Judge: Michael Shultz, Case: 22STCV05884, Date: 2023-04-25 Tentative Ruling
Case Number: 22STCV05884 Hearing Date: April 25, 2023 Dept: A
22STCV05884 Jane Doe v. Healthcare Career College, Alex Arviso
[TENTATIVE] ORDER
I.
BACKGROUND
The complaint alleges that
Plaintiff was a student of Alex Arviso (“Arviso”) at Healthcare Career College when
she was sexually assaulted by Arviso. Plaintiff alleges claims for assault,
battery, intentional infliction of emotional distress, negligent hiring and
retention, and for negligence.
The Court
initially heard this matter on March 14, 2023, and continued the hearing at
defense counsel’s request.
I.
ARGUMENTS
Defendant,
Infotech Institute, Inc., dba Healthcare Career College (“Infotech” or
“Defendant”), requests an order compelling Plaintiff to submit the claims to
binding arbitration pursuant to the parties’ agreement. The agreement is
enforceable and applies to any dispute against Infotech as well as its
employees.
In opposition, Plaintiff
argues that under federal law, the arbitration agreement is voidable at
Plaintiff’s election because the complaint involves sexual assault. Plaintiff
denies that she signed the purported arbitration agreement, and Defendant did
not prove that Plaintiff electronically signed it. The delegation clause in the
agreement is not enforceable and it is unconscionable. Defendant waived its
right to arbitrate.
In reply,
Defendant argues that the recently enacted federal statute on which Plaintiff
relies does not apply because Plaintiff’s dispute arose prior to the statute’s
enactment. The arbitration agreement is authenticated and admissible. Defendant
raised arbitration as an affirmative defense and did not waive the right to
compel it.
The Court has
considered the supplemental declaration of Amita Garg in support of the motion
filed on March 13, 2023.
II. LEGAL STANDARDS
The
court “shall” compel arbitration if it determines that an agreement to
arbitrate the controversy exists, unless the right to arbitration has been
waived or there are grounds for rescission of the agreement. (Code Civ. Proc., § 1281.2.) The petitioner’s burden is to establish that a valid arbitration
agreement exists. The opposing party’s burden is to establish a defense to
enforcement based on a preponderance of evidence. (Molecular
Analytical Systems v. Ciphergen Biosystems, Inc. (2010) 186 Cal.App.4th 696, 705.)
Defendant’s
burden in moving to compel arbitration is to show the existence of an agreement, not its
validity. (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."].) Therefore, all of Plaintiff’s
objections to the Declaration of Armita Garg are OVERRULED.
III.
DISCUSSION
A.
Plaintiff did not establish that federal
law bars arbitration of this action.
Plaintiff’s reliance
on 9 U.S.C., section 402 is misplaced. That statute provides that a pre-dispute
arbitration agreement is not enforceable if a person alleges conduct
constituting sexual harassment or sexual assault. (9 U.S.C.A. § 402 (West)). The statute applies to any dispute
or claim that arises or accrues on or after the date of its enactment. (PL 117-90, March 3, 2022, 136 Stat 26). Plaintiff’s claims arose on July 1,
2020, when she alleged the sexual assault took place. (Complaint, ¶ 2).
B.
Defendant has established that the
electronic signature on the agreement is attributable to Plaintiff.
Amita Garg,
Defendant’s Chief Executive Officer and Campus President, attests to
Defendant’s use of an application called “signNow” which requires students to
create a unique login and password to facilitate electronic signatures. (Garg Supp.
Decl. ¶ 2). Plaintiff declares that she signed “a bunch of papers” given to her
by her admissions officer. (Decl. of Jane Doe, ¶ 8). She declares she never signed an
arbitration agreement, nor did she see one in the papers she was directed to
sign. (Doe decl, ¶¶ 9-11).
