Judge: Robert B. Broadbelt, Case: 22STCV10181, Date: 2022-12-14 Tentative Ruling

Case Number: 22STCV10181    Hearing Date: December 14, 2022    Dept: 53

Superior Court of California

County of Los Angeles – Central District

Department 53

MOVING PARTIES:             Defendants Exodus Recovery, Inc., and Exodus Foundation for Recovery

RESPONDING PARTY:       Plaintiff Gloria Carter

Motion to Compel Arbitration and Stay or Dismiss Proceedings Pending Arbitration

The court considered the moving, opposition, and reply papers filed in connection with this motion.

EVIDENTIARY OBJECTIONS

The court overrules plaintiff Gloria Carter’s evidentiary objections, filed on December 7, 2022.

The court overrules defendants Exodus Recovery, Inc., and Exodus Foundation for Recovery’s evidentiary objections, filed on December 12, 2022.

The court denies Defendants’ request to strike Plaintiff’s opposition, filed on December 7, 2022, as untimely.  The court exercises its discretion to consider Plaintiff’s opposition.  

DISCUSSION

Plaintiff Gloria Carter (“Plaintiff”) filed this wrongful termination action on March 24, 2022, against defendants Exodus Recovery, Inc., Exodus Foundation which will do business in California as Exodus Foundation for Recovery, Hilary Aquino, and Vanessa Doe, alleging 11 causes of action under California’s Fair Employment and Housing Act, the Labor Code, and Business and Professions Code.

Defendants Exodus Recovery, Inc. (“Exodus Recovery”), and Exodus Foundation for Recovery (“Exodus Foundation”) (collectively, “Defendants”) move the court for an order (1) compelling Plaintiff to submit each of the causes of action in her Complaint to binding arbitration, and (2) staying or dismissing this action pending the completion of arbitration.

1.     Existence of a Written Agreement to Arbitrate the Controversy

“[U]nder both the [Federal Arbitration Act] and California law, ‘arbitration agreements are valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.’”  (Higgins v. Superior Court (2006) 140 Cal.App.4th 1238, 1247.)  The Federal Arbitration Act (“FAA”) requires courts to direct parties to proceed to arbitration on issues covered by an arbitration agreement upon a finding that the making of the arbitration agreement is not in issue.  (9 U.S.C. § 4; Chiron Corp. v. Ortho Diagnostic Sys. (9th Cir. 2000) 207 F.3d 1126, 1130.)  “The court’s role under the [FAA] is therefore limited to determining (1) whether a valid agreement to arbitrate exists and, if it does, (2) whether the agreement encompasses the dispute at issue.”  (Chiron Corp., supra, 207 F.3d at p. 1130.)  The FAA reflects “both a ‘liberal federal policy favoring arbitration,’ [citation], and the ‘fundamental principle that arbitration is a matter of contract,’ [citation].”  (AT&T Mobility LLC v. Concepcion (2011) 563 U.S. 333, 339.) 

A party seeking to compel arbitration bears the burden of proving a written agreement to arbitrate exists.  (Rosenthal v. Great Western Fin. Securities Corp. (1996) 14 Cal.4th 394, 413.)  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 or by setting forth the agreement’s provisions.  (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 Defendants have met their burden of producing prima facie evidence of a written agreement to arbitrate.

Defendants submit the “Employee Authorizations & Acknowledgements” form electronically signed by Plaintiff on September 10, 2014 in support of their motion.  (Torres Decl., Ex. A.)  The form (1) explains that the company for which the employee performs services—defined to be the Worksite Employer—has engaged Oasis Outsourcing (“Oasis”), a professional employer organization, to provide services under which the employee would be paid by Oasis, but the Worksite Employer would direct day-to-day work, and (2) contains an arbitration agreement.  (Ibid.)  The arbitration agreement states as follows:  “I and Oasis agree that any legal dispute with my Worksite Employer, Oasis, or any other party that may have an employment relationship with me arising out of or in connection with my employment, application for employment, or separation from employment for which I am, was, or would be paid through Oasis, will be resolved exclusively through binding arbitration by a neutral arbitrator as provided in this agreement and, to the extent not inconsistent with this agreement, under the rules of a neutral arbitration service.”  (Ibid.)

