Judge: Michelle Williams Court, Case: 22STCV06898, Date: 2022-10-25 Tentative Ruling

Case Number: 22STCV06898    Hearing Date: October 25, 2022    Dept: 74

22STCV06898           SASTA VERMA vs RAYTHEON TECHNOLOGIES CORPORATION

Defendants Raytheon Technologies and ARINC Incorporated dba Collins Aerospace’s Motion to Compel Arbitration and Stay Proceedings

TENTATIVE RULING:  Defendants Raytheon Technologies and ARINC Incorporated dba Collins Aerospace’s Motion to Compel Arbitration and Stay Proceedings is GRANTED. Plaintiff’s claims against Defendants Raytheon Technologies and ARINC Incorporated dba Collins Aerospace, are ordered to arbitration.  A Status Conference re Initiation of Arbitration and OSC re Entry of Default against Augusto De Macedo Santos is scheduled for November 30, 2022 at 8:30 a.m.

The action is STAYED as to Defendants Raytheon Technologies and ARINC Incorporated dba Collins Aerospace pending the outcome of arbitration.

Background

On February 24, 2022, Plaintiff Sasta Verma filed this action against Defendants Raytheon Technologies Corporation, Collins Aerospace, and Agusto De Macedo Santos arising out of Plaintiff’s employment with Defendants. The complaint asserts three FEHA causes of action for: (1) disability discrimination; (2) harassment; and (3) failure to prevent.

Motion

On June 29, 2022, Defendants Raytheon Technologies and ARINC Incorporated dba Collins Aerospace filed their motion to compel Plaintiff to arbitration.

Opposition

In opposition, Plaintiff contends the arbitration agreement is unconscionable.

Reply

In reply, Defendants contend Plaintiff failed to demonstrate the arbitration agreement is unenforceable as unconscionable.

Defendants’ Evidentiary Objections

Defendants’ objection is SUSTAINED.

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.”).) 

If a party asserts the applicability of the Federal Arbitration Act (“FAA”), that party “bears the burden to show it applies by presenting evidence establishing [that] the contract with the arbitration provision has a substantial relationship to interstate commerce . . . .” (Carbajal v. CWPSC, Inc. (2016) 245 Cal.App.4th 227, 238.) Alternatively, the parties may agree to the application of the FAA. (See Victrola 89, LLC v. Jaman Properties 8 LLC (2020) 46 Cal.App.5th 337, 355 (“But the presence of interstate commerce is not the only manner under which the FAA may apply. As discussed above, the parties may also voluntarily elect to have the FAA govern enforcement of the Agreement, as they did here.”).)

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.) 

Arbitration Agreement at Issue

“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 the Mutual Agreement to Arbitrate Claims between Plaintiff and “Rockwell Collins, Inc. and/or any of its subsidiaries or affiliates to which [Plaintiff] may be assigned (‘Rockwell Collins’ or the ‘Company’” dated August 17, 2018. (Dorman Decl. Ex. 1; Schneekloth Decl. Ex. C; Till Decl. Ex. 2.) Defendants demonstrate Plaintiff electronically signed the document via DocuSign. (Schneekloth Decl. ¶¶ 11-21; Till Decl. ¶ 4-8.) The Agreement provides, in relevant part:

By signing this Arbitration Agreement (“Agreement”), you agree to use final and binding arbitration to resolve workplace issues between you and Rockwell Collins. By agreeing to final and binding arbitration, you also agree to waive your right to a court action, including a jury trial, in accordance with the terms of this Agreement. Please read this Agreement carefully. Management representatives are available to answer your questions. You may consult with an attorney before signing. By signing this you agree to arbitrate any and all disputes, claims, or controversies (“claim”) against Rockwell Collins, any and all related or affiliated subsidiaries, entities or divisions, and all current and former officers, directors, employees, successors and assigns including, without limitation, those arising out of your employment, the termination of your employment or any other dispute, including any claim that could have been presented to or could have been brought before any court.

This Agreement includes, without limitation, claims under . . . the California Fair Employment and Housing Act (Cal. Gov’t Code § 12900 et seq.).

(Schneekloth Decl. Ex. C § A.)

Plaintiff sued both Raytheon and Collins Aerospace as their employer. (Compl. ¶ 4.) Defendant provides evidence that Raytheon is the parent company of Rockwell Collins, Inc. and Rockwell Collins, Inc. is the parent company of ARINC Incorporated. (Schneekloth Decl. ¶¶ 2-5.) All Plaintiff’s paychecks were issued by ARINC Incorporated. (Dorman Decl. ¶ 7.) As noted above, Plaintiff agreed to arbitrate all employment related claims against any related or affiliated subsidiary or entity of Rockwell Collins, Inc. (Schneekloth Decl. Ex. C § A.) Accordingly, the Agreement covers all of Plaintiff’s claims against the moving Defendants. (Fuentes v. TMCSF, Inc. (2018) 26 Cal.App.5th 541, 549 (“The arbitration clause itself specified the entities to which it applied.”).)

