Judge: Michael Shultz, Case: 22CMCV00534, Date: 2023-07-20 Tentative Ruling

INSTRUCTIONS: If the parties wish to submit on the tentative ruling and avoid a court appearance on the matter, the moving party must:

1. Contact the opposing party and all other parties who have appeared in the action and confirm that each will submit on the tentative ruling.

2. No later than 4:00 p.m. on the court day before the hearing, call the Courtroom (310-761-4302) advising that all parties will submit on the tentative ruling and waive hearing; and

3. Serve notice of the Court's ruling on all parties entitled to receive service.

If this procedure is followed, when the case is called the Court will enter its ruling on the motion in accordance with its tentative ruling. If any party declines to submit on the tentative ruling, then no telephone call is necessary, and all parties should appear at the hearing. If there is neither a telephone call nor an appearance, then the matter may either be taken off calendar or ruled on. 

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Case Number: 22CMCV00534    Hearing Date: July 21, 2023    Dept: A

22CMCV00534 Denetrius Harris v. Tap Worldwide, LLC, et al.

[TENTATIVE] ORDER DENYING DEFENDANTS’ MOTION TO COMPEL ARBITRATION AND TO STAY LITIGATION

I.        BACKGROUND

      The complaint alleges that Defendants engaged in acts of discrimination and harassment against Plaintiff during his employment and retaliated against Plaintiff when he complained about the unlawful practices. Plaintiff alleges eight causes of action for employment-related claims in violation of the Fair Employment & Housing Act and for failure to provide meal and rest breaks in violation of the Labor Code.

      On April 27, 2023, the Court heard and continued Defendants’ motion to compel arbitration to permit the parties to discover whether Plaintiff agreed to arbitrate any dispute. The parties filed supplemental briefs, which the Court has considered.

II.      ARGUMENTS

      Defendants collectively ask for an order compelling Plaintiff to submit his claims to binding arbitration. Plaintiff signed an agreement to arbitrate any dispute when he completed the “onboarding” online process at the time he was hired. Plaintiff refuses to submit his claims to binding arbitration.

      Plaintiff contends that he never received or signed an arbitration agreement. Defendants have not authenticated the agreement, and it is unconscionable and unenforceable in any event. Plaintiff’s Labor Code claims are not arbitrable as they seek injunctive relief.

      In reply, Defendants contend the opposition is untimely and should be deemed an admission of Defendants’ contentions. Defendants argue that the arbitration agreement is authentic and enforceable because a handwritten signature is not required. Defendants’ agreement to arbitrate has been recently validated by the Second District Court of Appeals.

      Defendants’ supplemental reply, prepared after the parties engaged in discovery, argues that Plaintiff contradicted his declaration filed in opposition to the motion. Plaintiff’s contention that he never accessed the online portal is the only consistent statement. Regardless, Defendants contend Plaintiff left a digital trail which establishes that he created an online account for purposes of direct deposit and otherwise interacted with Defendants’ online portal.

      Plaintiff’s supplemental opposition argues that John Skaggs, Defendants’ person most knowledgeable, testified that if Plaintiff electronically acknowledged the arbitration agreement, there would be a digital signature.

III.    LEGAL STANDARDS

      The court can order a matter to arbitration if it determines that an agreement exists unless the right to compel has been waived or grounds exist for the revocation of the agreement. (Code Civ. Proc., § 1281.2.) The petitioning party’s burden is to establish that a valid arbitration agreement exists by a preponderance of evidence while responding party’s burden is to establish a defense to enforcement. (Molecular Analytical Systems v. Ciphergen Biosystems, Inc. (2010) 186 Cal.App.4th 696, 705.)

