Judge: Loren G. Freestone, Case: 37-2023-00018143-CU-OE-CTL, Date: 2024-02-22 Tentative Ruling

SUPERIOR COURT OF CALIFORNIA,

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HALL OF JUSTICE

TENTATIVE RULINGS - January 25, 2024

01/26/2024  10:30:00 AM  C-64 COUNTY OF SAN DIEGO

JUDICIAL OFFICER:Loren G. Freestone

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Civil - Unlimited  Other employment Motion Hearing (Civil) 37-2023-00018143-CU-OE-CTL CONDER VS KIMBRELL [E-FILE] CAUSAL DOCUMENT/DATE FILED:

TENTATIVE RULING Defendants La Mesa R.V. Center Inc. and James Kimbrell's (collectively, Defendants) motion to compel Plaintiffs Garret Conder and Robbin Sealey (collectively, Plaintiffs) to individual arbitration and dismiss their class claims is GRANTED.

Preliminary Issues Plaintiffs' evidentiary objections are overruled.

On its own motion, the court takes judicial notice of the 'Employment Arbitration Rules and Mediation Procedures issued by the American Arbitration Association' (eff. Nov. 1, 2009), referenced in the parties' arbitration agreements and available online at www.adr.org. (See Evid. Code, §§ 452, subd. (h), 455, subd. (a); Emerald Aero, LLC v. Kaplan (2017) 9 Cal.App.5th 1125.) Enforceability of Arbitration Agreements There is no dispute that Conder and Sealey each signed an arbitration agreement, nor any dispute that the arbitration agreements cover the claims alleged in this case. Plaintiffs' only argument is that the arbitration agreements are unenforceable because they are unconscionable.

'The unconscionability defense requires a party to establish both procedural and substantive unconscionability.' (Basith v. Lithia Motors, Inc. (2023) 90 Cal.App.5th 951, 960–961; accord Fuentes v. Empire Nissan, Inc. (2023) 90 Cal.App.5th 919.) The party opposing arbitration bears the burden of proof on the defense of unconscionability. (See Iyere v. Wise Auto Group (2023) 87 Cal.App.5th 747, 755.) Plaintiffs argue that their arbitration agreements are substantively unconscionable in four respects: (1) the agreements lack mutuality because they require Plaintiffs but not Defendants to arbitrate all of their claims; (2) the agreements do not permit adequate discovery between the parties; (3) the agreements do not permit third-party discovery; and (4) the agreements impermissibly shorten the statute of limitations period.

Mutuality Calendar No.: Event ID:  TENTATIVE RULINGS

3040433  58 CASE NUMBER: CASE TITLE:  CONDER VS KIMBRELL [E-FILE]  37-2023-00018143-CU-OE-CTL As to the first argument (lack of mutuality), Plaintiffs argue that their agreements expressly encompass a variety of claims commonly brought by employees that would be subject to arbitration (e.g., 'claims for wrongful termination of employment,' 'claims under any and all federal, state, or municipal statutes, regulations, or ordinances, including but not limited to laws that prohibit discrimination, harassment, or retaliation in employment,' and 'claims for wages or other compensation or benefits and/or for payments, penalties, interest, and/or liquidated damages related thereto'), but do not similarly specify claims commonly brought by employers.

'It is said that, in assessing substantive unconscionability, the paramount consideration is mutuality.' (Fuentes v. Empire Nissan Inc. (2023) 90 Cal.App.5th 919, 930.) Mutuality exists when both parties must use arbitration exclusively. (See id. at p. 931.) When it otherwise exists, mutuality is not lost by providing specific examples in the agreement of arbitrable claims, even if all or the majority of those examples are types of claims that would most likely only be brought by one of the parties. (See Baltazar v. Forever 21, Inc. (2016) 62 Cal.4th 1237, 1248–1249.) In Baltazar, the arbitration agreement specified various types of claims subject to arbitration, including 'claims for wages or other compensation due; claims for breach of any employment contract or covenant (express or implied; [and] claims for unlawful discrimination, retaliation or harassment. (Baltazar, supra, 62 Cal.4th at p. 1248.) The plaintiff argued that this rendered the arbitration agreement 'unfairly one-sided because it list[ed] only employee claims as examples of the types of claims that are subject to arbitration.' (Id. at pp. 1248–1249.) The Court disagreed, noting that arbitration agreement expressly covered 'any claim or action arising out of or in any way related to the hire, employment remuneration, separation or termination of Employee,' which clearly covered 'claims an employer might bring as well as those an employee might bring.' (Id. at p. 1249.) The Court further explained: 'The illustrative list of claims subject to the agreement is just that; the agreement specifically states that such claims 'include but are not limited to' the enumerated claims, thus making clear that the list is not intended to be exhaustive. It thus casts no doubt on the comprehensive reach of the arbitration agreement. It is not particularly remarkable that the agreement's list of examples might highlight certain types of claims that employees often bring, since part of the purpose of the agreement is to put employees such as Baltazar on notice regarding the scope of the agreement, thus eliminating any possible surprise. The examples do not alter the substantive scope of the agreement, nor do they render the agreement sufficiently unfair as to make its enforceable unconscionable.' (Ibid., emphasis in original; accord Serafin v. Balco Properties Ltd. LLC (2015) 235 Cal.App.4th 165, 182.) Here, as in Baltazar, the agreements broadly cover 'any and all disputes or claims between the Company and me that arise out of or relate to my recruitment, employment or separation from employment with the Company . . . including claims involving and/or against any current or former officer, director, shareholder, agent or employee of the Company . . . whether the disputes or claims arise under common law, in tort, in contract, or pursuant to a statute, regulation, or ordinance . . .

