Judge: Joseph Lipner, Case: 24STCV20525, Date: 2025-03-06 Tentative Ruling
Case Number: 24STCV20525 Hearing Date: March 6, 2025 Dept: 72
SUPERIOR COURT OF CALIFORNIA
COUNTY OF LOS ANGELES
DEPARTMENT 72
TENTATIVE
RULING
|
CHARLES WILLIS, Plaintiff, v. COVENANT HOUSE CALIFORNIA, Defendant. |
Case No:
24STCV20525 Hearing Date: March 6, 2025 Calendar Number: 5 |
Defendant Covenant House California (“Defendant”) moves for
an order compelling Plaintiff Charles Willis (“Plaintiff”) to arbitrate his
claims against Defendant and staying this action pending the completion of
arbitration.
The Court GRANTS the motion to compel arbitration and STAYS
this action pending the completion of arbitration. The Court sets a status conference re
arbitration for September 14, 2026 at 8:30 a.m.
This is an employment case.
Plaintiff worked for Defendant as a Youth Safety Advocate. Plaintiff
was hired on March 3, 2022. Plaintiff alleges that he was subjected to
discrimination and retaliation during his employment. Plaintiff was terminated
on December 16, 2022.
Plaintiff filed this action on August 14, 2024, raising
claims for (1) disability/perceived disability discrimination; (2) FMLA/CFRA
discrimination; (3) retaliation under Government Code, section 12940, subd.
(h); (4) retaliation under Government Code, section 12945.2, subd. (k); (5)
failure to prevent discrimination and retaliation; (6) retaliation under Labor
Code, sections 98.6 and 1102.5; (7) failure to provide reasonable
accommodation; (8) failure to engage in good faith interactive process; (9) unfair
business practices; (10) wrongful constructive termination; and (11) wrongful
termination.
On January 29, 2025, Defendant moved to compel arbitration.
Plaintiff filed an opposition and Defendant filed a reply.
Under both the
Federal Arbitration Act (“FAA”) and California law, arbitration agreements are
valid, irrevocable, and enforceable, except on such grounds that exist at law
or equity for voiding a contract. (Winter
v. Window Fashions Professions, Inc. (2008) 166 Cal.App.4th 943, 947.)
The party moving to
compel arbitration must establish the existence of a written arbitration
agreement between the parties. (Code of Civ. Proc., § 1281.2.) In ruling on a
motion to compel arbitration, the court must first determine whether the
parties actually agreed to arbitrate the dispute, and general principles of
California contract law help guide the court in making this determination. (Mendez v. Mid-Wilshire Health Care Center
(2013) 220 Cal.App.4th 534, 541.)
“A petition to
compel arbitration or to stay proceedings pursuant to Code of Civil Procedure
sections 1281.2 and 1281.4 must state, in addition to other required
allegations, the provisions of the written agreement and the paragraph that
provides for arbitration. The provisions must be stated verbatim or a copy must
be physically or electronically attached to the petition and incorporated by
reference” (Cal. Rules of Court, rule 3.1330.) “With respect to the moving
party's burden to provide evidence of the existence of an
agreement to arbitrate, it is generally sufficient for that party to present a
copy of the contract to the court. Once such a document is presented to the
court, the burden shifts to the party opposing the motion to compel, who may
present any challenges to the enforcement of the agreement and evidence in
support of those challenges.” (Baker v.
Italian Maple Holdings, LLC (2017) 13 Cal.App.5th 1152, 1160 [internal
citations omitted].)
Defendant retains the services of TriNet HR III, LLC for
certain administrative services, including employee onboarding. (Thompson Decl.
¶¶ 3-4.) As part of the onboarding process that TriNet conducts for Defendant’s
employee’s, Defendant’s employees accept TriNet’s Terms and Conditions
Agreement (“TCA”), which includes a Dispute Resolution Protocol (“DRP”) that
mandates arbitration pursuant to the JAMS rules of any dispute arising out of
or relating to the employee’s employment with their employer – in this case,
Defendant. (Thompson Decl. ¶ 10, Ex. A, § 8.)
TriNet’s system requires employees to make a unique,
confidential username and password in order to access the system. (Thompson
Decl. ¶¶ 7-8.)
On May 29, 2022, Plaintiff used his unique username and
password to log into TriNet’s online system and acknowledge and accept the TCA.
