Judge: Sarah J. Heidel, Case: 23GDCV00990, Date: 2024-05-29 Tentative Ruling
Case Number: 23GDCV00990 Hearing Date: May 29, 2024 Dept: V
SUPERIOR COURT OF CALIFORNIA
COUNTY OF LOS ANGELES – NORTHEAST DISTRICT
DEPARTMENT V
OLIVIA KLAYMAN, an individual
Plaintiff,
vs.
SYSTECH SOLUTIONS, LLC, a California corporation; and DOES 1-50, inclusive,
Defendants.
Case No.: 23GDCV00990
Hearing Date: May 29, 2024
Time: 9:00 a.m.
[TENTATIVE] ORDER RE: MOTION TO COMPEL ARBITRATION AND STAY ACTION
MOVING PARTIES: Defendant SYSTECH SOLUTIONS, INC. erroneously sued as SYSTECH SOLUTIONS, LLC
RESPONDING PARTY: Plaintiff OLIVIA KLAYMAN
The court considered the moving papers, opposition and reply.
BACKGROUND
Plaintiff Olivia Klayman filed the complaint on May 11, 2023, against defendant Systech Solutions, Inc. (defendant). Plaintiff alleges the following causes of action against defendant: (1) race discrimination in violation of the Califiornia Fair Employment and Housing Act (FEHA); (2) gender discrimination in violation of FEHA; (3) religious discrimination in violation of FEHA; (4) wrongful termination in violation of public policy; (5) violation of California Business and Professions Code § 17200, et seq.; (6) violation of Labor Code §§ 510, 1194, and 1198 (Failure to Pay Overtime); (7) violation of Califiornia Labor Code §§ 226.7, 512, and 558 (Failure to Allow Meal and Rest Breaks); (8) violation of Labor Code §§ 201 through 203
(Waiting Time Penalties); (9) violation of California Labor Code § 226 (Failure to Provide Accurate Wage Statements); (10) violation of California Labor Code §§ 1194, 1194.2, 1197, 218.5, 218.6 (Failure to Pay Minimum Wage); (11) violation of California Labor Code §§ 2800, et seq. (Failure to Reimburse); and (12) violation of California Labor Code §§ 226, 1198.5 (Failure to Maintain/Provide Employment and Payroll Records).
Defendant filed the instant motion on November 9, 2023. Plaintiff filed her opposition and objection on January 5, 2024. Defendant filed its reply on January 11, 2024. Plaintiff filed her objection to defendant’s untimely and improper new evidence submitted on reply on January 12, 2024. Judge Ralph C. Hofer continued the hearing on the motion instructing the parties to file a supplemental opposition and reply after further deposition of defendant’s witness, Sureshkumar Srinivasan. Plaintiff filed a supplemental opposition to the instant motion on March 4, 2024. Defendant filed its supplemental reply to plaintiff’s supplemental opposition on March 8, 2024.
LEGAL STANDARD
Under both the Federal Arbitration Act and California law, arbitration agreements are valid, irrevocable, and enforceable, except on such grounds that exist at law or equity for voiding a contract. (Winter v. Window Fashions Professions, Inc. (2008) 166 Cal.App.4th 943, 947.) The party moving to compel arbitration must establish the existence of a written arbitration agreement between the parties. (Code of Civ. Proc. § 1281.2.) This is usually done by presenting a copy of the signed, written agreement to the court. “A petition to compel arbitration or to stay proceedings pursuant to Code of Civil Procedure sections 1281.2 and 1281.4 must state, in addition to other required allegations, the provisions of the written agreement and the paragraph that provides for arbitration. The provisions must be stated verbatim or a copy must be physically or electronically attached to the petition and incorporated by reference.” (Cal. Rules of Court, rule 3.1330.) The moving party must also establish the other party’s refusal to arbitrate
the controversy. (Code of Civ. Proc. § 1281.2.) The filing of a lawsuit against the moving party for a controversy clearly within the scope of the arbitration agreement affirmatively establishes the other party’s refusal to arbitrate the controversy. (Hyundai Amco America, Inc. v. S3H, Inc. (2014) 232 Cal.App.4th 572, 577.)
