Superior Court of California 

County of Los Angeles 

Department 78 

¿ 

 

I. BACKGROUND 

Plaintiff Rodrigo Sanguino (“Plaintiff”) filed this FEHA action against defendants Copart, Inc. (“Copart”), Daniel Lamotte (“Lamotte”), and Paul Stewart (“Stewart”), alleging that Plaintiff was employed with Copart until September 4, 2020, when the employers terminated Plaintiff’s employment. Lamotte and Stewart are alleged to be managers working for Copart, and who managed or supervised Plaintiff during his employment. 

Defendants Lamotte and Stewart (collectively, “Defendants”) move to compel arbitration. This case matter was then reassigned to this Court, effective as of July 5, 2024. The Court reviews the original briefs and supplemental briefs. The history of this matter is briefly recounted as follows. 

On May 23, 2023, the court issued a tentative ruling on co-defendant Copart’s motion to compel arbitration, but continued the matter to allow for additional briefing on the issue of authenticity of the signature and authenticity of the arbitration agreement. On August 25, 2023, the court granted Copart’s motion to compel arbitration. 

On December 15, 2023, Defendants filed their motion to compel arbitration. 

On June 14, 2024, the court noted that Defendants argued for the first time on reply that the parties delegated enforceability of the arbitration agreement to the arbitrator. (Min. Order, June 14, 2024.) Thus, the matter was continued for Defendants to file supplemental briefing by June 19, 2024, and Plaintiff Rodrigo Sanguino (“Plaintiff”) to file a response by June 24, 2024. 

On June 28, 2024, after having considered the supplemental briefing, the previous court was inclined to grant Defendants’ motion to compel arbitration. However, the court did not adopt the tentative and continued the motion. The court requested further briefing on the impact of the decision in Cook v. Univ. of S. California (2024) 102 Cal. App. 5th 312 on the pending motion as this case was first raised in Plaintiff’s June 24, 2024 supplemental opposition. Specifically, the Court requested briefing on (1) whether the delegation clause itself is unconscionable pursuant to Cook; (2) whether the arbitration agreement is otherwise unconscionable pursuant to Cook; (3) whether the case should be stayed in the event that this motion is denied; and (4) any other pertinent points the parties wish to address in light of the Cook case. (Min. Order, June 28, 2024.) 

 

II. LEGAL STANDARD 

Under both the Federal Arbitration Act and California law, arbitration agreements are valid, irrevocable, and enforceable, except on such grounds that exist at law or equity for voiding a contract. (Winter v. Window Fashions Professions, Inc. (2008) 166 Cal.App.4th 943, 947.)¿The party moving to compel arbitration must establish the existence of a written arbitration agreement between the parties.¿(Code of Civ. Proc. § 1281.2.) This is usually done by presenting a copy of the signed, written agreement to the court. “A petition to compel arbitration or to stay proceedings pursuant to Code of Civil Procedure sections 1281.2 and 1281.4 must state, in addition to other required allegations, the provisions of the written agreement and the paragraph that provides for arbitration. The provisions must be stated verbatim or a copy must be physically or electronically attached to the petition and incorporated by reference.” (Cal. Rules of Court, rule 3.1330.) The moving party must also establish the other party’s refusal to arbitrate the controversy.¿(Code of Civ. Proc. § 1281.2.) The filing of a lawsuit against the moving party for a controversy clearly within the scope of the arbitration agreement affirmatively establishes the other party’s refusal to arbitrate the controversy.¿ (Hyundai Amco America, Inc. v. S3H, Inc. (2014) 232 Cal.App.4th 572, 577.) 

“Code of Civil Procedure section 1281.2 requires a trial court to grant a petition to compel arbitration ‘if the court determines that an agreement to arbitrate the controversy exists.’”¿(Avery v. Integrated Healthcare Holdings, Inc. (2013) 218 Cal.App.4th 50, 59 (quoting CCP § 1281.2).) Accordingly, “when presented with a petition to compel arbitration, the court’s first task is to determine whether the parties have in fact agreed to arbitrate the dispute.”¿ (Id.)¿ A petition to compel arbitration is in essence a suit in equity to compel specific performance of a contract.¿ (Id. at 71.)¿ As with any other specific performance claim, “a party seeking to enforce an arbitration agreement must show the agreement’s terms are sufficiently definite to enable the court to know what it is to enforce.”¿ (Id. [internal citations omitted].)¿ “Only the valid and binding agreement of the parties, including all material terms well-defined and clearly expressed, may be ordered specifically performed.”¿(Id.)¿ An arbitration agreement “must be so interpreted as to give effect to the mutual intention of the parties as it existed at the time of contracting, so far as the same is ascertainable and lawful.”¿ (Civ. Code, § 1636.)¿ The language of the contract governs its interpretation if it is clear and explicit.¿ (Civ. Code, § 1368.) If uncertainty exists, “the language of a contract should be interpreted most strongly against the party who caused the uncertainty to exist.”¿(Civ. Code, § 1654.) 

