Judge: Peter Wilson, Case: 2021-01235479, Date: 2023-08-24 Tentative Ruling
Defendants Sun Mar Healthcare, Inc. Park Regency Care, LLC, Bartlett Care Center, LLC, Gordon Lane Health Care, LLC, Villa Rancho Bernardo Health Care, LLC, Garden Park Care Center, LLC, Anaheim Health Care Center, LLC, Inland Medical Enterprises, Inc., Community Care Rehab Center, LLC, DMN Enterprises, Inc., Heritage Manor Healthcare, LLC, Mission Carmichael Post Acute, LLC and Sun Mar Rehabilitation Services, LLC (collectively, Defendants) seeks to compel Plaintiff Luz M. Orduna (Plaintiff) to arbitrate her individual PAGA claims and stay the non-individual PAGA claims pending completion of arbitration.
For the reasons set forth below, the Motion is GRANTED.
Objection. Plaintiff objects to the ROA 145, Supplemental Casem Declaration and the 2020 Employee Handbook attached as Exhibit A attached thereto. ROA 149. Plaintiff contends that the Supplemental Casem Declaration presents new evidence in Reply. Plaintiff’s objections are SUSTAINED.
There is a Valid Arbitration Agreement Between the Parties. Defendants have met their initial burden of demonstrating the existence of an arbitration agreement between the parties. (Rosenthal v. Great Wester Fin. Securities Corp. (1996) 14 Cal. 394, 413; Engalla v. Permanente Medical Group, Inc. (1997) 15 Cal.4th 951, 972.) Defendants present evidence that in connection with Plaintiff’s onboarding, Plaintiff signed the stand alone four-page document entitled “Voluntary Mutual Agreement to Arbitrate Claims” on that date (Arbitration Agreement). ROA 107, Casem Decl., ¶¶1-4 and Ex. A. The Arbitration Agreement encompasses “all claims, disputes, and/or controversies (collectively, ‘claims’), whether or not arising out of [Plaintiff’s] employment or its termination, that Company [Park Regency Retirement Center] may have against me or that I may have against Company, its subsidiaries or affiliated entities, or against its employees or agents in their capacity.” ROA 107, Ex. A, §1, p. 1. This includes “claims for wages or other compensation due; … and claims for violation of any federal, state, or other governmental law, statute, regulation or ordinance”. Ibid.
Plaintiff does not dispute that she signed the Arbitration Agreement or that her claims fall within the scope of the Arbitration Agreement. ROA 139, Ordona Decl. (English), ¶¶5, 6, 8; ROA 134, Opp., p. 3.
Since the operative First Amended Complaint alleges Defendants are joint employers, they appear to satisfy the requirement that they are subsidiaries or affiliated entities with Park Regency Retirement Center. ROA 85, FAC, ¶¶24-29. Plaintiff does not dispute that all Defendants may enforce this Arbitration Agreement. See generally, ROA 134, Opp.
The FAA Applies. Section 2 of the FAA (9 U.S.C. § 2) applies to any “written provision in . . . a contract evidencing a transaction involving commerce.” Defendants have the burden of proving the FAA applies. (Woolls v. Sup.Ct. (Turner) (2005) 127 Cal.App.4th 197, 214.) Defendants contend that they are involved in interstate commerce because they operate a residential retirement facility that provides services and residences a portion of which are paid for by out of state individuals. ROA 107, Casem Decl., ¶5; ROA 106, Mem. Supp., pp. 8-9. Plaintiff does not dispute or otherwise contest this argument. This is sufficient to show that Defendants are involved or engage in interstate commerce. As such, the FAA applies.
Plaintiff argues the Arbitration Agreement is unenforceable because it is unconscionable. Plaintiff bears the burden of proving unconscionability. (Chin v. Advanced Fresh Concepts Franchise Corp. (2011) 194 Cal. App. 4th 704, 708.)
Unconscionability requires that the arbitration agreement be both procedurally and substantively unconscionable. (De La Torre v. CashCall, Inc. (2018) 5 Cal. 5th 966, 982; Baltazar v. Forever 21, Inc. (2016) 62 Cal. 4th 1237, 1243; Baxter v. Genworth North America Corp. (2017) 16 Cal. App. 5th 713, 723.) Procedural and substantive unconscionability are measured on a sliding scale, meaning if one element is present to only a lesser degree, then more evidence of the other element is required to establish overall unconscionability. (Torrecillas v. Fitness International (2020) 52 Cal.App.5th 495, 492.)
