Judge Lynne M. Hobbs, Case Number: 24STCV16271, Date: 2025-01-22 Tentative Ruling

Judge: Lynne M. Hobbs, Case: 24STCV16271, Date: 2025-01-22 Tentative Ruling

Case Number: 24STCV16271 Hearing Date: January 22, 2025 Dept: 61

MARTHA GARCIA, AN INDIVIDUAL vs NIAGARA BOTTLING, LLC, A DELAWARE CORPORATION, et al.

Tentative

Defendant Niagara Bottling, LLC and Niagara Bottling International, LLC’s Motion to Compel Arbitration is DENIED.

Plaintiff to provide notice.

Analysis:

On petition of a party to an arbitration agreement to arbitrate a controversy, a court must order the petitioner and respondent to arbitrate the controversy if it determines the arbitration agreement exists, unless (1) the petitioner has waived its right to arbitrate; (2) grounds exist for the revocation of the agreement; or (3) “[a] party to the arbitration agreement is also a party to a pending court action or special proceeding with a third party, arising out of the same transaction or series of related transactions and there is a possibility of conflicting rulings on a common issue of law or fact.” (Code Civ. Proc., § 1281.2.) “[T]he party moving to compel arbitration bears the burden of establishing the existence of a valid agreement to arbitrate, and the party opposing arbitration bears the burden of proving by a preponderance of the evidence any fact necessary to its defense. The role of the trial court is to sit as a trier of fact, weighing any affidavits, declarations, and other documentary evidence, together with oral testimony received at the court's discretion, to reach a determination on the issue of arbitrability.” (Hotels Nevada v. L.A. Pacific Center, Inc. (2006) 144 Cal.App.4th 754, 758.)

Defendants Niagara Bottling, LLC and Niagara Bottling International, LLC (Defendants) move to compel arbitration of Plaintiff Martha Garcia’s (Plaintiff) claims pursuant to an arbitration agreement executed by Plaintiff on June 5, 2022. (Torres Decl. Exh. 1.) The agreement applies to all disputes “relating to termination, demotion, failure to promote or any other issue regarding the terms and conditions of employment, the events leading up to employment, statements made at any time regarding Team Member’s employment at the Company, alleged violations of federal, state, and /or local statutes,” and a variety of other types of claims. (Torres Decl. Exh. 1.)

Plaintiff argues that this agreement is unconscionable. “Unconscionability requires a showing of both procedural unconscionability and substantive unconscionability.” (Ajamian v. CantorCO2e, L.P. (2012) 203 Cal.App.4th 771, 795.) “The oppression that creates procedural unconscionability arises from an inequality of bargaining power that results in no real negotiation and an absence of meaningful choice.” (Grand Prospect Partners, L.P. v. Ross Dress for Less, Inc. (2015) 232 Cal.App.4th 1332, 1347–1348.) “Substantive unconscionability is not susceptible of precise definition. It appears the various descriptions—unduly oppressive, overly harsh, so one-sided as to shock the conscience, and unreasonably favorable to the more powerful party—all reflect the same standard. Substantive unconscionability is not concerned with a simple old-fashioned bad bargain.” (Id. at p. 1349, citations omitted.)

Arbitration contracts presented to employees on a take-it-or-leave-it basis are at least minimally procedurally unconscionable. (See Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83, 113.) The agreement here, being of this type of agreement, is at least minimally unconscionable. Plaintiff identifies the following substantively unconscionable aspects of the agreement. Plaintiff claims that the agreement contains an unconscionable waiver of representative PAGA claims. (Opposition at p. 6.) Plaintiff argues that the agreement includes an unconscionable shortening of the limitations period for claims that require the filing of an administrative charge. (Opposition at pp. 6–7.) And Plaintiff argues that a provision of the concurrently executed employment confidentiality agreement contains a one-sided provision granting Defendants favorable access to injunctive relief not afforded to employees. (Opposition at pp. 7–8.)

