Judge: Kerry Bensinger, Case: 23STCV24224, Date: 2023-12-12 Tentative Ruling

Case Number: 23STCV24224    Hearing Date: April 2, 2024    Dept: 31

Tentative Ruling

Judge Kerry Bensinger, Department 31

HEARING DATE:     April 2, 2024                                      TRIAL DATE:  March 3, 2025

CASE:                         Samuel Wineman v. AMC Networks Inc., et al.

CASE NO.:                 23STCV24224

MOTION TO COMPEL ARBITRATION

MOTION TO FILE DEFENDANTS’ MOTION

TO COMPEL ARBITRATION UNDER SEAL

MOVING PARTY:               Defendants AMC Networks, Inc., AMC Network Entertainment LLC, and Shudder LLC

RESPONDING PARTY:     Plaintiff Samuel Wineman

I.          MOTION TO COMPEL ARBITRATION

A.    Factual and Procedural Background

Plaintiff Samuel Wineman (“Wineman” or “Plaintiff”) works in the entertainment industry.  From 2020 to 2022, Wineman was employed by Stage 3 Productions (“Stage 3”) as Writer and Director of the feature length documentary Queer for Fear.  The employment relationship between Wineman and Stage 3 is evidenced by a “Writer/Director Agreement” (hereafter, the “Agreement”).  The Agreement contains an arbitration provision and permits Stage 3 to assign the Agreement to any parent, subsidiary, or affiliated corporation.

Steakhaus Productions, Inc. (“Steakhaus”) served as executive producer of the Queer for Fear project.  While working on the project, Plaintiff regularly interacted with Steakhaus managing agent Bryan Fuller (“Fuller”).  Wineman alleges that Fuller cultivated and maintained a hostile work environment, which included harassment, discrimination, sexual harassment, sexual assault and retaliation.  Specifically, Wineman alleges that in May and June of 2021 Fuller sexually assaulted him  several times throughout the project by pressing his penis against Plaintiff’s buttocks.  Plaintiff further alleges that Fuller frequently discussed his penis, masturbation, adult/child dynamics, and grooming; inappropriately replied to text messages with references to the foregoing; harassed Wineman by leaving out personal lubricant and balled up tissues on his work desk so that when Wineman visited, Wineman would know Fuller had been masturbating, among numerous other allegations. 

In June and July of 2021, Plaintiff reported Fuller’s harassment to Stacy Rallison (“Rallison”)^[1] and Nick Lazo (a Shudder, LLC employee), among others.  Despite witnessing Fuller’s harassment, Rallison enabled Fuller’s conduct and ignored Wineman’s concerns.  In August 2021, after reporting Fuller’s abuse to Lazo, Rallison removed Wineman from the Queer for Fear project.

Assignment and Relevant Corporate Structure

Stage 3 is a subsidiary of Digital Store, LLC (“Digital Store”).  On June 17, 2019, Stage 3 and Digital Store entered into a Production Services Agreement regarding the production of the Queer for Fear project.  The Production Services Agreement has a termination and takeover clause which enables Digital Store to terminate the Production Services Agreement with or without cause and to take over and complete production and delivery of the project.  On September 26, 2021, Stage 3 and Digital Store executed a Termination & Takeover Agreement.  In relevant part, Stage 3 assigned to Digital Store all of Stage 3’s executory obligations due and owing in connection with the project.  Shudder, LLC (“Shudder”) is a wholly-owned subsidiary of Digital Store.  Shudder and Digital Store are subsidiaries of AMC Networks, Inc. 