Procedural Unconscionability. In OTO, L.L.C. v. Kho (2019) 8 Cal.5th 111, the California Supreme Court explained that the procedural unconscionability analysis begins with an inquiry into whether the contract is one of adhesion. (Id. at 126.) “An adhesive contract is standardized, generally on a preprinted form, and offered by the party with superior bargaining power on a take-it-or-leave-it basis. (Baltazar v. Forever 21, Inc. (2016) 62 Cal.4th 1237, 1245.) Arbitration contracts imposed as a condition of employment are typically adhesive (Armendariz v. Foundational Health Psychcare Services, Inc. (2000) 24 Cal.4th 83, 114-115; Serpa v. California Surety Investigations, Inc. (2013) 215 Cal.App.4th 695, 704.)
“When the contract is a contract of adhesion imposed and drafted by the party with superior bargaining power, the adhesive nature of the contract is ‘evidence of some degree of procedural unconscionability.’ ” (Sanchez v. Carmax Auto Superstores California, LLC (2014) 224 Cal.App.4th 398, 403.) But the fact that an agreement is adhesive is not, alone, sufficient to render it unconscionable. (Malone v. Superior Court (2014) 226 Cal.App.4th 1551, 1561.)
The Arbitration Agreement is not rendered unenforceable just because it was required as a condition of employment. (Baltazar v. Forever 21, Inc., supra, 62 Cal. 4th at 1245, 1251; Sanchez v. Carmax Auto Superstores California, LLC (2014) 224 Cal. App. 4th 398, 402-03.)
The court considers whether circumstances of the contract’s formation created such oppression or surprise that closer scrutiny of its overall fairness is required. (OTO, L.L.C., supra, 8 Cal.5th at 126-127.) “The circumstances relevant to establishing oppression include, but are not limited to (1) the amount of time the party is given to consider the proposed contract; (2) the amount and type of pressure exerted on the party to sign the proposed contract; (3) the length of the proposed contract and the length and complexity of the challenged provision; (4) the education and experience of the party; and (5) whether the party's review of the proposed contract was aided by an attorney.” (Id.)
Plaintiff argues she did not have sufficient time to review the Arbitration Agreement, that the Arbitration Agreement was provided to her in English and she is a Spanish speaker, that her supervisors did not review the Arbitration Agreement with her, inform her what she was signing or advise her she could ask questions or seek advice from an attorney. ROA 139, Orduna Decl., ¶¶5, 6, 7 and 9. Plaintiff contends that she “only understood that in order to continue working, [she] must sign and return the documents immediately.” ROA 139, Orduna Decl., ¶8.
However, “[t]he general rule is that, when a person with the capacity of reading and understanding an instrument signs it, he is, in the absence of fraud and imposition, bound by its contents, and is estopped from saying that its provisions are contrary to his intentions or understanding.” (Palmquist v. Mercer (1954) 43 Cal. 2d 92, 98.) Moreover, “[a]n arbitration clause within a contract may be binding on a party even if the party never actually read the clause. (Citations omitted.).” (Marenco v. DirecTV LLC (2015) 233 Cal.App.4th 1409, 1418; Randas v. YMCA of Metropolitan Los Angeles (1993) 17 Cal.App.4th 158, 163 [“It is well established, in the absence of fraud, overreaching or excusable neglect, that one who signs an instrument may not avoid the impact of its terms on the ground that he failed to read the instrument before signing it.”) The general rule applies even if a person does not speak or understand English. (See Ramos v. Westlake Service LLC (2015) 242 Cal.App.4th 674, 687 [Under general contract principles, signing a contract in a language plaintiff did not completely understand would not bar enforcement because if he did not speak or understand English sufficiently to comprehend the English contract, he should have had it read or explained to him].)
The cases cited by Plaintiff to support her claim that arbitration agreements that are not translated to a language the plaintiff understands are procedurally unconscionable are distinguishable. In Ramos, the court found there was no mutual assent because the Spanish translation of the English contract given to plaintiff by defendant did not contain the arbitration provision that was in the English contract. Thus, the Ramos court found “fraud in the execution” of the arbitration agreement. (242 Cal. App.4th at 690.)
In Carmona v. Lincoln Millennium Car Wash, Inc. (2014) 226 Cal.App.4th 74, defendant provided Spanish translations for some portions of the employment agreement but not for others, which indicated that defendant knew plaintiffs required Spanish translations and did not read and understand English sufficiently. (Id. at 50-51.) This factor, along with others, supported a finding a procedural unconscionability. (Id.)
Similarly, in Penilla v. Westmont Corporation (2016) 3 Cal.App.5th 205, defendants knew plaintiffs were not proficient in English and informed plaintiffs in Spanish that they were required to sign the rental agreements without providing any information about the arbitration provision or its terms and failed to give plaintiffs sufficient time to review the agreements. (Id. at 216.)
