Judge: Michael E. Whitaker, Case: 23SMCV01556, Date: 2023-08-11 Tentative Ruling

Case Number: 23SMCV01556    Hearing Date: August 11, 2023    Dept: 207

TENTATIVE RULING

MOTION

Defendants The Merchant of Tennis, Inc. dba US Merchants (“Merchant” and John David Morales (“Morales”) (collectively, “Defendants”) move to compel Plaintiff Shana Ricks (“Plaintiff” or “Ricks”) to arbitrate her employment discrimination, sexual harassment, and related claims.  Plaintiff opposes the motion and Defendants reply.

LEGAL STANDARD

            “[T]he advantages of arbitration include a presumptively less costly, more expeditious manner of resolving disputes.  It follows a party to a valid arbitration agreement has a contractual right to have its dispute with another party to the contract resolved quickly and inexpensively.”  (Henry v. Alcove Investment, Inc. (1991) 233 Cal.App.3d 94, 99–100 [cleaned up].)  Thus, “on petition of a party to an arbitration agreement alleging the existence of a written agreement to arbitrate a controversy and that a party to the agreement refuses to arbitrate that 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.”  (Code Civ. Proc., § 1281.2; see also

EFund Capital Partners v. Pless (2007) 150 Cal.App.4th 1311, 1320 [the language in section 1281.2 compelling arbitration is mandatory].) 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.  (Code Civ. Proc., § 1281.2, subds. (a)-(c).)   

            “On a petition to compel arbitration, the trial court must first determine whether an agreement to arbitrate the controversy exists.  Because the existence of the agreement is a statutory prerequisite to granting the petition, the petitioner bears the burden of proving its existence by a preponderance of the evidence.  The party seeking arbitration can meet its initial burden by attaching to the petition a copy of the arbitration agreement purporting to bear the respondent's signature.”  (Bannister v. Marinidence Opco, LLC (2021) 64 Cal.App.5th 541, 543-544 [cleaned up].)  The party seeking to compel arbitration must also “plead and prove a prior demand for arbitration and a refusal to arbitrate under the agreement.”  (Mansouri v. Superior Court (2010) 181 Cal.App.4th 633, 640-641.) 

            And while the moving party on a motion to compel arbitration “bears the burden of proving the existence of a valid arbitration agreement by a preponderance of the evidence, [a] party opposing the petition bears the burden of proving by a preponderance of the evidence any fact necessary to its defense.  The trial court sits as the trier of fact, weighing all the affidavits, declarations, and other documentary evidence, and any oral testimony the court may receive at its discretion, to reach a final determination.”  (Ruiz v. Moss Bros. Auto Group, Inc. (2014) 232 Cal.App.4th 836, 842 [cleaned up]; see also Pinnacle Museum Tower Assn. v. Pinnacle Market Development (US), LLC (2012) 55 Cal.4th 223, 236 [“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”].) 

ANALYSIS

1.      Arbitration Agreement

Defendants have provided a copy of the arbitration agreement Plaintiff signed on October 10, 2021.  (Maxwell Decl. ¶ 2, Ex. A.)  The agreement requires Plaintiff (employee) and Merchant (company) “to resolve by final and binding arbitration any dispute, claim, or controversy, including but not limited to those related to Employee’s employment with or termination of employment by Company, its affiliated entities, or their respective officers, directors, employees, or agents.”  (Ibid.)  The agreement explicitly includes “claims of discrimination, retaliation, or harassment under federal or state law” and “claims of wrongful termination.”  (Ibid.) 

Plaintiff does not dispute that she signed the agreement, or that the language of the agreement applies to the claims she has asserted in the complaint filed on April 10, 2023. Also Plaintiff does she assert common defenses against the enforceability of the agreement, such as waiver or unconscionability. 

Instead, Plaintiff argues that the “Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021,” (hereinafter “the Act”) signed into law by President Joe Biden on March 3, 2022, amends the Federal Arbitration Act to “prohibit employers from enforcing pre-dispute arbitration agreements in cases involving sexual assault and sexual harassment without the employee’s consent to arbitration.” 

2.      The Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021

The Act, formerly HR 4445, now Public Law 117-90, became effective on March 3, 2022, and applies to all causes of action that arise or accrue on or after that date.  “This Act, and the amendments made by this Act, shall apply with respect to any dispute or claim that arises or accrues on or after the date of enactment of this Act.”  (ENDING FORCED ARBITRATION OF SEXUAL ASSAULT AND SEXUAL HARASSMENT ACT OF 2021, PL 117-90, March 3, 2022, 136 Stat 26.)

