Judge Michael P. Linfield, Case Number: 23STCV13635, Date: 2023-09-08 Tentative Ruling

Judge: Michael P. Linfield, Case: 23STCV13635, Date: 2023-09-08 Tentative Ruling

The Court strikes Paragraph 26 concerning Attorneys’ Fees, but otherwise GRANTS grant the motion to compel arbitration.

This matter is STAYED pending the conclusion of arbitration. The Court sets a Status Conference re Arbitration for November 29, 2024 at 8:30 am. The parties are to file a Joint Status Conference Report 5 court days prior to the status conference hearing.

On June 14, 2023, Plaintiff Ronald De Jesus filed his Complaint against Defendant Grindr LLC on causes of action arising from Plaintiff’s employment with Defendant.

On July 19, 2023, Defendant filed its Motion to Compel Arbitration and Dismiss or Stay Action. In support of its Motion, Defendant filed: (1) Memorandum of Points and Authorities; (2) Declaration of Vanessa Ventura; (3) Declaration of Chirstopher A. Gelpi; and (4) Proposed Order.

On July 27, 2023, Plaintiff filed his Opposition to the Motion. In support of his Opposition, Plaintiff concurrently filed: (1) Declaration of Ronald De Jesus; (2) Declaration of Josh Schein; and (3) Objections to Evidence.

On August 31, 2023, Defendant filed its Reply. Defendant concurrently filed its Response to Plaintiff’s Objections to Evidence.

Plaintiff filed evidentiary objections to Defendant’s Declaration of Vanessa Ventura. The following are the Court’s rulings on these objections.

Objection
1		OVERRULED
2		OVERRULED
3		OVERRULED
4		OVERRULED
5		OVERRULED
6		OVERRULED
7		OVERRULED
8		OVERRULED
9		OVERRULED
10		OVERRULED
11		OVERRULED
12		OVERRULED
13		OVERRULED
14		OVERRULED
15		OVERRULED
16		OVERRULED
17		OVERRULED
18		OVERRULED
19		OVERRULED
20		OVERRULED
21		OVERRULED
22		OVERRULED
23		OVERRULED
24		OVERRULED
25		OVERRULED
26		OVERRULED

Plaintiff’s objections are frivolous. “This is hardly good advocacy, and it unnecessarily overburdens the trial court.” (Nazir v. United Airlines, Inc. (2009) 178 Cal.App.4th 243, 254, fn. 3.)

“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.)

“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 [unless it makes certain determinations].” (Code Civ. Proc., § 1281.2.)

“Under both federal and state law, arbitration agreements are valid and enforceable, unless they are revocable for reasons under state law that would render any contract revocable. . . . Reasons that would render any contract revocable under state law include fraud, duress, and unconscionability.” (Tiri v. Lucky Chances, Inc. (2014) 226 Cal.App.4th 231, 239, citations omitted.)

“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.” (Tiri, supra, at p. 239.)

Defendant provides the Court with an arbitration agreement signed by the Plaintiff on October 22, 2020 and December 26, 2020. (Decl. Ventura, Exhs. D, p. 6 and G, p. 6.)

Plaintiff does not dispute that he signed the arbitration agreement on October 22, 2020 and December 26, 2020, nor does he dispute that the terms of the arbitration agreement fall under the Federal Arbitration Act (FAA) and the California Arbitration Act (CAA).

However, certain issues regarding the arbitration agreement remain. The relevant portions of the arbitration agreement are as follows:

THIS CONFIDENTIALITY, PROPRIETARY RIGHTS AND ARBITRATION AGREEMENT (“Agreement”) is made between Grindr LLC, a California limited liability company (“Employer”), and RONALD DE JESUS (“Employee”). Employer and Employee will be collectively referred to as the “Parties.”

1. Purpose. This Agreement is intended to protect, among other things, the valuable business interests of Employer and any affiliated business entities, including, but not limited to, any future parent, subsidiary or sibling corporations of Employer. Employer and these other entities will be referred to jointly and severally as the “Affiliates.” . . . Further, this Agreement provides that all disputes relating to Employee’s employment will be settled by final, binding arbitration.

