Judge Randolph M. Hammock, Case Number: 23STCV26979, Date: 2024-02-28 Tentative Ruling

Judge: Randolph M. Hammock, Case: 23STCV26979, Date: 2024-02-28 Tentative Ruling

Plaintiff Marco Antonio Arzate brings this action against Defendant Golden State Foods Corp. (“GSF”) and various GSF employees. Plaintiff, who worked for GSF as a Maintenance Mechanic, alleges he suffered from a physical disability from injuries sustained at work. Plaintiff also alleges he faced sexual harassment from coworkers, which he reported to GSF. Plaintiff alleges Defendant GSF wrongful terminated his employment because of his physical disability and/or complaints of sexual harassment.

“Under the FAA, there is a strong policy favoring arbitration. [Citations.] ‘The overarching purpose of the FAA is to ensure the enforcement of arbitration agreements according to their terms ....’ [Citation.] Therefore, ‘[a]rbitration is a matter of consent ....’ [Citations.] [¶] ‘ “Although the FAA preempts any state law that stands as an obstacle to its objective of enforcing arbitration agreements according to their terms, ... we apply general California contract law to determine whether the parties formed a valid agreement to arbitrate their dispute.” ’ [Citations.]” (Barrera v. Apple Am. Grp. LLC (2023) 95 Cal. App. 5th 63, 76.) It is settled that “[u]nder both California and federal law, arbitration is strongly favored and any doubts concerning the scope of arbitrable issues should be resolved in favor of arbitration.” (Balandran v. Labor Ready, Inc. (2004) 124 Cal.App.4th 1522, 1527.)

California also 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.)

“[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.)

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.)

Arguing the transaction here involved commerce, Defendant presents evidence that GSF is a large supplier to the foodservice industry, currently servicing “200+ leading brand and 125,000+ locations nationally and globally.” (Goblowsky Decl. ¶ 3.) Defendants have therefore evinced a transaction involving commerce.

Second, the Arbitration Agreement itself states that the arbitration “shall comply with and be governed by the rules of the Federal Arbitration Act.” (Id., Exh. A; see Davis v. Shiekh Shoes, LLC (2022) 84 Cal. App. 5th 956, 963 [finding the FAA applies “if it is so stated in the agreement.”].)

Defendants have 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 submits a declaration from Teresa Goblowsky, GSF’s HR Supervisor at the City of Industry location. (Goblowsky Decl. ¶ 4.) Goblowsky conducts the “new hire orientation trainings” for employees of GSF. (Id. ¶ 5.)

Goblowsky attests that during Plaintiff’s new hire orientation training on October 2, 2019, she presented Plaintiff with the “At-Will Agreement” containing the arbitration provision. (Id. ¶ 6; Exh. A.) Plaintiff executed and returned the agreement that same day. (Id.)

Under the arbitration provision, Plaintiff agreed that “any controversy between [Plaintiff] and the Company involving the construction or application of any of the terms of this At-Will Agreement, or [Plaintiff’s] employment relationship with the Company, or any other workplace related matter, shall on written request of either party be submitted to Arbitration…” (Id. ¶ 6; Exh. A, ¶ 3.)

Considering this evidence, Defendant has met its initial burden to produce a written agreement to arbitrate the controversy. Because the agreement is broad, covering “any controversy” between the parties, the agreement covers Plaintiff’s claims here. (See Vianna v. Doctors’ Management Co. (1994) 27 Cal.App.4th 1186, 1189 [noting that “arbitration agreements should be liberally interpreted, and arbitration should be ordered unless the agreement clearly does not apply to the dispute in question”].)

In opposition, Plaintiff argues that arbitration is precluded by operation of the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021. (See 9 U.S.C. §§401 & 402; H.R. 4445.) In reply, Defendant argues the Act does not apply because the alleged sexual harassment occurred prior to the Act’s enactment date.

The Act “represent[s] the first major amendment of the Federal Arbitration Act,” and “voids predispute arbitration clauses in cases…involving sexual harassment allegations.” (Murrey v. Superior Ct. (2023) 87 Cal. App. 5th 1223, 1230.) A statutory note to the Act adds: “This Act, and the amendments made by this Act, shall apply with respect to any dispute or claim that arises or accrues on or after the date of enactment of this Act.” (Pub.L. No. 117-90, § 3, reprinted in notes foll. 9 U.S.C. § 401.)

While it is clear that the Act is “only applicable to cases filed after its enactment,” there exists “some debate about whether it matters when the underlying sexual harassment or assault took place.” (Murrey, supra, 87 Cal.App. 5th at 1235.) In Murrey, the Court of Appeal noted two opposing perspectives:

One federal court has resolved this question in favor of employers, holding the dispute or claim must arise after March 3, 2022, the date of the Act's enactment. (Steinberg v. Capgemini Am., Inc. (E.D.Pa. Aug. 16, 2022, Civ. A. No. 22-489) 2022 WL 3371323 pp. *2-3, 2022 U.S.Dist. Lexis 146014 p. *6.) The court reached this conclusion by relying on a marginal note to the Act which stated: “This Act, and the amendments made by this Act, shall apply with respect to any dispute or claim that arises or accrues on or after the date of enactment of this Act.” (Pub.L. No. 117-90, § 3, reprinted in notes foll. 9 U.S.C. § 401.)

