Judge Randolph M. Hammock, Case Number: 23STCV11353, Date: 2024-05-09 Tentative Ruling

Judge: Randolph M. Hammock, Case: 23STCV11353, Date: 2024-05-09 Tentative Ruling

Plaintiff Annunziata Crupi worked as a Postdoctoral Scholar at USC under Defendant Valter Longo. Plaintiff alleges she reported Defendant Longo to higher-ups after discovering Defendant allegedly used fraudulent or inaccurate data in his research. Plaintiff further alleges she was terminated or non-renewed after making these complaints.

“[T]he petitioner bears the burden of proving the existence of a valid arbitration agreement by the preponderance of the evidence . . . .” (Giuliano v. Inland Empire Personnel, Inc. (2007) 149 Cal.App.4th 1276, 1284). “In determining whether an arbitration agreement applies to a specific dispute, the court may examine only the agreement itself and the complaint filed by the party refusing arbitration [citation]. The court should attempt to give effect to the parties' intentions, in light of the usual and ordinary meaning of the contractual language and the circumstances under which the agreement was made.” (Weeks v. Crow (1980) 113 Cal.App.3d 350, 353). “Doubts as to whether an arbitration clause applies to a particular dispute are to be resolved in favor of sending the parties to arbitration. The court should order them to arbitrate unless it is clear that the arbitration clause cannot be interpreted to cover the dispute.” (California Correctional Peace Officers Ass'n v. State (2006) 142 Cal.App.4th 198, 205).

“[A] party opposing the petition bears the burden of proving by a preponderance of the evidence any fact necessary to its defense. [Citation.] 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.” (Giuliano v. Inland Empire Personnel, Inc. (2007) 149 Cal.App.4th 1276, 1284).

“If a court of competent jurisdiction, whether in this State or not, 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. . . .” (CCP § 1281.4.)

On November 19, 2021, Plaintiff, while represented by counsel, made a demand for arbitration with JAMS based on the same or substantially similar claims against Defendants. (Walrod Decl. ¶ 2, Exh. D.) Thereafter, the parties selected an arbitrator, paid filing fees, and provided “informal” discovery. (Id. ¶¶ 3, 4, 5.)

By August of 2022, Plaintiff was no longer represented by counsel, and the arbitration stalled. (Id. ¶ 4.) On May 19, 2023, Plaintiff filed the instant lawsuit in Los Angeles County asserting claims apparently based on the same facts as those in the underlying arbitration. On June 26, 2023, Defendants removed the action to federal court. Following brief proceedings in federal court, including dismissal of Plaintiff’s federal claims, the case was remanded to this court on February 22, 2024. Defendants now move to compel the matter to arbitration.

When considering if waiver occurred in the context of arbitration, both state and federal courts consider “(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 notified the opposing party of an intent to arbitrate; (3) whether a party either requested arbitration enforcement close to the trial date or delayed for a long period before seeking a stay; (4) whether a defendant seeking arbitration filed a counterclaim without asking for a stay of the proceedings; [and] (5) ‘whether important intervening steps [e.g., taking advantage of judicial discovery procedures not available in arbitration] had taken place…” [Citations]. (Iskanian, 59 Cal. 4th at 375). Notably, under recent authority from the Supreme Court of the United States, the element of prejudice is “no longer required to demonstrate a waiver of one's right to arbitration, and the waiver inquiry should instead focus on the actions of the holder of that right.” (Davis v. Shiekh Shoes, LLC (2022) 84 Cal.App.5th 956, 795 [citing Morgan v. Sundance, 142 S.Ct. 1708 (2022)].)

Here, there is no waiver under these facts. Defendants have justified the delay, given the removal and eventual remand back to this court. Courts have found significantly longer delays that did not amount to waiver. In Davis, the defendant waited 17-months to compel arbitration after being served with the complaint. (Davis, supra, 84 Cal. App. 5th at 967–68; see also Khalatian v. Prime Time Shuttle, Inc. (2015) 237 Cal. App. 4th 651, 663 [a 14-month period from the filing of the original complaint to the filing of the motion to compel was insufficient to support the waiver].)

Moreover, there is no evidence that Defendants have “invoked the litigation machinery” in this case, either before this court or the federal forum. (Iskanian, 59 Cal. 4th at 375). At most, the parties partook with procedural issues consistent with, and necessary for, removal to federal court. As a comparison, Courts have found a waiver when the party seeking to compel arbitration did so only after “sen[ding] two sets of lawyers to the third-party depositions and t[aking] full advantage of every opportunity to cross-examine the deponents.” (Guess?, Inc. v. Superior Ct. (2000) 79 Cal. App. 4th 553, 558. They also “t[ook] full advantage of the opportunity to test the validity of Guess's claims, both legally and factually, primarily at [the plaintiff’s] expense.” (Id.)

