Judge: Michelle Williams Court, Case: 21STCV36682, Date: 2022-09-12 Tentative Ruling
Case Number: 21STCV36682 Hearing Date: September 12, 2022 Dept: 74
21STCV36682 MICHAEL
VALLES vs LOS ANGELES PRODUCE FRESH
Defendants’
Motion to Compel Arbitration and Stay Litigation
TENTATIVE RULING:
Defendants’ Motion to Compel Arbitration and Stay Litigation is GRANTED.
This action is STAYED pending the
outcome of arbitration. A Status
Conference re Initiation of arbitration is scheduled for October 12, 2022 at
8:30 a.m.
Background
On October 5,
2021, Plaintiff Michael Valles filed this employment action against Defendants
Los Angeles Produce Fresh, LLC and Los Angeles Produce Distributors, LLC. The
complaint asserts fourteen causes of action under FEHA, the Labor Code, and
common law.
Motion
On March 7,
2022, Defendants Los Angeles Produce Fresh, LLC and Los Angeles Produce
Distributors, LLC filed the instant motion to compel Plaintiff’s claims to
arbitration and stay the litigation.
Opposition
In
opposition, Plaintiff contends Defendants failed to demonstrate a valid
contract exists because Plaintiff did not assent to arbitration.
Reply
In reply, Defendant
argues it is immaterial whether Plaintiff signed the arbitration agreement and
Plaintiff did not provide any evidence establishing he did not receive the
arbitration agreement.
Motion to Compel
Arbitration
Standard
“California
law reflects a strong public policy in favor of arbitration as a relatively
quick and inexpensive method for resolving disputes. To further that policy,
section 1281.2 requires a trial court to enforce a written arbitration
agreement unless one of three limited exceptions applies. Those statutory
exceptions arise where (1) a party
waives the right to arbitration; (2) grounds exist for revoking the arbitration
agreement; and (3) pending litigation with a third party creates the
possibility of conflicting rulings on common factual or legal issues.” (Acquire II, Ltd. v. Colton Real Estate Group
(2013) 213 Cal.App.4th 959, 967; Code Civ. Proc. § 1281.2.) Similarly, “under
the FAA, the strong federal policy favoring arbitration agreements requires
courts to resolve any doubts concerning arbitrability in favor of arbitration.”
(Valencia v. Smyth (2010) 185 Cal.App.4th 153, 176 (internal quotations
omitted).)
In deciding a petition to compel
arbitration, trial courts must decide first whether an enforceable arbitration
agreement exists between the parties, and then determine the second gateway
issue whether the claims are covered within the scope of the agreement. (Omar
v. Ralphs Grocery Co. (2004) 118 Cal.App.4th 955, 961.) The opposing party
has the burden to establish any defense to enforcement. (Gatton v. T-Mobile USA, Inc. (2007) 152 Cal.App.4th 571, 579 (“The
petitioner, T–Mobile here, bears the burden of proving the existence of a valid
arbitration agreement and the opposing party, plaintiffs here, bears the burden
of proving any fact necessary to its defense.”).)
Procedurally, a petition to compel
arbitration or stay proceedings must state verbatim the provisions providing
for arbitration, or must have a copy of them attached. (Cal. R. Ct., rule 3.1330.)
The Arbitration Agreement
“With
respect to the moving party’s burden to provide evidence of the existence of an
agreement to arbitrate, it is generally sufficient for that party to present a
copy of the contract to the court.” (Baker
v. Italian Maple Holdings, LLC
(2017) 13 Cal.App.5th 1152, 1160.)
Defendants
provide an unsigned copy of a form arbitration agreement that defines “Company”
as Los Angeles Produce Fresh, LLC. (Clark Decl. Ex. A.) The Agreement states,
in relevant part:
I and the Company agree to
utilize binding individual arbitration as the sole and exclusive means to all
claims, disputes, controversies, or disagreements of any kind whatsoever
arising out of or relating to my application or candidacy for employment,
employment, or termination of employment with the Company, and which may have
occurred prior to or after entering into this Agreement. . . . Both I and the
Company agree that the requirement to arbitrate shall also apply to any claim that
may arise out of or relate to my employment and which I may assert against the
Company's employees, shareholders, members, managers, officers, directors,
agents, suppliers, clients, or service providers, whether an individual or
entity. Both I and the Company consent to the joinder and participation in the
arbitration proceeding of parties, who are not parties or signatories to this
Agreement, including but not limited to Employer's employees, shareholders,
members, managers, officers, directors, agents, suppliers, clients, service
providers, or any other essential party relevant to a full and complete
settlement of any dispute arising out of or relating to my application or
candidacy for employment, employment, or termination of employment with the
Company, and which may have occurred prior to or after entering into this
Agreement and arbitrated under this Agreement. Both I and the Company intend
that this Agreement may be enforced by any such third party.
