Judge Robert B. Broadbelt, Case Number: 24STCV07345, Date: 2025-02-19 Tentative Ruling

Judge: Robert B. Broadbelt, Case: 24STCV07345, Date: 2025-02-19 Tentative Ruling

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

The court (1) sustains plaintiff Erica McPeck’s evidentiary objection to the request for judicial noticed filed by defendant Cardinal Financial Company, Limited Partnership on November 25, 2024, because rulings from other trial courts do not have binding or persuasive value on this court and are irrelevant, and therefore (2) denies defendant Cardinal Financial Company, Limited Partnership’s request for judicial notice. (Sargent Fletcher, Inc. v. Able Corp. (2003) 110 Cal.App.4th 1658, 1669 [“‘[a] written trial court ruling has no precedential value’”].)

The court rules on plaintiff Erica McPeck’s evidentiary objections, filed on November 19, 2024, as follows:

The court rules on defendant Cardinal Financial Company, Limited Partnership’s evidentiary objections to the declaration of Shadie Berenji, filed on November 25, 2024, as follows:

The court rules on defendant Cardinal Financial Company, Limited Partnership’s evidentiary objections to the declaration of Erica McPeck, filed on November 25, 2024, as follows:

The court overrules plaintiff Erica McPeck’s evidentiary objections to the supplemental declaration of Danielle Drabic in support of the reply papers because the supplemental declaration addresses issues raised in plaintiff Erica McPeck’s opposition papers (i.e., that she did not sign the subject arbitration agreement). (Golden Door Properties, LLC v. Superior Court of San Diego County (2020) 53 Cal.App.5th 733, 774 [recognized exception to rule that new evidence is not permitted with reply papers “is for points ‘strictly responsive’ to arguments made for the first time in opposition”].)

Defendant Cardinal Financial Company, Limited Partnership (“Defendant”) moves the court for an order (1) compelling plaintiff Erica McPeck (“Plaintiff”) to submit the claims alleged in her Complaint to binding arbitration, and (2) staying this action pending completion of arbitration.

As a threshold matter, the court finds that Defendant has met its burden to show that the Federal Arbitration Act (9 U.S.C. § 1 et seq.) (the “FAA”) governs this motion based on the choice-of-law provision in the alleged agreement, which states that “[t]he [FAA] governs th[e] Agreement, which evidences a transaction involving commerce.” (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’”]; Drabic Decl., Ex. D, Arbitration Agreement, p. 1; Victrola 89, LLC v. Jaman Properties 8 LLC (2020) 46 Cal.App.5th 337, 345 [parties may adopt procedural provisions of FAA].) However, the court applies general California contract law to determine the existence of an arbitration agreement between the parties. (Mar v. Perkins (2024) 102 Cal.App.5th 201, 212 [“[T]he existence of an enforceable arbitration agreement is established under state law principles involving formation, revocation and enforcement of contracts generally”] [internal quotation marks and citations omitted]; Weeks v. Interactive Life Forms, LLC (2024) 100 Cal.App.5th 1077, 1089 [“The FAA ordinarily defers to state law on questions of contract formation, unless state law fails ‘to place arbitration agreements “on equal footing with all other contracts”’”].)

“‘ “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 arbitration 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 initial burden to prove the existence of an arbitration agreement between it and Plaintiff.[1] (Iyere, supra, 87 Cal.App.5th at p. 755.)

Defendant has submitted a copy of the “Mutual Agreement to Arbitrate” (the “Arbitration Agreement”), which purportedly bears the electronic signature of Plaintiff. (Drabic Decl., Ex. D, Arbitration Agreement, p. 3 [electronic signature page showing Plaintiff’s electronic signature with the date December 31, 2019].) The Arbitration Agreement provides that the parties agreed that all disputes covered thereby “will be decided by a single arbitrator through final and binding arbitration and not by way of court or jury trial.” (Drabic Decl., Ex. D, Arbitration Agreement, p. 1.) The covered claims are defined to include claims based on or related to discrimination, harassment, retaliation, wages or compensation to be owed, termination, and tort and common law claims. (Ibid.)

