Judge: Mark A. Young, Case: 23SMCV01714, Date: 2023-09-19 Tentative Ruling
Case Number: 23SMCV01714 Hearing Date: September 19, 2023 Dept: M
CASE NAME: Hartman v. Avantstay
Inc., et al.
CASE NO.: 23SMCV01714
MOTION: Petition/Motion
to Compel Arbitration
HEARING DATE: 9/20/2023
Legal
Standard
Under California and federal law,
public policy favors arbitration as an efficient and less expensive means of
resolving private disputes. (Moncharsh
v. Heily & Blase (1992)
3 Cal.4th 1, 8-9; AT&T Mobility
LLC v. Concepcion (2011) 563 U.S. 333, 339.) Accordingly, whether an
agreement is governed by the California Arbitration Act (“CAA”) or the Federal
Arbitration Act (“FAA”), courts resolve doubts about an arbitration agreement’s
scope in favor of arbitration. (Moncharsh, supra, 3 Cal.4th at 9;
Comedy Club, Inc. v. Improv West
Assocs. (9th Cir. 2009) 553 F.3d 1277, 1284; see also Engalla v. Permanente Med. Grp., Inc.
(1997) 15 Cal.4th 951, 971-972 [“California law incorporates many of the basic
policy objectives contained in the Federal Arbitration Act, including a
presumption in favor of arbitrability [citation] and a requirement that an
arbitration agreement must be enforced on the basis of state law standards that
apply to contracts in general”].) “[U]nder both the FAA and California law,
‘arbitration agreements are valid, irrevocable, and enforceable, save upon such
grounds as exist at law or in equity for the revocation of any contract.’ ” (Higgins v. Superior Crout (2006) 140 Cal.App.4th 1238, 1247.)
“Code of
Civil Procedure section 1281.2 requires a trial court to grant a petition to
compel arbitration if the court determines that an agreement to arbitrate the
controversy exists.” (Avery v.
Integrated Healthcare Holdings, Inc. (2013) 218 Cal.App.4th 50, 59,
quotations omitted.) Accordingly, “when presented with a petition to compel
arbitration, the court’s first task is to determine whether the parties have in
fact agreed to arbitrate the dispute.” (Ibid.) A petition to compel arbitration is in essence a suit in equity
to compel specific performance of a contract. (Id. at 71.) As with any other specific performance claim, “a
party seeking to enforce an arbitration agreement must show the agreement’s
terms are sufficiently definite to enable the court to know what it is to
enforce.” (Ibid. [internal citations omitted].) “Only
the valid and binding agreement of the parties, including all material terms
well-defined and clearly expressed, may be ordered specifically performed.” (Ibid.) An arbitration agreement “must be so interpreted as to give
effect to the mutual intention of the parties as it existed at the time of
contracting, so far as the same is ascertainable and lawful.” (Civ. Code, §
1636.) The language of the contract governs its interpretation if it is clear
and explicit. (Civ. Code, § 1368.) If uncertainty exists, “the language of a
contract should be interpreted most strongly against the party who caused the
uncertainty to exist.” (Civ. Code, § 1654.)
The party
seeking to compel arbitration bears the burden of proving the existence of a
valid arbitration agreement by the preponderance of the evidence. (Engalla v. Permanente Medical Group, Inc.
(1997) 15 Cal.4th 951, 972.) It would then be plaintiff’s burden, in opposing
the motion, to prove by a preponderance of the evidence any fact necessary to her
opposition. (See Ibid.) “In these
summary proceedings, the trial court sits as a trier of fact, weighing all the
affidavits, declarations, and other documentary evidence, as well as oral
testimony received at the court’s discretion, to reach a final determination.” (Ibid.)
EVIDENTIARY ISSUES
Plaintiff’s evidentiary objections are OVERRULED.
Analysis
Valid Arbitration Agreement
Defendants
assert that the instant claims are required to be arbitrated because Plaintiff
signed an arbitration agreement covering her claims. As with any contract, mutual assent or
consent is necessary for the formation of a valid arbitration agreement. (Civ.
