Judge: Peter A. Hernandez, Case: 24STCV33412, Date: 2025-02-25 Tentative Ruling
Case Number: 24STCV33412 Hearing Date: February 25, 2025 Dept: 34
Maritza Miranda v. Premier America
Credit Union (24STCV33412)
Defendant Premier America Credit Union’s Motion to Compel Arbitration and Stay Proceedings is GRANTED.
I.
Background
On December
17, 2024, Plaintiff Maritza Miranda (“Plaintiff”) filed a complaint against
Defendant Premier America Credit Union (“Defendant”) arising from Plaintiff’s
employment with Defendant alleging causes of action for:
1.
Discrimination In Violation of FEHA;
2.
Hostile Work Environment Harassment In Violation of FEHA;
3.
Retaliation In Violation of FEHA;
4.
Failure To Provide Reasonable Accommodation In Violation of FEHA;
5.
Failure To Engage In The Interactive Process In Violation of FEHA;
6.
Failure To Prevent Discrimination, Harassment, or Retaliation In
Violation of FEHA;
7.
Violation of California Family Rights Act (“CFRA”);
8.
CFRA Leave Retaliation;
9.
Interference With CFRA Leave;
10.
Breach of Express Oral Contract Not To Terminate Employment Without Good
Cause;
11.
Breach of Implied-In-Fact Contract Not To Terminate Employment Without
Good Cause;
12.
Negligent Hiring, Supervision, and Retention;
13.
Wrongful Termination of Employment In Violation of Public Policy;
14.
Whistleblower Retaliation (Labor Code § 1102.5); and
15.
Intentional Infliction of Emotional Distress.
On January 27, 2025, Defendant filed
this Motion to Compel Arbitration. On February 10, 2025, Plaintiff filed an
opposition. On February 18, 2025, Defendant filed a reply.
II.
Legal Standard
“On petition of a party to an arbitration agreement alleging the
existence of a written agreement to arbitrate a controversy and that a party to
the agreement refuses to arbitrate that controversy, the court shall order the
petitioner and the respondent to arbitrate the controversy if it determines
that an agreement to arbitrate the controversy exists, unless it determines
that: (a) The right to compel arbitration has been waived by the petitioner; or
(b) Grounds exist for rescission of the agreement.” (Code Civ. Proc., § 1281.2,
subds. (a) and (b).)
The party seeking to compel arbitration bears the burden of proving the
existence of a valid arbitration agreement by the preponderance of the
evidence. (Hotels Nevada v. L.A. Pacific Center, Inc. (2006) 144
Cal.App.4th 754, 761.) The burden then shifts to the opposing party to
prove by a preponderance of the evidence a defense to enforcement (e.g., fraud,
unconscionability, etc.) (Ibid.) “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.” (Engalla v. Permanente
Medical Group, Inc. (1997) 15 Cal.4th 951, 972.)
“If a court of competent jurisdiction. . . has ordered arbitration of a
controversy which is an issue involved in an action or proceeding pending
before a court of this State, the court in which such action or proceeding is pending
shall, upon motion of a party to such action or proceeding, stay the action or
proceeding until an arbitration is had in accordance with the order to
arbitrate or until such earlier time as the court specifies.” (Code Civ. Proc.,
§ 1281.4).
III.
Discussion
Defendant moves to
compel arbitration of Plaintiff’s claims and staying all further judicial
proceedings in this action pending completion of arbitration.
A.
Existence of an Arbitration Agreement
Defendant argues that Plaintiff
entered into an arbitration agreement on January 9, 2017, as part of
Defendant’s “Employee Handbook Acknowledgement, At-Will And Agreement to
Arbitrate Disputes”. (Gearhart Decl., Exh. A.) Defendant provides evidence of
such agreement and Plaintiff’s acceptance. (Ibid.) Subsequently, on
January 15, 2019, Plaintiff signed a second arbitration agreement titled “Employment
At-Will and Arbitration Agreement-California” which provides provisions
consistent with the first agreement. (Gearhart Decl., Exh. B.) Defendant’s
arbitration agreements provide as follows:
3. I and the Credit Union
agree to utilize binding individual arbitration as the sole and exclusive means
to resolve all disputes that may arise out of or be related in any way to my
employment, including but not limited to the termination of my employment and
my compensation, except to the extent I opt out of certain portions of this
Agreement as set forth below. I and the Credit Union each specifically waive
and relinquish both of our respective rights to bring a claim against the other
in a court of law and to have a trial by jury, and this waiver shall be equally
binding on any person who represents or seeks to represent me or the Credit
Union in a lawsuit against the other in a court of law. Both I and the Credit
Union agree that any claim, dispute, and/or controversy that I may have against
the Credit Union (or its owners, directors, officers, managers, employees, or
agents), or the Credit Union may have against me, shall be submitted to and
determined exclusively by binding arbitration under the Federal Arbitration Act
("FAA"), in conformity with the procedures of the California
Arbitration Act (Cal. Code Civ. Proc. sec 1280 et seq., including section
1283.05 and all of the Act's other mandatory and permissive rights to
discovery). The FAA applies to this Agreement because the Credit Union's
business involves interstate commerce. Included within the scope of this
Agreement are all disputes, whether based on tort, contract, statute
(including, but not limited to, any claims of discrimination, harassment and/or
retaliation, whether they be based on the California Fair Employment and
Housing Act, Title Vl1 of the Civil Rights Act of 1964, as amended, or any
other state or federal law or regulation), equitable law, or otherwise, or as
may otherwise be required by state or federal law.
