Judge: Robert C. Longstreth, Case: 37-2023-00022282-CU-WT-CTL, Date: 2024-05-03 Tentative Ruling

SUPERIOR COURT OF CALIFORNIA,

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HALL OF JUSTICE

TENTATIVE RULINGS - May 02, 2024

05/03/2024  08:30:00 AM  C-65 COUNTY OF SAN DIEGO

JUDICIAL OFFICER:Robert Longstreth

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Civil - Unlimited  Wrongful Termination Motion Hearing (Civil) 37-2023-00022282-CU-WT-CTL ABDI VS THEKEY MANAGEMENT LLC [IMAGED] CAUSAL DOCUMENT/DATE FILED: Motion - Other, 09/07/2023

Defendants' Motion to Compel Arbitration and Stay the Case Pending Arbitration (ROA 13) is GRANTED.

Defendants seek to compel all of Plaintiff's claims against them pursuant to a Mutual Arbitration Agreement ('Agreement'). The Agreement is between Plaintiff and her employer, Defendant TheKey Management, LLC, then known as Home Care Assistance of California, LLC. (Gunnett Decl. ¶ 10.) Plaintiff does not dispute she signed the Agreement, but asserts it is unenforceable.

Defendants contend the Federal Arbitration Act ('FAA') governs the Agreement. (9 U.S.C. § 2.) The Agreement expressly provides that '[t]he Federal Arbitration Act (9 U.S.C. § 1 et seq.) governs this Agreement, which evidences a transaction involving commerce.' (Gunnett Decl. at Exh. A, p. 1.) Although Defendants cannot rely on this provision as necessarily establishing that the transaction does in fact involve interstate commerce, they have presented sufficient evidence that it does. (Gunnett Decl.

at ¶¶ 2-3.) Further, Plaintiff does not dispute the FAA governs the Agreement. Accordingly, the court concludes the FAA applies.

The court applies state law to determine whether a valid agreement to arbitrate exists in the first place.

(Perry v. Thomas (1987) 482 U.S. 483, 492, fn. 9; Metters v. Ralphs Grocery Co. (2008) 161 Cal.App.4th 696, 701.) Plaintiff asserts the Agreement is unconscionable and thus unenforceable. For the Agreement to be unenforceable, Plaintiff must demonstrate both procedural and substantive unconscionability.

(Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83, 114.) These two elements 'need not be present in the same degree'; rather, 'a sliding scale is invoked....' (Ibid.) 'In other words, the more substantively oppressive the contract term, the less evidence of procedural unconscionability is required to come to the conclusion that the term is unenforceable, and vice versa.' (Ibid.) 'The procedural element of unconscionability... focuses on two factors: oppression and surprise.' (Pinela v. Neiman Marcus Group, Inc. (2015) 238 Cal.App.4th 227, 243.) 'Oppression arises from an inequality of bargaining power which results in no real negotiation and an absence of meaningful choice.' (Ibid., citation omitted.) '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.' (Ibid., citation omitted.) Calendar No.: Event ID:  TENTATIVE RULINGS

3041430  10 CASE NUMBER: CASE TITLE:  ABDI VS THEKEY MANAGEMENT LLC [IMAGED]  37-2023-00022282-CU-WT-CTL Plaintiff asserts the Agreement is a contract of adhesion. Plaintiff claims she was not informed she could opt out or that the Agreement was optional, and her supervisor told her that signing the form was mandatory. (Pltf. Decl. at ¶¶ 3-6.) These assertions are undermined by the plain terms of the Agreement, which expressly states that Plaintiff may opt out within thirty days after signing it, which necessarily indicates that the arbitration provision is optional. (Gunnett Decl. at Exh. A, § 7.) Given this, whether Plaintiff was permitted to negotiate this or any other terms of the Agreement does not appear to be particularly relevant.

