Judge Lee S. Arian, Case Number: 23STCV00820, Date: 2024-02-13 Tentative Ruling

On January 17, 2023, plaintiff Darius Squire (“Plaintiff”) filed this action against defendants Exel Inc (“Defendant”), John Doe, Jane Doe, and Does 1-10 (collectively “Defendants”). Plaintiff asserts a complaint alleging violations of the California Fair Employment and Housing Act (racial discrimination, medical condition, retaliation, harassment); wrongful termination in violation of public policy; negligent hiring, supervision and retention; intentional infliction of emotional distress; negligence per se; slander; violation of the Unruh Civil Rights Act; and violation of Civil Code section 51.5.

Plaintiff alleges that he injured his neck while working at Exel and gave John and Jane medical documentation from his physician stating that Plaintiff needed to work less hours and work less strenuous assignments, but John and Jane ignored these medical requests and further assigned Plaintiff even more strenuous work assignments. (Compl. ¶ 13-15.) Plaintiff also claims that he was racially discriminated against as an African American at Exel. (Id. ¶¶ 16-24.) Plaintiff asserts that Defendants failed to remedy Plaintiff’s complaints and retaliatorily terminated Plaintiff because he was suffering from a medical condition. (Id. ¶¶ 16-36.)

On January 17, 2024, Defendant filed this motion to compel arbitration. On January 29, 2024, Plaintiff opposed. On February 5, 2024, Defendant replied.

“On petition of a party to an arbitration agreement alleging the existence of a written agreement to arbitrate a controversy and that a party thereto refuses to arbitrate such controversy, the court shall order the petitioner and the respondent to arbitrate the controversy if it determines that an agreement to arbitrate the controversy exists, unless it determines that: (a) The right to compel arbitration has been waived by the petitioner; or (b) Grounds exist for the revocation of the agreement.” (Code Civ. Proc. §1281.2, subds. (a), (b).)

The party seeking to compel arbitration bears the burden of proving the existence of a valid arbitration agreement by a preponderance of the evidence. (Fagelbaum & Heller LLP v. Smylie (2009) 174 Cal.App.4th 1351, 1363.) Courts “use general principles of California contract law to determine the enforceability of the arbitration agreement.” (Mission Viejo Emergency Medical Associates v. Beta Healthcare Group (2011) 197 Cal.App.4th 1146, 1153.)

Trial courts then determine the second gateway issue of whether the claims are covered within the scope of the agreement. (Omar v. Ralphs Grocer Co. (2004) 118 Cal.App.4th 955, 961.) The initial burden is on the party petitioning to compel arbitration to prove the existence of the agreement by a preponderance of that evidence. (Villacreses v. Molinari (2005) 132 Cal.App.4th 1223, 1230.)

Once petitioners allege that an arbitration agreement exists, the burden shifts to respondents to prove the falsity of the purported agreement, and no evidence or authentication is required to find the arbitration agreement exists. (Condee v. Longwood Mgt. Corp. (2001) 88 Cal.App.4th 215, 219.)

Defendant argues that a valid arbitration agreement exists because Plaintiff executed a binding mutual arbitration agreement with Defendant, which requires the employee who signed it to arbitrate all claims arising from that employee’s employment. Defendant asserts that the claims agreed upon to be arbitrated encompass the claims that Plaintiff alleges in this action. Defendant requests that the Court order Plaintiff to refile his causes of action numbers 1-11 to binding arbitration and dismiss the instant action in its entirety. Defendant provides the arbitration agreement which Plaintiff signed electronically on January 30, 2019, which provides in relevant part:

I further agree and acknowledge that the Company and I will utilize final and binding individual arbitration as the sole and exclusive means to resolve all disputes that may arise out of or be related in any way to my employment, including but not limited to the termination of my employment and my compensation. I and the Company each specifically waive and relinquish our respective rights to bring a claim against the other in a court of law. Both I and the Company agree that any claim, dispute, and/or controversy that I may have against the Company (or its owners, directors, officers, managers, employees, or agents), or the Company may have against me, shall be submitted to and determined exclusively by binding arbitration under the Federal Arbitration Act (“FAA”), in conformity with the procedures of the California Arbitration Act (Cal. Code Civ. Proc. Sec 1280 et seq. including section 1283.05 and all of the Act’s other mandatory and permissive rights to discovery.)

(Aguirre Decl. ¶ 4, Exhib. A, ¶ 2.) Plaintiff does not dispute the existence of the arbitration agreement, nor the validity of his signature. Plaintiff also does not dispute that the arbitration agreement covers the asserted claims. Instead, Plaintiff argues that the arbitration agreement is unconscionable and unenforceable for the following reasons: (1) the signing of the agreement was a forcible condition of attaining and continuing employment with Defendant; (2) Defendant did not attach the American Association Arbitration Rules to the arbitration agreement; (3) the discovery limitations are undefined in the agreement, so Plaintiff has no knowledge if he can adequately present his claims.

