Judge Robert B. Broadbelt, Case 22STCV00937 2023-02-17 Tentative Ruling

Judge: Robert B. Broadbelt, Case: 22STCV00937, Date: 2023-02-17 Tentative Ruling

The court considered the moving, opposition, and reply papers filed in connection with the motion to compel arbitration.[1]

Plaintiff Marquis Mejia Hill (“Plaintiff”) filed this employment action against defendants Memorial Hospital of Gardena and Citiguard, Inc. on January 10, 2022, alleging five causes of action for (1) constructive discharge in violation of public policy, (2) intentional infliction of emotional distress, (3) retaliation, (4) failure to pay wages, and (5) waiting time penalties.

Defendant Citiguard, Inc. (“Defendant”) now moves the court for an order (1) compelling Plaintiff to submit his claims to binding arbitration; (2) staying this action pending completion of arbitration; and (3) awarding sanctions against Plaintiff and in favor of Defendant.

“On petition of a party to an arbitration agreement alleging the existence of a written agreement to arbitrate a controversy and that a party to the agreement refuses to arbitrate that 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 the court finds that the right to compel arbitration has been waived by the petitioner or that grounds exist for rescission of the agreement. (Code Civ. Proc., §¿1281.2.)

“‘ “The party seeking to compel arbitration bears the burden of proving the existence of an arbitration agreement, while the party opposing the petition bears the burden of establishing a defense to the agreement’s enforcement.” ’” (Beco v. Fast Auto Loans (2022) 86 Cal.App.5th 292, 302.) The burden of production as to this finding shifts in a three-step process.¿ (Gamboa v. Northeast Community Clinic (2021) 72 Cal.App.5th 158, 165.)¿ First, the moving party bears the burden of producing prima facie evidence of a written agreement to arbitrate, which can be met by attaching a copy of the arbitration agreement purporting to bear the opponent’s signature. (Ibid.) If the moving party meets this burden, the opposing party bears, in the second step, the burden of producing evidence to challenge its authenticity. (Ibid.) If the opposing party produces evidence sufficient to meet this burden, the third and final step requires the moving party to establish, with admissible evidence, a valid arbitration agreement between the parties. (Ibid.)

The court finds that Defendant has met its burden of producing prima facie evidence of a written agreement to arbitrate by attaching a copy of the “Citiguard Inc. Arbitration Agreement” (the “Arbitration Agreement”) purporting to bear Plaintiff’s signature. (Nomair Decl., Ex. A, Arbitration Agreement; Gamboa, supra, 72 Cal.App.5th at p. 165.)

The Arbitration Agreement provides that the parties agree to submit to arbitration “any controversy or claim arising out of or relating to [Plaintiff’s] employment relationship with [Defendant] or the termination of that relationship,” except as to any claims excluded from arbitration by law. (Nomair Decl., Ex. A, Arbitration Agreement, ¶ 1.) Covered claims are specifically defined to include those for wrongful discharge in violation of public policy, emotional distress, other common law or tort matters, and claims under the California Labor Code. (Nomair Decl., Ex. A, Arbitration Agreement, ¶ 1, subd. (a).) Claims for workers’ compensation benefits are excluded from the Arbitration Agreement. (Nomair Decl., Ex. A, Arbitration Agreement, ¶ 1, subd. (b)(i).) The Arbitration Agreement bears Plaintiff’s signature and is dated June 22, 2021. (Nomair Decl. Ex. A, Arbitration Agreement, p. 5.)

The court finds that Plaintiff has not met his burden of producing evidence to challenge the authenticity of the Arbitration Agreement. (Gamboa, supra, 72 Cal.App.5th at p. 165.) Plaintiff has not presented any evidence or argument to establish that he did not sign, or does not remember seeing or signing, the Arbitration Agreement.

The court therefore finds that Defendant has met its burden of proving the existence of an arbitration agreement. (Beco, supra, 86 Cal.App.5th at p. 302.)

The court further finds that Defendant has met its burden of establishing that the claims asserted by Plaintiff’s Complaint are covered by the Arbitration Agreement. As set forth above, the Arbitration Agreement encompasses claims arising out of or relating to the employment relationship, and the termination thereof, with Defendant, including claims for wrongful discharge, emotional distress, and claims under the California Labor Code. (Nomair Decl., Ex. A, Arbitration Agreement, ¶ 1, subd. (a).) Plaintiff’s causes of action (1) relate to his employment relationship, and the alleged wrongful constructive termination of that relationship, with Defendant; (2) are not excluded by the Arbitration Agreement (e.g., are not claims for workers’ compensation benefits); or (3) arise under the Labor Code. (Compl., ¶¶ 29, 34-35, 43, 53, 59, 61.) The court therefore finds that Plaintiff’s causes of action are encompassed by the Arbitration Agreement.