The form includes an electronic signature of “Gloria Walker,” dated September 10, 2014.  (Torres Decl., Ex. A.)  Defendants produce evidence establishing that Plaintiff changed her name from Gloria Lynn Walker to Gloria Lynn Carter by submitting an “Employee Information Change Form” on February 26, 2019.  (Torres Decl., Ex. B.) 

As set forth above, the arbitration provision applies to any legal dispute between Plaintiff, Oasis, and the “Worksite Employer.”  Defendants produce the following evidence to establish that they are considered to be the worksite employer to which the arbitration agreement refers.

First, Defendants submit the declaration of Luis Torres (“Torres”), the PEO Systems and Project Analyst IT for Oasis, who states that (1) defendant Exodus Recovery is a client of Oasis, and (2) in Oasis’s documents, including the forms containing the arbitration agreement, Exodus Recovery is referred to as the worksite employer.  (Torres Decl., ¶¶ 6, 15 [the arbitration agreement contains the Exodus client ID number, meaning that “Plaintiff logged in the Oasis Electronic Onboarding using Exodus’s Client ID number and PIN”].)  Second, Defendants submit the declaration of Meliz Louy, the Vice President of Exodus Recovery, who explains that (1) Exodus Foundation was closed in July of 2018, and its employees, including Plaintiff, were transferred to and became legally employed by Exodus Recovery; (2) Defendants use Oasis as its professional employer organization; and (3) Defendants are known as the worksite employer in Oasis’s documents.  (Louy Decl., ¶¶ 1, 4, 6.)

The court therefore finds that Defendants have met their burden of producing prima facie evidence of a written agreement to arbitrate this controversy pursuant to the terms of the arbitration agreement set forth in the Employee Authorizations and Acknowledgements form since Defendants have (1) introduced evidence of an arbitration agreement purporting to bear Plaintiff’s electronic signature, and (2) introduced evidence establishing that the arbitration provision applies to Defendants as the “Worksite Employer.”  (Gamboa, supra, 149 Cal.App.4th at p. 165.)

The court further finds that Defendants have met their burden of establishing that the FAA applies to the arbitration agreement.

“The FAA applies to a contract ‘evidencing a transaction involving commerce.’”  (Basura v. U.S. Home Corp. (2002) 98 Cal.App.4th 1205, 1213.)  Under this standard, the FAA applies “not only to the actual physical interstate shipment of goods but also contracts relating to interstate commerce.”  (Id. at pp. 1213-1214.)  The phrase “evidencing a transaction involving commerce” is to be broadly construed by the courts.  (Giuliano v. Inland Empire Personnel, Inc. (2007) 149 Cal.App.4th 1276, 1286.)  Here, Defendants present evidence establishing that Defendants (1) use the internet to advertise employment to potential candidates in California and outside of California; (2) use the internet to promote its programs to different individuals in numerous different states and across state lines; (3) use out of state suppliers, and transfer funds used for financing purchases across state lines and through interstate banks; and (4) use, in their daily operations, interstate communication networks.  (Louy Decl., ¶ 8.)  The court finds that Defendants have met their burden of establishing that the arbitration agreement and employment documents is governed by the FAA based on Defendants’ engagement in interstate commerce.

The court finds that Plaintiff has met her burden of producing evidence to challenge the authenticity of the arbitration agreement by declaring under penalty of perjury that Plaintiff does not remember seeing the arbitration agreement.  (Gamboa, supra, 72 Cal.App.5th at p. 165; Carter Decl., ¶ 3 [“I do not remember [the arbitration agreement] at all”].)  The court notes that Plaintiff does not appear to dispute the applicability of the FAA to this agreement.

The court finds that Defendants have met their burden, in the third step, of establishing the existence of a valid arbitration agreement between the parties by a preponderance of the evidence based on the evidence submitted in support of their moving papers.  (Gamboa, supra, 72 Cal.App.5th at pp. 165-166.)

