Judge: Joseph Lipner, Case: 23STCV20072, Date: 2024-01-18 Tentative Ruling

Case Number: 23STCV20072    Hearing Date: January 25, 2024    Dept: 72

SUPERIOR COURT OF CALIFORNIA 

COUNTY OF LOS ANGELES 

DEPARTMENT 72 

TENTATIVE RULING  

Defendant TBC, L.P. (“Defendant”) moves for an order compelling Plaintiff Mark Ong to submit his claims against Defendant to binding arbitration.  

Defendant’s motion to compel arbitration is GRANTED. The Court orders Plaintiff to arbitrate his claims against Defendant. Any limitation of remedies regarding attorney’s fees and costs in the arbitration agreement is severed.

The request for a stay is GRANTED.  The litigation is stayed pending completion of the arbitration proceedings.  

The Court sets a status conference re arbitration for October 15, 2024 at 8:30 a.m.  Defendant shall give notice.

Background 

Plaintiff Mark Ong (“Plaintiff”) filed this employment law action on August 22, 2023.  

On September 25, 2023, Plaintiff filed the operative First Amended Complaint (“FAC”) against Parkwest Bicycle Casino, LLC, Park West Casinos, Inc. Grisel Fernandez, The Bike Casino, L.P. and Does 1 to 100, inclusive, asserting the following 18 causes of action: (1) age discrimination in violation of the Fair Employment and Housing Act (“FEHA”); (2) disability discrimination in violation of FEHA; (3) failure to accommodate/engage in a good faith interactive process of others in violation of FEHA; (4) interference with the California Family Rights Act (“CFRA”) rights and retaliation for taking/requesting CFRA leave in violation of FEHA; (5) race/color/national origin/ancestry discrimination in violation of FEHA; (6) hostile work environment in violation of FEHA; (7) retaliation for opposing practices forbidden by FEHA and requesting reasonable accommodation; (8) failure to do everything reasonably necessary to prevent discrimination, harassment, and retaliation from occurring in violation of FEHA; (9) retaliation and interference/violation of kin care; (10) violation of paid sick leave/retaliation for taking/requesting paid sick leave; (11) interference with/violations of Covid-19 supplemental paid sick leave; (12) violation of suitable seating laws; (13) invasion of privacy; (14) wrongful termination/adverse employment action in violation of public policy; (15) negligent hiring and retention; (16) intentional infliction of emotional distress; (17) retaliation for whistleblowing in violation of Labor Code section 1102.5; and (18) violation of Business and Professions Code § 17200, et seq.  

The FAC alleges, among other things, that during Plaintiff’s employment with the defendants, the defendants denied Plaintiff leave of absence for his disabilities, even though the leave was covered by various federal and state laws, and then disciplined Plaintiff when he missed work due to those disabilities. (FAC, ¶¶ 6, 26, 29, 30, 32, 33.) The defendants also denied Plaintiff other accommodations for his disabilities, failed to engage in a good faith interactive process, subjected him to racial and age harassment, invaded his privacy, and subjected him to Labor Code violations. (FAC, ¶¶ 35, 38, 43, 49, 52.)  

On October 27, 2023, Plaintiff amended the FAC to substitute Defendant TBC, L.P. for the defendant sued fictitiously as Doe 1.  

On November 21, 2023, Defendant TBC, L.P. (“Defendant”) filed the instant motion to compel arbitration and stay proceedings.  

On November 27, 2023, Plaintiff filed his opposition to the motion.  

          No reply has been filed.

Legal Standard 

Both the California Arbitration Act (“CAA”) and the Federal Arbitration Act (“FAA”) “are driven by a strong public policy of enforcing arbitration agreements.” (Weiler v. Marcus & Millichap Real Estate Investment Services, Inc. (2018) 22 Cal.App.5th 970, 979.) “Thus, a court generally must compel arbitration in accordance with the agreement when requested by one of the parties. (Code Civ. Proc., § 1281.2; 9 U.S.C. § 2.)” (Ibid.)  

