MURHI v. U.S. TELEPACIFIC CORP.,                                                    23STCV10864

Hearing:  8/31/23,  Dept. 55.

#9:    MOTION TO COMPEL ARBITRATION AND STAY/DISMISS THE PROCEEDINGS PENDING ARBITRATION.

 

Notice:  Okay

Opposition

 

MP:  Defendants U.S. TELEPACIFIC CORP., DBA TPX COMMUNICATIONS, U.S. TELEPACIFIC CORP., DBA TELEPACIFIC COMMUNICATIONS, U.S. TELEPACIFIC CORP., TPX COMMUNICATIONS CO., U.S. TELEPACIFIC HOLDINGS CORP., and SIRIS CAPITAL GROUP, LLC.

RP:  Plaintiff

 

 

Summary

 

On 5/15/23, Plaintiff ALI MURHI, filed a Complaint alleging that employer defendants discriminated, harassed, retaliated and later terminated employment, because of Plaintiff’s disability and ongoing requests for accommodations.

The causes of action are:

(1) DISCRIMINATION IN VIOLATION OF FEHA;

(2) HOSTILE WORK ENVIRONMENT HARASSMENT UNDER FEHA;

(3) RETALIATION UNDER FEHA;

(4) FAILURE TO PROVIDE REASONABLE ACCOMMODATIONS IN VIOLATION OF FEHA;

(5) FAILURE TO ENGAGE IN THE INTERACTIVE PROCESS IN VIOLATION OF FEHA;

(6) CFRA LEAVE DISCRIMINATION/RETALIATION;

(7) INTERFERENCE WITH CFRA RIGHTS;

(8) FAILURE TO PREVENT DISCRIMINATION, HARASSMENT, AND RETALIATION UNDER FEHA;

(9) WHISTLEBLOWER RETALIATION IN VIOLATION OF LABOR CODE § 1102.5;

(10) WRONGFUL TERMINATION OF EMPLOYMENT AND FAILURE TO HIRE IN VIOLATION OF PUBLIC POLICIES;

(11) BREACH OF EXPRESS ORAL CONTRACT NOT TO TERMINATE EMPLOYMENT WITHOUT GOOD CAUSE;

(12) BREACH OF IMPLIED-IN-FACT CONTRACT NOT TO TERMINATE EMPLOYMENT WITHOUT GOOD CAUSE;

(13) NEGLIGENT RETENTION, SUPERVISION AND HIRING;

(14) INTENTIONAL INFLICTION OF EMOTIONAL DISTRESS.

 

 

MP Positions

 

Moving parties request an order compelling arbitration and staying this action, on grounds including the following:

 

·         There is a valid, written arbitration agreement between Plaintiff and defendants covering all the claims in this action.

 

 

 

 

RP Positions

 

Opposing party advocates denying, for reasons including the following:

 

First, the arbitration agreement in question lacks mutual assent and is therefore invalid.

Murhi was not afforded the opportunity to understand the full terms of the arbitration agreement at the time he signed due to the limited time provided and hidden terms, based on Defendants’ failure to provide Murhi the arbitration rules or provide any indication of where to locate them to become fully informed of its terms, as well as other terms referenced in the agreement. Furthermore, the agreement is not signed by any representative of Defendants, which has also been held is evidence of a lack of mutual assent. As such, Defendants have not met their burden demonstrating the existence of a valid agreement.

 

Second, Defendants’ arbitration agreement is unenforceable because it is procedurally

unconscionable on the following grounds: (1) it is a contract of adhesion, was mandatory and non-negotiable, and was presented to Muhri on a “take-it or leave-it” basis. Muhri was not in the position to refuse a job and understood that he had no other choice but to sign the agreement in order to secure his employment “right there and then.” (2) Defendants failed to provide Muhri with the full terms of the agreement at the time of signature, including by failing to provide the arbitration rules or any indication

at all of where he could review them. (3) The limited time provided to Muhri to execute the agreement also constitutes procedural unconscionability where, as here, the employee is required to review multiple documents in order to become familiar with the full terms of the agreement (i.e., AAA rules.).

 

Third, Defendants’ arbitration agreement is permeated by substantive unconscionability. The agreement (1) includes one-sided prearbitration conditions and an unlawful “waiver of all claims” provision designed infringe on Murhi’s statutory right; (2) the agreement further waives Murhi’s statutory rights to attorney’s fees; (3) the agreement improperly contains a waiver of representative PAGA claims which recently has been affirmed to be an unwaivable right; (4) the agreement also contains a broad confidentiality provision that unreasonably inhibits Plaintiff’s discovery ability; (5) finally, the lack of mutuality demonstrated by Defendants failure to sign the agreement supports a finding of substantive unconscionability.     

 

(Opp. p.1.)

 

 

Tentative Ruling

 

The motion is granted. 

Plaintiff and moving defendants 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.

 

            Assent and Mutuality

The second arbitration agreement in evidence is signed by the employer, and the agreements have no language requiring employer signatures in order to constitute assent.

“[I]t is not the presence or absence of a signature which is dispositive; it is the presence or absence of evidence of an agreement to arbitrate which matters.”  Banner Entertainment, Inc. v. Sup. Ct.  (1998) 62 Cal.App.4th 348, 361 (finding a complete absence of proof of circumstances showing assent).  See also  Saint Agnes Medical Center v. PacifiCare of Cal. (2003) 31 Cal.4th 1187, 1200 (finding assent because parties did not deny agreeing to the terms, and party’s petition to compel arbitration reflected intent to be bound).  Where contract language shows that the parties contemplated that an arbitration provision would become effective only if each party has signed, or initialed, it, there is no assent as to a party who did not sign or initial it.  Marcus & Millichap Real Estate Inv. Brokerage Co. v. Hock Inv. Co.  (1998) 68 Cal.App.4th 83, 92.  Accord Romo v. Y-3 Holdings (2001) 87 Cal. App. 4th 1153, 1159;  But see  Grubb & Ellis Co. v. Bello (2d Dist. 1993) 19 Cal.App.4th 231, 237-38 (arbitration remedy effective even though party did not initial the arbitration provision).