As set forth above, Defendants have submitted the declaration of Torres, who has been employed by Oasis since 2010, and works as the PEO Systems and Project Analyst IT.  (Torres Decl., ¶ 2.)  In his declaration, Torres explains the mechanisms of the Oasis Electronic Onboarding portal as follows. 

Oasis provides Defendants’ worksite employees with a secure electronic link to access the Oasis Electronic Onboarding system as part of the employee onboarding process.  (Torres Decl., ¶ 7.)  When worksite employees first access the portal, they encounter a “New Hire Login” screen that requires them to enter their worksite employer’s client ID, employer PIN, first and last name, and Social Security number.  (Ibid.)  The worksite employee is required to review and sign each document presented during this process, “including the Employee Acknowledgment document, which contains the Arbitration Agreement.”  (Torres Decl., ¶ 10.) When confronted with that document, an employee may either (A) sign the document and proceed with the onboarding process, or (B) pause the onboarding process to further evaluate the document.  (Ibid.)  To accept the arbitration agreement, employees, including Plaintiff, are “required to click on a button marked ‘Sign and Continue.  The onboarding process is put on hold, and the remaining documents cannot be accessed, until a decision regarding the Arbitration Agreement is made.”  (Torres Decl., ¶ 11.)  Once the onboarding process is completed, the signed documents within the Oasis Electronic Onboarding system are converted in such a manner that “neither Oasis nor the worksite employer [i.e., Defendants] can edit or overwrite the documents.”  (Torres Decl., ¶ 13.)

Further, Torres states that the Oasis Electronic Onboarding system time and date stamps the documents completed by employees during the onboarding process.  (Torres Decl., ¶ 14.)  Here, the date and time stamps for Plaintiff’s onboarding process establishes that Plaintiff completed the first onboarding form on September 10, 2014, and submitted the final document on September 11, 2014.  (Torres Decl., ¶ 14, subd. (a).)  Upon reviewing the Oasis Electronic Onboarding record, Torres states that Plaintiff reviewed and signed the arbitration agreement on September 10, 2014.  (Torres Decl., ¶ 15.)  Moreover, Torres states that, if an individual does not complete the documents required in the onboarding system, “the individual’s information will not be posted to the payroll system and they will not receive a paycheck.”  (Torres Decl., ¶ 12.)

The court finds that Defendants have submitted competent evidence establishing that Plaintiff signed the Employee Authorizations and Acknowledgements form, which included the arbitration provision, on September 10, 2014.  Defendants have submitted substantial evidence explaining that (1) in order for Plaintiff to have been posted to the payroll system, Plaintiff would have had to complete all required documents in the onboarding process, including by completing the Employee Acknowledgment form that contains the subject arbitration agreement; (2) when an individual signs a document in the Oasis Electronic Onboarding system, the system automatically date and time stamps the documents; (3) once an individual completes the onboarding process, documents are converted so that they may not be altered by Oasis or the worksite employer; and (4) Oasis’s records establish that Plaintiff signed the arbitration agreement on September 10, 2014.  (Torres Decl., ¶¶ 12, 10, 14, 13, 15.) 

The court therefore finds that Defendants have met their burden of establishing a valid arbitration agreement between Defendants, as the worksite employers, on the one hand, and Plaintiff, on the other hand.

The court notes that Plaintiff also argues that no valid agreement to arbitrate this controversy exists on the ground that there was no mutual assent to the terms of the agreement, because Plaintiff “did not agree to anything.”  (Opp., p. 12:13-17.) 

“To form a valid contract there must be a meeting of the minds, i.e., mutual assent.”  (Moritz v. Universal City Studios LLC (2020) 54 Cal.App.5th 238, 246; Civ. Code, §§ 1550,

subd. (2), 1565.)  “‘Mutual assent is determined under an objective standard applied to the outward manifestations or expressions of the parties, i.e., the reasonable meaning of their words and acts, and not their unexpressed intentions or understandings.’”  (Chicago Title Ins. Co. v. AMZ Ins. Services, Inc. (2010) 188 Cal.App.4th 401, 422.)  