On May 25, 2023, Wineman filed two complaints against AMC Networks, Inc., and Shudder Network, c/o AMC Networks, Inc. with the CRD.  On the same day, the CRD issued Wineman right to sue letters.[2]

On October 4, 2023, Wineman, filed a complaint against AMC Networks, Inc., AMC Network Entertainment, LLC, Shudder, Steakhaus, and Fuller for: (1) Quid Pro Quo Sexual Harassment, (2) Retaliation in Violation of Public Policy, (3) Intentional Infliction of Emotional Distress, (4) Negligent Infliction of Emotional Distress, (5) Harassment and Hostile Work Environment in Violation of FEHA; (6) Failure to Prevent Harassment, Discrimination, and Retaliation in Violation of FEHA, (7) Negligent Hiring, Supervision, and Retention, and (8) Vicarious Liability.

On December 12, 2023, AMC Networks, Inc., AMC Network Entertainment, LLC, and Shudder (collectively, “AMC Defendants”) filed an Answer to the Complaint.  The Answer asserts arbitration as an affirmative defense.

            On March 6, 2024, AMC Defendants filed this Motion to Compel Arbitration and Stay or Dismiss Proceedings.

            Plaintiff filed an Opposition.  AMC Defendants replied.

B.     Legal Standard

            California law incorporates many of the basic policy objectives contained in the Federal Arbitration Act, including a presumption in favor of arbitrability. (Engalla v. Permanente Medical Group, Inc. (1997) 15 Cal.4th 951, 971-72.) Under both the 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 petitioner bears the burden of proving the existence of a valid arbitration agreement by a preponderance of the evidence, the party opposing the petition then bears the burden of proving by a preponderance of the evidence any fact necessary to demonstrate that there should be no enforcement of the agreement, and the trial court sits as a trier of fact to reach a final determination on the issue. (Rosenthal v. Great Western Financial Securities Corp. (1996) 14 Cal.4th 394, 413.)  Pursuant to Code of Civil Procedure section 1281.2, the Court can compel parties to an arbitration agreement to arbitrate their dispute.

C.     Judicial Notice

            Plaintiff requests judicial notice of (1) Public Law 117-90, Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act (hereafter, the “Act”), (2) the California Court of Appeal, Second District, Division 5, Kader v. Southern California Medical Center, Inc. (2024) 99 Cal.App.5th 214, 317 Cal.Rptr.3d 682, and (3) the California Court of Appeal, Fourth District, Division 3, Murrey v. Superior Court (2023) 87 Cal.App.5th 1223, 304 Cal.Rptr.3d 439.

            The unopposed request is GRANTED.  (See Evid. Code, § 452, subds. (a), (b).)

D.    Discussion

            There is no dispute Plaintiff signed an agreement with an arbitration provision covering Plaintiff’s claims.  Further, there is no dispute that New York law and the Federal Arbitration Act (FAA) governs.[3]  The issues to be decided are (1) whether the Act invalidates the arbitration agreement, (2) whether AMC Defendants, non-signatories to the Agreement, have standing to enforce the arbitration provision, and (3) whether the arbitration provision is unconscionable.  The court addresses each argument in turn.

1.      The Act

            The parties disagree over whether the Act applies to Wineman’s claims.  To begin, this court must decide, rather than the arbitrator whether the Act applies. “The applicability of this chapter to an agreement to arbitrate and the validity and enforceability of an agreement to which this chapter applies shall be determined by a court, rather than an arbitrator, irrespective of whether the party resisting arbitration challenges the arbitration agreement specifically or in conjunction with other terms of the contract containing such agreement, and irrespective of whether the agreement purports to delegate such determinations to an arbitrator.” (9 U.S.C. § 402(b).)

            The effective date of the Act is March 3, 2022.  As framed by Wineman in his opposition, “Mr. Wineman’s claim arose on May 25, 2023, when he filed his complaints with the California Civil Rights Department (“CRD”), naming AMC Networks, Inc., c/o Kristin Dolan, and Shudder Network, c/o AMC Networks, Inc., as “Respondents” (CRD Matter Nos. 202305-20791125 and 202305-20791825). (Verified Complaint, Exhibit A-1 and A-2.) These are well after the Mar. 3, 2022 enactment of the Act, and therefore, Mr. Wineman’s claims are subject to the arbitration prohibitions set forth in the Act.”  (Opp., p. 4.)  