California has a strong public policy in favor of arbitration as an expeditious and cost-effective way of resolving disputes. “Even so, parties can only be compelled to arbitrate when they have agreed to do so.” (Avila v. S. California Specialty Care, Inc. (2018) 20 Cal. App. 5th 835, 843.) “The party seeking to compel arbitration bears the burden of proving the existence of a valid arbitration agreement.” (Id.)

An arbitration agreement is a contractual agreement. “General contract law principles include that ‘[t]he basic goal of contract interpretation is to give effect to the parties’ mutual intent at the time of contracting. [Citations.] ... The words of a contract are to be understood in their ordinary and popular sense.” [Citations.] (Garcia v. Expert Staffing W., 73 Cal. App. 5th 408, 412–13.)

Defendant has the initial burden of producing “prima facie evidence of a written agreement to arbitrate the controversy.” (Gamboa v. Ne. Cmty. Clinic (2021) 72 Cal. App. 5th 158, 165.) “[I]t is not necessary to follow the normal procedures of document authentication.” (Condee v. Longwood Mgmt. Corp. (2001) 88 Cal. App. 4th 215, 218.)

Defendants submit a declaration from Wendy Snaer, who has worked as Senior Human Resources Partner and Payroll Manager for USC’s School of Gerontology since 2018. (Snaer Decl. ¶ 2.) Snaer attests to the following: Plaintiff began a one-year appointment as a Postdoctoral Scholar on June 15, 2018. (Id. ¶ 5.) Plaintiff signed an agreement to arbitrate with the initial employment offer. (Id.) On June 15, 2019, Plaintiff began her second employment term, again signing a second agreement to arbitrate. (Id.)

As relevant to this motion, Plaintiff signed a third agreement to arbitrate on January 6, 2021, corresponding with her third employment term. (Id. ¶¶ 5, 8, 9; Exhs. A, B.) Under the Agreement, the parties agreed to the “resolution by arbitration of all claims, whether or not arising out of Employee’s University employment, remuneration or termination, that Employee may have against the University or any of its related entities, including but not limited to faculty practice plans, or its or their officers, trustees, administrators, employees or agents, in their capacity as such or otherwise; and all claims that the University may have against Employee. Any claim that otherwise would have been decidable in a court of law — whether under local, state, or federal law — will instead be decided by arbitration, except as specifically excluded by this Agreement.” (Snaer Decl. ¶ 10, Exh. B, p. 1.)

The Agreement is broad, covering “claims for wages or other compensation due; claims for breach of any contract or covenant (express or implied); claims for personal, physical, or emotional injury, or for any tort; claims for discrimination or harassment (including, but not limited to, race, sex, religion, national origin, age, marital status, sexual orientation, gender identity or expression, military and veteran status, or medical condition or disability); claims for ‘whistleblowing’ or retaliation; and claims for violation of any federal, state or other governmental law, statute, regulation, or ordinance.” (Id.)

Considering this evidence, this court finds that Defendants have established prima facie evidence of an agreement to arbitrate that covers the claims here. (See California Corr. Peace Officers Assn. v. State of California (2006) 142 Cal. App. 4th 198, 205 [“Doubts as to whether an arbitration clause applies to a particular dispute are to be resolved in favor of sending the parties to arbitration”].)

This switches the burden to Plaintiff, who “bears the burden of producing evidence to challenge the authenticity of the agreement.” (Gamboa, supra, 72 Cal. App. 5th at 165.) Plaintiff can do this in “several ways,” including by “declar[ing] under penalty of perjury that the party never saw or does not remember seeing the agreement, or that the party never signed or does not remember signing the agreement.” (Id.)

Plaintiff apparently does not dispute that she signed the subject arbitration agreement. Instead, she raises various defenses to enforcement, as are discussed further below.

Accordingly, because Defendants have demonstrated the existence of a signed agreement to arbitrate that covers the dispute here, no more is required.

The FAA provides for enforcement of arbitration provisions in any contract “evidencing a transaction involving commerce.” (9 USC § 2.) The term “involving commerce” is functionally equivalent to “affecting commerce” and “signals an intent to exercise Congress’ commerce power to the full.” (Allied-Bruce Terminix Cos., Inc. v. Dobson (1995) 513 US 265, 277.) “The party asserting the FAA 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.)

Defendants present evidence that USC maintains a student body from throughout the United States and abroad. (Ishop Decl. ¶ 3.) In 2023, 58% of USC’s new student class resided outside of California, and 17% resided outside the United States. (Id.) USC maintains educational programs in Washington, D.C. as well as fellowship opportunities throughout the United States. (Id.) USC offers online classes taught by faculty outside of California. (Id.) Notably, Defendants Longo and Brandhorst, both professors of gerontology, have worked with Plaintiff in collaboration with out-of-state research teams. (Snaer Decl. ¶¶ 2-4; see also Compl. ¶ 19 [alleging that Plaintiff “over[saw] and manage[d] the partnership with the Hypertension Institute…in Nashville, Tenessee”].)

