Judge: Robert B. Broadbelt, Case: 22STCV18513, Date: 2023-01-19 Tentative Ruling
Case Number: 22STCV18513 Hearing Date: January 19, 2023 Dept: 53
Superior Court of California
County of Los Angeles – Central District
Department
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22STCV18513 |
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January
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[Tentative]
Order RE: defendant’s motion to compel arbitration and
to stay action |
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MOVING PARTIES:
Defendant Howroyd-Wright
Employment Agency, Inc., dba AppleOne (joined by defendant Call-the-Car, Inc.
on September 6, 2022)
RESPONDING PARTY: Plaintiff Latoya Knight
Motion to Compel Arbitration and to Stay Action
The court
considered the moving, opposition, and reply papers filed in connection with
this motion.
DISCUSSION
Plaintiff Latoya Knight (“Plaintiff”) filed this employment action
against defendants Call-the-Car, Inc., Howroyd Wright Employment Agency, Inc.,
Apple One, and Cindy Tajarda on June 6, 2022, alleging eight causes of action under
the California Fair Employment and Housing Act, Labor Code, the Business and
Professions Code, and for wrongful termination and intentional infliction of
emotional distress.
Defendant Howroyd-Wright Employment Agency, Inc., dba AppleOne
(“AppleOne”), joined by defendant Call-the-Car, Inc. (“CTC”) (collectively,
“Defendants”), move the court for an order (1) compelling Plaintiff to submit
all claims to binding arbitration, and (2) staying this action pending
completion of arbitration.
1. Existence
of a Written Agreement to Arbitrate
A written provision in any contract evidencing a transaction involving
commerce to settle by arbitration a controversy thereafter arising out of such
contract shall be valid, irrevocable, and enforceable, save upon such grounds
as exist at law or in equity for the revocation of any contract. (9
U.S.C. § 2.) 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.)
“‘ “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) 2022 WL 17665377 at *3.)
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.)
First, the court finds that Defendants have met their initial burden
of proving that (1) a valid agreement to arbitrate the controversy exists between
AppleOne and Plaintiff as signatories to the arbitration agreement, and (2) nonsignatory
CTC, as a third-party beneficiary, may enforce the arbitration agreement.
AppleOne has produced evidence of various agreements to arbitrate, the
last of which covered Plaintiff’s employment with defendant CTC. (Hennerty Decl., ¶¶ 5-6; Hennerty Decl.,
Exs. 1-4.) The fourth Applicant
Agreement includes an arbitration provision (the “Arbitration Agreement”) and
purports to bear Plaintiff’s electronic signature, dated June 25, 2021. (Hennerty Decl., Ex. 4, Arbitration Agreement,
p. 6.) The Arbitration Agreement provides
that the parties agree to arbitrate “any” disputes between them, including any
claims against AppleOne’s clients.
(Hennerty Decl., Ex. 4, Arbitration Agreement, § 7, subd.
(A).) Covered disputes are specifically
stated to include any disputes regarding employment with AppleOne or its
affiliates, disputes against AppleOne’s clients regarding job assignments and
termination, and disputes relating to unfair competition, compensation, meal
and rest periods, discrimination, harassment, retaliation, and all statutory
and common law claims. (Hennerty Decl., Ex. 4, Arbitration Agreement, § 7, subd. (B)(1).)
The court therefore finds
that AppleOne has met its burden of producing prima facie evidence of a written
agreement to arbitrate the controversy.
(Gamboa, supra, 72 Cal.App.5th at p. 165.)
Although the general rule is
that one must be a party to an arbitration agreement to enforce it, there are
judicially recognized exceptions that permit nonsignatories to compel arbitration
of a dispute arising from an arbitration agreement. (Garcia v. Pexco, LLC (2017) 11
Cal.App.5th 782, 785-786.) “[A] third
party beneficiary of an arbitration agreement may enforce it.” (Ronay Family Limited Partnership v. Tweed
(2013) 216 Cal.App.4th 830, 838.) To
invoke the third-party beneficiary exception, the proponent must show that the
arbitration agreement was expressly made for its benefit. (Id. at p. 838-839.)