Plaintiff also asserts the Agreement is procedurally unconscionable because it incorporates the rules of the American Arbitration Association ('AAA') without attaching them. (See, e.g., Baltazar v. Forever 21, Inc. (2016) 62 Cal.4th 1237, 1246.) However, Plaintiff has not pointed to any particular concern regarding the AAA rules; her argument is simply that her employer's failure to attach the rules renders the Agreement unenforceable. The Agreement tells Plaintiff how to access the AAA rules, Defendant has demonstrated that those rules are easily accessible, and Plaintiff had 30 days after she signed the Agreement to withdraw her consent, giving her time to review the AAA rules and reconsider her consent to the Agreement even after she signed it.

Plaintiff asserts the Agreement is procedurally unconscionable because it was a condition of her employment. (Armendariz at p. 114-115.) The court notes the Agreement was not offered as a pre-employment contract, nor as part of the onboarding process; rather, it was presented to Plaintiff a month after she started employment. In addition, as noted above, the Agreement provided a mechanism for Plaintiff to opt out. Again, in light of this provision, Plaintiff's statements that she was asked to sign the Agreement amid a shutdown due to the COVID-19 pandemic, and was told by her supervisor that she was required to sign it, (Pltf. Decl. ¶ 4), are of little moment.

Finally, Plaintiff contends the option to opt out is itself procedurally unconscionable, in that it required her to submit a written notice to her employer's headquarters (or via email) within 30 days of signing the Agreement. Plaintiff again notes she signed the Agreement amid the COVID-19 pandemic but provides no analysis of why this fact or any other circumstance would make the opt out provision difficult to understand and execute. Moreover, the cases Plaintiff cites in support of this argument (Gentry v. Superior Court (2007) 42 Cal.4th 443 and Swain v. LaserAway Medical Group (2020) 57 Cal.App.5th 59) are both factually distinguishable and thus inapposite, as Defendants point out in their reply.

Even if the court were to determine there was significant evidence of procedural unconscionability, which it is unable to do here, Plaintiff must also demonstrate significant evidence of substantive unconscionability. Substantive unconscionability is found where the terms of the agreement are 'overly harsh' or 'one-sided.' (Armendariz, supra, at p. 114.) Plaintiff asserts the Agreement is substantively unconscionable because it unfairly curtails discovery.

The Agreement expressly provides that either party can seek additional discovery based on a stipulation or a determination by the arbitrator. (Gunnett Decl. at Exh. A, § 5.) Thus, Plaintiff is asking the court not only to make an a priori determination as to the number of depositions that must be taken in this case, but to make an a priori determination that the Defendant and the arbitrator will deprive her of the ability to conduct needed discovery. This the court cannot do. As stated in Dotson v. Amgen, Inc. (2010) 181 Cal.App.4th 975, 984, a wrongful termination action involving a discovery provision virtually identical to the one at issue here, and which relied on previous authority construing a similar provision: 'The trial court assumed that the arbitrator would not be fair in determining whether additional depositions were needed. This assumption is not a consideration when determining the validity of a discovery provision. Indeed, it is quite the opposite. We assume that the arbitrator will operate in a reasonable manner in conformity with the law. (See, e.g., Booker v. Robert Half International, Inc.

(D.C.Cir.2005) 413 F.3d 77, 86 [provision giving arbitrator broad discretion over discovery not unconscionable based on speculation that arbitrator would impermissibly limit discovery]; Guyden v. Aetna, Inc. (2d Cir.2008) 544 F.3d 376, 386–387 [provision limiting discovery but permitting arbitrator to Calendar No.: Event ID:  TENTATIVE RULINGS

3041430  10 CASE NUMBER: CASE TITLE:  ABDI VS THEKEY MANAGEMENT LLC [IMAGED]  37-2023-00022282-CU-WT-CTL allow additional discovery upon a showing that it was 'necessary' could not be invalidated based on speculation that arbitrator would not exercise discretion to permit additional discovery].)' Plaintiff asserts the Agreement lacks mutuality because of an 'injunctive relief carve out.' However, the Agreement does not actually limit injunctive relief to the employer, nor does it limit injunctive relief to certain contexts, rendering it distinguishable from cases like Mercuro v. Superior Court (2002) 96 Cal.App.4th 167, 175-176 and Ferguson v. Countrywide Credit Industries, Inc. (9th Cir. 2002) 298 F.3d 778, cited in Plaintiff's opposition. (Gunnett Decl. at Exh. A, § 1.) Either side may seek injunctive relief in court related to an arbitrable dispute if the relief to which either party might be entitled in arbitration would otherwise be ineffectual without an injunction. Plaintiff makes no showing, or even argument, that her employer could be expected to be more likely to seek injunctive relief than she would be.