15. Survival of Obligations. The following terms of this Agreement will survive termination of employment: Paragraphs 1, and 6-26.

16. Construction of Agreement. This Agreement will be construed as if drafted equally by the Parties.

20. Invalidity. If any portion of this Agreement is found to be invalid, then the narrowest segment possible of that portion will be held to be excised from this Agreement, and the remainder of this Agreement will continue in full force and effect. If any portion of this Agreement is found to be unenforceable because it is overbroad or otherwise unreasonable, the court shall modify such portion and, to the maximum extent permissible under the law, enforce it.

21. Integration. Employee acknowledges receipt of a copy of this Agreement and agrees that, with respect to its subject matter, this is Employee’s entire agreement with Employer, superseding any previous oral or written communications, representations, understandings, or agreements with Employer regarding its terms.

23. Injunctions. The Parties acknowledge that irreparable harm will occur if this Agreement is breached in any way, damages would be difficult if not impossible to ascertain, and the faithful observance of all terms of this Agreement is an essential condition to employment with Employer. The Parties also agree that Employee’s services are of a special, unique, unusual, extraordinary or intellectual character, which gives them such value that the loss of them cannot be reasonably or adequately compensated in damages in an action at law. Furthermore, this Agreement is intended to protect the proprietary rights of the Affiliates in important ways, and even the threat of misuse of the proprietary rights of the Affiliates would be extremely harmful because of the importance of those proprietary rights. In the light of these considerations, a court of competent jurisdiction should immediately enjoin any breach or threatened breach of this Agreement, upon request, and the requesting party is released from the requirement of posting any bond in connection with temporary or interlocutory injunctive relief, to the fullest extent permitted by applicable law. The injunction shall be an interim order pending the appointment of an arbitrator as set forth in Paragraph 25.

25. Arbitration. The Parties agree that any dispute, controversy or claim of any kind or nature arising out of, related to, or connected with Employee’s employment relationship with Employer, the cessation of Employee’s employment relationship with Employer, or otherwise related to this Agreement and or any employment agreement (each a “Claim”) will be submitted, on an individual basis and not as part of any class or collective action, to and decided by binding arbitration in Los Angeles, California. Arbitration will be administered by Judicial Arbitration & Mediation Services, Inc. (“JAMS”), pursuant to its Employment Arbitration Rules & Procedures then in effect (the “JAMS Rules”) (available at http://www.jamsadr.com/rules-employment-arbitration/) and subject to JAMS Policy on Employment Arbitration Minimum Standards of Procedural Fairness. Employee also may obtain a copy of the JAMS Rules from Human Resources. Any Claim submitted to arbitration shall be decided by a single, neutral arbitrator, chosen according to JAMS Rules. Discovery in any arbitration proceeding shall be conducted according to the full extent authorized by the California Code of Civil Procedure. Any arbitral award determination shall be final and binding upon the Parties.

This arbitration clause prohibits any claim from being brought on a class-wide basis. Employee and Employer forego and waive any right they have to join or consolidate claims in arbitration with others and, therefore, are not allowed to assert claims in arbitration as a representative or as a member of a class or collective action.

The Arbitrator, and not any federal or state court, shall have the exclusive authority to resolve any issue relating to the interpretation, formation or enforceability of this Agreement, or any issue relating to whether a Claim is subject to arbitration under this Agreement, except that any party may bring an action in any court of competent jurisdiction to compel arbitration in accordance with the terms of this Agreement.

This Agreement to arbitrate is freely negotiated between Employee and Employer and is mutually entered into between the Parties. Each party fully understands and agrees that they are giving up certain rights otherwise afforded to them by civil court actions, including, but not limited to, the right to a jury trial and the right to pursue a Claim as part of a class or collective action.

Nothing in this Paragraph 25 will limit in any manner the ability of either Party to seek injunctive relief as expressly provided in Paragraph 23 above.