including, but not limited to' the examples listed above. (Emphasis added.) This language encompasses claims by Conder and Sealey against La Mesa RV, as well as claims by La Mesa RV against Conder and Sealey, and the illustrative/non-exhaustive list of arbitrable claims does not render the agreement one-sided or substantively unconscionable.

Carbajal v. CWPSC Inc. (2016) 245 Cal.App.4th 227, upon which Plaintiffs rely, is distinguishable. In that case, the arbitration agreement expressly permitted the employer to obtain a permanent injunction in court preventing the employee from disclosing trade secrets or using them for his own benefit. (Id. at pp. 249–250.) The agreement also enabled the employer to obtain a preliminary injunction in court without posting the statutorily required bond. (Id. at p. 250.) Here, unlike Carbajal, there is no unilateral carve out of certain claims in the arbitration agreement that favors La Mesa RV.

For the reasons set forth above, the arbitration agreement is mutual.

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3040433  58 CASE NUMBER: CASE TITLE:  CONDER VS KIMBRELL [E-FILE]  37-2023-00018143-CU-OE-CTL Party Discovery As to the second argument (lack of adequate party discovery), Plaintiffs argue that their arbitration agreements do not set forth a default amount of discovery and instead merely provide that '[d]iscovery shall be conducted to the next necessary to adequately arbitrate or defend any claims, including access to essential documents and witnesses, as determined by the Arbitrator.' 'California courts do not by any means require that an arbitration agreement permit 'unfettered discovery.' Parties may certainly agree to something less than the full panoply of discovery provided in a civil action. Arbitration is meant to be a streamlined procedure. Limitations on discovery is one of the ways streamlining is achieved.' (Sanchez v. Carmax Auto Superstores California LLC (2014) 224 Cal.App.4th 398, 404.) Here, the arbitration agreements state that the arbitration shall be conducted 'in accordance with the Employment Arbitration Rules and Mediation Procedures issued by the American Arbitration Association.' Rule 9 of those rules, entitled 'Discovery,' 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 to a full and fair exploration of the issues in dispute, consistent with the expedited nature of arbitration.' Courts have repeatedly held that Rule 9 permits sufficient discovery and is not substantively unconscionable. (See Lane v. Francis Capital Mgmt. LLC (2014) 224 Cal.App.4th 676, 692–693; Roman v. Superior Court (2009) 172 Cal.App.4th 1462, 1475–1476; see also Dotson v. Amen, Inc. (2010) 181 Cal.App.4th 975, 982–985 [courts assume arbitrators will permit discovery 'in a reasonable manner in conformity with the law'].) The above language quoted by Plaintiffs does not impermissibly limit the scope of discovery allowed under Rule 9. Rather, it ensures arbitrators will permit discovery under Rule 9 consistent with California Supreme Court precedent. (See Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83, 106 [although employees are not entitled to the full range of discovery, 'they are at least entitled to discovery sufficient to adequately arbitrate their statutory claim, including access to essential documents and witnesses, as determined by the arbitrator(s)'].) Plaintiffs rely on Fitz v. NCR Corp. (2004) 118 Cal.App.4th 702, but that case is distinguishable. In Fitz, the arbitration agreement limited discovery to the deposition of two individuals and any experts expected to testify, and a mutual exchange of exhibits and witness lists two weeks before the arbitration hearing.