(Id.
§ 2.) Thus, the terms of the arbitration provision are sufficiently broad to
encompass all of Plaintiff’s claims in this action against both Defendants.
The
Agreement contains a signature block, but is unsigned and is not specific to
Plaintiff. (Clark Decl. Ex. A.) Above the signature block, the agreement provides:
BY ACCEPTING EMPLOYMENT
WITH THE COMPANY, OR CONTINUING TO REMAIN EMPLOYED BY THE COMPANY, I AND THE
COMPANY ARE EACH GIVING UP HIS/HER/ITS RIGHT TO A JURY TRIAL AND HIS/HER/ITS
RIGHT TO PARTICIPATE IN A CLASS/COLLECTIVE ACTION BECAUSE ALL CLAIMS WILL BE
RESOLVED EXCLUSIVELY THROUGH ARBITRATION.
. . .
BY ACCEPTING EMPLOYMENT
WITH THE COMPANY, OR CONTINUING TO REMAIN EMPLOYED BY EMPLOYER, YOU ARE
ACKNOWLEDGING THAT YOU HAVE READ, UNDERSTOOD, AND AGREE TO BE BOUND BY THE
TERMS OF THIS MUTUAL ARBITRATION OF ALL CLAIMS AGREEMENT.
(Clark
Decl. Ex. A.)
Evidence Related to Plaintiff’s Receipt
of the Agreement
Defendants provide
the declaration of Brian Matsumoto, a Sales Manager for Defendant Los Angeles
Produce Fresh, LLC, who states he was Plaintiff’s supervisor in January 2020.
(Matsumoto Decl. ¶ 4.) Matsumoto states he was “aware
that at the time, Los Angeles Produce Fresh rolled out a new payroll company,
Co-Advantage, a new Employee Handbook, and a new arbitration agreement.”
(Ibid.) Matsumoto “understand[s] each employee of Los Angeles Produce Fresh,
including Mr. Valles, was provided with the paystub from their first respective
payment from Co-Advantage in January 2020, along with information regarding how
to access the new Employee Handbook, a hard copy of the Acknowledgment of
Receipt of the Employee Handbook, and the Arbitration Agreement.” (Id. ¶ 5.)
“At the time of the provision of the pay stub, Arbitration Agreement, and
Acknowledgment of Receipt of the Employee Handbook, we were all informed that
the Arbitration Agreement was a condition of employment and that we must sign
and return the documents provided.” (Id. ¶ 6.) Matsumoto states Plaintiff never
objected to the terms and conditions of the arbitration agreement and “[b]ased
on [his] relationship with Mr. Valles, [he] would not be surprised if
[Plaintiff] did not read the paperwork provided to him along with his paystub.”
(Id. ¶ 8.)
Defendants provide a similar
declaration from Cote Clark, a finance employee whose job functions include
acting as the HR coordinator. (Clark Decl. ¶ 1.) Clark states “[i]n January
2020, Los Angeles Produce Fresh rolled out a new payroll company, Co-Advantage,
a new Employee Handbook, and a new arbitration agreement.” (Id. ¶ 4.) “Each
employee of Los Angeles Produce Fresh, including Mr. Valles, was provided with
the paystub from their first respective payment from Co-Advantage in January
2020, along with information regarding how to access the new Employee Handbook,
a hard copy of the Acknowledgment of Receipt of the Employee Handbook, and the
Arbitration Agreement.” (Id. ¶ 5.) Similarly, Clark states “[a]t the time of
the provision of the paystub, Arbitration Agreement, and Acknowledgment of
Receipt of the Employee Handbook, the employees were all informed that the
Arbitration Agreement was a condition of employment and that they must sign and
return the documents provided.” (Id. ¶ 6.) According to Clark, “each employee,
with the exception of Mr. Valles, executed and returned the arbitration
agreement.” (Id. ¶ 8.)
In opposition, Plaintiff states he “did
not know that an Arbitration Agreement was rolled out in 2020,” “never signed
an Arbitration Agreement with Defendants or an Acknowledgment of Receipt of the
Employee Handbook,” and “was not aware that an Arbitration Agreement or
Employee Handbook was provided to me [in] 2020.” (Valles Decl. ¶¶ 4-6.)
Notably, Plaintiff does not deny receiving a copy of the Arbitration Agreement,
or employment related documents, in January 2020.
