Judge Robert B. Broadbelt, Case Number: 23STCV03563, Date: 2024-05-06 Tentative Ruling

Judge: Robert B. Broadbelt, Case: 23STCV03563, Date: 2024-05-06 Tentative Ruling

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

The court grants defendant Worldwide Flight Services, Inc.’s request for judicial notice. (Evid. Code, § 452, subd. (h).)

Defendant Worldwide Flight Services, Inc. (“Defendant”) moves the court for an order (1) compelling plaintiff Angie Gonzalez (“Plaintiff”) to submit the claims alleged in her Complaint to binding arbitration, and (2) staying this action pending completion of arbitration.

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 (9 U.S.C. §¿1 et seq.) (“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) 86 Cal.App.5th 292, 302.)¿ To determine the existence of an agreement, the court uses “a three-step burden-shifting process.”¿ (Iyere v. Wise Auto Group (2023) 87 Cal.App.5th 747, 755.)¿ “The arbitration proponent must first recite verbatim, or provide a copy of, the alleged agreement.¿ [Citations.]¿ A movant can bear this initial burden ‘by attaching a copy of the arbitration agreement purportedly bearing the opposing party’s signature.’”¿ (Ibid. [internal citations omitted].)¿ “If the movant bears its initial burden, the burden shifts to the party opposing arbitration to identify a factual dispute as to the agreement’s existence . . . .”¿ (Ibid.)¿ If the opposing party meets its burden to “submit sufficient evidence to create a factual dispute” as to the existence of the agreement, the burden shifts back to the arbitration proponent, who retains the ultimate burden of proving its existence by a preponderance of the evidence.¿ (Ibid.; Gamboa v. Northeast Community Clinic (2021) 72 Cal.App.5th 158, 165-166.)¿

First, the court finds that Defendant has met its burden to show that the arbitration agreement that is the subject of this motion is governed by the substantive provisions of the FAA. (Evenskaas v. California Transit, Inc. (2022) 81 Cal.App.5th 285, 292 [“The party asserting the FAA applies to an agreement has ‘the burden to demonstrate FAA coverage by declarations and other evidence’”] [internal citation omitted].)¿ Defendant has submitted (1) a copy of the parties’ arbitration agreement, which states that arbitration is subject to the FAA, and (2) evidence establishing that Defendant engages in activities that substantially affect interstate commerce since (i) it offers aircraft ground support services such as cargo handling, global cargo logistics, cargo facilities management, aircraft capacity management, and cargo documentation and handling across a network “spanning over 158 stations in more than 18 countries across five continents[,]” (ii) it employs individuals throughout the United States and internationally, and (iii) Plaintiff’s employment with Defendant required her to “coordinat[e] and organiz[e] outbound and inbound mail across various flights as appropriate[.]” (Stubbs Decl., Ex. 1, Arbitration Agreement, p. 2; Stubbs Decl., ¶¶ 2, 6; Evenskaas, supra, 81 Cal.App.5th at p. 293) Plaintiff does not dispute that the FAA governs this motion. (Opp., p. 2:26 [“Plaintiff concedes that the [FAA] controls this motion”].)

Second, the court finds that Defendant has met its burden of producing prima facie evidence of an arbitration agreement between it and Plaintiff.

Defendant has submitted a copy of the “Agreement to Submit all Disputes to Binding Arbitration” (the “Arbitration Agreement”) which purports to bear Plaintiff’s electronic signature. (Stubbs Decl., Ex. 1, Arbitration Agreement, p. 4.) The Arbitration Agreement states, in relevant part, that (1) it applies to any claims made by Plaintiff, as the employee, that Defendant “did not comply with its own policies, that [Defendant] did not comply with governing federal or state law, and to any other claim arising from or related to [Plaintiff’s] employment that is not subject to an applicable Collective Bargaining Agreement and the grievance procedure provided therein[,]” and (2) Plaintiff and Defendant agree that any claims not resolved pursuant to Defendant’s grievance and hearing process “shall be exclusively resolved through binding arbitration . . . .” (Stubbs Decl., Ex. 1, Arbitration Agreement, pp. 1 [emphasis in original], 2.)