OBJECTIONS TO EVIDENCE
Plaintiff’s Evidentiary Objections to Defendant’s Motion to Compel Arbitration
Sustained:
Overruled: 1, 2, 3, 4, 5
The court overrules objection 3, but the court acknowledges declarant erred in stating the documents could be found in Exhibit C when they are provided in Exhibit D.
Plaintiff’s Objections to Defendant’s Untimely and Improper New Evidence Submitted on Reply in Support of Its Motion to Compel Arbitration
Sustained:
Overruled: 1, 2, 3, 4, 5, 6
In Espejo v. Southern California Permanente Medical Group (2016) 246 Cal.App.4th 1047, because defendant was not required to introduce evidence regarding the authenticity of the signature and the document until the authenticity was challenged the court held that defendants were required to establish by a preponderance of the evidence that the signature was authentic after the plaintiff challenged the validity of that signature in his opposition. (Id. at 1060.) Therefore, evidence introduced in the reply papers regarding the authenticity of plaintiff’s signature is appropriate.
DISCUSSION
A. Motion to Compel Arbitration
Defendant argues that this matter should be submitted to arbitration because plaintiff signed an arbitration agreement when she accepted her employment with defendant. Defendant contends that plaintiff signed the Agreement for Binding Arbitration of Dispute, the Confidentiality and Invention/Idea Assignment Agreement and other documents on or about June 7, 2020. (Decl. of Sureshkumar Srinivasan (SK), ¶ 8.) Plaintiff also reviewed and acknowledged defendant's employee handbook which provided that employment is contingent upon the employee signing the Company’s standard arbitration agreement. (Decl. of SK, ¶ 11, Exh. E.) Defendant contends that a condition of employment is that all employees sign the arbitration agreement. (Decl. of SK, ¶ 10.)
1. Federal Arbitration Act (FAA)
The trial court must rule on the threshold question of the FAA’s applicability to the arbitration agreement. (Garcia v. Superior Court (2015) 236 Cal.App.4th 1138.) “In determining whether the employment agreement involved interstate commerce, the parties' subjective intent is not the determining factor. ‘[E]videncing a transaction involving commerce’ (9 U.S.C. § 2) simply means that the ‘transaction’ in fact ‘involv[e]’ interstate commerce, even if the parties did not contemplate an interstate commerce connection.’ (Allied–Bruce Terminix Companies v. Dobson (1995) 513 U.S. 265, 281.)” (Giuliano v. Inland Empire Personnel, Inc. (2007) 149 Cal.App.4th 1276, 1286.)
In Giuliano v. Inland Empire Personnel, Inc. (2007) 149 Cal.App.4th 1276, the court held that the interstate nature of the plaintiff’s employment was undisputed because his company, Empire, was engaged in business throughout Arizona and California; and plaintiff attended meetings, site visits, and grand opening ribbon cuttings in other states as well as negotiated multi-million dollar loan agreements with a bank that was headquartered in another
state. (Id. at 1286.). Similarly, defendant argues that Systech is involved in interstate commerce because Systech is a management consulting company with employees and clients all over the United States and abroad, plaintiff worked remotely from Tennessee and Massachusetts, and she communicated with employees in states across the United States as well as with individuals abroad. Accordingly, the FAA applies to the Arbitration Agreement.
2. Waiver
Plaintiff argues in her opposition that defendant waived its right to arbitration. The party who opposes arbitration on the grounds of waiver bears a heavy burden and any doubts regarding a waiver allegation should be resolved in favor of arbitration. (St Agnes Medical Center v. PacifiCare of California (2003) 31 Cal.4th 1187, 1195.) In determining whether a party waived its right to arbitration the court must consider the following:
(1) whether the party's actions are inconsistent with the right to arbitrate;
(2) whether ‘the litigation machinery has been substantially invoked’ and the parties ‘were well into preparation of a lawsuit’ before the party notified the opposing party of an intent to arbitrate;
(3) whether a party either requested arbitration enforcement close to the trial date or delayed for a long period before seeking a stay;
(4) whether a defendant seeking arbitration filed a counterclaim without asking for a stay of proceedings;
(5) ‘whether important intervening steps [e.g., taking advantage of judicial discovery procedures not available in arbitration] had taken place’; and (6) whether the delay ‘affected, misled, or prejudiced’ the opposing party.