Implied
Assent to Arbitration
“In
California, general principles of contract law determine whether the parties
have entered a binding agreement to arbitrate.” (Pinnacle Museum Tower Assn. v. Pinnacle
Market Development (US), LLC (2012) 55 Cal.4th 223, 236 quoting Craig
v. Brown & Root, Inc. (2000) 84 Cal.App.4th 416, 420.)
Defendants
cite case authority related to implied agreements to arbitrate based upon
continued employment after receipt of an arbitration agreement. (Mot. at 9:15-28.)
“California law in this area is settled: when an employee continues his or her
employment after notification that an agreement to arbitration is a condition
of continued employment, that employee has impliedly consented to the
arbitration agreement.” (Diaz v. Sohnen Enterprises (2019) 34
Cal.App.5th 126, 130.) “Plaintiff cannot have it both ways, acceptance of the
at-will job offer with all its emoluments and no responsibility to abide by one
of its express conditions.” (Harris v. TAP Worldwide, LLC (2016) 248
Cal.App.4th 373, 384.)
In Craig,
supra, 84
Cal.App.4th 416, the Court of Appeal reviewed a trial court’s ruling that an
employee was bound by a mandatory dispute resolution procedure imposed by her
employer after she had been employed with the company for 12 years. The
employer provided evidence that “[i]n a memorandum sent to all employees, Brown
& Root explained the purpose of the Dispute Resolution Program and
emphasized . . . that everyone would be bound by it.” (Id. at 419.)
The memorandum enclosed a brochure that “explained the Program's four-step
progression-from open access to management, to an informal conference, to
mediation, to arbitration.” (Ibid.) “Brown & Root's evidence showed that, in May
1993 and again in the fall of 1994, copies of the memorandum and the Dispute
Resolution Program brochure had been sent to Craig's home address.” (Id. at 420.)
Unlike
Plaintiff here, Craig affirmatively denied receiving the documents. (Ibid.) (“Her
declaration says this about the items mailed to her: ‘I have carefully read
[the memorandum and brochure] and can affirmatively state that I did not
receive any of these documents at my residence in Baldwin Park during the years
1993 or 1994.’”).) The trial court resolved the factual dispute in favor of
Brown & Root and enforced the agreement to arbitrate. (Id. at 421.)
The Court of Appeal affirmed the ruling. (Id. at 422 (“there is substantial evidence (1) that
the memorandum and brochure were received by Craig in 1993 and again in 1994;
(2) that she continued to work for Brown & Root until 1997; and (3) that
she thereby agreed to be bound by the terms of the Dispute Resolution Program,
including its provision for binding arbitration.”).)
In Diaz,
supra,
34 Cal.App.5th at 128, the company called a meeting and “informed all employees
present, including [plaintiff], about the new dispute resolution agreement. . .
. [and] included in [the] explanation that continued employment by an employee
who refused to sign the agreement would itself constitute acceptance of the
dispute resolution agreement.” The Court of Appeal found the employee’s
continued employment, after “the express explanation provided twice to Diaz: [stated]
that continued employment would itself be a manifestation of agreement to the
arbitration provisions,” was sufficient to bind the employee to the arbitration
provisions. (Id. at 130.) Defendants here similarly provide evidence
that Plaintiff was informed that the Arbitration Agreement was a condition of
employment, which is also stated in the terms of the Agreement Defendants
provided Plaintiff. (Clark Decl. ¶¶ 5-6.)
In
opposition, Plaintiff cites Esparza v. Sand & Sea, Inc. (2016) 2
Cal.App.5th 781, which is factually distinguishable. In Esparza, the
employer sought to enforce an arbitration agreement contained in an employee
handbook after the employee signed a policy acknowledgement at the end of the
52-page handbook. (Id. at 785.) Here, the evidence indicates Plaintiff
was provided a separate, hard copy of the Arbitration Agreement. (Clark Decl. ¶¶
5-6; Matsumoto Decl. ¶¶ 5-6.) Additionally, the court in Esparza noted “the
handbook also indicated to the reader that it was not intended to establish an
agreement. . . . which “undermines defendants' argument that the handbook and
its arbitration provision actually was intended to create a legally enforceable
obligation to arbitrate.” (Id. at 789.) Plaintiff cites no such limitation here.
The court in
Esparza
distinguished Harris, supra, in reaching
its decision: “[f]urthermore, this case is unlike Harris . . . where
the arbitration provision, set apart from the employee handbook as an appendix,
stated, ‘If Employee voluntarily continues his/her employment with TAP
[Worldwide, LLC] after the effective date of this Policy [or January 1, 2010],
Employee will be deemed to have knowingly and voluntarily consented to and
accepted all of the terms and conditions set forth herein without exception.’ .