The party seeking to compel arbitration bears the burden of proving the existence of a valid arbitration agreement by the preponderance of the evidence.¿(Engalla v. Permanente Medical Group, Inc. (1997) 15 Cal.4th 951, 972.) It would then be plaintiff’s burden, in opposing the motion, to prove by a preponderance of the evidence any fact necessary to her opposition.¿ (Id.) “In these summary proceedings the trial court sits as a trier of fact, weighing all the affidavits, declarations, and other documentary evidence, as well as oral testimony received at the court’s discretion, to reach a final determination.¿(Id.) 

 

III. DISCUSSION 

Defendants have provided a copy of the Mutual Arbitration Agreement (“MAA”) Plaintiff signed on August 16, 2016. (Santosuosso ¶ 7; Exh. 4.) The MAA provides, in relevant part, the following: 

“1. INTRODUCTION. This Arbitration Agreement (“Agreement”) is between me (sometimes referred to as “me”, “I”, “You” or “Your”) and my employer (the “Company”). Any reference to Company will be a reference to Company’s parents, subsidiaries, partners, divisions, DBAs, and affiliated entities (including without limitation Copart, Inc. and/or any of its subsidiaries) to which I have applied for employment or have been employed at any time. 

2. DISPUTES COVERED BY THE AGREEMENT. Except as it otherwise provides, the Company and I mutually agree to the resolution by arbitration of all claims or controversies, past, present or future, including without limitation, claims arising out of or related to my application for employment, employment, and/or the termination of my employment that the Company may have against me or that I may have against the Company and/or: (1) Company’s parents, subsidiaries, partners, divisions, DBAs, and affiliated entities (including without limitation Copart, Inc. and/or any of its subsidiaries), (2) Company’s officers, directors, employees, or agents in their capacity as such or otherwise, and/or (3) all successors and assigns of any of them. The entities or individuals in sub-sections (1) through (3) of this paragraph may enforce this Agreement as direct or third-party beneficiaries. 

… 

I AGREE THAT BY ENTERING INTO THIS ARBITRATION AGREEMENT, THE COMPANY AND I ARE GIVING UP OUR RIGHTS TO A COURT OR JURY TRIAL AND PURSUANT TO THE TERMS OF THIS AGREEMENT, WE ARE AGREEING TO ARBITRATE DISPUTES COVERED BY THIS AGREEMENT. YOU ARE ACCEPTING AND AGREEING TO THE TERMS OF THIS AGREEMENT THROUGH AN ELECTRONIC SIGNATURE. YOU ALSO AGREE THAT BY AGREEING TO THIS AGREEMENT THROUGH AN ELECTRONIC SIGNATURE YOU ARE BINDING YOURSELF JUST LIKE YOU HAD SIGNED IT BY HAND.” 

(Santosuosso ¶ 7; Exh. 4.) (Emphasis original.) 

Here, Plaintiff’s asserted claims against Defendants arise from his employment with Copart, wherein Defendants are alleged to be Copart’s managers and whose alleged acts against Plaintiff were within their capacity and role as Copart’s agents and/or employees. Plaintiff’s claims against Defendants are therefore covered claims under the MAA. Defendants have thus met their burden of demonstrating the existence of an arbitration agreement between the parties and that the subject claims are within the scope of the arbitration agreement. 

Because Defendants have met their burden, the burden shifts to Plaintiff to establish any defense, such as unconscionability.¿(Pinnacle Museum Tower Assn. v. Pinnacle Market Development (US), LLC (2012) 55 Cal.4th 223, 236.) 

Plaintiff denies signing the MAA, and provides his previous declaration made in opposition to Copart’s motion to compel arbitration. Plaintiff’s denial that he electronically signed it based on the conjecture that someone else used his email to sign it because “multiple employees and managers…frequently left their accounts open on the main computer” (Plf. Decl. ¶ 6) such that “It is very possible…that someone else could have access my email account to sign the 2016 MAA” (Id. ¶ 7) to be conjectural. According to the competing evidence provided, the Court finds that the signature was an act of Plaintiff. The Court is not persuaded by Plaintiff’s speculation regarding the possibility that someone may have accessed his email. 

Plaintiff does not dispute the existence of the arbitration agreement. Instead, Plaintiff asserts that the MAA is both procedurally and substantively unconscionable. Unconscionability is a valid reason for refusing to enforce an arbitration agreement under CCP section 1281 because it is a reason for refusing to enforce contracts generally. (Armendariz v. Foundation Health Psychcare Servs. (2000) 24 Cal.4th 83, 113-27.) As the party asserting unconscionability, Plaintiff has the burden of proving both procedural and substantive unconscionability. (Crippen v. Central Valley RV Outlet. Inc. (2004) 124 Cal.App.4th 1159, 1165). 

