Judge: Robert S. Draper, Case: 22STCV12623, Date: 2022-09-07 Tentative Ruling

Case Number: 22STCV12623    Hearing Date: September 7, 2022    Dept: 78

Superior Court of California 

County of Los Angeles 

Department 78 

Defendants Oakmont Senior Living, LLC and OMG II, Inc’s Motion to Compel Arbitration is GRANTED. All future proceedings are stayed pending arbitration.

FACTUAL BACKGROUND 

This is an action for workplace discrimination and wrongful discrimination. The Complaint alleges as follows.

Defendants Oakmont Senior Living LLC (“Oakmont”) and OMG II Inc. (“OMG” and with Oakmont, “Defendants”) employed Plaintiff Ann-Marie Boersma (“Plaintiff”) as a medication nurse in Defendants’ senior living facility. (Compl. ¶¶ 1, 10.) In May, 2017, Plaintiff suffered a right knee injury in the course of her employment. (Compl. ¶ 13.) Between June and October 2018, Plaintiff had to take several intermittent medical leaves to tend to her knee, and other assorted injuries. (Compl. ¶¶ 15-22.) In January 2019, Plaintiff reaggravated her knee injury, and required several leaves and accommodations related to her injury. (Compl. ¶¶ 24-30.) In March 2020, Plaintiff accepted a new position with Defendants as a memory care director. (Compl. ¶ 34.) In May 2020, Plaintiff’s knee pain returned, and she was placed on a leave of absence from June 19, 2020, through August 23, 2020. (Compl. ¶ 36.)

On September 9, 2020, Plaintiff was placed on a performance improvement plan. (Compl. ¶ 38.) Plaintiff alleges this was in retaliation for Plaintiff’s need for medical accommodations. (Compl. ¶ 39.)

On October 15, 2020, Plaintiff was provided with permanent work restrictions by her doctor. (Compl. ¶ 42.) On February 1, 2021, Defendants engaged in an interactive process meeting with Plaintiff where they informed Plaintiff they would be unable to accommodate her work restrictions. (Compl. ¶ 44.) Plaintiff was terminated from her employment on February 17, 2021. (Compl. ¶ 45.) Plaintiff alleges the reason for her termination was pretextual, and she was terminated because of her work restrictions, medical conditions, need for accommodations, and age. (Compl. ¶ 48.)

PROCEDURAL HISTORY

On April 14, 2022, Plaintiff filed the Complaint asserting eight causes of action:

1.    Discrimination Based Upon Physical Discrimination in Violation of FEHA;

2.    Discrimination Based Upon Age in Violation of FEHA;

3.    Violation of the California Family Rights Act;

4.    Failure to Accommodate Physical Disability in Violation of FEHA;

5.    Failure to Engage in the Interactive Process in Violation of FEHA;

6.    Failure to Prevent Discrimination in Violation of FEHA;

7.    Retaliation in Violation of FEHA;

8.    Wrongful Termination in Violation of Public Policy.

On May 27, 2022, Defendants filed an Answer.

On June 6, 2022, Defendants filed the instant Motion to Compel Arbitration.

On June 29, 2022, Plaintiff filed an Opposition.

On July 8, 2022, Defendants filed a Reply.

DISCUSSION 

I.               MOTION TO COMPEL ARBITRATION

Defendant moves the Court to compel arbitration pursuant to an arbitration agreement titled “Employee Agreement to Arbitrate Disputes” (the “Agreement”). (Ex. 1.)

California law reflects a strong public policy in favor of arbitration as a relatively quick and inexpensive method for resolving disputes. To further that policy, California Code of Civil Procedure section 1281.2 requires a trial court to enforce a written arbitration agreement unless one of three limited exceptions applies. Those statutory exceptions arise where (1) a party waives the right to arbitration; (2) grounds exist for revoking the arbitration agreement; and (3) pending litigation with a third party creates the possibility of conflicting rulings on common factual or legal issues.” (Acquire II, Ltd. v. Colton Real Estate Group (2013) 213 Cal.App.4th 959, 967 [citations omitted]; Code Civ. Proc. § 1281.2.)