. . No such contractual language existed in the employee handbook here.” (Esparza,
supra, 2
Cal.App.5th at 790.) The Arbitration Agreement in this case, like that in Harris, expressly
states “by . . . continuing to remain employed by employer, you are
acknowledging that you have read, understood, and agree to be bound by the
terms of this mutual arbitration of all claims agreement.” (Decl. Ex. A.) Accordingly,
Esparza does not
support Plaintiff’s attempt to avoid enforcement of the Agreement.
Plaintiff
also cites a series of cases involving an employee challenging their signature
on an arbitration agreement. (Opp. at 5:1-9.) In Gamboa v. Northeast Community Clinic (2021) 72
Cal.App.5th 158, the employer provided an “arbitration agreement [that] appeared
to be signed by a representative of the Clinic and an employee.” (Id.
at 163.) In
opposition, the employee plaintiff stated she did “not remember these documents
at all. . . . that before this case, no one had ever told her about an
arbitration agreement or explained what it was. . . . if she had known about
the arbitration agreement and had been told about its provisions, she would not
have signed it.” (Ibid.) No such declaration is provided by Plaintiff
here and the instant case is not based upon a challenged signature.
In Bannister
v. Marinidence Opco, LLC (2021) 64 Cal.App.5th 541, the employee challenged
the employer’s evidence that she electronically signed an arbitration agreement
during the onboarding process by stating “that she never saw the agreement
during the onboarding process and did not affix her electronic signature to it.”
(Id. at 544.)
The employee also provided evidence that another employee “completed the
onboarding process for other employees without their participation.” (Id.
at 547.) Similarly,
in Fabian
v. Renovate America, Inc. (2019) 42 Cal.App.5th 1062, 1067, Espejo
v. Southern California Permanente Medical Group (2016) 246
Cal.App.4th 1047, 1054, and Ruiz v. Moss Bros. Auto Group, Inc. (2014) 232
Cal.App.4th 836, 840, the court found the plaintiffs’ statements that they did
not recall electronically signing, or did not electronically sign, arbitration
agreements placed the burden on the defendant to go through the extra steps of
authenticating the electronic signature.
Here, it is
undisputed Plaintiff did not sign the Agreement and Defendants seek to compel arbitration
based upon Plaintiff’s continued employment after receipt thereof. Accordingly,
none of Plaintiff’s authority is persuasive. The evidence indicates Plaintiff
was provided a physical copy of the Arbitration Agreement, which clearly stated
an agreement to arbitrate was an express condition of continued employment. (Clark Decl. ¶¶ 5-6, Ex. A.) Plaintiff’s stated lack of awareness is not
sufficient to rebut Defendants’ evidence that Plaintiff received the
Arbitration Agreement and Plaintiff cannot avoid enforcement solely because he
did not read the agreement. (Pinnacle,
supra, 55 Cal.4th at 236; Avery v. Integrated Healthcare Holdings, Inc. (2013) 218 Cal.App.4th 50, 65 (“We do not
suggest an employee may avoid an employer's arbitration policy imposed as a
condition of employment by remaining willfully, or even negligently, ignorant
of the policy. For example, an employee may not avoid an implied-in-fact
arbitration agreement by failing to read a notice the employer sent to notify
the employee about the employer's arbitration policy.”).) “An employee who
continues in the employ of the employer after the employer has given notice of
changed terms or conditions of employment has accepted the changed terms and
conditions.” (Schachter v.
Citigroup, Inc. (2009) 47 Cal.4th
610, 620 (quoting DiGiacinto v.
Ameriko-Omserv Corp. (1997) 59
Cal.App.4th 629, 637.)
Accordingly,
Defendants met their burden to establish an implied agreement to arbitrate and
Plaintiff failed to meet his burden to establish a defense to enforcement.
The Agreement Complies with Armendariz
To
be enforceable, an arbitration agreement in an employment contract must comply
with the requirements of Armendariz v.
Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83. The Armendariz requirements are that: “(1)
the arbitration agreement may not limit the damages normally available under
the statute; (2) there must be discovery sufficient to adequately arbitrate
their statutory claim; (3) there must be a written arbitration decision and
judicial review sufficient to ensure the arbitrators comply with the
requirements of the statute; and (4) the employer must pay all types of costs
that are unique to arbitration.” (Little
v. Auto Stiegler, Inc. (2003) 29 Cal.4th 1064, 1076.)
Defendants
demonstrate the Agreement complies with the Armendariz requirements.
(Mot. at 12:14-14:10; Clark Decl. Ex. A §§ 2, 4, 5.) Accordingly, the Agreement
is enforceable, and Defendants may compel Plaintiff’s claims to arbitration.