Judge: Malcolm Mackey, Case: 22STCV15609, Date: 2022-12-06 Tentative Ruling
Case Number: 22STCV15609 Hearing Date: December 6, 2022 Dept: 55
FARRIS
v. NAT’L ACADEMY OF RECORDING ARTS & SCIENCES, INC. 22STCV15609
Hearing Date: 12/6/22,
Dept. 55
(same tentative posted for original hearing date)
#8: MOTION TO COMPEL ARBITRATION.
Notice: Okay
Opposition
MP:
Defendants
RP:
Plaintiff
Summary
On 5/11/22, Plaintiff LISA FARRIS filed a Complaint alleging
that defendants wrongfully terminated Plaintiff’s employment as Chief Marketing
Officer, on the bases of sex, gender, and age.
The causes of action are:
(1) DISCRIMINATION IN
VIOLATION OF THE FEHA;
(2) HOSTILE WORK
ENVIRONMENT HARASSMENT IN VIOLATION OF
THE FEHA;
(3) RETALIATION IN
VIOLATION OF THE FEHA;
(4) FAILURE TO PREVENT
DISCRIMINATION, HARASSMENT, OR RETALIATION IN VIOLATION OF FEHA;
(5) BREACH OF EXPRESS
ORAL CONTRACT NOT TO TERMINATE EMPLOYMENT WITHOUT GOODCAUSE;
(6) BREACH OF
IMPLIED-IN-FACT CONTRACT NOT TO TERMINATE EMPLOYMENT WITHOUT GOOD CAUSE.
MP
Positions
Moving party requests an order compelling arbitration,
and staying or dismissing this action, on grounds including the following:
·
Plaintiff signed a “Mutual Agreement to
Mediate and/or Arbitrate,” at the inception of her employment, which covers all
her claims.
·
On October 25, 2021, Plaintiff sent a
letter to Defendants, requesting mediation at the expense of Defendants, which
took place at Defendants’ expense, but Plaintiff refused to arbitrate.
·
“The Arbitrator shall have exclusive
authority to resolve any Claim, including, but not limited to, a dispute
relating to the interpretation, applicability, enforceability or formation of
this Agreement, or any contention that all or any part of this Agreement is
void or voidable.” (Grant Decl., ¶ 7, Ex. 1, Ex. A, ¶ G.)
·
The individual defendants have standing to
enforce the arbitration agreement, as agents, as alleged in the Complaint.
·
The Agreement complies with Armendariz and
is neither procedurally nor substantively unconscionable. Plaintiff had ample
time to review the Agreement and ask questions, but she did not do so. (Verma
Decl., ¶¶ 5, 7.)
·
The FAA applies, since the Academy’s work
and Plaintiff’s employment had a nexus to interstate commerce.
RP
Positions
Opposing party advocates denying, for reasons
including the following:
·
The agreement is unconscionable and has
been previously found by a trial court to be unconscionable.
·
The agreement was presented
electronically, take-it-or-leave-it, as one document in a list of over forty
forms that needed to be signed as part of the onboarding process, thereby
precluding Plaintiff the opportunity to negotiate the agreement. (Farris Decl.
¶2, 3, 6, 7). Farris was unaware and not
advised that she could opt out of the agreement.
·
Hidden within Paragraphs D and E of the
Agreement is a one-sided reduced statute limitations period.
·
Farris never was provided with a copy of
the incorporated JAMS rules.
·
The Agreement’s has incomprehensible
provisions constituting unfair surprise. Specifically, Paragraph G provides
that the arbitrator will have no authority to “(c) in the absence of a written
waiver pursuant to paragraph M below, hear or decide any matter that was not
processed in accordance with this Agreement.” However, paragraph M makes no
reference to written waiver.
·
The mediation requirement that the
mediation go through the same entity that would ultimately handle the
arbitration if unresolved, gives advantage to Defendants as “repeat players”
with JAMS, and allows Defendants a “free peek” at Plaintiff’s case through the
JAMS mediator.
·
Paragraph J prevents the Plaintiff from
initiating or prosecuting an administrative charge in any way related to any
claim, “including an administrative charge of discrimination to the extent
permitted by law”.
·
Confidentiality is not permitted.
Paragraph K of the Agreement herein states: “The mediation and/or arbitration
will be conducted in private, and will not be open, directly or indirectly, to
the public or the media.”
Tentative
Ruling
The motion is granted.
Plaintiff and defendants shall arbitrate the
controversies between them, including the entire Complaint, in accordance with
their agreement to arbitrate.
This entire case is stayed until such arbitration has
been completed.
Governing Law
The Court notes that the parties have cited some
federal and trial-court rulings.
Federal law applies to arbitration provisions in
contracts involving interstate commerce.