The Arbitration Agreement provides
that Plaintiff and AppleOne agreed to arbitrate any disputes between them,
“including any claims that [the employee] may have against AppleOne’s
clients.” (Hennerty Decl., Ex. 4, Arbitration
Agreement, § 7, subd. (A).) Further,
the Arbitration Agreement expressly provides that “AppleOne’s clients, vendors,
and subcontractors, and each of their corporate parents, subsidiaries, and
affiliates, including employees, officers, and agents, are intended third-party
beneficiaries of this agreement….”
(Hennerty Decl., Ex. 4, Arbitration Agreement, § 7, subd.
(C)(9).) CTC is a client of AppleOne and
is alleged to have hired Plaintiff “via” AppleOne. (Hennerty Decl., ¶ 2; Compl., ¶ 14.)
The court finds that, because
the Arbitration Agreement expressly requires arbitration of claims against AppleOne’s
clients, the arbitration clause was intended to benefit nonsignatory clients
such as CTC. (Ronay Family Limited
Partnership, supra, 216 Cal.App.4th at p. 839.) The court therefore
finds that Defendants have met their burden of establishing that CTC may
enforce the Arbitration Agreement as a third-party beneficiary.
The court further finds that
Defendants have met their burden of establishing that (1) the FAA applies, and
(2) the Arbitration Agreement covers the claims alleged by Plaintiff in her
Complaint.
The FAA applies to any
maritime transactions or contracts evidencing a transaction involving
commerce. (9 U.S.C. § 2; Basura
v. U.S. Home Corp. (2002) 98 Cal.App.4th 1205, 1213.) Here, the parties’ Arbitration Agreement
expressly states that (1) the employee acknowledges that it is to be governed
by the FAA, and (2) the agreement evidences a transaction involving
commerce. (Hennerty Decl., Ex. 4, Arbitration
Agreement, § 7, subd. (A).)
Defendants also present evidence establishing that AppleOne (1) places
associates on temporary job assignments throughout the United States, (2)
staffs businesses in almost 10 other countries, and (3) contracts with its
clients to locate prospective candidates for temporary job assignments. (Hennerty Decl., ¶ 3.) The court therefore finds that Defendants
have established that (1) the parties agreed to arbitrate pursuant to the FAA,
and (2) even if the parties had not agreed to be governed by the FAA, AppleOne
is involved in interstate commerce. (Cronus
Investments, Inc. v. Concierge Services (2005) 35 Cal.4th 376, 394 [parties
are not precluded from expressly designating that any arbitration proceeding
should move forward under the FAA].)
As set forth above, the
disputes covered under the Arbitration Agreement include any disputes regarding
employment with AppleOne or its clients, termination of employment,
discrimination, harassment, retaliation, claims arising under various federal
laws and corresponding state statutes, and all other statutory and common law
claims. (Hennerty Decl., Ex. 4, Arbitration
Agreement, § 7, subd. (B)(1).)
Plaintiff’s Complaint alleges eight causes of action related to her
employment: (1) disability harassment in violation of FEHA; (2) disability
discrimination in violation of FEHA; (3) disability retaliation in violation of
FEHA; (4) failure to engage in the good-faith interactive process in violation
of FEHA; (5) failure to accommodate in violation of FEHA; (6) violation of
Business and Professions Code section 17200 for unfair business practices; (7)
wrongful termination in violation of public policy; and (8) intentional
infliction of emotional distress. The
claims alleged by Plaintiff concern the alleged discrimination, harassment, and
retaliation against Plaintiff during her employment, as well as her allegedly
wrongful termination with Defendants, and therefore fall within the scope of
the Arbitration Agreement.
