Judge: Robert S. Draper, Case: 22STCV16129, Date: 2022-10-28 Tentative Ruling

Case Number: 22STCV16129    Hearing Date: October 28, 2022    Dept: 78

Superior Court of California 

County of Los Angeles 

Department 78 

Defendants Maryland Marketsource, Inc. and Ford Motor Company’s Motion to Compel Arbitration is GRANTED. Plaintiff’s claims against Maryland Marketsource, Inc. and Ford Motor Company are stayed pending arbitration.

Plaintiff’s claim against South Bay Ford, Inc. is stayed in this Court pending completion of arbitration of the above listed claims.

FACTUAL BACKGROUND   

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

Defendant Maryland Marketsource, Inc. (“MMI”) hired Plaintiff Robert Hernandez (“Hernandez”) to repair vehicle airbags on behalf of Defendant Ford Motor Company (“Ford”) in August 2019. (Compl. ¶ 2.) As part of his duties, Hernandez would frequently visit Defendant South Bay Ford (“SB Ford”). (Compl. ¶ 3.) Plaintiff suffered a workplace injury on February 14, 2020. (Compl. ¶ 4.) MMI unlawfully terminated Plaintiff two weeks later, while Plaintiff was recovering under the care of a workers’ compensation doctor. (Compl. ¶ 5.) Plaintiff was not made aware that he had been terminated until April 2021. (Compl. ¶ 6.)

PROCEDURAL HISTORY 

On May 13, 2022, Hernandez filed the Complaint asserting eleven causes of action:

1.    Retaliation: Labor Code;

2.    FEHA Discrimination: Disparate Treatment;

3.    FEHA Discrimination: Failure to Provide a Reasonable Accommodation;

4.    FEHA Discrimination: Failure to Engage in Interactive Process;

5.    FEHA Retaliation;

6.    FEHA Failure to Prevent Harassment, Discrimination, or Retaliation;

7.    Wrongful Discharge in Violation of Public Policy;

8.    Failure to Provide Accurate Wage Statements;

9.    Waiting Time Penalty;

10.                   Failure to Provide Employment Records Upon Demand; and,

11.                   Failure to Provide Meal and Rest Periods.

On June 20, 2022, MMI filed an Answer.

On July 11, 2022, SB Ford filed an Answer.

On August 18, 2022, Ford filed an Answer.

On September 26, 2022, MMI filed the instant Motion to Compel Arbitration.

On October 5, 2022, Ford filed a Joinder as to the instant motion.

On October 17, 2022, Hernandez filed an Opposition.

Also on October 17, 2022, SB Ford filed an Opposition.

On October 21, 2022, both Ford and MMI filed Replies.  

DISCUSSION 

                          I.          MOTION TO COMPEL ARBITRATION

Defendants MMI and Ford move to compel arbitration pursuant to a Mutual Arbitration Agreement (“the Agreement”) Hernandez signed as a part of his onboarding process. (Wiley Decl., Ex. C.)  

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 motion 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 Arbitration Agreement

MMI attaches the proffered arbitration agreement to the Declaration of Melissa Wiley (“Wiley”). Wiley states that she is MMI’s Director of Payroll and Onboarding, and in this position, she oversees the employee onboarding process. (Wiley Decl., ¶¶ 1, 3.) Wiley states that MMI employs a digital software platform to administer its onboarding paperwork. (Wiley Decl., ¶ 4.) This software requires the use of a unique username and a password created by the employee to access the documents. (Wiley Decl., ¶ 4.) Hernandez was sent the onboarding documents via the digital platform on July 19, 2018. (Wiley Decl., ¶ 7; Ex. A.)

Included in this onboarding paperwork was the subject arbitration agreement. This agreement is labeled MUTUAL ARBIRATION AGREEMENT in capitalized and bolded letters at top. (Ex. C.) At the bottom of the page is Hernandez’s electronic signature and the date of signing, July 23, 2022. (Ibid.)  

The Court finds that MMI has shown, by a preponderance of the evidence, the existence of a valid arbitration agreement.

Hernandez does not challenge the existence of the Agreement.

B.   Coverage of the Instant Claims within the Scope of the Agreement

The Agreement states that it covers:

[A]ll disputes, claims, complaints, or controversies (“Claims”) that I may have against MarketSource and/or any of its subsidiaries, affiliates, officers, directors, employees, agents, and/or any of its clients or customers (collectively and individually the “Company”), or that the Company may have against me, including contract claims; tort claims; discrimination and/or harassment claims; retaliation claims; claims for wages, compensation, penalties or restitution; and any other claim under any federal, state, or local statute, constitution, regulation, rule, ordinance, or common law, arising out of and/or directly or indirectly related to my application for employment with the Company, and/or my employment with the Company, and/or the terms and conditions of my employment with the Company, and/or termination of my employment with the Company (collectively “Covered Claims”), are subject to confidential arbitration pursuant to the terms of this Agreement and will be resolved by Arbitration and NOT by a court or jury. (Ex. C at p. 1.)

As the entirety of Hernandez’s claim relates to his employment, and eventual termination, with MMI and its client Ford, the Court finds that the instant action is within the scope of the Agreement.

C.   Defenses

Hernandez argues that the following defenses preclude enforcement of the Agreement.

1.    Unconscionability

First, Hernandez argues that the Agreement is void as unconscionable.

Commonly formulated, unconscionability refers to the “absence of meaningful choice on the part of one of the parties together with the contract terms which are unreasonably favorable to the other party. [Citations.]” (Sonic-Calabasas A, Inc. v. Moreno (2013) 57 Cal.4th 1109, 1145.) Unconscionability 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. (Sanchez v. Valencia Holding Company, LLC (2015) 61 Cal.4th 899, 910.) “But they need not be present in the same degree. . . . [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 v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83, 114.) 

