Judge: Mel Red Recana, Case: 23STCV26601, Date: 2024-03-27 Tentative Ruling

All rulings shown here are TENTATIVE ONLY, and thus oral argument WILL be heard. All Counsel are still required to attend.

Case Number: 23STCV26601    Hearing Date: March 27, 2024    Dept: 45

Superior Court of California

County of Los Angeles

Hearing date:              March 27, 2024

Moving Party:             Defendant Nationstar Mortgage LLC (“Nationstar”)

Responding Party:      Plaintiff Bianca Villalpando (“Plaintiff”)

Motion to Compel Arbitration and Stay Proceedings Pending Arbitration   

The Court has considered the moving, opposition, and reply papers.

The motion is GRANTED.

Background

            This is an action arising from Plaintiff Bianca Villalpando (“Plaintiff”) being wrongfully terminated and subject to discriminatory actions during her employment with Defendant Nationstar Mortgage LLC (“Nationstar”). On October 31, 2023, Plaintiff filed a Complaint against Defendants Nationstar, Jennifer Ruiz, Elizabeth Hall (collectively “Defendants”) and DOES 1 through 100, inclusive, alleging the following causes of action: (1) sex/gender harassment in violation of Gov. Code §§ 12940 et seq. (“FEHA”); (2) sex/gender discrimination in violation of the FEHA; (3) sex/gender retaliation in violation of the FEHA; (4) race/national origin harassment in violation of the FEHA; (5) race/national origin discrimination in violation of the FEHA; (6) race/national origin retaliation in violation of the FEHA; (7) age harassment in violation of the FEHA; (8) age discrimination in violation of the FEHA; (9) age retaliation in violation of the FEHA; (10) actual/perceived disability harassment in violation of the FEHA; (11) actual/perceived disability discrimination in violation of the FEHA; (12) actual/perceived disability retaliation in violation of the FEHA; (13) failure to engage in the mandatory good-faith interactive process; (14) failure to accommodate; (15) failure to prevent and investigate harassment, discrimination, or retaliation in violation of the FEHA; (16) violation of the California Family Rights Act (“CFRA”); (17) intentional infliction of emotional distress; (18) whistleblower violations pursuant to Cal. Lab. Code § 110.2.5; (19) failure to pay wages in violation of Cal. Lab. Code §§ 201 and 203; and (20) retaliation and wrongful termination in violation of public policy.

            On December 14, 2023, Defendant Nationstar filed and served the instant Motion to Compel Arbitration and Stay Proceedings Pending Arbitration.

            On March 14, 2024, Plaintiff filed and served an opposition to the motion, to which Defendant Nationstar replied on March 20, 2024.

Legal Standard

            Parties may be compelled to arbitrate a dispute upon the court finding that: (1) there was a valid agreement to arbitrate between the parties; and (2) said agreement covers the controversy or controversies in the parties’ dispute.¿ (Code Civ. Proc., § 1281.2.) California law favors enforcement of valid arbitration agreements. (Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83, 97.) A party petitioning to compel arbitration has the burden of establishing the existence of a valid agreement to arbitrate and the party opposing the petition has the burden of proving, by a preponderance of the evidence, any fact necessary to its defense. (Banner Entertainment, Inc. v. Superior Court¿(1998) 62 Cal.App.4th 348, 356-357.)¿ 

            The FAA applies to any contract evidencing a transaction involving interstate commerce which contains an arbitration clause. (Wolls v. Superior Court (2005) 127 Cal.App.4th 197, 211.) Section 2 of the FAA provides that arbitration provisions shall be enforced, save upon grounds as exist at law or in equity for the revocation of any contract. (Ibid.) A state court may refuse to enforce an arbitration clause on the basis of generally applicable contract defenses, such as fraud, duress, or unconscionability. (Ibid.) A state court, however, may not defeat an arbitration clause by applying state laws applicable only to arbitration provisions. (Ibid.)