In deciding a petition to compel arbitration, trial courts must decide first whether an enforceable arbitration agreement exists between the parties, and then determine the second gateway issue whether the claims are covered within the scope of the agreement. (Omar v. Ralphs Grocery Co. (2004) 118 Cal.App.4th 955, 961.) The party seeking arbitration has the “burden of proving the existence of a valid arbitration agreement by a preponderance of the evidence, while a party opposing the petition bears the burden of proving by a preponderance of the evidence any fact necessary to its defense.” (Ruiz v. Moss Bros. Auto Group, Inc. (2014) 232 Cal.App.4th 836, 842.) The trial court “sits as the trier of fact, weighing all the affidavits, declarations, and other documentary evidence, and any oral testimony the court may receive at its discretion, to reach a final determination.” (Id.) General principles of contract law govern whether parties have entered a binding agreement to arbitrate. (Pinnacle Museum Tower Assn. v. Pinnacle Market Development (US), LLC (2012) 55 Cal.4th 223, 236; see also Winter v. Window Fashions Professions, Inc. (2008) 166 Cal.App.4th 943, 947.) 

A.  Existence of a Valid Agreement

Here, Defendant attaches a copy of the Arbitration Agreement. (Ex. 1). The Agreement is a standalone agreement titled “Employee Agreement to Arbitrate Disputes” in large, bold font. (Ibid.)

Plaintiff signed and dated the Agreement on the bottom of the page. (Ibid.)

By attaching the signed and dated Agreement to its filing, Defendants have shown by a preponderance of the evidence the existence of a valid arbitration agreement. Plaintiff does not dispute the existence of the arbitration agreement.

B.  Applicability of Agreement as to Instant Claims

The Agreement states, in relevant part:

Employee and Oakmont Management Croup have agreed that any dispute, controversy, or claim arising out of or relating to Employee’s employment with Oakmont Management Group LLC and/or the termination thereof shall be settled by binding arbitration in accordance with the Federal Arbitration Act (“FAA”) . . . Arbitration shall be conducted in accordance with the procedures of the California arbitration Act (Cal. Code Civ. Proc. Section 1282 et seq., including section 1283.5) and all of the Act’s other mandatory and permissive rights to discovery.

The Agreement explicitly applies to “any dispute, controversy, or claim arising out of or relating to Employee’s employment with Oakmont Management Group LLC and/or the termination thereof.” As the entirety of Plaintiff’s Complaint arises from her employment, and subsequent termination, with Defendants, the Agreement facially applies to this suit.

C.  Defenses

While Plaintiff does not doubt the existence or authenticity of the Agreement, she argues several defenses preclude its enforcement.

1.    Employer as Non-Signatory

First, Plaintiff argues that the Agreement is not enforceable as it was entered into between Plaintiff and Oakmont Management Group, LLC. Plaintiff contends that she was only employed by OMG and was never employed by Oakmont. (Boersma Decl. ¶ 8.) Accordingly, Plaintiff argues that her employer, OMG, was a non-signatory to the Agreement, rendering the Arbitration Agreement unenforceable. OMG is a wholly owned subsidiary of Oakmont. (Ellis Decl. ¶ 2.) Oakmont conducts the onboarding process for Defendants’ employees at communities operated by both OMG and Oakmont. (Ibid.)

When a petitioner seeks to compel arbitration as to a non-signatory to the arbitration agreement, there are six theories which may support the petition: “‘(a) incorporation by reference; (b) assumption; (c) agency; (d) veil-piercing or alter ego; (e) estoppel; and (f) third-party beneficiary . . . . [Citations.]” (Benaroya v. Willis (2018) 23 Cal.App.5th 462, 469.) 

A.   Alter Ego Liability

First, Plaintiff’s argument is unavailing because it fundamentally contradicts the allegations contained in the Complaint, where Plaintiff alleges that OMG and Oakmont are sufficiently intertwined to warrant alter ego liability.

If there are allegations in a complaint that all defendants are agents of each other, all defendants can compel arbitration even if the party compelling is not party to the arbitration agreement. (Garcia v. Pexco, LLC (2017) 11 Cal.App.5th 782, 788.) In Garcia, the defendant, a staffing agency, hired the plaintiff as an hourly employee; as part of the hiring process, the plaintiff signed an arbitration agreement. (Id. at p. 784.) Subsequently, the plaintiff was assigned to work for Pexco. (Ibid.) A labor dispute arose between the plaintiff and Pexco, and the plaintiff brought suit against both the staffing agency and Pexco. (Ibid.) 

The Court of Appeal affirmed that Pexco had the right to compel the plaintiff to arbitrate, even though the plaintiff’s arbitration agreement was with the staffing agency and not with Pexco. (Id. at p. 788.) The Court observed that the plaintiff’s complaint alleged that all defendants were agents of one another, and that each cause of action in the operative complaint was alleged against “All Defendants,” making no distinction between the staffing agency and Pexco. The Court held that Pexco could compel arbitration because (1) the plaintiff’s claims were “intimately founded in and intertwined with his employment relationship with” the staffing agency, and (2) the agency exception, which allows a nonparty to an arbitration agreement to enforce arbitration when the plaintiff alleges that the defendant “acted as an agent of a party to an arbitration agreement.” (Id at p. 788.) 