Plaintiff contends that the court should deny Defendant’s motion to compel arbitration on the ground that Defendant’s delay in filing this motion constitutes a waiver of its right to arbitrate.

The court must compel the parties to an arbitration agreement to submit to arbitration unless the court finds that “[t]he right to compel arbitration has been waived by the petitioner….” (Code Civ. Proc., § 1281.2, subd. (a).) “[N]o single test delineates the nature of the conduct that will constitute a waiver of arbitration.” (St. Agnes Medical Center v. PacifiCare of California (2003) 31 Cal.4th 1187, 1195.) Courts may consider “(1) whether the party’s actions are inconsistent with the right to arbitrate; (2) whether the litigation machinery has been substantially invoked and the parties were well into preparation of a lawsuit before the party notified the opposing party of an intent to arbitrate; (3) whether a party either requested arbitration enforcement close to the trial date or delayed for a long period before seeking a stay; (4) whether a defendant seeking arbitration filed a counterclaim without asking for a stay of the proceedings; (5) whether important intervening steps [e.g., taking advantage of judicial discovery procedures not available in arbitration] had taken place; and (6) whether the delay affected, misled, or prejudiced the opposing party.” (Id. at p. 1196 [internal quotation marks omitted].) In determining whether a party’s conduct is inconsistent with a desire to arbitrate, the court views the litigation as a whole. (Hoover v. American Income Life. Ins. Co. (2012) 206 Cal.App.4th 1193, 1204.)

“California courts have found a waiver of the right to demand arbitration in a variety of contexts, ranging from situations in which the party seeking to compel arbitration has previously taken steps inconsistent with an intent to invoke arbitration [citations] to instances in which the petitioning party has unreasonably delayed in undertaking the procedure.” (Fleming Distribution Company v. Younan (2020) 49 Cal.App.5th 73, 80 [internal quotation marks omitted.]) “[W]aiver will not be lightly inferred and the party asserting waiver ‘bears a heavy burden of proof,’ with any doubts to be resolved in favor of arbitration.” (Ibid)

The court finds that Plaintiff has not met his burden of establishing that Defendant waived its right to compel arbitration.

First, the court finds that Plaintiff has not presented evidence showing that Defendant unduly delayed in filing this motion. Although Plaintiff filed his Complaint in this action on January 10, 2022, and Defendant filed this motion approximately eight months later, on September 6, 2022, the court has not been presented with evidence establishing that Defendant knew of its right to arbitrate and strategically delayed in moving to compel arbitration. Instead, the evidence suggests that Defendant discovered the Arbitration Agreement after Plaintiff filed this action. (Josephson Decl., ¶ 4 [“During the course of Defendants’ initial document production, an arbitration agreement executed by Plaintiff HILL was located”].) Second, the court finds that Defendant’s filing of a demurrer and motion to strike on March 15, 2022 does not constitute “continued litigation of the dispute” that would justify a finding of waiver. (Fleming Distribution Company, supra, 49 Cal.App.5th at p. 80.) Finally, Plaintiff has not presented any evidence of prejudice caused by Defendant’s conduct.

In viewing the litigation of this action as a whole, the court finds that Plaintiff has not met his burden to show that Defendant acted inconsistent with its right to compel arbitration, such that Defendant waived its right to arbitrate.

Plaintiff contends that the Arbitration Agreement is unenforceable because it is unconscionable.

“The burden of proving unconscionability rests upon the party asserting it.” (OTO, L.L.C. v. Kho (2019) 8 Cal.5th 111, 126 (Kho).) “‘[U]nconscionability 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.” (Armendariz v. Foundation Health Psychare Services, Inc. (2000) 24 Cal.4th 83, 114 [citations omitted].) “As a matter of general contract law, California courts require both procedural and substantive unconscionability to invalidate a contract.” (Torrecillas v. Fitness International, LLC (2020) 52 Cal.App.5^th 485, 492 (Torrecillas).) California courts “apply a sliding scale, meaning if one of these elements is present to only a lesser degree, then more evidence of the other element is required to establish overall unconscionability. In other words, if there is little of one, there must be a lot of the other.” (Ibid.)

