Judge: Stephen Morgan, Case: 22AVCV00811, Date: 2023-01-17 Tentative Ruling

Case Number: 22AVCV00811    Hearing Date: January 17, 2023    Dept: A14

Background

This is a wrongful termination action. Plaintiff David Delgado (“Delgado”) alleges that Defendants Smile Brands, Inc (“Smile Brands”).; and Sahawneh Dental Corporation dba Bright Now Dental and Smile Brands of Granada Hills (“Sahawneh Dental” and collectively “Defendants”) hired Plaintiff on or around 2010 as an x-ray technician/dental assistant, stopped working for Defendants in or around 2012, and was rehired by Defendants in or around February 2019. Plaintiff presents that at all relevant times he was performing his job duties in a satisfactory manner. Plaintiff also presents that he lost the use of his right eye due to a retinal detachment in or around May and August 2019 and was then transferred from Defendants’ Granada Hills office to the Palmdale office as well as required Plaintiff to move from location to location, including Defendant’s Burbank, Reseda, and Simi Valley locations. Defendants then allegedly began to give Plaintiff write-ups for his attendance after he spoke privately to his manager Elaina about his medical condition. Plaintiff believes Elaina also began disclosing his medical condition to his colleagues which caused him to be harassed. Plaintiff states that he complained about the harassment, an investigation was conducted, and all the write-ups given to Plaintiff by Elaina were dismissed. In or around November 2020, Plaintiff presents that he began to have issues with his left eye and his doctors placed him on medical leave through the end of January 2021 and, instead of accommodating this request, Defendants told Plaintiff that if he did not return by December 7, 2020, he would have to use personal time to cover the rest of the medical leave. Plaintiff further alleges that Defendants eventually extended the leave only until January 7, 2021 and told Plaintiff if he did not return by that date that his position would not be held. Ultimately, Plaintiff presents that he was actively trying to return to work, but Defendants refused to allow him to return.

On October 14, 2022, Plaintiff filed his Complaint alleging eight causes of action for: (1) Disability Discrimination in Violation of FEHA, (2) Failure to Accommodate Disability in Violation of FEHA, (3) Failure to Engage in the Interactive Process in Violation of FEHA, (4) Retaliation in Violation of FEHA, (5) Failure to Investigate and Prevent, (6) CFRA Retaliation/Interference; (7) Violation of California Labor Code § 1102.5; and (8) Wrongful Termination of Employment in Violation of Public Policy.

On December 13, 2022, Defendants filed their Answer.

On December 20, 2022, Defendants filed this Motion to Compel Arbitration.

On January 03, 2023, Plaintiff filed his Opposition.

On January 09, 2023, Defendants filed their Reply.

-----

Legal Standard

Standard for Compelling Arbitration – California law incorporates many of the basic policy objectives contained in the Federal Arbitration Act (“FAA”), including a presumption in favor of arbitrability. (Engalla v. Permanente Medical Group, Inc. (1997) 15 Cal.4th 951, 971-72.) Cal. Code¿Civ.¿Proc.¿§ 1281.2 permits a party to file a motion to request that the Court order the parties to arbitrate a controversy. Under Cal. Code¿Civ.¿Proc.¿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, unless it determines that:

(a) The right to compel arbitration has been waived by the petitioner; or

(b) Grounds exist for the revocation of the agreement.

(c) A party to the arbitration agreement is also a party to a pending court action or special proceeding with a third party, arising out of the same transaction or series of related transactions and there is a possibility of conflicting rulings on a common issue of law or fact. For purposes of this section, a pending court action or special proceeding includes an action or proceeding initiated by the party refusing to arbitrate after the petition to compel arbitration has been filed, but on or before the date of the hearing on the petition. This subdivision shall not be applicable to an agreement to arbitrate disputes as to the professional negligence of a health care provider made pursuant to Section 1295.

(Cal. Code¿Civ.¿Proc.¿§ 1281.2.)

The FAA compels judicial enforcement of a wide range of arbitration agreements in transactions affecting interstate commerce. (Allied-Bruce Terminix Cos. v. Dobson (1995) 513 U.S. 265, 273–275, 281.) Section 2 of the FAA provides that a written arbitration agreement “shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.” (9 U.S.C. § 2.) Section 2 of the FAA thus provides the validity and enforceability of an arbitration agreement is governed by state law applicable to contracts generally. (Doctor's Associates, Inc. v. Casarotto (1996) 517 U.S. 681, 686–687.