(Gearhart Decl., Exh. A.)
2. I and the Credit Union
agree to utilize binding individual arbitration as the sole and exclusive means
to resolve all disputes that may arise out of or be related in any way to my
employment. I and the Credit Union each specifically waive and relinquish our
respective rights to bring a claim against the other in a court of law and to
have a trial by jury. Both I and the Credit Union agree that any claim,
dispute, and/or controversy that I may have against the Credit Union (or its
owners, directors, officers, managers, Team Members, or agents), or the Credit
Union may have against me, shall be submitted to and determined exclusively by
binding arbitration under the Federal Arbitration Act ("FAA"), in
conformity with the procedures of the California Arbitration Act (Cal. Code
Civ. Proc. sec 1280 et seq., including section 1283.05 and all of the Act's
other mandatory and permissive rights to discovery). Included within the scope
of this Agreement are all disputes, whether based on tort, negligence,
contract, statute (including, but not limited to, any claims of discrimination,
harassment and/or retaliation, whether they be based on the California Fair
Employment and Housing Act, Title VII of the Civil Rights Act of 1964, as
amended, or any other state or federal law or regulation), equitable law, or
otherwise. The only exceptions to binding arbitration shall be for claims
arising under the National Labor Relations Act which are brought before the
National Labor Relations Board, claims for medical and disability benefits
under the California Workers' Compensation Act, Employment Development
Department claims, or other claims that are not subject to arbitration under
current law. Moreover, nothing herein shall prevent me from filing and pursuing
proceedings before the California Department of Fair Employment and Housing, or
the United States Equal Employment Opportunity Commission ( although if I
choose to pursue a claim following the exhaustion of such administrative
remedies, that claim would be subject to the provisions of this Agreement).
(Gearhart Decl., Exh. B.)
The court finds that Defendant
has met its initial burden of proving the existence of a signed arbitration
agreement between the parties wherein the parties agreed to arbitrate claims
arising out of Plaintiff’s employment by providing Exhibit A and B in the
declaration of Lisa Gearhart. The burden thus shifts to Plaintiff, who may
present any challenges to the enforcement of the agreement and evidence in
support of those challenges.
B.
Unconscionability
Plaintiff argues that
the arbitration agreement is unenforceable because it is procedurally and
substantively unconscionable. (Opp., at p. 3.)
An agreement is
unenforceable if it is both procedurally and substantively
unconscionable. (OTO, L.L.C. v. Kho (2019) 8 Cal.5th 111, 125; Sanchez
v. Valencia Holding Co., LLC (2015) 61 Cal.4th 899, 910.) But
procedural and substantive unconscionability need not be present in the same
degree. (OTO, supra, 8 Cal.5th at 125.) Courts use a
“sliding scale” approach—“the more substantively unconscionable 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. Found Health Psychcare Servs., Inc. (2000) 24 Cal.4th 83,
114.) Under general contract principles,¿unconscionability has both a
procedural and substantive element, with the former focusing on oppression or
surprise due to unequal bargaining power, and the latter focusing on overly harsh
or one-sided rules (Armendariz, supra, 24 Cal.4th at p. 114.)¿¿Both
procedural and substantive¿unconscionability must be present¿in order for¿a
court to exercise its discretion to refuse to enforce a contract on the basis
of unconscionability.¿ (Stirlen¿v. Supercuts, Inc. (1997) 51 Cal.App.4th
1519, 1533.)
1.
