Judge: Mel Red Recana, Case: 23STCV27305, Date: 2024-10-22 Tentative Ruling
Case Number: 23STCV27305 Hearing Date: October 22, 2024 Dept: 45
|
TRISHA
FRISBIE, Plaintiff, vs. ALO,
LLC, Defendant. |
Case No.: 23STCV27305
DEPARTMENT
45 [TENTATIVE] RULING Action
Filed: 11/07/2023 Trial
Date: N/A |
Hearing date: October 22, 2024
Moving Party: Defendant Alo, LLC
Responding
Party: Plaintiff Trisha Frisbie
Motion to Compel Arbitration and Stay
Proceedings
The Court considered the moving papers, opposition,
and reply.
The Court GRANTS the Motion
to Compel Arbitration and Stay Proceedings filed by Defendant Alo, LLC.
Background
On November 7, 2023, Plaintiff Trisha
Frisbie (“Plaintiff”) filed an action against her former employer Defendant
Alo, LLC (“Alo”) and Does 1 through 20, asserting the following causes of
action: (1) disability discrimination in violation of FEHA, (2) retaliation in
violation of FEHA, (3) failure to prevent discrimination and retaliation, (4)
wrongful termination in violation of Labor Code sections 230 and 230.1, (5)
wrongful termination in violation of public policy, and (6) unfair business
practices. Plaintiff alleges that she
began to work at Defendant’s retail store in Newport Beach, CA, as a General Manager
around February 20, 2023. (Complaint, ¶
3.) Between April 27, 2023, and June 5,
2023, Plaintiff requested a leave of absence to attend an alcohol
rehabilitation program and seek psychological treatment for mental injuries
sustained as a victim of a sex-related crime.
(Id. at ¶¶ 4-6, 10.)
Although she was cleared to return to work on June 5, 2023, Defendant’s
area manager and her immediate supervisor, Kristen Benson, allowed her to
return to work on June 9, 2023. (Id.
at ¶ 6.) On August 16, 2023, Defendant
Alo terminated Plaintiff’s employment.
On March 19, 2024, Defendant Alo
filed an Answer.
On May 23[1],
2024, Defendant Alo filed the instant Motion to Compel Arbitration and Stay
Proceedings (“Motion”). On August 13,
2024, the Court granted Plaintiff’s Ex Parte Application for Relief from
Untimely Opposition, filed on August 12, 2024, and continued the hearing on the
Motion to October 22, 2024. Plaintiff
filed an Opposition on August 15, 2024, and Defendant filed a Reply on October
15, 2024.
Legal Standard
Pursuant to Code of Civil
Procedure, section 1281.2, generally, on a petition to compel arbitration,
the court must grant the petition unless it finds either (1) no written
agreement to arbitrate exists; (2) the right to compel arbitration has been
waived; (3) grounds exist for revocation of the agreement; or (4) litigation is
pending that may render the arbitration unnecessary or create
conflicting¿rulings on common issues.
When seeking to compel arbitration,
the initial burden lies with the moving party to demonstrate the existence of a
valid arbitration agreement by prepondernace of evidence. (Ruiz v. Moss Bros. Auto Group (2014)
232 Cal.App.4th 836, 841-42; Gamboa v. Northeast Community Clinic (2021), 72 Cal.App.5th 158, 164-65.) It is sufficient for the moving
party to produce a copy of the arbitration agreement or set forth the
agreement’s provisions. (Gamboa,
72 Cal.App.5th at 165.) The
burden then shifts to the opposing party to prove by a preponderance of
evidence any defense to enforcement of the contract or the arbitration clause. (Ruiz, 232 Cal.App.4th at 842; Gamboa,
72 Cal.App.5th at 165.)
Subsequently, the moving party must establish with the preponderance of
admissible evidence a valid arbitration agreement between the parties. (Ibid.) The trial court then weighs all the evidence
submitted and uses its discretion to make a final determination. (Ibid.) “California law, ‘like [federal law],
reflects a strong policy favoring arbitration agreements and requires close
judicial scrutiny of waiver claims.’” (Wagner Const. Co. v. Pacific Mechanical
Corp. (2007) 41 Cal.4th 19, 31.)