¿¿¿¿ 

The right to arbitration depends upon contract; a petition to compel arbitration is simply a suit in equity seeking specific performance of that contract.¿(Marcus & Millichap Real Estate Inv. Brokerage Co. v. Hock Inv. Co. (1998) 68 Cal.App.4th 83, 88.)¿There is no public policy favoring arbitration of disputes which the parties have not agreed to arbitrate.¿(Id. at 89.)¿¿

¿¿ 

The party seeking to enforce the arbitration agreement bears the burden of proving the existence of a valid arbitration agreement by the preponderance of the evidence.¿(Giuliano v. Inland Empire Personnel, Inc.¿(2007) 149 Cal.App.4th 1276, 1284.)¿The trial court first decides whether an enforceable arbitration agreement exists between the parties and then¿determine whether the plaintiff’s claims are covered by the agreement.¿(Omar v. Ralphs Grocery Co.¿(2004) 118 Cal.App.4th 955, 961.)¿¿ 

¿¿ 

The party opposing the petition to compel arbitration bears the burden of proving by a preponderance of the evidence any fact necessary to its defense.¿(Giuliano v. Inland Empire Personnel, Inc.,¿supra,¿at¿1284.)¿In these summary proceedings, the trial court sits as a trier of fact, weighing all the affidavits, declarations, and other documentary evidence, as well as oral testimony received at the court’s discretion, to reach a final determination.¿(Id.) 

-----

Discussion

Evidentiary Objections –

Plaintiff’s Objection No. 1 [Decl. of Mary Phillips, ¶ 4 “As is the policy and practice of Company, the documents maintained in Plaintiff’s personnel and training files were made at or near the time reflected in the documents by persons with knowledge of the contents thereof. Consistent with Company’s policy and practice, the documents maintained in Plaintiff’s personnel and training files were made and maintained in the regular course of Company’s business operations.”]: OVERRULED.

Plaintiff’s Objection No. 2 [Decl. of Mary Phillips, ¶ 8 “All employees must set up their own confidential password in order to complete the Smile U courses and to review and electronically sign policies and the Company’s Arbitration Agreement. Employees are instructed to maintain the confidentiality of their login credentials. Because employees set up and maintain their own confidential password, no one at Company has the ability to electronically sign and acknowledge the documents accessed through Smile U on behalf of another employee. At the time of Plaintiff’s hire in February 2019, Company was using the Smile U system.”]: OVERRULED.

Plaintiff’s Objection No. 3 [Decl. of Mary Phillips, ¶ 9 “All employees must set up their own confidential password in order to complete the Smile U courses and to review and electronically sign policies and the Company’s Arbitration Agreement. Employees are instructed to maintain the confidentiality of their login credentials. Because employees set up and maintain their own confidential password, no one at Company has the ability to electronically sign and acknowledge the documents accessed through Smile U on behalf of another employee. At the time of Plaintiff’s hire in February 2019, Company was using the Smile U system.”]: OVERRULED.

Plaintiff’s Objection No. 4 [Decl. of Mary Phillips, ¶ 10 “On March 14, 2019, Plaintiff logged onto Smile U, using his username and individually created confidential password to acknowledge receipt of and agree to the Arbitration Agreement. On March 14, 2019, Plaintiff logged onto Smile U and accessed the module for his ‘Mutual Arbitration Acknowledgment and Agreement.’ ”]: OVERRULED.

Plaintiff’s Objection No. 5 [Decl. of Mary Phillips, ¶ 10, Exhibit A “A true and correct copy of the Arbitration Agreement that Plaintiffs electronically signed and acknowledged is attached hereto as Exhibit A. The Arbitration Agreement was a stand-alone, threepage document, written in plain English, titled, “MUTUAL ARBITRATION AGREEMENT.” A true and correct copy of the Arbitration Agreement is attached hereto as Exhibit A. Plaintiff was provided the Arbitration Agreement and given an opportunity to ask questions about it before signing and acknowledging receipt and compliance with its terms. Once an employee has launched the Arbitration Agreement, they must view the entire text of the agreement by scrolling down on the screen-page. Before Plaintiff signed the Arbitration Agreement, he acknowledged that he: [A]grees that he or she has read and understands this [Arbitration] Agreement and has consulted an attorney of Employee’s own choosing regarding the effect of this Agreement to the extent Employee deems necessary. Employee acknowledges that he or she is knowingly and voluntarily waiving the right to file a lawsuit relating to Employee’s employment with Company as well as the right to resolve disputes in a proceeding before a judge or jury, except as described above. Employee further acknowledges and agrees that this Agreement, while mutually binding upon the parties, does not constitute a guarantee of continued employment for any fixed period or under any particular terms.”]: OVERRULED.

Plaintiff’s Objection No. 6 [Decl. of Mary Phillips, ¶ 10 “It was at that point when the Smile U module prompted Plaintiff to “[s]croll down to read the entire Arbitration Agreement. Then Plaintiff was prompted to “[c]heck the box to acknowledge and agree” to the Arbitration Agreement, after which a new screen appears advising the employee that he or she ‘may now exit the course.’ ”]: OVERRULED.