(Thompson Decl. ¶ 15.)
Plaintiff does not dispute that he accepted the TCA and, by
extent, the DRP.
Plaintiff argues that the arbitration agreement in the DRP
is unenforceable because it is unconscionable.
“ ‘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).)
“ ‘Procedural unconscionability’ concerns the manner in
which the contract was negotiated and the circumstances of the parties at that
time. It focuses on factors of oppression and surprise. The oppression
component arises from an inequality of bargaining power of the parties to the
contract and an absence of real negotiation or a meaningful choice on the part
of the weaker party. The component of surprise arises when the challenged terms
are ‘hidden in a prolix printed form drafted by the party seeking to enforce
them.’” (Nyulassy v. Lockheed Martin Corp. (2004) 120 Cal.App.4th 1267,
1281.)
Where a contract of adhesion includes the unequal bargaining
power of contracting parties, with the weaker party's inability to negotiate,
this may indicate procedural unconscionability in the form of oppression. (See Thompson
v. Toll Dublin, LLC (2008) 165 Cal.App.4th 1360, 1372.) “The term ‘adhesion
contract’ refers to standardized contract forms offered to consumers of goods
and services on essentially a ‘take it or leave it’ basis without affording the
consumer a realistic opportunity to bargain and under such conditions that the
consumer cannot obtain the desired product or services except by acquiescing in
the form contract. [Citations.] The distinctive feature of a contract of
adhesion is that the weaker party has no realistic choice as to its terms.
[Citations.]” (Wheeler v. St. Joseph Hospital (1976) 63 Cal.App.3d 345,
356.)
“[A] compulsory pre-dispute arbitration agreement is not
rendered unenforceable just because it is required as a condition of employment
or offered on a ‘take it or leave it’ basis.” (Lagatree v. Luce, Forward,
Hamilton & Scripps (1999) 74 Cal. App. 4th 1105, 1127.) However, the
fact that an arbitration agreement is mandatory for employment may be a factor
in determining that it is procedurally unconscionable. (See, e.g., Trivedi
v. Curexo Technology Corp. (2010) 189 Cal.App.4th 387, 393; Armendariz,
supra, 24 Cal.4th at pp. 114-115.) Where a contract of adhesion includes
the unequal bargaining power of contracting parties, with the weaker party's
inability to negotiate, this may indicate procedural unconscionability in the
form of oppression. (See Thompson v. Toll Dublin, LLC (2008) 165
Cal.App.4th 1360, 1372.)
“Ordinarily when a person with capacity of reading and
understanding an instrument signs it, he may not, in the absence of fraud,
imposition or excusable neglect, avoid its terms on the ground he failed to
read it before signing it.” (Ramirez v. Superior Court¿(1980) 103
Cal.App.3d 746, 754 [internal quotation marks omitted].)
Defendant admits in its motion that it was mandatory that
Plaintiff accept the TCA and DRP as part of Plaintiff’s hiring process. The DRP
is thus a contract of adhesion.
Furthermore, Defendant failed to provide a copy of the JAMS
rules or an internet link to the rules to Plaintiff.
Plaintiff has therefore shown a significant degree of
procedural unconscionability.
Substantive unconscionability focuses on the actual terms of
the agreement and evaluates whether they create overly harsh or one-sided
results as to shock the conscience. (Suh v. Superior Court (2010) 181
Cal.App.4th 1504, 1515.) The paramount consideration in assessing substantive
unconscionability is mutuality. (Carmona, supra, 226 Cal.App.4th
at p. 85.)
In Armendariz, the California Supreme Court held that
a mandatory pre-dispute arbitration agreement requiring arbitration of
unwaivable statutory rights must provide for the following: (1) a neutral
arbitrator; (2) adequate discovery; (3) availability of all types of relief
that are otherwise available in court; (4) a written decision that will permit
a limited form of judicial review; and (5) a provision that the employer must
pay for the arbitrator’s fees and all costs unique to arbitration. (Armendariz,
supra, 24 Cal.4th at p. 102.)
Plaintiff argues that the jury trial waiver is substantively
unconscionable because it violates Code of Civil Procedure, section 631, which
sets out the specific ways in which a party may waive trial by jury.