Code, §§ 1550, 1565.) “Consent is not mutual, unless the parties all agree upon
the same thing in the same sense.” (Civ. Code, § 1580.) The moving party bears
the initial burden of showing the existence of an agreement to arbitrate by a
preponderance of the evidence. (Mitri
v. Arnel Mgmt. Co. (2007) 157 Cal.App.4th 1164, 1169 [“Because the
existence of the agreement is a statutory prerequisite to granting the
petition, the petitioner bears the burden of proving its existence by a
preponderance of the evidence.”].)
On March 22, 2022, Plaintiff
executed a PEO Arbitration Agreement and AvantStay’s Arbitration and Equitable
Relief Agreement (hereinafter, the “Arbitration Agreements”) through which she
agreed that both she and AvantStay would submit to binding arbitration of any
and all claims arising out of her employment. Specifically:
By signing the PEO Arbitration
Agreement, Jennifer Hartman (“Worksite Employee”), on the one hand, and
AvantStay, Inc. (“Worksite Employer”). . . on the other hand, agree to use
binding arbitration as the sole and exclusive means to resolve all
disputes that may arise between Worksite Employee and Worksite Employer and/or
Worksite Employee and PEO, including, but not limited to, disputes
regarding termination of employment and compensation. Worksite Employee
specifically waives and relinquishes Worksite Employee’s right to bring a claim
against Worksite Employer and/or PEO, in a court of law, and this waiver shall
be equally binding on any person who represents or seeks to represent Worksite
Employee in a lawsuit against Worksite Employer or PEO in a court of law.
Similarly, Worksite Employer and PEO specifically waive and relinquish their
respective rights to bring a claim against Worksite Employee in a court of law,
and this waiver shall be equally binding on any person who represents or seeks
to represent Worksite Employer or PEO in a lawsuit against Worksite Employee in
a court of law.
(Kreitler Decl. at ¶ 7, Exhibit C.)
There is no reasonable dispute that
the claims fall under the scope of the broad arbitration provision set forth
above. Plaintiff’s complaint against Defendants makes claims solely related to
her employment with Defendants. This above clause would apply to the claims at
hand.
In addition, Plaintiff challenges
the authenticity of the electronic signature on the Agreements. Under the
Uniform Electronic Transactions Act, an electronic signature “is attributable
to a person if it was the act of the person. 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.” (Civ. Code, § 1633.9(a).) The effect of such
electronic signature “is determined from the context and surrounding
circumstances at the time of its creation, execution, or adoption, including
the parties’ agreement.” (Civ. Code, § 1633.9(b).)
Caselaw describes the security precautions
necessary to show that that an electronic signature is attributable to a person
under the UETA. In Ruiz v. Moss
Bros. Auto Group, Inc. (2014) 232 Cal.App.4th 836, the declaration
seeking to authenticate the plaintiff’s electronic signature on an arbitration
agreement was deemed insufficient where the declarant “summarily asserted”
plaintiff electronically signed the agreement and “did not explain how she
arrived at that conclusion or inferred [plaintiff] was the person who
electronically signed the agreement” or that the electronic signature “was ‘the
act’” of the plaintiff. (Ruiz
232 Cal.App.4th at 844-845.) A supplemental declaration, generally explaining
the onboarding process, failed to explain that: all Moss Brothers employees
were required to use their unique login ID and password when they logged into
the HR system and signed electronic forms and agreements; how an electronic
signature in the name of “Ernesto Zamora Ruiz” could only have been placed
on the 2011 agreement by a person using Ruiz's “unique login ID and password”;
or, how the declarant otherwise ascertained how Ruiz's printed electronic
signature came to be placed on the 2011 agreement. (Id., at 845.) The
court concluded that in “the face of Ruiz's failure to recall electronically
signing the 2011 agreement, the fact the 2011 agreement had an electronic
signature on it in the name of Ruiz, and a date and time stamp for the
signature, was insufficient to support a finding that the electronic signature
was, in fact, ‘the act of’ Ruiz.” (Id.)