Procedural and substantive unconscionability are analyzed on a sliding scale; where, as here, there is a low-to-moderate amount of procedural unconscionability, there must be a moderate-to-high amount of substantive unconscionability in order for the court to declare the contract unconscionable. (See Grand Prospect Partners, L.P. v. Ross Dress for Less, Inc. (2015) 232 Cal.App.4th 1332, 1347 [party proving unconscionability must show both procedural and substantive unconscionability].) 

a.    Procedural Unconscionability

First, Hernandez argues the Agreement is procedurally unconscionable as it was offered as a take-it-or-leave-it condition to his employment. Accordingly, Hernandez argues that it is a procedurally unconscionable adhesion contract.  

The mere fact that an arbitration agreement was adhesive typically does not, without more, support a finding of procedural unconscionability. (Roman v. Superior Court (2009) 172 Cal.App.4th 1462, 1471, n.2.) 

Accordingly, the Court finds that there is minimal procedural unconscionability based on the Agreement’s adhesive nature.

b.    Substantive Unconscionability

First, Hernandez argues that the Agreement is substantively unconscionable as it does not provide for sufficient discovery.

The Agreement allows for “at least one deposition for each side.” Hernandez argues this is insufficient, as there are four named defendants, and defendants control the majority of the relevant documents.

However, as MMI notes on Reply, the Agreement states the bare minimum requirement for discovery under JAMS rules. Here, as there are multiple defendants, nothing in the Agreement prevents the arbitrator from ordering additional discovery and depositions.

Accordingly, there is no substantive unconscionability due to minimal discovery requirements.

Next, Hernandez argues that the Agreement impermissibly shifts the costs of arbitration on to Hernandez, the employee.

A valid arbitration agreement must not “require employees to pay either unreasonable costs or any arbitrators’ fees or expenses as a condition of access to the arbitration forum.” (Armendariz, supra, 24 Cal.4th at p. 102.) “A mandatory employment arbitration agreement that contains within its scope the arbitration of FEHA claims impliedly obliges the employer to pay all types of costs that are unique to arbitration.” (Ibid.)

Here, the Agreement states that Hernandez is responsible for paying “any JAMS filing fee or administrative fee up to the amount of the initial filing fee to commence an action in a Court . . . and the Company will pay any amount in excess of the filing fee. The Company will pay any other JAMS administrative fees, the Arbitrator’s fees, and any additional fees unique to arbitration.” (Ex. C.)

The Court finds that the cost allocation is in full compliance with Armendariz as it explicitly states that Hernandez will not be responsible for any fees unique to arbitration in excess of the initial filing fee to commence an action in Court.

Finally, Hernandez argues that JAMS cannot be a neutral arbitrator as MMI is a repeat player. Hernandez provides no authority that supports this contention.

Accordingly, the Court finds that the Agreement is not void as unconscionable.

2.    Labor Code section 432.6

Finally, Hernandez argues that Labor Code section 432.6 precludes enforcement of the Agreement.

Section 432.6 states that “A person shall not, as a condition of employment, continued employment, or the receipt of any employment-related benefit, require any applicant for employment or any employee to waive any right, forum, or procedure for a violation of any provision of the California Fair Employment and Housing Act (Part 2.8 (commencing with Section 12900) of Division 3 of Title 2 of the Government Code) or this code, including the right to file and pursue a civil action or a complaint with, or otherwise notify, any state agency, other public prosecutor, law enforcement agency, or any court or other governmental entity of any alleged violation.”  (Labor Code § 432.6(a)).

Section 432.6(a) applies to “contracts for employment entered into, modified, or extended on or after January 1, 2020.” (§ 432.6(h).) Hernandez entered into the Agreement on July 23, 2018. (Ex. C.) Hernandez offers no explanation as to why section 432.6 should apply to a contract to which the statute explicitly states it does not apply. Accordingly, section 432.6 does not preclude enforcement of the Agreement.

D. Defendant Ford

Ford joins MMI’s motion, arguing that Hernandez should be compelled to arbitrate his claim against Ford as Ford is an intended third party beneficiary to the Agreement between Hernandez and MMI.

“A third party beneficiary may enforce a contract expressly made for his benefit. [Citation.] And although the contract may not have been made to benefit him alone, he may enforce those promises directly made for him. [Citations.]” (Murphy v. Allstate Ins. Co. (1976) 17 Cal.3d 937, 943.) With regard to arbitration clauses, a third party beneficiary wishing to invoke an arbitration clause has to show that the arbitration clause itself was made expressly for its benefit. (Ronay Family Limited Partnership v. Tweed (2013) 216 Cal.App.4th 830, 838.) 

Here, the Agreement states that it applies to all claims relating to its clients and customers. As both parties agree that Ford was MMI’s client, Ford may compel arbitration as a third party beneficiary.

D.   Defendant SB Ford

Finally, SB Ford filed an Opposition stating that it is not a party to the Agreement, does not wish to compel arbitration, and wishes instead to stay the proceedings against it pending arbitration of Hernandez’s claims against Ford and MMI.

Absent an objection from Hernandez, the Court grants this request.

Accordingly, Defendants Maryland Marketsource, Inc. and Ford Motor Company’s Motion to Compel Arbitration is GRANTED.

Hernandez’s claims against Maryland Marketsource, Inc. and Ford Motor Company are stayed pending arbitration.

Hernandez’s claim against South Bay Ford, Inc. is stayed in this Court pending completion of arbitration as to the above listed claims.

DATED:  October 28, 2022

___________________________

Hon. Robert S. Draper 

Judge of the Superior Court