Defendants counter that while Wineman filed his CRD complaint after the passage of the Act, the dispute arose before the passage of the Act.  Defendants have the better argument.

            The Act applies “to any dispute or claim that arises or accrues on or after the date of the enactment of this Act.”  (Kader v. Southern California Medical Center, Inc. (2024) 99 Cal.App.5th 214, 222 (Kader).)  The Court in Kader addressed the question:  when does a dispute arise?  The Court of Appeal wrote:

We conclude the date that a dispute has arisen for purposes of the Act is a fact-specific inquiry in each case, but a dispute does not arise solely from the alleged sexual conduct. A dispute arises when one party asserts a right, claim, or demand, and the other side expresses disagreement or takes an adversarial posture. In other words, “[a] dispute cannot arise until both sides have expressed their disagreement, either through words or actions.”  Until there is a conflict or disagreement, there is nothing to resolve in litigation.

Other courts have analyzed this language and similarly concluded that a dispute requires some sort of disagreement or ‘adversarial posture.’ The term dispute is broader than simply filing an action in court and includes many forums.

(Id. at pp.  222–223 (clean up).)

            In Kader, the court determined the Act applied because the dispute arose after the passage of the Act.  The Court of Appeal observed that “[t]here was no evidence that Kader asserted any right, claim, or demand prior to filing charges with the DFEH in May 2022, and at oral argument, Kader's attorney conceded that Kader never complained to anyone at the Center about Rasekhi's conduct.” (Kader, supra, 99 Cal.App.5th at p. 224.)   

            The same is not true here.  Plaintiff “reported MR. FULLER’s harassment and hostile work environment to Defendant STAGE 3, namely Phil Noble Jr., Defendant STEAKHAUS, namely Ms. House, and Nick Lazo at Defendants AMC ad SHUDDER in June and July 2021.”  (Complaint, ¶ 39.)  “DEFENDANTS, and the employees and agents, including but not limited to DOES 1 though 50, and each of the[m], were aware of the discriminatory, harassing, and retaliatory conduct because PLAINTIFF repeatedly reported to supervisors and/or management. (Complaint, ¶ 105.)  Using Kader’s analysis, the dispute here arose when Plaintiff reported the harassing conduct to Defendants and to his supervisors and/or management and Defendants took no action, ignored Plaintiff’s concerns, failed to investigate, and retaliated against him.      

            Because the Wineman’s dispute arose before the passage of the Act, the Act does not apply.

            2.  Standing to Enforce the Arbitration Provision

            As an initial matter, the court interprets the Agreement under the law of New York.  The arbitration clause provides: “This Agreement shall be governed by and construed in accordance with the laws of the State of New York applicable to contracts entered into and fully performed therein.”  (Agreement, § 8(b).)  Absent any argument from Plaintiff that the contract was not entered into and not fully performed in New York, the court applies New York law pursuant to the choice of law provision.

            There is no dispute that AMC Defendants are neither signatories to nor assignees of the Agreement.  Instead, AMC Defendants hitch their wagon to the doctrine of equitable estoppel.             

Mozzachio v. Schanzer (Sup. Ct. 2020) 136 N.Y.S.3d 59 succinctly sets forth the applicable standard as follows:

“[O]n a motion to compel or stay arbitration, a court must determine, in the first instance ... whether parties have agreed to submit their disputes to arbitration and, if so, whether the disputes generally come within the scope of their arbitration agreement. When deciding whether the parties agreed to arbitrate a certain matter ... courts generally ... should apply ordinary state-law principles that govern the formation of contracts. Arbitration is a matter of contract, grounded in agreement of the parties.  Inasmuch as an arbitration clause is a contractual right, the general rule is that only a party to an arbitration agreement is bound by or may enforce the agreement.

