Judge Michael P. Linfield, Case 21STCV38410 2022-10-06 Tentative Ruling

Judge: Michael P. Linfield, Case: 21STCV38410, Date: 2022-10-06 Tentative Ruling

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SUBJECT: Defendant Southern California Permanente Medical Group’s Motion to Compel Arbitration and Stay Proceedings

Defendant Southern California Permanente Medical Group’s Motion to Compel Arbitration and Stay Proceedings is CONTINUED pending an evidentiary hearing on the issue of whether Plaintiff Jawchyi C. Lee received and signed the Arbitration Agreement.

On October 19, 2021, Plaintiff Jawchyi C. Lee filed a complaint against Defendant Kaiser Foundation Hospitals alleging the following causes of action:

On October 22, 2021, Plaintiff Jawchyi C. Lee (“Lee”) filed a First Amended Complaint against Defendant Southern California Permanente Medical Group (“SCPMG”) alleging the same causes of action.

On September 9, 2022, SCPMG moved the Court “for an order enforcing the arbitration agreement entered into by Plaintiff Jawchyi Lee (“Plaintiff”), compelling this action to binding arbitration and staying the current action pending the outcome of arbitration. This motion is made pursuant to the Federal Arbitration Act, 9 U.S.C. § 1, et seq., the California Arbitration Act and California Code of Civil Procedure §§ 1281.2 and 1281.4, on the grounds that Plaintiff agreed – by written agreement and by continued employment with SCPMG after being on notice of the arbitration agreement – to submit any and all disputes arising out of his employment to binding arbitration under the parties Dispute Resolution Procedure (“DRP”). Because the DRP is a valid and binding agreement, and all of the causes of action pled by Plaintiff in this action are covered disputes under the parties’ DRP, Defendant is entitled to have this case submitted to binding arbitration and to have the proceedings in this action stayed pending the outcome of arbitration.” (Motion, p. 2:5-16.)

On September 22, 2022, Plaintiff Jawchyi C. Lee filed evidentiary objections with the Court to the Declarations of Babak Yousefzadeh and Debra Hammons. The Court rules as follows on these objectins:

Objection
1		OVERRULED
2		OVERRULED
3	SUSTAINED
4		OVERRULED
5	SUSTAINED
6	SUSTAINED
7	SUSTAINED
8	SUSTAINED
9	SUSTAINED
10	SUSTAINED except as to 2nd sentence	OVERRULED as to the 2nd sentence which starts "Plaintiff's personnel file contains other documents…"
11		OVERRULED

On October 3, 2022, Lee objected to the Supplemental Declaration of Debra Nelson Hammons “on the grounds that Defendant may not include new evidence in reply. There is no justifiable reason the supplemental declaration could not have been presented with the moving papers. The original declaration failed to lay a foundation for numerous statements, contained hearsay, improper opinion and more. The supplemental declaration fails to cure the evidentiary defects.” (Plaintiff Jawchyi Lee’s Objections to Request for Judicial Notice and Supplemental Declaration Present by Defendant in Reply Brief, p. 2:18-23.)

The Court SUSTAINS Lee’s objection to the Supplemental Declaration. (San Diego Watercrafts, Inc. v. Wells Fargo Bank, N.A. (2002) 102 Cal.App.4th 308, 316.)

On September 29, 2022, Defendant Southern California Permanente Medical Group asked the Court to take judicial notice of the following documents:

1. The August 8, 2018 Remittur [sic] from the case file of Zipkin v. Kaiser Foundation Health Plan, Inc., Los Angeles County Super. Ct. No. BC479175.

2. The November 16, 2015 Minute Order from the case file of Wakil v. Kaiser Foundation Health Plan Inc., San Diego Super. Ct. No. 37-2015-00018827-CU-WT-CTL a copy of which is attached hereto as Exhibit 1.

3. The January 26, 2017 Ruling Re: Defendants’ Motion to Compel Arbitration from the case file of Espejo v. SCPMG, Los Angeles County Super. Ct. No. BC562377 a copy of which is attached hereto as Exhibit 2.