Second, the court finds that
Plaintiff has met her burden of challenging the authenticity of the Arbitration
Agreement. Plaintiff has stated, under
penalty of perjury, that she (1) does “not recall ever seeing an Arbitration
Agreement[,]” (2) was not “informed that one was present in the documents [she]
was asked to e-sign[,]” and (3) does “not remember seeing any arbitration
agreement among the electronic documents that [she] was instructed to fill
out.” (Knight Decl., ¶¶ 5, 8.) The court therefore finds that Plaintiff has
met her burden of producing evidence to challenge the authenticity of the
Arbitration Agreement. (Gamboa, supra,
72 Cal.App.5th at p. 165 [a party opposing a motion to compel arbitration may
meet her burden by declaring under penalty of perjury that the party never saw
or does not remember seeing the agreement].) The court notes that Plaintiff does not
present argument or evidence to dispute that the FAA applies, or that her
claims are covered by the Arbitration Agreement.
Third, the court finds that
Defendants have met their burden of establishing, with admissible evidence,
that a valid arbitration agreement exists.
(Gamboa, supra, 72 Cal.App.4th at p. 165.)
Defendants submit the
declaration of an Executive Account Manager for AppleOne, who explains that (1)
Plaintiff registered for temporary employment through AppleOne in April 2016;
(2) as part of the hiring process, all applicants, including Plaintiff, are
required to complete and sign various documents as part of AppleOne’s
onboarding process before being placed on temporary assignment; (3) applicants
complete all required documents by electronically logging into AppleOne’s
portal and accessing, reviewing, and electronically signing the documents; (4)
in reviewing Plaintiff’s records, Plaintiff completed the four agreements
containing arbitration provisions, including the Arbitration Agreement signed
on June 25, 2021. (Hennerty Decl.,
¶¶ 2, 5-6.)
The court finds that this evidence is
sufficient to establish that Plaintiff intended to electronically sign the
Arbitration Agreement on June 25, 2021, and therefore finds that Defendants
have met their burden of presenting evidence sufficient to establish, by the
preponderance of the evidence, a valid agreement to arbitrate the controversy.
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 unenforceable because it
(1) does not meet the minimum requires set forth in Armendariz v. Foundation
Health Psychcare Services, Inc., and (2) 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 Psychcare
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.5th 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 asserts that she was
presented with the Arbitration Agreement along with other employment documents
and was told that she needed to sign the documents in order to accept the
assignment. (Knight Decl.,
¶ 4.) The court notes that the
Arbitration Agreement contains an opt-out provision, which (1) states that
arbitration “is not a mandatory condition of [] employment with AppleOne” and
(2) permits an employee to opt out of arbitration by following the steps
outlined in the clause. (Hennerty Decl.,
Ex. 4, Arbitration Agreement, § 7, subd. (C)(10).) However, because Plaintiff has presented
evidence suggesting that the Arbitration Agreement was presented as mandatory,
the court finds that Plaintiff has established a low level of procedural
unconscionability.
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 asserts that the
Arbitration Agreement was presented electronically with other employment
documents, and therefore appears to argue that she was induced to sign it under
surprise. (Knight Decl., ¶¶ 5,
8.) The court notes that the Arbitration
Agreement is included within the six-page Applicant Agreement, is labeled
“AGREEMENT TO ARBITRATE,” in uppercase, bold font, and spans approximately 2.5
pages. (Hennerty Decl., Ex. 4,
Arbitration Agreement pp. 3-6.)
The court finds that Plaintiff
has established a low level of procedural unconscionability because she has
presented evidence that (1) she was instructed to sign all documents, including
the Arbitration Agreement, “to be cleared for compliance,” and (2) the
Arbitration Agreement was presented for signing alongside numerous other
employment documents. (Knight Decl., ¶¶
4, 5.) Although the court notes that
Plaintiff could have opted out of the Arbitration Agreement and that the terms
of the agreement provide that arbitration is not a condition for employment,
Plaintiff has produced evidence showing that the manner in which the
Arbitration Agreement was presented to her (1) suggested that her agreement was
mandatory, and (2) did not call a substantial amount of attention to the
Arbitration Agreement, demonstrating some level of surprise.