However, a nonsignatory to an arbitration clause may, in certain situations, compel a signatory to the clause to arbitrate the signatory’s claims against the nonsignatory despite the fact that the signatory and nonsignatory lack an agreement to arbitrate.  A non-party to an arbitration agreement may compel a party to arbitration if the relevant state contract law allows the non-party to enforce the arbitration agreement.”

(Id. at p. 61 (cleaned up).)

            Estoppel is one such theory under which a non-signatory to an agreement may nevertheless be bound by an agreement to arbitrate.  (See Merrill Lynch Int’l Fin., Inc. v. Donaldson (Sup. Ct. 2010) 895 N.Y.S.2d 698, 702-03.)  Compelling a signatory to arbitrate their claims with a non-signatory is proper “where a careful review of the relationship among the parties, the contracts they signed ..., and the issues that had arisen among them discloses that the issues the nonsignatory is seeking to resolve in arbitration are intertwined with the agreement that the estopped party has signed.”  (Id. at p. 703 (cleaned up).)  Thus, a court must engage in a two-pronged analysis which “requires a court to examine (1) whether the signatory’s claims ‘arise[ ] out of and relate[ ] directly to’ the ‘subject matter’ of the underlying agreement and (2) whether the non-signatory has a ‘close relationship’ to a signatory of the agreement.”  (Trustees of N.Y. State Nurses Assoc. Pension Plan v. Hakkak (S.D.N.Y. Aug. 3, 2023) No. 22-cv-5672, 2023 WL 4967071, at *5.) 

Here, AMC Defendants meet their burden.  First, they correctly point out that Wineman’s claims arise out of the Agreement.  The Agreement governs any claims or disputes that arise in relation to Wineman’s employment as Writer and Director of the Queer for Fear project.  The Complaint alleges conduct that occurred while Wineman was engaged in that project.  (See, e.g., Complaint, ¶¶ 23, 34, 41.)  Plaintiff’s claims are directly related to and arises from the subject-matter of the Agreement. 

Second, AMC Defendants offer the Termination & Takeover Agreement to establish that Stage 3 assigned its rights and obligations to the Queer to Fear project to Digital Store.  (Maheran Decl., Ex. 3.)  There is no dispute that Digital Store is a subsidiary of AMC Networks, Inc.  AMC Defendants also submit a Domestic Structure Chart which confirms Digital Store’s relationship to AMC Networks, Inc., and which further establishes that Shudder, LLC is a subsidiary of Digital Store and that AMC Network Entertainment, LLC is a subsidiary of AMC Networks, Inc.  (Maheran Decl., Ex. 5.)  Moreover, as alleged, Wineman complained to Shudder and an individual at AMC Networks, Inc. about Fuller’s conduct.  (Complaint, ¶ 39.)  Fuller was a managing agent of AMC Networks, Inc.  (Complaint, ¶ 6.)  Indeed, AMC Defendants are Wineman’s alleged employers.  (Complaint, ¶ 13.)  Wineman’s role as Writer and Director of the Queer for Fear project is the only employment alleged.  AMC Defendants demonstrate a close relationship between Digital Store (the assignee of the Agreement) and AMC Defendants. 

In opposition, Wineman argues his claims do not depend on the Agreement.[4]  He points out that neither Stage 3 nor its assignee Digital Store are defendants in this action.  The Agreement itself is also not referenced or attached to the Complaint.  However, as discussed above, the allegations belie Wineman’s argument.  AMC Defendants are identified as his employers.  The only employment described in the Complaint is Wineman’s connection to the Queer for Fear project.  Fuller’s alleged conduct occurred while working on the Queer for Fear project.  Wineman does not offer any other argument or authority to avoid the ineluctable conclusion that AMC Defendants have standing to invoke the arbitration agreement.

