Judge Richard S. Whitney, Case 37-2023-00024023-CU-OE-CTL 2024-02-16 Tentative Ruling

Judge: Richard S. Whitney, Case: 37-2023-00024023-CU-OE-CTL, Date: 2024-02-16 Tentative Ruling

SUPERIOR COURT OF CALIFORNIA,

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HALL OF JUSTICE

TENTATIVE RULINGS - February 15, 2024

02/16/2024 10:30:00 AM C-68 COUNTY OF SAN DIEGO

JUDICIAL OFFICER:Richard S. Whitney

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Civil - Unlimited Other employment Motion Hearing (Civil) 37-2023-00024023-CU-OE-CTL GALLEGO VS DALTON MOTORS SD LLC [IMAGED] CAUSAL DOCUMENT/DATE FILED:

TENTATIVE RULING: DEFENDANTS DALTON MOTORS SD, LLC AND FRANK MOTORS, INC.'S AMENDED MOTION TO COMPEL ARBITRATION is GRANTED, on the condition identified below.

Defendants DALTON MOTORS SD, LLC ('DALTON') and FRANK MOTORS, INC. ('FRANK') (collectively 'Defendants') seek to compel Plaintiff ALFREDO GALLEGO's ('Plaintiff') individual PAGA claims and to stay the remaining representative PAGA claims.

CCP section 1281.2 provides: On petition of a party to an arbitration agreement alleging the existence of a written agreement to arbitrate a controversy and that a party thereto refuses to arbitrate such controversy, the court shall order the petitioner and the respondent to arbitrate the controversy if it determines that an agreement to arbitrate the controversy exists, unless it determines that: (a) The right to compel arbitration has been waived by the petitioner; or (b) Grounds exist for the revocation of the agreement. (c) A party to the arbitration agreement is also a party to a pending court action or special proceeding with a third party, arising out of the same transaction or series of related transactions and there is a possibility of conflicting rulings on a common issue of law or fact....

(CCP §1281.2.) The moving party must prove by a preponderance of the evidence the existence of the arbitration agreement and the dispute is covered by the agreement. (Rosenthal v. Great Western Fin.

Securities Corp. (1996) 14 Cal.4th 394, 413.) The burden then shifts to the resisting party to prove by a preponderance of the evidence a ground for denial, e.g., unconscionability. (Id.) Plaintiff first argues the Defendants do not have standing to bring this motion as they are not identified in the arbitration agreements. 'It is a basic rule of contract law that '[i]t is essential to the validity of a contract, not only that the parties should exist, but that it should be possible to identify them.' (Civ. Code, § 1558.)' (Westlye v. Look Sports, Inc. (1993) 17 Cal.App.4th 1715, 1728.) Westlye and Hernandez v. Meridian Management Services, LLC (2023) 87 Cal. App. 5th 1214, cited by Plaintiffs, deal with third-party beneficiary situations. Here, Defendants have demonstrated they can be identified as the arbitration agreements themselves identify it is between 'Company' and the employee as part of an employment relationship. Plaintiff does not dispute that it was possible to identify who his employers were nor that the agreements were signed at the time of Defendants' onboarding process. Plaintiff's argument fails.

Next, Plaintiff asserts Defendant should have brought two separate motions. The Court agrees, but finds Calendar No.: Event ID: TENTATIVE RULINGS

3073090 46 CASE NUMBER: CASE TITLE: GALLEGO VS DALTON MOTORS SD LLC [IMAGED] 37-2023-00024023-CU-OE-CTL it is not dispositive. Rather, Defendants should pay the Court another motion filing fee. As a condition of granting this motion, Defendants must remit payment to the Court for another motion filing fee.

Plaintiff also suggests that Defendants have not demonstrated that Plaintiff signed the arbitration agreements. In reply, Janice Rougas explains the new hire process, which includes the fact the signed agreements are kept in the ordinary course of business, new employees are required to use a username and password that they are to keep secret, and the records indicate Plaintiff signed the agreements.

Defendants have overcome Plaintiff's mere assertion that he does not recall signing the agreements.

Plaintiff also argues the arbitration agreements are unconscionable.