The Federal Arbitration Act (“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.)
A. Motion
Defendant Alo
moves for an order compelling Plaintiff to arbitrate her claims pursuant to the
arbitration clause contained in the At-Will Employment, Confidential
Information & Arbitration Agreement (“Employment Agreement”). Defendant also requests an order staying the
action pending arbitration.
Defendant
is a nationwide retailer of apparel and wellness products that operates stores
in 17 states, the District of Columbia, and sells merchandise online throughout
the United States. (Springer Decl., ¶ 3.) Thus, according to Defendant, for purposes of
the Federal Arbitration Act (“FAA”), Alo is involved in interstate
commerce. (Motion, p. 8.)
Plaintiff
accepted an offer for the position of General Manager at the Fashion Island
store in Newport Beach, CA, operated by Defendant, with a February 20, 2023,
start date. (Springer Decl., ¶ 4, Ex. D;
Ku Decl., ¶ 3.) On February 6, 2023, around
10:54 p.m., Plaintiff signed the written Employment Agreement via
DocuSign. (Ku Decl., ¶¶ 4, 7-8, Ex.
B.) The arbitration provision of the Employment
Agreement states in relevant part:
A. Arbitration. IN CONSIDERATION OF
MY EMPLOYMENT WITH THE COMPANY, ITS PROMISE TO ARBITRATE ALL EMPLOYMENT-RELATED
DISPUTES, AND MY RECEIPT OF ANY SALARY, COMMISSION AND/OR BONUS COMPENSATION
AND OTHER BENEFITS PAID TO ME BY THE COMPANY, AT PRESENT AND IN THE FUTURE, I
AGREE THAT ANY AND ALL CONTROVERSIES, CLAIMS, OR DISPUTES WITH ANYONE
(INCLUDING THE COMPANY AND ANY EMPLOYEE, OFFICER, DIRECTOR, SHAREHOLDER, OR
BENEFIT PLAN OF THE COMPANY, IN THEIR CAPACITY AS SUCH OR OTHERWISE), ARISING
OUT OF, RELATING TO, OR RESULTING FROM MY EMPLOYMENT WITH THE COMPANY OR THE
TERMINATION OF MY EMPLOYMENT WITH THE COMPANY, INCLUDING ANY BREACH OF THIS
AGREEMENT, SHALL BE SUBJECT TO BINDING ARBITRATION ADMINISTERED BY JAMS
PURSUANT TO ITS EMPLOYMENT ARBITRATION RULES & PROCEDURES AND SUBJECT TO
JAMS POLICY ON EMPLOYMENT ARBITRATION MINIUMUM STANDARDS OF PROCEDURAL FAIRNESS
(“JAMS RULES”), WHICH ARE AVAILABLE AT:
https://www/jamsadr.com/rules-employment-arbitration/. THE ARBITRATOR SHALL
ADMINISTER AND CONDUCT ANY SUCH ARBITRATION IN ACCORDANCE WITH CALIFORNIA LAW,
AND SHALL APPLY SUBSTANTIVE AND PROCEDURAL CALIFORNIA LAW TO ANY DISPUTE, CLAIM
OR CONTROVERSY, WITHOUT REFERENCE TO ANY CONFLICT-OF-LAW PROVISIONS OF ANY
JURISDICTION. TO THE EXTENT THE JAMS RULES CONFLICT WITH CALIFORNIA LAW,
CALIFORNIA LAW SHALL TAKE PRECEDENCE. DISPUTES THAT I AGREE TO ARBITRATE, AND
THEREBY AGREE TO WAIVE ANY RIGHT TO A TRIAL BY JURY, INCLUDE ANY STATUTORY CLAIMS
UNDER LOCAL, STATE, OR FEDERAL LAW, INCLUDING, BUT NOT LIMITED TO, CLAIMS UNDER
TITLE VII OF THE CIVIL RIGHTS ACT OF 1964, THE AMERICANS WITH DISABILITIES ACT
OF 1990, THE AGE DISCRIMINATION IN EMPLOYMENT ACT OF 1967, THE OLDER WORKERS
BENEFIT PROTECTION ACT, THE SARBANES-OXLEY ACT, THE WORKER ADJUSTMENT AND
RESTRAINING NOTIFICATION ACT, THE FAMILY AND MEDICAL LEAVE ACT, CLAIMS OF
HARASSMENT, DISCRIMINATION, AND WRONGFUL TERMINATION, AND ANY STATUTORY OR
COMMON LAW CLAIMS. NOTWITHSTANDING THE FOREGOING, I UNDERSTAND THAT NOTHING IN
THIS AGREEMENT CONSTITUTES A WAIVER OF MY RIGHTS UNDER SECTION 7 OF THE
NATIONAL LABOR RELATIONS ACT (THE “ACT”). I FURTHER UNDERSTAND THAT THIS
AGREEMENT TO ARBITRATE ALSO APPLIES TO ANY DISPUTES THAT THE COMPANY MAY HAVE WITH
ME.
