Judge: Michael E. Whitaker, Case: 23SMCV02492, Date: 2024-06-13 Tentative Ruling

Case Number: 23SMCV02492    Hearing Date: June 13, 2024    Dept: 207

TENTATIVE RULING

MOTION

On June 7, 2023, Plaintiff Sebastian Covarrubias (“Plaintiff”) brought this California Private Attorney Generals Act (“PAGA”) action individually and on behalf of all aggrieved employees against Defendant Frida Restaurant Beverly Hills, LLC (“Defendant”), Plaintiff’s former employer. 

Defendant now moves to compel Plaintiff’s individual claims to arbitration, based on a standalone arbitration agreement Plaintiff signed when he was hired.  Plaintiff opposes the motion, Defendant replies, and Plaintiff objects to the evidence submitted with the Reply.[1]  

ANALYSIS

1.     MOTION TO COMPEL ARBITRATION – LEGAL STANDARDS

            “[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”].) 

2.     ENFORCEABLE ARBITRATION AGREEMENTS

Defendant advanced the Declaration of Gilberto Romo who states:

1. I am employed as the Head Chef at the Cantina Frida restaurant in Beverly Hills, California, which is owned by Frida Restaurant Beverly Hills, LLC (“Frida”), the Defendant in the above-entitled action. I have personal knowledge of the facts set forth herein, which are known by me to be true and correct, and if called as a witness, I could and would competently testify thereto.

2. In operating its restaurant in Beverly Hills, California, Frida is engaged in interstate commerce. The food and beverages Frida purchases to prepare its menu items are, in some cases, supplied by vendors from outside of California. Likewise, the food and beverages (such as Tequila and other liquor) Frida offers on its menu are, in some cases, produced outside the United States, and in other cases produced in states outside California. Frida is also a public restaurant located in a popular tourist location (Beverly Hills) that serves all customers, including those from outside of California and the United States.

3. Part of my responsibilities for Frida involve hiring employees at the restaurant. It is Frida’s policy that all of its new employees are given the option of reviewing and filling out employment paperwork (including agreements to arbitrate) in either English or Spanish. It is also Frida policy that a Frida employee go over the employment paperwork (including agreements to arbitrate) with all new employees any questions they may have and to ensure they fully understand the paperwork they are signing. The executed employment paperwork is then kept on site at the restaurant in each employee’s respective files.

4. Plaintiff Sebastian Covarrubias is a former employee of Frida. At the time he was hired by Frida, Covarrubias signed a written arbitration agreement (“Arbitration Agreement”). A true and correct copy of the Arbitration Agreement signed by Covarrubias is attached hereto as Exhibit A. The original Arbitration Agreement was made in the regular course of Frida’s business, and is maintained (along with all of Frida’s other employee files) at the restaurant.

5. Mr. Covarrubias speaks both English and Spanish, and has no difficulty understanding English.

6. On or about July 30, 2022, Covarrubias’ employment with Frida was terminated. A true and copy of the separation notice from his employment file is attached hereto as Exhibit B.

(Romo Decl. ¶¶ 1-6.)  Attached as Exhibit A to the Romo Declaration is a copy of a Mutual Arbitration/Class Action Waiver Agreement signed only by Plaintiff.  The signature and date lines for “Vicente Del Rio, President” to sign on behalf of Defendant are blank.  Further, the “Employee” and “Employer” lines at the beginning of the agreement are blank.

Defendant argues that “the writing memorializing an arbitration agreement need not be signed by both parties in order to be upheld as a binding arbitration agreement.”  (Serafin v. Balco Properties Ltd., LLC (235 Cal.App.4th 165, 176) (hereafter Serafin).) 

The Court generally agrees that an agreement to arbitrate may be express or implied (Craig v. Brown & Root, Inc. (2000) 84 Cal.App.4th 416, 420-421) and that a writing memorializing an agreement does not necessarily have to be signed by both parties for the Court to find the existence of a binding agreement to arbitrate  (Serafin, supra, 235 Cal.App.4th at p. 176.)  As the Court of Appeal has explained, “it is not the presence or absence of a signature which is dispositive; it is the presence or absence of evidence of an agreement to arbitrate which matters.”  (Banner Entertainment, Inc. v. Superior Court (1998) 62 Cal.App.4th 348, 361, emphases in original.) 

For example, in Serafin, the employee was presented with a “MANDATORY ARBITRATION POLICY” that indicated “Any and all claims arising out of or in any way connected with your employment […] must be submitted to binding arbitration.” and “All employees will be required to sign an acknowledgment stating that they understand this policy and will comply with it.”  (Serafin, supra, 235 Cal.App.4th at pp. 174-175.)  Thus, in Serafin, the employer had a mandatory arbitration policy that all employees were required to agree to, and the employee’s assent to that policy was demonstrated by virtue of the employee’s signature (as well as by the employee’s choice to continue employment.)

By contrast, here, Plaintiff was presented with a standalone “Mutual Arbitration/Class Action Waiver Agreement” (emphasis added.)  The Agreement provides:

4.         THIS AGREEMENT CONTAINS A BINDING INDIVIDUAL ARBITRATION AGREEMENT AND CLASS ACTION WAIVER PROVISION SUCH THAT BOTH PARTIES GIVE UP ALL RIGHTS TO A JURY TRIAL AND TO PROCEED IN A CLASS OR MULTIPLE PARTY ACTION. […]

5.         This Agreement contains all the terms, obligations and understandings between the parties regarding its subject matter.

(Ex. A to Romo Decl. at ¶¶ 4-5.)

Thus, unlike the writing in Serafin, which informed the employee of the employer’s mandatory arbitration policy and evidenced the employee’s assent thereto, here, the writing is, by its own terms, the agreement itself.  Because Defendant did not sign it, there is no evidence of a mutual agreement to arbitrate.  “A contract must be so interpreted as to give effect to the mutual intention of the parties as it existed at the time of contracting, so far as the same is ascertainable and lawful.”  (Code Civ. Proc., § 1636, emphases added.) 

CONCLUSION

            Because the evidence does not demonstrate Defendant entered into a valid and binding arbitration agreement with Plaintiff, the Court denies Defendant’s motion to compel arbitration.

            Defendant shall provide notice of the Court’s ruling and file the notice with a proof of service forthwith.

DATED:  June 13, 2024                                                         ___________________________

                                                                                    Michael E. Whitaker

                                                                                    Judge of the Superior Court