Judge: Ronald F. Frank, Case: 22TRCV01630, Date: 2023-08-11 Tentative Ruling
Case Number: 22TRCV01630 Hearing Date: August 11, 2023 Dept: 8
Tentative
Ruling
HEARING DATE: August 11, 2023
CASE NUMBER: 22TRCV01630
CASE NAME: Tiana Brown v. ERMC Aviation, LLC, et al.
MOVING PARTY: Defendants, ERMC Aviation, Inc. and Maria Mendoza
RESPONDING PARTY: Plaintiff, Tiana Brown
TRIAL DATE: Not Set.
MOTION: (1)
Motion to Compel Arbitration
TENTATIVE RULING: (1)
The Court tentatively finds that Plaintiff did sign an arbitration agreement but
with a different party than Defendants.
Since Defendants are non-signatories, they need to fit within one of the
recognized exceptions to the general rule that a non-signatory party cannot
enforce an arbitration agreement with the plaintiff. The sole
exception offered by the defense here, third-party beneficiary, has not been established
on the record presented.
I. BACKGROUND
¿
On
December 29, 2022, Plaintiff, Tiana Brown (“Plaintiff”) filed a Complaint
against Defendants, ERMC Aviation, LLC, Maria Mendoza, and DOES 1 through 100
(“Defendant”). The Complaint alleges the following causes of action: (1) Racial
Discrimination; (2) Racial Harassment; (3) Retaliation for Complaints of Racial
Discrimination and Harassment; (4)
Pregnancy Discrimination; (5) Retaliation for Request for Pregnancy
Leave; (6) Failure to Provide Pregnancy Accommodation; (7) Failure to Engage in
the Interactive Process; (8) Failure to Prevent Discrimination and Harassment;
(9) Intentional Infliction of Emotional Distress.
Defendants
now file a Motion to Compel Arbitration.
II. ANALYSIS
A. Legal Standard
Pursuant to Code of Civil
Procedure §1281.2, generally, on a petition to
compel arbitration, the court must grant the petition unless it finds either
(1) no written agreement to arbitrate exists; (2)¿the right to compel
arbitration has been waived; (3) grounds exist for revocation of the agreement;
or (4) litigation is pending that may render the arbitration unnecessary or
create conflicting¿rulings on common issues.
When seeking to compel
arbitration, the initial burden lies with the moving party to demonstrate the
existence of a valid arbitration agreement by preponderance of evidence.
(Ruiz v. Moss Bros. Auto Group (2014) 232 Cal.App.4th 836, 841-42; Gamboa
v. Northeast Community Clinic (2021) 72 Cal.App.5th 158, 164-65.) It
is sufficient for the moving party to produce a copy of the arbitration
agreement or set forth the agreement’s provisions. (Gamboa, 72
Cal.App.5th at 165.) The burden then shifts to the opposing party to
prove by a preponderance of evidence any defense to enforcement of the contract
or the arbitration clause. (Ruiz, 232 Cal.App.4th at 842; Gamboa,
72 Cal.App.5th at 165.) Subsequently, the moving party must
establish with the preponderance of admissible evidence a valid arbitration
agreement between the parties. (Ibid.) The trial court then
weighs all the evidence submitted and uses its discretion to make a final
determination. (Ibid.) “California law, ‘like [federal law],
reflects a strong policy favoring arbitration agreements and requires close
judicial scrutiny of waiver claims.’” (Wagner Const. Co. v. Pacific
Mechanical Corp. (2007) 41 Cal.4th 19, 31.)
If the court orders arbitration,
then the court shall stay the action until arbitration is completed. (See
Code Civ. Proc., § 1281.4.)