Thus, the court finds that Defendant has met its initial burden to produce evidence of an arbitration agreement between it and Plaintiff.

Third, the court finds that Plaintiff has not met her burden to identify a factual dispute as to the existence of the Arbitration Agreement because Plaintiff did not present argument, in her opposition memorandum, contending that her signature is not authentic or identifying a factual dispute about the Arbitration Agreement’s existence. Instead, Plaintiff has argued only that the Arbitration Agreement is unconscionable. Thus, the court finds that Plaintiff has not met her burden to identify a factual dispute as to the existence of an agreement to arbitrate between her and Defendant. [1]

The court therefore finds that Defendant has shown the existence of an agreement to arbitrate the controversy alleged in Plaintiff’s Complaint.

Plaintiff contends that the Arbitration Agreement is unconscionable and therefore unenforceable.

“‘[A]greements to arbitrate [may] be invalidated by “generally applicable contract defenses, such as fraud, duress, or unconscionability.” ’”¿ (Beco, supra, 86 Cal.App.5th at p. 302.)¿ “The burden of proving unconscionability rests upon the party asserting it.”¿ (OTO, L.L.C. v. Kho (2019) 8 Cal.5th 111, 126 (Kho).)¿ “Unconscionability entails an absence of meaningful choice on the part of one of the parties together with contract terms which are unreasonably favorable to the other party.”¿ (Iyere, supra, 87 Cal.App.5th at p. 759 [internal quotations omitted].)¿ It “‘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).)¿ 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.)¿ It “‘“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].)¿¿¿¿¿¿¿

As set forth above, “[o]ppression occurs where a contract involves lack of negotiation and meaningful choice . . . .”¿ (Kho, supra, 8 Cal.5th at p. 126 [internal quotations and 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).)¿ “‘The circumstances relevant to establishing oppression include, but are not limited to (1) the amount of time the party is given to consider the proposed contract; (2) the amount and type of pressure exerted on the party to sign the proposed contract; (3) the length of the proposed contract and the length and complexity of the challenged provision; (4) the education and experience of the party; and (5) whether the party’s review of the proposed contract as aided by an attorney.’”¿ (Kho, supra, 8 Cal.5th at pp. 126-127.)¿¿

The court finds that Plaintiff has shown that the Arbitration Agreement is a contract of adhesion. Specifically, although Plaintiff states that she does not “specifically recall seeing or signing an arbitration agreement[,]” Plaintiff also states that she received an overwhelming number of emails during the onboarding process (i.e., including the Arbitration Agreement), was not told that there was an agreement to arbitrate, and did not have an opportunity to negotiate any terms of the preprinted Arbitration Agreement. (Gonzalez Decl., ¶ 6.) Moreover, the Arbitration Agreement is a “form contract” drafted by a party with superior bargaining power. (Torrecillas, supra, 52 Cal.App.5th at p. 493.)

Thus, the court finds that Plaintiff has established a low level of procedural unconscionability due to the adhesive nature of the Agreement. (Fisher v. MoneyGram Intern., Inc. (2021) 66 Cal.App.5th 1084, 1095 [“An adhesive contract does . . . establish at least some degree of procedural unconscionability”].)

As discussed above, “[s]urprise is when a prolix printed form conceals the arbitration provision.”¿ (Torrecillas, supra, 52 Cal.App.5th at p. 493; Fisher, supra, 66 Cal.App.5th at p. 1095 [“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’”].)¿

The court finds that Plaintiff has not shown that surprise exists here. The court acknowledges that the Arbitration Agreement is three pages long. However, the terms of the arbitration agreement are not hidden therein. For example, the title of the Arbitration Agreement is, in bold typeface, “AGREEMENT TO SUBMIT ALL DISPUTES TO BINDING ARBITRATION[.]” (Stubbs Decl., Ex. 1, Arbitration Agreement, p. 1.) The second page sets forth the arbitration proceedings in detail, and on the third page, there is a disclaimer, in bold typeface and all capital letters, that states that the employee has read and understands the Arbitration Agreement. (Stubbs Decl., Ex. 1, Arbitration Agreement, pp. 2-3.)