(Id. at p. 716.) No other discovery was allowed unless the arbitrator found a 'compelling need' to allow it and unless the parties could demonstrate that a fair hearing would be 'impossible' without additional discovery. (Ibid.) Here, unlike Fitz, the agreements do not presumptively restrict the types or amounts of discovery allowed, nor do they limit the arbitrator from permitting discovery only upon satisfaction of nearly insurmountable standards.

For the reasons set forth above, the arbitration agreements allow for adequate discovery between the parties.

Third-Party Discovery As to the third argument (lack of third-party discovery), Plaintiffs argue that the agreement is subject to the FAA, the FAA does not empower arbitrators to issue discovery subpoenas, and that such a limitation is substantively unconscionable because they will not be able to compel the depositions of former employees.

The parties agreed that 'the arbitration and this Agreement shall be controlled and governed by the Calendar No.: Event ID:  TENTATIVE RULINGS

3040433  58 CASE NUMBER: CASE TITLE:  CONDER VS KIMBRELL [E-FILE]  37-2023-00018143-CU-OE-CTL Federal Arbitration Act ('FAA')' and that 'the FAA governs the interpretation and enforcement of this Agreement.' The FAA empowers arbitrators to subpoena witnesses to provide testimony and produce documents at the arbitration hearing. (9 U.S.C. § 7; see also AAA Employment Arbitration Rule 30.) However, although the federal circuits are split on the issue, the California Court of Appeal has held that the FAA does not grant arbitrators the power to compel discovery from nonparties prior to the hearing.

(See Aixtron Inc. v. Veeco Instruments Inc. (2020) 52 Cal.App.5th 360, 392–395.) As noted above, parties 'may certainly agree to something less than the full panoply of discovery provided in a civil action.' (Sanchez, supra, 224 Cal.App.4th at p. 404.) Depositions of percipient witnesses often play a small role in wage and hour cases because 'Labor Code claims will rest largely on documentation [employee pay and time records, employer wage-and-hour policies, etc.] rather than testimony.' (See Martinez v. Master Protection Corp. (2004) 118 Cal.App.4th 107, 118–119.) To that end, 'unconscionability requires a factual showing that the discovery limitations would as a practical matter thwart employees' ability to prove their particular claims.' (Torrecillas v. Fitness International LLC (2020) 52 Cal.App.5th 485, 497, emphasis in original.) The party opposing arbitration may not simply argue that he 'requires certain documents and witnesses to pursue his claims' because '[a]rguments are not evidence.' (Ibid.) As set forth above, and as the parties agreed, Plaintiffs are entitled to discovery, including the most critical type of discovery for this type of case-document requests. Although they provide some argument, Plaintiffs do not provide any evidence that they would be unable to prove their claims if they are unable to compel the depositions of former employees. There is no evidence as to the number of former employees who will purportedly be off limits. There is no evidence that any former employees possess critical information that is both unknown to Plaintiffs and inaccessible from other sources (the documents likely to be produced, current employees, etc.) Nor is there any evidence that Plaintiffs will be unable to secure relevant information from former employees voluntarily, without compelling them to testify under threat of contempt. For example, there is no evidence that Plaintiffs or their counsel attempted to interview a former employee and were rebuffed. Indeed, former employees often want to help other employees in lawsuits against the employer. (See Belaire-West Landscape Inc. v. Superior Court (2007) 149 Cal.App.4th 554, 561.) And there is no evidence Plaintiffs will be unable to prove their particular claims if they need to wait until the arbitration hearing to compel any recalcitrant former employees to testify.

For the reasons set forth above, Plaintiffs have failed to establish that the inability to compel third-party depositions is unconscionable.

Statute of Limitations As to the fourth argument (shortened statute of limitations), Plaintiffs argue that the arbitration agreement impermissibly shortens the statute of limitations on their claims down to one year.

Most, if not all, of Plaintiffs' claims are subject to either a three-year or four-year statute of limitations.