Plaintiff asserts a requirement to participate in an employer-controlled dispute resolution procedure before initiating arbitration is substantively unconscionable. (Nyulassy v. Superior Court (2004) 120 Cal.App.4th 1267, 1282-83.) The Agreement refers to 'internal procedures for resolution of complaints,' though it is not clear from the Agreement what such procedures may entail, nor whether they are a precondition of initiating arbitration. (Gunnett Decl. at Exh. A, § 1.) Defendants assert the procedures simply require Plaintiff to give notice of her claim, (Defendants' Reply Mem., ROA 35, at 9:1-3), and it is clear at this point that Defendant has had ample notice of the Plaintiff's claim. Thus, while there are certain circumstances in which requiring that internal procedures be followed may unfairly advantage the employer, (Nyulassy at pp. 1282-83), there is no showing that this is such a case. To the contrary, it appears that by Defendants' own admission Plaintiff has already satisfied the applicable internal procedures.

Plaintiff contends the Agreement's requirement that she bear her own attorney fees and costs, and permitting 'any party' to recover its attorneys' fees and costs if that party prevails, is substantively unconscionable. (Gunnett Decl. at Exh. A, § 6.) Under FEHA, employers are only permitted to recover fees against an employee if the action was frivolous or continued to litigate after it became clear the action was baseless. (Govt. Code § 12965(c)(6).) The court agrees the challenged portions of the provision contravene FEHA and violate Armendariz. A provision requiring both sides to bear their own fees and costs runs counter to FEHA 'as it has the effect of denying a plaintiff the rights and remedies he or she would have if he or she were litigating his or her claims in court.' (Pinela at p. 255.) Unconscionable provisions may be severed unless the agreement is 'permeated' by unconscionability or 'contains unconscionable aspects that cannot be cured by severance, restriction, or duly authorized reformation.' (Armendariz at p. 126; see also Civ. Code § 1670.5.) The Agreement also provides that '[i]f any portion of this Agreement is deemed unenforceable, the unenforceable provision will be severed from the Agreement and the remainder of the Agreement will be enforceable.' (Gunnett Decl. at Exh. A, § 8.) Here, the court concludes that the fees and costs provision does not permeate the entire Agreement and thus may be properly severed. (Gunnett Decl. at Exh. A, § 6.) This is particularly true since, as Defendant points out, the Agreement elsewhere provides that '[t]he Arbitrator may award any remedy to which a party is entitled under applicable law' which includes FEHA's provisions relating to fees and costs. (Id. at § 5.) Defendants contend Plaintiff may be compelled to arbitrate her claims against the individual Defendants, Jessica Pascasio and Amy Joiner, as well. The Agreement specifically contemplates arbitration of claims Plaintiff may have against other employees. (Gunnett Decl. at Exh. A, § 1.) Further, Plaintiff did not oppose this in her opposition.

Accordingly, Plaintiff and Defendants are ordered to arbitration and this case is STAYED pending completion of arbitration. (9 U.S.C. § 3.) Calendar No.: Event ID:  TENTATIVE RULINGS

3041430  10 CASE NUMBER: CASE TITLE:  ABDI VS THEKEY MANAGEMENT LLC [IMAGED]  37-2023-00022282-CU-WT-CTL The court sets a status conference regarding the status of arbitration for November 1, 2024 at 10:30 a.m.

Once confirmed, this ruling shall be the final ruling of the court and no further written order is required.

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