Thus, the court finds that Plaintiff has established a low level of procedural unconscionability based on the adhesive nature of the Arbitration Agreement. Plaintiff must therefore show a high level of substantive unconscionability. (Torrecillas, supra, 52 Cal.App.5th at p. 492.)

“‘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 substantively unconscionable because (1) it limits the statute of limitations significantly, (2) it does not provide for adequate discovery, (3) it authorizes the arbitrator to award reasonable attorney’s fees to a prevailing defendant, and (4) it lacks judicial review.

First, the court finds that the Arbitration Agreement appears to significantly limit the statute of limitations on claims brought against Defendant to seven days and therefore is substantively unconscionable.

Under the terms of the Arbitration Agreement, before commencing arbitration, an employee must first follow Defendant’s Grievance and Hearing Process, which consists of the following five steps: (1) an employee is required “to submit a written grievance to [his or her] immediate supervisor within 7 days of the action grieved[,]” which will be investigated by the immediate supervisor, who will return a written decision on the grievance within one week of receipt; (2) if (i) the immediate supervisor was involved in the subject action, (ii) the immediate supervisor has not returned a written decision on the grievance in one week, or (iii) the employee is not satisfied with the decision, the grievance process moves to the third step; (3) the employee must request and schedule an appeal hearing, directed to Defendant’s Chief Operating Officer; (4) if the employee is unsatisfied with the decision by the Chief Operating Officer and the employee is represented by a union, an appeal may be taken to the System Board of Adjustment as provided in the collective bargaining agreement; and (5) if the employee is represented by a union but the dispute cannot be resolved through the System Board of Adjustment, or if the employee is not represented by a union, then the employee and Defendant agree as the final step to exclusively resolve any unresolved claims through binding arbitration. (Stubbs Decl., Ex. 1, Arbitration Agreement, pp. 1-2.) Pursuant to the arbitration provision, “[t]he arbitrator shall be bound by and apply any and all relevant agreements between the parties including, without limitation, this Agreement, which includes the Grievance and Hearing Process contained herein[.]” (Id., at p. 2.) Thus, the arbitration provision requires that “the arbitrator shall enter an award for [Defendant] promptly on any Claims where it has been shown that [the employee] ha[s] not complied with such Grievance and Hearing Process.” (Ibid.)

Plaintiff contends that, when read together, the Arbitration Agreement limits Plaintiff to seven days to bring her employment claims against Defendant, or the arbitrator will be compelled to rule in Defendant’s favor. The court agrees with this interpretation.
As set forth above, the Arbitration Agreement states that “the arbitrator shall enter an award for [Defendant]” if the arbitrator finds that the employee has “not complied with such Grievance and Hearing Process.” (Stubbs Decl., Ex. 2, Arbitration Agreement, p. 2.) The first step of Defendant’s Grievance and Hearing Process states that an employee is “required to submit a written grievance to [the employee’s] immediate supervisor within 7 days of the action grieved.” (Id., at p. 1 [emphasis added].) Thus, pursuant to the language of the Arbitration Agreement, if an arbitrator finds that Plaintiff did not comply with Defendant’s Grievance and Hearing Process – including by failing to comply with the seven-day time-period to submit a grievance – the arbitrator will be required to find in favor of Defendant. (Id., at p. 2.)

The court finds that this limitation on Plaintiff’s ability to bring claims against Defendant—including claims brought pursuant to the Fair Employment and Housing Act (“FEHA”)—effectively shortens the statute of limitations on Plaintiff’s claims to seven days and therefore is substantively unconscionable. (Ellis v. US Security Associates (2014) 224 Cal.App.4th 1213, 1225 [shortened limitations period did not “provide ‘sufficient time for the effective pursuit of the judicial remedy’” and violated public policy in Government Code section 12920].)

The court notes that Defendant argues, in reply, that “Plaintiff’s characterization of this seven-day period as a statute of limitations is an overstatement” because the grievance procedure is intended to ensure that Defendant can investigate and address claims expeditiously. (Reply, p. 5:8-11.) However, Defendant does not appear to dispute that, if Plaintiff fails to comply with the Grievance and Hearing Process, including the time limits set forth therein, the arbitrator is required to enter an award in Defendant’s favor. (Stubbs Decl., Ex. 1, Arbitration Agreement, p. 2.) The court finds that, in effect, the Arbitration Agreement sets forth a seven-day statute of limitations on the claims that Plaintiff may bring against Defendant.

