Judge: Kevin C. Brazile, Case: 23STCV15862, Date: 2024-03-12 Tentative Ruling

Case Number: 23STCV15862    Hearing Date: March 12, 2024    Dept: 20

Tentative Ruling

Judge Kevin C. Brazile

Hearing Date:                         Tuesday, March 12, 2024

Case Name:                             Paola Arriaga-Martinez, et al. v. UnitedHealth Group Inc., et al.

Case No.:                                23STCV15862

Motion:                                  Motion to Compel Arbitration

Moving Party:                         Defendants UnitedHealth Group Incorporated, Optum Care, Inc., and OptumCare Management, LLC

Responding Party:                  Plaintiffs Paola Arriaga-Martinez, Desiree Crosthwaith, Angelica Quinones, and Noemi Vasquez

Notice:                                    OK

Ruling:                                    The Motion to Compel Arbitration is GRANTED.

Moving Party to give notice.

BACKGROUND

This is an employment action. On July 7, 2023, Plaintiffs Paola Arriaga-Martinez, Desiree Crosthwaith, Angelica Quinones, and Noemi Vasquez filed a complaint against Defendants UnitedHealth Group Incorporated, Optum Care, Inc., and OptumCare Management, LLC, and John Kennedy alleging causes of action regarding her employment with Defendants.

On November 13, 2023, Defendants UnitedHealth Group Incorporated, Optum Care, Inc., and OptumCare Management, LLC filed a motion to compel arbitration. 

On February 28, 2024, Plaintiffs filed an opposition.

On March 5, 2024, Defendants filed a reply. 

DISCUSSION

Motion to Compel Arbitration

On a motion to compel arbitration, the moving party has the burden of establishing the existence of a valid arbitration agreement and that the dispute is covered by the agreement, and the opposing party has the burden of proving a ground for denial (e.g., fraud, unconscionability, etc.). (Rosenthal v. Great Western Fin. Securities Corp. (1996) 14 Cal.4th 394, 413; Ruiz v. Moss Bros. Auto Group, Inc. (2014) 232 Cal.App.4th 836, 842 [“The petitioner 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”].) 

“California has a strong public policy in favor of arbitration and any doubts regarding the arbitrability of a dispute are resolved in favor of arbitration.” (Coast Plaza Doctors Hospital v. Blue Cross of California (2000) 83 Cal.App.4th 677, 686.) “This strong policy has resulted in the general rule that arbitration should be upheld unless it can be said with assurance that an arbitration clause is not susceptible to an interpretation covering the asserted dispute.” (Ibid. [internal quotations omitted].) This is in accord with the liberal federal policy favoring arbitration agreements under the Federal Arbitration Act (“FAA”), which governs all agreements to arbitrate in contracts “involving interstate commerce.” (9 U.S.C. § 2, et seq.; Higgins v. Superior Court (2006) 140 Cal.App.4th 1238, 1247.)  

“Thus, under both the FAA and California law, ‘arbitration agreements are valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.’” (Higgins v. Superior Court, supra, 140 Cal.App.4th at p. 1247, citing Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83, 98 (“Armendariz”).)  

“A trial court must grant a petition to compel arbitration ‘if it determines that an agreement to arbitrate the controversy exists.’ There is, however, ‘no public policy in favor of forcing arbitration of issues the parties have not agreed to arbitrate.’ Thus, in ruling on a motion to compel arbitration, the court must first determine whether the parties actually agreed to arbitrate the dispute.” (Mendez v. Mid-Wilshire Health Care Center (2013) 220 Cal.App.4th 534, 541 (citations omitted).) 

Defendants seeks to compel arbitration of this matter based on an arbitration agreement entered into by Plaintiffs as a component of their employment. Plaintiffs argue that the subject agreement is unenforceable because (1) Plaintiff Quinones did not sign an arbitration agreement; and (2) the arbitration provision is procedurally and substantively unconscionable.

Applicability of the FAA

1.     Relationship to Interstate Commerce 

The parties do not dispute the applicability of the arbitration agreement to the FAA.