IV.    DISCUSSION

A.      The Court has considered Plaintiff’s late-filed opposition over Defendants’ objection.

       Plaintiff filed his opposition on April 14, 2023, although it was due on April 17, 2023 (nine court days before the hearing). (Code Civ. Proc., § 1005 (Deering).) Absent any showing of prejudice resulting from the late filing, the Court has discretion to consider late papers. (Mink v. Superior Court (1992) 2 Cal.App.4th 1338, 1343.) Defendants have not shown any prejudice resulting from the late opposition as Defendants were able to file a timely reply brief which the Court has also considered. 

B.      Defendants’ authentication of the arbitration agreement is not required.

            Defendants’ burden is to show the existence of an agreement.  (Espejo v. Southern California Permanente Medical Group (2016) 246 Cal.App.4th 1047, 1058 ["as a preliminary matter the [trial] court is only required to make a finding of the agreement's existence, not an evidentiary determination of its validity.”]). To meet its burden, the moving party need only attach a copy of the agreement to the petition and incorporate it by reference. (Id. at 1058; Cal. Rules of Court, rule 3.1330 [“The provisions must be stated verbatim or a copy must be physically or electronically attached to the petition and incorporated by reference."].) Defendants submit the arbitration agreement at issue. (Donlon Decl., Ex. A.)

C.      Defendants’ supplemental evidence does not include an agreement to arbitrate signed by Plaintiff, or an electronic signature that can be attributed to Plaintiff.

      General contract principles apply to agreements created on the internet.  (Long v. Provide Commerce, Inc. (2016) 245 Cal.App.4^th 855, 862 [“mutual manifestation of assent, whether by written or spoken word or by conduct, is the touchstone of contract.”]) Consent to the agreement may be inferred from the person’s conduct on the website using an objective standard. (Sellers v. JustAnswer LLC (2021) 73 Cal.App.5th 444, 460.) 

      Defendants established that new hires must complete an onboarding process, create a user identification, and electronically acknowledge Defendants’ policies, acceptance of the employee handbook, and agreement to arbitrate. (Donlen Decl.; Krezinski Decl.) However, Plaintiff contends he completed the onboarding process “in person.” (Turner Decl. ¶ 8.)

      At the time of the hearing, Defendants’ evidence established what would have occurred during the online onboarding process, however, none of the documents provided indicated that Plaintiff acknowledged the arbitration policy by checking a box. Instead, the evidence showed records pertaining to people other than Plaintiff. (Krezinski Decl., .pdf p. 19).

      Defendants’ supplemental reply correctly states that an electronic signature can be shown to be the act of Plaintiff “by presenting evidence that a unique login and password known only to that person was required to affix the electronic signature, along with evidence detailing the procedures the person had to follow to electronically sign the document and the accompanying security precautions.” (Bannister v. Marinidence Opco, LLC (2021) 64 Cal.App.5th 541, 545.) The supplemental evidence shows that Plaintiff electronically signed up for direct deposit and to request time off both of which required Plaintiff to create a unique account and user password to access Defendants’ electronic portal. However, Defendants do not provide any evidence of an electronic signature acknowledging the arbitration provision which can be attributed to Plaintiff. (Decl. of John Skaggs, Exs. F, G.)

      Mr. Skaggs testified at his deposition that he does not know whether an arbitration agreement signed by Plaintiff, either by hand or electronically, exists. (Supp. Opp. Ex. 2, 99:10-18.) He testified that if an employee acknowledges the arbitration policy, the portal will digitally capture it at the bottom of the document “saying that this employee signed and … dated it, like a digital signature.” (Supp. Opp., Ex. 2, 98:4-8.) Such a document is not submitted.

      Defendants point out in detail how Plaintiff’s deposition testimony contradicted his declaration in support of his opposition to the motion to compel arbitration. However, the burden is on Defendants to establish by a preponderance of evidence that Plaintiff signed an agreement to arbitrate. (Molecular at 705.) Evidence that Plaintiff had to have created a secure account on Defendants’ portal to request direct deposit and time off does not establish Plaintiff’s agreement to arbitrate.

III.  CONCLUSION

      Based on the foregoing, Defendants’ motion is DENIED.