Judge: Malcolm Mackey, Case: BC704125, Date: 2022-12-08 Tentative Ruling
Case Number: BC704125 Hearing Date: December 8, 2022 Dept: 55
ARELLANO
v. OPTUMCARE MED. GRP. BC704125
Hearing Date: 12/8/22, Dept. 55
#6: MOTION TO COMPEL ARBITRATION OF PLAINTIFF’S INDIVIDUAL CLAIMS AND
DISMISS PLAINTIFF’S REPRESENTATIVE CLAIMS.
Notice: Okay
Opposition
MP:
Defendants
RP:
Plaintiff
Summary
On 4/27/18, Plaintiff CRYSTAL
RUSSELL filed a Complaint.
Subsequently, Plaintiff
filed a First Amended Complaint for violation of The California Labor Code
Private Attorneys General Act of 2004.
Allegedly, Plaintiff, and
represented, aggrieved employees, experienced defendants’ violations in Los
Angeles, including failure to properly pay wages for all overtime and regular
hours work, failure to properly calculate overtime compensation, unlawful meal
and rest period policies, failure to pay all wages due to discharged or
quitting employees, failure to maintain required records, failure to provide
accurate itemized wage statements, failure to timely pay wages during
employment, and failure to indemnify employees for necessary expenditures
and/or losses incurred in discharging their duties.
On 10/16/20, Plaintiff
moved for leave to file a Second Amended Complaint, granted on 11/26.
Moving parties request an
order compelling arbitration, on bases including the following:
·
Plaintiff signed
a valid and enforceable arbitration agreement requiring her to submit all
claims, including her Private Attorneys General Act (“PAGA”) claim, to
individual arbitration.
·
On August 16,
2016, Plaintiff began her employment as a Medical Assistant for Defendant Optum Services, Inc. (“OSI”).
OSI is a subsidiary of Defendant Optum, Inc. (“Optum”), which, in turn, is a
subsidiary of Defendant UnitedHealth Group Incorporated (“UnitedHealth”).
·
Before the start
of her employment, Plaintiff was sent an offer letter for the position of
Medical Assistant. (Weedman decl.,” ¶¶3-4, Ex. A.) The four-page Offer Letter
informed Plaintiff that a copy of the Employment Arbitration Policy for UnitedHealth
Group Incorporated and its subsidiaries, was enclosed. The letter explained
that the Arbitration Agreement was “a binding contract” and other aspects.
·
On August 29,
2016, Plaintiff logged into UnitedHealth Group Incorporated’s computer system,
with her secure, unique password, and individual employee ID number, to
acknowledge receipt of an electronic copy of the Arbitration Agreement.
(Weedman Decl., ¶¶3-4, 8.) On August 29, 2016, Plaintiff electronically
executed the Arbitration Agreement, which unambiguously requires Plaintiff and
UnitedHealth, and its subsidiaries, including OSI and Optum, to arbitrate any
disputes that may arise related to Plaintiff’s employment.
·
The Arbitration
Agreement states “Acceptance of employment or continuation of employment with
UnitedHealth Group is deemed to be acceptance of this Policy.” (Weedman Decl.,
¶ 2-4, 8; Ex. B).
·
The Arbitration
Agreement is not unconscionable, because it is not one-sided in that Defendants
also are required to arbitrate any claims it may have against Plaintiff.
Further, in accordance with the Supreme Court’s holding in Viking River, the
representative action waiver is not unconscionable, and the Arbitration
Agreement meets the factors outlined in Armendariz v. Found Health Psychcare
Servs., Inc., 24 Cal. 4th 83 (2000).
·
Since the
decision in Viking River came out on June 15, 2022, Defendants have not taken
any action that would constitute a waiver of its right to compel arbitration. The
law did not recognize Defendants’ ability to enforce the arbitration agreement
with respect to Plaintiff’s PAGA claims, until the U.S. Supreme Court decided
Viking River Cruises, Inc. v. Moriana.
RP
Positions
Opposing
party advocates denying, for reasons including the following:
First, no arbitration agreement exists between the
Parties. Plaintiff never signed the
contested Employment Arbitration Policy…, and, in
the absence of a contract consenting to arbitrate, there is no basis to compel
arbitration. Stolt-Nielsen S.A. v. AnimalFeeds International Corp. (2010) 130
S. Ct. 1758, 1773-74…; Davis v. TWC Dealer-Group, Inc. (2019) 41 Cal.App.5th
662. Here, Defendants cannot (and did not) produce an executed agreement
between the parties. Indeed, Employee Relations Vice President, Susan Weedman,
provided testimony regarding the blank signature line on the Arbitration
Agreement, stating “[t]he fact that the employee’s name is not also displayed
in the box does not mean that the employee did not enter his or her name when
agreeing to the Arbitration Agreement – this is simply how the Arbitration
Agreement prints out.” (Declaration of Susan
Weedman, ¶¶ 6-8) Yet she could not also produce one that was later signed by
the Plaintiff. As there is no meeting of the minds to arbitrate any claim, the
Court’s inquiry should end here.