Where
electronic signatures are involved, Defendant is required to authenticate
Plaintiff’s signature since Plaintiff denies signing the agreement. (See Ruiz v. Moss Bros. Auto Group, Inc. (2014) 232 Cal.App.4th 836, 844). Defendant can attribute the signature to
Plaintiff by showing the "efficacy of any security procedure applied to
determine the person to which the electronic record or electronic signature was
attributable.” (Civ. Code, § 1633.9, (a)). The effect of an electronic
signature attributed to a person "is determined from the context and
surrounding circumstances at the time of its creation, execution, or adoption,
including the parties' agreement, if any, and otherwise as provided by
law." (Civ. Code, § 1633.9, (b)).
A party can establish that the
electronic signature was 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; Ruiz, supra at 844 [where the court of appeal found a
“critical gap in the evidence” to infer that the electronic signature was in
fact the employee’s without evidence to show that only the employee could have
affixed the electronic signature.].)
Ms. Garg provides the electronic
time stamps showing Plaintiff accessed “signNow” through her Gmail account and
signed the arbitration agreement on July 30. Garg Suppl. Decl., Ex. B.
C. Plaintiff has not established that the
arbitration agreement is unconscionable.
There
are two elements for determining whether an agreement is unconscionable. There
must be evidence of “procedural unconscionability” – namely that circumstances
of oppression or surprise due to unequal bargaining power exist. The second
element involves “substantive unconscionability,” defined as the presence of
overly harsh, one-sided terms. Both elements must be present in order for the
Court to exercise its discretion to refuse to enforce the arbitration
provision. (De La Torre
v. CashCall, Inc. (2018)
5 Cal.5th 966, 982. The Court examines the entire bargaining process and the degree to
which each element exists. No one term of the contract determines its
application. Rather, Plaintiff must establish the factual context to determine
whether both elements exist. (Id. 982-983.)
The second element,
substantive unconscionability, requires a determination that the terms are
overly harsh or one sided. More precisely, “substantive unconscionability
examines the fairness of a contract's terms. This analysis ‘ensures that
contracts, particularly contracts of adhesion, do not impose terms that have
been variously described as ‘overly harsh’ [citation], ‘unduly oppressive’
[citation], so one-sided as to ‘shock the conscience’ [citation], or ‘unfairly
one-sided’ [citation]. All of these formulations point to the central idea that
the unconscionability doctrine is concerned not with ‘a simple old-fashioned
bad bargain’ [citation], but with terms that are ‘unreasonably favorable to the
more powerful party.” (Prima Donna
Development Corp. v. Wells Fargo Bank, N.A. (2019) 42 Cal.App.5th 22, 38.)
Plaintiff argues that the clause
delegating disputes to arbitration demonstrates that it was a contract of
adhesion as it was “apparently presented” on a “take it or leave it basis.” Plaintiff
refers to an “Uber” contract which is not relevant here. (Opp. 10:18:23.)
Regardless, Plaintiff’s declaration does not account for the circumstances in
which she was given the arbitration agreement. Plaintiff declares she signed “a
bunch of papers,” she did not see the arbitration agreement, and upon
information and belief, she never signed it. (Decl. of Jane Doe, ¶ 8-11.) Procedural
unconscionability “focuses on the oppression that arises from unequal
bargaining power and the surprise to the weaker party that results from hidden
terms or the lack of informed choice.” (Ajamian v. CantorCO2e, L.P. (2012) 203 Cal.App.4th 771, 795.) There is no evidence that the arbitration
agreement itself was “hidden.”
Nor has Plaintiff established
that the arbitration agreement is “overly harsh” or so “one-sided” as to “shock
the conscience.” The agreement states that arbitration will be conducted by a
neutral arbitrator with the American Arbitration Association. (Garg Supp.
Decl., Ex. B, ¶ 2). Defendant agrees to pay fees incurred to file an
arbitration, the arbitrator’s compensation, and facilities fees in excess of
the Court filing fee. (Id. ¶ 2.) Plaintiff is not deprived of a neutral
arbitrator, which was held "essential to ensuring the integrity of the
arbitration process.” (Armendariz at 103.)
D.
Plaintiff has not established that
there is a risk of inconsistent rulings if the Court ordered this case to
arbitration against Defendant Infotech.