“Procedural unconscionability pertains to the making of the agreement . . . .” (Ajamian v. CantorCO2e, L.P. (2012) 203 Cal.App.4th 771, 795.) Procedural unconscionability “‘“focuses on two factors: ‘oppression’ and ‘surprise.’ [Citations.] ‘Oppression’ arises from an inequality of bargaining power which results in no real negotiation and ‘an absence of meaningful choice.’ [Citations.] ‘Surprise’ involves the extent to which the supposedly agreed-upon terms of the bargain are hidden in the prolix printed form drafted by the party seeking to enforce the disputed terms.”’” (Zullo v. Superior Court (2011) 197 Cal.App.4th 477, 484 [citations omitted].)

“Oppression generally ‘takes the form of a contract of adhesion, “‘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.]” (Carmona v. Lincoln Millennium Car Wash, Inc. (2014) 226 Cal.App.4th 74, 84 (Carmona).) “‘[A] predispute arbitration agreement is not invalid merely because it is imposed as a condition of employment. [T]he mandatory nature of an agreement does not, by itself, render the agreement unenforceable.’ [Citation.] But the adhesive nature of a contract is one factor that the courts may consider in determining the degree of procedural unconscionability.” (Id. at p. 84, fn. 4.)

As discussed above, “[o]pression . . . occurs when there is a lack of negotiation and meaningful choice.” (Torrecillas, supra, 52 Cal.App.5^th at p. 493.) “Adhesion contracts are form contracts a party with superior bargaining power offers on a take-it-or-leave-it basis.” (Ibid.) “Arbitration contracts imposed as a condition of employment are typically adhesive . . . .” (Kho, supra, 8 Cal.5th at p. 126.)

The court finds that Plaintiff has met his burden of establishing oppression since the Arbitration Agreement is a contract of adhesion. Plaintiff points to language in the Arbitration Agreement indicating that arbitration is mandatory. (Nomair Decl., Ex. A, Arbitration Agreement, p. 1 [Defendant “has instituted a mandatory arbitration procedure for all employees] and certain disputes “must be submitted for resolution by mandatory binding arbitration”].) Further, the court notes that the Arbitration Agreement states that the parties agree that, “as a condition of [Plaintiff’s] employment at Citiguard,” any covered claim must be submitted to arbitration. (Nomair Decl., Ex. A, Arbitration Agreement, ¶ 1.)

The court therefore finds that Plaintiff has met his burden of establishing that the Arbitration Agreement has a low level of procedural unconscionability based on its adhesive nature.

As discussed above, “[s]urprise is when a prolix printed form conceals the arbitration provision.” (Torrecillas, supra, 52 Cal.App.5^th at p. 493.) Plaintiff has not presented any evidence or argument establishing surprise.

The court finds that Plaintiff has established a low level of procedural unconscionability by showing that the Arbitration Agreement is a contract of adhesion. (Ajamian, supra, 203 Cal.App.4th at p. 796 [“Where there is no other indication of oppression or surprise, the degree of procedural unconscionability of an adhesion agreement is low”].)

“‘Substantive unconscionability pertains to the fairness of an agreement’s actual terms and to assessments of whether they are overly harsh or one-sided. [Citations.] A contract term is not substantively unconscionable when it merely gives one side a greater benefit; rather, the term must be “so one-sided as to ‘shock the conscience.’”’” (Carmona, supra, 226 Cal.App.4th at p. 85.) “‘“[T]he paramount consideration in assessing [substantive] unconscionability is mutuality.”’” (Ibid.)

Plaintiff argues that the Arbitration Agreement is substantively unconscionable because it (1) limits his ability to conduct adequate discovery, (2) places the burden of proof on Plaintiff, and (3) does not list the specific rights of Plaintiff, “including the right to adequate discovery, waiver, or remedies.” (Opp., p. 5:5-7.)

First, the court finds that the Arbitration Agreement does not limit Plaintiff’s ability to conduct adequate discovery. As noted by Plaintiff, the Arbitration Agreement authorizes the arbitrator “to allow for appropriate discovery and exchange of information before a hearing, including, but not limited to, production of documents, information requests, depositions and subpoenas.” (Nomair Decl., Ex. A, Arbitration Agreement, ¶ 1, subd. (d).) This language does not limit Plaintiff’s ability to conduct adequate discovery, and Plaintiff points to no authority indicating that this provision would prohibit Plaintiff from engaging in meaningful discovery.

Second, the court finds that Plaintiff has not met his burden to show that the Arbitration Agreement places Defendant at an unfair advantage by requiring Plaintiff to bear the burden of proof on his claims. (Nomair Decl., Ex. A, Arbitration Agreement, ¶ 1, subd. (d)(ii).) Plaintiff has not presented authority or sufficient argument establishing that requiring Plaintiff to prove the claims on which he is seeking relief is unconscionable.