The first argument as to the PAGA waiver is unpersuasive, because the agreement contains no waiver of PAGA claims. The agreement divests the arbitrator of power to hear “any claims on a collective or class-wide basis,” and waives the parties’ right “to be a class or collective action representative or to otherwise participate in any putative or certified class, collective, or multi-party action or proceeding.” (Torres Decl. Exh. 1.) This provision waives the right to participate in class or collective actions, which are permissible under federal law — not representative actions, from which they are analytically distinct. (See Viking River Cruises, Inc. v. Moriana (2022) 596 U.S. 639, 657–658 [distinguishing multi-party “class or collective” actions from “single-principal, single-agent” actions, which are akin to PAGA].)

However, Plaintiff is correct that the alteration on the limitations period is unconscionable. The agreement requires the party demanding arbitration to file their claim by the time an administrative charge would be due on the same claim. (Torres Decl. Exh. A.) A virtually identical arbitration provision was held unconscionable in Ramirez v. Charter Communications, Inc. (2024) 16 Cal.5th 478, 500, based on the provision’s effective elimination of the one-year period ordinarily granted FEHA plaintiffs between the filing of their administrative charge and the filing of their complaint. “FEHA's protections, including its limitations periods, cannot be abrogated by private agreement.” (Id. at p. 503.) This shortening of the limitations provision is similarly unconscionable here.

And Plaintiff is correct that there is no mutuality in the availability of injunctive relief. “While a provision in an arbitration agreement allowing an employer to seek equitable relief in court for violations of a non-disclosure agreement is not necessarily unconscionable, it becomes unconscionable “when it authorizes the stronger party to obtain injunctive relief without establishing all of the essential elements for the issuance of an injunction.” (Lange v. Monster Energy Company (2020) 46 Cal.App.5th 436, 451.) The confidentiality agreement executed in conjunction with the arbitration agreement contains just such a provision: an acknowledgement by the employee that any breach of the confidentiality agreement “may cause the Company irreparable harm for which monetary damages may be inadequate,” and therefore “that the Company shall be entitled to an injunction from such breach or threatened breach in addition to any other remedies to which the Company may be entitled.” (Garcia Decl. Exh. 1 [“Confidentiality Non-Solicitation and Intellectual Property agreement”].) By this provision Defendants seek to preserve to themselves procedural advantages not available to their employees, an unconscionable lack of mutuality.*

The number of unconscionable provisions at issue here supports a conclusion that the agreement is permeated by unconscionability, and that the provisions are not severable from the agreement. A trial court has the discretion to refuse to enforce an agreement as a whole if it is permeated by the unconscionability. The overarching inquiry is whether the interests of justice would be furthered by severance. If the central purpose of a contractual provision, such as an arbitration agreement, is tainted with illegality, then the provision as a whole cannot be enforced. If the illegality is collateral to the main purpose of the contractual provision, and can be severed or restricted from the rest, then severance is appropriate. (Carmona v. Lincoln Millennium Car Wash, Inc. (2014) 226 Cal.App.4th 74, 90, internal quotation marks, citations, and alterations omitted.) “When an arbitration agreement contains multiple unconscionable provisions, such multiple defects indicate a systematic effort to impose arbitration on an employee not simply as an alternative to litigation, but as an inferior forum that works to the employer's advantage.” (Ibid, internal quotation marks and alterations omitted.)

Here, Defendants’ arbitration agreement evidences an intent to impose by contract of adhesion upon its employees an arbitral forum in which the time to bring their statutory claims is significantly curtailed, while reserving to itself not only the advantages of a judicial forum for equitable relief, but a preemptive contractual stipulation that any such relief would be appropriately rendered in the employer’s favor, without any such concession for the employee. The agreement is permeated with unconscionability.

Thus the motion is DENIED.

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* Although Defendants argue in reply that the arbitration agreement guarantees both parties access to injunctive relief, it does not contain a concession from the employer that the employee is entitled to injunctive relief, as it does in the other direction. (Reply at p. 8.)