The Federal Arbitration Act Applies

Defendants allegedly hired Plaintiff to work remotely in California as a Sales Director for Defendants. (Compl. ¶ 7.) Defendants provide evidence that Defendant “provides information management services in the aviation, rail and critical infrastructure sectors, and sells its products across state lines. It operates throughout the United States and its operations involve the purchase and use of goods and services, equipment, and other items and supplies from numerous manufacturers, suppliers, and distributors, which in turn, are regularly transported across state lines. Company employees routinely communicate with other employees, vendors or other third parties in other states. The companies also sell products and/or make advertising materials available in various States, including but not limited to California.” (Schneekloth Decl. ¶ 22.) Plaintiff does not oppose application of the FAA. The Court finds the FAA applies.

 The Arbitration Agreement Does Not Violate 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, even where the FAA applies. (See Ramos v. Superior Court (2018) 28 Cal.App.5th 1042, 1055 (“Since Concepcion was decided, the California Supreme Court has reaffirmed the validity of Armendariz multiple times.”).) 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.) 

The Arbitration Agreement does not limit the remedies available, expressly requires the issuance of a written award by a neutral arbitrator from the American Arbitration Association, requires application of the Employment Arbitration Rules and Mediation Procedures of the American Arbitration Association, does not contain any express limits on discovery, and provides that Defendant shall pay all costs of arbitration. (Schneekloth Decl. Ex. C. See Lane v. Francis Capital Management LLC (2014) 224 Cal.App.4th 676, 693; Roman v. Superior Court (2009) 172 Cal.App.4th 1462, 1476.) The Court finds the Agreement complies with the Armendariz requirements.

Unconscionability

Plaintiff solely argues the agreement is unenforceable as unconscionable. (Opp. at 2:15-7:21.)

Regardless of the claim asserted, arbitration agreements are only enforceable if they are not unconscionable. (Armendariz, supra, 24 Cal.4th at 113; Baxter v. Genworth N. Am. Corp., (2017) 16 Cal.App.5th 713, 721.).) “Both procedural and substantive unconscionability must be present for a court to refuse to enforce a contract, although they need not be present in the same degree.” (Baxter, supra, 16 Cal.App.5th at 721 (citing Baltazar v. Forever 21, Inc. (2016) 62 Cal.4th 1237, 1243.) Procedural unconscionability focuses on (1) “oppression” resulting from unequal bargaining power that adheres the weaker party to nonnegotiable terms and (2) “surprise” involving “the extent to which the supposedly agreed-upon terms are hidden in a prolix printed form drafted by the party seeking to enforce them.” (Flores v. Transamerica HomeFirst, Inc., (2001) 93 Cal.App.4th 846, 853.) Substantive unconscionability “focuses on overly harsh or one-sided results [that lack substantial justification].” (Baxter, supra, 16 Cal.App.5th at 724; see Armendariz, supra, 24 Cal.4th at 117-18.).)

Plaintiff Has Demonstrated Minimal Procedural Unconscionability

Plaintiff notes the arbitration agreement was a mandatory condition of employment. (Opp. at 4:5-15; Schneekloth Decl. Ex. C § J (“You agree that if you decide not to sign this agreement, any offer of employment will be withdrawn.”).)

A mandatory arbitration agreement in the employment context establishes a small degree of procedural unconscionability. (Armendariz, supra, 24 Cal.4th at 113 (“The term [contract of adhesion] signifies a standardized contract, which, imposed and drafted by the party of superior bargaining strength, relegates to the subscribing party only the opportunity to adhere to the contract or reject it.”); Serpa v. California Surety Investigations, Inc. (2013) 215 Cal.App.4th 695, 704 (“It is well settled that adhesion contracts in the employment context, that is, those contracts offered to employees on a take-it-or-leave-it basis, typically contain some aspects of procedural unconscionability.”).) 

However, the Arbitration Agreement here is a separate document signed by Plaintiff, which reduces any claimed procedural unconscionability. (See e.g. Serafin v. Balco Properties Ltd., LLC (2015) 235 Cal.App.4th 165, 179 (“where the arbitration provisions presented in a contract of adhesion are highlighted for the employee, any procedural unconscionability is ‘limited.’”).)