Here, as in Pexco, Plaintiff alleges that all defendants were agents of one another, and each cause of action is alleged against all defendants.

Specifically, the Complaint states that “Plaintiff was an individual employed by Oakmont Senior Living, and/or OMG II Inc.” (Compl. ¶ 1.)

Additionally, the Complaint alleges:

[E]ach Defendant is, and at all times relevant to this Complaint are, the agent, joint employer, partner, constitute an integrated enterprise, joint venturer, alter ego, affiliate, and/or co-conspirator with or of each of the other Defendants and/or otherwise acted on the behalf of each other Defendant and/or are otherwise legally responsible for the actions of each other Defendant.

The Complaint repeatedly alleges that Plaintiff was a joint employee of Oakmont and OMG, and that Oakmont and OMG are sufficiently inseparable to warrant alter ego liability. The doctrine of judicial estoppel precludes Plaintiff from alleging that the two parties are joint employers and legally responsible for one another’s behavior in the Complaint, then arguing that there is no such relationship in a subsequent filing.

Accordingly, Oakmont can compel arbitration as a non-signatory to the Agreement pursuant to alter ego liability, which Plaintiff has alleged.

B.   Equitable Estoppel

Even if Plaintiff had not alleged that the two parties were subject to alter ego liability, the Agreement would be enforceable through equitable estoppel.

“[A] nonsignatory defendant may invoke an arbitration clause to compel a signatory plaintiff to arbitrate its claims when the causes of action against the nonsignatory are ‘intimately founded in and intertwined’ with the underlying contract obligations.” (Boucher v. Alliance Title Co., Inc. (2005) 127 Cal.App.4th 262, 271.) “By relying on contract terms in a claim against a nonsignatory defendant, even if not exclusively, a plaintiff may be equitably estopped from repudiating the arbitration clause contained in that agreement.” (Id. at 272.) “The focus is on the nature of the claims asserted by the plaintiff against the nonsignatory defendant.” (Id.) “That the claims are cast in tort rather than contract does not avoid the arbitration clause.” (Id.)

Here, Plaintiff’s causes all are based on Plaintiff’s employment with OMG. The Agreement explicitly states that “any dispute, controversy, or claim arising out of or relating to Employee’s employment with Oakmont Management Group LLC and/or the termination thereof shall be settled by binding arbitration in accordance with the Federal Arbitration Act (“FAA”) . . .” (Ex. 1.) Plaintiff’s attempt to circumvent the agreement based on the technicality of whether a parent company or its wholly owned subsidiary was the named signatory is precisely the instance where equitable estoppel is intended to apply. (See Metalclad Corp. v. Ventana Environmental Organizational Partnership (2003) 109 Cal.App.4th 1705, 1714 [“estoppel prevents a party from playing fast and loose with its commitment to arbitrate, honoring it when advantageous and circumventing it to gain undue advantage”].)

Finally, the Court notes that Plaintiff argues Plaintiff was not a party to the Agreement. As Plaintiff signed, dated, and printed her name on the Agreement, and does not doubt the authenticity of the document or her signature, this argument is not worthy of further discussion.

2.    Unconscionability

Next, Plaintiff argues the Agreement is unenforceable as it is both procedurally and substantively unconscionable.

Unconscionability generally includes the absence of meaningful choice on the part of one of the parties together with contract terms that unreasonably favor the other party. (Carboni v. Arrospide (1991) 2 Cal.App.4th 76, 82-83.) As the party asserting unconscionability, Plaintiff has the burden of proving both procedural and substantive unconscionability. (Crippen v. Central Valley RV Outlet. Inc. (2004) 124 Cal.App.4th 1159, 1165). Courts analyze the unconscionability standard in Civil Code section 1670.5 as invoking elements of procedural and substantive unconscionability. (See id. at 1280-81.) Procedural unconscionability focuses on whether there is ‘oppression’ arising from an inequality of bargaining power or ‘surprise’ arising from buried terms in a complex printed form. (Id.) The substantive element addresses the existence of overly harsh or one-sided terms. (Id.) An agreement to arbitrate is unenforceable only if both the procedural and substantive elements are satisfied. (Stirlen v. Supercuts, Inc. (1997) 51 Cal.App.4th 1519, 1533.) However, Armendariz held, ‘[T]he 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.’ (Armendariz, at 114).”  (McManus v. CIBC World Markets Corp. (2003) 109 Cal.App.4th 76, 87 (citations omitted).)  

