Judge Randolph M. Hammock, Case Number: 24STCV33981, Date: 2025-04-16 Tentative Ruling

Judge: Randolph M. Hammock, Case: 24STCV33981, Date: 2025-04-16 Tentative Ruling

“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.)

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 provides a declaration from Adriana Ortiz, its Corporate Human Resources Manager. (Ortiz Decl. ¶ 1.) Ortiz has reviewed Plaintiff’s personnel file maintained in the regular course of business. (Id. ¶¶ 2-5.) Ortiz attests that Plaintiff signed an Agreement to Arbitrate Disputes on January 29, 2015. (Id. ¶ 6, Exh. A.) In relevant part, the Agreement Provides:

Employer and Employee agree that any claim, complaint, or dispute that cannot be resolved informally through the Preliminary Internal Grievance Procedure, or otherwise, that relates in any way to the Parties’ employment relationship, whether based in contract, tort, statute, fraud, misrepresentation or any other legal theory, shall be submitted to binding arbitration…

The arbitration agreement defines “covered disputes” to include “disputes Employee may have against Employer or against its officers, directors, supervisors, managers, employees, or agents in their capacity as such or otherwise, or that Employer may have against Employee.” (Ortiz Decl. ¶ 6, Exh. A, ¶ 5 [emphasis added].)

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 argues that evening assuming an agreement to arbitrate exists, it 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 Arbitration Agreement is procedurally unconscionable because it was a contract of adhesion—that is, mandatory and non-negotiable. “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).

On the date Plaintiff signed the agreement, he attests that he and “approximately thirty (30) other employees” were “called into a mandatory meeting at approximately 5:00 am.” (Carrera Decl. ¶ 3.) “At that meeting, Defendants handed [him] a series of multi-page documents and stated that [he] was required to sign them if [he] wanted to keep [his] job.” (Id. ¶ 4.) Defendants provided him “with no time to take the documents home, review them, or to ask any questions about the same. [¶] Defendants refused to explain what the documents meant as well as what the legal consequences of signing them would be. [He] was only provided with approximately ten (10) minutes to look over the numerous documents before [he] was required to leave to make it to [his] job site on time.” (Id. ¶ 5.) Plaintiff was not provided a copy of the arbitration rules, nor an opportunity to consult an attorney. (Id. ¶¶ 6-8.) Plaintiff concludes: “I only signed the agreement…because it was clear to me that I would be terminated if I failed to do so then and there.” (Id. ¶ 9.)

Based on the circumstances, the court agrees with Plaintiff that the dynamic demonstrates a classic contract of adhesion. 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 Defendant’s failure to present Plaintiff with the governing arbitration rules points to further procedural unconscionability, resulting in undue “surprise.” The employer’s failure to attach the arbitration rules to the agreement, however, is not dispositive. (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 arbitration provider’s rules could be accessed on the internet. (Id.)

Here, the arbitration agreement provided a “UHL” link to the ADR Services rules online. At most, the failure to attach the governing rules directly to the agreement adds only slight procedural unconscionability to that already existing based on the adhesive nature.

Next, Plaintiff argues the agreement is substantively unconscionable because it lacks mutuality. Plaintiff contends that “the listed claims are exclusively those that only employees would assert against employers, such as wage and hour violations, discrimination, harassment, wrongful termination, and violations of the California Labor Code,” but “[n]owhere does the agreement identify any claims an employer would realistically bring against an employee that would be subject to arbitration.” (Opp. 8: 20-24.)

The court does not agree that the agreement lacks mutuality. The only claims expressly excluded from the arbitration agreement are “claims for workers’ compensation, unemployment compensation benefits, or any other claims that, as a matter of law, the Parties cannot agree to arbitrate.” (Ortiz Decl. ¶ 6, Exh. A, ¶ 6.) The agreement otherwise applies broadly to “all grievances, disputes, claims, or causes of action” arising out of the employment relationship. (Ortiz Decl. ¶ 6, Exh. A, ¶ 5.) The arbitration agreement (and claims excluded) are distinguishable from those that other courts have found substantively unconscionable. (See Martinez v. Master Prot. Corp. (2004) 118 Cal. App. 4th 107, 115 [provision of arbitration agreement was substantively unconscionable where it excluded “claims involving trade secrets, misuse or disclosure of confidential information, and unfair competition,” which “typically are asserted only by employers”].) The agreement is therefore mutual.

Second, Plaintiff argues the agreement does not provide for adequate discovery. Plaintiff asserts that the ADR Services Arbitration Rules, which govern in the arbitration, grants the arbitrator discretion to allow or disallow depositions. ADR Services Arbitration Rules, Rule 22(a), provides depositions “shall not be taken unless leave to do so is first granted by the arbitrator(s) as deemed necessary to a full and fair exploration of the issues in dispute.” (Anavim Decl., ¶ 3, Exh. 2, p. 13-14.)

Under Armendariz, an arbitration agreement need only “provide for more than minimal discovery.” (Armendariz, supra, 24 Cal.4th at p. 102.) Here, this court is unaware of any authority holding that the discretion vested within arbitrators under the ADR rules is substantively unconscionable. So long as the depositions sought are “necessary to a full and fair exploration of the issues in dispute,” they are permitted. (Id.) The ADR rules otherwise mirror California law, as they grant the parties the “right to obtain discovery and to use and exercise the same rights, remedies, and procedures, and be subject to the same duties, liabilities, and obligations in the arbitration as if the subject matter of the arbitration were pending before a superior court of California, other than a limited civil case.” (Id.) Therefore, the parties are afforded “more than minimal” discovery.

Finally, Plaintiff argues the agreement is unconscionable because it incorporates an unconscionable confidentiality provision. ADR Services Inc.’s rule 36 provides that the “case management team, other essential ADR Services staff, and the arbitrator shall maintain the confidential nature of the arbitration proceeding and the Award unless otherwise required by law or judicial decision.” (Anavim Decl., ¶ 3, Exh. 2). Plaintiff asserts this Rule “prevents Plaintiff from conducting informal discovery via informal interviews, requires Plaintiff to expend more costs via depositions, and chills Plaintiff from exercising his civil and statutory rights.” (Opp. 10: 12-13.)

Not so. Unlike in Ramos, in which the confidentiality clause required the arbitrator and parties to keep the arbitration confidential, ADR Rule 36 here requires that only the arbitrator and ADR staff keep the arbitration confidential. (Ramos v. Superior Court (2018) 28 Cal.App.5th 1042.) It does not require the parties to maintain the same confidences. Nothing about this Rule will inhibit Plaintiff’s discovery or chill his rights.

Therefore, Plaintiff has not established any substantive unconscionability. Under the sliding scale approach, the slight procedural unconscionability alone is not sufficient to invalidate the agreement. Therefore, the agreement is enforceable.

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.