On the other hand, one treatise proposes that because this marginal note is not included in the Act, it should be interpreted “as merely clarifying that the Act is inapplicable to claims already filed in arbitration.” (Laura Farley, Ending Forced Arbitration: Understanding the New Federal Law That Prohibits Mandatory Arbitration in Matters of Sexual Assault or Harassment (2022) 79 Bench & B. Minn. 26, 29.) “Giving any further weight to this marginal note yields results that are unintelligible and contrary to the purpose of this legislative effort. It is illogical to interpret the Act to conclude that Congress intended that someone sexually assaulted at work on March 2, 2022, would be forced to bring their claim in arbitration, whereas someone sexually assaulted the next day could pursue their claims in court.” (Ibid.)

Here, Plaintiff filed this action on November 2, 2023, well-after the Act’s March 2022 enactment date. However, this case falls into the grey area noted in Murrey, as the Complaint was filed after the Act’s enactment date, but the alleged harassment occurred prior to the enactment date.

More recently, the Court of Appeal addressed the issue in Kader v. S. California Med. Ctr., Inc. (2024) 317 Cal. Rptr. 3d 682, 688. There, the Court of Appeal held that “the date a dispute has arisen for purposes of the Act is a fact-specific inquiry in each case,” and affirmed based on the statutory note that the Act only applies to claims that “arise or accrue” on or after the effective date. (Id. at 690.) The Court reasoned that “[a]ll provisions enacted by Congress, including a provision codified as a statutory note, must be given equal weight regardless of their placement by the codifier.” (Id. [emphasis added].)

Plaintiff goes on to argue that even if this court finds “the date of the sexual harassment as determinative, the sexual harassment here continued after March 3, 2022 and through the date Arzate was terminated – March 22, 2022.” (Opp. 10: 13-15.) The court does not agree.

Here, Plaintiff was hired on October 3, 2019. (Compl. ¶ 12.) During Plaintiff’s employment, Defendant Yadar “sexually harassed Plaintiff by grabbing Plaintiff’s ass and moaning.” (Id. ¶¶ 19, 67, 73 [language in original].) Plaintiff was terminated on March 22, 2022. (Id. ¶ 13.)

In reply, Defendant submits a supplemental declaration from Teresa Goblowsky. [FN 1] Goblowsky attests that Plaintiff commenced FMLA leave on or about December 2, 2021, and did not return to work before his March 23, 2022, separation from the Company. (Goblowsky Decl. ¶ 8.)

Because the only sexual harassment alleged in the Complaint was that by coworker Defendant Yadar grabbing Plaintiff and moaning, this harassment presumably could not have occurred while Plaintiff was on FMLA leave. In other words, the alleged sexual harassment must have “accrued” sometime before December 2, 2021, which is clearly before the Act’s enactment date. Therefore, the Act does not apply to Plaintiff’s claims, and his claims for sexual harassment remain arbitrable.

Putting aside the Act, there is no blanket rule prohibiting the arbitration of tort claims involving alleged sexual misconduct. “Although the law favors contracts for arbitration of disputes between parties,’ there is no policy compelling persons to accept arbitration of controversies which they have not agreed to arbitrate.” (Victoria v. Superior Court (1985) 40 Cal.3d 734, 744, cleaned up.) When addressing the scope of an arbitration agreement, “[t]he 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.” (RN Sol., Inc. v. Cath. Healthcare W. (2008) 165 Cal. App. 4th 1511, 1523.)

Because the Arbitration Agreement here applies to tort claims arising out of the employment context, it is broad enough to cover 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”].)

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.)

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.)

Plaintiff also argues that Defendant’s failure to attach the FAA rules to the agreement lends a further finding of procedural unconscionability. However, this fact is of little consequence, and Plaintiff cites no authority requiring an employer to provide an employee with a copy of the FAA or any other controlling law or rules. (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 the AAA rules could be accessed on the internet. (Id.) Similarly, the provisions of the FAA can be readily found by an online search.

Plaintiff argues the agreement is substantively unconscionable because it lacks mutuality. The court disagrees. As discussed earlier, the arbitration agreement covers “any controversy between [Plaintiff] and the Company” and all “workplace related matter[s].” (Id. ¶ 6; Exh. A, ¶ 3.) This broad provision goes both ways: it requires arbitration of claims Plaintiff has against the employer, and claims the employer has against Plaintiff. Therefore, the agreement does not lack mutuality.

Judge of the Superior Court

FN 1 - 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; Jay v. Mahaffey (2013) 218 Cal.App.4th 1522, 1538-1538 [court can consider reply declarations that “fill[] gaps in the evidence created by the [plaintiff’s] opposition.” (Jay, supra, 218 Cal. App. 4th at 1538.) To the extent Plaintiff wishes to address the evidence submitted in the reply, he will have the opportunity to do so at the hearing.

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.