4. The September 1, 2016 Minutes from the case file of Calio Gianchandani v. Kaiser Foundation Health Plan, Inc., Los Angeles County Super. Ct. No. BC619608 a copy of which is attached hereto as Exhibit 3.

5. The July 27, 2017 Notice of Ruling on Defendants’ Petition to Stay Action and Compel Arbitration from the case file of Cheung v. Kaiser Foundation Health Plan Inc., San Bernardino Super. Ct. No. CIVDS1704862 a copy of which is attached hereto as Exhibit 4.

The Court DENIES SCPMG’s requests. As to Request for Judicial Notice No. 1, Zipkin v. Kaiser Foundation is an unpublished opnion. Counsel is no doubt aware that “an opinion of a California Court of Appeal . . . that is not certified for publication . . . must not be cited or relied on by a court or a party in any other action.” (CRC, Rule 8.1115.) As to Requests for Judicial Notice Nos. 2-5, “A written trial court ruling in another case has no precedential value.” (Budrow v. Dave & Buster’s of California (2009) 171 Cal.App.4th 875, 885; Bolanos v. Superior Court (2008) 169 Cal.App.4th 744, 761; In re Molz (2005) 127 Cal.App.4th 836, 845; Santa Ana Medical Hospital Center v. Belshé (1997) 56 Cal.App.4th 819, 831.)

“The court shall order the petitioner and the respondent to arbitrate the controversy if it determines that an agreement to arbitrate the controversy exists, unless it determines that:

(c) A party to the arbitration agreement is also a party to a pending court action or special proceeding with a third party, arising out of the same transaction or series of related transactions and there is a possibility of conflicting rulings on a common issue of law or fact. For purposes of this section, a pending court action or special proceeding includes an action or proceeding initiated by the party refusing to arbitrate after the petition to compel arbitration has been filed, but on or before the date of the hearing on the petition. This subdivision shall not be applicable to an agreement to arbitrate disputes as to the professional negligence of a health care provider made pursuant to Section 1295.” (CCP § 1281.2.)

A proceeding to compel arbitration is in essence a suit in equity to compel specific performance of a contract. (Freeman v. State Farm Mutual Auto Insurance Co. (1975) 14 Cal.3d 473, 479.) Such enforcement may be sought by a party to the arbitration agreement. (CCP § 1280(e)(1).) Under both the Federal Arbitration Act and California law, arbitration agreements are valid, irrevocable, and enforceable, except on such grounds that exist at law or equity for voiding a contract. (Winter v. Window Fashions Professions, Inc. (2008) 166 Cal.App.4th 943, 947.) The party moving to compel arbitration must establish the existence of a written arbitration agreement between the parties. (CCP § 1281.2.)

The petition to compel arbitration functions as a motion and is to be heard in the manner of a motion, i.e., the facts are to be proven by affidavit or declaration and documentary evidence with oral testimony taken only in the court's discretion. (CCP §1290.2; Rosenthal v. Great Western Fin. Securities Corp. (1996) 14 Cal.4th 394, 413, 414.) The petition to compel must set forth the provisions of the written agreement and the arbitration clause verbatim, or such provisions must be attached and incorporated by reference. (Cal. Rules of Court, rule 3.1330; see Condee v. Longwood Mgmt. Corp. (2001) 88 Cal.App.4th 215, 218, 219.)

To decide a petition to compel arbitration, trial courts must first decide whether an enforceable arbitration agreement exists between the parties, and then determine whether the claims are covered within the agreement’s scope. (Omar v. Ralphs Grocer Co. (2004) 118 Cal.App.4th 955, 961.)