…
F. Voluntary Nature of Agreement. I
ACKNOWLEDGE AND AGREE THAT I AM EXECUTING THIS AGREEMENT VOLUNTARILY AND
WITHOUT ANY DURESS OR UNDUE INFLUENCE BY THE COMPANY OR ANYONE ELSE. I FURTHER
ACKNOWLEDGE AND AGREE THAT I HAVE CAREFULLY READ THIS AGREEMENT AND THAT I HAVE
ASKED ABY QUESTIONS NEEDED FOR ME TO UNDERSTAND THE TERMS, CONSEQUENCES, AND
BINDING EFFECT OF THIS AGREEMENT AND FULLY UNDERSTAND IT INCLUDING THAT I AM
WAIVING MY RIGHT TO A JURY TRIAL. FINALLY I AGREE THAT I HAVE BEEN PROVIDED AN
OPPORTUNITY TO SEEK THE ADVICE OF AN ATTORNEY OF MY CHOICE BEFORE SIGNING THIS
AGREEMENT.
(Ku Decl., ¶ 8, Ex. B at Section 13.) Defendant has submitted the declaration of
Sara Ku authenticating Plaintiff’s signature on the Employment Agreement. (Id. at ¶¶ 4-9.)
Pursuant to the
Employment Agreement, Plaintiff agreed to resolve any employment-related
disputes with Defendant through binding arbitration in accordance with the JAMS
Employment Rules and Procedures. The six
causes of action asserted in the Complaint relate to Plaintiff’s employment;
however, despite Defendant’s attempts to resolve the dispute informally, Plaintiff
has filed the instant Complaint and refuses to stipulate to arbitration of the
claims. (Logoluso Decl., ¶¶ 3-4.)
Defendant argues that the arbitration
provision of the Employment Agreement should be enforced because it meets all
the Armendariz requirements.
(Motion, pp. 10-12; see Armendariz
v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83.) The provision states that binding arbitration
will be administrated by JAMS rules which require the selection of a neutral
arbitrator and the exchange of more than minimal discovery. (Ku Decl., ¶ 8, Ex. B at
Section 13; Logoluso Decl. ¶ 5, Ex. C – JAMS Rules 7, 15, 17.) Moreover, a written decision regarding the
disposition of the claims and relief is required and the arbitrator may grant
any remedies under applicable law that are just and equitable. (Ku Decl., ¶ 8, Ex. B at Section 13.C;
Logoluso Decl. ¶ 5, Ex. C – JAMS Rule 24.)
According to the arbitration provision, fees are covered by Defendant, except
for filing fees if Plaintiff initiates arbitration, and the provision provides
for a bilateral enforcement of arbitration of employment-related disputes. (Ku Decl., ¶ 8, Ex. B at Section 13.C.)
Defendant also
argues that the arbitration provision is not unconscionable. (Motion, pp. 12-14.) The provision is not procedurally
unconscionable because there is no element of surprise as the arbitration
provision is presented “in all-capitalized letters and bold-type face that
Plaintiff voluntarily executed at the outset of her employment with Alo.” (Motion, p. 13; Ku Decl. ¶ 8, Ex. B at
Section 13.) Moreover, the title of the Employment
Agreement clearly indicates that it contains an arbitration provision. (Ibid.) The provision is not substantively
unconscionable as it does not contain any oppressive substantive terms or limit
Plaintiff’s rights in any respect. It
holds both parties to the same requirements as it applies to both employer and
employee. The provision is substantively
similar to other such provisions regularly upheld by California courts.