A.   Procedural Unconscionability

As to procedural unconscionability, Plaintiff argues, first, that the arbitration agreement was an adhesion contract, offered on a take it or leave it basis. (Boersma Decl. ¶ 5.) Finally, Plaintiff argues that Defendants failed to attach the AAA rules governing the arbitration process to the Agreement.

“[T]he adhesive nature of the agreements does not, in and of itself, render the arbitration agreements unconscionable. (See Dotson v. Amgen, Inc. (2010) 181 Cal.App.4th 975, 981; McManus, supra, 109 Cal.App.4th at 89.) The adhesive nature of an agreement is just the beginning, not the end, of the inquiry into its enforceability. (Pinela v. Neiman Marcus Group., Inc. (2015) 238 Cal.App.4th 227, 242.)

The Court finds that the alleged adhesive nature of the Agreement warrants minimal procedural unconscionability.

Next, Plaintiff argues that she was in no way informed of what rights she had, or what rights she was surrendering as a result of the Agreement. (Boersma Decl. ¶ 6.) 

As a general rule under California law, arguments that arbitration provisions are unenforceable because the party did not carefully read the agreements, did not understand the significance of the arbitration provisions, and did not knowingly waive their right to a jury trial may not be used to invalidate a written arbitration provision. (Powers v. Dickson, Carlson & Campillo (1997) 54 Cal.App.4th 1102, 1109.) 

Plaintiff’s failure to fully understand a contract that she signed is not an indication of procedural unconscionability.

Finally, Plaintiff argues that Defendants failed to attach to the Agreement the arbitration rules governing any future arbitration proceeding.

Failure to attach arbitration rules, standing alone, is insufficient grounds to support a finding of unconscionability. (Peng v. First Republic Bank (2013) 219 Cal.App.4th 1462, 1469-72.) Where the non-moving party had not been provided with a copy of the arbitration rules, the Court must make a factual determination in deciding whether the non-moving party is prejudiced by the moving party’s failure to attach said rules. (See id.)

Here, Plaintiff has not indicated the manner in which she has been prejudiced by Defendants’ failure to provide her with the arbitration. Moreover, the Arbitration Agreement states:

All rules of pleading (including the right of demurrer), all rules of evidence, all rights to resolution of the dispute by means of motions for summary judgment, judgment on the pleadings, and judgment under Code of Civil Procedure section 631.8 shall be observed. The arbitrator shall have the authority to award any remedy or relief that a court of this State could order or grant, including, without limitation, specific performance, payment of damages, issuance of injunction, or the imposition of sanctions for abuse of frustration of the arbitration process.  

This clause is pertinent because it indicates that Plaintiff would not be denied any rights in arbitrating her claim where she would be afforded the same rights available in a court of law. There are also no facts to indicate Defendants have obtained an unfair advantage over Plaintiff by failing to provide the relevant rules, as the Agreement does not state which arbitration service the parties will use, only that:

[T]he arbitrator selected to hear claims under this Agreement shall be a retired California Superior Court Judge, or an otherwise qualified individual to whom the parties mutually agree, and shall be subject to disqualification on the same grounds as would apply to a judge of such court.

Accordingly, the Court finds that the failure to attach arbitration rules to the Agreement caused Plaintiff no prejudice and does not constitute procedural unconscionability.

B.   Substantive Unconscionability

As to substantive unconscionability, Plaintiff argues first that as Plaintiff was asked to sign the Arbitration Agreement on August 18, 2017, after she had sustained her first injury, rather than when she was first hired by Defendants, “Defendant[s] likely intended to wrongfully terminate her and violate her civil rights due to her injury, disability, and/or need for an accommodation prior to deciding to have her sign the Arbitration Agreement.” (Motion at p. 18.)

Plaintiff cites no authority stating that an arbitration agreement entered subsequent to, rather than upon, employment is an indicator of substantive unconscionability. Moreover, the Court refuses to accept that Defendants’ introduction of an arbitration agreement three and a half years before their eventual termination of Plaintiff represents a premeditated attempt to wrongfully terminate and violate Defendants’ civil rights such that the Court should render the Agreement void.

Finally, Plaintiff argues that the Agreement is not mutual, as the party compelling arbitration here was not a signatory to the Agreement. As this argument was discussed above, the Court need not address it again here.

Accordingly, the Court finds there was minimal procedural unconscionability, and no substantive unconscionability, and therefore the Agreement is valid.

Defendants’ Motion to Compel Arbitration is GRANTED. All further proceedings are stayed pending arbitration.

DATED: September 7, 2022 

____________________________

Hon. Robert S. Draper 

Judge of the Superior Court