Second, even if the Agreement was signed, it is both
procedurally and substantively
unconscionable. These terms include a reference to
AAA arbitration rules, which are not attached to the Agreement and were never provided
to the Plaintiff. The Agreement also drastically limits Plaintiff’s discovery
rights, permitting only “one interrogatory” per party. Of course, the Agreement
permits Defendants to pool resources to defend against the claims, but prevents
Plaintiff from joining with any other aggrieved employees. These unconscionable
terms permeate the Agreement, making it unsuitable for severance.
Third, even if the Court is inclined to grant
Defendants’ request, the Court should deny
the request to dismiss Plaintiff’s representative
PAGA claim. Contrary to Defendants’ assertion, Viking River does not compel
dismissal of representative PAGA claims, and the California Supreme Court has
taken up this very question in Adolph v. Uber Techs., Inc., No. G059860, 2022
WL 1073583 (Cal. Ct. App. Apr. 11, 2022), review granted (July 20, 2022)….
Lastly, Defendants’ clear and unmistakable conduct
to not only fully engage and
participate in discovery but to take full advantage
of all aspects of discovery (e.g., law and motion, propound and respond to
discovery, take depositions, including Ms. Russell’s on March 15, 2022) and
proceedings in court demonstrates their intent to waive their right to
arbitrate. Plaintiff and the State of California would be severely prejudiced
if the Court granted this relief so late in the process, and after the
expenditure of considerable resources.
(Opposition,
pp. 7 – 8.)
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.
The PAGA representative
action is dismissed.
Dismissal
The
Iskanian
opinion correctly decided a PAGA waiver is unenforceable as to non-individual
claims, without any FAA preemption, but arbitration can be compelled as to
individual plaintiffs’ waived claims, and the remaining claims of
representative actions should be dismissed, due to lack of standing upon
plaintiffs’ removal from the action and into arbitration. Viking River Cruises v. Moriana (2022) 142 S. Ct. 1906, 1924-25 (opinion after granting petition for writ of
certiorari to the Court of Appeal of California). There is a rule against PAGA waivers and
predispute arbitration agreements, notwithstanding the Federal Arbitration
Act. Contreras v. Sup. Ct. (2021)
61 Cal.App.5th 461, 471-72.
See also Winns v.
Postmates Inc. (2021) 66 Cal. App. 5th 803, 815 n. 4 (California cases never overruled Iskanian,
although the Viking opinion was then anticipated to address Ikanian).
A case can be dismissed
on the grounds that all issues are susceptible to arbitration by agreement and
plaintiff did not attempt to exhaust arbitration. 24 Hour Fitness, Inc. v.
Sup. Ct. (1998) 66 Cal. App. 4th 1199, 1208; Charles J. Rounds Co. v. Joint Council of
Teamsters (1971) 4 Cal.3d 888, 899.
Pending Decision
The Court exercises its
discretion to decide and not delay the ruling pending a related decision-- Adolph v. Uber Techs., Inc., No.
G059860, 2022 WL 1073583 (Cal. Ct. App. Apr. 11, 2022), rev. grt’d (July
20, 2022). A
trial court would not abuse discretion in delaying litigation pending an
appeal of a case involving the same issues.
California Canning Mach. Co. v. Sup. Ct. (1935) 3 Cal.2d 606,
608; Reed v. Sup. Ct (2001) 92
Cal. App. 4th 448, 455.
Assent
Moving parties’ evidence
competently shows that Plaintiff assented to the arbitration agreement,
including details of a computer procedure whereby Plaintiff would have needed
to enter a password, and to select a button indicating agreement, as to which
no signature is required.
"Civil Code section
1633.9 addresses how a proponent of an electronic signature may authenticate
.... 'The act of the person may be shown in any manner, including a showing of
the efficacy of any security procedure applied to determine the person to which
the electronic record or electronic signature was attributable.' ” Ruiz v. Moss Bros. Auto Group, Inc.
(2014) 232 Cal.App.4th 836, 843.
Unconscionability
Take-It-Or-Leave-It
Plaintiff’s evidence is
too general and conclusory to show employer communication of a requirement to
accept the arbitration agreement. If a
plaintiff’s evidence shows that a moving party communicated that an arbitration
agreement was nonnegotiable, then the moving party needs to establish that it
had made opposing party aware of an ability to negotiate, or that by law
opposing party such a right. Htay
Htay Chin v. Advanced Fresh Concepts Franchise Corp. (2011) 194 Cal.App.4th 704, 710.