Thus, the court finds that Defendant has met its initial burden to produce evidence of an agreement to arbitrate this controversy entered into by and between Defendant and Plaintiff.

Second, the court finds that Plaintiff has met her burden to identify a factual dispute as to the existence of the Arbitration Agreement. (Iyere, supra, 87 Cal.App.5th at p. 755.)

Plaintiff has submitted her declaration, in which she attests that she (i) never saw, reviewed, received, submitted, agreed to, or signed the Arbitration Agreement, and (ii) never authorized or consented to anyone signing the Arbitration Agreement on her behalf. (McPeck Decl., ¶¶ 9-11; Iyere, supra, 87 Cal.App.5th at p. 757 [in the case of an electronic signature, “the individual’s inability to recall signing electronically may reasonably be regarded as evidence that the person did not do so”].) Thus, the court finds that Plaintiff has identified a factual dispute as to the authenticity of the Arbitration Agreement.

Third, the court finds that Defendant has met its ultimate burden of producing prima facie evidence that the parties entered into the Arbitration Agreement. (Iyere, supra, 87 Cal.App.5th at p. 755.)

Defendant has submitted the declaration of its director of Human Resources, Danielle Drabic (“Drabic”), in which Drabic states the following. (Drabic Decl., ¶ 1.) Newly hired employees are required to log-into Defendant’s iSolved system to complete the onboarding process, at which time the employee is required to reset their account “by creating a unique and confidential password to access their account.” (Drabic Decl., ¶ 7.) Neither Drabic nor “anyone at Cardinal [i.e., Defendant] can see an employee’s password, sign into the employees account, or perform any function as the employee.” (Drabic Decl., ¶ 8.) In addition to using iSolved to complete the onboarding process, Defendant “also utilizes the iSolved system to communicate updates to its written policies and/or practices to [its] personnel.” (Drabic Decl., ¶ 13.) The Arbitration Agreement was placed in Plaintiff’s personnel records, and the iSolved HRIS system shows that, at 12:57:04 p.m., Plaintiff (identified based on her email address) accessed the Arbitration Agreement. (Drabic Decl., ¶ 13 and Ex. E.) No other user was identified in the iSolved HRIS system report. (Drabic Decl., Ex. E.)

The court finds that Defendant has met its burden of proving that Plaintiff electronically signed the Arbitration Agreement based on the evidence set forth above, because Defendant has shown that (1) its employees are required to make a unique and confidential account password to access their account on iSolved, which is unknown to Defendant, (2) Defendant used the iSolved system to communicate its policy updates to its employees, and (3) Plaintiff electronically signed the Arbitration Agreement on the iSolved system,[2] which necessarily would have required Plaintiff to log into her account with her confidential password. (Drabic Decl., ¶¶ 7, 13.)

The court notes that Plaintiff has raised various arguments as to the merits of Defendant’s showing. Specifically, Plaintiff has argued that (1) Defendant has not shown when and how the Arbitration Agreement was sent to Plaintiff, (2) Defendant has not shown who had access to the Arbitration Agreement, since Plaintiff has argued that her managers had access to her account, (3) the Arbitration Agreement does not include any distinguishing marks, such as Plaintiff’s IP address or her name in the Arbitration Agreement, and (4) the timeline in which Plaintiff allegedly signed various agreements raises a dispute as to the credibility of Defendant’s claim that she signed the Arbitration Agreement. The court finds that these arguments do not have merit.