2.       Unconscionability

Wineman next argues that the arbitration provision is unconscionable.  Having found that Wineman signed an agreement which contains an arbitration provision covering his claims, and that AMC Defendants may assert the arbitration provision, the court does not reach Wineman’s unconscionability challenge.  This is so because the arbitration provision contains a clear and unmistakable delegation clause.  The delegation issue is a “gateway” question.  (Rent-A-Center, West, Inc. v. Jackson (2010) 561 U.S. 63, 69 (Rent-A-Car).)   

“The [United States] Supreme Court has also held that arbitration agreements must be enforced according to their terms, and that parties can agree to arbitrate gateway questions of arbitrability.  Such “delegation clauses” are enforceable where there is clear and unmistakable evidence that the parties intended to arbitrate arbitrability issues.  When deciding whether the parties agreed to arbitrate a certain matter (including arbitrability), courts generally ... should apply ordinary state-law principles that govern the formation of contracts.  (Monarch Consulting, Inc. v. Nat'l Union Fire Ins. Co. of Pittsburgh, PA (2016) 26 N.Y.3d 659, 675 (cleaned up).)

“Further, courts treat an arbitration clause as severable from the contract in which it appears and enforce it according to its terms unless the party resisting arbitration specifically challenges the enforceability of the arbitration clause itself. This rule of severability extends to delegation clauses, which are severable from larger arbitration provisions. Thus, where a contract contains a valid delegation to the arbitrator of the power to determine arbitrability, such a clause will be enforced absent a specific challenge to the delegation clause by the party resisting arbitration.”  (Id. at pp. 675-76 (cleaned up).)

Here, Wineman does not specifically challenge the delegation clause.  Moreover, the clause clearly and unmistakably delegates the authority to determine scope and applicability of the Agreement to the arbitrator.^[5]  The question whether the Agreement is unconscionable is delegated to the arbitrator.

Conclusion

            The motion to compel arbitration is GRANTED.  The action is stayed as to all parties pending the conclusion of the arbitration.  The Court sets a post-arbitration status conference for October 9, 2024 at 9:00 a.m.

II.        MOTION TO SEAL

            In conjunction with the Motion to Compel Arbitration, the AMC Defendants submitted the supporting Declaration of Tarek Maheran (“Maheran Decl.”) which attaches a number of contractual agreements that govern the relationship between various entities at issue in this action.  Accordingly, the AMC Defendants now move for an order to file the following documents under seal, pursuant to California Rules of Court 2.550 and 2.551 et seq.:

1.      Exhibit 1 to the Declaration of Tarek Maheran (“Maheran Decl.”) filed in support of the AMC Defendants’ Motion to Compel Arbitration.

2.      Exhibit 2 to the Maheran Decl.

3.      Exhibit 3 to the Maheran Decl.

            AMC Defendants publicly filed the Maheran Decl. with redacted versions of the foregoing exhibits.  The AMC Defendants have not publicly filed the unredacted information, nor has the court read and considered the unredacted information.  Under these circumstances, a party may file redacted information without the need for a sealing order. (See, e.g., rule 1.201; Concepcion v. Amscan Holdings, Inc. (2014) 223 Cal.App.4th 1309, 1327 [explaining that documents requested by the court could have been filed as “redacted copies of the bills deleting any privileged information” as opposed to requiring an in camera review]; see generally Weil & Brown, Cal. Practice Guide: Civil Procedure Before Trial (The Rutter Group 2023) ¶ 9.416.1 [“Many, if not most, motions to seal are unnecessary because the judge does not need to review the confidential material to decide the underlying motion. In such cases, simply file the redacted document in the public file and explain the redaction in, e.g., the accompanying memorandum of points and authorities”].) In these situations the redacted information is never presented to the court for its consideration or to the public and is not subject to “unsealing.”

Given that the redacted information is subject to a protective order in this matter, neither party cites to or relies upon the redacted information, nor does the court cite to or rely on the redacted information in its ruling on the Motion to Compel Arbitration, AMC Defendants’ Motion to Seal is MOOT.  Additionally, because AMC Defendants have already filed the redacted exhibits, no further action is necessary.

Dated:   April 2, 2024