Judge Mel Red Recana, Case Number: 23STCV12784, Date: 2024-03-11 Tentative Ruling

Motion: Defendant’s Motion to Compel Arbitration and Stay or Dismiss Proceedings

The Court considered the moving papers, opposition, and reply. Defendant’s Motion to Compel Arbitration is GRANTED. The proceedings are stayed until the completion of arbitration proceedings.

This case stems from alleged violations of numerous labor codes. Camilo Salazar (Plaintiff) filed a Complaint containing eleven causes of action against his former employer Miracle Mile Properties, LP (Defendant) on June 5, 2023. The causes of action are as follows:

1. Failure To Pay All Minimum Wages Earned (Lab. Code §§ 510, 1194, 1194.2 & 1198)

5. Failure To Pay All Wages Upon Discharge, Waiting Time Penalties (Lab. Code §§ 201, 202, & 203)

Plaintiff began working for Defendant in 2011 as a maintenance worker assigned to maintain HVAC units in properties owned by Defendant. (Complaint, ¶ 13.) Plaintiff’s work hours were from 9 A.M. to 6 P.M., Monday through Friday, and was paid on an hourly basis. (Complaint, ¶ 15.) Plaintiff alleges that he was regularly overloaded on daily assignments and began to accrue overtime through no fault of his own. (Id. at ¶¶ 16-18.) Although Plaintiff was given a pay raise in 2018, Plaintiff alleges that this was the last pay raise received and noted that despite holding a valid HVAC technician certification, Defendant improperly classified Plaintiff’s position to justify a lower pay rate. (Id. at ¶ 20.)

On September 20 2021, Plaintiff was involved in a 4-vehicle accident while driving between assigned worksites, suffering fractures to his ribs and sternum. (Id. at ¶ 28.) Plaintiff then alleges that he did not receive proper treatment from his assigned workers’ compensation doctor and was sent back to work too soon. On December 20, 2021, Plaintiff returned to work, but complained to management that he could not fulfill his job functions because of pain and loss of balance caused by the accident. (Id. at ¶ 30.) After reasonable accommodation requests were denied, Plaintiff fell off a stepladder on June 30, 2022. Plaintiff has been on medical leave since then and has informed Defendants he does not wish to resume employment. (Id. at ¶¶ 1 & 32.) Plaintiff subsequently filed suit.

The motion before the Court now is Defendant’s Motion to Compel Arbitration (the Motion). Plaintiff opposes the Motion, and Defendant filed reply papers.

Under both the Federal Arbitration Act and California law, arbitration agreements are valid, irrevocable, and enforceable, except on such grounds that exist at law or equity for voiding a contract. (Winter v. Window Fashions Professions, Inc. (2008) 166 Cal.App.4th 943, 947.) The party moving to compel arbitration must establish the existence of a written arbitration agreement between the parties. (Code of Civ. Proc. § 1281.2.)

This is usually done by presenting a copy of the signed, written agreement to the court. “A petition to compel arbitration or to stay proceedings pursuant to Code of Civil Procedure sections 1281.2 and 1281.4 must state, in addition to other required allegations, the provisions of the written agreement and the paragraph that provides for arbitration. The provisions must be stated verbatim, or a copy must be physically or electronically attached to the petition and incorporated by reference.” (Cal. Rules of Court, rule 3.1330.)

The moving party must also establish the other party’s refusal to arbitrate the controversy. (Code of Civ. Proc. § 1281.2.) The filing of a lawsuit against the moving party for a controversy clearly within the scope of the arbitration agreement affirmatively establishes the other party’s refusal to arbitrate the controversy. (Hyundai Amco America, Inc. v. S3H, Inc. (2014) 232 Cal.App.4th 572, 577.)

Concurrently filed with their opposition papers, Plaintiff files objections to the Declaration of Ronnie Atienza (Atienza Decl.). The Court rules as follows:

As a preliminary matter, the existence of an arbitration agreement has been established. (See Atienza Decl., Exhs. A & B.) Next, the Defendant has shown that Plaintiff is unwilling to arbitrate.

In their opposition papers, Plaintiff asserts four main arguments contending that the subject arbitration agreement (the Agreement) is unenforceable: (1) the intent to arbitrate is unclear, (2) Defendant fails to make the requisite showing that the FAA applies, (3) the Agreement contains substantial procedural and substantive unconscionability and is therefore unenforceable, and (4) Defendant waived their right to compel arbitration. The Court disagrees, takes each contention in turn below, and grants the Motion.

After being employed by Defendant, Plaintiff signed at minimum two[1] separate arbitration agreements: the first on January 16, 2015 (Atienza Decl., Exh A) and the second on December 19, 2016 (Atienza Decl., Exh. B). The second arbitration agreement is the subject Agreement Defendant intends to enforce.[2] Plaintiff argues that there was no meeting of the minds as to the 2015 Agreement, as he alleges that he was forced to sign the Agreement while under the impression that he would lose his job if he did not. (Opposition Papers 6:23-26.) Plaintiff additionally argues the same as to the 2016 Agreement where Plaintiff added the statement “I do not understand what all this mean or agreed with it, but I sign for my job sake” just above his signature. (6:26-28 and 7:1-4.) Plaintiff’s primary argument here is that he felt he needed to sign the Agreements or lose his job.