Higgins v. Sup. Ct. (2006) 140 Cal.App.4th 1238, 1247. However, “[e]ven when the Federal Arbitration
Act applies, state law governs such matters as who is bound by and who may
enforce an arbitration agreement.” Thomas
v. Westlake (2012) 204 Cal.App.4th 605, 614 n. 7.
Trial court rulings are not binding precedent. E.g., Schachter v. Citigroup, Inc. (2005)
126 Cal.App.4th 726, 738. Rulings in
other trial court cases are irrelevant absent some additional showing like the
elements of claim or issue preclusion. Drummond
v. Desmarais (2009) 176 Cal.App.4th 439, 448. Further, federal case law is not binding upon
California courts, and may be only persuasive in some circumstances. Alameida v. State Personnel Bd. (2004)
120 Cal. App. 4th 46, 61. California
courts are not bound to follow decisions of lower federal courts. People v. Sup. Ct. (2002) 103 Cal.
App. 4th 409, 431.
Assent
Moving parties’ declarations evidence Plaintiff’s
electronic signature of the subject arbitration agreement.
As for whether the signature included all provisions,
the Court finds that the declarations filed 6/17/22 prove that Plaintiff was
allowed plenty of time to carefully read and signed the subject arbitration
agreement. Failure to read a contract
with reasonable diligence is not a ground to avoid arbitration. Brookwood v. Bank of America (1996) 45 Cal.App.4th
1667, 1673. “‘[O]rdinarily one who signs
an instrument which on its face is a contract is deemed to assent to all its
terms. A party cannot avoid the terms of a contract on the ground that he or
she failed to read it before signing….’”
Metters v. Ralphs Grocery Co. (2008) 161 Cal.App.4th 696, 701.
Unconscionability
Take-It-or-Leave-It
Contrary to the employer communicating the arbitration
agreement was nonnegotiable, it expressly states that Plaintiff could read it
carefully and discuss it with counsel
(motion, ex. 1). Distinguishably, if evidence proves the employer had
expressly communicated that an arbitration agreement was nonnegotiable, then
the employer would be required to show that the opposing party such a
right. See Htay Htay Chin v. Advanced Fresh Concepts
Franchise Corp. (2011) 194
Cal.App.4th 704, 710.
Further, the Court finds that the Complaint and
evidence show that Plaintiff was a sophisticated employee, hired as Chief
Marketing Officer, capable of asserting equal bargaining power towards
negotiating it, instead of taking it or leaving it. Armendariz scrutiny is inapplicable
where an employee was sophisticated with equal bargaining power. Parker v. McCaw (2005) 125 Cal. App.
4th 1494, 1507. Armendariz
scrutiny is applicable where an employee was sophisticated with equal
bargaining power, where the party’s “stature and skills do not demonstrate his
power to bargain with respect to arbitration.” Abramson v. Juniper Networks, Inc. (2004)
115 Cal.App.4th 638, 662.
Even if the agreement were nonnegotiable: "[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." Lagatree v. Luce, Forward, Hamilton &
Scripps (1999) 74 Cal. App. 4th 1105, 1127.
Accord Giuliano v. Inland Empire Personnel,
Inc. (2007) 149 Cal.App.4th 1276, 1292.
Statute
of Limitations
There really is no shortening of the Statute of
Limitations (see motion, ex. 1, ex. A,
p. 1, ¶ D (“either party may serve written notice to the other party of its
intention to proceed to arbitration, within fifteen (15) working days from the
termination of the mediation, or within the time period prescribed by the
statute of limitations applicable to a party’s Claims, whichever is later.”)). In sharp contrast, an arbitration agreement
requiring the assertion of all claims within six months of the date the claim
arose, was an unconscionable provision. See
Martinez v. Master Protection Corp.
(2004) 118 Cal.App.4th 107, 117.
Administrative
Claims
Paragraph J does not actually preclude administrative
claims, because it makes an exception where the provision is not allowed by
applicable law, as follows-- “To the
extent permitted by law, each party agrees not to initiate or prosecute
against the other party any administrative action (including an administrative
charge of discrimination to the extent permitted by law) in any way related to
any Claim.” [Emphasis added.]
Confidentiality
Paragraph K does not constitute any confidentiality
agreement, because it merely makes arbitration proceedings private, but does
not express any preclusion of Plaintiff revealing what happened in those
proceedings or bar otherwise communicating about anything.
Analogously, justices concluded that arbitration
confidentiality terms (“ ‘[e]xcept as may be required by law, no party or
arbitrator(s) may disclose the existence, content or results of any arbitration
hereunder without the prior written consent of both parties’ ”) did not raise
colorable claims of unconscionability, because of two limitations placed on the
breadth of the provision in this case— i.e., not applicable where disclosure is
required by law, or the parties consent.