“The FAA applies to arbitration clauses in contracts involving interstate commerce and ‘was designed “to overrule the judiciary’s long-standing refusal to enforce agreements to arbitrate,” [citation], and to place such agreements “‘upon the same footing as other contracts.’”’ [Citation.]” (Rodriguez v. American Technologies, Inc. (2006) 136 Cal.App.4th 1110, 1117 (“Rodriguez”).)  

Section 2 of the FAA states that “[a] written provision in ... a contract ... to settle by arbitration a controversy thereafter arising out of such contract ... 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.) 

The CAA “echoing the FAA’s language and its policy favoring arbitration, likewise provides that a written arbitration agreement ‘is valid, enforceable and irrevocable, save upon such grounds as exist for the revocation of any contract.’” (Rodriguez, supra, 136 Cal.App.4th at p. 1117 [discussing Code of Civil Procedure section 1281].)  

“The court’s role under the [FAA] is … limited to determining (1) whether a valid agreement to arbitrate exists and, if it does, (2) whether the agreement encompasses the dispute at issue.” (Chiron Corp. v. Ortho Diagnostic Systems, Inc. (9th Cir. 2000) 207 F.3d 1126, 1130.) “If the response is affirmative on both counts, then the Act requires the court to enforce the arbitration agreement in accordance with its terms.” (Ibid.)  

Even when the FAA applies, “[i]n determining the rights of parties to enforce an arbitration agreement within the FAA’s scope, courts apply state contract law while giving due regard to the federal policy favoring arbitration.” (Pinnacle Museum Tower Assn. v. Pinnacle Market Development (US), LLC (2012) 55 Cal.4th 223, 236.) 

Under California law, “[t]he petitioner [seeking to compel arbitration] 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 v. Moss Bros. Auto Group, Inc. (2014) 232 Cal.App.4th 836, 842; see also Knutson v. Sirius XM Radio Inc. (9th Cir. 2014) 771 F.3d 559, 565 [discussing an arbitration agreement governed by the FAA and stating that “the party seeking to compel arbitration, has the burden of proving the existence of an agreement to arbitrate by a preponderance of the evidence”].)  

“The trial court sits as the trier of fact, weighing all the affidavits, declarations, and other documentary evidence, and any oral testimony the court may receive at its discretion, to reach a final determination.” (Ruiz v. Moss Bros. Auto Group, Inc., supra, 232 Cal.App.4th at p. 842.) 

Discussion 

Existence of a Valid Agreement to Arbitrate  

“The moving party ‘can meet its initial burden by attaching to the [motion or] petition a copy of the arbitration agreement purporting to bear the [opposing party’s] signature.’ [Citation.] Alternatively, the moving party can meet its burden by setting forth the agreement’s provisions in the motion. [Citations.] For this step, ‘it is not necessary to follow the normal procedures of document authentication.’ [Citation.] If the moving party meets its initial prima facie burden and the opposing party does not dispute the existence of the arbitration agreement, then nothing more is required for the moving party to meet its burden of persuasion.” (Gamboa v. Northeast Community Clinic (2021) 72 Cal.App.5th 158, 165 (“Gamboa”.) 

Here, Defendants have submitted a copy of the arbitration agreement purporting to bear the Plaintiff’s signature.  Plaintiff does not deny that an arbitration agreement exists.  Nor does Plaintiff deny that it covers the allegations in the complaint.  Instead, Plaintiff argues that the arbitration agreement is unenforceable.

Accordingly, Defendant has met its initial burden.  The Court proceeds to discuss Plaintiff’s enforceability arguments. 

Unconscionability  

Plaintiff argues that the arbitration agreement is unenforceable because it is unconscionable and does not comply with Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83, 98 (“Armendariz”).) 

“The burden of proving unconscionability rests upon the party asserting it.” (OTO, L.L.C. v. Kho (2019) 8 Cal.5th 111, 126.)  

