Judge: Mel Red Recana, Case: 23STCV28883, Date: 2024-04-24 Tentative Ruling
Case Number: 23STCV28883 Hearing Date: April 24, 2024 Dept: 45
Hearing
date: April 24, 2024
Moving
Party: Defendant Hollywood Production
Center
Responding
Party: Plaintiff Marciano Rafael Valdez
Motion
to Compel Arbitration and Request for Stay of the Action.
The
Court considered the moving papers, opposition, and reply.
The
motion is GRANTED. The matter is STAYED pending a final
resolution of Plaintiff’s claims in the arbitration proceedings as provided by
the parties’ agreement.
Moving party is
ordered to give notice.
Background
On November 27,
2023, Plaintiff Marciano Rafael Valdez (“Plaintiff”) filed a complaint against
Defendant Hollywood Production Center (“Defendant”) for 1) disability
discrimination in violation of the Fair Employment and Housing Act under
Government Code § 12940, et seq.; 2) failure to provide reasonable
accommodations; 3) failure to engage in good faith interactive process; 4)
retaliation; and 5) wrongful termination.
Defendant filed
the instant motion to compel arbitration and request for a stay of action on
February 16, 2024. Plaintiff files in opposition. Defendant replies.
Legal
Standard
Under Code of
Civil Procedure §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 a preponderance
of the 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. (Id.)
The trial court then weighs all the evidence submitted and uses its
discretion to make a final determination.
(Id.) “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.)
If the court
orders arbitration, then the court shall stay the action until arbitration is
completed. (See Code Civ. Proc., §
1281.4.)
Evidentiary
Objections
Plaintiff’s objection to the copy of the
fully executed Employment Agreement labeled as Exhibit A of Lucy Mardonovich’s
Declaration, and Paragraph 5 lines 5-6 of the same declaration, is OVERRULED as the Plaintiff has not provided
sufficient evidence, such as a declaration of a handwriting expert, for the
Court to distrust Defendant’s Declaration and copy of the Employment Agreement.
Discussion
The Arbitration Agreement
Defendant brings
the instant motion seeking to compel Plaintiff
to submit to arbitration based on a written employment agreement (Mardonovich
Decl. ¶ 3., Exh. A.) Defendant argues that the Employment Agreement has an
arbitration provision (“AA”) and sets out the following language:
Any
controversy or claim arising out of or relating to this agreement, or any
controversy or claim involving you and the company, companies affiliates, or
their agents, including, but not limited to, disputes over termination,
benefits, wages and compensation, performance evaluation, sexual harassment,
discrimination, statutory claims (such as Title VII, Age Discrimination and Employment
Act, Americans with Disabilities Act) shall be settled by arbitration
administered by the American Arbitration Association under its national rules
for the resolution of employment disputes and judgment shall be entered upon
the award rendered by the neutral arbiter…
(Id.
Exh. A.) Defendant contends that the claims alleged in Plainitff’s Complaint arise
from his employment with Defendant, which is covered by the Agreement. Defendant
claims that Plaintiff and his counsel refuse to arbitrate per the AA. Defendant
further argues that the AA is valid and enforceable and not procedurally or
substantively unconscionable. (Mot. p. 7:7-9.)
Based on the Defendant’s moving papers, the AA is
valid. Defendant’s General Manager, Lucy Mardonovich, states that during the onboarding
process, Defendant presents new hires with an Employment Agreement containing the
AA. The Employment Agreement allows each employee to opt out of the AA and
provides those who sign 30 days to review the AA and later opt out within that
time. (Id. ¶ 3.; See also Exh A ¶ 7.) Mardonovich notes that it is the
Defendant’s practice to provide an HR representative and the Defendant’s legal
department to answer employees' questions about the Employment Agreement and
the AA. (Id.) Employees who choose not to sign the arbitration agreement
notify the Defendant by not signing ther intials under the arbitration provision.
(Id.) Finally, when an employee signs the Employment Agreement, a copy
is provided to the employee for their records. At the same time, the original
is kept within the employee’s respective personnel file and stored in a filing
cabinet that Ms. Mardonovich and the Defendant’s legal department can access. (Id.