As set forth above, Defendant’s (1) moving papers sufficiently established that Plaintiff signed the Arbitration Agreement by accessing the iSolved system after entering a unique and confidential password created by Plaintiff, and (2) supplemental evidence in reply establishes that, after receiving emails on December 20, 2019, December 27, 2019, and December 31, 2019 informing her of the updated Arbitration Agreement, Plaintiff accessed and electronically signed the Arbitration Agreement via the iSolved system. (Drabic Decl., ¶¶ 7 [new hires are required to create unique and confidential password for iSolved’s systems], 13 and Ex. E [audit of agreement from iSolved’s system]; Supp. Drabic Decl., ¶¶ 15-18, 21 and Exs. 1-3 [Dec. 20, 23, and 31, 2019 emails].) Defendant has also submitted a copy of an email from Plaintiff dated December 31, 2019, in which Plaintiff stated “Completed, thank you!” in response to an email advising her of the existence of the updated Arbitration Agreement. (Supp. Drabic Decl., ¶ 15 and Ex. 3.)

Further, although Plaintiff stated that her managers were able to access her iSolved account and perform functions on her behalf (e.g., modifying her timecard report), Plaintiff did not submit evidence establishing that any of her managers in fact executed the Arbitration Agreement on her behalf. (McPeck Decl., ¶ 7.) Moreover, Defendant has sufficiently rebutted that assertion in its reply by submitting the supplemental declaration of Drabic, in which they stated that, while managers may view and verify an employee’s timecard report, managers “cannot access an employee’s actual iSolved account, which is protected by the employee’s unique and confidential password to which no one at Cardinal has access . . . .” (Supp. Drabic Decl., ¶ 22.) Drabic has also stated that “managers do not have access to and cannot sign a[n Arbitration Agreement] on behalf of any employee.” (Ibid.) Finally, as set forth above, Defendant submitted evidence, in support of its moving papers, showing that Plaintiff is the only person that accessed the subject Arbitration Agreement on the iSolved system. (Drabic Decl., Ex. E [audit from iSolved system].)

The court notes, as Plaintiff has raised, that the Arbitration Agreement itself does not include the time of execution or the IP address of the signee, or state that it was created within the iSolved system. (Garcia, supra, 102 Cal.App.5th at p. 54 [noting the lack of a date, time, IP address, and indication that it was created within the Taleo system].) But (1) Defendant has shown that, in order to access Plaintiff’s iSolved account, a user would be required to enter a unique and confidential password known only to Plaintiff, and (2) Defendant has submitted an audit report downloaded from iSolved, which does set forth the date and time of access of the Arbitration Agreement by Plaintiff (identified by her work email address). (Ibid.; Drabic Decl., ¶¶ 7, 13, and Ex. E.)

The court also finds that the timeline of Plaintiff’s execution of the Arbitration Agreement and two other policies within a single minute do not call into question the authenticity of Plaintiff’s electronic signatures and whether her signature was auto populated on the form because Plaintiff has not submitted evidence showing that she could not have executed those agreements within a minute due to, for example, any impairments or difficulties with technology. (Cf. West v. Solar Mosaic LLC (2024) 105 Cal.App.5th 983, 994 [finding factual dispute where the plaintiff, who “was in his 90’s, suffered from dementia, did not use a computer, mobile phone, or e-mail, and was unable to answer simple questions such as his birthdate and telephone number without assistance and significant delay[,]” was alleged to have electronically signed and executed an agreement in seven locations in the span of 23 seconds].)

Thus, for the reasons set forth above, the court finds that Defendant has met its burden to establish the existence of an agreement to arbitrate between itself and Plaintiff.

Plaintiff has argued that the Arbitration Agreement (1) is unenforceable because (i) the parties previously entered into an employment agreement, which contained an arbitration provision and a provision providing that “any modification of any term or condition of this Agreement (‘Employment Agreement Modification’), must be in writing and signed by employee and [Defendant’s] Chief Executive Officer, its President, or its Director of Human Resources[,]” but (ii) the Arbitration Agreement was not signed by Defendant’s Chief Executive Officer, its President, or its Director of Human Resources and therefore is not an enforceable modification of the employment agreement,[3] and (2) is unenforceable as unconscionable. (Berenji Decl., Ex. A, ¶¶ 3.4, Agreement Modification, and 6.4, Arbitration Provision.) However, the parties have agreed to delegate these issues of validity and enforceability of the Arbitration Agreement to the arbitrator.

