Judge: Ronald F. Frank, Case: 22TRCV00070, Date: 2022-07-28 Tentative Ruling

Case Number: 22TRCV00070    Hearing Date: July 28, 2022    Dept: 008

On January 28, 2022, twenty former employees of Defendant Torrance Memorial Medical Center (“TMMC” or “the Hospital”) filed this action against TMMC alleging six causes of action arising from adverse employment decisions that they claim were motivated by religious discrimination in violation of the Fair Employment and Housing Act (“FEHA”), plus harassment, retaliation, and wrongful termination of employment in violation of public policy. The context of the claimed adverse employment decisions is TMMC’s enforcement of its

determination to mandate that all the Hospital’s employees obtain COVID-19 vaccinations. Plaintiffs allege that they sought exemption from the Hospital’s vaccination policy due to sincerely held religious beliefs and their religious creed protected by the California Constitution Art. I, §4 and by Government Code § 12940(a), but the Hospital rejected each of their exemption applications.

TMMC raised the defense of arbitration agreements in its Answer to the Complaint, and indicated in its Case Management Conference Statement that it intended to move to compel arbitration if Plaintiffs did not consent or stipulate to binding arbitration. On July 1, 2022, TMMC filed the motion to compel arbitration and stay the action pending the completion of arbitration as to the half-dozen plaintiffs who did not have a signed arbitration agreement. Also on 7/1/22, the Hospital also filed a Request for Judicial Notice seeking notice of the California Department of Public Health’s Orders issued 7/26/21 and 2/22/22 concerning vaccinations and the transmission high-risk setting of health care facilities like hospitals. There is no opposition to the RFJN and pursuant to Evidence Code §§ 452(c), (d), and (h) the RFJN is GRANTED.

Plaintiffs opposed the Motion to Compel arbitration, many of them submitting declarations attesting to the contract-of-adhesion nature of their arbitration agreements. The Complaint alleges among other things that “vaccinated individual pose the same risk of transmission as unvaccinated individuals,” a contention supported by the recent revelation that President Biden himself has contracted COVID-19 even though being vaccinated and boosted. The Court’s tentative ruling is the GRANT the motion, ORDER the 14 signatory plaintiffs to arbitration before JAMS, and to STAY the cases brought by the 6 non-signatory plaintiffs pending the outcome of the arbitration and any subsequent petition to enforce the ultimate arbitrators’ decision. The Court below outlines it reasoning for the tentative rulings.

MOTION TO COMPEL ARBITRATION

Under Code of Civil Procedure section 1281.2, “the court shall order the petitioner and the respondent to arbitrate the controversy if it determines that an agreement to arbitrate the controversy exists[.]” When seeking to compel arbitration of a plaintiff’s claims, the defendant must allege the existence of an agreement to arbitrate. (Condee v. Longwood Management Corp. (2001) 88 Cal.App.4th 215, 219.) The burden then shifts to the plaintiff to prove the falsity of the agreement. (Ibid.) After the Court determines that an agreement to arbitrate exists, it then considers objections to its enforceability. (Ibid.)

¿ “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, 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.)¿

“There is no public policy favoring arbitration of disputes which the parties have not agreed to arbitrate.” (Engineers & Architects Assn. v. Community Development Dept.¿(1994) 30 Cal.App.4th 644, 653.) Nevertheless, the strong public policy promoting private arbitration of civil disputes gives rise to a presumption in favor of arbitrability and compels the Court to construe liberally the terms of the arbitration agreement. (Vianna v. Doctors’ Management Co.¿(1994) 27 Cal.App.4th 1186, 1189).¿ ¿¿

Here, Plaintiffs’ Opposition brief does not assert that TMMC waived arbitration of their claims. Instead, Plaintiffs assert that the arbitration agreements are unconscionable and therefore

grounds exist for revoking the arbitration agreement. The Opposition also asserts that TMMC’s proof that TMMC is engaged in interstate commerce, a prerequisite to the applicability of the Federal Arbitration Act (“FAA”), should not be considered by the Court because Plaintiffs’ admissions of interstate commerce are contained within the purportedly unconscionable Subject Arbitration Agreements. Under both California and federal law, an arbitration agreement may be invalided based upon grounds applicable to any contract, including unconscionability, fraud, duress, and public policy. (Sanchez v. Western Pizza Enterprises, Inc. (2009) 172 Cal.App.4th 154, 165-166.) Moreover, while under the California Arbitration Act the Court has some discretion in deciding whether to compel arbitration; here, the Court exercises its discretion to grant the motion for the reasons discussed in this ruling.