¶ 4.)
In Plainitff’s case, Mardonovich swears that as part
of Plaintiff’s onboarding process, he was provided a copy of the Employment
Agreement. (Id. ¶5.) Mardonovich swears that Plaintiff could read and
write in English and that Plaintiff did not indicate to her that he did not
understand the agreement. (Id.) Plaintiff initialed his name next to the
arbitration agreement, agreeing to arbitrate all claims. (Id.) Mardonovich further points out that Defendant
did not receive any indication or notice from Plaintiff that he was choosing to
opt out of the arbitration agreement after he signed. (Id.) Furthermore,
the Court notes that Mardonovich’s declaration identifies the same procedures
generally followed for providing a copy of the signed Employment Agreement, was
the same process employed during Plaintiff’s onboarding process.
In opposition, Plaintiff asserts that he did not sign
or assent to the AA because his signature was forged. Plaintiff declares that
he is a native Spanish speaker and cannot functionally speak or read English
(Plaintiff Decl. ¶ 6.) Moreover, Plaintiff attempts to point out that Defendant
did not offer Plainitff the Employment Agreement in Plainitff’s native
language. (Opp’n p.11:4.) Plaintiff further asserts that he was never told
about the AA, nor did anyone on behalf of his employer ever discuss an arbitration
agreement with him or that he could opt out. However, the Court is not
persuaded as it appears that based on Defendant’s declarations, Plaintiff was
provided with a clear opportunity, if not immediately at his onboarding process,
but within 30 days after signing the Employment Agreement, to review and later
opt-out if he changed his mind.
In both Ms. Mardonovich’s initial and supplemental
declarations, she attest that Plaintiff was given this opportunity, as were
other new employees. Indeed, this is distinguishable from the California
Supreme Court’s holding in Rosenthal, where it was clear that the factors
in that case were meant to induce assent to the contract without allowing the
plaintiff the opportunity to know the contract’s terms. (Rosenthal v. Great
Western Financial Securities Corp. (1996) 14 Cal 4th 394.) Here, Defendant
gave Plaintiff several opportunities to learn about the Employment and the AA.
Both Ms. Mardonovich and her assistant, Alexandria Aguilar who was also at
Plaintiff’s onboarding process, were fluent in Spanish and could have
communicated with the Plaintiff in Spanish if he requested. (Suppl. Mardonovich
Decl. ¶ 2.) Yet it appears that the Plaintiff did not do so. Furthermore, per
the AA, the Plaintiff had 30 days to opt out of the AA if he chose to do so. At
that time, Plaintiff could have further reviewed the Employment Agreement and
sought further clarification if needed.
Thus, the Defendant has sufficiently shown that the AA
is valid.
Unconscionability
“Unconscionability” is one of the principal defenses
to a request for arbitration. It is a generally applicable contract defense
under California law (Civ. Code, § 1670.5). Two elements must be shown: (1)
“procedural” unconscionability and (2) “substantive” unconscionability. (Armendariz
v. Foundation Health Psychcare Services, Inc. (2000) 24 C4th 83, 113-115.)
The issue is reviewed in the context of
when the contract was signed. (Bakersfield College v. California Comm.
College Athletic Ass'n (2019) 41 CA5th 753, 762.) “The procedural element
of unconscionability focuses on whether the contract is one of adhesion.
Procedural unconscionability focuses on whether there is “oppression” arising
from an inequality of bargaining power or “surprise” arising from buried terms
in a complex printed form. The substantive element addresses the existence of
overly harsh or one-sided terms. An agreement to arbitrate is unenforceable
only if both the procedural and substantive elements are satisfied. However…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.” (McManus v. CIBC World Markets Corp.
(2003) 109 Cal.App.4th 76, 87.) (internal quotations and citations omitted).
a.