“‘[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.” (Armendariz, supra, 24 Cal.4th at p. 114 [citations omitted].)   

“As a matter of general contract law, California courts require both procedural and substantive unconscionability to invalidate a contract.” (Torrecillas v. Fitness International, LLC (2020) 52 Cal.App.5th 485, 492 (“Torrecillas”).) California courts “apply a sliding scale, meaning if one of these elements is present to only a lesser degree, then more evidence of the other element is required to establish overall unconscionability. In other words, if there is little of one, there must be a lot of the other.” (Ibid.)      

(a)  Procedural Unconscionability 

Procedural unconscionability concerns the manner in which the contract was negotiated and the parties’ circumstances at that time. It focuses on the factors of oppression or surprise. (Kinney v. United Healthcare Servs. (1999) 70 Cal.App.4th 1322, 1329.)  

“[P]rocedural unconscionability requires either oppression or surprise.” (The McCaffrey Group, Inc. v. Superior Court (2014) 224 Cal.App.4th 1330, 1349.) 

Surprise occurs “where the allegedly unconscionable provision is hidden within a prolix printed form.” (Pinnacle, supra, 55 Cal.4th at p. 247.)  

“Oppression generally takes the form of a contract of adhesion, which, imposed and drafted by the party of superior bargaining strength, relegates to the subscribing party only the opportunity to adhere to the contract or reject it.” (Carmona v. Lincoln Millennium Car Wash, Inc. (2014) 226 Cal.App.4th 74, 84 [quotations and citations omitted].)  

“The circumstances relevant to establishing oppression include, but are not limited to (1) the amount of time the party is given to consider the proposed contract; (2) the amount and type of pressure exerted on the party to sign the proposed contract; (3) the length of the proposed contract and the length and complexity of the challenged provision; (4) the education and experience of the party; and (5) whether the party’s review of the proposed contract was aided by an attorney.” (Swain v. LaserAway Medical Group, Inc. (2020) 57 Cal.App.5th 59, 69, citation and quotations omitted.)  

Here, Plaintiff cannot establish surprise because there is no evidence that the arbitration agreement was hidden within a prolix printed form; it was a standalone document with legible font.  

As for oppression, Plaintiff testifies Defendant forced the arbitration agreement on him, refused to explain it to him, told him he had to sign the agreement right then and there to keep his job and could not negotiate it, and did not give him time to review the agreement. (Ong Decl., ¶¶ 4-9.) 

Although Plaintiff’s declaration establishes some degree of oppression, the Court finds that the degree of oppression was not high based on the following. Plaintiff provides that Defendant did not explain to him what the agreement was, but at the top of the agreement it is titled “Employment At-Will and Arbitration Agreement.” The agreement is a standalone document that is only a little more than one page long. It consists of only three provisions which are titled in bold and include few subsections which are numbered. The provisions and subsections and separated by a space, and the font is legible. Also, Plaintiff presents no evidence that he attempted to negotiate the agreement; nor does Plaintiff present any evidence that he attempted to take more time to review the agreement but was not allowed to.

For those reasons, the Court finds that Plaintiff has shown low procedural unconscionability.  

Accordingly, Plaintiff would have to show a high level of substantive unconscionability to invalidate the entire arbitration agreement.  

(b)  Substantive Unconscionability  

“‘Substantive unconscionability pertains to the fairness of an agreement’s actual terms and to assessments of whether they are overly harsh or one-sided. [Citations.] A contract term is not substantively unconscionable when it merely gives one side a greater benefit; rather, the term must be “so one-sided as to ‘shock the conscience.’”’” (Carmona, supra, 226 Cal.App.4th at p. 85.) “‘“[T]he paramount consideration in assessing [substantive] unconscionability is mutuality.”’” (Ibid.) 

