Judge Robert S. Draper, Case 22STCV34390 2023-04-21 Tentative Ruling

Judge: Robert S. Draper, Case: 22STCV34390, Date: 2023-04-21 Tentative Ruling

Case Number: 22STCV34390 Hearing Date: April 21, 2023 Dept: 78

Superior Court of California

County of Los Angeles

Department 78

LESLIE VALENCIA,

Plaintiff,

vs.

AUTOZONE INC., et al.,

Defendants.

Case No.: 22STCV34390

Hearing Date: April 21, 2023

[TENTATIVE] RULING RE:

Defendants AutoZone, Inc., AutoZoners, LLC, and Ratana Nonora’s Motion to Compel Arbitration.

Defendants AutoZone, Inc., AutoZoners, LLC and Ratana Nonora’s Motion to Compel Arbitration is GRANTED.

This action is DISMISSED without prejudice.

AutoZone, Inc. and AutoZoners, LLC’s Request for Monetary Sanctions against Plaintiff’s Counsel is DENIED.

FACTUAL BACKGROUND

This is an action for workplace harassment brought under the Fair Employment and Housing Act (“FEHA”). The Complaint alleges as follows.

Plaintiff Leslie Valencia (“Plaintiff”) was hired as an associate by defendants AutoZone, Inc. and AutoZoners, LLC (together, “AutoZone”) in September 2019. (Compl. ¶ 11.) While employed there, the store manager, defendant Ratana Nonora (“Nonora”), repeatedly harassed Plaintiff by making inappropriate comments about her body and inappropriately touching or poking her. (Compl. ¶ 13.)

Plaintiff reported Nonora’s harassment to AutoZone’s human resources department in September 2020, in December 2020, and in January 2021. (Compl. ¶ 15.) Though the sexual harassment stopped after Plaintiff’s reporting, Nonora continued to treat Plaintiff rudely. (Compl. ¶ 16.)

When a managerial position opened up in Plaintiff’s store, Plaintiff told Nonora that she wanted to be considered. (Compl. ¶ 17.) Nonora told Plaintiff that she would not be considered because her hair was dyed purple, despite there being no restriction on hair color in AutoZone’s employee handbook. (Ibid.)

In April 2021, Plaintiff took a medical leave, retained counsel, and informed her manager that she would not be returning to work. (Compl. ¶ 20.) AutoZone failed to pay Plaintiff he last paycheck for two months. (Compl. ¶ 21.)

PROCEDURAL HISTORY

On October 26, 2022, Plaintiff filed the Complaint asserting four causes of action:

1. Sexual Harassment and Hostile Work Environment;

2. Failure to Prevent Discrimination, Sexual Harassment, and Retaliation;

3. Retaliation for Reporting Sexual Harassment; and,

4. Failure to Pay Wages, Waiting Time Penalties, and Civil Penalties.

On January 12, 2023, AutoZone filed an Answer.

On February 9, 2023, Nonora filed a Joinder to AutoZone’s Motion to Compel Arbitration.

On March 3, 2023, AutoZone filed the instant Motion to Compel Arbitration.

On April 10, 2023, Plaintiff filed an Opposition.

On April 14, 2023, AutoZone filed a Reply.

DISCUSSION

I. MOTION TO COMPEL ARBITRATION

AutoZone moves to compel binding arbitration pursuant to a stipulation to binding arbitration (the “Stipulation”) entered into between AutoZone and Plaintiff on November 3, 2021. (Hoffman Decl.; Exh. 3.)

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 and Applicability to the Instant Claims

Here, AutoZone moves to compel arbitration pursuant to a stipulation for binding arbitration.

The Stipulation states, in relevant part:

It is hereby stipulated by and between the undersigned parties and their respective attorneys of record that the above-captioned matter is hereby submitted for binding arbitration before Hon. Joe Hilberman (Ret.) (Judge Retired) (Attorney at Law), hereinafter referred to as the “Arbitrator.”

Except as may be agreed to between the parties, or their attorneys, or as otherwise provided by law, the Arbitrator, in his sole discretion, shall control the proceedings and regulate the order of proof. (Hoffman Decl.; Exh C.)

Additionally, the Stipulation states that “no portion of the arbitration proceeding shall conflict with the Arbitration Agreement (attached hereto as Exhibit A) unless stipulated by the parties or their counsel.” (Ibid.)

The Arbitration Agreement states that it applies “to any dispute arising out of or related to AutoZoner’s employment with AutoZone or one of its affiliates, subsidiaries or parent companies or termination of employment” and states that “except as otherwise noted, this Agreement requires all such disputes to be resolved only by an arbitrator through final and binding arbitration and not by way of court or jury trial.” (Ibid.)

The Stipulation is signed by Raymond E. Hane, attorney for Leslie Valencia, and Kathryn M. Weeks, attorney for AutoZone.

The Court finds that AutoZone has met its initial burden of showing the existence of a valid arbitration agreement. The burden now shifts to Plaintiff to show the invalidity of the agreement.

In Opposition, Plaintiff argues that AutoZone fails to show the authenticity of Plaintiff’s electronic signature on the Arbitration Agreement. However, as AutoZone notes on Reply, Plaintiff not only stipulated to binding arbitration, but proceeded with arbitration for more than a year before filing the instant action. The Stipulation is signed by Plaintiff’s Counsel, whose consent can be attributed to Plaintiff. (See Rivera v. Shivers (2020) 54 Cal.App.5th 82, 92.)

As Plaintiff does not contest the authenticity of the Stipulation, or the authenticity of Plaintiff’s Counsel’s signature on the Stipulation, she fails to meet her burden.

Accordingly, the Court finds the existence of a valid arbitration agreement. And, as the Stipulation states that it applies to exactly this dispute, the Court finds that the claims are covered within the scope of the Stipulation.