26. Attorneys’ Fees. If either party engages outside counsel to enforce this Agreement, and/or in any action or proceeding between the Parties relating to this Agreement, the prevailing party (i.e., the party whose major positions taken could fairly be said to have prevailed over the other party’s major positions on material disputed issues) will be entitled to recover its/his/her attorneys’ fees, expert witness fees and other fees and costs incurred in that action or proceeding, in addition to any other relief to which it may be entitled. Any order or judgment entered in such action or proceeding must contain a specific provision providing for such payment, separate from the judgment, for amounts incurred in enforcing such judgment, and the previous sentence is intended to survive any judgment and is not to be deemed merged into any judgment.

I ACKNOWLEDGE THAT, BEFORE SIGNING THIS AGREEMENT, I WAS GIVEN AN OPPORTUNITY TO READ IT, EVALUATE IT, AND DISCUSS IT WITH MY PERSONAL ADVISORS AND WITH REPRESENTATIVES OF EMPLOYER. I HAVE READ THIS AGREEMENT CAREFULLY AND I UNDERSTAND AND ACCEPT THE OBLIGATIONS WHICH IT IMPOSES UPON ME WITHOUT RESERVATION. NO PROMISES OR REPRESENTATIONS HAVE BEEN MADE TO ME TO INDUCE ME TO SIGN THIS AGREEMENT, EXCEPT FOR ANY EXPRESSLY MADE IN THIS AGREEMENT. I SIGN THIS AGREEMENT VOLUNTARILY AND FREELY.

I ALSO UNDERSTAND THAT BY SIGNING THIS AGREEMENT I AM AGREEING TO FINAL AND BINDING ARBITRATION OF ANY AND ALL DISPUTES BETWEEN ME AND THE AFFILIATES, INCLUDING, WITHOUT LIMITATION, DISPUTES RELATED TO MY EMPLOYMENT WITH EMPLOYER AND CESSATION THEREOF, AND ANY CLAIMS OF DISCRIMINATION AND HARASSMENT, EXCEPT AS PROVIDED IN PARAGRAPH 23.

Defendant moves the Court to compel arbitration and stay or dismiss the proceedings pending the outcome of arbitration. (Memorandum, p. 12:2–4.) Defendant argues: (1) that the FAA requires arbitration of Plaintiff’s claims against Defendant; (2) that the FAA governs the arbitration agreement in this case; (3) that the FAA favors arbitration; (4) that the arbitration agreement complies with the requirements set forth in Armendariz v. Foundation Health Psychcare Services (2000) 24 Cal.4th 83, 91; (5) that any provision of the arbitration agreement deemed unconscionable should be severed and the remainder of the agreement should be enforced; and (6) that Plaintiff’s claims should be stayed or dismissed pending the completion of arbitration. (Id. at pp. 6:9–10, 7:6, 7:24, 8:12–13, 10:25–26, 11:11–12.)

Plaintiff opposes the Motion, arguing: (1) that the arbitration agreement is procedurally unconscionable; (2) that the arbitration is substantively unconscionable; and (3) that severance of the unconscionable provisions is inappropriate. (Opposition, pp. 6:2, 6:7, 8:12, 13:22.)

In its Reply, Defendant argues that the arbitration agreement is neither procedurally nor substantively unconscionable. (Reply, pp. 3:3, 6:5.)

“Agreements to arbitrate may be invalidated if they are found to be unconscionable.” (Fitz v. NCR Corp. (2004) 118 Cal.App.4th 702, 713, citations omitted.)

“Unconscionability consists of both procedural and substantive elements. The procedural element addresses the circumstances of contract negotiation and formation, focusing on oppression or surprise due to unequal bargaining power. Substantive unconscionability pertains to the fairness of an agreement's actual terms and to assessments of whether they are overly harsh or one-sided. (Pinnacle Museum Tower Ass’n v. Pinnacle Mkt. Dev. (US), LLC (2012) 55 Cal.4th 223, 246, citations omitted.)

“‘The prevailing view is that [procedural and substantive unconscionability] must both be present in order for a court to exercise its discretion to refuse to enforce a contract or clause under the doctrine of unconscionability.’ But they need not be present in the same degree. ‘Essentially a sliding scale is invoked which disregards the regularity of the procedural process of the contract formation, that creates the terms, in proportion to the greater harshness or unreasonableness of the substantive terms themselves.’ In other words, 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. (Armendariz v. Found. Health Psychcare Servs., Inc. (2000) 24 Cal.4th 83, 114, [cleaned up], italics in original, abrogated in part on other grounds by AT&T Mobility LLC v. Concepcion (2010) 565 U.S. 333.).)

