Judge Lisa K. Sepe-Wiesenfeld, Case Number: 23SMCV05278, Date: 2024-07-09 Tentative Ruling

Judge: Lisa K. Sepe-Wiesenfeld, Case: 23SMCV05278, Date: 2024-07-09 Tentative Ruling

Defendant The Belvedere Hotel Partnership dba Peninsula Beverly Hills (“Defendant”) moves to compel Plaintiff to submit to arbitration on the ground that the parties have an agreement to arbitrate all claims arising out of Plaintiff’s employment with Defendant, but Plaintiff has refused to submit to arbitration. Plaintiff opposes the motion on the grounds that Defendant has not made a demand for arbitration, certain claims cannot be arbitrated, and the agreement is unenforceable because it is contrary to public policy and unconscionable. The Court notes that Plaintiff’s opposition memorandum exceeds the page limit set forth in rule 3.1113(d) of the California Rules of Court, as Plaintiff’s opposition is 17 pages long, while the limit is 15 pages, and Plaintiff failed to seek leave of court to file a longer memorandum. The Court exercises its discretion to consider the entirety of the memorandum in the interest of judicial efficiency, but Plaintiff’s counsel is advised to familiarize himself with the formatting requirements set forth in the California Rules of Court.

“[I]n considering a . . . petition to compel arbitration, a trial court must make the preliminary determinations whether there is an agreement to arbitrate and whether the petitioner is a party to that agreement (or can otherwise enforce the agreement).” (M & M Foods, Inc. v. Pac. Am. Fish Co. (2011) 196 Cal.App.4th 554, 559; see also Giuliano v. Inland Empire Personnel, Inc. (2007) 149 Cal.App.4th 1276, 1284 (Giuliano) [“petitioner bears the burden of proving the existence of a valid arbitration agreement by the preponderance of the evidence”].) In deciding a petition to compel arbitration, trial courts must first decide whether an enforceable arbitration agreement exists between the parties, and then determine whether plaintiff’s claims are covered by the agreement. (Omar v. Ralphs Grocery Co. (2004) 118 Cal.App.4th 955, 961.) The burden then shifts to the opposing party to prove, by a preponderance of evidence, a defense to enforcement of the agreement. (Rosenthal v. Great Western Financial Securities Corp. (1996) 14 Cal.4th 394, 413.)

Code of Civil Procedure section 1281 states, “A written agreement to submit to arbitration an existing controversy or a controversy thereafter arising is valid, enforceable and irrevocable, save upon such grounds as exist for the revocation of any contract.” Code of Civil Procedure section 1281.2 provides, in relevant part:

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:

“The right to arbitration depends upon contract; a petition to compel arbitration is simply a suit in equity seeking specific performance of that contract.” (Eng’rs & Architects Ass’n v. Cmty. Dev. Dep’t (1994) 30 Cal.App.4th 644, 653.) General principles of contract law determine whether the parties have entered a binding agreement to arbitrate. (Chan v. Drexel Burnham Lambert, Inc. (1986) 178 Cal.App.3d 632, 640-641 [“The existence of a valid agreement to arbitrate involves general contract principles”].)

On August 18, 2021, Plaintiff’s first day of employment with Defendant as a Food and Beverage Manager, Plaintiff entered into a Mutual Agreement to Arbitrate along with signing other onboarding documents. (Mot., Kupka Decl. ¶ 3, Ex. 1.) The arbitration agreement provides that Plaintiff agreed “to submit all claims arising from any [employment related] differences to the arbitration procedures described in” the agreement “entered into by and between” Plaintiff and Defendant. (Ibid.) The agreement sets forth the terms of arbitration and clearly states that Plaintiff was giving up the right to a jury trial. (Ibid.) The agreement is a four-page document signed by both Plaintiff and the Human Resources coordinator for Defendant as Defendant’s authorized representative, and the agreement is said to be between Plaintiff and The Peninsula Beverly Hills and related companies and/or entities. (Ibid.) Plaintiff does not dispute that he signed this agreement. It follows that Defendant has met its burden of showing an arbitration agreement exists between the parties.

Plaintiff argues that Defendant has not made a demand for arbitration as required for an arbitration agreement to be enforced. Plaintiff provides only an unsworn, conclusory statement to this effect, while Defendant has provided evidence with the motion showing that on December 14, 2023, defense counsel sent a written demand for arbitration by email to Plaintiff’s counsel. (Mot., Rosen Decl. ¶ 3, Ex. A.) Thus, this argument is unavailing.

Plaintiff also argues that state law governs the arbitration agreement because Plaintiff is a California resident, Defendant is a California company, and Defendant has provided no evidence to show the employment relationship involved interstate commerce. First, Plaintiff again provides only a conclusory statement to this effect, but more importantly, Defendant need not make such a showing when the parties agreement that the Federal Arbitration Act governed enforcement of the agreement in paragraph 6 of the agreement. (Mot., Kupka Decl. ¶ 3, Ex. 1.) “[T]he presence of interstate commerce is not the only manner under which the FAA may apply”; “the parties may also voluntarily elect to have the [Federal Arbitration Act] govern enforcement of the Agreement, as they did here.” (Victrola 89, LLC v. Jaman Properties 8 LLC (2020) 46 Cal.App.5th 337, 355.) This argument, too, does not compel a finding that the action should not be submitted to arbitration, i.e., Plaintiff’s argument that certain claims are not subject to arbitration under state law is unconvincing when Plaintiff agreed in the arbitration agreement that the agreement is subject to the Federal Arbitration Act.