The court finds that Plaintiff has not met her burden of establishing that there was no mutual assent.  Although Plaintiff states that she does not recall seeing the arbitration agreement, and that its terms were not discussed with her, Plaintiff does not meaningfully dispute that her signature appears on the form containing the arbitration agreement, and concedes that she was required to sign certain documents.  (Carter Decl., ¶¶ 3-6.)  Mutual assent is determined not based on Plaintiff’s unexpressed intentions or understandings, but under an objective standard.  (Chicago Title Ins. Co., supra, 188 Cal.App.4th at p. 422.)  As set forth above, the court has determined that Defendants have presented substantial evidence establishing that Plaintiff signed the Employee Authorizations and Acknowledgements form, which included the subject arbitration provision.  The court therefore finds that Plaintiff’s outward manifestation in expressing consent to be bound to the terms of the arbitration agreement by signing the form containing the arbitration agreement sufficiently establishes mutual assent. 

Finally, the court finds that Defendants have met their burden of establishing that the arbitration agreement governs the claims alleged by Plaintiff in her Complaint.  The arbitration agreement provides for the arbitration of “any legal dispute” with Defendants “arising out of or in connection with [Plaintiff’s] employment, application for employment, or separation from employment….”  (Torres Decl., Ex. A, p. 1.)  Plaintiff’s Complaint alleges 11 causes of action for (1) discrimination in violation of FEHA; (2) harassment in violation of FEHA; (3) retaliation in violation of FEHA; (4) failure to prevent discrimination, harassment, and retaliation in violation of FEHA; (5) failure to provide reasonable accommodations in violation of FEHA; (6) failure to engage in the good faith interactive process in violation of FEHA; (7) wrongful termination; (8) declaratory judgment; (9) retaliation for disclosing violations of law pursuant to the Labor Code; (10) failure to provide meal and rest breaks; and (11) unfair competition.  Each of the causes of action asserted by Plaintiff arises out of her employment with Defendants, or her termination of employment with Defendants.

The court therefore finds that the arbitration agreement encompasses the causes of action alleged in Plaintiff’s Complaint.

2.     Unconscionability

Arbitration agreements are subject to all defenses to enforcement that generally apply to contracts, and state contract law is applied to determine the validity of an arbitration agreement.  (Ingle v. Circuit City Stores, Inc. (2003) 328 F.3d 1165, 1170; 9 U.S.C. § 2.)  Plaintiff contends that the arbitration agreement is unconscionable and therefore unenforceable.

“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.)  

a.      Procedural Unconscionability

 “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].)     

i.       Oppression 

“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.5th 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.)  Plaintiff does not specifically cite to any evidence to argue that the arbitration agreement is adhesive or otherwise oppressive.

                                   ii.          Surprise 

As discussed above, “[s]urprise is when a prolix printed form conceals the arbitration provision.”  (Torrecillas, supra, 52 Cal.App.5th at p. 493.)   

Plaintiff does not appear to argue that the arbitration agreement was concealed within the Employee Authorizations and Acknowledgements form.  At most, Plaintiff appears to argue that the arbitration agreement does not provide for the selection of a neutral arbitration.  However, the arbitration agreement provides that arbitration shall be resolved “by a neutral arbitrator” and “under the rules of a neutral arbitration service.”  (Torres Decl., Ex. A, p. 1.)  Plaintiff does not cite any authority establishing that this is insufficient. 

The court therefore finds that Plaintiff has not established the existence of procedural unconscionability.  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 [emphasis added].)  Because Plaintiff has not met her burden of establishing procedural unconscionability, Plaintiff has not met her burden of establishing that the arbitration agreement must be invalidated as unconscionable.

Even if the court were to find that Plaintiff established a low level of procedural unconscionability, the court finds that Plaintiff has not met her burden of establishing that the arbitration agreement is permeated with unconscionability based on substantively unconscionable terms for the reasons set forth below.

b.     Substantive Unconscionability

 “‘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 contends that the arbitration agreement is unconscionable because it (1) does not provide for adequate discovery; (2) mandates the Federal Rules of Evidence; and (3) does not make any reference to costs that Plaintiff would incur in arbitration. 