A. Existence of Arbitration Agreement

TMMC contends that 14 of the 20 Plaintiffs entered into separate offer letters and stand-alone and separate arbitration agreements. (Telles Decl. ¶5, and ¶¶ 7, 11, 15, 19, 23, 27, 31, 35, 39, 43, 47, 51, 55, and 59.) Defendant provides a copy of each signed Mutual Agreement to Arbitrate Claim which the Court refers to as the Subject Arbitration Agreements. (Telles Decl., Exs. 1-14.) Plaintiffs do not dispute that 14 of the 20 of them signed the Subject Arbitration Agreements as a condition of their hiring or of their continued employment. Nor do plaintiffs dispute that the scope of the Subject Arbitration Agreements and the key language -- “all claims and controversies in any way relating to or associated with [the signatory plaintiffs’] employment or the termination of [their] employment” -- embrace the claims in their Complaint. The first page of the Subject Arbitration Agreements all specifically reference the California Fair Employment and Housing Act (“FEHA”) in the list of types of claims included in the scope of disputes between employer and employee to be resolved by binding arbitration.

B. Armendariz Factors

Arbitration agreements for FEHA claims must (1) provide for neutral arbitrators, (2) provide for more than minimal discovery, (3) require a written award, (4) provide for all of the types of relief that would otherwise be available in court, and (5) not require employees to pay either unreasonable costs or any arbitrators’ fees or expenses as a condition of access to the arbitration forum. (Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83, 102 (Armendariz).) These requirements also may apply to non-FEHA employment claims. (See Pinela v. Neiman Marcus Group, Inc. (2015) 238 Cal.App.4th 227, 254 [applying the Armendariz factors in the context of claims under the Labor Code].)

The Subject Arbitration Agreements require arbitration pursuant to the rules of JAMS, the Judicial Arbitration and Mediation Service, which provide for a neutral arbitrator or arbitrators and allow for adequate discovery, including document production and depositions. (Telles Decl., Exs. 1-14; see JAMS Rule 17 for Employment cases.) It is common knowledge that a high percentage of JAMS arbitrators are retired judges and appellate justices, so the pool of available members of an arbitration panel contains judicial professionals as well as retired lawyers. To the extent that Plaintiffs or their counsel believe a prospective panelist is biased or pro-employer, JAMS Employment case Rule 15 addresses arbitrator selection in a manner to encourage that the neutral will be neutral. Under those rules, each side can essentially exercise peremptory challenges to a subset of available arbitrators. The award will be in writing. (Id..) “[T]he arbitrator may award any form of remedy or relief that would be available in a court of law”. (Ibid.) The unique costs of arbitration are to be borne by TMMC, so it must be interpreted to provide that the employer will bear the arbitration forum costs. (Id.)

Accordingly, the Arbitration Agreements satisfy Armendariz.

C. Procedural Unconscionability

Unconscionability is a valid defense to a petition to compel arbitration. (Sonic-Calabasas A, Inc. v. Moreno (2013) 57 Cal.4th 1109, 1143.) State law governs the “unconscionability” defense. (Doctor’s Assocs., Inc. v. Casarotto (1996) 517 US 681, 687.) The core concern of the unconscionability doctrine is the “absence of meaningful choice on the part of one of the parties together with contract terms which are unreasonably favorable to the other party.” (Sonic-Calabasas A, Inc., 57 Cal.4th at 1145.) The unconscionability doctrine ensures that contracts—particularly contracts of adhesion—do not impose terms that are overly harsh, unduly oppressive, so one-sided as to shock the conscience, or unfairly one-sided. (Id.)

For an arbitration agreement to be unenforceable as unconscionable, both procedural and substantive unconscionability must be present. (Armendariz, supra, 24 Cal.4th at p. 114.) “[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.” (Ibid.) “The relevant factors in assessing the level of procedural unconscionability are oppression and surprise.” (Orcilla v. Big Sur, Inc. (2016) 244 Cal.App.4th 982, 997.) “‘The oppression component arises from an inequality of bargaining power of the parties to the contract and an absence of real negotiation or a meaningful choice on the part of the weaker party.’” (Abramson v. Juniper Networks, Inc. (2004) 115 Cal.App.4th 638, 656.) “The circumstances relevant to establishing oppression include, but are not limited to (1) the amount of time the party is given to consider the proposed contract; (2) the amount and type of pressure exerted on the party to sign the proposed contract; (3) the length of the proposed contract and the length and complexity of the challenged provision; (4) the education and experience of the party; and (5) whether the party’s review of the proposed contract was aided by an attorney.” (Grand Prospect

Partners, L.P. v. Ross Dress for Less, Inc. (2015) 232 Cal.App.4th 1332, 1348, fn. omitted.) “The component of surprise arises when the challenged terms are ‘hidden in a prolix printed form drafted by the party seeking to enforce them.’” (Ibid.) “The adhesive nature of the employment contract requires [the court] to be ‘particularly attuned’ to [Plaintiff’s] claim of unconscionability [citation], but [the court] do[es] not subject the contract to the same degree of scrutiny as ‘[c]ontracts of adhesion that involve surprise or other sharp practices’ [citation].” (Baltazar v. Forever 21, Inc. (2016) 62 Cal.4th 1237, 1245 (Baltazar).)