Alternatively,
employer-required arbitration agreements are not necessarily
unconscionable. "[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.
Discovery
The agreement allows for
sufficient, various discovery methods.
"‘[A]dequate’
discovery does not mean unfettered discovery....'" Fitz v. NCR Corp. (2004)118
Cal.App.4th 702, 715. An AAA provision
allowing arbitrators to control the extent of discovery did not constitute
substantive unconscionability. See Roman v. Sup. Ct. (2009) 172 Cal.App.4th 1462, 1476. An arbitration clause is substantively
unconscionable if it makes no express provision for discovery rights. Sparks v. Vista Del Mar Child and Family
Services (2012) 207 Cal.App.4th 1511, 1523,
abrogated on other grounds by Harris v. TAP Worldwide, LLC (2016)
248 Cal. App. 4th 373, 387.
Incorporated
Rules
The arbitration agreement
made easy the access to the incorporated AAA rules, by providing Plaintiff with
the Internet address. For valid incorporation of arbitration rules by
reference, in an arbitration agreement, the reference must be clear and
unequivocal and called to the attention of the other party, who must consent
thereto, and the incorporated document must be known or easily available. Wolschlager v. Fidelity Nat. Title Ins. Co.
(2003) 111 Cal.App.4th 784, 790. Accord
Shaw v. Regents of Univ. of Cal. (1997) 58 Cal.App.4th 44, 54
(whether incorporation of terms is enforced depends on the particular
facts). “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.
Further, the opposition
shows nothing about the AAA Rules content that creates any substantive
unconscionability. 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.
Explaining Arbitration Agreement
Opposing parties’
evidence lacks factors indicating that any further explanations of the
arbitration agreement were needed.
Distinguishably, surprise caused
by provisions buried in a long contract, language not fully explained, or
misleading captions, indicates procedural unconscionability. Thompson v. Toll Dublin, LLC (2008)
165 Cal.App.4th 1360, 1373. Circumstances
indicating that employees' agreeing to arbitration likely was not free and
informed can constitute procedural unconscionability. Sanchez v. Western Pizza Enterprises, Inc. (2009) 172 Cal.App.4th 154, 174-75 (low-wage
employees likely feeling pressure to agree, and lack of information,
constituted procedural unconscionability),
abrogated on other grounds by Iskanian v. CLS Transportation Los Angeles,
LLC (2014) 59 Cal. 4th 348, 366.
Waiver
The Court finds that
defendants did not waive the ability to move to compel arbitration, mainly because
new law enabling the motion to compel individual claims and to dismiss
representative claims, was not decided until mid-2022-- Viking
River Cruises v. Moriana
(2022) 142 S. Ct. 1906, 1924-25. No established test determines waiver of
arbitration, but courts may consider whether (1) a party's actions are
inconsistent with arbitrating, (2) litigation proceedings were substantially
invoked and parties were well into lawsuit preparations before party
notification of intent to arbitrate; (3) a party requested arbitration close to
trial or delayed for a long period; (4) a party seeking arbitration filed a
cross-action without requesting arbitration; (5) important intervening steps
occurred such as discovery procedures unavailable in arbitration; and (6) delay
prejudiced, affected or misled parties opposing arbitration. Wagner Construction Co. v. Pacific
Mechanical Corp. (2007) 41 Cal. 4th 19, 30-31. Appellate courts may reverse the trial
courts’ arbitration-waiver findings only if the record establishes a lack of
waiver as a matter of law. Lewis v.
Fletcher Jones Motor Cars, Inc. (2012) 205 Cal.App.4th 436, 453.
Co-Defendants’ Enforcement
Moving parties’ evidence well
shows that the defendants consist of a corporation and subsidiaries, and that the
arbitration agreement expressly references subsidiaries as being intended
beneficiaries of the agreement. Intended
third-party beneficiaries may enforce arbitration provisions. Macaulay v. Norlander (1992) 12
Cal.App.4th 1, 7–8; Michaelis v.
Schori (1993) 20 Cal.App.4th 133, 139 (agreement expressly included
arbitration of claims as to signatory’s employees).
Governing Law
The Court disregards trial
court rulings in other cases, referenced in the opposing papers, which are not
binding precedent. E.g., Schachter
v. Citigroup, Inc. (2005) 126 Cal.App.4th 726, 738. Rulings in other 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.
If both parties wish to
submit on the court’s tentative ruling, please call Department 55 at 213-633-0655.