First, for purposes of both this section and where the Court addresses unconscionability below, Plaintiff concedes the following: (1) Plaintiff became a consumer electronics technician in 1991 through Santa Ana College (Declaration of Camilo Salazar, hereinafter Salazar Decl., ¶ 3.), (2) Plaintiff obtained his HVAC certification in 2006 through LA Trade Tech College (Id.), and (3) Plaintiff considers himself bilingual in both English and Spanish. (Id.) The Court notes that the 2015 Agreement was only three pages long, and the 2016 Agreement was two pages long. Plaintiff argues that he was under the belief that in order to maintain his employment he would need to sign the documents immediately but provides no further information to substantiate this belief. Additionally, there is nothing in the Salazar Decl. or Plaintiff’s opposition papers that indicates Plaintiff could not ask questions or request time to understand the provisions of the 2015 or 2016 Agreements before signing. Moreover, with regard to Plaintiff’s note on the 2016 Agreement, there is no indication that Plaintiff ever asked for clarification of the documents prior to signing. In so signing, Plaintiff indicated his intention to arbitrate. Case law supports this finding.

In Randas v. YMCA of Metropolitan Los Angeles, (1993) 17 Cal.App.4^th, 158 a swimmer who was literate in Greek, but not English, signed a release in order to attend a swimming class. (Randas, supra at 160.) After slipping and filing on a wet tile, she filed suit against the YMCA. Plaintiff in that case argued that the release was invalid because she could not read it, however, the Court ruled that “…one who signs an instrument may not avoid the impact of its terms on the ground that he failed to read the instrument before signing it.” (Id. at 163). The Randas Court continued, stating that “Ordinarily, one who accepts or signs an instrument, which on its face is a contract, is deemed to assent to all its terms, and cannot escape liability on the ground that he has not read it. If he cannot read, he should have it read or explained to him.” (Id.)

Second, only the 2015 agreement places continuing employment as contigent upon signing, nothing in the 2016 Agreement states that Plaintiff’s employment was contingent on him signing the Agreement. (See Atienza Decl., Exhs. A & B.) Assuming arguendo that both Agreements place Plaintiff’s continued employment contingent upon signing either Agreement, this factor, in and of itself presents a low level of procedural unconscionability (Cisneros Alvarez v. Altamed Health Services Corporation (2021) 60 Cal.App.5^th 572, 591, “Cisneros”), and certainly has no bearing on the parties’ intention to arbitrate. Therefore, the Court finds that both parties intended to arbitrate in accordance with the Agreements signed.

Plaintiff’s second argument is that Defendant failed to make the requisite showing that the FAA applies to the 2016 Agreement. The Court disagrees.

Defendant demonstrates they regularly purchase supplies and equipment from numerous supplies, and that those supplies are transported across state lines for MPP. Moreover, in Circuit City Stores, Inc. v. Adams (2001) 532 U.S. 105, 105-106, the United States Supreme Court made it profusely clear that the FAA applies to all employment contracts except those of transportation workers. Therefore, the FAA applies.

Plaintiff’s third argument is that the Agreement was both procedurally and substantively unconscionable so as to render the Agreement unenforceable. Unconscionability has both a procedural and a substantive element, the former focusing on oppression or surprise due to unequal bargaining power, the latter on overly harsh or one-sided results. (Carlson v. Home Team Pest Defense, Inc. (2015), 239 Cal.App.4^th 619, 630. “Carlson”) The prevailing view is that procedural and substantive unconscionability must both be present in order for a court to exercise its discretion to refuse to enforce a contract or clause under the doctrine of unconscionability, but they need not be present in the same degree. (Id.)

“Procedural unconscionability exists when the stronger party drafts the contract and presents it to the weaker party on a take-it-or-leave-it basis.” (Carlson, supra, at 631.) “However, the fact that the arbitration agreement is an adhesion contract does not render it automatically unenforceable as unconscionable.” (Id., internal citations omitted.) Instead, to determine whether an arbitration agreement satisfies the “procedural element of unconscionability,” courts focus on “two factors: oppression and surprise.” [citation] ‘Oppression’ arises from an inequality of bargaining power which results in no real negotiation and ‘an absence of meaningful choice.’ [Citations; cleaned up.] ‘Surprise’ involves the extent to which the supposedly agreed-upon terms of the bargain are hidden in the prolix printed form drafted by the party seeking to enforce the disputed terms.” (Id.) Additionally, the lone factor of placing an employee’s continued employment contingent upon signing either Agreement in and of itself presents only a low level of procedural unconscionability (Cisneros, supra, at 591.)

