Raul Moreno v. Design Masonry, Inc.

MOTION TO COMPEL ARBITRATION

 

MOVING PARTY: Defendants Design Masonry, Inc.

RESPONDING PARTY(S): Plaintiff Raul Moreno

STATEMENT OF MATERIAL FACTS AND/OR PROCEEDINGS:

Plaintiff Raul Moreno worked as a stone mason for Defendant Design Masonry, Inc. Plaintiff suffers from a speech impairment caused by a congenital cleft palate. Plaintiff alleges that Defendant terminated his employment after Plaintiff complained that a coworker had continuously mocked his speech impairment. Plaintiff brings causes of action for (1) disability discrimination, (2) disparate treatment, (3) failure to accommodate, (4) failure to engage in the interactive process, (5) retaliation, (6) wrongful termination, and (7) failure to prevent harassment, retaliation, and discrimination.

Defendant now moves for an order compelling Plaintiff to arbitrate the dispute pursuant to CCP § 1281 et seq.  Plaintiff opposed.

TENTATIVE RULING:

Defendant’s Motion to Compel Arbitration is GRANTED.  The action is stayed pending the results of the arbitration.

A Status Review/OSC re: Dismissal is set for February 7, 2025, at 8:30 a.m.

Defendant to give notice, unless waived.

DISCUSSION:

Motion to Compel Arbitration

1. Evidentiary Objections

Plaintiff submits evidentiary objections to portions of Defendant’s evidence, including the evidence Defendant submitted in reply. 

This Court is unaware of any legal authority which requires a court to rule on evidentiary objections on a motion, except as to a motion for summary motion/adjudication (CCP § 437c (q)] or a special motion to strike (CCP § 425.16 (b)(2)); see also, Sweetwater Union High School Dist. v. Gilbane Building Co. (2019) 6 Cal.5th 931, 947-949.)

As such, this court respectfully declines to rule on these objections.  This court is well aware of the rules of evidence, and to how much weight, if any, should be given to any of the proposed evidence.

Regarding the reply evidence, this court is aware that as a general rule, new evidence may not be submitted in reply. But “a trial court may properly consider new evidence submitted with a reply brief ‘so long as the party opposing…has notice and an opportunity to respond to the new material.’” (Wall St. Network, Ltd. v. New York Times Co. (2008) 164 Cal. App. 4th 1171, 1183.) Plaintiff will be given the opportunity to address the “new evidence” at the hearing, as necessary.  A continuance may be appropriate, if requested and needed.

2. Legal Standard

“[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.)

3. Analysis 

A. The FAA Applies

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.)

Defendant Design Masonry, Inc., submits a declaration from its President, Scott Floyd. Floyd attests that DMI is involved in marketing, communications, and customer retention through instrumentalities of interstate commerce such as the internet, cellular networks, postal services, and land lines.” (Floyd Decl. ¶ 6.) He attests that DMI works with “various vendors, developers, builders, and general contractors, and 25% of these entities have offices out of state and overseas.” (Id.) Moreover, DMI currently has between 10 and 20 clients that are headquartered outside of California and operate across state lines.” (Id.) The company also employs over 100 field workers. (Id.)

In opposition, Plaintiff does not dispute that Defendant is involved in interstate commerce.  Considering the evidence, Defendant has evidenced a transaction involving commerce. 

Finally, the Agreement itself provides: “This Agreement…shall be governed by the Federal Arbitration Act (the FAA) and cases decided thereunder…” (D’ Exh. A, ¶ 8, “Governing Law; Davis v. Shiekh Shoes, LLC (2022) 84 Cal. App. 5th 956, 963 [finding the FAA applies “if it is so stated in the agreement.”].)

Accordingly, this court will consider and apply the FAA, where necessary. 

B. Existence of Arbitration Agreement

1. Defendant’s Initial Burden

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.)

Defendant presents evidence that Plaintiff hand-signed an agreement to arbitrate at the beginning of his employment on March 29, 2021. (D’s Exh. A.) In its moving papers, Defendant submits a declaration from its “Payroll Administrator,” Amanda Lozano. (Lozano Decl. ¶ 2.) Lozano attests that Plaintiff came to the company building at the time of his hiring, at which point Nellie Anaya, the front desk administrator, presented Plaintiff with the Arbitration Agreement in English and Spanish. (Id. ¶ 5.) Plaintiff proceeded to sign and date the Arbitration Agreement, among other onboarding documents. (Id.) Once Anaya informed Lozano that all documents were signed, Lozano “then entered the room [to] introduce [herself] to the Plaintiff,” and “reviewed his signature and date on signature block to make sure that the Arbitration Agreement was executed properly, which it was.” (Id. ¶ 5.)