B. Discussion
Existence of
an Arbitration Agreement
Here, Defendants argue that there
can be no dispute that an arbitration agreement exists between Plaintiff and
Unifi Aviation, LLC (“Unifi”) which encompasses all nine (9) claims in
Plaintiff’s complaint. Defendants further note that Unifi is an “affiliate” of
ERMC and entirely owned by the same parent company (AirCo Aviation Services,
LLC.) Defendants contend that the Plaintiff affirmatively electronically signed
the five-page Arbitration Agreement which contained the bolded title “Arbitration
Agreement”. (Stillwagon Decl. ¶ 5, Exh. A.) By electronically signing the
Agreement, Defendants argue that Plaintiff expressly consented to be bound by
the Agreement, and at the time she electronically singed the Agreement,
Plaintiff did not raise any questions or concerns about the Agreement. Defendants
cite to Civil Code § 1633.7, which states that an electronic signature has the
same legal effect as a handwritten signature. Here, Defendants assert that
there is a valid and authenticated electronic signature. Defendants point to
the declaration of Corporate Secretary of Defendant ERMC Aviation, Bryan
Stillwagon, the Arbitration Agreement was sent to Plaintiff for her review and
signature, and she used the UKG onboarding system to access the onboarding
portal. In accessing the portal, Defendants argue that Plaintiff used her own
unique log-in credential for logging into the UKG system that she created when
she submitted her initial application for the job at ERMC. Defendants suggest
Plaintiff was the only person who knew her log-in credentials and used her own
unique credential to log into the UKG system to view the arbitration agreement.
(Stillgawon Decl. ¶ 4.) Defendants further note that the only access to the
Arbitration Agreement was by way of Plaintiff’s own unique log-in credentials,
and as such, it is confirmed that Plaintiff signed the agreement. (Stillgawon
Decl. ¶ 4.)
In opposition, Plaintiff argues that
Defendants cannot authenticate the purported electronic signature of Plaintiff.
Plaintiff concedes that while Civil Code § 1633.7 provides that an electronic
signature shall have the same legal effect as a handwritten signature, all
writings – including electronic signatures – must be properly authenticated
before the writing may be received into evidence. (Evidence Code §1401.) As
such, Plaintiff contends that under Civil Code §1633.9, authentication of an
electronic signature requires the proponent of the signature to show the
signature is, in fact, the signature of the person the proponent claims it is.
The statute states, “[a]n electronic record or electronic signature is
attributable to a person if it was the act of the person.” (Civil Code
§1633.9(a).) Plaintiff relies on Ruiz v. Moss Bros. Auto Grp. (2014) 232
Cal. App. 4th 836, 842, discussed below.
In
Ruiz, the Court of Appeal held that the defendant moving for an order
compelling arbitration “did not present sufficient evidence to support a
finding that the electronic signature on the 2011 agreement was the act of [the
plaintiff].” (Id.) “Under Civil Code section 1633.7, enacted in 1999 as part of
the Uniform Electronic Transactions Act (Civ. Code, § 1633.1 et seq.; Stats.
1999, ch. 428, § 1, pp. 2809–2816), an electronic signature has the same legal
effect as a handwritten signature (Civ. Code, § 1633.7, subd. (a) [“A ...
signature may not be denied legal effect or enforceability solely because it is
in electronic form.”] ). (Id. at 842-843.) In Ruiz, the defendant
submitted a declaration which summarily asserted “that Ruiz was the person who
electronically signed the 2011 agreement ‘on or about September 21, 2011,’” but
. . . did not explain how [the declarant] arrived at that conclusion or
inferred Ruiz was the person who electronically signed the 2011 agreement.” (Id.
at 843.) Furthermore, the plaintiff “averred he did not recall electronically
signing the 2011 agreement . . .” (Id. at 844.) The declarant explained
that “the 2011 agreement was part of an employee acknowledgment form that ‘is’
presented to all Moss Bros. employees as part of a series of changes to the
company's employee handbook, and each employee is required to log into the
company's HR system, using his or her ‘unique login ID and password,’ to review
and sign the employee acknowledgment form,” but the Court of Appeal again noted
that the declarant “did not explain how, or upon what basis, she inferred that
the electronic signature on the 2011 agreement was ‘the act of’ Ruiz.” (Id.)
