Judge: Michael Small, Case: 23STCV12834, Date: 2024-01-10 Tentative Ruling

Case Number: 23STCV12834    Hearing Date: January 10, 2024    Dept: 57

Plaintiff Jonathan Hughes alleges that he was employed as a service advisor by Kia of Van Nuys, LLC and Van Nuys LLC dba Van Nuys Kia (collectively, “VNK”). Hughes has sued VNK and Emir Kozoglu (collectively, “the Defendants”), whom Hughes alleges was a supervisor at VNK, for discrimination, harassment, and retaliation on the basis of Hughes’s race in violation of the California Fair Employment and Housing Act and for violations of the wage and hour provisions in the California Labor Code. 

 Pending before the Court is the Defendants’ motion to compel arbitration of Hughes’s claims.  The Defendants’ motion is based on an arbitration agreement (“the Agreement”) that they maintain Hughes electronically signed at the start of his employment with VNK and acknowledged on several subsequent occasions during his employment with VNK.  If the Agreement is valid, there is no dispute that Hughes’s claims are subject to arbitration.   Hughes argues that the Agreement is invalid for two reasons.  First, Hughes contends that he did not electronically sign the Agreement.  Second, Hughes contends that even if he did electronically sign it, the Agreement is unenforceable because it is unconscionable.   The Court disagrees with both of Hughes’s contentions.  Accordingly, the Court is granting the Defendants’ motion to compel arbitration of Hughes’s claims.  In light of that ruling, proceedings in this Court are stayed pending the completion of the arbitration.  

 THE VALIDITY OF HUGHES’S ELECTORNIC SIGNATURE

Hughes submitted a declaration in support of his opposition to the Defendants’ motion to compel arbitration in which he states that he does not recall electronically signing the Agreement.  In the Court’s view, the Defendants have established that Hughes did electronically sign the Agreement.  

Civil Code section 1633.9 addresses how a proponent of an electronic signature may authenticate the signature.  It states that “[a]n electronic signature is attributable to a person if it was the act of the person.  The act of the person may be shown in any manner, including a showing of the efficacy of any security procedure applied to determine the person to which the electronic . . . signature was attributable.”   

In Ruiz v. Moss Bros. Auto Group, Inc. (2014) 232 Cal.App.4th 836, the Court affirmed the denial of an employer’s motion to compel arbitration of a former employee’s claims, holding that the employer failed to authenticate the former employee’s electronic signature on a  purported arbitration agreement.  That failure, the Court in Ruiz stated, lay in the employer’s inability to point to procedures that would confirm that the employee was the only person who could have electronically signed the agreement.  (Id. at pp. 839-841.)

By contrast, in Espejo v. Southern California Permanente Medical Group (2016) 246 Cal.App.4th 1047, the Court reversed the denial of an employer’s motion to compel arbitration of a former employee’s claims, holding that the employer adequately authenticated the electronic signature of the former employee on the arbitration agreement.  Specifically, the employer’s motion was supported by a declaration explaining the security procedures the employer had in place regarding the use and transmission of a prospective employee’s username and password necessary to electronically sign documents and the steps the prospective employee would have to take to electronically sign the documents.  Based on that declaration, the Court in Espejo distinguished Ruiz and concluded that those procedures ensured that the signature could only have been placed on the agreement by the former employee.   (Id. at p. 1062.)

 Here, in support of its motion to compel arbitration, VNK submitted the declaration of Whitney Stanley, VNK’s Human Resources and Payroll Specialist.  Stanely’s declaration falls on the Espejo side of the electronic signature authentication ledger, not on the Ruiz side.  The following considerations have informed that determination.  First, Stanely’s declaration explains that VNK uses a web-based platform called HR Hotlink “to administer policies and procedures to employees for their signature” and that all employees have an individual HR Hotlink account. (Stanley Decl., ¶ 4.)  Second, Stanley’s declaration states that the initial log-in to HR Hotlink requires the employee to create a password, which cannot be viewed or changed by VNK.  (Id., ¶¶ 5-6.)  Next, Stanley’s declaration adds that upon termination of employment, VNK “does not gain access to that employee’s HR Hotlink account, login credentials, or an ability to sign documents in HR Hotlink on behalf of that former employee.” (Id., ¶ 7.)  Finally, Stanley’s declaration contains screenshots of Hughes’ secure “File Cabinet” on HR Hotlink and its “Handbook and Policies” folder, where employee handbooks containing Hughes’ arbitration agreements are kept. (Stanley Decl., ¶¶ 10-11, Exs. A and B.)   All told, Stanely’s declaration is sufficient to authenticate Hughes’s signature on the Agreement.  Hughes’s evidentiary objections to Stanley’s declaration are not well-grounded.  The Court is overruling them.