(St Agnes Medical Center, supra, 31 Cal.4th at 1196.)
Plaintiff argues that defendant has waived its right to arbitration because it has (1) appeared in the case; (2) filed an answer; (3) propounded hundreds of burdensome discovery requests on Klayman; (4) answered two sets of discovery; (5) engaged in several meet and confer processes; (5) provided supplemental discovery responses; (6) surprised Klayman with three ex parte applications for out-of-state subpoenas without meet and confer efforts; (7) will have participated in two depositions noticed by Klayman by the time this motion is heard; (8) filed three motions to compel further discovery responses and (9) forced Klayman to file two motions
to compel by ignoring meet and confer efforts. (Decl. of Stephanie P. Chyorny, ¶¶ 4, 7, 10-22, 24.) Plaintiff also argues that defendant in its case management statement requested a jury trial. (Decl. of Stephanie P. Chyorny, ¶ 19. Exh. 17.)
Defendant argues that it asserted its right to binding arbitration in its answer filed on July 27, 2023, where defendant asserted its fifth affirmative defense, lack of jurisdiction, because of the presence of the Agreement for Binding Arbitration of Disputes (Arbitration Agreement). (Answer, 3:1-11; Exh. A.) Defendant argues that it diligently sought plaintiff’s cooperation for arbitration as early as July 17, 2023, when defendant’s counsel sent a meet and confer email prior to filing a motion to compel arbitration. (Decl. of Nishita Patel, ¶¶ 3-10, Exhs. F-L.) Defendant argues that it wasn’t until October 31, 2020, that plaintiff’s counsel advised defendant’s counsel that plaintiff would not agree to arbitration. (Decl. of Nishita Patel, ¶ 9, Exh. K.) Defendant also argues that no trial date has been set.
The court does not find plaintiff has met the heavy burden of showing defendant has waived its right to arbitration. In Doers v. Golden Gate Bridge etc. Dist. (1979) 23 Cal.3d 180, the Supreme Court of California held that it is the judicial litigation of the merits of arbitrable issues that waives a party’s right to arbitration. (Id. at 188.) Here, there has been no litigation on the merits of arbitrable issues. Furthermore, defendant’s participation in discovery does not establish waiver of arbitration because that discovery is not necessarily outside of the discovery authorized under the ADR Services Rules and Code of Civil Procedure section 1283.05.
Accordingly, the court finds that defendant did not waive its right to arbitration.
3. Existence of an Arbitration Agreement
Defendant has provided a copy of Systech’s Agreement for Binding Arbitration of Dispute (Arbitration Agreement) plaintiff signed on July 7, 2020. (Decl. of SK, ¶ 8; Exh. D.) The Arbitration Agreement provides the following:
Any disputes between the Parties will be resolved by binding arbitration, as
set forth in Systech's attached Arbitration of Disputes Policy ("Policy"). The
Parties agree to comply with each of the provisions of the Policy. . .
This Agreement sets forth the final, complete and exclusive agreement of the
Parties on the subject of the resolution and arbitration of disputes.
The Policy provides the following:
To the fullest extent permitted by law, this policy applies to all claims, disputes
or controversies, of any kind whatsoever, between an employee and Systech,
whether raised by the employee, or by Systech, including but not limited to those
arising out of or related to an employee's hiring, employment, the terms and
conditions of that employment, and the termination of employment ("Claim" or
"Claims"). Such Claims include any and all complaints, charges, causes of action
(whether at law, in equity or otherwise), or demands arising under the law of
contract (express or implied), the law of torts, any applicable unfair competition or
bade secrets law, the federal and California Constitutions, federal, state and local
statutes, ordinances, and regulations, such as but not limited to the Age
Discrimination in Employment Act, Title VII of the Civil Rights Act of 1964, the
Americans With Disabilities Act, the California Fair Employment and Housing
Act, the federal Family and Medical Leave Act, and the California Family Rights
Act, and all laws of similar import.
Any such Claim shall be settled by arbitration, in Los Angeles, California, to
be administered by Action Dispute Resolution Services ("ADR Services"), in
accordance with and pursuant to its Arbitration Rules ("Rules") then in effect,
except as otherwise modified herein.