Defendant also submits a declaration from Ms. Anaya (married name, “Nellie Robles) in reply. Ms. Anaya confirms she was the receptionist who assisted with Plaintiff’s onboarding process. (Robles Decl. ¶ 4.) She states that Plaintiff was “very familiar with the hiring process and the documents he needed to sign” since he had worked for Defendant before. (Id.) Anaya presented Plaintiff with the onboarding documents, including the arbitration agreement. (Id.) Plaintiff signed them and gave them back to Anaya, who then immediately reviewed the arbitration agreement and confirmed Plaintiff signed it. (Id.) Anaya then informed Amanda Lozano that Plaintiff had signed his onboarding documents. (Id.) 

Considering this evidence, this court finds that Defendant has established prima facie evidence of an agreement to arbitrate. 

2. Plaintiff’s Burden

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 states that he “did not sign” the purported arbitration agreement. (Moreno Decl. ¶ 2.) He continues that the signature on the agreement “is not [his].” (Id. ¶ 3.) Plaintiff attests that the arbitration agreement was “not among the documents [he] was given” to sign, and that if he “had been presented these documents, [he] would have refused to sign them.” (Id.)  [FN 1]

Plaintiff also submits a declaration from Beth Chrisman, a “court qualified expert witness in the field of questioned documents.” (Chrisman Decl. ¶ 1.) Using the unaided eye and computerized enlargements, Chrisman reviewed “known documents” signed by Plaintiff, and compared them to the Arbitration Agreements produced both before and after the start of litigation. (Id. ¶ 8.) 

Based on her review, Chrisman is ultimately “inconclusive as to whether or not Raul Moreno signed the questioned signatures.” (Id. ¶ 10(g).)

Considering the above evidence, Plaintiff has met his prima facie burden to challenge the authenticity of the agreement.

3. Defendant’s Final Burden

This places the final burden on Defendants to “establish with admissible evidence a valid arbitration agreement between the parties.” (Gamboa, supra, 72 Cal. App. 5th at 165.) In determining whether Plaintiff signed the agreement by a preponderance of the evidence, this court must necessarily sit as the trier of fact and resolve evidentiary conflicts.  (Giuliano v. Inland Empire Personnel, Inc. (2007) 149 Cal.App.4th 1276, 1284). 

Defendant initially presented Plaintiff’s counsel with an arbitration agreement signed and dated by Plaintiff, and also signed by DMI President Scott Floyd. However, the date box next to Floyd’s signature was blank. (Gordon Decl. ¶ 2, Exh. A.) 

However, the arbitration agreement produced by Defendant with the moving papers is now dated next to Floyd’s signature. In a supplemental declaration, DMI President Scott Floyd attests that he “inadvertently” failed to date his wet signature when he signed the arbitration agreement on DMI’s behalf on March 29, 2021. (Floyd Supp. Decl. ¶ 3.) After realizing this “clerical error” in September of 2023, Floyd gave a DMI manager consent to add the date “3/29/2021” to the arbitration agreement. (Id.) “The purpose [of] adding the correct date next to my wet signature,” Floyd attests, “was only to correct this clerical error to memorialize what had already been agreed to by Plaintiff and DMI on March 29, 2021, and there was no underlying intent to defraud Plaintiff or any other party with this act.” (Id.)

Here, it is of little consequence that Defendant added the date to the arbitration agreement after litigation began.  [FN 2]  While this court does not recommend or condone the modification of documents, this alteration does not render the agreement invalid. Indeed, even an employer’s complete failure to sign an arbitration agreement does not preclude its enforcement where the employer’s agreement to arbitrate is evidenced by the use of the employer's letterhead and the agreement's reference to the employer by name. (See Davis v. Kozak (2020) 53 Cal.App.5th 897, 915.) Ultimately, “it is not the presence or absence of a signature which is dispositive; it is the presence or absence of evidence of an agreement to arbitrate which matters.” (Banner Entertainment, Inc. v. Superior Court (1998) 62 Cal.App.4th 348, 361.)

