Judge: Stephen P. Pfahler, Case: 23STCV24551, Date: 2024-03-07 Tentative Ruling

Case Number: 23STCV24551    Hearing Date: March 7, 2024    Dept: 68

Dept. 68

Date: 3-7-24

Case #23STCV24551

Trial Date: Not Set

ARBITRATION & STAY

MOVING PARTY: Defendants, Kisco Senior Living, LLC, et al.

RESPONDING PARTY: Plaintiff, Christopher Alpert

RELIEF REQUESTED

Motion to Compel Arbitration and Stay of Action

SUMMARY OF ACTION

In February 18, 2018, plaintiff Christopher Alpert began employment with defendants Kisco Senior Living, LLC and KRC Anaheim, L.P. dba Emerald Court, as a “Utility Worker,” with main duties assigned as a dishwasher. Beginning in September/October 2019, Plaintiff began experiencing “degenerative” based “physical disabilities” in his neck, back and hands, which led to a medical accommodation of a front desk assignment, host, with interspersed delivery duties. Said delivery work exacerbated the medical condition, which led to a 60-day medical leave beginning on June 19, 2021. In September 2021, Plaintiff was informed of no available positions to accommodate his medical condition, and was given the option of either resigning or facing termination.

On October 9, 2023, Plaintiff filed a nine (9) cause of action complaint for FEHA Discrimination (Gov. Code §12940(a)); Failure to Accommodate in Violation of FEHA (Gov. Code §12940(m)); Failure to Engage in Interactive Process in Violation of FEHA (Gov. Code §12940(n)); FEHA Harassment (Gov. Code §12940(j)); FEHA Retaliation (Gov. Code §12940(h), (m)); CFRA Interference and Retaliation (Gov. Code § 12945.1, et seq.); FEHA Failure to Prevent (Gov. Code §12940(k)); Wrongful Discharge in Violation of Public Policy; and, Intentional Infliction of Emotional Distress.

RULING: Denied

Evidentiary Objections: Overruled.

·         The court concludes the executed arbitration agreement exists. Dyer may also state company policies for onboarding new hires.

·         The court allows the statements of plaintiff Alpert for purposes of establishing context of the presented arbitration agreements, and otherwise declines to consider statements regarding work conditions unrelated to the motion.

Defendants Kisco Senior Living, LLC and KRC Anaheim, L.P. dba Emerald Court move to compel arbitration on the complaint of plaintiff Christopher Apert, and a stay of the case. Defendants move to compel arbitration based on the arbitration provisions in the Applicant’s Statement & Agreement and the Comprehensive Agreement Employment At-Will and Arbitration documents. Defendants maintain all claims are subject to arbitration under the terms of the agreement. Plaintiff in opposition challenge enforcement of the agreement on grounds within the language of the agreement, as well as legal bars. Defendants in reply maintain the existence of the executed arbitration agreement and enforceability. Defendants deny the unconscionability arguments as well, and otherwise maintain the ability to sever any offending sections. Defendants also downplay the importance of the modification procedure challenge.

“A written agreement to submit to arbitration an existing controversy or a controversy thereafter arising is valid, enforceable and irrevocable, save upon such grounds as exist for the revocation of any contract.” (Code Civ. Proc., § 1281.) “On petition of a party to an arbitration agreement alleging the existence of a written agreement to arbitrate a controversy and that a party thereto refuses to arbitrate such controversy, 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.” (Code Civ. Proc., § 1281.2.)

The agreements require arbitration for any claims arising from employment. Federal Arbitration Act governs the rules for conducting arbitration with acknowledgment of California Arbitration Act regulations. (See Adolph v. Uber Technologies, Inc. (2023) 14 Cal.5th 1104, 1119; Viking River Cruises, Inc. v. Moriana (2022) 142 S.Ct. 1906; Volt Information Sciences, Inc. v. Board of Trustees of Leland Stanford Junior University (1989) 489 U.S. 468, 477–479; Victrola 89, LLC v. Jaman Properties 8 LLC (2020) 46 Cal.App.5th 337, 346.)