Plaintiff’s Objection No. 7 [Decl. of Mary Phillips, ¶ 10 “A true and correct copy of the “Acknowledgement & Agreement” for the Arbitration Agreement that Plaintiff was required to scroll through and electronically acknowledge by clicking the check box that states “Check the box to acknowledge and agree” is attached hereto as Exhibit B. After an employee acknowledges and agrees to the Arbitration Agreement a copy of the acknowledged Arbitration Agreement is automatically stored in the ‘Courses I Have Done’ section of that lesson and remains available on the Resources menu of Smile U.”]: OVERRULED.

Defendant’s Objection No. 1 [“I worked for Defendants as a dental assistant and X-ray technician. I don’t know who Mary Phillips is. When I started working in 2019, my manager, Star Doe (“Star”), sat me down at a computer and rushed me through the onboarding process. Star said, “You don’t need to read anything,” and “just quickly go through this.” Star stood over me while I clicked through the onboarding process. I felt pressured to click on everything without reading. At no point during my employment was I ever told that any document I was required to sign was an arbitration agreement, or that any document that I was required to sign had the effect of me waiving my right to a jury trial, or any of my rights. I do not want to waive my right to a jury trial. I was shocked to learn of this agreement after the lawsuit was filed. I did not have an opportunity to negotiate any of the terms.”]: OVERRULED.

Defendant’s Objection No. 2 [“Nobody reviewed or discussed with me any documents that I was required to sign or any of their real provisions with me or told me that signing the documents was voluntary, that the terms were negotiable or that I could refuse to agree to the arbitration agreement, or that there was some opt-out procedure of the arbitration agreement. I would never agree to arbitrate my disputes.”]: OVERRULED.

Defendant’s Objection No. 3 [“Nobody discussed with me the advantages or disadvantages of agreeing to binding arbitration. I would not agree to give up my Constitutional right to a jury trial for any of my potential claims, much less any statutory rights or claims, nor was that fact explained or even told to me. No representative of Defendants told me that I could hold off signing any documents so that I could consult with a lawyer, or that I should consult with a lawyer.”]: OVERRULED.

Defendant’s Objection No. 4 [“At no point did anybody provide a copy of any arbitration rules to me. I did not ask for a copy of the rules because I had no knowledge that any particular arbitration rules applied.”]: OVERRULED.

Application – Defendants seek to compel Plaintiff to arbitration to resolve the action.

1. Existence of an Arbitration Agreement

Under both the Federal Arbitration Act (“FAA”) 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.) In ruling on a motion to compel arbitration, the court must first determine whether the parties actually agreed to arbitrate the dispute, and general principles of California contract law help guide the court in making this determination. (Mendez v. Mid-Wilshire Health Care Center (2013) 220 Cal.App.4th 534, 541.)

Once petitioners allege that an arbitration agreement exists, the burden shifts to respondents to prove the falsity of the purported agreement, and no evidence or authentication is required to find the arbitration agreement exists. (See Condee v. Longwood Mgt. Corp. (2001) 88 Cal.App.4th 215, 219.) However, if the existence of the agreement is challenged, "petitioner bears the burden of proving [the arbitration agreement's] existence by a preponderance of the evidence." (Rosenthal v. Great Western Fin. Securities Corp. (1996) 14 Cal.4th 394, 413. See also Espejo v. Southern California Permanente Medical Group (2016) 246 Cal.App.4th 1047, 1058-1060.)

“With respect to the moving party's burden to provide evidence of the existence of an agreement to arbitrate, it is generally sufficient for that party to present a copy of the contract to the court. (See Condee, supra, 88 Cal.App.4th 215, 218; see also Cal. Rules of Court, Rule 3.1330 [“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”].) Once such a document is presented to the court, the burden shifts to the party opposing the motion to compel, who may present any challenges to the enforcement of the agreement and evidence in support of those challenges. [Citation]” (Baker v. Italian Maple Holdings, LLC (2017) 13 Cal.App.5th 1152, 1160.)

Here, Defendant presents evidence of an arbitration agreement entered into by Decedent and Premiere. The Court has looked at the arbitration agreement and finds the following clauses pertinent:

1. Except as provided below, Employee and Company both agree all legal disputes and claims between them, including without limitation those relating to Employee's employment with Smile Brands Inc. or any subsidiary or affiliate thereof, or any separation of such employment and claims by Employee against any of the Company's parents, subsidiaries, affiliates, directors, officers, employees, or agents, shall be determined exclusively by final and binding arbitration before a single, neutral arbitrator as described herein. Claims subject to arbitration under this Agreement include without limitation any and all claims for discrimination, harassment, or retaliation; wages, overtime, benefits, or other compensation; breach of any express or implied contract; violation of public policy; and negligence or other tort claims including defamation, fraud, and infliction of emotional distress. Except as provided below, Employee and Company voluntarily waive all rights to trial in court before a judge or jury on all legal claims between them.