For the FAA to apply, a contract must involve interstate commerce. (Ibid.) When it applies, the FAA preempts any state law rule that stands as an obstacle to the accomplishment of the FAA’s objectives. (Carbajal v. CWPSC, Inc. (2016) 245 Cal.App.4th 227, 238.) A party asserting FAA preemption bears the burden to present evidence establishing a contract with the arbitration provision affects interstate commerce, and the failure to do so renders the FAA inapplicable. (Ibid.) Evidence must be presented, in the form of declarations or other evidence, that establishes that the contract affects interstate commerce.  (Ibid.) “[S]ince arbitration is a matter of contract, the FAA also applies if it is so stated in the agreement.” (Davis v. Shiekh Shoes, LLC (2022) 84 Cal.App.5th 956, 963.)

“If a court of competent jurisdiction . . . has ordered arbitration of a controversy which is an issue involved in an action or proceeding pending before a court of this State, the court in which such action or proceeding is pending shall, upon motion of a party to such action or proceeding, stay the action or proceeding until an arbitration is had in accordance with the order to arbitrate or until such earlier time as the court specifies.” (Code Civ. Proc., § 1281.4.) 

Evidentiary Objections

            The Court OVERRULES Plaintiff’s evidentiary objections numbers 1, 2, 3, and 4 to the declaration of Nichole Moseley in support of the motion.

            The Court OVERRULES Defendant Nationstar’s evidentiary objections numbers 1 and 2 to Plaintiff’s evidence submitted in opposition to the motion.

            The Court SUSTAINS Defendant Nationstar’s evidentiary objections numbers 3, 4, 5, 6, 7, 8, 9, and 10 to Plaintiff’s evidence submitted in opposition to the motion pursuant to Evid. Code §§ 800, 803, and 804.

            Defendant Nationstar’s evidentiary objections numbers 11 through 96 all concern the declaration of Plaintiff submitted in opposition to the motion. “[C]ourts do not find compliance with section 2015.5 to be both substantial and sufficient unless all statutory conditions appear on the face of the declaration in some form.” (Kulshrestha v. First Union Commercial Corp. (2004) 33 Cal.4th 601, 613.) A declaration in opposition to a motion must be “signed under the penalty of perjury under the laws of the State of California” pursuant to Code Civ. Proc. § 2015.5. (ViaView, Inc. v. Retzlaff (2016) 1 Cal.App.5th 198, 217.) A declaration that is not signed under the penalty of perjury has “no evidentiary value.” (Ibid.)

            Here, the declaration of Plaintiff in opposition to the motion is not signed under the penalty of perjury under the laws of the State of California as required by ViaView, Inc. v. Retzlaff, supra, 1 Cal.App.5th 198, 217. Plaintiff’s declaration states that she has “taken the time to review this document for errors or omissions and feel[s] confident in signing [her] declaration under the penalty of perjury.” (Villalpando Decl., ¶ 24.) Plaintiff’s declaration is therefore not sufficient as it is not signed under the penalty of perjury under the laws of the State of California. Plaintiff’s declaration is insufficient on its face under Kulshrestha, supra, 33 Cal.4th 601, 613. As such, the Court SUSTAINS Defendant Nationstar’s evidentiary objections numbers 11 through 96. The Court therefore will not consider the declaration of Plaintiff in opposition to the motion as it is not compliant with CCP § 2015.5.  

Discussion

            The Existence of an Agreement to Arbitrate

            Defendant Nationstar contends that the parties entered into an agreement to arbitrate and that such agreement is valid and enforceable. Plaintiff asserts that Defendant Nationstar has not met its burden in establishing a valid written agreement to arbitrate because Defendant Nationstar never formed a valid arbitration agreement with Plaintiff. Plaintiff argues that Defendant “ha[s] not and cannot produce an arbitration agreement that was actually signed, physically or digitally, by Plaintiff.” (Opp’n at p. 4: 16-20.)

            The right to arbitration depends upon contract; a petition to compel arbitration is simply a suit in equity seeking performance of that contract. (Engineers & Architects Assn. v. Community Development Dept. (1994) 30 Cal.App.4th 644, 653.) There is no public policy favoring arbitration of disputes which the parties have not agreed to arbitrate. (Ibid.) The FAA does not force parties to arbitrate when they have not agreed to do so. (Cronus Investments, Inc. v. Concierge Services (2005) 35 Cal.4th 376, 385.) “An electronic record or electronic signature is attributable to a person if it was an act of the person. The act of the person may be shown in any manner, including a showing of the efficacy of any security procedure applied to determine the person to which the electronic record or electronic signature was attributable.” (Ruiz v. Moss Bros. Auto Group, Inc. (2014) 232 Cal.App.4th 836, 843.)