The Ruiz court maintained this reasoning even considering that “[t]o be sure,
“Ernesto Zamora Ruiz (Electronic Signature)” and “9/21/2011 11:47 AM” appear in
print on signature and date lines of the 2011 agreement, and [the declarant]
apparently retrieved the proffered ‘true and correct copy” of the 2011
agreement from Moss Bros.' personnel records.” (Id. at 843.) The court
ultimately concluded as follows:
Though Ruiz did not deny that the
electronic signature on the 2011 agreement was his, he claimed he did not
recall signing the 2011 agreement and would not have signed it had it been
presented to him. In the face of Ruiz's failure to recall signing the 2011
agreement, Moss Bros. had the burden of proving by a preponderance of the
evidence that the electronic signature was authentic (Evid. Code, § 1401), that
is, it was the Moss Bros. claimed it was: “the act of” Ruiz (Civ. Code,
§ 1633.9, subd. (a)). Moss Bros. did not meet this evidentiary burden.
(Id. at
846.) More specifically, the Court in Ruiz noted that the declaration
did not explain that an electronic signature in the name of “Ernesto Zamora
Ruiz” could only have been placed on the 2011 agreement (i.e., on the employee
acknowledgement form) by a person using Ruiz's “unique login ID and password”;
that the date and time printed next to the electronic signature indicated the
date and time the electronic signature was made; that all Moss Bros. employees
were required to use their unique login ID and password when they logged into
the HR system and signed electronic forms and agreements; and the electronic
signature on the 2011 agreement was, therefore, apparently made by Ruiz on
September 21, 2011, at 11:47 a.m. Rather than offer this or any other
explanation of how she inferred the electronic signature on the 2011 agreement
was the act of Ruiz, the declaration only offered her unsupported assertion
that Ruiz was the person who electronically signed the 2011 agreement.
Here, Plaintiff argues that under Ruiz,
Defendants cannot authenticate the electronic signature. The Court disagrees. Plaintiff contends that Bryan Stillwagon’s
declaration in support of Defendants’ motion is similar to the failed employer
declaration in Ruiz, as Stillwagon stated that ERMC used an electronic
system called the “UKG” system for delivering the arbitration agreement to
employees and that Plaintiff was assigned her own unique log-in credentials for
logging into that system and viewing the arbitration agreement. (Stillwagon
Decl., ¶¶ 3, 4.) Plaintiff further notes that Stillwagon’s declaration also
states that “Plaintiff consented to ERMC’s arbitration agreement by signing it
using the UKG system, which has a digital signing tool.” (Stillwagon Decl., ¶
5.) Like in Ruiz, Plaintiff contends that he cannot recall signing the
agreement (Brown Decl., ¶ 4.) Also similar to Ruiz, Plaintiff argues
that Stillwagon did not explain that the electronic signature in the name of
“Tiana Brown” could only have been placed on the agreement by a person using
Plaintiff’s unique log-in.”
However, Plaintiff’s attempted
distinctions from the facts in Ruiz are mostly unavailing. The Stillwagon
declaration clearly notes that “[i]n order to use [the UKG] system, [Plaintiff]
was assigned her own unique log-in credentials for logging into the UKG system,”
that “Plaintiff was the only person who knew her unique log-in credentials,”
and that “she used her own unique credentials to log into the UKG system to
view the arbitration agreement. (Stillwagon, ¶ 4.) The Court notes that the Ruiz Court stated
that a more helpful declaration would have included an explanation that an
electronic signature in the name of “Ernesto Zamora Ruiz” could only have been
placed on the 2011 agreement (i.e., on the employee acknowledgement form) by a
person using Ruiz's “unique login ID and password”; that the date and time
printed next to the electronic signature indicated the date and time the
electronic signature was made; that all Moss Bros. employees were required to
use their unique login ID and password when they logged into the HR system and
signed electronic forms and agreements; and the electronic signature on the
2011 agreement was, therefore, apparently made by Ruiz on September 21, 2011,
at 11:47 a.m.. Here, the declaration of Bryan Stillwagon does note that
Plaintiff was the only one using her “unique login ID and password,” by explaining
the UKG system and how it utilizes a digital signing tool, how the UKG system delivers
employment-related documents electronically to employees of ERMC, and how they
review and acknowledge the arbitration agreement.