As set forth above in footnote 1, “parties may delegate questions regarding the validity of an arbitration agreement (such as enforceability in the face of a challenge based on unconscionability) or aspect of an arbitration agreement (such as whether a particular claim is subject to the arbitration agreement) to the arbitrator if they clearly and unmistakably agree to do so.” (Garcia, supra, 102 Cal.App.5th 41, 50.)

The Arbitration Agreement sets forth the following delegation clause: “The Arbitrator, and not any federal, state, or local court or agency, shall have exclusive authority to resolve any dispute relating to the validity, applicability, enforceability, or waiver of this Agreement including, but not limited to any claim that all or any part of this Agreement is void or voidable. But, as stated below, the preceding sentence does not apply to the Class Action Waiver.” (Drabic Decl., Ex. D, Arbitration Agreement, p. 2.) The court finds that this language is clear and unmistakable in delegating to the arbitrator the issues of validity and enforceability of the Arbitration Agreement.

The court acknowledges that Plaintiff has argued that the delegation clause is ambiguous because it “concurrently delegates exclusive authority to a ‘court of competent jurisdiction’ to resolve a claim for” injunctive relief and any claim that the class action waiver and/or collective action waiver is unenforceable, unconscionable, void or voidable. (Drabic Decl., Ex. D, Arbitration Agreement, p. 2.) The court disagrees.

The court acknowledges that arbitration agreements that include conflicting language regarding the issue of delegation have been found to be ambiguous. For example, in Hartley v. Superior Court (2011) 196 Cal.App.4th 1249, 1257-1258, the court found ambiguous an arbitration agreement that (1) stated that the determination of the scope and applicability of the agreement to arbitrate shall be submitted to arbitration, but (2) used the term “‘trier of fact of competent jurisdiction,’ rather than the term ‘arbitrator’” in a severability clause, thereby indicating that the court had the authority to decide whether a provision was unenforceable. Thus, “if a severability clause states that a court may excise unconscionable provisions, the delegation clause does not meet the heightened standard necessary for enforcement, because it is no longer clear that only the arbitrator may decide issues such as unconscionability.” (Najarro v. Superior Court (2021) 70 Cal.App.5th 871, 880 [emphasis in original].)

Here, the severability clause does not provide the court with the ability to sever unconscionable provisions. (Drabic Decl., Ex. D, Arbitration Agreement, p. 3, ¶ 10 [“in the event any portion of this Agreement is deemed unenforceable, the unenforceable provision will be severed from the Agreement and the remainder of this Agreement will be enforceable”].) Further, while the Arbitration Agreement also states that “any claim that all or part of the Class Action Waiver and/or Collective Action Waiver is invalid, unenforceable, unconscionable, void or voidable, may be determined only by a court of competent jurisdiction and not by an arbitrator,” the Arbitration Agreement makes clear that (1) class action actions are not encompassed thereby, and (2) the delegation clause “does not apply to the Class Action Waiver.” (Drabic Decl., Ex. D, Arbitration Agreement, ¶¶ 1, 2, 5 [emphasis added].) Thus, the inclusion of this language does not render the delegation clause unclear or unambiguous, because it is clear which issues have been delegated to the arbitrator. (Najarro, supra, 70 Cal.App.5th at p. 880.) Similarly, the court finds that the ability of a party to apply for injunctive relief in connection with an arbitrable controversy before a court of competent jurisdiction does not render the delegation clause ambiguous since it does not suggest that the court has the authority to determine the issues of “the validity, applicability, enforceability, or waiver of” the Arbitration Agreement. (Ibid.)