            “A contract may validly include the provisions of a document not physically part of the basic contract.” (Shaw v. Regents of University of California (1997) 58 Cal.App.4th 44, 54.) “[T]he parties may incorporate by reference into their contract the terms of some other document.” (Ibid., citation omitted.) “But each case must turn on its facts.” (Ibid., citation omitted.) “For the terms of another document to be incorporated into the document executed by the parties the reference must be clear and unequivocal, the reference must be called to the attention of the other party and he must consent thereto, and the terms of the incorporated document must be known or easily available to the contracting parties.” (Ibid.)

            “In California, [g]eneral principles of contract law determine whether the parties have entered into a binding agreement to arbitrate.” (Pinnacle Museum Tower Assn. v. Pinnacle Market Development (US), LLC (2012) 55 Cal.4th 223, 236.) “Generally, an arbitration agreement must be memorialized in writing.” (Ibid.) “A party’s acceptance of an agreement to arbitrate may be express, as where a party signs the agreement. A signed agreement is not necessary, however, and a party’s acceptance may be implied in fact.” (Ibid.) “An arbitration clause within a contract may be binding on a party even if the party never actually read the clause.” (Ibid.) An employee’s continued employment “constitutes her acceptance of an agreement proposed by her employer.” (Craig v. Brown & Root, Inc. (2000) 84 Cal.App.4th 416, 420.)

a.      Evidence in Support of the Motion

In support of the motion, Defendant Nationstar presents the declaration of Nichole

Moseley (“Moseley”), who is the Assistant Vice President of Human Resources Compliance at Defendant Nationstar. (Mosely Decl., ¶ 1.) Mosely sets forth her familiarity with Defendant Nationstar’s cloud-based platform, called Workday, which it utilizes to administer the onboarding process, its policies, its arbitration agreement, and to maintain electronic personnel files and data. (Id., ¶¶ 2-3.) As part of its onboarding process, Defendant Nationstar sends newly hired employees an e-mail containing a link to Workday along with a username and temporary password generated by Workday. (Id., ¶ 4.) When the employee first signs in to Workday using the temporary username and password received, the employee is then prompted to create a unique password that is known only to the employee, establish security questions to ensure that the employee is the person trying to retrieve or reset a password if the employee has forgotten his or her Workday password, and then complete his or her new-hire paperwork. (Id.) Defendant Nationstar also distributes important policy updates including its Arbitration Policy and its Arbitration Agreement, via Workday where employees can access, review, and acknowledge the documents. (Id.) After an employee electronically acknowledges a document, an electronic record is generated showing the date and time the employee acknowledged the document, and includes, as an attachment, the document which the employee acknowledged. (Id.)

            Plaintiff began her employment with Defendant Nationstar and completed her onboarding paperwork on or about May 5, 2020. (Id., ¶ 5.) At all relevant times since the implementation of the onboarding process through Workday, and through November 19, 2021 (the effective date of Plaintiff’s resignation), newly hired employees were asked to review and complete, as necessary, several documents as part of an “Onboarding task” that is queued in Workday for each such employee. (Id.) The Onboarding task for all newly hired employees always included, in relevant part, the Arbitration Policy and a separate acknowledgement thereto. (Id., ¶ 6.) The Arbitration Policy was uploaded to Workday on or about May 31, 2019 for newly hired employees as a standalone document and was not part of a larger document. (Id., ¶ 7; Exh. A.) As with the Arbitration Policy, Defendant Nationstar has at all relevant times maintained an arbitration agreement (the “Arbitration Agreement”) that is revised periodically. (Id., ¶ 8; Exh. B.)