2. The only legal disputes and claims excluded from this Agreement are: (a) claims by Employee for workers’ compensation, unemployment, or other benefits under a plan or program that provides its own process for dispute resolution; (b) claims for which this Agreement would be invalid as a matter of law; (c) actions to enforce this Agreement, compel arbitration, or enforce or vacate an arbitrator's award under this Agreement; (d) a claim or charge filed with a federal, state, or local administrative agency such as the Equal Employment Opportunity Commission, National Labor Relations Board, Department of Labor, or similar agency; (e) an action by either party seeking a provisional remedy in any court of competent jurisdiction; and (f) claims asserted by Employee prior to his or her execution or deemed acceptance of this Agreement as provided herein. As to subpart (c) above, the parties hereby agree and stipulate that such actions and this Agreement are covered and governed by Section 2 of the Federal Arbitration Act and not any state law. Judgment upon the arbitrator's award may be entered in any court of competent jurisdiction.

(Decl. Ashley A. Halberd Exh. A; Decl. Mary Phillips Exh. A.)

On it’s face, there are appears to be a valid arbitration agreement. However, the Court notes that this arbitration agreement was given to Plaintiff and signed electronically. This is not a traditional website agreement. This agreement was presented to Plaintiff via Defendants’ internal learning management system, Smile U. (Decl. Mary Phillips ¶ 8.) Plaintiff had to access the system via Defendants’ computer desktop; enter his first and last name; and enter his confidential and individually created password. (Ibid.) Smile Brands’ Arbitration Agreement is presented to all employees as a required course, accessible on Smile U’s homepage, under the section titled “Courses I Have To Do,” which section includes the electronic modules that employees must complete as a condition of employment. (Id. at ¶ 9.) The module for the arbitration agreement is a stand-alone, three page document titled “MUTUAL ARBITRATION AGREEMENT.” (Id. at ¶ 10.)  Plaintiff must check a box to agree. (Ibid.) There is also an express opt-out provision within the agreement:

Employee may opt-out of this Agreement by delivering, within 30 days of the date this Agreement is provided to Employee, a completed and signed Opt-Out Form to Company’s senior Human Resources officer at Company’s headquarters. An Opt-Out Form is available from Human Resources upon request. If Employee does not deliver the executed form within 30 days, and if Employee accepts or continues employment with Company after that date, he or she shall be deemed to have accepted the terms of this Agreement, regardless of whether Employee signs or acknowledges this Agreement.

(Decl. Ashley A. Halberd Exh. A; Decl. Mary Phillips Exh. A.)

Upon completion of any course, Smile U generates a “Training Record.” (Decl. Mary Phillips ¶ 9.) For the Arbitration Agreement, the Training Record identifies the date on which Plaintiff acknowledged receipt of and the terms of the Arbitration Agreement. (Ibid.) Plaintiff completed the process on March 14, 2017. (Id. at ¶ 11.) The Training Record is automatically generated by Smile U and no employee of Smile Brands has access to alter this document. (Ibid.)

Plaintiff argues that he did not sign any agreement to arbitrate as Defendant never provided the agreement to Plaintiff, there are no electronic signature details that are usually accompanying a motion to compel arbitration agreement relying on electronic signature, that no meeting of the minds occurred as Plaintiff did not make any outward manifestations to be bound by an arbitration agreement, the document is not authenticated, and the AAA[1] rules are not specifically incorporated into the contract.

Despite Plaintiff’s arguments in his Opposition, Plaintiff concedes that he was given the arbitration agreement. (See Decl. Pl. ¶ 2.) Plaintiff states that an individual sat him down at the computer and stood over him, rushing the process. (Ibid.) However, rushing does not prevent Plaintiff from reading the Arbitration Agreement or accessing it after signing. This segways into Plaintiff’s argument that no one provided him a copy – the arbitration agreement remained available in his Smile U account.

Regarding Plaintiff’s argument that the arbitration is not authenticated, this is incorrect. Mary Phillips, a Senior Manager, Learning & Development since September 2021 and Manager Learning & Development from March 2017, authenticates the document and provides information as to how the document was transmitted to Plaintiff under the penalty of perjury under the laws of the state of California. Cal. Code Civ. Proc. 2015.5 provides the following formats for a declaration under the penalty of perjury:

(a) If executed within this state:

"I certify (or declare) under penalty of perjury that the foregoing is true and correct":_____________ _________(Date and Place)(Signature)

(b) If executed at any place, within or without this state:

"I certify (or declare) under penalty of perjury under the laws of the State of California that the foregoing is true and correct":

_____________ _________

(Date)(Signature)

Mary Phillips’ declaration follows subsection (a):

I declare under penalty of perjury per the laws of the State of California that the foregoing

is true and correct based on my firsthand knowledge.

Executed on this 16rh day of December, 2022, at Laguna Hills, California.

(Decl. Mary Phillips at p. 6.)

Defendants’ Reply highlights that Plaintiff’s declaration states he received the arbitration agreement and argues that failure to read a document does not render an agreement unenforceable and that Plaintiff failed to opt-out of the agreement and, by doing so, shows his manifestation to be bound by the agreement.