Plaintiff argues procedural unconscionability is further demonstrated by the failure to provide the AAA Employment Arbitration rules. (Opp. at 4:16-25.) However, California law no longer supports this argument. (Baltazar, supra, 62 Cal.4th at 1246; Da Loc Nguyen v. Applied Medical Resources Corporation (2016) 4 Cal.App.5th 232, 249 (“As to these cases, Baltazar removed the nonprovision or nonattachment of the AAA rules as a basis for increasing the procedural unconscionability level.”); Cisneros Alvarez v. Altamed Health Services Corporation (2021) 60 Cal.App.5th 572, 590 (“the failure to provide a copy of the arbitration rules generally raises procedural unconscionability concerns only if there is a substantively unconscionable provision in the omitted rules.”).)

Plaintiff’s opposition does not establish any other basis for finding the agreement procedurally unconscionable. Accordingly, Plaintiff has demonstrated minimal procedural unconscionability and must “make a strong showing of substantive unconscionability to render the arbitration provision unenforceable.”  (Gatton, supra, 152 Cal.App.4th at 586.)

Plaintiff Has Not Demonstrated Substantive Unconscionability Sufficient to Avoid Enforcement

Plaintiff argues portions of the agreement regarding an appeal of the arbitrator’s decision are substantively unconscionable. (Opp. at 4:26-5:10.) Specifically, Plaintiff contends “[i]n addressing the issue of appeal, the Agreement requires either party, at its own expense, to have the arbitration transcribed.” (Opp. at 4:27-28.) However, transcription is entirely voluntary under the agreement. (Schneekloth Decl. Ex. C § E (“To this end, either party, at its own expense, may have the arbitration transcribed. If the arbitration is not transcribed, a court of appropriate jurisdiction still may evaluate the arbitrator’s decision based on the decision itself as well as any other evidence it deems appropriate to consider.”).) Additionally, Plaintiff has not demonstrated they would not be required to pay for a transcript if the case were brought in court. (LASC Local Rule 2.21(a) (“Official court reporters are not normally available for reporting trials in unlimited civil cases.”).)

Plaintiff also contends “the Agreement states that no bond shall be required in the case of an appeal. This language demonstrates no mutuality, since bonds would not apply to the employee.” (Opp. at 5:1-3.) Plaintiff does not cite any authority for this proposition. (See Fenton v. City of Delano (1984) 162 Cal.App.3d 400, 410 (“A point totally unsupported by argument and authority may be rejected by the reviewing court without discussion.”).) Moreover, the provision is mutual on its face as it applies to all appeals, not just those by plaintiff. (Schneekloth Decl. Ex. C § E (“No bond shall be required in the case of an appeal.”).) Neither of these provisions are substantively unconscionable.

Plaintiff also contends the class action waiver renders the agreement substantively unconscionable. (Opp. at 5:10-21. See Schneekloth Decl. Ex. C § A (“You cannot be a class representative or a member of a class with respect to any dispute you may have against the Company because your personal claim is subject to arbitration.”).) Plaintiff cites Gentry v. Superior Court (2007) 42 Cal.4th 443, which does not apply where, as here, the Defendant demonstrates the applicability of the FAA. (Iskanian v. CLS Transportation Los Angeles, LLC (2014) 59 Cal.4th 348, 364 (“the FAA preempts Gentry's rule against employment class waivers.”).) Even if the FAA did not apply and Gentry was not preempted here, Plaintiff has not established the existence of the Gentry factors. (Muro v. Cornerstone Staffing Solutions, Inc. (2018) 20 Cal.App.5th 784, 793 (“It is the plaintiff's burden to show the class action waiver is invalid by making a factual showing of the four Gentry factors.”).)

Furthermore, Plaintiff has not brought a class action and the agreement contains a severance clause. (Schneekloth Decl. Ex. C § H.) Accordingly, Plaintiff is properly ordered to arbitration. (See Correia v. NB Baker Electric, Inc. (2019) 32 Cal.App.5th 602, 621 (“we are satisfied that the parties agreed (through the agreement’s severance clause) that if any provision (such as the representative claim waiver in all forums) is found to be invalid, the finding does not preclude the enforcement of any remaining portion of the agreement.”); Iskanian, supra, 59 Cal.4th at 391 (sending individual claims to arbitration despite PAGA waiver).) Chin v. Advanced Fresh Concepts Franchise Corp. (2011) 194 Cal.App.4th 704, 714 (“She also claims that the class action waiver in the arbitration provision is unconscionable but admits that it is not applicable in her case.”).)

The Court finds Plaintiff has not met their burden to establish the arbitration agreement is unenforceable as unconscionable.