Both procedural and substantive elements must be present in order for a court to exercise its discretion to refuse to enforce a contract or clause under the doctrine of unconscionability. (Id.)¿They need not be present in the same degree. (Id.) The Courts invoke a sliding scale 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, i.e., 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, supra, 24 Cal.4th at 114.) 

A. Procedural Unconscionability 

Plaintiff argues the MAA is procedurally unconscionable because Plaintiff had no meaningful opportunity to negotiate the terms of the agreement, and that it was a condition of his employment. In other words, Plaintiff argues that the MAA is procedurally unconscionable because the MAA is a contract of adhesion on a “take-it-or-leave-it basis.”  

A contract of adhesion typically denotes a standardized contract imposed and drafted by the party of superior bargaining strength which relegates to the subscribing party only the opportunity to adhere to the contract or reject it. (Armendariz, supra, 24 Cal.4th at 113.) The adhesive nature of a contract is one factor that the courts may consider in determining the degree of procedural unconscionability. (Carmona v. Lincoln Millennium Car Wash, Inc. (2014) 226 Cal.App.4th 74, 84 fn.4.) 

A pre-employment arbitration agreement can be a contract that is procedurally unconscionable.¿(Little v. Auto Stiegler, Inc. (2003) 29 Cal. 4th 1064, 1071; Armendariz, supra, 24 Cal.4th at 113-27.)¿ However, the adhesive nature of the agreements does not, in and of itself, render the arbitration agreements unconscionable.¿ (See Dotson v. Amgen, Inc. (2010) 181 Cal.App.4th 975, 981; McManus v. CIBC World Markets Corp. (2003) 109 Cal.App.4th 76, 89.)¿The adhesive nature of an agreement is just the beginning, not the end, of the inquiry into its enforceability.¿(Pinela v. Neiman Marcus Group., Inc. (2015) 238 Cal.App.4th 227, 242.) 

While an arbitration agreement being presented as a condition of his employment supports Plaintiff’s assertion that the MAA is an adhesion contract, as provided above, the adhesive nature of the agreement does not in and of itself render an arbitration agreement unconscionable.¿Plaintiff thus must demonstrate more than just the adhesive nature of the MAA.¿Plaintiff has failed to do so. Further, Plaintiff’s undeveloped contention that there was surprise is unavailing. “Surprise” involves the extent to which the supposedly agreed-upon terms of the bargain are hidden in the printed form drafted by the party seeking to enforce the disputed terms.¿(Stirlen v. Supercuts (1997) 51 Cal.App.4th 1519, 1530-33.)¿Plaintiff has failed to demonstrate surprise. 

Arbitration agreements that are “take it or leave it” have some degree of procedural unconscionability. (Ajamian v. CantorCO2e, L.P. (2012) 203 Cal.App.4th 771, 796.) The Court therefore finds that the adhesive nature of the Arbitration Agreement presents a minimal to moderate degree of procedural unconscionability.  

B. Substantive Unconscionability 

Even if Plaintiff had sufficiently demonstrated that the MAA was procedurally unconscionable, Plaintiff must still demonstrate that the MAA is also substantively unconscionable.¿Plaintiff has failed to do so.¿Further, the Court finds that the material facts present in Cook v. Univ. of S. California (2024) 102 Cal. App. 5th 312 to not be found here, nor is there any relevance of Cook to the contentions surrounding the delegation clause of the MMA.  

In Cook, plaintiff Cook filed an employment lawsuit against her university employer for allegations of discrimination and harassment in the course and scope of her employment. The appellate court affirmed the trial court’s holding that the broad scope of the arbitration agreement was substantively unconscionable because the agreement required Cook to arbitrate all claims she may have against USC, including those unrelated to her employment with USC, and was therefore unreasonably broad. (Cook, supra, 102 Cal. App. 5th at 321.) Second, the arbitration agreement was unconscionable because it would survive indefinitely following Cook’s termination from USC. (Id. at 325.) Third, the court found that the agreement lacked mutuality, because it required Cook to arbitrate any and all claims she may have against USC regardless of its relation to her employment, and that it conferred a broad one-sided treatment to the benefit on USC that was not mutually afforded to Cook. “No explanation is offered as to why Cook should be required to give up the ability to ever bring claims in court against a USC employee that are unrelated to USC or her employment there.” (Id. at 327.) 