At the time Plaintiff began her employment with Defendant Nationstar, and at all times since, an employee’s agreement to the Arbitration Agreement has been a mandatory condition of employment with Defendant Nationstar. (Id., ¶ 8.) The Arbitration Agreement is made available to all employees in the Company’s Policy SharePoint Site to which Plaintiff had access upon her hire with Defendant Nationstar. (Id.) Plaintiff successfully completed Defendant Nationstar’s required HR Policies & Procedures Training which included showing employees where to find all HR-related policies and procedures, including but not limited to the Arbitration Policy and the Arbitration Agreement. (Id., ¶ 8; Exh. C.) Plaintiff electronically acknowledged the Arbitration Policy. (Id, ¶¶ 9-10; Exh. D.)

Moseley states that due to the COVID-19 pandemic, and the transition of existing employees and new hires to remote work on a temporary basis, Defendant Nationstar was not always able to capture an employee’s signature on the Arbitration Agreement whether by hard copy or through an electronic acknowledgement. (Id., ¶ 11.) Despite a thorough search, Defendant Nationstar has been unable to locate a physical or electronic record of Plaintiff’s signature to or acknowledgement of the Arbitration Agreement. (Id.) Defendant Nationstar is headquartered in Coppell, Texas and provides quality servicing, origination, and transaction-based services related principally to mortgage loans for single-family residents throughout the United States. (Id., ¶ 12.)

b.     Evidence in Opposition to the Motion

Plaintiff’s counsel, Troy Candiotti, Esq. (“Candiotti”), declares that his office filed a

charge with the California Department of Fair Employment and Housing (“DFEH”) on August 29, 2023, and the DFEH complaint and accompanying right to sue letter were attached to Plaintiff’s civil complaint. (Candiotti Decl., ¶ 3; Exh. A.)

c.      Analysis

Initially, the Court finds that Plaintiff’s contention that she did not agree to allow

use of an electronic signature is inapposite. Plaintiff presents no admissible evidence to support such a contention. “In law and motion practice, factual evidence is supplied to the court by way of declarations.” (Calcor Space Facility, Inc. v. Superior Court (1997) 53 Cal.App.4th 216, 224.)

            The Court also finds that although Defendant Nationstar states that it cannot locate a signed copy of the Arbitration Agreement, such an agreement was incorporated into the Arbitration Policy. The Arbitration Agreement is explicitly referenced in the Arbitration Policy. (Moseley Decl., ¶ 7; Exh. A.) The reference to the Arbitration Agreement is clearly stated in the Arbitration Policy and Plaintiff consented to the Arbitration Policy which states that “[a]greement to the [c]ompany’s Arbitration Policy and Arbitration Agreement is a condition of employment at the Company.” (Id.) Moreover, the Arbitration Policy sets forth exactly where the Arbitration Agreement could be accessed by Plaintiff. (Id.) Defendant Nationstar has also presented sufficient evidence that the signature on the Arbitration Policy was attributable to Plaintiff as required under Ruiz v. Moss Bros. Auto Group, Inc., supra, 232 Cal.App.4th 836, 843. As such, the Court finds that the Arbitration Agreement was incorporated by reference and Defendant Nationstar has shown that there is valid, binding agreement between the parties to arbitrate.

            Additionally, Plaintiff’s continued employment with Nationstar constitutes a binding agreement to arbitrate between the parties pursuant to Craig v. Brown & Root, Inc., supra, 84 Cal.App.4th 416, 420. Defendant Nationstar has provided evidence showing that Plaintiff’s acceptance of the Arbitration Agreement was a mandatory condition of employment. (Moseley Decl., ¶ 7; Exh. A.)

            The Court also notes that the Arbitration Agreement at issue explicitly provides that the FAA shall apply to such agreement. Thus, under Davis v. Shiekh Shoes, LLC, supra, 84 Cal.App.5th 956, 963, the FAA applies to the Arbitration Agreement. The Court therefore finds that the FAA governs the Arbitration Agreement, and that Defendant Nationstar has shown the existence of a valid agreement to arbitrate.

            Coverage of Claims Alleged

            The Arbitration Agreement specifically states that it applies to “any and all claims or controversies, past, present or future, involving legally-protected rights, arising out of, or relating to employee’s application, selection process, employment, and/or separation of employment that the Company may have against employee or that employee may have against the Company and/or its successors and assigns, and their former, current and future officers, directors and employees.” (Moseley Decl., Exh. B at p. 1.) The Arbitration Agreement applies to “claims for discrimination or harassment on the bases of race, sex . . . national origin, age, marital status, disability, [or] medical condition.” (Id.)