Finally, public
policy supports compelling Plaintiff to arbitrate the claims where, as here,
the parties have a valid and enforceable written agreement to arbitrate
disputes.
B. Opposition
In Opposition, Plaintiff
submits her declaration presenting the following facts. Plaintiff was working at a retail store at
Fashion Island in Newport Beach, CA in early 2023. (Frisbie Decl., ¶ 2.) She was contacted by a recruiter for
Defendant Alo, applied for the General Manager position at Alo, and received a
written offer letter on February 3, 2023, which she electronically signed on
the same day. (Id. at ¶¶ 2-3, Ex.
A.) Plaintiff understood the offer
letter to constitute the entire agreement and to govern the terms of
employment, as it stated that it “sets forth the complete agreement between [Plaintiff]
and the Company regarding employment,” and she relied on the statements in the
letter when she quit her job. (Id. at
¶ 4, Ex. A.) On February 6, 2023, after
providing notice of resignation to her then-employer, Plaintiff received a New
Hire Package (“Package”) through DocuSign consisting of approximately 257 pages
of documents; she was not informed that she could complete the Package on her
first day of work or thereafter, she did not receive a hard copy of the Package,
and was not advised that she could use one of Defendant’s computers to complete
the documents. (Id. at ¶ 5.) It took Plaintiff several hours to review and
complete the Package, which was sent in a single DocuSign request and included the
employee handbook, policies and procedures, and codes of conduct. (Id. at ¶ 6.) Moreover, approximately 26 pages of the
Package required Plaintiff to complete information and initial and/or sign the
page. (Ibid.) Given that Plaintiff did not have a computer
at the time, she used the small screen on her iPhone to review and complete the
Package. (Ibid.) In addition to the Employment Agreement,
which Plaintiff found confusing, she had to sign other documents, including “An
Assumption of Risk and Release of Liability Agreement.” (Id. at ¶ 7, Exs. B-C.) To complete and return the Package through
DocuSign, Plaintiff believed that she was required to complete every page,
without the option to decline any field, prior to starting her employment. (Id. at ¶¶ 8-9.) Plaintiff had already accepted the job offer
and did not believe that she had the option to negotiate or change any terms in
the standard documents provided to all new hires. (Id. at ¶ 9.) Plaintiff does not have any legal training,
no one explained to her the meaning of arbitration or the Employment Agreement,
or provided her with the arbitration rules.
(Id. at ¶ 10.) Plaintiff adds
that the New Hire Package contained more paperwork than she had ever completed
for employment, and with terms that seemed unfair or one-sided; however, she
did not believe she could say anything without jeopardizing her
employment. (Id. at ¶¶ 11-12.)
Plaintiff opposes
Defendant’s Motion on the basis that the Employment Agreement is procedurally
and substantively unconscionable. First,
she argues that it is procedurally unconscionable. (Opposition, pp. 7-10.) The Employment and Release Agreements signed
by Plaintiff are “textbook contracts of adhesion.” (Id. at p. 8.) Plaintiff was required to sign these
documents as a condition of her employment prior to her first day of work,
after she had already signed the offer letter claiming to be the complete
agreement between the parties, and after she had resigned from her previous
employment. The offer letter did not
reference an arbitration agreement or further documentation and conditioned
employment only on the “successful completion of all requirements to establish
the legal right to work in the United States and the results of a background
check.” (Frisbie Decl., Ex. A.) Presenting a 257-page New Hire Package to
Plaintiff after representing that the offer letter was a complete agreement was
“a bait-and-switch tactic designed to deceive her.” (Opposition, p. 8.) Given that she had already resigned from her previous
employment when she was presented with the New Hire Package, Plaintiff “had no
option but to sign the oppressive form documents prior to her first day of
work.” (Ibid.)
The Arbitration
Agreement also included an element of unfair surprise as it was not a
stand-alone agreement, but rather part of a lengthy 257-page packet presented
in electronic form in a single DocuSign link.