Plaintiff’s strongest evidence against enforcement is his flat contention that Defendant never gave him the arbitration agreement, that he did not sign and arbitration agreement, and that he would not have signed an arbitration agreement had he been presented with one. (Moreno Decl. ¶¶ 2, 3.) The court has considered this evidence and given it its due weight.

But this evidence must be weighed against Defendant’s evidence, which this court finds more credible. 

Nelly Anaya and Amanda Lozano, both of whom were present on the day Plaintiff signed the agreement, state they reviewed Plaintiff’s signature on the arbitration agreement nearly contemporaneously to the time he signed it. (Anaya Decl. ¶ 4 [“I personally reviewed the Arbitration Agreement immediately after he handed it to me and saw Plaintiff Raul Moreno's wet signature on the signature block”]; Lozano Decl. ¶ 5 [“I then entered the room [to] introduce myself to the Plaintiff, and “reviewed his signature and date on signature block to make sure that the Arbitration Agreement was executed properly, which it was.”].) 

Moreover, the declaration from Plaintiff’s expert does little to help Plaintiff. Ms. Chrisman is “inconclusive as to whether or not Raul Moreno signed the questioned signatures.” (Chrisman Decl. 10(g).) In other words, she cannot say that the signature on the arbitration agreement is not Plaintiff’s.

Based on a preponderance of the evidence and the totality of the circumstances, this court finds that Defendants have met their burden to “establish with admissible evidence a valid arbitration agreement between the parties.” (Gamboa, supra, 72 Cal. App. 5th at 165.) 

C. Plaintiff’s Unconscionability Defense to Enforcement

Plaintiff also 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.)

1. Procedural Unconscionability

First, Plaintiff argues the agreement is procedurally unconscionable because it was a contract of adhesion.  “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.” [Citation]. (Id. at 113).

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.) 

Defendant’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 AAA rules could be accessed on the internet.  (Id.)

2. Substantive Unconscionability

First, Plaintiff argues the agreement is substantively unconscionable because the AAA rules, which are incorporated into the agreement, limit discovery.

In Armendariz, the California Supreme Court outlined five elements that must be present in an arbitration agreement in order to avoid substantive unconscionability, including that it “provide for more than minimal discovery.” (Armendariz, supra, 24 Cal.4th 83, 114.)

This court is unaware of any authority holding that the AAA rules unconscionably limit discovery in violation of Armendariz. Therefore, this argument fails.

Next, Plaintiff argues the agreement is substantively unconscionable because it gives the arbitrator “discretion to award the prevailing party reasonable costs and attorney fees in bringing or defending an action under this agreement.” (D’s Exh. A, ¶ 4). 

However, Plaintiff omits the second half of the provision, which limits the arbitrator’s authority to award fees and costs to the “extent allowed by law.” (Id.) Thus, the arbitrator’s ability to award fees and costs is limited by FEHA or other governing law. 

Therefore, Plaintiff has established little to no substantive unconscionability.  Under the sliding scale approach, Plaintiff has not established the Agreement is unconscionable.

Accordingly, Defendant’s Motion to Compel Arbitration is GRANTED. The action is stayed pending the results of the arbitration.

A Status Review/OSC re: Dismissal is set for February 7, 2025, at 8:30 a.m.

IT IS SO ORDERED.

Dated:   February 8, 2024 ___________________________________

Judge of the Superior Court

FN 1- To be frank, this Court typically views these types of self-serving statements with skepticism.  First, most people do not carefully read everything in documents which they sign.  We essentially act like robots signing most things that are put in front of us, including checking boxes on a computer screen acknowledging that we have “read and accept all terms and conditions.”  Moreover, most people applying for a job do not care about an arbitration clause.  They just want the job.   They rarely say: “Hell no.  I ain’t signing this arbitration clause.  You can take this job and shove it!”  Nevertheless, as will be discussed infra, this Court did consider the Plaintiff’s declaration and gave it the weight it deserved in view of the totality of the circumstances.

FN 2- It is also a great leap to suggest that Defendant having backdated the arbitration agreement suggests that Defendant must have also forged Plaintiff’s signature and submitted multiple perjurious declarations in support of this motion.  People do sometimes date documents after the fact.  However, that is certainly different than blatantly forging the signature.  Be that as it may, this Court did consider that possibility.