Third-Party
Beneficiary
Generally,
only parties to a contract containing an arbitration agreement may enforce that
arbitration clause. (Thomas v. Westlake (2012) 204 Cal.App.4th
605, 613.) There are exceptions to the general rule. Defendants argue that they can compel
arbitration under the exception for a third-party beneficiary to the
arbitration provision. “ ‘A third party beneficiary is someone who may enforce
a contract because the contract is made expressly for his benefit.’ ” (Jensen
v. U-Haul Co. of California (2017) 18 Cal.App.5th 295, 301; see also Civ.
Code, § 1559 [“[a] contract, made expressly for the benefit of a third person,
may be enforced by him ....”].) A person “only incidentally or remotely
benefited” from a contract is not a third-party beneficiary. (Lucas v. Hamm (1961)
56 Cal.2d 583, 590.) Thus, “the ‘mere
fact that a contract results in benefits to a third party does not render that
party a “third party beneficiary.” (Jensen, at p. 302, 226 Cal.Rptr.3d
797.) Nor does knowledge that the third party may benefit from the contract
suffice. (Goonewardene v. ADP, LLC (2019) 6 Cal.5th 817, 830 (Goonewardene).)
Rather, the parties to the contract must have intended the third party to
benefit.
In
order for a third party to show that the contracting parties intended to
benefit it, under the express terms of the contract at issue and any other
relevant circumstances under which the contract was made, “(1) “the third party
would in fact benefit from the contract”; (2) “a motivating purpose of the
contracting parties was to provide a benefit to the third party”; and (3)
permitting the third party to enforce the contract “is consistent with the
objectives of the contract and the reasonable expectations of the contracting
parties.” (Goonewardene, supra, 6 Cal.5th at p. 830.) Here, Defendants
contend that Plaintiff agreed to arbitrate disputes arising out of her
employment with Unifi, an affiliate of ERMC Aviation, the signatory of the
Arbitration Agreement. (Stillwagon Decl., ¶¶ 5-6.) Defendants assert that the
Arbitration Agreement makes clear that affiliates, and subsidiaries of Unifi Aviation
can enforce the Arbitration Agreement. Defendants also concede that although
they are not explicitly named as a subsidiary or affiliated entity, ERMC
Aviation is just that.
In
opposition, Plaintiff contends that the arbitration agreement lists the
employer as “Unifi Aviation, LLC” and Plaintiff was not employed by Unifi
Aviation, LLC, but instead, was employed by ERMC Aviation, LLC. (Brown Decl.,
¶¶ 2,3; Stillwagon Decl., ¶ 7.) Plaintiff contends that without any corroborating
evidence or foundation, Bryan Stillwagon states in his declaration that “Unifi
Aviation, LLC., is an affiliate of ERMC Aviation LLC and is entirely owned by
the same parent company AirCo Aviation Services, LLC.” (Stillwagon Decl., ¶ 6.)
Plaintiff argues that just because Unifi and ERMC share the same parent company
does not mean that ERMC can magically step into Unifi’s shoes for purposes of enforcing
this agreement. Moreover, Defendant Maria Mendoza is not a party to the arbitration
agreement either.
While
ERMC may in fact be an affiliate of Unifi, on the record presented here Defendants
have not carried their burden of showing how they are a third-party
beneficiary. There is no supporting evidence made with such a claim, nor do Defendants
allege that they benefit from the contract, that there was a motivating purpose
of the contracting parties which was to benefit the third party, nor is there
an argument in the moving papers that permitting them to enforce the contract
“is consistent with the objectives of the contract and the reasonable
expectations of the contracting parties.” (Goonewardene, supra, 6
Cal.5th at p. 830.) As such, the Court does not believe that the non-signatory Defendants
can enforce the Arbitration Agreement as a third-party beneficiary.
Unconscionability
Plaintiff
contends that the Arbitration Agreement is unconscionable. The Court does not reach the unconscionability analysis until
and unless the non-signatory moving party has established one of the exceptions
to the general rule that a non-signatory cannot enforce an arbitration
agreement.