“The party resisting arbitration bears the burden of proving unconscionability.” (Pinnacle, supra, 55 Cal.4th at p. 247, citation omitted.)

“Moreover, courts are required to determine the unconscionability of the contract ‘at the time it was made.’” (Sanchez v. Valencia Holding Co., LLC (2015) 61 Cal.4th 899, 920, quoting Civ. Code, § 1670.5.)

“Unconscionability is ultimately a question of law.” (Patterson v. ITT Consumer Fin. Corp. (1993) 14 Cal.App.4th 1659, 1663, citation omitted.)

“[P]rocedural unconscionability requires oppression or surprise. Oppression occurs where a contract involves lack of negotiation and meaningful choice, surprise where the allegedly unconscionable provision is hidden within a prolix printed form.” (Pinnacle, supra, 55 Cal.4th at p. 247 [cleaned up].)

“The procedural element of an unconscionable contract generally takes the form of a contract of adhesion . . . .” (Little v. Auto Stiegler, Inc. (2003) 29 Cal.4th 1064, 1071.)

Plaintiff argues that the arbitration agreement is procedurally unconscionable because: (1) the arbitration agreement is a contract of adhesion; (2) the arbitration agreement was hidden in a non-disclosure agreement; (3) the arbitration agreement was provided in a single-spaced document with small font; (4) Plaintiff was pressured to sign the arbitration agreement eight times, including being requested to sign the same document again after it was voided and rescinded; (5) Plaintiff did not have access to any person who had the knowledge or authority to explain the document he was signing; (6) Plaintiff was not told what the terms of the arbitration agreement meant; and (7) the JAMS rules were not attached to the agreement. (Opposition, pp. 6–8.)

Defendant argues that the arbitration agreement is not procedurally unconscionable because: (1) Defendant provided Plaintiff with identical copies of the arbitration agreement on multiple occasions; (2) Plaintiff had multiple opportunities to review the arbitration agreement, ask any questions, and decide whether to sign it; (3) parties to a contract generally do not owe a duty to explain the terms of the agreement to each other; (4) Defendant did not impose a deadline for executing the arbitration agreement, and Plaintiff did not request additional time to review it; (5) contracts of adhesion are permissible as a matter of law; and (6) provision of the JAMS rules in the arbitration agreement is not required. (Reply, pp. 3–5.)

There is no question that the arbitration agreement is procedurally unconscionable. This is clearly a contract of adhesion. If Plaintiff did not sign these documents, he probably would not have been hired. Although the title of the contract notes in bolded underline that it is an arbitration agreement, the arbitration agreement is combined with other agreements in one document. The repeated emails from Defendant’s employees to have Plaintiff sign the arbitration agreement added to the pressure for Plaintiff to sign.

“Substantive unconscionability focuses on overly harsh or one-sided results. In assessing substantive unconscionability, the paramount consideration is mutuality.” (Fitz, supra, 118 Cal.App.4th at p. 723 [cleaned up].)

Plaintiff argues that the arbitration agreement is substantively unconscionable because: (1) the arbitration agreement lacks mutuality by allowing Defendant to seek injunctive relief in court while limiting Plaintiff’s relief solely to arbitration; (2) the arbitration agreement waives the requirement for a bond to obtain injunctive relief; (3) the arbitration agreement allows Defendant to recover attorneys’ fees and costs to enforce the arbitration agreement if Defendant prevails on Plaintiff’s employment claims, where recovery is otherwise not permitted; and (4) Defendant filed a demand for arbitration with JAMS after Plaintiff had notified Defendant of Plaintiff’s intent to file his Complaint. (Opposition, pp. 8:12, 9:1–2, 10:14–15, 11:1–3, 12:8–9.)

Defendant argues that the arbitration agreement is not substantively unconscionable because: (1) the arbitration is unequivocally bilateral; (2) mutual waiver of the bond posting requirement is not substantively unconscionable; and (3) the arbitration agreement’s fee shifting provision is neither unlawful nor unconscionable. (Reply, pp. 6:5–6, 7:9–10, 8:3–4.)