Htay Htay Chin v. Advanced Fresh Concepts Franchise Corp. (2011) 194 Cal.App.4th 704, 714.
Incorporated
Rules
Regarding the unsupplied JAMS rules, nothing in them
was unconscionable in relation to Plaintiff.
Cases that have held that the failure to provide a copy of the
arbitration rules support finding procedural unconscionability have involved an
unconscionability claim that somehow depended upon the incorporated arbitration
rules. Baltazar v. Forever 21, Inc.
(2016) 62 Cal.4th 1237, 1246.
Repeat
Player
That a party seeking to compel contractual arbitration
is a "repeat player" before arbitrators, alone, is not a cognizable
ground to deny a request to compel arbitration, but instead is part of the
analysis of factors of unconscionability.
Imagistics Internat., Inc. v. Dep't of Gen. Services (2007) 150
Cal. App. 4th 581, 592 ("being a repeat player would not of itself be
sufficient to render an arbitration agreement unconscionable."). See
also, e.g., Ontiveros v. DHL Express (USA), Inc. (2008) 164 Cal.
App. 4th 494, 505.
Free
Peek
The subject mediation provision provides for
neutrality via JAMS, and is expressly nonbinding, such that this case is unlike
governing opinions finding substantive unconscionability.
Arbitration agreements requiring plaintiffs to submit
to defense-controlled dispute resolution mechanisms, without a neutral mediator,
suggests that defendants would receive a free peek at plaintiffs’ cases,
thereby giving an advantage to defendants in any future arbitration, and making
such agreements substantively unconscionable.
Nguyen v. Applied Med. Res. Corp. (2016) 4 Cal. App. 5th 232, 254.
Intelligibility
The very minor lettering error, referenced in the
opposition, does not materially affect the scope of the arbitration agreement
or the unconscionability analysis. At
worst, it could be interpreted to mean that the arbitrator cannot decide
disputes outside of the agreement and no exceptions. At best, it could be interpreted to mean that
there was a mere lettering-sequence error, and the agreement provides that the
parties may waive that provision, and allow the arbitrator to decide issues
from outside the scope of the agreement
(see opp., 1:23 – 25 (“Paragraph
G of the agreement provides that the arbitrator will have no authority to ‘(c)
in the absence of a written waiver pursuant to paragraph M below, hear or
decide any matter that was not processed in accordance with this
Agreement.” However, paragraph M makes
no reference to written waiver.”)).
“‘The burden is on the party opposing arbitration
to show the agreement cannot be interpreted to apply to the dispute.’” Gravillis v. Coldwell Banker Residential
Brokerage Co. (2006) 143 Cal.App.4th 761, 772 (quoting Balandran v. Labor Ready, Inc.
(2004) 124 Cal.App.4th 1522, 1527-1528).
Delegation
The arbitration agreement validly delegates deciding
arbitrability to the arbitrator.
Under federal law, parties may reserve issues of
arbitrability or unconscionability for arbitrators’ exclusive determination,
but only by clear and unmistakable evidence, including an unambiguous agreement, but the issue is
unsettled in California case law. Hartley
v. Sup. Ct. (2011) 196 Cal.App.4th
1249, 1253-58. Assuming that California
law allows parties to delegate gateway issues such as unconscionability
arbitrators, the agreement must clearly and unmistakably show the parties
agreed to give the arbitrator the exclusive power to decide gateway issues of
arbitrability. Hartley v. Sup. Ct.
(2011) 196 Cal.App.4th 1249, 1255-56.
JAMS Rule 11 authorizes arbitrators to decide what issues are
arbitrable. Greenspan v. LADT, LLC
(2010) 185 Cal.App.4th 1413, 1442.
Third-Party
Enforcement
The individual defendants have standing to enforce the
arbitration agreement, as agents alleged in the Plaintiff’s Complaint. “[A] plaintiff's allegations of an agency
relationship among defendants is sufficient to allow the alleged agents to invoke
the benefit of an arbitration agreement executed by their principal even though
the agents are not parties to the agreement.”
Thomas v. Westlake (2012) 204 Cal.App.4th 605, 614-15.
Stay
The Court having compelled contractual arbitration,
also orders a stay.
Where a court has ordered arbitration, it shall stay
the pending action, until an arbitration is had in accordance with the order to
arbitrate, or another earlier time, and the stay may be with respect to an
issue that is severable. CCP
§1281.4; Cruz v. PacifiCare Health
Systems, Inc. (2003) 30 Cal. 4th 303, 320;
Twentieth Century Fox Film Corp. v. Sup. Ct. (2000) 79 Cal.App.4th
188, 192; Heritage Provider Network,
Inc. v. Sup. Ct. (2008) 158 Cal.App.4th 1146, 1152, 1154 n. 12.