Second, the court finds that the Arbitration Agreement’s provision on discovery is not substantively unconscionable.

“In striking the appropriate balance between the desired simplicity of limited discovery and an employee’s statutory rights, courts assess the amount of default discovery permitted under the arbitration agreement, the standard for obtaining additional discovery, and whether the plaintiffs have demonstrated that the discovery limitations will prevent them from adequately arbitrating their statutory claims.” (Davis v. Kozak (2020) 53 Cal.App.5th 897, 910-911.)

Here, the Arbitration Agreement states that, “if not unreasonable, [discovery] shall be limited to one party deposition, one non-party deposition, three requests for document production, and five interrogatories per side.” (Stubbs Decl., Ex. 1, Arbitration Agreement, p. 3.) Thus, the “default discovery permitted under the [A]rbitration [A]greement” is low, but only if it is not deemed to be unreasonable. (Ibid.; Davis, supra, 53 Cal.App.5th at p. 511.) Moreover, the Arbitration Agreement also states that “[d]iscovery afforded by the arbitrator shall be reasonable and commensurate with the Claim(s)[.]” (Stubbs Decl., Ex. 1, Arbitration Agreement, p. 3.) Thus, “the standard for obtaining additional discovery” beyond the default amount permitted is not unduly burdensome or onerous. (Davis, supra, 53 Cal.App.5th at p. 511.) Further, Plaintiff has not presented evidence or argument establishing that this provision will prevent her from adequately arbitrating her FEHA claims. (Ibid.)

Thus, the court finds that the Arbitration Agreement does not deny Plaintiff the ability to conduct adequate discovery.

Third, the court finds that the provision permitting Defendant to obtain attorney’s fees is substantively unconscionable.

The Arbitration Agreement provides that reasonable fees incurred by Defendant may be awarded if Defendant prevails in the arbitration upon a finding by the arbitrator that the employee’s claim “was filed for purposes of harassment or is patently frivolous, and if appropriate following the arbitrator’s consideration of the economic condition of the employee who did not prevail[.]” (Stubbs Decl., Ex. 3.) However, a prevailing defendant on a claim brought under FEHA “shall not be awarded fees and costs unless the court finds the action was frivolous, unreasonable, or groundless when brought, or the plaintiff continued to litigate after it clearly became so.” (Gov. Code, § 12965, subd. (c)(6).)

The court finds that this provision is substantively unconscionable because it would allow Defendant to recover attorney’s fees from Plaintiff that would not otherwise be recoverable in court since (1) the Arbitration Agreement permits an award of attorney’s fees in favor of Defendant upon a finding that the employee’s claim “was filed for purposes of harassment[,]” but (2) a prevailing defendant on a FEHA claim in court cannot recover attorney’s fees from a plaintiff on the ground that the action was brought for purposes of harassment.[2] (Mills v. Facility Solutions Group, Inc. (2022) 84 Cal.App.5th 1035, 1055 [arbitration agreement was substantively unconscionable when it allowed for the recovery of attorney’s fees and costs that would not have been recoverable in court]; Stubbs Decl., Ex. 1, Arbitration Agreement, p. 3; Gov. Code, § 12965, subd. (c)(6).)

Fourth, the court finds that the Arbitration Agreement is not unconscionable because it does not expressly provide for the provision of a written agreement or judicial review.

The court acknowledges that the Arbitration Agreement, although requiring the arbitrator to “issue a reasoned decision within 30 days from the close of the arbitration hearing[,]” does not expressly require the issuance of a written decision. (Armendariz, supra, 24 Cal.4th at p. 107 [“in order for such judicial review to be successfully accomplished, an arbitrator in a FEHA case must issue a written arbitration decision that will reveal, however briefly, the essential findings and conclusions on which the award is based”].) However, the Arbitration Agreement does not preclude the issuance of a written award, and therefore “the [Arbitration Agreement] must be interpreted to provide for such findings.” (Ibid.)