Finally, the court finds that Plaintiff has not submitted evidence to support his argument that the Arbitration Agreement is vague by failing “to list the specific rights of the employee including the right to adequate discovery, waiver, or remedies.” (Opp., p. 5:5-7.) First, the Arbitration Agreement includes provisions concerning discovery and available remedies. As to discovery, as set forth above, the Arbitration Agreement expressly provides that Plaintiff has the right to obtain appropriate discovery. (Nomair Decl., Ex. A, Arbitration Agreement, ¶ 1, subd. (d).) As to the remedies available to Plaintiff, the Arbitration Agreement provides that the arbitrator has “the power to award all remedies that could be awarded by a court or administrative agency in accordance with the governing and applicable substantive law....” (Nomair Decl., Ex. A, Arbitration Agreement, ¶ 1, subd. (d)(ii).) Second, even if the Arbitration Agreement did not include these provisions, Plaintiff does not cite to any authority to establish that the failure to list his “specific” rights, including the right to obtain discovery and the remedies available to Plaintiff, is substantively unconscionable.

The court finds that Plaintiff has not met his burden of showing that the Arbitration Agreement is substantively unconscionable.

As set forth above, “California courts require both procedural and substantive unconscionability to invalidate a contract.” (Torrecillas, supra, 52 Cal.App.5th at p. 492.) The court therefore finds that Plaintiff has not met his burden of establishing that the Arbitration Agreement may be invalidated as unconscionable.

The court finds that (1) Defendant has met its burden of proving the existence of a valid, written agreement to arbitrate the claims alleged in Plaintiff’s Complaint, and (2) Plaintiff has not met his burden of establishing that (i) Defendant waived its right to arbitration, or (ii) the Arbitration Agreement is unconscionable and therefore unenforceable.

The court therefore grants Defendant’s motion to compel arbitration. The court grants Defendant’s request to stay this action pending completion of arbitration. (Code Civ. Proc., § 1281.4.)

The court denies Defendant’s request that the court award monetary sanctions against Plaintiff and in favor of Defendant because Defendant has not identified any authority for the court to award sanctions in connection with this motion.

Defendant Memorial Hospital of Gardena filed its “Notice of Joinder and Joinder in Motion to Compel Arbitration, for Stay and for Sanctions Brought by Defendant Citiguard, Inc.” on September 2, 2022.

Thereafter, on October 10, 2022 and October 24, 2022, defendant Memorial Hospital of Gardena filed notices with the court to show that it has filed a bankruptcy case. The court finds that this action is automatically stayed as to defendant Memorial Hospital of Gardena. (Shaoxing County Huayue Import & Export v. Bhaumik (2011) 191 Cal.App.4th 1189, 1196; 11 U.S.C. §¿362, subd. (a).)

The court therefore takes defendant Memorial Hospital of Gardena’s joinder to Defendant’s motion to compel arbitration off calendar, without prejudice to any motion seeking that relief if the automatic bankruptcy stay is lifted.

Defendant filed a demurrer and motion to strike directed to Plaintiff’s Complaint on March 15, 2022.

The court has granted Defendant’s motion to compel arbitration for the reasons set forth above. The court therefore takes Defendant’s demurrer and motion to strike off calendar.

The court orders (1) plaintiff Marquis Mejia Hill and defendant Citiguard, Inc. to arbitrate the claims alleged in plaintiff Marquis Mejia Hill’s Complaint, and (2) this action is stayed until arbitration is completed.

The court orders that defendant Memorial Hospital of Gardena’s “Notice of Joinder and Joinder in Motion to Compel Arbitration, for Stay and for Sanctions Brought by Defendant Citiguard, Inc.,” filed on September 2, 2022, is taken off calendar, without prejudice to any motion seeking that relief if the automatic bankruptcy stay is lifted.

The court takes defendant Citiguard, Inc.’s demurrer and motion to strike, filed on March 15, 2022, off calendar.

The court sets an Order to Show Cause re completion of arbitration for hearing on _______________, 2023, at 11:00 a.m., in Department 53.

The court sets a Status Conference re bankruptcy case for hearing on _______________, 2023, at 11:00 a.m., in Department 53.

[1] The court notes that the opposition was filed on February 15, 2023, and is therefore untimely under Code of Civil Procedure section 1005, subdivision (b). The court exercises its discretion to consider the untimely opposition.

marquis mejia hill ; Plaintiff, vs. memorial hospital of gardena , et al.; Defendants.	Case No.:	22STCV00937

	Hearing Date:	February 17, 2023

	Time:	10:00 a.m.

	[Tentative] Order RE: (1) defendant’s motion to compel arbitration and stay proceedings (2) defendant’s DEMURRER TO COMPLAINT (3) defendant’s MOTION TO STRIKE