The actual sentence in the arbitration agreement regarding scope of covered disputes states: “Except as it otherwise provides, the Company and I mutually agree to the resolution by arbitration of all claims or controversies, past, present or future, including without limitation, claims arising out of or related to my application for employment, employment, and/or the termination of my employment that the Company may have against me or that I may have against the Company….” (Santosuosso Decl.; Exh. 4.) (emphasis added). Unlike in Cook, in which there was no limiting language on the type of claims that may be compelled to arbitration, here the scope is specifically limited to Plaintiff’s employment. Plaintiff’s argument that the MMA has an unlimited duration and lacks mutuality fails for the same reasons. 

In terms of the confidentiality clause, Plaintiff urges this Court to find substantive unconscionability in reliance upon the previous court’s analysis on this matter. Where the degree of procedural unconscionability is low, the agreement will be enforced unless the degree of substantive unconscionability is high. (Serpa v. California Surety Investigations, Inc. (2013) 215 Cal.App.4th 695, 704.) Citing Ramos v. Superior Court (2018) 28 Cal.App.5th 1042, 1066, The Court agrees that the confidentiality clause constitutes moderate substantive unconscionability as it inhibits Plaintiff from conducting informal investigation outside the costly formal discovery allowed by arbitration. However, the confidentiality clause contained in paragraph 13 of the MMA is severable to minimize unconscionability while preserving the remainder of the agreement. (Civil Code § 1670.5, subd. (a).) The Court finds it appropriate here for the confidentiality clause to be simply stricken, and in doing so, the remainder of the arbitration agreement, which is generally mutual, is preserved. (See Armendariz, supra, 24 Cal.4th at pp. 124-125 [implying that, if there is a single provision that can be stricken in order to remove the “unconscionable taint” from the agreement, the provision is severable].) 

As to Plaintiff’s argument that AAA discovery procedures limits discovery, a presumptive limit on discovery is not substantively unconscionable. This provision is insufficient to show an undue restriction of Plaintiff’s discovery rights, especially since the discovery clause provides that “Each party can request that the Arbitrator allow additional discovery, and additional discovery may be conducted by agreement or as ordered by the Arbitrator.” (Santosuosso Decl. Exh. 4.). One of the purposes of arbitration is to limit the cost and time of litigation. Adequate discovery does not mean unfettered discovery under Armendariz, and Armendariz recognizes an arbitration agreement may require “something less than the full panoply of discovery provided in California Code of Civil Procedure, Section 1283.05.” (Armendariz, supra, at 105. [emphasis original]) By agreeing to arbitration, Plaintiff has accepted certain limitations on discovery. Further, the clause provides leeway in which either the parties may agree to expand discovery or the Arbitrator may order additional discovery as needed. Lastly, in terms of the argument that the MMA expressly requires Plaintiff to waive his right to bring or participate in a PAGA representative action, the Court finds this contention to be irrelevant because Plaintiff is pursuing an action based on his own claims, rather than a representative action. 

As to the rest of the MMA, the Court finds that there is no showing that it is permeated with unconscionable clauses as to result in an unconscionable result. In terms of the specific contention surrounding the delegation clause, as long as it is not overly harsh, does not sanction one-sided results, and does not lack mutuality, then it is not substantively unconscionable. (Tiri v. Lucky Chances, Inc. (2014) 226 Cal. App. 4th 231, 246.) Here, both Plaintiff and Defendants are bound equally by the delegation clause. The Court finds nothing about the delegation clause that is unreasonably favorable to Defendants, nor is Cook relevant or instructive on that matter. 

There being the severance of the confidentiality clause to minimize any substantive unconscionability, and there being a showing of only minimal procedural unconscionability, the motion will be granted with the condition that the confidentiality clause in paragraph 13 of the MMA is stricken. The Court denies Plaintiff’s request to sua sponte reconsider the ruling granting Copart’s motion to compel arbitration. 

 

IV. CONCLUSION 

Defendants’ Daniel Lamotte and Paul Stewart motion to compel arbitration is GRANTED. The case is stayed pending arbitration. 

 

Moving Party is ordered to give notice. 

 

DATED: August 22, 2024 

__________________________ 

Hon. Michelle C. Kim 

Judge of the Superior Court 

 

PLEASE TAKE NOTICE: 

• Parties are encouraged to meet and confer after reading this tentative ruling to see if they can reach an agreement. 

• If a party intends to submit on this tentative ruling, the party must send an email to the court at SMCDEPT78@lacourt.org with the Subject line “SUBMIT” followed by the case number. The body of the email must include the hearing date and time, counsel’s contact information, and the identity of the party submitting. 

• Unless all parties submit by email to this tentative ruling, the parties should arrange to appear remotely (encouraged) or in person for oral argument. You should assume that others may appear at the hearing to argue. 

• If the parties neither submit nor appear at hearing, the Court may take the motion off calendar or adopt the tentative ruling as the order of the Court. After the Court has issued a tentative ruling, the Court may prohibit the withdrawal of the subject motion without leave.