Jasmine Estrada v. Quest Diagnostics Incorporated, et al.

MOTION TO COMPEL ARBITRATION

 

MOVING PARTY: Defendant Quest Diagnostics Incorporated

RESPONDING PARTY(S): Plaintiff Jasmine Estrada

STATEMENT OF MATERIAL FACTS AND/OR PROCEEDINGS:

Plaintiff Jasmine Estrada brings this action against her former employers, Defendants Quest Diagnostics Incorporated, Quest Diagnostics Nichols Institute, Quest Diagnostics Clinical Laboratories, Inc., and Quest HealthConnect, LLC. Plaintiff alleges she experienced harassment and discrimination at work based on her sex and gender, and was then subjected to a retaliatory and discriminatory constructive discharge after complaining of same. Plaintiff brings causes of action against Defendants for (1) Hostile Work Environment Harassment in Violation of FEHA; (2) Retaliation in Violation of FEHA; (3) Discrimination in Violation of FEHA; and (4) Wrongful Termination in Violation of Public Policy.

Defendant Quest Diagnostics Inc. now moves to compel 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 March 13, 2025 at 8:30 a.m.

Defendant to give notice.

DISCUSSION:

Motion to Compel Arbitration

I. Judicial Notice

Each party asks the court to take judicial notice of various trial court rulings or records. With certain exceptions, not applicable here, the Rules of Court generally prohibit judicial notice of unpublished opinions. (See Cal. Rules of Court, rule 8.1115(a); see also Hernandez v. Restoration Hardware, Inc. (2018) 4 Cal. 5th 260, 269.)  Trial court opinions are unpublished and have no precedential value.  (Neary v. Regents of Univ. of Calif. (1992) 3 Cal.4th 273, 282.)

Therefore, all requests for judicial notice are DENIED.

II. Objections to Evidence

Defendant has submitted objections to Plaintiff’s evidence.

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.

III. Legal Standard

“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.)

IV. 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, as moving party, has not presented evidence or argument demonstrating the FAA should apply here. Be that as it may, the Arbitration Agreement itself states that the “Agreement is governed by the Federal Arbitration Act.” (Harvey Decl. 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.”].)

 Plaintiff apparently does not dispute that the FAA applies here. Accordingly, this court will consider and apply the FAA, where necessary. 

B. Delegation Clause

As a threshold issue, Defendant argues the question of arbitrability should be determined by the arbitrator. The Agreement provides that “[e]xcept as it relates to Excluded Claims, the parties agree to submit to the arbitrator any disputes regarding issues of arbitrability, the validity, scope, and enforceability of this Agreement, and his or her Jurisdiction.” (Harvey Decl. Exh. 1, p. 3.) Defendant also relies on the Agreement’s incorporation of the AAA rules, which grant authority to the arbitrator to rule on his or her own jurisdiction.

Despite this language seemingly delegating the arbitration question to the arbitrator, the Ending Forced Arbitration Act specifically provides that the enforceability of an agreement to arbitrate “shall be determined by a court, rather than an arbitrator…[,] irrespective of whether the agreement purports to delegate such determinations to an arbitrator.” (9 U.S.C. § 402(b) [emphasis added].)

Here, Plaintiff has raised the EFAA as a defense to arbitration. Therefore, the applicability of the EFAA to the agreement to arbitrate must be addressed by this court, not the arbitrator.

However, the result may be different as to the limited issue of the unconscionability defense. “Under California law, it is presumed the judge will decide arbitrability, unless there is clear and unmistakable evidence the parties intended the arbitrator to decide arbitrability.” (Nelson v. Dual Diagnosis Treatment Center (2022) 77 Cal.App.5th 643, 654.) 

Here, the delegation clause, which grants the authority to the arbitrator to decide any disputes as to the “enforceability of this Agreement,” is “clear and unmistakable evidence” that the parties intended that an arbitrator address any defenses to enforcement. 

Moreover, the Agreement incorporates and provided Plaintiff a copy of the AAA rules, which at minimum appears to be a factor further supporting this point. (See Brennan v. Opus Bank (9th Cir. 2015) 796 F.3d 1125, 1130 [“we hold that incorporation of the AAA rules constitutes clear and unmistakable evidence that contracting parties agreed to arbitrate arbitrability”]; but see Beco v. Fast Auto Loans, Inc. (2022) 86 Cal. App. 5th 292, 305 [incorporation by reference of the AAA rules, at least not without providing a copy of the rules, does not meet the “clear and unmistakable test”].)

Based on these considerations, this court concludes the parties delegated the question of unconscionability to the arbitrator, and that the EFAA does not interfere with that delegation. Be that as it may, this court continues to address the unconscionability defense in section (D)(2), infra, for purposes of discussion, or alternatively, in case this conclusion is incorrect.