Plaintiff was not provided with a hard copy of the documents or informed
that she could use one of Defendant Alo’s computers, thus, she had to review
and complete the Package on her smartphone.
All the fields were required, without any option to decline, and the
Package could not be returned without completing all the fields. Moreover, the documents presented were
standard form documents and Plaintiff was not informed that she could change
any terms.
Plaintiff argues
that the facts of the instant case are similar to those in Hasty v. American
Automobile Assn. etc., in which the Court of Appeal found that the
employer’s email with new hire documents was unconscionable and unenforceable
because plaintiff had to rely on her smartphone for internet access to review
the arbitration agreement. (Hasty v.
American Automobile Assn. etc. (2023) 98 Cal. App. 5th 1041.) Here, the two-page arbitration provision “is
even worse than” the one in Hasty because it was contained in a 13-page Employment
Agreement, further embedded in a 257-page New Hire Package. Unlike the plaintiff in Hasty, here,
Plaintiff did not receive notice in the offer letter that she would have to
sign an arbitration agreement, further demonstrating the element of surprise.
Second, Plaintiff
argues that the Employment and Release Agreements are substantively
unconscionable. These Agreements are
permeated with unconscionable terms, including unlawful provisions. Plaintiff claims that the following
provisions are unlawful:
1)
Section 2(B) of
the Employment Agreement which addresses confidentiality of information
violates Government Code section 12964.5 because it attempts to prevent
disclosure of unlawful practices such as harassment and discrimination.
2)
Section 8
regarding “Non-Solicitation of Employees” violates Business and Professions
Code section 16600 because it attempts to prevent Plaintiff from soliciting
employees from Defendant.
3)
Section 9
regarding “Non-Solicitation of Customers Using Employer’s Trade Secrets;
Non-Interference” violates Business and Professions Code section 16600 because
it attempts to prevent Plaintiff from doing business or engaging in a lawful
profession with Alo’s customers, regardless of whether she may have had prior
relationships with these customers.
4)
Section 14(C) of
the Employment Agreement regarding “Non-Disparagement” violates Government Code
section 12964.5 because it attempts to prevent disclosure of unlawful conduct,
including harassment and discrimination.
5)
The terms of the
Release Agreement violate Government Code section 12964.5 because they attempt
to require Plaintiff to release potential FEHA claims.
(Opposition, pp. 11-14; Ku Decl., ¶ 8, Ex. B.)
These provisions
and several others render the arbitration provision one-sided and unfair, thus,
there is no part of the Employment Agreement that can be severed to remove the
unconscionability element. Some of these
terms are so broad and overreaching that they could potentially prevent
Plaintiff from pursuing the claims asserted in the instant action and provide
Defendant with an unfair advantage in arbitration.
Furthermore, the arbitration
clause, standing alone, is also substantively unconscionable because it
requires Plaintiff to arbitrate all employment-related and breach of
contract-related claims, but requires Alo to arbitrate only employment-related
claims.
Given that there
are numerous unconscionable provisions throughout the Employment Agreement that
are unlawful and lack mutuality, these provisions cannot be severed, and the
entire Employment Agreement should be deemed unenforceable.
C. Reply
In its Reply,
Defendant states that Plaintiff has filed another lawsuit against Defendant Alo
in the Orange County Superior Court, Frisbie v. Alo, LLC, Case No.
30-2024-01374172-CU-OE-CXC. On October
11, 2024, the Honorable Randall J. Sherman ruled that the arbitration provision
in this case is valid and enforceable and granted Defendant’s motion to compel
arbitration. (Mullen Decl. ¶ 3, Ex. A.)
Defendant also
presents the following arguments in response to Plaintiff’s opposition.
Plaintiff does not
contest that the FAA governs the instant matter. Under the FAA, the Court’s review must be
limited to the arbitration provision, not the validity or unconscionability of
the entire New Hire Package. Thus, the arbitration
provision is valid and enforceable unless Plaintiff can show that it is both
procedurally and substantively unconscionable.
Here, Plaintiff has not satisfied this burden.