Finally, the court finds that Plaintiff has not met her burden to show that the delegation clause itself is unconscionable because Plaintiff did not show that the delegation clause contained substantively unconscionable terms. (Mendoza v. Trans Valley Transport (2022) 75 Cal.App.5th 748, 773 [delegation clause (1) must be clear and unmistakable and (2) must not be revocable under state contract defenses such as fraud, duress, or unconscionability]; OTO, LLC v. Kho (2019) 8 Cal.5th 111, 125 [“Both procedural and substantive unconscionability must be shown for the defense to be established . . . .”].)

Thus, the court finds that (1) the delegation clause is clear and unmistakable, and (2) the delegation clause is not revocable under the doctrine of unconscionability. The court therefore finds that the arbitrator must determine the issues of the validity, enforceability, voidableness of the Arbitration Agreement.

For the reasons set forth above, the court finds that Defendant has met its burden to show that (1) there exists an agreement to arbitrate between it, on the one hand, and Plaintiff, on the other hand, and (2) there exists a delegation clause in that agreement. The court therefore grants Defendant’s motion to compel Plaintiff to submit the claims set forth below to binding arbitration.

The court grants defendant Cardinal Financial Company, Limited Partnership’s motion to compel arbitration and stay proceedings as follows.

The court orders (1) defendant Cardinal Financial Company, Limited Partnership and plaintiff Erica McPeck to submit to binding arbitration (i) the issues of whether the parties’ December 31, 2019 “Mutual Agreement to Arbitrate” is valid, enforceable, or void or voidable, and, if the arbitrator determines that the agreement is valid, enforceable, and not void or voidable, (ii) the claims alleged in plaintiff Erica McPeck’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 October 28, 2025, at 8:30 a.m., in Department 53.

The court orders defendant Cardinal Financial Company, Limited Partnership to give notice of this ruling.

[1] The court notes that Defendant has argued that the arbitrator must decide all “gateway” issues of arbitration. To the extent that Defendant has argued that the arbitrator must determine the existence of an agreement to arbitrate between itself and Plaintiff, the court disagrees. While “parties may delegate questions regarding the validity of an arbitration agreement (such as enforceability in the face of a challenge based on unconscionability) or aspect of a arbitration agreement (such as whether a particular claim is subject to the arbitration agreement) to the arbitrator if they clearly and unmistakably agree to do so[,]” “the delegation of such questions presupposes the existence of an agreement between the parties, which the court necessarily ha[s] to decide before it c[an] enforce any such delegation.” (Garcia v. Stoneledge Furniture LLC (2024) 102 Cal.App.5th 41, 50.)

[2] Although Drabic did not expressly state, in the declaration submitted in support of the moving papers, that Plaintiff signed the Arbitration Agreement by using this system, Drabic (1) stated that Defendant used the iSolved system to communicate updates to its written policies to its employees, and (2) attached “a true and correct copy of the audit trail for the Arbitration Agreement signed by Plaintiff, which [they] accessed and exported from the iSolved HRIS system[,]” which is sufficient to show that Plaintiff signed the Arbitration Agreement using that system. (Drabic Decl., ¶ 13 [emphasis added].) Further, Drabic’s supplemental declaration makes clear that the Arbitration Agreement was hosted on the iSolved system. (Supp. Drabic Decl., ¶¶ 15-17.)

[3] The court notes that Defendant (1) does not appear to dispute that the Arbitration Agreement constitutes an Employment Agreement Modification within the meaning of the employment agreement, and (2) does not dispute that the Arbitration Agreement was not signed by its Chief Executive Officer, its President, or its Director of Human Resources. (Supp. Drabic Decl., ¶ 23; Drabic Decl., Ex. D, Arbitration Agreement, p. 3 [showing signature of “SVP, HUMAN RESOURCES” on behalf of Defendant.)

erica mcpeck ; Plaintiff, vs. cardinal financial company, limited partnership , et al.; Defendants.	Case No.:	24STCV07345

	Hearing Date:	February 19, 2025

	Time:	10:00 a.m.

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