In Armendariz, the California Supreme Court held that, for the enforcement of a mandatory employment arbitration agreement to be lawful, it must satisfy the following five minimum requirements: “(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.” (Armendariz, supra, 24 Cal.4th at p. 102.)  

1.     Limitation of Remedies: Attorney’s Fees and Costs

Plaintiff argues that the agreement to arbitrate is substantively unconscionable because it limits Plaintiff’s remedies regarding attorney fees.  Specifically, Plaintiff argues that agreement requires Plaintiff pay for his own attorney fees, but if Plaintiff were to prevail on his FEHA claims, then FEHA permits him to recover his attorney’s fees and costs.  (Opposition, pp. 12:13-26; see Stephens Decl., Ex. “A,” p. 1, ¶ 2, [“…[plaintiff] will…be responsible for [his] own attorney’s fees and costs.”].)

However, it is by no means clear that Plaintiff is correctly interpreting this clause.  The attorney fee provision states:  “The company and [Plaintiff] will each be responsible for our own attorney’s fees and costs.”  ((Stephens Decl., Ex. “A,” p. 1, ¶ 2.)  This is hardly a clear statement that no fees and costs are recoverable under FEHA.  Rather, it may set a baseline rule; it does not expressly provide for attorney’s fees from the outset but does not by its terms forbid recovery of attorney’s fees under FEHA.

To the extent the term is interpreted to forbid the recovery of attorney’s fees under FEHA, the Court agrees with Plaintiff that such a term is unconscionable. Under Armendariz, where a party seeks to arbitrate nonwaivable statutory civil rights in the workplace, such as the FEHA claims that are involved here, there are five minimum requirements for the lawful arbitration of such rights pursuant to a mandatory employment arbitration agreement including that the arbitration agreement “provides for all of the types of relief that would otherwise be available in court.”

Thus, the attorney’s fees provision is unenforceable to the extent it purports to preclude the award of attorney’s fees to Plaintiff under FEHA.  However, as explained below, the Court in any event severs such an unenforceable term from the remainder of the arbitration provision.

2.     Mutuality 

Plaintiff also argues that the agreement to arbitrate is unconscionable because it requires Plaintiff to arbitrate his claims against Defendant including Defendant’s “agents, attorneys, insurers, shareholders, partners, officers, directors, members, representatives, investors, administrators, and employees in any capacity,” but does not require those affiliates to arbitrate their claims against Plaintiff.  (Opposition, pp. 13:12-17, see Stephens Decl., Ex. “A,” p. 1, ¶ 2.)

The Court disagrees. The Arbitration Agreement clearly states that both parties must arbitrate any issue related to Plaintiff’s employment. (Stephens Decl., Exhibit A, p. 1, ¶¶ 2-3 [“Both the Company and [Plaintiff] agree that any claim, dispute, and/or controversy that either [Plaintiff] may have against the Company (or any of its current, former, and future direct or indirect parent companies, subsidiaries, affiliates, divisions, predecessors, successors, assigns, and employee benefit or health plans including The Bicycle Casino, Inc., and each of their agents, attorneys, insurers, shareholders, partners, officers, directors, members, representatives, investors, administrators, and employees in any capacity) or that the Company may have against [Plaintiff], arising from, related to, or having any relationship or connection whatsoever with [Plaintiff] seeking employment with, employment by, or other association with the Company, shall be submitted to and determined exclusively by binding arbitration…”].)

3.     Infinite Scope

Plaintiff also argues that the agreement to arbitrate is unconscionable because it requires Plaintiff and Defendant to arbitrate all claims “arising from, related to, or having any relationship or connection whatsoever with [Plaintiff] seeking employment with, employment by, or other association with the Company…” (Opposition, pp. 14:7-10, See Stephens Decl., Ex. “A,” p. 1, ¶ 2.)