First, the court finds that the arbitration agreement provides for adequate discovery.   Plaintiff points to no provision within the arbitration agreement that limits Plaintiff’s ability to engage in meaningful discovery.  When parties agree to arbitrate statutory claims, “they also implicitly agree, absent express language to the contrary, to such procedures as are necessary to vindicate that claim.”  (Armendariz, supra, 24 Cal.4th at p. 106.)  The court therefore finds that, although the arbitration agreement does not provide for specific discovery, Defendants, “by agreeing to arbitrate the FEHA claim[s], [have] already impliedly consented to such discovery.”  (Ibid.)

Second, although Plaintiff contends that the arbitration provision is unconscionable because it mandates the Federal Rules of Evidence, Plaintiff points to no authority supporting that contention. 

Third, the court recognizes that the arbitration provision does not state which parties will pay the cost of the arbitration.  (Torres Decl., Ex. A, p. 1.)  However, Plaintiff does not point to any authority establishing that an arbitration agreement that does not designate costs to one party is unconscionable.  The court finds that the absence of this allocation of costs does not render the arbitration agreement unenforceable.  “The absence of specific provisions on arbitration costs [does not constitute] grounds for denying the enforcement of an arbitration agreement.”  (Armendariz, supra, 24 Cal.4th at p. 113.)  Instead, “a mandatory employment arbitration agreement that contains within its scope the arbitration of FEHA claims impliedly obliges the employer to pay all types of costs that are unique to arbitration.”  (Ibid.)  The court therefore finds that, even though the arbitration provision does not require Defendants to pay the costs of arbitration, because the agreement mandates arbitration of FEHA claims, it impliedly requires Defendants to pay the arbitration fees and is therefore not unconscionable.[1]  (Ibid.)

Finally, the court notes that Plaintiff excerpts a portion of the arbitration agreement that appears to constitute a predispute jury trial waiver.  (Opp., p. 13:16-17; Torres Decl., Ex. A, p. 1 [“If, for any reason a matter is not arbitrated, I AGREE THAT THE MATTER WILL BE HEARD BY A JUDGE AND WAIVE TRIAL BY JURY, and Oasis also agrees to waive trial by jury”].)  Plaintiff does not argue that this term is unconscionable.  However, “predispute contractual jury trial waivers are unenforceable under California law.”  (Doughtery v. Roseville Heritage Partners (2020) 47 Cal.App.5th 93, 107.)  The court finds that the predispute jury trial waiver set forth in the arbitration agreement, in the event that arbitration does not occur, is unenforceable.  However, the court finds that this term may be severed from the arbitration agreement without affecting its other provisions.  The court therefore orders that this term is severed from the arbitration agreement contained within the Employee Authorizations and Acknowledgments form.  (Civ. Code, § 1670.5, subd. (a).)

As set forth above, both procedural and substantive unconscionability must be shown for the defense of unconscionability to be established.  (Kho, supra, 8 Cal.5th at p. 125.)  The court finds that Plaintiff has not met her burden of establishing that the arbitration agreement is substantively unconscionable, because the only unconscionable term has been severed from the arbitration agreement. 

Upon consideration of the evidence and arguments set forth by the parties, the court finds that the arbitration agreement, as set forth in the Employee Authorizations and Acknowledgments form signed by Plaintiff on September 10, 2014, is not permeated with unconscionability.  The court therefore finds that Plaintiff has not met her burden of proving that the arbitration agreement is unconscionable and unenforceable.

3.     Waiver

Finally, Plaintiff argues that Defendants have waived their right to compel arbitration by actively litigating this action.

“[W]aiver of the right to compel arbitration is a rule for arbitration, such that the FAA controls.”  (Sovak v. Chugai Pharm Co. (9th Cir. 2002) 280 F.3d 1266, 1270.)  To prove that Defendants waived their right to arbitration, Plaintiff must show (1) Defendants had knowledge of their right to compel arbitration, (2) Defendants acted inconsistently with that right, and (3) Plaintiff suffered prejudice from their delay in moving to compel arbitration.  (Ibid.)  Plaintiff “bears a ‘heavy burden of proof’ in showing these elements.”  (Ibid.)  Courts, however, may not “condition a waiver of the right to arbitrate on a showing of prejudice[,]” and must instead “focus[] on the actions of the person who held the right” to arbitrate.  (Morgan v. Sundance, Inc. (2022) 142 S.Ct. 1708, 1712-1713.)  Thus, the primary inquiry focuses on whether a party acted inconsistently with the right to arbitrate.