There are numerous sections of the agreement that are substantively unconscionable. Among others:

· Paragraph 1 states that the entire purpose of the Agreement is “to protect . . . the . . . Employer.”

· Paragraph 23 ostensibly allows either party to request an injunction, but this section is actually designed to protect the Employer. This paragraph states that “the faithful observance of all terms of this Agreement is an essential condition to employment with Employer.” This clearly only binds the employee. The paragraph continues by stating that “[t]he Parties also agree that Employee’s services are of a special, unique, unusual, extraordinary or intellectual character, which gives them such value that the loss of them cannot be reasonably or adequately compensated in damages in an action at law.” This clause also inures only to the Employer’s interest. Further, this sentence is not true if the Employee is suing for, e.g., wrongful termination because the employee can indeed be “adequately compensated in damages in an action at law.” The next sentence goes to the heart of this paragraph: “Furthermore, this Agreement is intended to protect the proprietary rights of the Affiliates in important ways, and even the threat of misuse of the proprietary rights of the Affiliates would be extremely harmful because of the importance of those proprietary rights.” It explicitly states that the purpose of this paragraph concerning injunctions is to protect the rights of the Employer. And lastly, since only an employer would seek an injunction, the final clause releasing the Employer from posting a bond only helps the Employer.

· Paragraph 25 prohibits “any class or collective action.” The second paragraph of this section states that “This arbitration clause prohibits any claim from being brought on a class-wide basis. Employee and Employer forego and waive any right they have to join or consolidate claims in arbitration with others and, therefore, are not allowed to assert claims in arbitration as a representative or as a member of a class or collective action.” This too only benefits the Employer.

The fourth paragraph of this section states that “This Agreement to arbitrate is freely negotiated between Employee and Employer and is mutually entered into between the Parties.” We know this is not true, because this was a contract of adhesion.

Lastly, the third paragraph of this section states that “The Arbitrator, and not any federal or state court, shall have the exclusive authority to resolve any issue relating to the interpretation, formation or enforceability of this Agreement, or any issue relating to whether a Claim is subject to arbitration under this Agreement, except that any party may bring an action in any court of competent jurisdiction to compel arbitration in accordance with the terms of this Agreement.” Thus, it appears that Defendant should not even be asking this Court to determine whether this case is arbitrable. According to this paragraph, the question of arbitrability should be decided by the arbitrator. However, neither side has raised this issue in their pleadings, so this Court will decide the issue of arbitrability.

· Paragraph 26 purportedly allows the prevailing party to obtain attorney's fees. “If either party engages outside counsel to enforce this Agreement, and/or in any action or proceeding between the Parties relating to this Agreement, the prevailing party (i.e., the party whose major positions taken could fairly be said to have prevailed over the other party’s major positions on material disputed issues) will be entitled to recover its/his/her attorneys’ fees, expert witness fees and other fees and costs incurred in that action or proceeding, in addition to any other relief to which it may be entitled.”

This explicitly contradicts California law; under FEHA, a prevailing Plaintiff may obtain attorney's fees, but a prevailing defendant is only entitled to attorney's fees in rare and exceptional cases. It further contradicts California law in that its definition of prevailing party is not the same as the definition in the Code of Civil Procedure.

The Court finds that there is some substantive unconscionability to this agreement. While Paragraph 23 concerning injunctions is substantively unconscionable, that paragraph has not been invoked in this action. Paragraph 26 concerning arbitration contains substantively unconscionable clauses concerning collective or class actions, but again these issues are not relevant to this lawsuit.

However, Paragraph 26, which purportedly allows Defendant to obtain attorney's fees is contrary to California law.

Considering both procedural unconscionability and substantive unconscionability, the arbitration agreement does not contain a significant enough degree of unconscionability for the Court to find that the arbitration agreement is unenforceable.

Weighing the Armendariz factors, the Court will strike Paragraph 26, but otherwise grant the motion to compel arbitration.

The Court strikes Paragraph 26 concerning Attorneys' Fees, but otherwise GRANTS grant the motion to compel arbitration.