Plaintiff also makes several arguments that the agreement is unconscionable. Notably, the arguments largely consist of a recitation of boilerplate law followed by a conclusory statement that the agreement is unconscionable in that regard, which provides the Court with little basis to agree with Plaintiff. Nonetheless, each of Plaintiff’s arguments is unpersuasive. It is axiomatic that “a party opposing the petition [to compel arbitration] bears the burden of proving by a preponderance of the evidence any fact necessary to its defense. [] In these summary proceedings, the trial court sits as a trier of fact, weighing all the affidavits, declarations, and other documentary evidence, as well as oral testimony received at the court’s discretion, to reach a final determination.” (Giuliano, supra, 149 Cal.App.4th at p. 1284.) “Courts analyze the unconscionability standard in Civil Code section 1670.5 as invoking elements of procedural and substantive unconscionability.” (McManus v. CIBC World Markets Corp. (2003) 109 Cal.App.4th 76, 87 (McManus).) “The procedural element of unconscionability focuses on whether the contract is one of adhesion” and “whether there is oppression arising from an inequality of bargaining power or surprise arising from buried terms in a complex printed form.” (Ibid., quotation marks omitted.) “The substantive element addresses the existence of overly harsh or one-sided terms.” (Ibid.) “An agreement to arbitrate is unenforceable only if both the procedural and substantive elements are satisfied.” (Ibid.)

“Procedural unconscionability pertains to the making of the agreement; it focuses on the oppression that arises from unequal bargaining power and the surprise to the weaker party that results from hidden terms or the lack of informed choice.” (Ajamian v. CantorCO2e, L.P. (2012) 203 Cal.App.4th 771, 795.) An arbitration provision is substantively unconscionable where the provision “does not fall within the reasonable expectations of the weaker or ‘adhering’ party,” is “unduly oppressive,” or has “overly harsh or one-sided” terms. (Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83, 113-114 (Armendariz); McManus, supra, 109 Cal.App.4th at p. 87.) “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 [the assenting party] to pay either unreasonable costs or any arbitrators fees or expenses as a condition of access to the arbitration forum.” (Armendariz, supra, 24 Cal.4th at p. 102, quotation marks omitted.)

First, presentation of an arbitration agreement on a “take it or leave it” basis, even in an employment onboarding context, does not automatically render the agreement procedurally unconscionable; Plaintiff must also show that there was no opportunity for meaningful negotiation or that he was subjected to oppressive tactics that forced him to sign the agreement. (See Lagatree v. Luce, Forward, Hamilton & Scripps (1999) 74 Cal.App.4th 1105, 1127 [“a compulsory predispute 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”].) Notably, Plaintiff makes no argument that he was not given the agreement to review and study before signing, and there is no evidence that anyone exerted pressure on him to sign it. Further, the agreement is a relatively short proposal, only four pages in length, in a normal sized typeface, with a heading making clear that the agreement was one to arbitrate claims.

Plaintiff argues that because the arbitration agreement provides for an arbitrator from the AAA Employment Dispute Panel in Los Angeles, he has been denied a neutral arbitrator. He provides no legal authority to support his conclusion that this requirement of selection from a specific panel denies him a neutral arbitrator, and the Court has no reason to conclude he will be so denied. Plaintiff also argues that a waiver of representative actions impacts his potential relief, but the agreement only precludes bringing a class action or private attorney general claim, not that certain forms of relief will not be permitted; rather, the agreement allows the arbitrator to award the parties any remedy that would have been available had the action been litigated in court. (Mot., Kupka Decl. ¶ 3, Ex. 1, at ¶¶ 7, 10.) Plaintiff’s reliance on Alberto v. Cambrian Home Care (2023) 91 Cal.App.5th 482, 493-494, is also misplaced, as that case concerned a separate agreement with a prohibition of discussing wages, which is not present here, and the Court does not find a prohibition from disclosing personnel data of the hotel to be analogous to a prohibition of discussing wages.

The agreement does not compel a party to submit to any laws other than those of California, or to adjudicate the claims outside of California, and the arbitrator is permitted to award any remedy as discussed above. Defendant also states it is willing to submit to the application of the California Evidence Code to the arbitration proceedings. (Reply, p. 6, ll. 7-9.) Insofar as Plaintiff takes issue with the class waiver, choice of arbitrator procedure, and jury waiver, case law has established that representative actions may be required to be submitted to arbitration (Viking River Cruises, Inc. v. Moriana (2022) 596 U.S. 639, 662-663), but the Court notes that Plaintiff’s complaint does not include any statements that it is brought in a representative or private attorney general manner.