An arbitration clause is governed by the FAA if the agreement is a contract “evidencing a transaction involving commerce.” (9 U.S.C. § 2.) Courts “broadly construe” this phrase, because the FAA “embodies Congress’ intent to provide for the enforcement of arbitration agreements within the full reach of the Commerce Clause.” (Giuliano v. Inland Empire Pers., Inc. (2007) 149 Cal.App.4th 1276, 1286.) In the context of an employment agreement, this means that the Court looks only to whether the parties’ relationship “in fact” involved interstate commerce, as opposed to whether they contemplated that it would: 

In determining whether the employment agreement involved interstate commerce, the parties’ subjective intent is not the determining factor. “[E]videncing a transaction involving commerce” (9 U.S.C. § 2) simply means that “the ‘transaction’ in fact ‘involv[es]’ interstate commerce, even if the parties did not contemplate an interstate commerce connection.” (Allied–Bruce Terminix Companies v. Dobson(1995) 513 U.S. 265, 281, 115 S.Ct. 834, 130 L.Ed.2d 753 (Allied–Bruce ).) 

(Id. 149 Cal.App.4th at 1286.) 

Defendants have the “burden to demonstrate FAA coverage by declarations and other evidence.” (Hoover v. American Income Life Ins. Co. (2012) 206 Cal.App.4th 1193, 1207.) Here, Defendants have met that burden with evidence that UnitedHealth is a “subsidiary of UnitedHealth Group Incorporated, a nationwide health care delivery organization that provides healthcare related services to individuals in all fifty states of the United States, and partners with doctors and providers to improve the care and services offered in local communi[ties]” and “OCI and OCM are two subsidiaries of UnitedHealth.” (Weedman Decl. ¶ 4.) Plaintiffs were employees with OCM and OCI and dealt with clients beyond those located in California. 

Thus, the Court finds that the FAA governs the parties’ agreement. Having reached that conclusion, the Court now considers which of Plaintiff’s claims must be arbitrated.   

Existence of Arbitration Agreement

Under California law, “the party seeking arbitration bears the burden of proving the existence of an arbitration agreement.” (Ruiz v. Moss Bros. Auto Group, Inc., supra, 232 Cal.App.4th 836, 842.) To prove the existence of an arbitration agreement, Defendants submit the declaration of Susan Weedman, the VP of Employee Relations for United HealthCare Services, Inc. (Weedman Decl. ¶ 1.) Weedman is responsible for training employees and assisting new and existing employees with onboarding and the completion of UnitedHealth Group-required documents. (Id. ¶ 3.) On November 9, 2022, Plaintiff Arriaga-Martinez electronically signed the arbitration agreement. (Id. ¶ 12, Exhib. E.) On November 9, 2022, Plaintiff Crosthwaith electronically signed the arbitration agreement. (Id. ¶ 13, Exhib. F.) On November 10, 2022, Plaintiff Vasquez electronically signed the arbitration agreement. (Id. ¶ 14, Exhib. G.) Plaintiff Quinones accepted OCI’s offered position, subject to the Arbitration Agreement as outlined in her signed transition letter, following the transition process wherein OCM was integrated with UnitedHealth Group. (Id. ¶ 15.) All plaintiffs received a transition letter on November 9 or 10, 2022. (Id. ¶¶ 7-10, Exhib. A-D.) 

“A party’s acceptance of an agreement to arbitrate may be express, as where a party signs the agreement.” (Pinnacle Museum Tower Assn. v. Pinnacle Market Development (US), LLC¿(2012) 55 Cal.4th 223, 236 (“Pinnacle”).) Plaintiffs do not dispute that Arriaga-Martinez, Croswith, and Vasquez signed the agreement. Rather, they assert that no arbitration agreement exists because plaintiff Quinones did not sign an agreement. However, an agreement may also be implied in fact. (See Civil Code § 1621 [“An implied contract is one, the existence and terms of which are manifested by conduct.”].) “California law permits employers to implement policies that may become unilateral implied-in-fact contracts when employees accept them by continuing their employment. Whether employment policies create unilateral contracts is ‘a factual question in each case.’ [Citation.] ‘It is generally held that the existence of an implied contract is usually a question of fact for the trial court. Where evidence is conflicting, or where reasonable conflicting inferences may be drawn from evidence which is not in conflict, a question of fact is presented for decision of the trial court....” (Gorlach v. Sports Club Co. (2012) 209 Cal.App.4th 1497, 1508.) 

Plaintiffs argue that while Defendants claim Quinones signed an Employment Transition Letter referencing an arbitration policy, Quinones claims she never saw or signed the letter. Additionally, Plaintiffs state the signature on the letter does not match Quinones’ signature, it was dated when Quinones was on leave, and the documents could only be signed from the worksite. (Quniones Decl. ¶¶ 2-4.) Plaintiffs assert that even if Quinones had signed the Employment Transition Letter, it did not contain the content of the Arbitration Policy itself, nor did it confirm that she received or read the policy. Plaintiffs argue that no enforceable agreement to arbitrate exists without mutual assent, citing Banner Entertainment, Inc. v. Superior Court, which emphasizes the necessity of a meeting of the minds on all material points.