“A procedural unconscionability analysis ‘begins with an inquiry into whether the contract is one of adhesion.’ [Citation.] An adhesive contract is standardized, generally on a preprinted form, and offered by the party with superior bargaining power ‘on a take-it-or-leave-it basis.’” (OTO, LLC v. Kho (2019) 8 Cal.5th 111, 126.) “Arbitration contracts imposed as a condition of employment are typically adhesive[.] The pertinent question, then, is whether circumstances of the contract's formation created such oppression or surprise that closer scrutiny of its overall fairness is required.” (Ibid.) “Oppression occurs where a contract involves lack of negotiation and meaningful choice, surprise where the allegedly unconscionable provision is hidden within a prolix printed form.” (Ibid.)

Plaintiff argues that the Subject Arbitration Agreements are procedurally unconscionable because they were contained in a non-negotiable set of pages together with the offer of employment. Arbitration agreements that are “take it or leave it” have some degree of procedural unconscionability. (Ajamian, supra, 203 Cal.App.4th at p. 796.) The arbitration agreements in this case clearly have some degree of procedural unconscionability.

Plaintiff also argues the Subject Arbitration Agreements were not discussed, not negotiated, and that all 14 agreements are verbatim versions of the same document proving that

they were part of a contract of adhesion. It is undisputed that the agreements here were adhesion contracts, as Plaintiffs’ signatures were required as a condition of the 14 Signatory Plaintiff’s employment. However, beyond that, there is no indication that the Agreement was in any way a surprise or oppressive. The Subject Arbitration Agreements are freestanding documents, clearly titled. Each one is 4 pages long with one inch wide margins and not unusually small font. Each provision in the Subject Arbitration Agreements is titled in boldface type. The signature lines appear on the 4th page below a boldface, all capital letter notice. “‘[I]t is generally unreasonable . . . to neglect to read a written agreement before signing it.’ ” TMMC was not obligated to highlight or call attention to the arbitration provision. (Sanchez v. Valencia Holding Co., LLC (2015) 61 Cal.4th 899, 914-915; Pinnacle Museum Tower Assn. v. Pinnacle Market Development (US), LLC (2012) 55 Cal.4th 223, 236 [“An arbitration clause within a contract may be binding on a party even if the party never actually read the clause”].) The Subject Arbitration Agreements are not clauses buried in a long employment contract; rather, they were separate, stand-alone documents requiring separate signatures and dates.

In sum, these agreements have some degree of procedural unconscionability due to their adhesive nature, but as explained below, it is not enough to justify voiding them.

D. Substantive Unconscionability

“‘Substantive unconscionability pertains to the fairness of an agreement’s actual terms and to assessments of whether they are overly harsh or one-sided. [Citations.] A contract term is not substantively unconscionable when it merely gives one side a greater benefit; rather, the term must be “so one-sided as to ‘shock the conscience.’”’ [Citation.]’” (Carmona v. Lincoln Millennium Car Wash, Inc. (2014) 226 Cal.App.4th 74, 85.) The Opposition addresses substantive unconscionability in general terms, but the arguments are largely a re-

characterization of procedural unconscionability issues. The Court finds that the Subject Arbitration Agreements are not shocking or so one-sided as to warrant their being voided.

Unlike some other arbitration provisions requiring litigation in a remote location, the subject Arbitration Agreements call for use of the JAMS Los Angeles office, Los Angeles being the County selected by Plaintiffs in which to file their civil suit. Further, there are no onerous provisions in the Arbitration Agreements such as one requiring the employee to advance the daily arbitrator fee, or to accept a panelist from a small group of healthcare industry executives or corporate board members, or to bring a claim within an unreasonably short period of time, or to apply another state’s law that is in violation of California public policy.

Because the Court finds some procedural unconscionability but no substantive unconscionability, the arbitration agreement should not be invalidated due to unconscionability.

TENTATIVE RULING CONCLUSION The motion to compel arbitration is GRANTED as to the 14 signatory plaintiffs. The case is STAYED as to the 6 non-signatory plaintiffs pending the completion of arbitration. A Status Conference re: Arbitration is scheduled six months out, on January 27, 2023 at 8:30 a.m. in Inglewood Department 8. Five court days before that Status Conference, the parties are to file a joint report regarding the status of arbitration, including the name of the retained arbitrator or panel of arbitrators and information on any pending or completed arbitration dates as to the 14 Signatory Plaintiff