Judge Mark H. Epstein, Case 21SMCV01499 2022-10-24 Tentative Ruling

Judge: Mark H. Epstein, Case: 21SMCV01499, Date: 2022-10-24 Tentative Ruling

Case Number: 21SMCV01499 Hearing Date: October 24, 2022 Dept: R

The motion to compel arbitration is CONTINUED.

The California Supreme Court currently has a case pending before it that could be pertinent: Adolph v. Uber, Case No. S274671. The issue to be decided there is whether “an aggrieved employee who has been compelled to arbitrate claims under the [PAGA] that are ‘premised on Labor Code violations actually sustained by’ the aggrieved employee . . . maintains statutory standing to pursue ‘PAGA claims arising out of events involving other employees’ . . . in court or in any other forum the parties agree is suitable.” (Citations omitted.) The resolution of that issue will be helpful to the Court here.

Further, the Court would like briefing on the effect of Gavriiloglou v. Prime Health Care (Aug. 26, 2022) ___ Cal.App.5th ___on this motion.

Preliminarily, and without yet so holding, the Court tends to agree with the defense that the contract’s arbitrability clause is generally enforceable. While the Court does believe that the contract is one of adhesion and that respective bargaining power is relevant even outside the employer/employee context (and it is far from clear whether this contract is outside that context anyway), that does not end the matter. The Court cannot quite agree that there was surprise or the like with regard to the arbitration clause. It was in an attachment to the main document, but it was one of two attachments and it was not hidden. The law is clear that the adhesive nature of a contract is not, standing alone, to make a contract or a clause therein unconscionable.

Plaintiff also claims that the jurisdiction clause in the main contract (and proximate to the signature) could be viewed as inconsistent with the arbitration clause, but Mohamed v. Uber Technologies, Inc. (9th Cir. 2016) 848 F.3d 1201 [applying California law] suggests that the clause upon which plaintiff relies is not enough to eviscerate the arbitration provision. Thus, the adhesive nature of the contract is relevant, but not in and of itself sufficient.

On the substantive front, the only argument plaintiff makes that the Court finds may have bite is that the intellectual property carve-out favors defendant and therefore makes the agreement essentially one-sided. While defendant suggests that plaintiffs have IP, too, it is far from clear to the Court that the IP that a plaintiff might have in this context is really all that significant or significant enough to make the clause not one-sided. But at the same time, one-sidedness is a sliding scale. It is not clear to the Court that, even if the IP issue is one that only the defendant would want to litigate, that carve-out is significant enough to make the contract substantively unconscionable (even given the relatively low bar for substantive unconscionability in light of the fact that the contract appears to be one of adhesion).

The issue in the Court’s mind is whether this is enough. The Court is leaning in defendant’s favor on the balance given the strong public policy (federal and state) favoring arbitrations and the rule that doubts are resolved in arbitration’s favor. But the Court is not actually so holding at present.

The Court is not convinced that plaintiff cannot maintain a representative PAGA action under Viking and Gavriiloglou and that the action could not be maintained even were defendant to prevail in the arbitration. That is the point of the continuance and the supplemental briefing. The Supreme Court’s ruling in Adolph may well shed light on that question. That, in turn, will inform whether the virtually automatic stay imposed on litigation where arbitration is ordered ought to apply in this case.

For now, the matter will be CONTINUED FOR APPROXIMATELY 60 DAYS. If Adolph is not yet decided, the Court will entertain a further continuance. That said, the Court will not wait forever on this issue, so if the Adolph resolution looks too far away, the Court will consider moving forward. The Court will also ask for briefing on Gavriiloglou.