EXCEPT WITH RESPECT TO JUDICIAL REVIEW OF THE FINAL WRITTEN
DECISION, IT IS UNDERSTOOD AND ACKNOWLEDGED THAT
ARBITRATION INVOLVES WAIVING ANY AND ALL RIGHTS THAT
MIGHT OTHERWISE APPLY TO HAVE A JUDGE OR JURY DECIDE ANY
ISSUES.
Here, plaintiff’s asserted claims arise from her employment and are covered under the Arbitration Agreement. Defendant has met its burden of demonstrating the existence of an arbitration agreement between the parties and that the subject claims are within the scope of the arbitration agreement.
4. Validity of the Arbitration Agreement
Arbitration agreements are valid and enforceable unless they are revocable for reasons under state law that would render a contract revocable including fraud, duress, and
unconscionability. (Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83, 98.) The party opposing the motion to compel arbitration bears the burden of proving by a preponderance of the evidence any facts necessary to establish any defense to enforcement of an arbitration agreement. (Engalla v. Permanente Medical Group, Inc. (1997) 15 Cal.4th 951, 972.)
a. Validity of plaintiff’s signature
Plaintiff argues that she did not sign the Arbitration Agreement and the first time she saw the document was when it was shown to her by counsel during this litigation.
As discussed above, defendant properly provided evidence to show the authenticity of plaintiff’s signature in its reply. Defendant shows in its reply that defendant sent the arbitration agreement, along with the confidentiality agreement, and the new team member information sheet on July 6, 2020, to plaintiff’s personal email. (Supp. Decl. of SK, ¶ 3; Exhs. M, Q.) Defendant shows that plaintiff emailed SK back with five attachments including an attachment labeled “SIGNED 20200706 Arbitration of Disputes – Olivia”. (Supp. Decl. of SK, ¶ 4; Exh. N.) Defendant argues that plaintiff’s signature on the Arbitration Agreement is the same signature as on her Employment Agreement and the Confidentiality Agreement and on the New Team Member Information Sheet. (Decl. of SK, ¶¶ 5, 9; Exhs. A, D; Supp. Decl. of SK, ¶ ¶ 5-7; Exhs. O-Q.) Defendant argues that plaintiff has not disputed her signature on her Employment Agreement of June 24, 2020.
In her supplemental opposition, plaintiff argues that defendant failed to provide native versions of the alleged emails, therefore defendant has not provided any evidence of the validity of plaintiff’s signature.
In its supplemental reply, defendant argues that defendant produced documents during the deposition of SK on February 6, 2024: the pdf copy of SK’s email dated July 6,2020, to plaintiff, along with three attachments and the pdf copy of Plaintiff s email from her personal
email address - okldayma@gmail.com dated July 7, 2020, to SK, along with five attachments which included the signed Arbitration Agreement. (Decl. of Nisha Patel, Supp. Reply, ¶¶ 3, 4; Exhs. R, S.)
"A writing may be authenticated by evidence that the writing was received in response to a communication sent to the person who is claimed by the proponent of the evidence to be the author of the writing." (Evid. Code, § 1420.) And, "[a] writing may be authenticated by evidence that the writing refers to or states matters that are unlikely to be known to anyone other than the person who is claimed by the proponent of the evidence to be the author of the writing." (Evid. Code, § 1421.) An electronic signature has the same legal effect as a handwritten signature, but it must still be authenticated and may be done so as follows: “(a) An electronic record or electronic signature is attributable to a person if it was the act of the person. The act of the person may be shown in any manner, including a showing of the efficacy of any security procedure applied to determine the person to which the electronic record or electronic signature was attributable.” (Code Civ. Proc. §§ 1633.7, 1633.9(a).)