Procedural Unconscionability
There is no
dispute that this was a contract of adhesion as Defendant used the same
Employment Agreement for all new employees. That alone will satisfy the
procedural element of the analysis as a matter of law. (Lane v. Francis
Capital Management LLC (2014) 224 Cal.App.4th 676, 689.) However, it bears
repeating that unconscionability is examined on a sliding scale – the stronger
the procedural issues, the less prominent the substantive issues need to be,
and vice versa. The adhesive nature of a contract does not weigh strongly on the
procedural side of the scale. (Baltazar v. Forever 21, Inc. (2016) 62
Cal.4th 1237, 1245; Nguyen v. Applied Medical Resources Corp. (2016) 4
Cal.App.5th 232, 248-249.)
Moreover, there
is very little else to suggest procedural unconscionability. Plaintiff's
contention that no one explained the arbitration provision to him and that he signed
where he was instructed to by HR employees is again not persuasive because he
had 30 days to review and opt out if he changed his mind. But if Plaintiff had
read the Employment Agreement or requested an explanation on the day of his
onboarding process, he could not have been surprised. The title of the AA is in
big, bold letters, indicating the presence of an arbitration clause. The fourth
page of the Agreement, in a box that Plaintiff did sign, indicates assent to an
arbitration clause predominantly contained on Page 3 of the Employment Agreement.
Plaintiff cannot fail to read an agreement and then claim surprise about its
provisions. Moreover, as articulated above, Defendant gave Plaintiff several
opportunities to have the terms of the agreement explained to him, and if need
be, could have been communicated in Spanish. (Suppl. Mardonovich Decl. ¶ 3.) While
the Court agrees that Defendant's failure to provide the rules of the American
Arbitration Association does add a degree of procedural unconscionability,
taken together with the adhesive nature of the contract, this still does not equate
to a high level of procedural unconscionability that would lessen the level of
substantive unconscionability necessary to render the AA unenforcible.
b.
Substantive Unconscionability
Plaintiff
alleges that the AA is substantively unconscionable because its provisions
violate Plainitff’s rights. Specifically, Plaintiff argues that the AA contains
illegal fee-shifting provisions for arbitration cost and Plainitff’s attorney’s
fees; it illegally prohibits an appeal of the arbitration award and lacks
adequate discovery by restricting discovery to the AAA’s employment litigation
arbitration rules. (Opp’n p. 13-15.) However, the Court is not persuaded as
this grossly misconstrues the clear language presented in the Arbitration
Agreement. First, the Arbitration Agreement does not shift attorney’s fees and
arbitration costs as the language states that “Under the National Rules for the
Resolution of Employment Disputes, the arbitrator may grant any remedy or
relief that the arbitrator deems just and equitable, including any remedy or
relief that would have been available to the parties had the matter been heard
in court.” (Mardonovich Decl.; Exh. A p. 3.) (emphasis added.) This would
not deprive Plaintiff of his right to recover fees and costs, as the arbitrator
may grant this remedy if it deems it just and equitable. The same applies to
the issue of arbitration costs, as when the sentence is read in full context,
the arbitrator will determine if the claim has been previously filed or if it
was filed with the intent to harass the Company. Furthermore, the agreement
does not prohibit appealing the arbitration award. Instead, it provides that
the parties expressly waive their right to appeal. Thus, the Court fails to see
how enforcing the Arbitration agreement is substantively unconscionable and,
therefore, finds the agreement to be enforceable.
Per the
Arbitration Agreement, the American Arbitration Association (“AAA”) is to be
the forum for the arbitration. Thus, the Court finds that the parties' dispute
can be sufficiently arbitrated under CCP § 1281.6 through the AAA.
The Court further
finds that a stay of the action is appropriate in this case once the motion is
granted, as Code of Civil Procedure § 1281.4 stipulates that the Court shall
stay the action until arbitration is completed. (Code Civ. Proc., § 1281.4.)
Therefore, the Court GRANTS the Defendant’s Motion to Compel Arbitration and STAYS
the proceeding pending a final resolution of Plaintiff’s claims through
arbitration.
It
is so ordered.
Dated: April 24, 2024
_______________________
ROLF TREU
Judge of the
Superior Court