C. Existence of Agreement to Arbitrate 

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 submits a declaration from Jolee A. Harvey, Quest’s current Senior Manager, Talent Acquisition Operations and former Manager, Human Resources Service Center. (Harvey Decl. ¶ 1.) At the time of Plaintiff’s hiring, Defendant used the Cornerstone OnDemand onboarding software “to facilitate its recruiting, hiring, and talent management functions.” (Id. ¶ 2.) In Cornerstone, employment applicants created a personal and private account with a unique login and password. (Id. ¶ 3.) If successful, Quest then sent all applicants onboarding documents through Cornerstone, including an arbitration agreement. (Id.) 

Harvey attests that Plaintiff was offered employment through her Cornerstone account on July 20, 2020. (Id. ¶ 5.) Quest sent the onboarding documents, including the standalone Arbitration Agreement, through Cornerstone thereafter. (Id. ¶¶ 6, 7.) On July 22, 2020, at 2:31 p.m., Plaintiff electronically signed the Arbitration Agreement. (Id. ¶ 8., Exh. A, B.) Although the Agreement provided Plaintiff the opportunity to “opt-out” of the Agreement, Plaintiff never did so. (Id. ¶¶ 9, 10; Exh. A.)

By electronically signing the Agreement, Plaintiff agreed to arbitrate “any claim, dispute, or controversy that either [she] may have against the Company, or which the Company may have against [her], arising from, related to, or having any relationship or connection whatsoever with” her employment. (Harvey Decl. Exh. 1, ¶ A.) Because of the broad nature of the agreement, it plainly 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 her opposition, Plaintiff apparently concedes that she received and signed the Arbitration Agreement. (Estrada Decl. ¶¶  2-6.) Considering this evidence, Defendant has met its initial burden to produce a written agreement to arbitrate the controversy. The court now turns to any defenses to enforcement.

D. Defenses to Enforcement

1. Forced Arbitration of Sexual Assault Claims

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.) It “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.) 

The Act provides that “at the election of the person alleging conduct constituting a sexual harassment dispute or sexual assault dispute,…no predispute arbitration agreement or predispute joint-action waiver shall be valid or enforceable with respect to a case which is filed under Federal, Tribal, or State law and relates to the sexual assault dispute or the sexual harassment dispute.” (9 U.S.C. §§401(a).) Therefore, when considering if this action invokes the EFAA, this court must determine if Plaintiff has “alleg[ed] conduct constituting a sexual harassment dispute.” (9 U.S.C. 402(a).)

As relevant here, the Act defines “sexual harassment dispute” as “a dispute relating to conduct that is alleged to constitute sexual harassment under applicable Federal, Tribal, or State law.” (9 U.S.C. § 401(4).)

It is critical to look to the allegations in Plaintiff’s complaint. “ ‘It is an elementary principle of modern pleading that the nature and character of a pleading is to be determined from its allegations, regardless of what it may be called, and that the subject matter of an action and issues involved are determined from the facts alleged rather than from the title of the pleadings....' ” (Jaffe v. Carroll (1973) 35 Cal.App.3d 53, 57, quoting from McDonald v. Filice (1967) 252 Cal.App.2d 613, 622; Ameron Internat. Corp. v. Insurance Co. of State of Pennsylvania (2010) 50 Cal.4th 1370, 1386 [in construing a complaint, courts must “emphasiz[e] substance over form”].)

Here, Plaintiff alleges that she “faced recurrent mistreatment and harassment on the bases of her sex and gender.” (Compl. ¶ 18.) “The harassing conduct included but was not limited to pay inequity based on sex and gender, a sex-based double standard for employee discipline, having her job conditioned on not discussing sex-based pay inequalities at work, unfavorable schedules and assignments based on sex and gender, and overt and repeated retaliation for opposing sex harassment and discrimination.” (Id. [emphasis added].) 

In essence, Plaintiff alleges a “double standard” in the workplace, where men received more favorable treatment then women. (Id. ¶ 20.) On these allegations—viewed in context with the EFAA—Plaintiff has not “alleg[ed] conduct constituting a sexual harassment dispute.” (9 U.S.C. § 402(a).) Instead, she has alleged discriminatory and retaliatory practices in Defendant’s routine personnel management based on sex. 

California law distinguishes between discrimination and harassment.  [FN 1]  And this distinction—though it might feel like splitting hairs at times—is an important one, especially considering the nature of the EFAA. “[D]iscrimination refers to bias in the exercise of official actions on behalf of the employer, [whereas] harassment refers to bias that is expressed or communicated through interpersonal relations in the workplace.” (Roby v. McKesson Corp. (2009) 47 Cal. 4th 686, 707.) In other words, “commonly necessary personnel management actions…may retrospectively be found discriminatory if based on improper motives, but in that event the remedies provided by the FEHA are those for discrimination, not harassment.” (Id.) Harassment, on the other hand, “focuses on situations in which the social environment of the workplace becomes intolerable because the harassment (whether verbal, physical, or visual) communicates an offensive message to the harassed employee.” (Id.)

Were this court to adopt Plaintiff’s broad reading of the statute, nearly any claim for discrimination or harassment based on gender would be immune from arbitration. This court suspects that if the legislature intended such a sweeping result, it would have clearly said so. (People v. McHenry (2000) 77 Cal. App. 4th 730, 732 [“When interpreting a statute [the court’s] primary task is to determine the Legislature’s intent”].)

