Judge: Maurice A. Leiter, Case: 22STCV23399, Date: 2023-01-10 Tentative Ruling

Case Number: 22STCV23399    Hearing Date: January 10, 2023    Dept: 54

Hearing Date: January 10, 2023

Department 54, Judge Maurice A. Leiter

Motion to Compel Arbitration

Moving Party: Defendants United Dwelling Construction, Inc., Insperity PEO Services, L.P., Reggie Thornton and David Hada

Responding Party: Plaintiff Michael McNeil

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

DEFENDANTS 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

            On July 19, 2022, Plaintiff filed a complaint against Defendants alleging employment discrimination, harassment, and retaliation.

ANALYSIS

“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 and Applicable Law

Defendants move to compel arbitration based on the “Mutual Arbitration Agreement” executed by Plaintiff on November 19, 2021 through the new employee onboarding process. (Decl. Tejeda, Exh. A.) The agreement provides, “Except as this Arbitration Agreement otherwise provides, Insperity, you, and Client Company mutually agree to resolve by arbitration the following, which constitute ‘Covered Claims’; (a) all claims or disputes related to or arising out of my application for employment, my employment, or the termination of my employment with Insperity and/or Client Company…” (Id.)  This action arises from Plaintiff’s employment with Defendants.

In opposition, Plaintiff asserts Defendants have failed to establish Plaintiff executed the agreement. To establish execution, Defendants provides the declaration of Jannine Tejeda, Vice President of Human Resources for United Dwelling. Tejeda explains the process of electronic onboarding and record keeping. Tejeda declares that the records show Plaintiff electronically signed the agreement on January 5, 2021. (Decl. Tejeda ¶ 7.) This is sufficient to establish the existence of an agreement to arbitrate.

Defendants have met their burden to establish an agreement to arbitrate. The burden shifts to Plaintiff to establish any defenses to enforcement.

The agreement states that it is governed by the FAA.

B. Enforceability of Agreement

1. Unconscionability

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

“[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.”]

The agreement is one of adhesion; there is a low degree of procedural unconscionability here. But this alone does not 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 the agreement is substantively unconscionable because it does not provide for adequate discovery, does not allow for judicial review, and does not provide the current AAA rules for arbitration. As to the last two points, the agreement does allow for judicial review, and it lists the principal arbitration rules.

As to discovery, the agreement states, “[t]he parties have the right to conduct adequate civil discovery, and to present witnesses and evidence. Each party has the right to: (a) take the deposition of two individual fact witnesses and any expert witness designated by another party, (b) propound requests for production of documents to any party, and (c) subpoena witnesses and documents, including documents relevant to the case from third parties. Additional discovery may be had by mutual agreement of the parties, and in the absence of mutual agreement, the Arbitrator will have exclusive authority to entertain requests for additional discovery and to grant or deny such requests, based on the Arbitrator’s determination whether additional discovery is warranted by the circumstances of a particular case.” (Decl. Tejeda, Exh. A.)

The provision is not substantively unconscionable. Arbitration need not allow for all discovery allowed in court actions and the agreement vests authority in the arbitrator to allow additional discovery.

Defendants’ motion to compel arbitration is GRANTED. The action is STAYED.