B. Defenses

Next, Plaintiff raises several arguments as to why the Stipulation and the Arbitration Agreement are unenforceable.

1. Ending Forced Arbitration Act

First, Plaintiff contends that she ceased engaging in the arbitration process as arbitration of this matter was made voidable by the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021 (“EFA”).

The EFA amends the Federal Arbitration Act, 9 U.S.C. § 1, et seq., and renders unenforceable (at option of person alleging assault or harassment) pre-dispute arbitration agreements relating to claims of sexual assault or sexual harassment:

Notwithstanding any other provision of this title, at the election of the person alleging conduct constituting a sexual harassment dispute or sexual assault dispute, or the named representative of a class or in a collective action alleging such conduct, no predispute arbitration agreement or predispute joint-action waiver shall be valid or enforceable with respect to a case which is filed under Federal, Tribal, or State law and relates to the sexual assault dispute or the sexual harassment dispute. (9 U.S.C. § 402, subd. (a).)

Here, Plaintiff contends that, as the gravamen of her Complaint is sexual harassment, she cannot be compelled to arbitrate under the EFA. Plaintiff argues that, as the EFA was passed while the parties were in arbitration, Plaintiff was justified in terminating arbitration and bringing the instant action.

Not so.

As Plaintiff concedes in her Opposition, the EFA was passed in March 2022. (Opposition at p. 2.) All events constituting Plaintiff’s claim occurred before that date. Indeed, Plaintiff stopped working for AutoZone nearly a year before the EFA’s passage. (Compl. ¶ 20.)

The EFA states: “This Act, and the amendments made by this Act, shall apply with respect to any dispute or claim that arises or accrues on or after the date of enactment of this Act.” (PL 117-90, March 3, 2022, 136 Stat 26, emphasis added.)

Defendant cannot contend that the dispute arose after the enactment of the EFA, and therefore the EFA facially does not apply to her claim.

2. Unconscionability

Finally, Plaintiff contends that the Arbitration Agreement, which the Stipulation states will provide the rules for arbitration, is both procedurally and substantively 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].)

Here, Plaintiff contends that the Arbitration Agreement is procedurally unconscionable, as it was a adhesive contract offered to Plaintiff as a condition of employment. Additionally, Plaintiff argues that she was essentially forced to sign the Arbitration Agreement without a meaningful opportunity to read and understand the contract.

However, the Stipulation, which is the binding document here, was entered into by Plaintiff’s Counsel well-after Plaintiff’s employment relationship with AutoZone ended. Plaintiff presents no evidence that she was forced to sign the Stipulation, and as the Stipulation was signed by Plaintiff’s Counsel, Plaintiff’s argument that she was unaware of the significance of the contract is inapposite.

Accordingly, the Court finds that no procedural unconscionability exists.

Next, Plaintiff contends that the Arbitration Agreement is substantively unconscionable. As the Stipulation adopts the Arbitration Agreement’s rules and procedures, the Arbitration Agreement itself is relevant to this conversation. Plaintiff argues that, as the Arbitration Agreement states that “the parties will have the right to conduct adequate civil discovery, bring dispositive motions, and present witnesses and evidence as needed to present their cases and defenses, and any disputes in this regard shall be resolved by the arbitrator” Plaintiff is not assured of her access to information she needs to litigate her claims.

However, Plaintiff cites to no case saying that an Arbitration Agreement must provide specific discovery allowances before arbitration. Indeed, the only case that Plaintiff cites to support this contention, Fitz v. NCR Corporation (2004) 118 Cal.App.4th 792, held that a mandatory arbitration agreement limiting discovery to two individuals and any experts was impermissible.

That an arbitration agreement may not limit Plaintiff to only two individuals is irrelevant to an arbitration agreement that allows the arbitrator to determine proper discovery limitations after considering the matter at hand.

Accordingly, the Court finds that the Stipulation, and the rules of the Arbitration Agreement, are neither procedurally nor substantively unconscionable.

C. Applicability to Nonora

AutoZone and Nonora contend that Nonora, a non-signatory to the Stipulation, may compel arbitration under the agency exception.

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, the Complaint alleges that Nonora is an agent of AutoZone, and that AutoZone may be held liable for Nonora’s actions under principles of respondeat superior. (Compl. ¶ 7.)

Accordingly, the agency exception applies, and Nonora may compel arbitration pursuant to the Stipulation.

II. SANCTIONS

Finally, AutoZone requests monetary sanctions against Plaintiff’s Counsel only pursuant to Code of Civil Procedure sections 128.5 and 128.7.

Code of Civil Procedure section 128.5 permits a trial court to “order a party, a party’s attorney, or both, to pay the reasonable expenses, including attorney’s fees, incurred by another party as a result of actions or tactics, made in bad faith, that are frivolous or solely intended to cause unnecessary delay.” (Code Civ. Proc., § 128.5, subd. (a).) Actions or tactics include, but are not limited to, filing or opposing motions, complaints, answers, or other responsive pleadings. (Code Civ. Proc., § 128.5, subd. (b)(1).) “ ‘Frivolous’ means totally and completely without merit or for the sole purpose of harassing an opposing party.” (Code Civ. Proc., § 128.5, subd. (b)(2).) Bad faith is determined using a subjective standard. (In re Marriage of Sahafzadeh-Taeb & Taeb (2019) 39 Cal.App.5th 139, 134-35.)

Although this case falls very close to the line, the Court is not prepared to find bad faith here.

With respect to Code of Civil Procedure 128.7, the Court does not see that the procedural requirements set forth at 128.7(c)(1) have been met. Therefore, sanctions are denied under this provision as well.

DATED: April 21, 2023

________________________________

Hon. Jill T. Feeney

Judge of the Superior Court