By contrast, in Espejo v. Southern California Permanente
Medical Group (2016) 246
Cal.App.4th 1047, the “declaration offered the critical factual connection that
the declarations in Ruiz lacked,” by detailing “security precautions regarding
transmission and use of an applicant’s unique username and password, as well as
the steps an applicant would have to take to place his or her name on the
signature line” of the agreement. (Espejo,
246 Cal.App.4th at 1062.) The declarant, Tellez, specifically stated:
once the “Area Medical Director
decides to make a physician an offer of employment, [the director] completes
the employment agreement, and electronically signs the agreement, an email is
generated to the applicant” with a link to the SCPMG Applicant Homepage. Access
to the applicant homepage “requires the use of a private and unique username
and password,” both of which are provided by phone “directly and orally to the
applicant.” After logging into SCPMG's online system with this username and
password, “the first thing Dr. Espejo would be required to do is re-set his
password to one of his own choosing. He cannot proceed to the next page unless
he re-sets his password.” At that point, according to Tellez, Espejo would
have to “opt to agree to complete the employment documents using an electronic
signature.” Once he agreed, he would be directed to the portion of the
Applicant Homepage containing the four hyperlinks to his employment agreement,
the DRP, the R&R, and a benefits handbook. “Dr. Espejo only had access to
these documents by logging in and using his unique user name and password.”
…On the signature page of the
employment agreement Dr. Espejo was prompted to either accept or decline the
employment agreement.” If he accepted, “he was prompted to complete his name as
he would sign it. Whatever name he typed into this entry is what populated on
the signature line of the contract.” “Once that information was input and
accepted by Dr. Espejo, then the employment agreement was finalized, including
his name, date, time, and the IP address where Dr. Espejo electronically signed
the agreement.” Tellez then outlined the same process with respect to the DRP.
She stated that the “name Jay Baniaga Espejo could have only been placed on the
signature pages of the employment agreement and the DRP by someone using Dr.
Espejo's unique user name and password.... [¶] Given this process for signing
documents and protecting the privacy of the information with unique and private
user names and passwords, the electronic signature was made by Dr. Espejo” to
the employment agreement and the DRP at the date, time, and IP address listed
on the documents. Tellez therefore concluded that the copies of the employee
agreement and the DRP attached to defendants' petition were true and correct
copies of the documents “electronically signed by Dr. Espejo on May 22, 2011,
and kept and maintained in SCPMG's records.”
(Id. at 1053-1054.)
Defendants provide a declaration which
demonstrates sufficient authentication of the onboarding process to demonstrate
that the electronic signature was the act of Plaintiff. (Kreitler Decl., ¶¶
2-6.) This includes a description of the on-boarding process, where the
employee is sent a link sent to their email address, and the employee creates a
“Rippling account” with a unique username and password. (Id. ¶ 5.) Only after
creating an account and logging in with the user’s unique credentials, the user
can access and view the onboarding documents supplied to them by their employer
or prospective employer. (Id.) Rippling PEO’s Worksite Employee Acknowledgement
and PEO Arbitration Agreement were made available to Plaintiff via her
individual online portal account on March 17, 2022, and executed by Ms. Hartman
on March 22, 2022. (Id. ¶ 7.) The Rippling PEO online portal data shows that
Hartman executed both Rippling PEO’s Worksite Employee Acknowledgement and PEO
Arbitration Agreement on March 22, 2022. (Id. ¶ 8.)
Plaintiff’s own evidence admits
that Plaintiff, in fact, signed the agreements in question. Plaintiff explains
that when she began employment with Defendant, Defendant requested that she
review and sign a series of onboarding documents online. (Hartman Decl. ¶ 3.)
On March 17, 2022, Plaintiff opened the onboarding documents on her computer.