Defendants contend that Plaintiff’s causes of action did not arise or accrue on or after March 3, 2022, because Plaintiff’s allegations include her manager’s conduct from February 2022.  The Court disagrees.

Plaintiff’s sexual harassment cause of action is based on a hostile work environment theory.  (Complaint ¶ 24.a.)  Unlike a quid-pro-quo sexual harassment claim, which accrues at the moment the employee is denied a promotion or other benefit (Pollock v. Tri-Modal Distribution Services, Inc. (2021) 11 Cal.5th 918, 930), a hostile work environment sexual harassment claim necessarily involves an ongoing course of conduct.  (Richards v. CH2M Hill, Inc. (2001) 26 Cal.4th 798, 811.)  With respect to hostile work environment claims, “If it is only with the benefit of hindsight, after a series of discriminatory acts, that the [employee] can realize that he is indeed a victim of unlawful discrimination,” some courts have applied equitable tolling under the continuing violation doctrine.  (Id. at pp. 813-814.)

For example, in Accardi v. Superior Court (1993) 17 Cal.App.4th 341, a female police officer sued for sexual harassment under the Fair Employment and Housing Act (“FEHA”), alleging that for 11 years she was subjected to having rumors spread about her, being singled out for unfavorable work assignments, and being subjected to various sexist remarks and sexual advances.  The appellate court held that plaintiff was subjected to “a decade-long campaign against her” and permitted her claims to continue.

Similarly here, Plaintiff alleges that in February 2022, Morales spread rumors about her at work that they had been a couple in the past.  (Complaint ¶ 9.b.)  This caused Plaintiff to resign.  (Complaint ¶ 9.c.)  Then in March 2022, Plaintiff asked to return to work because she needed the money, and was hired back.  (Complaint ¶ 9.e.)  The next allegation is that Plaintiff complained in June 2022 to an executive manager about Morales’ behavior.  (Complaint ¶¶ 9.f-g.)  Also in June 2022, Plaintiff switched from the day shift to the night shift, and Morales changed her patrol area from inside the warehouse to outside.  (Complaint ¶ 9.h.)  Plaintiff next alleges escalating harassing behavior in September and October, and reaching out to the executive manager again in November 2022.  (Complaint ¶¶ 9.k-q.)  Plaintiff then alleges Morales retaliated against her from November 2022 through March 2023, when she was terminated.  (Complaint ¶¶ 9.r-x.)

Therefore, Plaintiff’s sexual harassment cause of action accrued after March 2022, and is thus subject to the Act.

3.      Severability

Defendant next contends that Plaintiff’s sexual harassment claim is severable from the other claims, such that Plaintiff can litigate her sexual harassment claim while arbitrating the remainder of her claims.  The Court disagrees. Severance is inappropriate where the claims are “all bound up with each other” such that the arbitrator and jury would face the same issues, running the risk of inconsistent adjudications.  (Harper v. Ultimo (2003) 113 Cal.App.4th 1402, 1410-12.)  That is precisely the case here. 

Plaintiff’s causes of action for gender discrimination; sexual harassment; retaliation; wrongful termination; failure to prevent discrimination, harassment, and retaliation; violation of Labor Code section 1102.5; negligent hiring, retention, and supervision; and intentional infliction of emotional distress all stem from the same basic fact pattern of Morales’ alleged harassing and discriminatory conduct based upon Plaintiff’s gender/sex, and Merchant’s response when Plaintiff allegedly reported the inappropriate conduct.  Thus, severing the sexual harassment claim from the remainder of the complaint would require both the Court and the arbitrator to review and evaluate the same facts, and would create a risk of inconsistent adjudications.

Therefore, Plaintiff’s sexual harassment cause of action cannot be severed from the remainder of the complaint.

4.      Plausibility of Claims

Defendant’s final argument is that some courts have held that the Act includes “an implicit plausibility standard […] such that a claim of sexual harassment must pass muster prior to being used to invalidate an arbitration agreement.”  (Motion at p. 11.)  In support of this proposition, Defendant cites only to a federal district court case from New York, no binding authority from California.  Notwithstanding, the Court does not find Defendant’s argument to be persuasive absent clear California authority.   

CONCLUSION

            For the reasons stated, the Court denies Defendants’ motion to compel arbitration.  Defendants shall provide notice of the Court’s ruling and file a proof of service regarding the same. 

DATED: August 11, 2023                                                      ___________________________

Michael E. Whitaker

                                                                                          Judge of the Superior Court