Judge: Maurice A. Leiter, Case: 23STCV09082, Date: 2023-09-08 Tentative Ruling

Case Number: 23STCV09082    Hearing Date: September 8, 2023    Dept: 54

Hearing Date: September 9, 2023

Department 54, Judge Maurice A. Leiter

Motion to Compel Arbitration R

Moving Party: Defendant Paychex North America, Inc.

Responding Party: Plaintiff Mandip Rai

RULING:          DEFENDANT’S MOTION TO COMPEL ARBITRATION IS GRANTED.

THE ACTION IS STAYED.

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

On April 24, 2023, Plaintiff filed a complaint against Defendant, asserting causes of action for FEHA violations, whistleblower retaliation and wrongful termination.

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

Defendant moves to compel arbitration based on the Arbitration Agreement contained in the MMS Sales Representative Incentive Plan Agreement executed by Plaintiff on December 20, 2019. (Decl. Gimello, Exh. A.) The agreement provides, “Any dispute between you and [Paychex], (or you and any officer, director, or employee) including, but not limited to, a dispute arising out of or relating to your employment with Company, or any questions or disputes regarding the arbitrability of any matter, or involving claims of discrimination or harassment based on race…in violation of …any [] federal, state, or local law or regulation or common law principle forbidding such discrimination…or for acting contrary to public policy shall be resolved by arbitration.” (Id.) The agreement states it is governed by the FAA. (Id.)

Defendant has met its burden to establish an agreement to arbitrate. The burden shifts to Plaintiff to establish any defenses to enforcement.

B. Enforceability of Agreement

Plaintiff argues the agreement is unenforceable because it is procedurally and substantively unconscionable. Defendant asserts that questions of enforceability are reserved for the arbitrator under the delegation clause. The enforceability of an arbitration agreement is generally determined by the court. (See Aanderud v. Superior Court (2017) 13 Cal.App.5th 880, 891; Ajamian v. CantorCO2e, L.P. (2012) 203 Cal.App.4th 771, 781.) But parties may agree to arbitrate gateway questions of arbitrability such as the enforceability of an arbitration agreement and whether claims are covered by the arbitration agreement. (See Rent-A-Center, West, Inc. v. Jackson (2010) 561 U.S. 63, 68-69; Aanderud, supra, 13 Cal.App.5th at 891-92; Ajamian, supra, 203 Cal.App.4th at 781.)  “To establish this exception, it must be shown by ‘clear and unmistakable’ evidence that the parties intended to delegate the issue to the arbitrator.”  (Ajamian, supra, 203 Cal.App.4th at 781 (citing First Options of Chicago, Inc. v. Kaplan (1995) 514 U.S. 938, 944).)

Here, the parties agreed that “any questions or disputes regarding the arbitrability of any matter” shall be determined by the arbitrator. (Decl. Gimello, Exh. A.) This is a clear and unmistakable delegation clause. Issues of arbitrability are reserved for the arbitrator.

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

“[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 Court finds that a very low degree of procedural unconscionability exists here; the agreement is one of adhesion. This low degree of procedural unconscionability 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 raises several purported reasons why the agreement is substantively unconscionable, including alleged lack of mutuality, a restrictive attorneys’ fee provision, an improper choice of law provision, and a fee-shifting provision. These arguments are unavailing. Plaintiff has not shown a high degree of substantive unconscionability.

Defendant’s motion to compel arbitration is GRANTED. The action is STAYED.