Regarding electronic contracts:

Civil Code section 1633.9, subdivision (a) governs the authentication of electronic signatures. It provides that an electronic signature may be attributed to a person if “it was the act of the person.” (Civ. Code, § 1633.9, subd. (a).) Further, “[t]he 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.” (Ibid.) For example, a party may establish that the electronic signature was “the act of the person” by presenting evidence that a unique login and password known only to that person was required to affix the electronic signature, along with evidence detailing the procedures the person had to follow to electronically sign the document and the accompanying security precautions. (See Espejo, supra, 246 Cal.App.4th at p. 1062; Ruiz v. Moss Bros. Auto Group, Inc. (2014) 232 Cal.App.4th 836, 844 [181 Cal. Rptr. 3d 781].)

(Bannister v. Marinidence Opco (2021) LLC, 64 Cal.App.5th 541, 545.)

Further, clicking on an online portal box to accept terms and conditions may bind the clicker. (See, e.g., B.D. v. Blizzard Entertainment, Inc. (2022) 76 Cal.App.5th 931, 944.)

The evidence presented is sufficient to authenticate Plaintiff’s signature and determine that a valid arbitration agreement exists. Accordingly, an evidentiary hearing is not needed.

1. Whether the Agreement to Arbitrate is Subject to the FAA

As a threshold matter, the Court must determine which body of law – the FAA or the California Arbitration Act (Code Civ. Proc., § 1280 et seq.) ("CAA") – applies to the issues presented here as the two statutory schemes apply different standards and presumptions. The FAA embodies a strong federal policy favoring arbitration. To assure uniform results as to arbitrability of disputes subject to the FAA, conflicting state law is preempted under the Supremacy Clause: "Federal law in the terms of the Arbitration Act governs . . . [arbitrability] in either state or federal court." (Southland Corp v. Keating (1984) 465 U.S. 1, 12; Preston v. Ferrer (2008) 552 U.S. 346, 353.See also Muller v. Roy Miller Freight Lines, LLC (2019) 34 Cal.App.5th 1056, 1062 [FAA preempts any state law rule that '"stand[s] as an obstacle to the accomplishment of the FAA's objectives”].)

This Arbitration Agreement is governed by the FAA.

Specifically, it reads: “As to subpart (c) above, the parties hereby agree and stipulate that such actions and this Agreement are covered and governed by Section 2 of the Federal Arbitration Act and not any state law.” (Decl. Ashley A. Halberd Exh. A; Decl. Mary Phillips Exh. A.) Subpart (c) is “actions to enforce this Agreement, compel arbitration, or enforce or vacate an arbitrator's award under this Agreement.” (Ibid.) The Court notes that Plaintiff’s claims are not covered within the highlighted exemptions of paragraph 2 to the Arbitration Agreement. (Ibid.)

The parties expressly designated that the contract is enforced by federal law. (See Cronus Investments, Inc. v. Concierge Services (2005) 35 Cal.4th 376 [California Supreme Court noted that parties may expressly designate in the contract that federal law rather than state law will govern enforcement of the arbitration agreement].)

The FAA permits the invalidation of an arbitration clause for “generally applicable contract defenses, such as fraud, duress, or unconscionability.” (See FAA § 2; AT&T Mobility LLC v. Concepcion (2011) 563 U.S. 333, 339.)

1. Invalidation

Fraud and duress are not at issue in this action.

The doctrine of unconscionability refers to “an 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. v. Moreno¿(2013) 57 Cal.4th 1109, 1133.) It consists of both procedural and substantive components - "the former focusing on oppression or surprise due to unequal bargaining power, the latter on overly harsh or one-sided results."¿ (Ibid.)¿

Both substantial and procedural unconscionability must be present to invalidate an arbitration agreement; however, they do not need to be present in the same degree. (Armendariz v. Found Health¿Psychcare¿Services, Inc.¿(2000) 24 Cal.4th 83, 114; Parada v. Superior Court (2009) 176 Cal.App.4th 1554, 1570.)¿ “Essentially a sliding scale is invoked which disregards the regularity of the procedural process of the contract formation, that creates the terms, in proportion to the greater harshness or unreasonableness of the substantive terms themselves. In other words, the more substantively unconscionable 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, supra, (2000) 24 Cal.4th 83 at 114.)

"The party resisting arbitration bears the burden of proving unconscionability."¿ (Pinnacle Museum Tower¿Association. v. Pinnacle Market Development (US), LLC¿(2012) 55 Cal.4th 223, 247.)¿¿¿

Plaintiff argues that (1) the arbitration agreement is substantively unconscionable as there are uneven treatment of claims brought by the employer, the agreement fails to comply with Armendariz v. Found Health¿Psychcare¿Services, Inc.¿(2000) 24 Cal.4th 83 as the arbitrator may award fees and costs or any portion thereof instead of rendering an opinion, Defendants are a repeat player; and (2) the agreement is procedurally unconscionable as there is oppression and surprise. Plaintiff requests an evidentiary hearing. Plaintiff also has a separate argument regarding the inclusion of AAA rules.