As an independent basis to invoke the FAA, the controlling Agreement provides that the “Federal Arbitration Act shall govern the interpretation, enforcement, and all proceedings pursuant to this Agreement.” (Snaer Decl., Exh. B, p. 2; Davis v. Shiekh Shoes, LLC (2022) 84 Cal. App. 5th 956, 963 [finding the FAA applies “if it is so stated in the agreement.”].)

Plaintiff argues the Agreement should be disregarded based on principles of unconscionability. Unconscionability has “both a procedural and a substantive element, the former focusing on oppression or surprise due to unequal bargaining power, the latter on overly harsh or one-sided results. (Sanchez v. Valencia Holding Company, LLC (2015) 61 Cal.4th 899, 910.) Under California law, an arbitration agreement must be in some measure both procedurally and substantively unconscionable in order for the agreement to be unenforceable. (Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83, 114; De La Torre v. CashCall, Inc. (2018) 5 Cal.5th 966, 982.) “But they need not be present in the same degree. . . . [T]he 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 p. 114.)

“Oppression occurs where a contract involves lack of negotiation and meaningful choice, surprise where the allegedly unconscionable provision is hidden within a prolix printed form.” (OTO, L.L.C. v. Kho (2019) 8 Cal. 5th 111, 126.) Both factors ultimately go to whether the contract was one of “adhesion.” (Id.) “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.’” (Id.)

The court agrees with Plaintiff that the dynamic here represents a classic contract of adhesion. Therefore, the “take it or leave it” nature of the agreement is sufficient to establish “some degree of procedural unconscionability.” (Sanchez v. Valencia Holding Co., LLC (2015) 61 Cal.4th 899, 915). This means the substantive terms of the agreement must be scrutinized to ensure they are not manifestly unfair or one-sided. (Id.)

Plaintiff’s other arguments in support of procedural unconscionability, all read and considered by this court, are less convincing. (See Opp. pp. 6-10.) An employer’s failure to attach the arbitration rules to the agreement is of little consequence. (See Peng v. First Republic Bank (2013) 219 Cal. App. 4th 1462, 1472 [“failure to attach the AAA rules, standing alone, is insufficient grounds to support a finding of procedural unconscionability”].) “The failure to attach a copy of arbitration rules could be a factor supporting a finding of procedural unconscionability where the failure would result in surprise to the party opposing arbitration. (Lane v. Francis Cap. Mgmt. LLC (2014) 224 Cal. App. 4th 676, 690.) In Lane, the Court found there was not a “surprise” element where, as here, the arbitration provider’s rules could be accessed on the internet. (Id.)

Plaintiff argues the arbitration agreement is unconscionable because it lacks mutuality, is ambiguous, contained jargon, does not provide adequate discovery, does not provide all remedies available in court, requires employees to pay unreasonable costs, and is “against international human rights,” among other claimed defects. (See Opp. pp. 10-12.)

In Armendariz, the California Supreme Court outlined five elements that must be present in an arbitration agreement in order to avoid substantive unconscionability. (24 Cal.4th at p. 102.) Armendariz factor 1 requires that the agreement provide for a “neutral arbitrator[].” (Id.) Armendariz factor 2 and 3 requires that the arbitration agreement “provide for more than minimal discovery” and that the arbitrator issue a written opinion. (Id.) Armendariz factor 4 requires that the agreement provide for all the types of relief that would otherwise be available in court. (Id.) Finally, Armendariz factor 5 provides that the agreement must not “require employees to pay either unreasonable costs or any arbitrators’ fees or expenses as a condition of access to the arbitration forum.” (Id.)

Upon review and consideration of the Agreement at issue, the Agreement’s terms comply with those outlined in Armendariz. To the extent it is silent, the Court in Armendariz expressly held that its elements are interpreted into an arbitration agreement covering FEHA claims. (Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83, 106-07.)

Plaintiff’s remaining arguments are unavailing. Plaintiff has failed to identify any specific provision of the Agreement that is substantively unconscionable. Finally, Plaintiff’s general and unsupported concerns that JAMS (and its arbitrators) are biased against her or employees is not grounds to set aside the agreement. This court is aware of no authority suggesting otherwise.

Judge of the Superior Court

FN 1 - Defendants also argue that Plaintiff should be estopped from denying the existence of the arbitration agreement because she was the one who initially filed a demand for arbitration. This contention is a fair one, although the authorities supporting estoppel in the same context are scarce. Because the court finds the existence of a valid agreement to arbitrate that requires compelling the matter to arbitration, it ultimately need not decide that issue.

Any party may submit on the tentative ruling by contacting the courtroom via email at Smcdept49@lacourt.org by no later than 4:00 p.m. the day before the hearing. All interested parties must be copied on the email. It should be noted that if you submit on a tentative ruling the court will still conduct a hearing if any party appears. By submitting on the tentative you have, in essence, waived your right to be present at the hearing, and you should be aware that the court may not adopt the tentative, and may issue an order which modifies the tentative ruling in whole or in part.