The prevailing view is that [procedural and substantive unconscionability] must both be present in order for a court to exercise its discretion to refuse to enforce a contract or clause under the doctrine of unconscionability.' (Stirlen v. Supercuts, Inc., supra, 51 Cal.App.4th at p. 1533 (Stirlen).) But they need not be present in the same degree. 'Essentially a sliding scale is invoked which disregards the regularity of the procedural process of the contract formation, that creates the terms, in proportion to the greater harshness or unreasonableness of the substantive terms themselves.' (15 Williston on Contracts (3d ed.

1972) § 1763A, pp. 226-227; see also A & M Produce Co., supra, 135 Cal.App.3d at p. 487.) In other words, the 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 v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83, 114.) The procedural unconscionability element focuses on 'oppression' or 'surprise' due to unequal bargaining power. The substantive unconscionability element focuses on 'overly harsh' or 'one-sided' results. (Id.) 'The general principles of unconscionability are well established. A contract is unconscionable if one of the parties lacked a meaningful choice in deciding whether to agree and the contract contains terms that are unreasonably favorable to the other party.' (OTO, L.L.C. v. Kho (2019) 8 Cal.5th 111, 125.) 'Arbitration contracts imposed as a condition of employment are typically adhesive.' (Kho, supra, 8 Cal.5th at 126.) 'Where there is no other indication of oppression or surprise, the degree of procedural unconscionability of an adhesion agreement is low, and the agreement will be enforceable unless the degree of substantive unconscionability is high.' (Ajamian v. CantorCO2e, L.P. (2012) 203 Cal.App.4th 771, 796.) Substantive unconscionability 'traditionally involves contract terms that are so one-sided as to 'shock the conscience,' or that impose harsh or oppressive terms.' (24 Hour Fitness, Inc. v. Superior Court (1998) 66 Cal.App.4th 1199, 1213.) Plaintiff argues the agreements are procedurally unconscionable because they do not contain opt-out provisions as required under Labor Code section 432.6. 'Because all provisions of AB 51 work together to burden the formation of arbitration agreements, we conclude that the FAA preempts AB 51 as a whole to the extent it applies to arbitration agreements.' (Chamber of Commerce of the United States of America v. Bonta (9th Cir. 2023) 62 F.4th 473, 490.) Plaintiff does not dispute the agreements are to be governed by the FAA. Plaintiff's argument fails.

Plaintiff's argument as to the PAGA waiver also fails. The language of the arbitration agreements explicitly recognizes the arbitrator does not have the authority to make the arbitration proceedings a class, representative or collective action, or to award relief to a group of employees in one proceeding, including claims brought pursuant to the PAGA. The agreements later provide that Plaintiff expressly waives 'the right to bring a class, collective, representative or PAGA claim (unless prohibited by controlling law) seeking any relief on behalf of others.' (Decl. Rougas, Exhibits A and B [Emphasis added].) As Iskanian v. CLS Transportation Los Angeles, LLC (2014) 59 Cal.4th 348, and Viking River Cruises, Inc. v. Moriana (2022) 142 S.Ct. 1906, confirm wholesale waivers of PAGA claims are not permitted, the agreements incorporate the controlling law that the waiver is not applicable. Therefore, the agreements' explicit terms that the arbitrator's authority is limited to hearing and adjudicating individual claims governs. Further, the agreements contain a severance clause which would permit this Court to sever the waiver of representative PAGA claims. (Decl. Rougas, Exhibits A and B.) Plaintiff's Calendar No.: Event ID: TENTATIVE RULINGS

3073090 46 CASE NUMBER: CASE TITLE: GALLEGO VS DALTON MOTORS SD LLC [IMAGED] 37-2023-00024023-CU-OE-CTL argument fails.

Plaintiff's individual PAGA claims are arbitrable and the remaining representative PAGA action may be stayed pending the arbitration of Plaintiff's individual PAGA claims. (Adolph v. Uber Technologies, Inc.

(2023) 14 Cal.5th 1104.) The motion is granted on the condition Defendants remit payment to the Court for another motion filing fee. The Court elects to stay the remainder of this matter not compelled to arbitration pending the arbitration. A status conference is hereby set for August 9, 2024, at 10:00 am.

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