Therefore, this matter is not barred from arbitration under the FAA, and any doubts as to that conclusion must be resolved in favor of arbitration. (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”].)  

2. Unconscionability

Plaintiff also argues the Agreement should be disregarded based on principles of unconscionability.  As discussed previously, the delegation clause in the parties’ agreement delegates this question to the arbitrator. Be that as it may, this court continues with its analysis for discussion purposes, or alternatively, in case its interpretation of the delegation clause is incorrect.

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.)

i. 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.) 

ii. Substantive Unconscionability

Plaintiff also argues the agreement is substantively unconscionable because it lacks mutuality. As discussed earlier, the arbitration agreement covers “any claim, dispute, or controversy that either [Plaintiff] may have against the Company, or which the Company may have against [Plaintiff]…” (Harvey Decl. Exh. 1, ¶ A.) This broad provision goes both ways: it requires arbitration of claims Plaintiff has against the employer, and claims the employer has against Plaintiff. 

However, the agreement goes a step further by containing certain “carve-outs” for claims that are more likely to be brought by an employer than an employee, such as those involving trade secrets, confidential information, or intellectual property. Addressing a similar “carve-out” provision, the Court of Appeal has explained:

This provision of the arbitration agreement is substantively unconscionable. It requires employees to arbitrate the claims they are most likely to assert against FireMaster, while simultaneously permitting FireMaster to litigate in court the claims it is most likely to assert against its employees. Claims for unpaid wages, wrongful termination, employment discrimination and the like invariably are brought by employees, while claims involving trade secrets, misuse or disclosure of confidential information, and unfair competition typically are asserted only by employers

(Martinez v. Master Prot. Corp. (2004) 118 Cal. App. 4th 107, 115.)

Based on this authority—which Defendant does not address or distinguish—the inclusion of this carve-out provision points to a finding of some substantive unconscionability. 

Next, Plaintiff argues the agreement is substantively unconscionable because it includes a “confidentiality clause.” The Agreement provides that “[t]he proceedings, evidence, and final results of any such arbitration shall be private and confidential.” (Harvey Decl., Exh. A, p. 1.)

Courts have concluded that confidentiality provisions in arbitration agreements can be substantively unconscionable. (See, e.g., Davis v. O'Melveny & Myers, 485 F.3d 1066, 1078 (9th Cir. 2007).) In Davis, the Ninth Circuit explained:

Such restrictions would prevent an employee from contacting other employees to assist in litigating (or arbitrating) an employee's case. An inability to mention even the existence of a claim to current or former O'Melveny employees would handicap if not stifle an employee's ability to investigate and engage in discovery. The restrictions would also place O'Melveny “in a far superior legal posture” by preventing plaintiffs from accessing precedent while allowing O'Melveny to learn how to negotiate and litigate its contracts in the future. [Citation]. Strict confidentiality of all “pleadings, papers, orders, hearings, trials, or awards in the arbitration” could also prevent others from building cases.

(Id.)

Based on the above analysis, the court concludes that the agreement contains two unconscionable terms: the confidentiality provision and the carve-out provision.

“Civil Code section 1670.5, subdivision (a) states that ‘[i]f the court as a matter of law finds the contract or any clause of the contract to have been unconscionable at the time it was made the court may refuse to enforce the contract, or it may enforce the remainder of the contract without the unconscionable clause, or it may so limit the application of any unconscionable clause as to avoid any unconscionable result.’ The Supreme Court has interpreted this provision to mean that if a trial court concludes that an arbitration agreement contains unconscionable terms, it then “must determine whether these terms should be severed, or whether instead the arbitration agreement as a whole should be invalidated.” (Lange v. Monster Energy Co. (2020) 46 Cal. App. 5th 436, 452–53.) “[T]he presence of multiple unconscionable clauses is merely one factor in the trial court's inquiry; it is not dispositive. [Citation.] That an agreement can be considered permeated by unconscionability if it contains more than one unlawful provision does not compel the conclusion that it must be so. (Lange v. Monster Energy Co. (2020) 46 Cal. App. 5th 436, 454.)

Here while the Agreement arguably contains two unconscionable portions, it is not “permeated” with unconscionability. (Lange, supra, 46 Cal. App. 5th at 454.) Notably, the Agreement still provides for a neutral arbitrator, a written opinion, and that Defendant will cover the “arbitrator’s fees and expenses and any AAA administrative fees.” (Harvey Decl., Exh. A, p. 2.) 

Severance of the unconscionable provisions will therefore have minimal impact on the parties’ rights or the Agreement as a whole. It is therefore consistent with the parties’ expectations—and the strong policy favoring arbitration to resolve disputes—that the agreement to arbitrate be enforced as modified.

The court therefore finds it appropriate under these circumstances to sever the unconscionable provision and enforce the agreement as modified. Once accounting for the severed portion, Plaintiff has established little, if any, 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 March 13, 2025 at 8:30 a.m.

Defendant to give notice.

IT IS SO ORDERED.

Dated:   March 13, 2024 ___________________________________