(See Ali v. Daylight Transport, LLC (2020) 59 Cal.App.5th 462, 478; Martinez, supra, 118 Cal.App.4th at p. 117.) 'While parties to an arbitration agreement may agree to shorten the applicable limitations period for bringing an action, a shortened limitations period must be reasonable. A contractual period of limitation is reasonable if the plaintiff has a sufficient opportunity to investigate and file an action, the time is not so short as to work a practical abrogation of the right of action, and the action is not barred before the loss or damage can be ascertained.' (Baxter v. Genworth North America Corp. (2017) 16 Cal.App.5th 713, 731.) It is therefore unconscionable, for example, to shorten the statute of limitations on wage-and-hour claims down to 120 days, or even down to six months, from the date the claim arose. (See Ali, supra, 59 Cal.App.5th 462, 478; Martinez, supra, 118 Cal.App.4th at p. 117.) Calendar No.: Event ID:  TENTATIVE RULINGS

3040433  58 CASE NUMBER: CASE TITLE:  CONDER VS KIMBRELL [E-FILE]  37-2023-00018143-CU-OE-CTL Here, the arbitration agreements state: 'The Company and I agree that the aggrieved Party must serve a formal written demand for arbitration, containing all factual bases of any claim, to the other Party within the time limit established by the applicable statute of limitations for the asserted claim(s) or within one (1) year of the date the aggrieved Party first knows or should have known of the event giving rise to the claim(s) if no statutory limitation is applicable.' Thus, contrary to Plaintiffs' argument, the plain language of the agreements do not shorten any statutes of limitations. Rather, the agreements expressly incorporate 'the applicable statute of limitations for the asserted claim(s).' Rather than shorten any statute of limitations, the agreements create a one-year limitations period-subject to delayed discovery. But that limitations period only applies 'if no statutory limitation is applicable.' Such a provision is not unconscionable in the abstract, and as there is no dispute that all of Plaintiffs' claims have a statutory limitations period, it is neither applicable nor unconscionable in this case.

Plaintiffs' reliance on Samaniego v. Empire Today LLC (2012) 205 Cal.App.4th 1138 is misplaced. In that case, the arbitration agreement stated that the worker could not commence any action or suit more than six months after the earlier of either (1) the date the claim arose, or (2) the date the agreement terminated, and that the worker 'expressly waive[d] any statute of limitation to the contrary.' (Id. at p. 1143, fn. 2.) Here, unlike Samanigo, the arbitration agreement incorporates all statutes of limitations and only imposes a one-year limitation period where no statute of limitation is otherwise applicable.

For the reasons set forth above, the statute of limitations provision is not unconscionable.

Conclusion As set forth above, an unconscionability defense requires the party opposing arbitration to prove both procedural and substantive unconscionability. Here, Plaintiffs failed to meet their burden of proving that their arbitration agreements are substantively unconscionable, and therefore it is unnecessary to address the parties' arguments regarding procedural unconscionability. Even if the agreements were to some extent procedurally unconscionable (e.g., because they were a condition of Plaintiffs' employment), they are enforceable.

Dismissal of Class Claims Plaintiffs' arbitration agreements contain the following class action waiver: 'The Company and I agree that we must bring all claims covered by this Agreement against the other Party only in the Parties' individual capacity, and not as a plaintiff or class member in any purported class collective, or representative proceeding. With respect to the claims covered by this Agreement, the Parties expressly waive any right to submit, initiate, or participate in a representative capacity or as a plaintiff, claimant or member in a class action, regardless of whether the action is filed in arbitration or in court. This provision shall not constitute a waiver of any right I may have under the National Labor Relations Act, as amended. However, either Party may lawfully seek enforcement of this provision under the FAA and seek dismissal of class, collective or representative actions or claims. The Company and I acknowledge and agree that the conditions set forth in this provision are material terms of this Agreement.' The agreement also specifies that 'any issue concerning the validity of the class, collective, representative or joint action waivers provided in this Agreement must be decided by a court, not an arbitrator.' Calendar No.: Event ID:  TENTATIVE RULINGS

3040433  58 CASE NUMBER: CASE TITLE:  CONDER VS KIMBRELL [E-FILE]  37-2023-00018143-CU-OE-CTL Class action waivers in employment arbitration agreements are enforceable under the FAA and mandate dismissal of class claims when employees are compelled to arbitrate their individual wage-and-hour claims. (See Evenskaas v. California Transit, Inc. (2022) 81 Cal.App.5th 285, 298.) Plaintiffs only argument is that their class action waivers are unenforceable because the arbitration agreements containing those waivers are unconscionable. As set forth above, the arbitration agreements are not unconscionable and therefore this argument is not persuasive.

The class action waivers are enforceable.

Conclusion The motion is granted.

Plaintiffs are ordered to arbitrate their claims on an individual basis. The class claims are dismissed without prejudice.

This case is stayed pending arbitration. The court sets a status conference for July 26, 2024 at 10:00am.

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