Judge: Michael P. Linfield, Case: 22STCV12331, Date: 2022-10-24 Tentative Ruling
Case Number: 22STCV12331 Hearing Date: October 24, 2022 Dept: 34
SUBJECT: Petition to Compel Arbitration and to Stay the Action Pending Arbitration
Moving Party: Defendant Strain Balboa Caregivers, Inc.
Resp. Party: Plaintiff Breana Sesma
The Court DENIES Defendant’s Petition to Compel Arbitration and to Stay the Action Pending Arbitration.
PRELIMINARY COMMENTS:
Much of the declaration of Shaun Lang, Defendant’s CEO, is replete with hearsay. Most of the information he relates in his declaration is not personal knowledge, but was relayed to him by Patrick Long, Defendant’s General Manager. (See, e.g., Lang Declaration, ¶ 3 [“I know this because Patrick advised me that he saw Plaintiff sign the agreement.”; “I know this via verifying this fact again with Patrick.”]) However, since Plaintiff has not objected to this hearsay, the Court is not striking the statements in the Lang Declaration.
BACKGROUND:
On April 12, 2022, Plaintiff Breana Sesma filed her Complaint against Strain Balboa Caregivers, Inc., Strain Balboa Caregivers, and Strain on causes of action related to violations of the Fair Employment and Housing Act (FEHA).
On August 31, 2022, Defendant Strain Balboa Caregivers, Inc. filed its Petition to Compel Arbitration and to Stay the Action Pending Arbitration.
On September 30, 2022, Plaintiff filed her Opposition and Declaration in support of her Opposition.
On October 5, 2022, Defendant filed its Reply.
ANALYSIS:
I. Legal Standard for a Petition to Compel Arbitration
“A written agreement to submit to arbitration an existing controversy or a controversy thereafter arising is valid, enforceable and irrevocable, save upon such grounds as exist for the revocation of any contract.” (Code Civ. Proc., § 1281.)
“The party seeking to compel arbitration bears the burden of proving by a preponderance of the evidence the existence of an arbitration agreement. The party opposing the petition bears the burden of establishing a defense to the agreement's enforcement by a preponderance of the evidence. In determining whether there is a duty to arbitrate, the trial court must, at least to some extent, examine and construe the agreement.” (Id.)
II. Discussion
It is undisputed that on November 2, 2019 Plaintiff signed an arbitration agreement during her employment with Defendant. (Petition, Ex. A, p. 6; Sesma Decl., ¶ 7.)
The language of the arbitration agreement is as follows:
17. Arbitration Clause and Attorney’s Fees Provision. Any dispute arising from this Agreement shall be subject to binding Arbitration conducted by Judicate West, JAMS, ADR, or any other mutually agreed upon retired Judge with at least five (5) years of experience in such disputes. The cost of arbitration shall be divided equally between the parties. In the event of any dispute between the parties arising out of or relating to this Agreement, the prevailing party shall be entitled to recover all costs incurred and reasonable attorneys’ fees, including attorneys’ fees in all investigations, trials, bankruptcies and appeals.
(Petition, Ex. A, p. 6.)
However, this Arbitration agreement is paragraph 17 of a document entitled “Employee Non-Disclosure and Confidentiality Agreement.” (Petition, Exh. A, p. 1.) Nothing in the Non-Disclosure Agreement concerns FEHA or other aspects of Plaintiff’s employment.
Defendant argues that arbitration of this dispute is required pursuant to the terms of the signed agreement. (Petition, p. 6:3–4.)
Plaintiff argues that this agreement only covers items related to confidentiality and non-disclosure, not to other conditions regarding Plaintiff’s employment. (Opposition, p. 2:12–22.) Plaintiff cites two pieces of evidence in support of her argument: (1) the signed contract itself; and (2) that she refused to sign a subsequently-presented revised arbitration agreement that included additional terms such as harassment, discrimination, and retaliation. (Id. at pp. 2:27–28, 3:1–2.) The second agreement has not been presented to the Court.
In its Reply, Defendant argues that “Plaintiff’s admission [that she signed the initial agreement], plus Mr. Lang’s testimony that this was the only employment agreement Defendant had on file for Plaintiff, confirms [sic] that the Employee Non-Disclosure and Confidentiality Agreement was intended to cover Plaintiff and Defendant’s employee-employer relationship.” (Reply, p. 3:23–27.)
The Court disagrees with Defendant’s contentions. Upon reviewing the signed arbitration agreement, the Court concludes that the terms of this agreement, including its arbitration clause, only cover issues of confidentiality and non-disclosure. They do not cover the entirety of the employee-employer relationship, including the present causes of action for violations of FEHA. Moreover, defendant has admitted that “Plaintiff refused to sign” any other employment agreement. (Petition, p. 7:26-27; Lang Declaration, ¶3, p. 27 – p. 4:1.) Thus, it is undisputed that there are no other agreements that the parties have both signed and consented to.
Defendant has not met its burden to show the existence of an arbitration agreement that covers the causes of action alleged in this complaint. Because the Court finds that there is no enforceable arbitration agreement, the Court need not reach the parties’ additional arguments regarding the motion.
Nonetheless, the Court will note that the arbitration provision of the non-disclosure agreement appears to be both procedurally and substantively unconscionable. It is procedurally unconscionable as a contract of adhesion. It is substantively unconscionable for numerous reasons, including: 1) it requires Plaintiff to pay half the cost of the arbitration; and 2) contrary to California law, it requires that a prevailing defendant be awarded its costs and attorney's fees. Thus, the Court questions whether such an arbitration provision would be enforceable under Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83.
III. Conclusion
The Court DENIES Defendant’s Petition to Compel Arbitration and to Stay the Action Pending Arbitration.