California law creates a general presumption in favor of arbitration. In a motion to compel arbitration, the moving party must prove by a preponderance of evidence the existence of the arbitration agreement and that the dispute is covered by the agreement. “‘Under “both federal and state law, the threshold question presented by a petition to compel arbitration is whether there is an agreement to arbitrate.”’” (Long v. Provide Commerce, Inc. (2016) 245 Cal.App.4th 855, 861.) “Private arbitration is a matter of agreement between the parties and is governed by contract law. (Platt Pacific, Inc. v. Andelson (1993) 6 Cal.4th 307, 313.) In a motion to compel arbitration, the moving party must prove by a preponderance of evidence the existence of the arbitration agreement and that the dispute is covered by the agreement. The burden then shifts to the resisting party to prove by a preponderance of evidence a ground for denial (e.g., fraud, unconscionability, etc.). (Rosenthal v. Great Western Fin'l Securities Corp. (1996) 14 Cal.4th 394, 413-414; Gamboa v. Northeast Community Clinic (2021) 72 Cal.App.5th 158, 164–165; Hotels Nevada v. L.A. Pacific Ctr., Inc. (2006) 144 Cal.App.4th 754, 758.) Any challenges to the formation of the arbitration agreement should be considered before any order sending the parties to arbitration. The trier of fact weighs all evidence, including affidavits, declarations, documents, and, if applicable, oral testimony to determine whether the action goes to arbitration. (Hotels Nevada v. L.A. Pacific Ctr., Inc., supra, 144 Cal.App.4th at p. 758.)

The court interprets the arbitration clause like any other contract, including determination of the intent of the parties and ambiguities. (Gravillis v. Coldwell Banker Residential Brokerage Co. (2006) 143 Cal.App.4th 761, 772.) “‘A contract must be so interpreted as to give effect to the mutual intention of the parties as it existed at the time of contracting, so far as the same is ascertainable and lawful.’ (Civ. Code, § 1636.) ‘The language of a contract is to govern its interpretation, if the language is clear and explicit, and does not involve an absurdity.’ (Civ. Code, § 1638.) ‘When a contract is reduced to writing, the intention of the parties is to be ascertained from the writing alone, if possible; subject, however, to the other provisions of this Title.” (Civ. Code, § 1639.) “The whole of a contract is to be taken together, so as to give effect to every part, if reasonably practicable, each clause helping to interpret the other.’ (Civ. Code, § 1641.) ‘A contract must receive such an interpretation as will make it lawful, operative, definite, reasonable, and capable of being carried into effect, if it can be done without violating the intention of the parties.’ (Civ. Code, § 1643.) ‘The words of a contract are to be understood in their ordinary and popular sense, rather than according to their strict legal meaning; unless used by the parties in a technical sense, or unless a special meaning is given to them by usage, in which case the latter must be followed.’ (Civ. Code, § 1644.) ‘However broad may be the terms of a contract, it extends only to those things concerning which it appears that the parties intended to contract.’ (Civ. Code, § 1648.) ‘Repugnancy in a contract must be reconciled, if possible, by such an interpretation as will give some effect to the repugnant clauses, subordinate to the general intent and purpose of the whole contract.’ (Civ. Code, § 1652.) ‘Stipulations which are necessary to make a contract reasonable, or conformable to usage, are implied, in respect to matters concerning which the contract manifests no contrary intention.’ (Civ. Code, § 1655.)” (Siligo v. Castellucci (1994) 21 Cal.App.4th 873, 880–881.)

“A contract term should not be construed to render some of its provisions meaningless or irrelevant.” (Estate of Petersen (1994) 28 Cal.App.4th 1742, 1754 (footnote 4).) “A well-settled maxim states the general rule that ambiguities in a form contract are resolved against the drafter. (Citations.) But that is a general rule; it does not operate to the exclusion of all other rules of contract interpretation. It is used when none of the canons of construction succeed in dispelling the uncertainty.” (Oceanside 84, Ltd. v. Fidelity Federal Bank (1997) 56 Cal.App.4th 1441, 1448.)