The Court disagrees. Each of Plaintiff’s claims in this action do arise out of his employment with defendants. As such, the practical applicability of this argument is tangential. Also, Plaintiff cites several cases that are inapposite. Plaintiff first relies on Revitch v. DIRECTV, LLC  (9th Cir. 2020) 977 F.3d 713, 717 in which the U.S. Court of Appeals found an agreement to arbitrate did not exist between the Plaintiff and a third party, because the third party did not qualify as an “affiliate” of the signatory party to the agreement, because it only became an affiliate years after the parties entered into their agreement; the language requiring the plaintiff to arbitrate claims with then-unknown corporate entities could not bind the plaintiff. Plaintiff then relies on Smith v. Steinkamp (7th Cir. 2003) 318 F.3d 775, 777, which stands for the proposition that language in an arbitration agreement for one loan requiring arbitration of “all disputes” could not be extended to a future loan between the parties.  This is not analogous to the issues here. The third case that Plaintiff relies on is the only California case, and it is unpublished and uncitable. (Cal. Rules of Court, Rule 8.1115.)

4.     PAGA Waiver

Plaintiff lastly argues that the agreement to arbitrate is unconscionable because it contains the following PAGA waiver: “[Plaintiff] and the Company further agree that there will be no right or authority for any dispute to be brought, heard, or arbitrated as a private attorney general representative action ("Private Attorney General Waiver")." (Opposition, pp. 16:2-5, See Stephens Decl., Ex. “A,” p. 1, ¶ 3). 

The Court disagrees. The agreement to arbitrate states, “[Plaintiff] and the Company agree that this Arbitration Provision requires all disputes between the Company and [Plaintiff] (except as provided in section 2 above) to be resolved only by an arbitrator through final and binding arbitration on an individual basis only and not by way of court or jury trial, or by way of class or collective action.” (Stephens Decl., Ex. “A,” p. 1, ¶ 3). Consequently, in any theoretical PAGA case, Plaintiff’s individual PAGA claims would proceed in arbitration.

This outcome is allowable because of a recent California Supreme Court decision. Adolph v. Uber Techs., Inc. (2023) 14 Cal.5th 1104 held that when a Plaintiff’s individual PAGA claims are compelled to arbitration, the Plaintiff’s representative/non-individual PAGA claims may still be stayed pending arbitration and litigated in court. Arbitrating the individual claims does not strip a plaintiff of standing to litigate non-individual claims in court. 

Moreover, this is not a PAGA case.  Accordingly, Plaintiff’s argument has limited relevance to the issues here.

5.     Whether the Unconscionable Provisions are Severable  

“In the context of severing unconscionable provisions from an arbitration agreement, ‘the strong legislative and judicial preference is to sever the offending term and enforce the balance of the agreement: Although “the statute appears to give a trial court some discretion as to whether to sever or restrict the unconscionable provision or whether to refuse to enforce the entire agreement[,] ... it also appears to contemplate the latter course only when an agreement is ‘permeated’ by unconscionability.” [Citation.]’ [Citations.]” (Alberto v. Cambrian Homecare (2023) 91 Cal.App.5th 482, 495.) “One factor weighing against severance is when ‘the arbitration agreement contains more than one unlawful provision.’ [Citation.]” (Id. at pp. 495–496; Armendariz, supra, 24 Cal.4th at p. 126 [“Civil Code section 1670.5 makes clear … that an arbitration agreement permeated by unconscionability, or one that contains unconscionable aspects that cannot be cured by severance, restriction, or duly authorized reformation, should not be enforced”].) 

Here, the Court has found a low level of procedural unconscionability and the limitation of remedies regarding attorney’s fees and costs in the agreement substantively unconscionable.  

However, the attorney’s fees and costs requirement can be severed without impacting the rest of the agreement.

Therefore, the Court does not find that the agreement to arbitrate is permeated with unconscionability and finds it proper to compel Plaintiff’s claims to arbitration.  

Request for Stay 

Defendant asks the Court to stay or dismiss this case should it grant their request to compel Plaintiff’s claims to arbitration. (Motion, p. 14:3-6.) The request for stay is granted.