Hughes’s declaration also contends that he witnessed Kozoglu “log in to another employee’s account,” and implies that it was Kozoglu who electronically signed the Hughes’s name on the Agreement. (Hughes Decl., ¶¶ 3-5.)  Along with their reply brief, the Defendants submitted a declaration from Kozoglu, who denies knowledge of Hughes’ password to his HR Hotlink account and having ever logged in to it. (Kozoglu Decl., ¶ 2.)  Kozoglu further states, “I have never executed or completed an arbitration agreement on behalf of any current or former employee of Van Nuys Kia, including Jonathan Hughes.” (Id., ¶ 4.)  Together with the Stanley declaration, the Kozoglu declaration supports the Defendants’ position that Hughes’s electronic signature on the Agreement could have placed there by Hughes alone and nobody else.   Hughes’s evidentiary objections to the Kozolgu declaration are unavailing.  The Court is overruling them.

THE AGREEEMET IS NOT UNCONSCIONABLE

“Unconscionability has procedural and substantive aspects.”  (Abramson v. Juniper Networks, Inc. (2004) 115 Cal.App.4th 638, 655.) “Both procedural and substantive unconscionability must be present before a contract or term will be deemed unconscionable.”  (Serafin v. Balco Properties Ltd., LLC (2015) 235 Cal.App.4th 165, 178.)  Procedural unconscionability focuses on the circumstances surrounding the execution of the agreement and the relative bargaining power of the parties to the agreement; substantive unconscionability focuses on the fairness, or lack thereof, of the agreement’s terms.  (OTO, LLC v. Kho (2019) 8 Cal.5th 111, 125.)    In analyzing unconscionability, courts apply a “sliding scale, which means that “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. Foundation Health Psychcare Services (2000) 24 Cal.4th 83, 114.)

Hughes’s argument for procedural and substantive unconscionability in his brief in opposition to the Defendants’ motion to compel arbitration rests largely on the Defendants’ failure to provide Hughes with a copy of the rules of the Judicial Arbitration and Mediation Services, Inc. (‘JAMS’).  The hitch here for Hughes is that the Agreement does not reference JAMS or require that the arbitration be conducted before JAMS arbitrators.  The Agreement states simply that the arbitration will be conducted in accordance with the federal and California Arbitration Acts.  Hence, the failure of the Defendants to provide Hughes with the JAMS rules is inconsequential.

Hughes’s opposition also makes a fleeting, one-sentence argument on the first page, which then goes undeveloped, that the Agreement is unconscionable because the Defendants presented the Agreement to him as a condition of his employment with VNK.   The hitch here for Hughes is that “arbitration agreements imposed as a mandatory condition of employment are not per se unlawful or unconscionable.”   (Rocha v. U-Haul Co. of California (2023) 88 Cal.App.5th 65, 75; see also (Lagatree v. Luce, Forward, Hamilton, & Scripps (1999) 74 Cal.App.4th 1105, 1127.)   Rather, whether an arbitration agreement presents employees with a “take it or leave it” choice (i.e. take the arbitration agreement or leave the job) is just one factor that is to be considered in the overall, sliding scale analysis of both procedural and substantive unconscionability.  (Serpa v. California Surety Investigators (2013) 215 Cal.App.4th 695, 704.)   Applying that sliding scale here, Hughes has not demonstrated that the Agreement is both procedurally and substantively unconscionable