Regarding unconscionability, Defendants argue (1) the agreement is substantively conscionable as its terms are not so one-sided as to “shock the conscience” (see Nyulassy v. Lockheed Martin Corp. (2004) 120 Cal.App.4th 1267, 1281), the arbitration agreement is balanced because the arbitration agreement equally excludes an action by the employer, and the arbitration agreement complies with  Armendariz v. Found Health¿Psychcare¿Services, Inc.¿(2000) 24 Cal.4th 83 as  it provides that “the arbitrator may grant any remedy or relied that would have been available to the parties had the matter been heard in court including awards of attorney’s fees and costs, in accordance with applicable law[]” and the award must be in writing, provide the written reasons for the award, and be executed in the manner required by law (see Decl. Mary Phillips Exh. E, Rule 39; and (2) the arbitration agreement is not procedurally unconscionable as there is no surprise as the AAA rules were indicated within the arbitration agreement and Lane v. Francis Capital Mgmt LLC (2014) 224 Cal.App.4th 676, 692 holds that the failure to attach a copy of the AAA rules when he arbitration agreement at issue clearly specified a particular set of AAA rules does not render the agreement unconscionable. Defendants present that, should the Court find any provision unenforceable, that provision may be severed without affecting the remainder of the agreement. Defendant also presents that the “repeat player” argument is unsubstantiated as the AAA is a proper arbitral forum.

The Court notes that the Arbitration Agreement allows the party with less power, Plaintiff, to opt-out within 30-days of the date of the agreement. (See Decl. Ashley A. Halberd Exh. A; Decl. Mary Phillips Exh. A.) The California Supreme Court in Gentry v. Superior Court, 42 Cal. 4th 443 held that an agreement with a 30-day opt out provision has a degree of procedural unconscionability.  (See Gentry, supra, 42 Cal.4th 443 generally [unclear whether someone in Gentry’s position would have felt free to opt-out, one-sided explanation of benefits of arbitration, legally unsophisticated businessmen may be unfairly surprised].) Accordingly, “the fact that some degree of procedural unconscionability is present does not mean necessarily that the arbitration agreement is unenforceable. But it does mean that the agreement is not immune from judicial scrutiny to determine whether or not its terms are so one-sided or oppressive as to be substantively unconscionable.” (Gentry, supra, 42 Cal.4th at 472.)  As to the AAA rules, Lane v. Francis Capital Management LLC, 224 Cal. App. 4th 676 clearly addresses this issue:

Here, we conclude the failure to attach a copy of the AAA rules did not render the agreement procedurally unconscionable. There could be no surprise, as the arbitration rules referenced in the agreement were easily accessible to the parties—the AAA rules are available on the Internet. (See Boghos v. Certain Underwriters at Lloyd's of London (2005) 36 Cal.4th 495, 505, fn. 6 [30 Cal. Rptr. 3d 787, 115 P.3d 68] [full, up-to-date text of AAA rules is available on AAA's Internet site]). In addition, Lane—a formerly well-paid professional analyst—does not appear to lack the means or capacity to locate and retrieve a copy of the referenced rules. Finally, the arbitration agreement at issue clearly specified a particular set of AAA rules, and it did not modify those rules in any manner. In the absence of oppression or surprise, we decline to find the failure to attach a copy of the AAA rules rendered the agreement procedurally unconscionable. (Cf. Dotson v. Amgen, Inc. (2010) 181 Cal.App.4th 975, 981 [104 Cal. Rptr. 3d 341]  [“Dotson is not an uneducated, low-wage employee without the ability to understand that he was agreeing to arbitration. He was the opposite—a highly educated attorney, who knowingly entered into a contract containing an arbitration provision in exchange for a generous compensation and benefits package. In such circumstances, the courts have found a minimum degree of procedural unconscionability.”].)

(Lane, supra, 224 Cal.App.4th at 691-92.)

Here, the arbitration agreement clearly states that the “parties shall administer the arbitration according to the Employment Arbitration Rules (or successor rules) of the American Arbitration Association (‘AAA’) and Federal Rule of Civil Procedure 68 (‘Offer of Judgment’).” (Decl. Ashley A. Halberd Exh. A; Decl. Mary Phillips Exh. A) Thus, this arbitration agreement falls within the Lane precedent.