Debra Nelson Hammons, Director of Physician Relations for Permanente Human Resources for SCPMG attests that “all Physicians, including Plaintiff, were required to accept the terms of the May 24, 2006 Arbitration Agreement as a condition of employment.” (Hammons Decl., ¶ 6, 9.) The Court finds that the Arbitration Agreement is a contract of adhesion, and therefore is procedurally unconscionable as prospective employees would have to accept this document on a take-it-or-leave-it basis. (Graham v. Scissor-Tail, Inc. (1981) 28 Cal.3d 807, 817 n. 10; Tiri v. Lucky Chances, Inc. (2014) 226 Cal.App.4th 231, 243.)

SCPMG argues that the Arbitration Agreement “unquestionably meets and exceeds the minimum Armendariz requirements.” (Motion, MPA, p. 19:15.) SCPMG notes that the Arbitration Agreement’s reliance on the American Arbitration Association’s (“AAA”) rules incorporated by reference suggest that Lee’s remedies are not limited by the Arbitration Agreement and that Lee’s fees would be paid in accordance with the Costs of Arbitration section of the AAA rules and require Lee to pay $200.00 out-of-pocket “with the employer to cover everything else”. (Motion, MPA, p. 21:3-4; Yousefzadeh Decl. ¶¶ 8-10, Ex. 5.)

Lee notes that the acknowledgement form of the Arbitration Agreement specifically states, “I agree to abide by the Dispute Resolution Procedure and by any changes made to it from time to time by the SCPMG Board of Directors.” (Opposition, p. 13:22-24; Hammons Decl., Ex. 1.) Lee contends that this sentence renders the Arbitration Agreement illusory and invalid. (Opposition, p. 13:25-28; Ingle v. Circuit City Stores, Inc. (9th Cir. 2003) 328 F.3d 1165, 1174.) SCPMG contends that “California courts have recognized that the reservation of the right to modify does not per se render an arbitration agreement unenforceable.” (Marks v. Bridgestone Americas, Inc. (C.D. Cal., Nov. 16, 2015, No. 215CV05153CASRAO) 2015 WL 13919149, at *7; Reply, p. 10:7.)

Lee argues that the confidentiality requirement imposed on discovery under the Arbitration Agreement allows an unfair corporate advantage over “employees who seek to assert their rights.” (Opposition, p. 14:3-4.) Lee notes that the Arbitration Agreement limits a plaintiff to four seven-hour depositions and fails to require SCPMG to bear arbitration expenses. (Opposition, p. 15:15—16:3.

The Court finds that the provisions requiring confidentiality and limiting discovery are indeed unconscionable. If the Court were to enforce the arbitration provision, it would strike out these provisions, and make explicit that Defendant must pay the cost of arbitration. However, before the Court can decide whether or not to enforce the arbitration agreement, it must determine if Plaintiff signed the arbitration agreement.

The Parties dispute whether Lee actually signed the agreement. (Lee Decl., ¶¶ 3, 4.) The parties provide conflicting declarations on this issue, and the Court cannot determine if Plaintiff signed the agreement from the moving and opposing papers. (Hammons Decl., ¶¶ 7, 13-17; Golan Decl., ¶¶ 11-17, Ex. 4.) Where “the enforceability of an arbitration clause may depend upon which of two sharply conflicting factual accounts is to be believed, the better course would normally be for the trial court to hear oral testimony and allow the parties the opportunity for cross-examination.” (Rosenthal v. Great Western Fin. Securities Corp. (1996) 14 Cal.4th 394, 414. See also Hotels Nevada v. L.A. Pacific Center, Inc. (2006) 144 Cal.App.4th 754, 762; Bouton v. USAA Cas. Ins. Co. (2008) 167 Cal.App.4th 412, 428; Burch v. Premier Homes, LLC (2011) 199 Cal.App.4th 730, 742-743.)

Whether Plaintiff signed the arbitration agreement is a foundational fact that must be resolved before the Court can even apply the Armendariz unconscionability analysis. Therefore, the Court will continue this hearing pending an evidentiary hearing. Each side will be given one hour to present testimony and/or cross-examine the other party’s witnesses at the evidentiary hearing.