Judge: Joseph Lipner, Case: 24STCV01850, Date: 2024-03-21 Tentative Ruling

Case Number: 24STCV01850    Hearing Date: March 21, 2024    Dept: 72

SUPERIOR COURT OF CALIFORNIA

COUNTY OF LOS ANGELES

DEPARTMENT 72

TENTATIVE RULING

Defendant California Commerce Club, Inc. (“Defendant”) moves the Court for an order compelling Plaintiff Moe Mostashari (“Plaintiff”) to arbitrate his claims against Defendant and staying this action.

The Court GRANTS Defendant’s motion to compel arbitration and STAYS this action pending the outcome of arbitration.  The Court sets a status conference re arbitration for December 11, 2024 at 8:30 a.m.

Background

            This is an employment case. Plaintiff was employed by Defendant for approximately 38 years until his termination. Plaintiff alleges that Defendant discriminated against him, harassed him, denied him pay, and eventually terminated him in retaliation for whistleblowing.

            Plaintiff filed this action on January 24, 2024. The operative complaint is now the First Amended Complaint (“FAC”), which raises claims for (1) retaliation under Labor Code, section 1102.5; (2) retaliation under FEHA; (3) wrongful termination; (4) breach of contract; (5) breach of the covenant of good faith and fair dealing; (6) discrimination (race and age); (7) discrimination (failure to fairly compensate and promote); (8) harassment; (9) failure to prevent harassment and retaliation; (10) fraudulent concealment; (11) intentional misrepresentation; (12) intentional infliction of emotional distress (“IIED”) (13) negligence; (14) negligent misrepresentation; and (15) violation of Business and Professions Code, section 17200 et seq.

            Defendant moved to compel arbitration on February 6, 2024. Plaintiff filed an opposition and Defendant filed a reply.

Discussion

The Arbitration Provisions

The parties executed two arbitration agreements during his employment: one in 2009 as part of his general employment contract (the “Employment Agreement”) and one in 2015 (the “2015 Agreement”).

The 2015 Agreement provides that all claims relating to Plaintiff’s employment with Defendant must be submitted to binding arbitration with JAMS.

The Employee Agreement provides that any controversy that Plaintiff or Defendant may assert against the other shall be subject to binding arbitration with JAMS.

Applicable Agreement

Plaintiff argues that it is the Employment Agreement, and not the 2015 Agreement, that is the applicable agreement because the Employment Agreement provided that it was fully integrated could not be modified except in writing. However, the 2015 Agreement is a contract in writing between the parties, and thus functions as a modification of the parties’ employment agreement.

Unconscionability

“‘The prevailing view is that [procedural and substantive unconscionability] must both be present in order for a court to exercise its discretion to refuse to enforce a contract or clause under the doctrine of unconscionability.’ [Citation] But they need not be present in the same degree. “Essentially a sliding scale is invoked which disregards the regularity of the procedural process of the contract formation, that creates the terms, in proportion to the greater harshness or unreasonableness of the substantive terms themselves.” [Citation] In other words, the 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.” (Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83, 114 (Armendariz).)

Substantive Unconscionability

Plaintiff argues that the 2015 Agreement is substantively unconscionable because it requires Plaintiff to pay some costs associated with arbitration.

“[W]hen 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.” (Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83, 110-111.)

Here, both agreements provide that Plaintiff shall not be required to pay any costs in excess of what he would have to pay in court, and that those excesses shall be paid by Defendant.

Plaintiff argues that the agreements only subject claims that would be brought by an employee, and not an employer, to arbitration. However, the agreements do not list those claims as a limitations, but rather as inclusions. Thus, the general applicability to disputes still applies and covers claims the employer could bring.

Plaintiff argues that the 2009 Employee Agreement is unconscionable because it contains a clause for prevailing party attorney’s fees, which could grant Defendant attorney’s fees against a plaintiff in broader circumstances than permitted by FEHA. However, because the 2015 Agreement modified the Employee Agreement, this clause is no longer in place.

Because the agreement is not substantively unconscionable, Plaintiff cannot show general unconscionability, which requires a showing of both procedural and substantive unconscionability.

            The Court therefore grants Defendant’s motion to compel arbitration and stays this action pending the outcome of arbitration.