Defendant has provided a screenshot and PDF version of the email showing the Arbitration Agreement was sent to plaintiff’s personal email along with other onboarding documents. Defendant has a screenshot and PDF version of the email that plaintiff sent back with an attachment labeled “SIGNED 20200706 Arbitration of Disputes – Olivia” along with other personal identifying documents such as her passport, California Driver License, and bank account information. Defendant has provided a signed copy of the Arbitration Agreement by plaintiff and has provided a signed copy of the Employee Agreement by plaintiff, among other signed documents, with signatures that resemble each other. Accordingly, the court finds that defendant has shown by a preponderance of the evidence that signed the arbitration agreement.
b. Unconscionability
Under California law, "procedural and substantive unconscionability must both be present in order for a court to exercise its discretion to refuse to enforce a contract or clause under the doctrine of unconscionability." (Armendariz, supra, 24 Cal.4th at 114.) The contract must not be unconscionable procedurally and substantively to the same degree, but is a sliding scale; where one is greater the other may be lesser. (Gentry v. Superior Court (2007) 42 Cal.4th 443, 469.)
i. Procedural Unconscionability
Procedural unconscionability turns on adhesiveness—a set of circumstances in which the weaker or ‘adhering’ party is presented a contract drafted by the stronger party on a take it or leave it basis. (Mercuro v. Superior Court (2002) 96 Cal.App.4th 167, 174.) The arbitration agreement in this case a condition of employment; all employees sign the Arbitration Agreement. (Decl. of SK, ¶ 10.) Because plaintiff’s employment was contingent on her signing the Arbitration Agreement, the Arbitration Agreement is adhesive, therefore there is a degree of procedural unconscionability.
ii. Substantive Unconscionability
The court in Armendariz identified five safeguards for a lawful enforceable arbitration agreement: (1) a neutral arbitrator; (2) adequate discovery; (3) a written reasoned opinion; (4) identical types of relief as available in a judicial forum; and (5) not requiring the employee to bear costs unique to arbitration. (Armendariz, supra, (2000) 24 Cal.4th at 102-114.)
Here, the Arbitration Agreement provides that the arbitrator would be selected from the ADR Services local or regional Employment Panel of arbitrators, otherwise, the parties shall in good faith agree upon a neutral single arbitrator, therefore, the arbitrator is neutral. (Decl. of SK, Exh. D, pp. 3.) The Arbitration Agreement provides that discovery would be authorized under California Code of Civil Procedure section 1283.05
of SK, Exh. D, pp. 3.) The Arbitration Agreement states that the arbitrator will render a written final decision, therefore the written reasoned requirement is met. (Decl. of SK, Exh. D, pp. 4.) The Arbitration Agreement states that “the arbitrators will have the authority to grant any appropriate remedy, whether legal or equitable, so long as that remedy would be authorized in a court of law based upon the asserted claims for relief”, therefore there are identical types of relief as available in a judicial forum under the agreement. (Decl. of SK, Exh. D, pp. 4.) The Arbitration Agreement states Systech will pay all arbitration forum fees except the portion of the arbitration filing fee which would be equivalent to filing a lawsuit in a court of law, therefore the employee would not be paying the costs unique to arbitration. (Decl. of SK, Exh. D, pp. 3.)
The Arbitration Agreement meets the five safeguards for a lawful enforceable arbitration agreement, therefore, the Arbitration Agreement is substantively conscionable.
Agreements to arbitrate must contain at least "a modicum of bilaterality" to avoid substantive unconscionability. (Armendariz, supra, 24 Cal. 4th at 117-119.) A "modicum of bilaterality" exists when both the employer and the employee are bound to submit their claims to arbitration, subject to the same rules and procedures and the same advantages and disadvantages. (Fittante v. Palm Springs Motors, Inc. (2003)105 Cal.App.4th 708, 725.) Here, both Systech and plaintiff must submit their claims to arbitration, therefore, the Arbitration Agreement is substantively conscionable. (Decl. of SK, Exh. D, pp. 3.)
Because there is procedural unconscionability but no substantive unconscionability, the court finds that the Arbitration Agreement is conscionable and is enforceable.
Accordingly, the court grants defendant’s motion to compel arbitration.
B. Motion to Stay Action
Pursuant to section 3 of the FAA, the court must stay the trial of the action upon referring a dispute to arbitration. (9 U.S.C. § 3.) Trial of the action is stayed.
Based on the foregoing, the court GRANTS defendant’s motion to compel and stays the trial of the action.
Defendant is ordered to give notice of this ruling