The Court finds that even if Quinones did not explicitly sign the Employment Transition Letter, there is an implied-in-fact agreement to arbitrate. The letter states in relevant part: 

As a condition of your employment, you must agree to be bound by the terms of UnitedHealth Group’s Employment Arbitration Policy. The Arbitration Policy is a binding contract between you and UnitedHealth Group to resolve through arbitration all covered employment-related disputes that are based on a legal claim, and mutually waive the right to a trial before a judge or jury in court in favor of final and binding arbitration. By accepting employment with UnitedHealth Group, you agree to be bound by the terms of the Arbitration Policy.

Your transition is also contingent upon your ability to undertake and perform the responsibilities and requirements of the position without violating the terms of any restrictive covenant or confidentiality agreement to which you may be a party. If you join UnitedHealth Group, we expect that you will comply with any applicable restrictive covenant or confidentiality agreement to which you are a party with any prior employer.

By accepting employment, you will have agreed to all terms of this transition letter and

the attachments provided in New Employee Connect.

(Weedman Decl. ¶ 8, Exhib. C.) Since the letter states that acceptance of employment constitutes an agreement to be bound, her decision to accept employment and continue working constitutes acceptance of the terms and conditions, thus, the Court may imply the existence of an agreement to arbitrate. 

Accordingly, the Court finds that the parties actually entered into an arbitration agreement.

Unconscionability

Plaintiffs argue that the arbitration agreement is also unenforceable because it is both procedurally and substantively unconscionable. “ ‘[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. [Citation.] ‘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.... [T]he 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. Found. Health Psychcare Servs., Inc. (2000) 24 Cal.4th 83, 114.) 

Plaintiffs argue that the entire agreement is unenforceable because it is unconscionable.  

1.     Substantive Unconscionability

“A provision is substantively unconscionable if it ‘involves contract terms that are so one-sided as to “shock the conscience,” or that impose harsh or oppressive terms.’ [Citation.] The phrases ‘harsh,’ ‘oppressive,’ and ‘shock the conscience’ are not synonymous with ‘unreasonable.’ Basing an unconscionability determination on the reasonableness of a contract provision would inject an inappropriate level of judicial subjectivity into the analysis. ¿‘With a concept as nebulous as “unconscionability” it is important that courts not be thrust in the paternalistic role of intervening to change contractual terms that the parties have agreed to merely because the court believes the terms are unreasonable. The terms must shock the conscience.’ [Citations.]”  

(Walnut Producers of California v. Diamond Foods, Inc. (2010) 187 Cal.App.4th 634, 647-648.) 

Where a party seeks to arbitrate nonwaivable statutory civil rights in the workplace, such as the FEHA and Labor Code claims involved here, there are “five minimum requirements for the lawful arbitration of such rights” under a mandatory employment arbitration agreement:  

Such an arbitration agreement is lawful if it “(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 v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal. 4th 83, 102.) 

As to the first requirement for neutral arbitrators, the Agreement provides for the appointment of a neutral arbitrator as agreed upon by the parties. (Weedman Decl. ¶ 12-14, Exhibs. E-G ¶ 2.) Thus, this requirement is satisfied.

As to the second requirement, case law provides that: “[a]dequate discovery is indispensable for the vindication of statutory claims. (Citation omitted.) “‘[A]dequate’ discovery does not mean unfettered discovery ….” (Citation omitted.) And parties may “agree to something less than the full panoply of discovery provided in Code of Civil Procedure section 1283.05.” (Citation omitted.)¿However, arbitration agreements must “ensure minimum standards of fairness” so employees can vindicate their public rights. (Citation omitted).” (Fitz v. NCR Corp. (2004) 118 Cal.App.4th 702, 715-16 (bold emphasis added).) Here, the Agreement provides for parties to propound interrogatories and requests for production of documents, conduct depositions and physical and mental examinations. (Weedman Decl. ¶ 12-14, Exhibs. E-G ¶10a-d.) Although Plaintiffs argue that the discovery provisions are too restrictive and prevent third-party discovery, the provision also allows each party to request additional discovery from the arbitrator. (Id.) Thus, the agreement provides for more than minimal discovery. 

As to the third requirement regarding a written award, the agreement provides: The award shall be in writing and shall set forth findings of fact and conclusions of law upon which the arbitrator based the award. All awards shall be executed in the manner required by law.” (Weedman Decl. ¶ 12-14, Exhibs. E-G ¶12a.) Thus, the agreement provides for a written award. 