Procedural Unconscionability
“Procedural unconscionability pertains to the making of the agreement; it
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.)¿¿Arbitration clauses are often found in adhesion contracts
(standardized contracts drafted by a party of superior bargaining power and
presented to the weaker party on a take-it-or-leave-it basis).¿ (Armendariz,
supra, 24 Cal.4th at 113-114.)¿
Defendant argues that there is no indication of procedural
unconscionability present in the arbitration agreements as there was little to
no unequal bargaining position between the parties, Plaintiff was willing to
sign the agreement not once, but twice, and there is no evidence that Plaintiff
attempted to negotiate the terms of the agreement or looked for comparable work
in the nearly eight years which elapsed between the time Plaintiff was hired
and the time she was terminated. (Motion, at p. 6.)
In opposition, Plaintiff
argues that the arbitration agreement is procedurally unconscionable as the
arbitration agreement was forced upon Plaintiff as a condition of continued
employment, Plaintiff had no opportunity to negotiate or reject the terms, and
the agreement was solely drafted by Defendant to favor its own interests.
(Opp., at p. 3-5.) Additionally, Plaintiff argues that as the agreement was
never signed by Defendant, it lacks mutual assent. (Id., at p. 5.)
In reply, Defendant
argues that Plaintiff concedes to have signed the arbitration agreements. (Reply,
at p. 1.) However, Defendant does not directly address Plaintiff’s procedural
unconscionability arguments and instead focuses on arguing that there is no
substantive unconscionability. (Id., at p. 9.) Nevertheless, Defendant
argues that it was not required to sign the arbitration agreement to make it
binding as Defendant drafted and acted upon the agreement, therefore its assent
is apparent even in the absence of a signature. (Id., at pp. 6-8.)
There is no indication
that Plaintiff had an opportunity to opt-out of the arbitration agreement or
had a chance to review it. Nevertheless, the mere fact an adhesion contract is
involved does not per se render the arbitration provision unenforceable
because such contracts are¿“an inevitable fact of life for all
citizens—businessman and consumer alike.”¿ (Graham v. Scissor-Tail, Inc.¿(1981)
28 Cal.3d 807, 817.)
While Defendant did not
sign the arbitration agreement, “the writing memorializing an arbitration
agreement need not be signed by both parties in order to be upheld as a binding
arbitration agreement.” (Serafin v. Balco Properties Ltd., LLC (2015)
235 Cal.App.4th 165, 176.) “Evidence confirming the existence of an agreement
to arbitrate, despite an unsigned agreement, can be based, for example, on
‘conduct from which one could imply either ratification or implied acceptance
of such a provision.’ [Citations].” (Id., at 176.) “[A]n arbitration
agreement can be specifically enforced against the signing party regardless of
whether the party seeking enforcement has also signed, provided that the party
seeking enforcement has performed or offered to do so.” (Id., at 177.) Here,
it is clear that Defendant accepted the provisions found in the agreements
between the parties. To the extent this factor indicates any unconscionability,
the court finds that it shows, at most, low unconscionability.
Accordingly, the court finds that there is only a moderate degree of
procedural unconscionability from the arbitration agreement being an adhesion
contract and not signed by Defendant.
2.
Substantive Unconscionability
Substantive unconscionability focuses on the actual terms of the
agreement and evaluates whether¿the terms¿create overly harsh or one-sided
results as to shock the conscience.¿ (Suh v. Superior Court¿(2010) 181
Cal.App.4th 1504, 1515;¿Sanchez, supra,¿61 Cal.4th at 910-911¿[an
“old-fashioned bad bargain” or a contract term which “merely gives one side a
greater benefit” insufficient].)¿
Defendant argues that the
arbitration agreement meets the Armendariz requirements and, thus, it is
not substantively unconscionable. (Motion, at p. 6.)
In opposition, Plaintiff argues that the arbitration agreement fails to
meet these fairness standards and contains multiple one-sided, unfair, and
oppressive provisions that render it substantively unconscionable. (Opp., at p.
6.)
First, Plaintiff contends that the agreement fails to provide for
necessary and adequate discovery as the agreement mentions that discovery will
be available but it does not affirmatively guarantee that Plaintiff will have
the same ability to obtain necessary evidence as she would in court. (Opp., at
p. 6.)
In reply, Defendant argues that there is no limitation on discovery
expressed in the agreement itself, rather, the agreement is drafted
specifically to incorporate the discovery procedures of the California
Arbitration Act, including section 1283.05, and all of the Acts other mandatory
and permissive rights to discovery. (Reply, at p. 3.) Defendant also contends
that section 1283.05 establishes that the full panoply of discovery is
available to the parties of an arbitration agreement (Id., at pp. 3-4.)
