          Defendants Angel Salcido, Karina Patlan, Allynn Magnolia, Hector Melendes and Jose Alberto Loreto’s (“Individual Defendants”) request to join Thorson’s Motion to Compel Arbitration.  Individual Defendants are all employees of Thorson who allegedly participated in the alleged wrongful conduct during their employment. 

          The arbitration provision in the 2022 Arbitration Agreement applies to claims against the “Company” and the “Company’s” “affiliates, predecessors and successor, owners, managers and related third parties.” (Magolia Dec., Ex. A, Ex. C, ¶1.)  Plaintiff’s claims against Individual Defendants, who are all alleged employees of Thorson, are subject to the arbitration agreement.  Plaintiff did not file any opposition to Individual Defendants’ request for joinder. 

          Individual Defendants’ interests are joined with Thorson’s and the request for joinder is granted.  The petition to compel arbitration is granted as to Individual Defendants.