As to the fourth requirement providing for all types of relief available in court, the agreement provides that “[t]he arbitrator shall have the authority to grant any remedy or relief (including attorneys’ fees where authorized by statute) that the arbitrator deems just and equitable and which is authorized by and consistent with applicable law, including applicable statutory limitations on damages.” (Weedman Decl. ¶ 12-14, Exhibs. E-G ¶ 12b.) Thus, the agreement provides for all types of relief available in court. 

As to the fifth requirement for fees, costs, or expenses, the agreement provides that “UnitedHealth Group shall pay 100 percent in excess of the first twenty-five dollars ($25) of the required AAA administrative fee.” (Weedman Decl. ¶ 12-14, Exhibs. E-G ¶ 1a.) This is sufficient to show that the agreement does not require Plaintiff to pay unreasonable costs or any arbitrator’s fees or expenses as a condition to access to arbitration. Further, to the extent that there is any provision which violates California law governing the costs that may be imposed on an employee in arbitration, Defendant’s obligation to pay the entirety of those costs would be implied. (Armendariz, supra, 24 Cal. 4th at 106, 107, 113.) As such, the Armendariz requirements are satisfied, and the agreement is not substantively unconscionable. 

2.     Procedural Unconscionability

Because Plaintiffs have not shown substantive unconscionability, the Court need not reach procedural unconscionability. Even if the Court reached Plaintiffs’ claim of procedural unconscionability, however, Plaintiffs have only made a slight showing of procedural unconscionability based on the agreements being contracts of adhesion. However, a stronger showing of substantive unconscionability is required. Although Plaintiffs argue that the agreement is procedurally unconscionable because the arbitration agreement was a mandatory condition for employment, this presents a minimal degree of procedural unconscionability: 

“The procedural element of the unconscionability analysis concerns the manner in which the contract was negotiated and the circumstances of the parties at that time. [Citation.] The element focuses on oppression or surprise. [Citation.] ‘Oppression arises from an inequality of bargaining power that results in no real negotiation and an absence of meaningful choice.’ [Citation.] Surprise is defined as ‘ “the extent to which the supposedly agreed-upon terms of the bargain are hidden in the prolix printed form drafted by the party seeking to enforce the disputed terms.” ’ [Citation.]” (Citation omitted.) 

Plaintiffs claim the Agreement is procedurally unconscionable because it is an adhesion contract. An adhesion contract is “a standardized contract … imposed upon the subscribing party without an opportunity to negotiate the terms.” (Citation omitted.) “The term signifies a standardized contract, 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. [Citation.]” (Citation omitted.) 
 
The California Supreme Court has consistently stated that “‘[t]he procedural element of an unconscionable contract generally takes the form of a contract of adhesion … .’ ” (Citations omitted.) 
 
“Whether the challenged provision is within a contract of adhesion pertains to the oppression aspect of procedural unconscionability. A contract of adhesion is “imposed and drafted by the party of superior bargaining strength” and “relegates to the subscribing party only the opportunity to adhere to the contract or reject it.” (Citations omitted.) “[A]bsent unusual circumstances, use of a contract of adhesion establishes a minimal degree of procedural unconscionability notwithstanding the availability of market alternatives.” (Citation omitted.) 

(Walnut Producers of California, supra, 187 Cal.App.4th at 645-46 (bold emphasis added).)  

Plaintiffs also argue this agreement is procedurally unconscionable because it did not give them the ability to “opt out” of its provisions. As discussed above, this type of “take it or leave it” agreement does suggest a degree of procedural unconscionability. (Bakersfield College v. California Community College Athletic Assn. (2019) 41 Cal.App.5th 753, 763 [concluding that the uncontroverted evidence that the College had “no ability to individually negotiate the terms of the contract at the time it was made, it could not opt-out of the arbitration provision, and it thus had no meaningful choice but to accept the arbitration provision” supported a finding of procedural unconscionability].) 

Plaintiffs also argue the agreement is procedurally unconscionable because Defendants failed to provide the rules of the arbitration. This likewise supports a finding of only a slight degree of procedural unconscionability. (Bigler v. Harker School (2013) 213 Cal.App.4th 727, 737.) Ultimately, because Plaintiffs have not shown that the agreement is substantively unconscionable, this degree of procedural unconscionability is insufficient to render the entire agreement unenforceable.

Thus, the agreement is not unenforceable due to unconscionability.

CONCLUSION

            The Motion to Compel Arbitration is GRANTED.

Moving party to give notice.