Plaintiff has not
shown that the arbitration agreement is substantively unconscionable. The agreement is not one-sided as Defendant
is required to arbitrate “any dispute” related to Plaintiff, not just
employment-related actions, as stated in Section 13 of the Employment
Agreement. (Ku Decl., ¶ 8, Ex. B –
Section 13.A.) Moreover, Plaintiff does
not identify any terms in the arbitration provision that are allegedly
substantively unconscionable. Defendant
reiterates that the arbitration provision satisfies the factors set forth in Armendariz
“including: (1) it is bilateral; (2) it requires a neutral arbitrator; (3) it
provides for adequate discovery; (4) it requires a written award; (5) it
provides for all of the types of relief that would otherwise be available in
court; and (6) it requires Alo to pay all arbitration fees beyond what
Plaintiff would pay in court.” (Reply,
p. 7.) If the Court does find any
unconscionable provisions, these provisions should be severed.
Plaintiff has also
failed to show any procedural unconscionability. In the offer letter signed on February 3,
2023, Plaintiff agreed that the terms of her employment could be “amended or
modified by an instrument in writing signed by both parties” and signed the Employment
Agreement three days later. (Springer
Decl. ¶ 4, Ex. D.) When signing the Employment
Agreement, she acknowledged that 1) she had a chance to review it and ask
questions, 2) she was aware of her right to consult an attorney, and 3) that
she was signing it voluntarily. (Ku
Decl., ¶ 8, Ex. B at Section 13.F.) In
her declaration she admits that she spent several hours reviewing the documents
sent to her. (Frisbie Decl., ¶ 6.) Furthermore, the arbitration provision was
not hidden within the Employment Agreement, as the title clearly pointed to its
inclusion in the Employment Agreement and it was “a separate, standalone
section in all-capitalized letters and bold-type face making it easy to
see.” (Reply, pp. 8-9.) Plaintiff claims that she believed that she
had to complete the New Hire Package prior to her first day of employment on
February 20, 2023, which means she had 14 days from February 6 to February 20,
to review the Agreement, ask questions, and consult an attorney. Defendant also argues that simply because
Plaintiff had to review the New Hire Package on her smartphone screen does not
make it procedurally unconscionable, as she admits that she did review all the
pages, including the arbitration provision, undermining her argument regarding
oppression or surprise. As a General
Manager, she was a professional with the ability to understand the Employment
Agreement, and she does not present any evidence that she lacked the education
or experience to understand the paperwork.
Furthermore, she did not request the paperwork in any other format or notify
Alo that she was unable to view it. The
instant case is highly distinguishable from Hasty because in Hasty,
the arbitration agreement was heavily permeated with unconscionable terms.
Defendant also
argues that, even if Plaintiff was unable to access the arbitration rules
through the link due to a typographical error that was obvious (“www/jams”
instead of www.jams), there was nothing in the JAMS rules that was surprising
or oppressive and therefore, the error in the link does not reflect procedural
unconscionability.
Thus, Plaintiff
has not demonstrated that there was any substantive or procedural
unconscionability.
D.
Analysis
Having reviewed the moving papers,
opposition, and reply, the Court makes the following findings.
First, Defendant has complied with Code of
Civil Procedure, section 1281.2, which requires that the party seeking to
compel arbitration “plead and prove a prior
demand for arbitration under the parties’ arbitration agreement and a refusal
to arbitrate under the agreement.” (Mansouri
v. Super. Ct. (2010) 181 Cal.App.4th 633, 640; Civ. Proc. Code,
§ 1281.2.) Defendant has presented
proof of attempting to meet and confer with Plaintiff to stipulate to
arbitration of Plaintiff’s claims; however, Plaintiff has refused.
Second, the Court finds that the Arbitration Agreement
in this case is governed by the FAA. Defendant has met its burden of
demonstrating that the Arbitration Agreement at issue is a contract that demonstrates
transactions involving interstate commerce.
Plaintiff does not dispute that the FAA governs here.
Third, the Court finds
that Defendant met its burden in demonstrating the existence of a valid
Employment Agreement, with an express arbitration provision, signed by both
parties.
The burden shifts to Plaintiff to demonstrate
that the arbitration provision is not enforceable.