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 established a low level of procedural
unconscionability, Plaintiff must establish a high level of substantive
unconscionability in order to prove that the Arbitration Agreement is invalid
and unenforceable.
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 does not meet the Armendariz factors and is
substantively unconscionable on the grounds that it (1) does not provide for
adequate discovery, and (2) “contains terms that are unduly oppressive and
unfairly one-sided, including the inadequate discovery provisions and lack of
mutuality ([AppleOne] did not sign the agreement).” (Opp., p. 8:16-18.)
The court finds that Plaintiff
has not met her burden of establishing that the Arbitration Agreement is
substantively unconscionable.
First, the court finds that
Plaintiff has not shown that the Arbitration Agreement does not provide for
adequate discovery. The Arbitration
Agreement states that the JAMS Employment Arbitration and Rules and Procedures
regarding discovery shall apply to arbitration proceedings. (Hennerty Decl., Ex. 4, Arbitration
Agreement, § 7, subd. (C)(5).) In
particular, Plaintiff contends that the Arbitration Agreement “severely limits
the party to only one deposition….”
(Opp., p. 7:1.) However, the
relevant JAMS rule states that parties are entitled to take “at least one
deposition of an opposing Party or individual under the control of the opposing
Party[,]” and that the arbitrator may determine whether to grant a request for
additional depositions. (Cohen Decl.,
Ex. 6, JAMS Employment Arbitration Rules & Procedures, pp. 9-10, Rule 17
[emphasis added].) The court finds that
this language does not indicate that Plaintiff will not be entitled to obtain
adequate discovery. Moreover, the court
notes that, “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.) Plaintiff points to no express language in
the Arbitration Agreement that unequivocally bars Plaintiff from obtaining
discovery necessary to vindicate her claims.
Second, Plaintiff asserts that
the Arbitration Agreement is substantively unconscionable for “lack of
mutuality” because AppleOne did not sign the agreement. However, Plaintiff presents no argument or
authority in support of this contention, and therefore has not met her burden
to establish that the absence of AppleOne’s signature constitutes a
substantively unconscionable term.
The court finds that Plaintiff
has not met her burden to establish that the Arbitration Agreement is
substantively unconscionable. The court
therefore finds that Plaintiff has not met her burden to establish that the
Arbitration Agreement is unenforceable.
3.
Conclusion
The court finds that (1)
AppleOne has met its burden of establishing the existence of a valid agreement
to arbitrate this controversy as between AppleOne and Plaintiff; (2) AppleOne
and CTC have met their burden of establishing that CTC, as a nonsignatory, may
enforce the agreement to arbitrate as a third-party beneficiary of the
Arbitration Agreement; and (3) the Arbitration Agreement covers each of the
claims asserted by Plaintiff in her Complaint.
The court therefore grants Defendants’
motion to compel arbitration.
The court notes that Defendants
appear to argue that arbitration should also be compelled as to nonmoving
defendant Cindy Tajarda. (Mot., p.
12:5-6, 12:23.) However, defendant Cindy
Tajarda does not appear to have been served with the Complaint, and has not
appeared in this action. The court
therefore does not have jurisdiction or the authority to order her to
arbitration.
The court grants Defendants’
request to stay this action pending completion of arbitration.
ORDER
The
court grants defendant Howroyd-Wright Employment Agency, Inc.’s motion to
compel arbitration and to stay action.
The court orders (1) defendants
Howroyd-Wright Employment Agency, Inc. and Call-the-Car, Inc., and plaintiff Latoya
Knight to arbitrate the claims alleged in plaintiff Latoya Knight’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 defendant Howroyd-Wright Employment Agency, Inc. to give notice of
this ruling.
IT IS SO ORDERED.
DATED:
_____________________________
Robert
B. Broadbelt III
Judge
of the Superior Court