In contrast, while Plaintiff represents she is a Spanish speaker, Defendants correctly note that unlike in Ramos, Carmona and Penilla, Plaintiff does not state that she cannot read, write or speak English. Assuming, arguendo, that Plaintiff was not proficient in English, again unlike in Ramos, Carmona and Penilla, Plaintiff does not present evidence that her supervisors or Defendants were aware that she was not proficient in English. Plaintiff does not attest that her supervisors or Defendants ever spoke to her in Spanish or provided her with Spanish translations of any documents.
Although Plaintiff states she “understood” she need to return the signed onboarding documents “immediately”, Plaintiff presents no evidence that her supervisors or Defendants actually told her she had to return the documents “immediately”, that they gave her any time limit to review the Arbitration Agreement, or that they exerted any pressure on her to return the Arbitration Agreement quickly.
Plaintiff also argues this matter is similar to OTO, LLC but the Court disagrees. In OTO, LLC, a high degree of procedural unconscionability was found because plaintiff worked for defendant employer for years before the arbitration agreement was presented to him, he had no time to read the documents, a “porter” presented the documents giving the message that the low level porter could not explain or negotiate anything, the employer used a piece-rate compensation system so anytime plaintiff spent reviewing the agreement reduced his pay, the agreement was written in extremely small font that was barely legible and he was not given a copy. (OTO, LLC, 8 Cal.5th at 127-128.) Here, as indicated there is no evidence Defendants required Plaintiff to immediately return the Arbitration Agreement, that reviewing the Arbitration Agreement would reduce her pay, or that the Arbitration Agreement was presented to her by low level personnel with no authority to negotiate or explain anything to her. The Arbitration Agreement is plainly labeled as such and is written in a standard font and plain language.
Plaintiff further argues the Arbitration Agreement did not contain, and Defendant did not provide, copies of the applicable arbitration rules. An employer’s failure to provide copies of the arbitration rules does not render an employment agreement procedurally unconscionable per se. (See, e.g., Baltazar v. Forever 21, Inc. (2016) 62 Cal.4th 1237, 1246; Serafin v. Balco Properties Ltd., LLC (2015) 235 Cal.App.4th 165, 179-180, citing Tiri v. Lucky Chances, Inc. (2014) 226 Cal.App.4th 231, 246, fn. 9.)
In summary, the Arbitration Agreement is a contract of adhesion and there is at most a low degree of procedural unconscionability.
Substantive Unconscionability. In assessing substantive unconscionability, the “paramount consideration” is mutuality of the obligation to arbitrate. (Nyulassy v. Lockheed Martin Corp. (2004) 120 Cal. App. 4th 1267, 1287.) “[I]t is unfairly one-sided for an employer with superior bargaining power to impose arbitration on the employee as plaintiff but not to accept such limitations when it seeks to prosecute a claim against the employee, without at least some reasonable justification for such one-sidedness based on ‘business realities.’” (Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83, 117; Ingle v. Circuit City Stores, Inc. (9th Cir. 2003) 328 F.3d 1165, 1174 [applying Calif. law, unilateral agreement presumed substantively unconscionable]; Baltazar v. Forever 21, Inc., supra, 62 Cal.4th at 1248-1249 [agreement listing only employee claims as examples of types arbitrable not unfairly one-sided if it requires arbitration of all employment related claims].)
Here, Plaintiff argues that the agreement is substantively unconscionable because it waives her right to pursue a PAGA action, and the Arbitration Agreement limits discovery and does not provide for the payment of attorney fees. Plaintiff contends that none of these unconscionable terms can be severed from the Arbitration Agreement.
The Court disagrees that the Arbitration Agreement requires Plaintiff to waive her PAGA claims. The Arbitration Agreement requires Plaintiff to arbitrate her individual claims, and not as a plaintiff or class member in a class or “representative proceeding”. ROA 107, Ex. B, § 2.
As explained by the Fourth District Court of Appeals, Division 3 in Piplack v. In-N-Out Burgers (2023) 88 Cal.App.4th 1281, after Viking River, a PAGA action is “properly understood as a combination of two claims: an ‘individual’ claim, arising from the Labor Code violations suffered by the plaintiff or plaintiffs themselves, and a ‘representative’ claim, arising from violations suffered by employees. By virtue of FAA preemption, these claims are severable from one another, and the ‘individual’ claim is arbitrable, ... and only the ‘representative’ claim is a true qui tam, or ‘private attorney general,’ action.” (88 Cal.App.4th at 1288-1289.)