An agreement is unenforceable if it is both
procedurally and substantively unconscionable. (OTO, L.L.C. v. Kho (2019) 8 Cal.5th
111, 125; Sanchez v. Valencia Holding Co., LLC (2015) 61 Cal.4th 899,
910.) Under general contract principles,
procedural unconscionability focuses on oppression or surprise due to unequal
bargaining power, and substantive unconscionability focuses on overly harsh or
one-sided rules. (Armendariz v. Foundation Health Psychcare Services, Inc.
(2000) 24 Cal.4th 83, 114.) "Essentially
a sliding scale is invoked which disregards the regularity of the procedural
process of the contract formation, that creates the terms, in proportion to the
greater harshness or unreasonableness of the substantive terms themselves.
[Citations.] In other words, the 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.)
“Under the Federal Arbitration Act (9 U.S.C. § 1
et seq.) (FAA), issues that go to the validity of an underlying contract, as
opposed to the validity of an arbitration agreement itself, are normally
decided by an arbitrator, not the court. (See Buckeye Check Cashing, Inc. v.
Cardegna (2006) 546 U.S. 440, 445–446 [163 L. Ed. 2d 1038, 126 S. Ct. 1204]
[“unless the challenge is to the arbitration clause itself, the issue of the
contract’s validity is considered by the arbitrator in the first
instance”].) (Alberto
v. Cambrian Homecare (2023) 91 Cal.App.5th 482, 494, fn. 4.)
Thus, the Court’s analysis focuses on whether the arbitration provision
is procedurally and substantively unconscionable.
Here, the Court does not find that the
arbitration provision is procedurally unconscionable. The provision is presented in all-capitalized
letters and bold-faced and the title “At-Will Employment,
Confidential Information & Arbitration Agreement” clearly points Plaintiff
to the arbitration provision. Moreover,
Plaintiff was hired as a General Manager of the store and provided
approximately 14 days to review the agreement, ask questions, and consult an
attorney. She also had an opportunity to
independently locate a computer or ask Defendant for access to a computer. When she signed it, Plaintiff acknowledged
that she had read and understood the agreement and signed it voluntarily. Although Plaintiff argues that the offer letter
did not reference the arbitration agreement, as noted by Defendant, it stated
that it could be “amended or modified by an instrument in writing signed by
both parties.” (Springer Decl. ¶ 4, Ex. D.) Moreover, the California Supreme Court has
made it clear that a failure to attach arbitration rules is relevant only where
the rules are substantively unconscionable. (Baltazar v. Forever 21, Inc. (2016) 62
Cal.4th 1237, 1246.) Thus, the Court
does not find any element of surprise or unequal bargaining power that would
render the Agreement procedurally unconscionable.
The Court also does not find that the Agreement was
substantively unconscionable. Defendant
has shown that the arbitration provision satisfies the factors set forth in Armendariz,
as the provision (1) is bilateral; (2) requires a neutral arbitrator; (3)
provides for adequate discovery; (4) requires a written award; (5) provides for
all of the types of relief that would otherwise be available in court; and (6)
requires Alo to pay all arbitration fees beyond what Plaintiff would pay in
court. In opposition, Plaintiff points
to several allegedly unconscionable terms, but these terms are not in the
arbitration provision, but rather in the Employment and Release
Agreements. As stated above, under the
FAA, the Court’s analysis of unconscionability focused on the arbitration
provision itself. Plaintiff does not
point to any unconscionable terms in the arbitration provision. The Court also finds that the arbitration
provision is not one-sided, as Defendant is required to arbitrate “any dispute”
related to Plaintiff, not just employment-related actions, as stated in Section
13 of the Employment Agreement. (Ku
Decl., ¶ 8, Ex. B at Section 13.A.)
The Court does not find Plaintiff has presented
sufficient evidence of procedural or substantive unconscionability of the
arbitration provision. Thus, the arbitration agreement is valid and
enforceable.
For the reasons discussed herein, the
Court GRANTS the Motion to Compel Arbitration and Stay Proceedings filed
by Defendant Alo, LLC.
It
is so ordered.
Dated: October 22, 2024
_______________________
MEL RED RECANA
Judge of the
Superior Court