Plaintiff argues that the contingency of Plaintiff’s employment is sufficient to render the Agreement procedurally unconscionable. As aforementioned, Cisneros counsels otherwise. Plaintiff then claims that because his first language is Spanish, that the Agreement is procedurally unconscionable because he was not provided with a translated copy of the same. However, the aforementioned Randas and Cisneros provides law to the contrary. In Randas the plaintiff was wholly illiterate in English, however the Court still held that plaintiff there was responsible for understanding the Agreement. Cisneros is even more similar to the case before the Court, the plaintiff there was bilingual, and confirmed their comfort with speaking and reading English. (Cisneros, supra, at 589.) Here, the Plaintiff relocated to the U.S. in 1974, became a consumer electronics technician in 1991, then obtained their HVAC certification in 2006. (Salazar Decl., ¶ 3.) Although English may be Plaintiff’s second language, there is no support in Plaintiff’s filings that the Agreement was in any way incomprehensible to Plaintiff. Therefore, the Court finds little procedural unconscionability here.

“Substantive unconscionability addresses the fairness of the term in dispute; substantive unconscionability traditionally involves contract terms that are so one-sided as to shock the conscience, or that impose harsh or oppressive terms.” (Brown v. Wells Fargo Bank, N.A. (2008) 168 Cal.App.4^th 938, 956, internal quotations omitted.)

Although Plaintiff states that a contract is unconscionable when the substantive terms of the contract reveal that the contract terms unreasonably favor one party (Opposition Papers, 7:22-25), no facts are given to substantiate that this is what occurred here. For example, in Carlson, the court found substantive unconscionability where the defendant retained the right to file a lawsuit, while the plaintiff-former employee did not. (Carlson, supra, at 635-636.) Similarly, in Baxter v. Genworth North America Corp., (2017) 16 Cal.App.5^th 713 (“Baxter”), the court found substantive unconscionability where the employer was permitted to contact other employees during the arbitration process, but the plaintiff-employee was not. (Baxter, supra, 724-725.) However, here, Plaintiff makes no such claim, and after review of both the 2015 and 2016 Agreements, the Court sees no grounds for one.

Finally, Plaintiff argues that Defendant waived their right to compel arbitration because (1) the action has been pending since June 5, 2023 and (2) Defense counsel asked for two successive extensions of time to respond to written discovery propounded upon Defendant.

When evaluating whether a party has waived their right to compel arbitration Iskanian v. CLS Transportation Los Angeles, LLC (2014) 59 Cal.4^th 348 (“Iskanian”), is instructive: “…the following factors are relevant to the waiver inquiry: “ ‘ “(1) whether the party's actions are inconsistent with the right to arbitrate; (2) whether ‘the litigation machinery has been substantially invoked’ and the parties ‘were well into preparation of a lawsuit’ before the party notified the opposing party of an intent to arbitrate; (3) whether a party either requested arbitration enforcement close to the trial date or delayed for a long period before seeking a stay; (4) whether a defendant seeking arbitration filed a counterclaim without asking for a stay of the proceedings; (5) ‘whether important intervening steps [e.g., taking advantage of judicial discovery procedures not available in arbitration] had taken place’; and (6) whether the delay ‘affected, misled, or prejudiced’ the opposing party.” (Iskanian, supra, at 375.) (internal quotations and citations omitted.)

First, the Court sees no actions in this case taken by Defendant that were in direct conflict with its intention to arbitrate. Fulfilling discovery obligations is not inconsistent with the intent to arbitrate, but rather a requirement demanded by statute. Similarly, discovery obligations, though crucial to litigation, are not generally considered as a substantial invocation of the litigation machinery. Plaintiff next contends that waiting six months to file the Motion when the case commenced on June 5, 2023 is dilatory. However, as Defendant points out, parties have waited far longer, and still retained their right to compel arbitration. (Khalatian v. Prime Time Shuttle, Inc. (2015) 237 Cal.App.4^th 651, 663. [“Finally, even though there was a 14-month period from the filing of the original complaint to the filing of the motion to compel, absent prejudice, the delay is insufficient to support the waiver.”]) Additionally, no counterclaim has been filed here, trial has not been set, and Plaintiff fails to demonstrate prejudice. Therefore, Defendant did not waive their right to compel arbitration.

Accordingly, Defendant’s Motion to Compel Arbitration is GRANTED. The proceedings are stayed until the completion of arbitration.

[1] Defendant contends a third was signed on December 12, 2016, however, no such agreement was attached in the filings.

[2] Although Plaintiff contends that the 2015 Agreement is the controlling agreement, Plaintiff presents no rationale nor case law as to why. Defendant contends – and the Court agrees – that the 2016 Agreement is the controlling agreement. Regardless, the Agreements are substantively similar, and the question of which controls is inconsequential.

Superior Court of California

County of Los Angeles

Case No.: 23STCV12784