The court finds that Plaintiff has not met her burden of establishing that Defendants waived their right to compel arbitration in this action.  Plaintiff’s Counsel contends that, because Defendants filed an answer and received Plaintiff’s discovery requests, Defendants waived their rights to compel arbitration.  First, as to the discovery process, Plaintiff’s evidence establishes only that Plaintiff served written discovery, and does not establish that Defendants propounded substantial discovery.  (DeClue Decl., ¶ 4.)  To determine whether a waiver has occurred, “the court focuses on the actions of the person who held the right; the court seldom considers the effects of those actions on the opposing party.”  (Morgan, supra, 142 S.Ct. at p. 1713.)  Thus, the evidence establishing that Plaintiff propounded discovery on Defendants does not establish that Defendants waived their right to arbitration.  Second, although the court notes that Defendants filed their answer to the Complaint before filing this motion, the circumstances do not indicate that Defendants delayed in filing this motion.  Plaintiff filed her Complaint on March 24, 2022, and Defendants filed this motion to compel arbitration just over three months later, on June 29, 2022.

The court finds that the evidence that (1) Defendants filed an answer, and (2) Plaintiff propounded discovery on Defendants is insufficient to establish that Defendants had knowledge of their right to compel arbitration and acted inconsistently with that right.  (DeClue Decl., ¶¶ 3-4; Sovak, supra, 280 F.3d at p. 1270; Morgan, supra, 142 S.Ct. at p. 1713.)  The court therefore finds that Plaintiff has not met her burden of establishing that Defendants waived their right to compel arbitration.

4.     Conclusion

The court finds that Defendants have met their burden of establishing (1) the existence of a valid agreement to arbitrate between Plaintiff and Defendants, and (2) that the arbitration agreement encompasses each of the claims asserted by Plaintiff in her Complaint. 

The court therefore grants Defendants’ motion to compel arbitration.

The court notes that Defendants request the court find that the arbitration agreement applies to the individual defendants named in Plaintiff’s Complaint as third party beneficiaries.  (Mot., p. 15:15-20.)  Defendants further argue that, because all of the parties are subject to the agreement, “all of Plaintiff’s claims against all Defendants must be compelled to binding arbitration.”  (Mot., p. 16:25-28 [emphasis added].) 

Individual defendants Hilary Aquino and Vanessa Doe, although named in the Complaint, (1) do not appear to have been served with the Complaint; (2) have not appeared in this action; and (3) are not moving parties to this motion.  The court therefore does not have jurisdiction to order them to binding arbitration, and denies Defendants’ request to compel arbitration as to the individual defendants.

The court grants Defendants’ request to stay this action until arbitration between Defendants and Plaintiff is completed.  (9 U.S.C. § 3.)

ORDER

            The court grants defendants Exodus Recovery, Inc., and Exodus Foundation for Recovery’s motion to compel arbitration and stay proceedings.

The court orders that the following term is severed from the arbitration provision: “If, for any reason a matter is not arbitrated, I AGREE THAT THE MATTER WILL BE HEARD BY A JUDGE AND WAIVE TRIAL BY JURY, and Oasis also agrees to waive trial by jury.”  (Civ. Code, § 1670.5, subd. (a).)

The court orders (1) defendants Exodus Recovery, Inc., and Exodus Foundation for Recovery and plaintiff Gloria Carter to arbitrate the claims alleged in plaintiff Gloria Carter’s Complaint, and (2) this action is stayed until arbitration is completed.

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 orders defendants Exodus Recovery, Inc., and Exodus Foundation for Recovery to give notice of this ruling.

IT IS SO ORDERED.

DATED:  December 14, 2022

_____________________________

Robert B. Broadbelt III

Judge of the Superior Court