While Plaintiff also
named (but did not serve) Alex Arviso as a defendant, the scope of the
arbitration agreement includes disputes against Defendant, “or any of its
parents, subsidiaries, officers, directors, or employees, without limitation, …
.” (Garg Supp. Decl., Ex. B, ¶ 1.) Therefore, there is no risk of inconsistent
rulings.
Additionally, the agreement provides
that the case is to be decided pursuant to the Federal Arbitration Act (“FAA”)
and under California law. (Garg Supp. Decl., ¶ 1.) Under state law, when a
party to an arbitration agreement is also a party to a pending court action
with a third party, and there is a possibility of conflicting rulings on a
common issue of law or fact, “the court has several options. It may refuse to
compel arbitration, or it may stay either the arbitration or the court
proceeding pending completion of the proceedings in the other forum. (Code Civ.
Proc., § 1281.2, subd. (c) (section 1281.2(c).)
However, under the Federal
Arbitration Act, title 9 United States Code section 1 et seq. (“FAA”), the
court's only option in these circumstances is to stay the court proceeding and
compel the arbitration. (Rodriguez v.
American Technologies, Inc. (2006) 136 Cal.App.4th 1110, 1114-1115.)
E. Plaintiff has not established that
Defendant waived its right to arbitrate.
The burden of
establishing waiver is a heavy one and “rests on the party seeking to establish
waiver which ‘is not to be lightly inferred.’” (Christensen v. Dewor Developments (1983)
33 Cal.3d 778, 782.) Plaintiff
does not cite any applicable authority that Defendant’s “delay” in filing this
motion three months after the complaint was filed constitutes a waiver of the
right to arbitration.
There is no single test to determine
whether waiver has occurred. (St. Agnes Medical Center v. PacifiCare of California (2003) 31 Cal.4th 1187, 1195.) The Court considers a number of
factors including “(1) whether the party’s actions are inconsistent with the
right to arbitrate; (2) whether ‘the litigation machinery has been
substantially invoked’ and the parties ‘were well into preparation of a lawsuit
before the party notified the opposing party of an intent to arbitrate; (3)
whether a party either requested arbitration enforcement close to the trial
date or delayed for a long period before seeking a stay; (4) whether a
defendant seeking arbitration filed a counterclaim without asking for a
stay of the proceedings; (5) ‘whether important intervening steps [e.g., taking
advantage of judicial discovery procedures not available in arbitration] had
taken place’; and (6) whether the delay ‘affected, misled, or prejudiced’ the
opposing party.” (Id. at
1196.)
Defendant asserted the right to
arbitrate as a 53rd affirmative defense. (1st Am.
Answer). Plaintiff does not proffer any evidence that Infotech acted in a
manner inconsistent with the right to arbitrate, such as obtaining Plaintiff’s
discovery responses. Nor has Plaintiff established how the purported delay
alone caused prejudice to Plaintiff. “Mere participation” in litigation does
not result in waiver; “there must be 'judicial litigation of
the merits of arbitrable issues.” (Christensen v. Dewor Developments (1983)
33 Cal.3d 778, 782.)
Finally, Plaintiff requests a continuance
of the hearing to present evidence regarding the “commercial setting, purpose,
and effect” of the contract or provision. (Cal Civ Code § 1670.5).. The Court has discretion to afford
the parties a reasonable opportunity to prevent evidence where it appears that
the contract or clause “may” be unconscionable. (Id.) The Court has
considered Plaintiff’s arguments regarding unconscionability, which is not
supported by any evidence. Plaintiff could have attested to the circumstances
that created an oppressive environment but did not. Plaintiff did not establish
that the agreement itself is harsh or one-sided. Nor has Plaintiff explained what
evidence, assuming any exists, would warrant a different conclusion.
IV.
CONCLUSION
Based on the
foregoing, Defendant’s Motion to Compel Arbitration is GRANTED. This action is
stayed pending completion of arbitration. The Court sets an Order to Show Cause
Re: Status of Arbitration for October 9, at 8:45 a.m. in Department A of the
Compton courthouse