“Section 631, however, presupposes a pending action, and
relates only to the manner in which a party to such action can waive his right
to demand a jury trial instead of a court trial. It does not purport to prevent
parties from avoiding jury trial by not submitting their controversy to a court
of law in the first instance. Indeed it has always been understood without
question that parties could eschew jury trial either by settling the underlying
controversy, or by agreeing to a method of resolving that controversy, such as
arbitration, which does not invoke a judicial forum. Consequently when the Legislature
enacted the specific language of the California Arbitration Act (Code
Civ.Proc., s 1280 et seq.) to govern the enforcement of arbitration agreements,
it did not require that such agreements conform to section 631.” (Madden v.
Kaiser Foundation Hospitals (1976) 17 Cal.3d 699, 713.)
Plaintiff argues that the DRP does not provide for judicial
review of the arbitration award.
The agreement at issue states in relevant part: “The
arbitrator may award any
remedy warranted under applicable
law and will provide a written opinion including reasoned explanations for the
decision. The decision of the arbitrator is final and not subject to appeal,
except that, to the extent allowed or required by applicable law, the award may
be confirmed, corrected, modified, or vacated by a court of competent
jurisdiction based on the limited grounds set forth in the FAA, and a court of
competent jurisdiction will have the authority to enter judgment based on a
final arbitration award.” (Thompson Decl., Ex. A, § 8(e).)
The Court in Armendariz was not faced with a petition
to confirm an arbitration award, and therefore had no occasion to articulate
precisely what standard of judicial review is necessary. (Armendariz, supra,
24 Cal.4th at p. 107.) The Court only stated that “in order for such judicial
review to be successfully accomplished, an arbitrator in a FEHA case must issue
a written arbitration decision that will reveal, however briefly, the essential
findings and conclusions on which the award is based.” (Ibid.)
The DRP meets this standard because it requires a written
opinion and permits judicial review.
The Court therefore finds that Plaintiff has not shown
substantive unconscionability. Because Plaintiff has not shown substantive
unconscionability, unconscionability is not a viable defense to enforcement
here.
Plaintiff argues that Defendant, which is not a signatory to
the DRP, is not a valid third-party beneficiary of the DRP.
For a third party to be able to enforce a contract, three
factors must be established: (1) the third party would in fact benefit from the
contract; (2) a motivating purpose of the contracting parties was to provide a
benefit to the third party; and (3) permitting the third party to bring its own
breach of contract action against a contracting party is consistent with the
objectives of the contract and reasonable expectations of the third parties. (Goonewardene
v. ADP, LLC¿(2019) 6 Cal.5th 817, 830.)
Whether the third party is an intended beneficiary or merely
an incidental beneficiary involves construction of the intention of the
parties, gathered from reading the contract as a whole in light of the
circumstances under which it was entered. (Cione v. Foresters Equity
Services, Inc. (1997) 58 Cal.App.4th 625, 636.) It is not necessary that
the beneficiary be named or identified as an individual. (Ronay Family
Limited Partnership v. Tweed (2013) 216 Cal.App.4th 830, 838.)
Where the language of a contract is clear and explicit, and
does not involve an absurdity, the plain meaning governs. (West Pueblo
Partners, LLC v. Stone Brewing Co., LLC (2023) 90 Cal.App.5th 1179, 1185, citing
Civ. Code, § 1638.)
Here, the plain meaning supports a finding that Defendant is
a third-party beneficiary. Indeed, the
agreement states explicitly that plaintiff’s employer (“your company”) is a
third party beneficiary. (Thompson Decl. ¶ 10, Ex. A § 8(a).) The agreement further meets all the
requirements for Defendant to be a third party beneficiary. First, Defendant would benefit from the
contract because it seeks to compel arbitration. Second, a motivating purpose
of the contract was Defendant’s benefit, because TriNet presented the TCA and
DRP to Plaintiff as part of TriNet’s administrative services to Defendant and
because the DRP specifically states that its procedures will apply to disputes
with the signatory’s employer – Defendant. Third, permitting Defendant to invoke
the arbitration agreement is consistent with the TCA and DRP’s objectives
because, again, the DRP states that it applies to disputes between the
signatory and the signatory’s employer who retained TriNet.
The Court therefore finds that Defendant is a third-party
beneficiary of the TCA and DRP and may invoke the arbitration clause.
The Court therefore grants the motion to compel arbitration.