            Here, the claims alleged in the Complaint all arise from Plaintiff’s employment with Defendant Nationstar. Thus, the Court finds that the Arbitration Agreement covers the causes of action alleged in the Complaint.

            Delegation of Gateway Issues to the Arbitrator  

            Defendant Nationstar contends that any challenges to the enforceability or validity of the Arbitration Agreement must be decided by the arbitrator. Plaintiff does not respond to such argument in the opposition and has therefore conceded to such an argument because “[c]ontentions are waived when a party fails to support them with reasoned argument and citations to authority.” (Moulton Niguel Water Dist. v. Colombo (2003) 111 Cal.App.4th 1210, 1215.)

            “[T]he question of arbitrability . . . is undeniably an issue for judicial determination.” (AT&T Technologies, Inc. v. Communication Workers of America (1986) 475 U.S. 643, 649.) “Unless the parties clearly and unmistakably provide otherwise, the question of whether the parties agreed to arbitrate is to be decided by the court, not the arbitrator.” (Ibid.) “An agreement to arbitrate a gateway issue is simply an additional, antecedent agreement the party seeking arbitration asks the . . . court to enforce, and the FAA operates on this additional arbitration agreement just as it does on any other.” (Rent-A-Center, West, Inc. v. Jackson (2010) 561 U.S. 63, 70.)

            Here, the Arbitration Agreement provides that “[t]he Arbitrator, and not any federal, state, or local court or agency, shall have exclusive authority to resolve any dispute relating to the interpretation, applicability, enforceability or formation of this Agreement including, but not limited to any claim that all or any part of this Agreement is void or voidable.” (Mosely Decl., Exh. B at p. 1.) The Court has found, as stated above, that there is a valid arbitration agreement between the parties and that the claims alleged are covered by the Arbitration Agreement. However, Plaintiff’s challenges to enforceability must be decided by the arbitrator. Thus, based on the language of the Arbitration Agreement, Plaintiff’s argument that the Arbitration Agreement violates the Ending Forced Arbitration Act of 2022 (“EFASASHA”) must be decided by the Arbitrator and not this Court.

            The Court, however, will still address Plaintiff’s argument that the Arbitration Agreement is unconscionable.

            Unconscionability

             The inquiry into unconscionability consists of two prongs: A contract will be revoked if it is both procedurally unconscionable and substantively unconscionable. (Armendariz v. Foundation Health Psychcare Services, Inc., supra, 24 Cal.4th 83, 114.) Procedural and substantive unconscionability need not be present to the same degree, with the test operating on a “sliding scale”: “[T]he more substantively oppressive the contract term, the less evidence of procedural unconscionability is required to come to the conclusion that the term is unenforceable, and vice versa.” (Ibid.) 

            “‘Procedural unconscionability’ concerns the manner in which the contract was negotiated and the circumstances of the parties at that time.  It focuses on the factors of oppression and surprise. The oppression component arises from an inequality of bargaining power of the parties to the contract and an absence of real negotiation or a meaningful choice on the part of the weaker party. The component of surprise arises when the challenged terms are ‘hidden in a prolix printed form drafted by the party seeking to enforce them.’” (Nyulassy v. Lockheed Martin Corp. (2004) 120 Cal.App.4th 1267, 1281.)

            Here, Plaintiff has not presented any admissible evidence of procedural unconscionability in the Arbitration Agreement. Because “[b]oth procedural unconscionability and substantive unconscionability must be shown” (Pinnacle Museum Tower Assn. v. Pinnacle Market Development (US), LLC, supra, 55 Cal.4th 223, 247), Plaintiff cannot show that the Arbitration Agreement is unconscionable, regardless of the issue of substantive unconscionability.

            Accordingly, the motion to compel arbitration filed by Defendant Nationstar is GRANTED. The Court stays this action pending the completion of arbitration. (Code Civ. Proc., § 1281.4.)  

It is so ordered.

Dated: March 27, 2024

_______________________

ROLF M. TREU

Judge of the Superior Court