Judge: Maurice A. Leiter, Case: 21STCV35165, Date: 2022-08-11 Tentative Ruling

Case Number: 21STCV35165    Hearing Date: August 11, 2022    Dept: 54

Hearing Date: August 11, 2022

Department 54, Judge Maurice A. Leiter

Motion to Compel Arbitration;

Motion for Sanctions;

Motion for Leave to Amend

T/R:    DEFENDANT’S MOTION TO COMPEL ARBITRATION IS GRANTED. THE ACTION IS STAYED.

PLAINTIFF’S MOTION FOR LEAVE TO FILE AN AMENDED COMPLAINT IS DENIED AS MOOT.

DEFENDANT’S MOTION FOR SANCTIONS IS DENIED.

DEFENDANT TO NOTICE.

If the parties wish to submit on the tentative, please email the courtroom at¿SMCdept54@lacourt.org¿with notice to opposing counsel (or self-represented party) before 8:00 am on the day of the hearing.

            The Court considers the moving papers, opposition, and reply.

BACKGROUND

            This is an employment action. On September 23, 2021, Plaintiff Aimee Law filed a complaint against Defendant Hot Topic Merchandising Inc. asserting causes of action for wrongful termination in violation of public policy, Labor Code violations, and intentional infliction of emotional distress.

ANALYSIS

1. Defendant’s Motion to Compel Arbitration

“On petition of a party to an arbitration agreement alleging the existence of a written agreement to arbitrate a controversy and that a party thereto refuses to arbitrate a controversy, the court shall order the petitioner and the respondent to arbitrate the controversy if it determines that an agreement to arbitrate the controversy exists….”  (CCP § 1281.2.)  The right to compel arbitration exists unless the court finds that the right has been waived by a party’s conduct, other grounds exist for revocation of the agreement, or where a pending court action arising out of the same transaction creates the possibility of conflicting rulings on a common issue of law or fact.   (CCP § 1281.2(a)-(c).)  “The party seeking arbitration bears the burden of proving the existence of an arbitration agreement, and the party opposing arbitration bears the burden of proving any defense, such as unconscionability.”  (Pinnacle Museum Tower Assn. v. Pinnacle Market Development (US), LLC (2012) 55 Cal.4th 223, 236.)

A.        Existence of Arbitration Agreement

Defendant moves to compel arbitration based on the Dispute Resolution Agreement executed by Plaintiff on June 6, 2017 upon being hired. (Decl. Burke, Exh. A.) The agreement “applies to any disputes arising out of or in any way related to your employment by Hot Topic, including, without limitation, your application for employment, any disciplinary actions, and the termination of your employment.” (Id.) This action relates to Plaintiff’s employment by Hot Topic.

In opposition, Plaintiff asserts that no agreement to arbitrate exists because she does not remember seeing the DRA in Defendant’s HR system. But Defendant provides a detailed explanation of the employee onboarding process and provides documentation showing Plaintiff completed it. (Decl. Burke.) Plaintiff’s inability to remember this process does not invalidate her consent to be bound by the DRA.

Defendants has met its burden to establish the existence of an agreement to arbitrate. The burden shifts to Plaintiff to establish any defenses to enforcement.

B. Enforceability of Agreement

            Plaintiff asserts that the arbitration agreement is procedurally unconscionable as  an adhesion contract. Regarding procedural unconscionability, the California Supreme Court has held:

“[T]here are degrees of procedural unconscionability. At one end of the spectrum are contracts that have been freely negotiated by roughly equal parties, in which there is no procedural unconscionability . . . . Contracts of adhesion that involve surprise or other sharp practices lie on the other end of the spectrum. [Citation.] Ordinary contracts of adhesion, although they are indispensable facts of modern life that are generally enforced (see Graham v. Scissor–Tail, Inc. (1981) 28 Cal.3d 807, 817–818, 171 Cal.Rptr. 604, 623 P.2d 165), contain a degree of procedural unconscionability even without any notable surprises, and ‘bear within them the clear danger of oppression and overreaching.’ (Id. at p. 818 [171 Cal.Rptr. 604, 623 P.2d 165].)” (Gentry v. Superior Court (2007) 42 Cal.4th 443, 469, 64 Cal.Rptr.3d 773, 165 P.3d 556.)

(Baltazar v. Forever 21, Inc. (2016) 62 Cal.4th 1237, 1244.)

Generally, in the employer-employee context there is unequal bargaining power. (See Amendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83, 115 [“in the case of preemployment arbitration contracts, the economic pressure exerted by employers on all but the most sought-after employees may be particularly acute, for the arbitration agreement stands between the employee and necessary employment, and few employees are in a position to refuse a job because of an arbitration requirement.”]

Plaintiff contends that the agreement was provided to her on a take-it-or-leave-it basis and as a condition of employment. The agreement was not a condition of employment because it contained an opt-out procedure. However, given the general nature of employment arbitration agreements, the parties have unequal bargaining power and there is a low degree of procedural unconscionability here.

A low degree of procedural unconscionability does not in and of itself render the arbitration agreement unconscionable. To find the agreement unenforceable, the degree of substantive unconscionability must be high. (See Dotson v. Amgen, Inc. (2010) 181 Cal.App.4th 975, 981.)

            Plaintiff asserts that the agreement is substantively unconscionable because it does not require arbitration for claims an employer would bring, and because it provides very limited discovery. These assertions are contrary to the plain language of the agreement. The agreement states there will be “adequate discovery” and excludes only claims that may not be legally arbitrable. The arbitration agreement is enforceable.

            Defendant’s motion to compel arbitration is GRANTED. Plaintiff’s motion for leave to file a first amended complaint is DENIED as moot.

2. Defendant’s Motion for Sanctions

            Defendant moves for sanctions against Plaintiff under CCP §§ 128.7 and 128.5. Defendant asserts Plaintiff previously filed an action for the same relief but dismissed the action after the parties stipulated to arbitration. Defendant contends Plaintiff is forum shopping in bad faith. In opposition, Plaintiff represents that her previous lawyer did not tell her about the agreement to arbitrate or stipulation to arbitrate.