Distinguishably, an arbitration agreement was permeated with unconscionability in a FEHA case, because it “contained … the lack of mutuality,…”  Ramirez v. Charter Communications, Inc. (2022) 75 Cal.App.5th 365, 371.

 

            Unconscionability

                        Procedural

The Court finds no procedural unconscionability, including because the very quickly noticeable two paragraphs in capital letters right above Plaintiff’s signature state that Plaintiff had time to read the arbitration agreement and to consult with an attorney.  Any failure to read those, and to inquire of the employer whether Plaintiff was given a take-it-or-leave-it contract in light of such open and obvious language, was negligence.

Persons capable of reading and understanding contracts may not avoid them on the basis of failure to read them before signing, unless there was fraud, coercion or excusable neglect. Brown v. FSR Brokerage, Inc. (1998) 62 Cal.App.4th 766, 777;  Coon v. Nicola  (1993) 17 Cal.App.4th 1225, 1239;   Bolanos v. Khalatian  (1991) 231 Cal.App.3d 1586, 1590.  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. 

"[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.4^th 1276, 1292.

                       

Confidentiality

The Court concludes that narrow language regarding confidentiality of just the arbitration process, does not constitute unconscionability.

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.

"‘[A]dequate’ discovery does not mean unfettered discovery....'"  Fitz v. NCR Corp. (2004)118 Cal.App.4th 702, 715. 

 

                        Free Peek

The Court finds no unlawful type of “free peek” provision, as to requiring arbitration requests to describe claims and facts, which is simply similar to pleading and discovery practice in civil cases.

Distinguishably, 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.

 

                        AAA Rules

 

The Court finds that there is no issue about unconscionability of AAA rules, and that they were readily accessible online 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.4^th 1237, 1246.

“Whether a document purportedly incorporated by reference was ‘readily available’ is a question of fact.”  Baker v. Osborne Development Corp. (2008) 159 Cal.App.4th 884, 895.

 

                        FEHA Relief

 

The arbitration agreements expressly require the arbitrator to follow the law, and do not prohibit awards of attorneys’ fees and costs under FEHA.  Distinguishably, provisions for each party to pay their own attorneys’ fees relate to conducting arbitration, and not to arbitration awards.  Further, the waiver of claims by inadequate requesting of arbitration is unripe and not prejudicial, because it never occurred in this case where instead the instant motion is the arbitration request.

Distinguishably, an arbitration clause in an employment agreement that is contrary to FEHA (Gov. C. §12965(b)), as to attorney fees and cost recovery, is substantively unconscionable, but may be severed from the rest of the contract, and not enforced, in the Court’s discretion.  Trivedi v. Curexo Technology Corp.  (2010) 189 Cal.App.4th 387, 396-98  (applying AAA rules),  disapproved on other grounds by  Baltazar v. Forever 21, Inc. (2016) 62 Cal. 4th 1237, 1248. 

 

            PAGA Waiver

The issue of PAGA waiver is not ripe, since the instant Complaint does not include a PAGA claim.  Further, the arbitration agreements expressly allow severing arbitration provisions.

Distinguishably, a trial court had ruled correctly that the Iskanian opinion rendered a PAGA waiver unenforceable, but erred by severing the provision, because the arbitration agreement language provided it was not severable.  See  Securitas Security Services USA, Inc. v. Sup. Ct.  (2015) 234 Cal. App. 4th 1109, 1112-13.

 

            Evidentiary Objections

The Court overrules all of opposing party’s evidentiary objections.

Moving parties’ declaration regarding employees signing arbitration agreements, is admissible as business records.

Courts have broad discretion in determining whether witnesses are qualified to testify concerning  “ ‘the identity and mode of preparation’ ” of business records, to permit a determination that ‘[t]he sources of information and method and time of preparation were such as to indicate its trustworthiness.’ ”  Sierra Managed Asset Plan, LLC v. Hale (2015) 240 Cal.App.4th Supp. 1, 9.    Foundational evidence in support of the business records exception to the hearsay rule need not be presented by the custodian of the record, or the employee who prepared it.  Grail Semiconductor, Inc. v. Mitsubishi Electric & Electronics USA, Inc. (2014) 225 Cal.App.4th 786, 798.  To establish admissibility, based on the business records exception to the hearsay rule, a witness having personal knowledge of the transaction or event, need not testify, but instead any qualified witness familiar with the procedures followed, may testify.  Jazayeri v. Mao (2009) 174 Cal. App. 4th 301, 322.  “ ‘The witness need not have been present at every transaction to establish the business records exception; he or she need only be familiar with the procedures followed ….’ ”  Midland Funding LLC v. Romero (2016) 5 Cal.App.5th Supp. 1, 8.

 

            Oral Hearing Request

The Court denies  opposing party’s request for a hearing involving live testimony, in its discretion. 

As to motions to compel arbitration, factual issues are resolved based upon conflicting affidavits or declarations and, the court has discretion to consider oral testimony. M & M Foods, Inc. v. Pacific American Fish Co. (2011) 196 Cal.App.4th 554, 559. Trial courts have discretion as to whether to allow oral testimony as to petitions to compel arbitration.  Warfield, v. Summerville Senior Living, Inc. (2007) 158 Cal.App.4^th 443, 446.

 

            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.4^th 188, 192;  Heritage Provider Network, Inc. v. Sup. Ct.  (2008) 158 Cal.App.4th 1146, 1152, 1154 n. 12.