Thus, the court finds that Plaintiff has shown that the Arbitration Agreement has a high level of substantive unconscionability based on the provisions that (1) effectively limit the statute of limitations on claims brought against Defendant to seven days, and (2) allow Defendant to recover attorney’s fees from Plaintiff that Defendant would not otherwise recover in court.

The court further finds that the court should not exercise its discretion to sever these provisions pursuant to the Arbitration Agreement’s severance clause. (Stubbs Decl., Ex. 1, Arbitration Agreement, p. 3 [“If any term(s) in this Agreement is found to be void or voidable, the remainder of the Agreement is severable and will remain in force”].)

“If the court as a matter of law finds the contract or any clause of the contract to have been unconscionable at the time it was made the court may refuse to enforce the contract, or it may enforce the remainder of the contract without the unconscionable clause, or it may so limit the application of any unconscionable clause as to avoid any unconscionable result.” (Civ. Code, §¿1670.5, subd. (a).) “The trial court has discretion under [section 1670.5] to refuse to enforce an entire agreement if the agreement is permeated by unconscionability.” (Gostev v. Skillz Platform, Inc. (2023) 88 Cal.App.5th 1035, 1062 [internal quotations and citations omitted].) “The overarching inquiry is whether the interests of justice . . . would be furthered by severance.” (Beco, supra, 86 Cal.App.5th at p. 313 [internal quotations and citations omitted].)

The court finds that the Arbitration Agreement here is permeated by unconscionability and that severance would not further the interests of justice. As set forth above, there are two provisions that are overly harsh and unfair, and therefore are substantively unconscionable. (Carmona, supra, 226 Cal.App.4th at p. 85.) “‘Such multiple defects indicate a systematic effort to impose arbitration on an employee not simply as an alternative to litigation, but as an inferior forum that works to the employer’s advantage.’” (Beco, supra, 86 Cal.App.5th at p. 313; Navas v. Fresh Venture Foods, LLC (2022) 85 Cal.App.5th 626, 637 [“Given the number of challenged provisions, the court could reasonably find severance was not an acceptable option”].)

Thus, the court finds that severance would not serve the interests of justice and therefore exercises its discretion (1) to decline to sever the unconscionable provisions and (2) to refuse to enforce the Arbitration Agreement against Plaintiff. (Civ. Code, § 1670.50, subd. (a).)

The court denies defendant Worldwide Flight Services, Inc.’s motion to compel arbitration and stay proceedings.

[1] The court notes that Plaintiff has submitted her declaration, in which she states that she does not recall seeing or signing an arbitration agreement. (Gonzalez Decl., ¶ 6.) To the extent that Plaintiff contends that this evidence identifies a factual dispute as to the Arbitration Agreement’s existence, the court finds that Defendant has met its ultimate burden of proving that an agreement to arbitrate exists by submitting the declaration of a Manager with its Talent Management Department, who states that, in order for Plaintiff to have signed the Arbitration Agreement, she was required (1) to log onto Defendant’s onboarding platform with the auto-generated passcode that she was provided in a welcome email, which could not have been completed by anyone who did not have her private log-in credentials, and (2) to review the document, close the file, and type her full legal name. (Wignal Decl., ¶¶ 1, 4-5.) Thus, even if Plaintiff had met her burden to identify a factual dispute as to the existence of the Arbitration Agreement, the court finds that Defendant submitted evidence establishing its existence by a preponderance of the evidence.

[2] While the court acknowledges that the Arbitration Agreement also allows a prevailing defendant to recover attorney’s fees upon a finding that the claim was “patently frivolous,” which is consistent with Government Code section 12965, the recovery of attorney’s fees upon a finding that the claim was brought for purposes of harassment is not and therefore is substantively unconscionable.

angie gonzalez ; Plaintiff, vs. worldwide flight services, inc. , et al.; Defendants.	Case No.:	23STCV03563

	Hearing Date:	May 6, 2024

	Time:	10:00 a.m.

	[tentative] Order RE: defendant’s motion to compel arbitration and stay proceedings