Plaintiff argues the arbitration agreement is both procedurally and substantively unconscionable such that it may not be enforced. Unconscionability claims have both a “‘procedural’” and “‘substantive’” element. (Stirlen v. Supercuts, Inc. (1997) 51 Cal.App.4th 1519, 1531.) “‘Procedural unconscionability’” concerns the manner in which the contract was negotiated and the circumstances of the parties at that time. (Kinney v. United HealthCare Services, Inc. (1999) 70 Cal.App.4th 1322, 1329.) “‘The procedural element focuses on two factors: “oppression” and “surprise.” “Oppression” arises from an inequality of bargaining power which results in no real negotiation and an absence of meaningful choice. “Surprise” involves 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.’” (Stirlen v. Supercuts, Inc., supra, 51 Cal.App.4th at p. 1532.) “Substantive unconscionability” involves contracts leading to “‘“overly harsh”’” or “‘“one-sided”’” results.’” … “[U]nconscionability turns … on an absence of ‘justification “for it…” [and therefore] must be evaluated as of the time the contract was made.’” (Id. at p. 1532.)

“[T]he adhesive nature of the contract is sufficient to establish some degree of procedural unconscionability. Yet ‘a finding of procedural unconscionability does not mean that a contract will not be enforced, but rather that courts will scrutinize the substantive terms of the contract to ensure they are not manifestly unfair or one-sided.’” (Sanchez v. Valencia Holding Co., LLC (2015) 61 Cal.4th 899, 915.)

Here, Plaintiff presents evidence that the contracts were one of adhesion and that Plaintiff was not given the rules for arbitration, and thus some mild procedural unconscionability is present. However, the circumstances do not show any significant oppression or surprise. Defendant provides evidence that when signing, Defendant did not provide employees with any limitation as to how long they could take to consider and decide to accept or reject the arbitration agreement. (Aguirre Decl. ¶ 4.) Further, employees were free to consider and review the agreement and sign it at their leisure and were not asked to complete the agreement during work hours. (Id.) Plaintiff presents no evidence that he could not have taken the time he needed to review the documents. Since only mild procedural unconscionability is shown, a high degree of substantive unconscionability would have to be shown to establish the defense.

Plaintiff asserts that the agreement is substantively unconscionable because the arbitration agreement states: “…this Agreement shall be controlled by the Federal Arbitration Act, in conformity with the procedures of the California Arbitration Act (Cal. Code Civ. Proc. Sec. 1280 et seq., including section 1283.05 and all of the Act’s other mandatory and permissive rights to discovery.” Plaintiff states that Defendant failed to attach a copy of the AAA rules. Plaintiff provides that the discovery limitation states: “The arbitrator shall have the authority to order such discovery, by way of deposition, interrogatory, document production, or otherwise, as the arbitrator considers necessary…” (see AAA National Rules for Employment Arbitration) Plaintiff argues these unclear limitations makes it impossible for Plaintiff to adequately present his claims and thus, the arbitration agreement should be found as substantively unconscionable. The Court disagrees as the agreement also provides a provision which states: “If any term, provision or portion of this Agreement is determined to be void or unenforceable it shall be severed and the remainder of this Agreement shall be fully enforceable.” (Aguirre Decl. ¶ 4, Exhib. A, ¶ 7.) Other than a statement of adhesion, the Court finds no one- sided unfairness in the contract itself given the severance of the equitable/injunctive relief language. Thus, Plaintiff fails to satisfy his burden of showing unconscionability to render the agreement unenforceable.

As to Defendant’s request to dismiss the action, the Court DENIES this request. The FAA provides for a stay of proceedings if the issues therein are referable to arbitration. 9 U.S.C. § 3. In addition, Code of Civil Procedure § 1281.4 provides, in relevant part:

If a court¿.¿.¿.¿has ordered arbitration of a controversy which is an issue involved in an action or proceeding pending before a court of this State, the court in which such action or proceeding is pending shall, upon motion of a party to such action or proceeding, stay the action or proceeding until an arbitration is had in accordance with the order to arbitrate or until such earlier time as the court specifies.

Because Plaintiff’s claims against Defendant are referable to arbitration, the Court will stay the current action pending the completion of arbitration pursuant to 9 U.S.C. § 3 and Code of Civil Procedure § 1281.4. Staying this action in its entirety would also promote judicial efficiency and conserve the parties’ resources. The parties would not be forced to litigate in parallel court and arbitral proceedings, and there would be less risk of inconsistent rulings.

Accordingly, Defendant’s motion to compel arbitration is GRANTED. The action is stayed and the Court sets a status conference on ___________ at 8:30 a.m. in Department 27 so that the parties may provide an update on the arbitration proceedings.

Parties who intend to submit on this tentative must send an email to the Court at SSCDEPT27@lacourt.org indicating intention to submit on the tentative as directed by the instructions provided on the court website at www.lacourt.org. Please be advised that if you submit on the tentative and elect not to appear at the hearing, the opposing party may nevertheless appear at the hearing and argue the matter. Unless you receive a submission from all other parties in the matter, you should assume that others might appear at the hearing to argue. If the Court does not receive emails from the parties indicating submission on this tentative ruling and there are no appearances at the hearing, the Court may, at its discretion, adopt the tentative as the final order or place the motion off calendar.

Hon. Lee S. Arian

Judge of the Superior Court