(Hartman Decl. ¶ 3.) As Plaintiff scrolled through the onboarding documents,
she noticed an arbitration agreement. (Hartman Decl. ¶ 3.) The arbitration
agreement appeared to offer two options, to either agree to, or to opt out of,
the arbitration agreement. (Hartman Decl. ¶ 3.) Plaintiff would never have
agreed to arbitration, so she intended to select the “opt out” option. (Hartman
Decl. ¶ 3.) Plaintiff did not click any button or option to agree to or sign an
arbitration agreement. (Hartman Decl. ¶ 3.) However, the software would not
allow her to check the “opt out” button because the space for opting out was
not accessible. (Hartman Decl. ¶ 3.) Instead, the accept option was preselected
and Plaintiff was not permitted to undo it. (Hartman Decl. ¶ 3.) Hartman’s
intention was that after she completed the onboarding documents, she would
contact her supervisor to confirm she was opting out of the arbitration
agreement. (Hartman Decl. ¶ 3.) However, she never completed the onboarding
paperwork because the system froze completely when she accidentally clicked
“no” in response to a prompt to allow access to her device for purposes of
uploading a picture of herself for the Company. (Hartman Decl. ¶ 3.) When the
system froze on Hartman, rendering it impossible to complete her onboarding
documents, she tried to log out and back in, and cleared her internet cache to
try to regain access to her onboarding documents. (Hartman Decl. ¶ 4.) These
attempts to access and complete the onboarding documents were unsuccessful and
the system would not allow Hartman to complete the onboarding documents or to
see or review any documents. (Hartman Decl. ¶ 4.) Hartman could not review
documents she previously reviewed and could not review any potential documents
beyond the documents she reviewed. (Hartman Decl. ¶ 4.)
Hartman contacted her supervisor,
Yael Livneh, to explain that she was unable to complete the onboarding
documents because the system glitched. (Hartman Decl., ¶ 5.) Plaintiff
specifically mentioned the arbitration agreement and told Livneh she wanted to
opt out but that there was no way to select the opt out box. (Hartman Decl., ¶
5.) Livneh advised her to submit a tech support ticket, which she did. (Id.)
However, she never heard back from anyone from tech support, the issue was
never resolved, and she never completed the paperwork. (Id.) On March 23, 2022,
she discussed these issues with Ms. Livneh, including her intent to opt out of
the Arbitration Agreement because the opt out option was not available the only
time she was able to access the onboarding documents. (Id. ¶6.)
In effect, Plaintiff admits that
the signature on the Agreements is her signature, but that her signature is on
the agreement because the program would not allow her to opt out. This further
separates this case from Ruiz, where the plaintiff averred that he was
unable to recall signing the agreement. Here, Plaintiff admits to
electronically signing an arbitration agreement, just that she did not actually
intend to agree to arbitrate. While there is some unfairness in leading an
employee to believe that they could opt out of an arbitration agreement, but
precluding them from doing so, the take-it-or-leave-it nature of the instant arbitration
agreement would not negate the fact that Plaintiff, indeed, signed the
Agreements. Thus, the totality of the evidence suggests Plaintiff agreed to the
arbitration agreements. Further, Plaintiff was provided notice that there was
an arbitration agreement attendant to her employment. When an employee
continues her employment after notification that an agreement to arbitration is
a condition of employment, that employee has impliedly consented to the
arbitration agreement. (Diaz v. Sohnen Enterprises (2019) 34 Cal.App.5th
126, 130) Thus, even if Plaintiff did not wish to agree to the arbitration
agreement, she still accepted employment knowing that she had signed the
agreement. Plaintiff has not presented persuasive evidence that she expressed
her intent not to arbitrate.
Accordingly, Defendants meet their burden
to demonstrate the existence of an arbitration agreement between the parties
that covers Plaintiff’s claims. The motion is therefore GRANTED and the Court
orders Plaintiff’s claims to arbitration, as discussed above. The entire action
is STAYED pending the completion of the arbitration. (CCP § 1281.4.)
The Court will set a status
conference re arbitration in approximately nine months.