Judge: Lindsey E. Martinez, Case: 2021-01225822, Date: 2022-08-08 Tentative Ruling
1. Case Management Conference
2. Motion to Compel Arbitration
Defendants DT Management LLC and Hilton Management LLC’s Motion to Compel Arbitration is DENIED. Defendants’ Request for Judicial Notice is DENIED.
Defendants seek to enforce the “Agreement Re At-Will Employment and Arbitration.” (ROA 63, Exhibit A.) On 3/7/07, Plaintiff executed the agreement written only in English.
Plaintiff Lucia Cruz De Rogue submitted a declaration stating, “I was born in El Salvador and my native language in Spanish. I have completed third grade level education in El Salvador and never have any legal training or background in law. I speak very little to no English and cannot read much English at all.” (ROA 75, page 2, lines 11- 13.) “Since the time of my hire, all my managers at Doubletree Hotel Anaheim were aware that I only spoke Spanish. Accordingly, all day-to-day work-related communications were done in Spanish.” (ROA 75, page 2, lines 17- 19.)
Unconscionability Still Viable: The California Supreme Court applies “generally applicable unconscionability principles and heeds Concepcion’s counsel that arbitration agreements be placed ‘on an equal footing with other contracts.’” (OTO, L.L.C. v. Kho (2019) 8 Cal.5th 111, 137.) “[A]rbitration agreements remain subject, post-Concepcion, to the unconscionability analysis employed by the trial court in this case.” (Samaniego v. Empire Today LLC (2012) 205 Cal.App.4th 1138, 1150.)
Two Prongs: Unconscionability consists of two prongs: procedural and substantive 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.’ [Citations.] 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.” (Baltazar v. Forever 21, Inc. (2016) 62 Cal.4th 1237, 1243–1244.) (Emphasis original.)
“The unconscionability of an arbitration agreement is a question of law . . . applying general principles of California contract law to determine the agreement's enforceability.” (Nunez v. Cycad Management LLC (2022) 77 Cal.App.5th 276, 282.)
Procedural Unconscionability: “A procedural unconscionability analysis ‘begins with an inquiry into whether the contract is one of adhesion.’ . . . An adhesive contract is standardized, generally on a preprinted form, and offered by the party with superior bargaining power “on a take-it-or-leave-it basis.” (OTO, L.L.C. v. Kho (2019) 8 Cal.5th 111, 126.)
“Oppression arises from an inequality of bargaining power, when one party has no real power to negotiate or a meaningful choice. Surprise occurs when the allegedly unconscionable provision is hidden.” (Carmona v. Lincoln Millennium Car Wash, Inc. (2014) 226 Cal.App.4th 74, 84.) In Carmona, the employer’s failure to translate the entire agreement into Spanish for employees that spoke Spanish was unconscionable.
“Procedural unconscionability arises when an arbitration agreement ‘was neither provided in a Spanish-language copy nor explained to respondents who did not understand written English.’” (Nunez v. Cycad Management LLC (2022) 77 Cal.App.5th 276, 284.) In this case, Plaintiff was incapable of understanding the “agreement.”
“When a person with the capacity of reading and understanding an instrument signs it, he may not, in the absence of fraud, coercion or excusable neglect, avoid its terms on the ground he failed to read it before signing it.” (Bolanos v. Khalatian (1991) 231 Cal.App.3d 1586, 1590.) (Emphasis added.) This rule does not apply where the employee is not able to read the language of the document.
Substantive Unconscionability: “Although procedural unconscionability alone does not invalidate a contract, its existence requires courts to closely scrutinize the substantive terms ‘to ensure they are not manifestly unfair or one-sided.’” (OTO, L.L.C. v. Kho (2019) 8 Cal.5th 111, 130.) “Substantive unconscionability examines the fairness of a contract's terms. This analysis ‘ensures that contracts, particularly contracts of adhesion, do not impose terms that have been variously described as ‘ ‘overly harsh.’ . . .’unduly oppressive,’ . . .‘so one-sided as to ‘shock the conscience’ or ‘unfairly one-sided.”’ (OTO, L.L.C. v. Kho at 129–130.)
In the second paragraph, the agreement states, “I understand that I am giving up not substantive rights, and this Agreement simply governs forum.” (Emphasis added.) Even if Plaintiff could understand this agreement, this statement is deceptive. The Arbitration does more than select the forum and secretly deprives Plaintiff of her rights.
In the third paragraph, the agreement states, “Arbitration under this Agreement shall be before a single arbitrator in the county with the dispute arose and will be conducted in accordance with the Federal Arbitration Act in conformity with the Federal Rules of Civil Procedure and Federal Rules of Evidence.”
“[C]ourts will more closely scrutinize the substantive unconscionability of terms that were ‘artfully hidden’ by the simple expedient of incorporating them by reference rather than including them in or attaching them to the arbitration agreement.” (Baltazar v. Forever 21, Inc. (2016) 62 Cal.4th 1237, 1246.)
By applying the Federal discovery rules, Defendant curtails Plaintiff discovery rights. “The denial of adequate discovery in arbitration proceedings leads to the de facto frustration of the employee's statutory rights. . . . [A]dequate discovery is indispensable for the vindication of FEHA claims.” (Armendariz v.
Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83, 104.)
In particular, this case involves ten causes of action for an employment history of twelve years. While the employer does not require extensive discovery, Plaintiff has a critical need for open history. The Arbitration Agreement does not alert the employ of the restricted discovery. Plaintiff has established that the Arbitration Agreement is procedurally and substantively unconscionable.
Severance: “Though public policy generally favors arbitration, ‘when the agreement is rife with unconscionability, as here, the overriding policy requires that the arbitration be rejected. . . . Eliminating unfair clauses in the Agreement cannot save it: [Plaintiff] never knew what [she] signed in the first place, having done so under compulsion, threatened with termination if [she] failed to sign a document in a foreign language on the spot. The Agreement is not a voluntary means of resolving disputes between the parties.” (Nunez v. Cycad Management LLC (2022) 77 Cal.App.5th 276, 286.) (Emphasis original.)
Based on the extreme unfairness in this Arbitration, the defects cannot be cured by severance. The motion to compel arbitration must be denied.