Consistent with Viking River and Piplack, the Arbitration Agreement here permits the individual PAGA component to be severed from the representative non-individual claims. ROA 107, Ex. A, ¶12 [“If any provision of this Agreement is adjudged to be void or otherwise unenforceable, in whole or in part, such adjudication shall not affect the validity of the remainder of the Agreement.”]. But the non-individual PAGA claims must still be brought in court pursuant to Iskanian v. CLS Transportation Los Angeles, LLC (2014) 59 Cal.4th 348 and Viking River Cruises, 143 S.Ct. at 1923-1926.
Additionally, the Arbitration Agreement adequately provides for discovery. Adequate discovery does not equal unfettered discovery, and parties may agree to something less than what is available under the Code of Civil Procedure. (Sanchez v. Carmax Auto Superstores Cal, LLC (2014) 224 Cal.App.4th 398, 404 [citing Armendariz v. Foundation Health Psycare Servs., Inc. (2000) 24 Cal.4th 83, 105-06].) “[A]rbitration is meant to be a streamlined procedure. Limitations on discovery…is one of the ways streamlining is achieved.” (Dotson v. Amgen, Inc. (2010) 181 Cal.App.4th 975, 983.)
Further, the Arbitration Agreement does permit Plaintiff to recover attorneys’ fees. The Arbitration Agreement provides that “[t]he parties shall each bear their own costs for legal representation…provided, however, that the Arbitrator shall have the authority to require either party to pay the fee for the other party’s representation…as is otherwise permitted under federal or state law, as part of any remedy that may be ordered.” (ROA 107, Ex. A, ¶9.)
Based on the above, the Arbitration Agreement provides basic fairness to plaintiff, is not substantively unconscionable, and is therefore enforceable. (Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal. 4th 83, 90-91, 120.)
Thus, in summary, there is little or no substantive unconscionability.
As there is only little if any procedural unconscionability, Plaintiff has not satisfied her burden of proof that the Arbitration Agreement is unconscionable.
Plaintiff has also not met her burden of establishing waiver.
Under both California and federal law, the party resisting arbitration “bears a heavy burden, and any doubts regarding a waiver allegation should be resolved in favor of arbitration.” (St. Agnes Med. Ctr. v. PacifiCare of Cal. (2003) 31 Cal.4th 1187, 1195.) “Although a court may deny a petition to compel arbitration on the ground of waiver [citation], waivers are not to be lightly inferred and the party seeking to establish a waiver bears a heavy burden of proof.” (Id.) “Both state and federal law emphasize that no single test delineates the nature of conduct that will constitute a waiver of arbitration.” (Id.) The California Supreme Court identified some factors that courts may consider in determining waiver of the right to arbitrate: (1) whether the party’s actions are inconsistent with the right to arbitrate; (2) whether the “litigation machinery has been substantially invoked” and the parties “were well into preparation of a lawsuit” before the party sought to arbitrate; (3) whether a party requested arbitration enforcement close to the trial date or delayed a long period before seeking a stay; (4) whether a defendant seeking arbitration filed a counterclaim without asking for a stay; (5) whether important intervening steps – such as taking advantage of discovery procedures not available in arbitration – had taken place; and (6) whether the delay affected, misled, or prejudiced the opposing party. (Id. at 1196 [quoting Sobremonte v. Superior Court (1998) 61 App.4th 980, 992].)
Here, Plaintiff fails to present evidence or legal authority supporting her claim of waiver. Shortly after Viking River was published in June 2022, Defendants noted that Plaintiff signed an arbitration agreement and that they would move to compel arbitration in light of Viking River. ROA 63, Status Conf. Stmt. Plaintiff has not presented evidence that Defendants have acted in a manner inconsistent with their right to arbitrate, or have invoked the litigation machinery. Delay in filing this Motion is not sufficient evidence of waiver. (See Gloster v. Sonic Automotive, Inc. (2014) 226 Cal.App.4th 438, 449 [“[w]hile we recognize that [the moving] defendants delayed for an extended period in taking affirmative steps to enforce their right to arbitrate, [plaintiff] failed to carry his ‘heavy burden’ of demonstrating this delay was unreasonable and prejudicial.”])
Plaintiff has not satisfied her burden of proving waiver.
Accordingly, Plaintiff is ordered to arbitrate her individual PAGA claims.
Pursuant to Adolph v. Uber Technologies, Inc. (2023) 14 Cal.5th 1104, 310 Cal.Rptr.3d 667, 681, 9 U.S.C §3 and Code Civil Procedure §1281.4, the representative non-individual claims must be litigated in court, and as such, this matter is STAYED pending completion of the arbitrations.
An arbitration review hearing is scheduled for February 23, 2024 at 9 AM, and the parties are ordered to file a joint status report not later than February 16, 2024.
The status conference is off calendar.
Defendants are ordered to give notice.