Second, Plaintiff argues that the agreement fails to specify that
Defendant will pay for arbitration costs. (Opp., at pp. 6-7.)
In reply, Defendant argues that state law, per Armendariz,
requires the employer to pay the arbitrator’s fees and there is nothing in the agreement
to the contrary. (Reply, at pp. 2-3.)
Third, Plaintiff argues that the agreement does not ensure that Plaintiff
has access to all remedies available in court. (Opp., at p. 7.)
In reply, Defendant argues that the agreement does not provide any
language that limits Plaintiff’s rights to recover all remedies available to
her. (Reply, at p. 4.)
Fourth, Plaintiff argues that the agreement improperly attempts to waive
Plaintiff's right to bring a PAGA claim. (Opp., at p. 8.) Plaintiff argues that
any attempt to strip Plaintiff of her ability to bring a PAGA claim further
demonstrates the agreement’s one-sided and unfair nature, supporting a finding
of substantive unconscionability. (Ibid.)
In reply, Defendant argues that the limitations on PAGA claims in the
agreement are consistent with current law. (Reply, at pp. 4-5.) Defendant
contends that the agreement provides “[i]f under applicable law, a
representative claim under the California Private Attorneys Generals Act (PAGA)
is found to be unwaivable and such an action is pursued in court, I and the
Credit Union agree that any such PAGA claim will be severed and stayed pending
resolution of claims that are arbitrable.” (Ibid.) Thus, Defendant
argues that if under applicable law PAGA claims are found not to be arbitrable,
then consistent with the California Arbitration Act, that non-arbitrable claim
would be severed and litigated in court. (Ibid.)
Fifth, Plaintiff argues that the agreement contains ambiguous and contradictory
provisions that favor Defendant. (Opp., at p. 8.)
The court finds that the agreement satisfies each of the necessary
safeguards for arbitration agreements governing employment relationships set
forth in Armendariz. Here, the agreement contains no terms that
contravene either the American Arbitration Association (“AAA”) Rules or the Armendariz
decision. Further, to the extent that the Arbitration Agreement is silent on
the Armendariz requirements on discovery, arbitration costs, and does
not limit Plaintiff’s remedies, such provisions may be implied as a matter of
law. (Sanchez v. W. Pizza Enterprises, Inc. (2009) 172 Cal. App. 4th
154, 177 (“the absence of express provisions requiring a written arbitration
award and allowing discovery does not render the arbitration agreement
unconscionable. Rather, those terms are implied as a matter of law as part of
the agreement”); Fittante v. Palm Springs Motors, Inc. (2003) 105
Cal.App.4th 708, 717 (where an arbitration agreement does not preclude
any legal remedy, the agreement implicitly “complies with the requirement under
Armendariz that all types of relief otherwise available in court be
afforded to vindicate plaintiff’s statutory rights”).)
Moreover, the court does not find that the agreement forces Plaintiff to
waive her PAGA claims. Additionally, Plaintiff fails to provide the specific provisions
that she argues to be ambiguous and contradictory.
As such, the court does not find the arbitration agreement to have a high
degree of substantive unconscionability to render it invalid.
C.
Evidentiary Hearing
As an alternative to
granting Defendant’s motion, Plaintiff requests an evidentiary hearing under California
Rules of Court Rule 3.1306 to conduct discovery on Defendant’s extrinsic
evidence and to present oral testimony at a hearing before this court. (Opp.,
at pp. 10-11.)
In reply, Defendant
argues that an evidentiary hearing would only be necessary if there was
conflicting evidence regarding the enforceability of the arbitration agreement which
is not necessary here. (Reply, at pp. 8-9.)
As discussed in further detail above, the court finds that Defendant has
established that a valid arbitration agreement exists here and that it covers
the claims alleged by Plaintiff in this action. There is no conflicting
evidence presented by Plaintiff that warrants an evidentiary hearing under rule
3.1306.
D.
Stay Request
If a party applies to a court “for an order to
arbitrate a controversy which is an issue involved in an action or proceeding
pending before a court of this State and such application is undetermined, the
court in which such action or proceeding is pending shall, upon motion of a
party to such action or proceeding, stay the action or proceeding until the
application for an order to arbitrate is determined and, if arbitration of such
controversy is ordered, until an arbitration is had in accordance with the order
to arbitrate or until such earlier time as the court specifies.” (Code of Civ.
Proc., § 1281.4.)
Because the court has found that arbitration is warranted in this matter,
the court also stays the proceedings during the pendency of the arbitration
process.
IV.
Conclusion
Defendant Premier America Credit
Union’s Motion to Compel Arbitration and Stay Proceedings is GRANTED.