As to Plaintiff’s oppression argument, a contract of adhesion is only sufficient to establish some degree of procedural unconscionability. (See Sanchez v. Valencia Holding Co., LLC (2015) 61 Cal.4th 899, 915.) “By itself, an adhesion contract may present a low or modest degree of procedural unconscionability, but that can ‘rise[] to a moderate level’ when the party drafting the agreement fails to provide a copy of the applicable arbitration rules.” (Nelson v. Dual Diagnosis Treatment Center, Inc. (2022) 77 Cal.App.5th 643, 660 [internal citations omitted].) At best, the arbitration agreement in this instant action provides only a low degree of procedural unconscionability and, at worst, a modest degree. Plaintiff was allowed to opt-out. Plaintiff presents that he was not forced to sign the agreement, but simply rushed. (Dec. Pl. ¶ 2 [“You don’t need to read anything,” and “just quickly go through this.”].) This is distinguished from examples of high procedural unconscionability such as when an individual has difficulty understanding or comprehending. (See Carmona v. Lincoln Millennium Car Wash, Inc. (2014) 226 Cal.App.4th 74 [Plaintiffs Esteban and Matute Casco could not read English, and yet the car wash companies provided the enforceability clause in English only which led to a finding of a high degree of procedural unconscionability].) 

Substantive unconscionability pertains to the fairness of an agreement's actual terms and to assessments of whether they are overly harsh.” (Carmona v. Lincoln Millennium Car Wash, lnc. (2014) 226 Cal.App.4th 74, 85 [citations omitted].) 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. (Id.) The “paramount consideration” is the mutuality of the obligation to arbitrate. (Nyulassy v. Lockheed Martin Corp. (2004) 120 Cal.App.4th 1267, 1287.)

Here, both parties are to arbitrate claims, with the exception of those outlined in the second paragraph. That is, both employer and employee are to arbitrate claims. The Arbitration Agreement provides:

4. A party wishing to initiate arbitration must notify the other party in writing by hand delivery or certified mail. The notice must identify the party requesting arbitration by name, address, and telephone number; describe the facts upon which the claim is based, the persons involved, and the date and location of any occurrences giving rise to the claim; and describe the remedy requested. Notice to Company must be sent to its senior Human Resources official at Company’s corporate office. Notice to Employee must be sent to Employee’s most recent residence address reflected in Company's employment records.

 5. Within 30 days of receipt of a notice of arbitration, the parties shall select a mutually agreeable arbitrator. The arbitration shall be held in or near the city in which Employee is/was last employed by Company. To the maximum extent permitted by law and except as noted herein, the arbitrator selected by the parties shall administer the arbitration according to the Employment Arbitration Rules (or successor rules) of the American Arbitration Association (“AAA”) and Federal Rule of Civil Procedure 68 (“Offer of Judgment”). These rules can be found at www.adr.org and http://www.law.cornell.edu/rules/frcp/rule_68, respectively, or requested from Company. If AAA’s rules are inconsistent with this Agreement, the terms of this Agreement shall govern. If the parties are unable to agree on an arbitrator, the party 2 requesting arbitration shall submit the matter to AAA, and an arbitrator shall be selected pursuant to AAA’s rules.

6. The parties shall have the right to file dispositive motions and post-hearing briefs. The arbitrator's authority and jurisdiction shall be limited to determining the matter in dispute consistent with controlling law and this Agreement. Except as otherwise provided herein, the arbitrator shall apply, and shall not deviate from, the substantive law of the state in which the claim(s) arose and/or federal law, as applicable. The arbitrator shall have the same authority to order remedies (e.g., emotional distress damages, punitive damages, equitable relief, etc.) as would a court of competent jurisdiction. The arbitrator shall not have the authority to hear disputes not recognized by existing law and shall dismiss such claims upon motion by either party in accordance with the summary judgment standards of the applicable jurisdiction. Similarly, the arbitrator shall not have the authority to order any remedy that a court would not be authorized to order. The arbitrator shall render a written award setting forth the arbitrator's findings of fact and conclusions of law. Except as noted in the following paragraph, the arbitrator, and not any federal, state, or local court, shall have exclusive authority to resolve any dispute relating to the formation, enforceability, applicability, or interpretation of this Agreement, including without limitation any claim that this Agreement is void or voidable. Thus, except as noted in the following paragraph, the parties voluntarily waive the right to have a court determine the enforceability of this Agreement.

7. This Agreement prohibits the arbitrator from consolidating the claims of others into one proceeding, to the maximum extent permitted by law. This means an arbitrator shall hear only individual claims and is prohibited from fashioning a proceeding as a class, collective, representative, or group action or awarding relief to a group of employees in one proceeding, to the maximum extent permitted by law. Any question or dispute concerning the scope or validity of this paragraph shall be decided by a court of competent jurisdiction and not the arbitrator. Should a court determine that the above prohibition on class, collective, representative, or group actions is invalid for any reason, the parties hereby waive any right to arbitration of a class, collective, representative, or group action and instead agree and stipulate that such claims will be heard only by a judge and not an arbitrator or jury. Additionally, the parties agree that if a party brings an action that includes both claims subject to arbitration under this Agreement and claims that by law are not subject to arbitration, all claims that by law are not subject to arbitration shall be stayed until the claims subject to arbitration under this Agreement are fully arbitrated. The parties further agree that in such a situation, the arbitrator's decision on the claims subject to arbitration, including any determinations as to disputed factual or legal issues, shall be entitled to full force and effect in any separate lawsuit on claims that by law are not subject to arbitration.

8. Company shall pay all costs unique to arbitration (as compared to the costs of adjudicating the same claims before a court), including the regular and customary arbitration fees and expenses. However, if Employee is the party initiating the claim, Employee shall be responsible for contributing an amount equal to the filing fee to initiate the claim in the court of general jurisdiction in the state in which Employee is or was last employed by Company. Except as provided in Federal Rule of Civil Procedure 68, each party shall pay its own attorneys’ fees and any costs that are not unique to the arbitration (i.e., costs that each party would incur if the claim(s) were litigated in a court such as costs to subpoena witnesses and/or documents, take depositions and purchase deposition transcripts, copy documents, etc.). Any dispute as to whether a cost is unique to arbitration shall be resolved by the arbitrator. The arbitrator may award reasonable fees and costs or any portion thereof to the prevailing party to the same extent a court would be entitled to do so, in accordance with applicable law

(Decl. Ashley A. Halberd Exh. A; Decl. Mary Phillips Exh. A.)

The arbitration provides an adequate forum to adjudicate claims. That is, the arbitration shall be conducted in accordance with the Employment Rules of the AAA and such rules provide for a neutral arbitrator, no limitation or remedies, discovery, a written decision, and the employer pays the arbitrator’s compensation. (See Armendariz. supra, 24 Cal.4th at 102; Decl. Mary Phillips ¶ 8, Exh. E.) The agreement itself does state that, if the employee is initiating the claim, “Employee shall be responsible for contributing an amount

equal to the filing fee to initiate the claim in the court of general jurisdiction in the state in which Employee is or was last employed by Company” and that “[e]xcept as provided in Federal Rule of Civil Procedure 68, each party shall pay its own attorneys’ fees and any costs that are not unique to the arbitration.” (Decl. Ashley A. Halberd Exh. A; Decl. Mary Phillips Exh. A.)

The AAA rules state that “[t]he award shall be in writing and shall be signed by a majority of the arbitrators and shall provide the written reasons for the award unless the parties agree otherwise. It shall be executed in the manner required by law.” (Decl. Mary Phillips Exh. E at No. 39.) Plaintiff’s qualms about the failure of the agreement to comply with Armendariz v. Found Health¿Psychcare¿Services, Inc.¿(2000) 24 Cal.4th 83 is moot.

The argument regarding Defendants being a “repeat player” neglects the second part of the Tiri v. Lucky Chances, Inc. (2014) 226 Cal.App.4th 231 holding. The pertinent section reads in its entirety:

We discuss how each of these cases has undermined the holdings in Murphy and Ontiveros, and we begin with Rent-A-Center. In Murphy and Ontiveros, two substantive unconscionability concerns were identified with delegation clauses in employment arbitration contracts of adhesion. The first was a lack of mutuality because the agreement was “‘entirely one sided because [the employer] cannot be expected to claim that it drafted an unconscionable agreement.’” (Ontiveros, supra, 164 Cal.App.4th at p. 504.) In other words, the concern was that if arbitrators get to decide enforcement issues, employees will be more caught up in arbitration processes than employers because they are far more likely to bring enforcement challenges. The second was that allowing arbitrators to decide enforceability issues is unfair because arbitrators could be invested in the outcome: “In such situations, in which one party tends to be a repeat player, the arbitrator has a unique  self-interest in deciding that a dispute is arbitrable.” (Id. at p. 505.)

But these concerns, as reasonable as they are, are virtually always present with delegation clauses in employment arbitration agreements. To conclude that they signify substantive unconscionability would be tantamount to concluding that delegation clauses in employment arbitration agreements are categorically unenforceable. Such a conclusion would conflict with Rent-A-Center's indication that delegation clauses in employment agreements are enforceable so long as they are clear and unmistakable. (Rent-A-Center, supra, 561 U.S. at p. 72; see First Options, supra, 514 U.S. at pp. 944–945.) We conclude that the inescapable import of Rent-A-Center is that clear delegation clauses in employment arbitration agreements are substantively unconscionable only if they impose unfair or one-sided burdens that are different from the clauses' inherent features and consequences. Here, Tiri has failed to demonstrate that the delegation clause imposes any such burdens.

(Tiri, supra, 226 Cal.App.4th at 248-49.)

Plaintiff’s own cited case negates his argument.

The arbitration agreement is not permeated with unconscionability. When viewed as a whole and balancing all the circumstances, the arbitration agreement is not unconscionable.

As a valid arbitration agreement exists, Plaintiff did not sign under duress, fraud is not claimed, and the arbitration agreement is not unconscionable, arbitration must be compelled. Accordingly, the motion is GRANTED.

-----

Conclusion