The court considers that the Applicant’s Statement & Agreement was executed by Alpert with an unidentified entity called “Company.” [Declaration of Nikkiana Dyer, Ex. A.] The second At-Will and Arbitration agreement was also executed by Alpert with Emerald Court identified. [Id., Ex. B.] The “Emerald Court” lacks any signature from any representative employee or officer. [Dyer Decl., ¶¶ 5-6.] The continued employment however supports a finding of acceptance of the agreement with Emerald Court for purposes of the motion barring any factual challenges from Plaintiff. (Gorlach v. Sports Club Co. (2012) 209 Cal.App.4th 1497, 1508.)

Plaintiff challenges the second agreement as improperly seeking to modify the first agreement, in that any modification may only be made by the “president” of the “Company.” While the court appreciates the plain language of the agreements, the court cannot determine any material change to the sought after arbitration provision based on the second agreement, thereby supporting an unconscionability argument, and declines to speculate on impacts under the arbitration standard. (Casas v. Carmax Auto Superstores California LLC (2014) 224 Cal.App.4th 1233, 1237.)

The court finds the terms of the agreement(s) encapsulate all claims raised in the complaint. Thus, the court finds a valid arbitration agreement between Alpert and “Company” and Emerald Court for purposes of seeking arbitration under one or both agreements. The burden now shifts to Plaintiff to challenge enforcement. The court considers the myriad arguments under unconscionability presented in opposition.

Unconscionability claims have both a “‘procedural’” and “‘substantive’” element. (Stirlen v. Supercuts, Inc. (1997) 51 Cal.App.4th 1519, 1531.) “‘Procedural unconscionability’” concerns the manner in which the contract was negotiated and the circumstances of the parties at that time. (Kinney v. United HealthCare Services, Inc. (1999) 70 Cal.App.4th 1322, 1329.) “‘The procedural element focuses on two factors: “oppression” and “surprise.”  “Oppression” arises from an inequality of bargaining power which results in no real negotiation and an absence of meaningful choice. “Surprise” involves the extent to which the supposedly agreed-upon terms of the bargain are hidden in the prolix printed form drafted by the party seeking to enforce the disputed terms.’” (Stirlen v. Supercuts, Inc., supra, 51 Cal.App.4th at p. 1532.) “Substantive unconscionability” involves contracts leading to “‘“overly harsh”’” or “‘“one-sided”’” results.’” … “[U]nconscionability turns … on an absence of ‘justification “for it…” [and therefore] must be evaluated as of the time the contract was made.’” (Ibid.)

In the employment context, a mandatory arbitration agreement is enforceable, if it “(1) provides for neutral arbitrators, (2) provides for more than minimal discovery, (3) requires a written award, (4) provides for all of the types of relief that would otherwise be available in court, and (5) does 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.) Required execution of an arbitration agreement as a condition of employment may constitute an unconscionable provision, where the contract lacks mutuality and/or imposes a disadvantage on the employee. (Armendariz v. Foundation Health Psychcare Services, Inc., supra, 24 Cal.4th at pp. 114-118; Little v. Auto Stiegler, Inc. (2003) 29 Cal.4th 1064, 1071-1072.) A showing of procedural unconscionability will not invalidate an arbitration clause, but can lead to greater scrutiny under the substantive standard, thereby supporting invalidation. (Davis v. TWC Dealer Group, Inc., supra, 41 Cal.App.5th at p. 674 accord OTO, L.L.C. v. Kho (2019) 8 Cal.5th 111, 129-130.)

Cases addressing unconscionability continues to offer guidance on the standard in the case of employment adhesion contract—an agreement substantively presented as a “take or it leave it” agreement imposing a potential disadvantage on the employee. “With respect to preemployment arbitration contracts, we have observed that ‘the economic pressure exerted by employers on all but the most sought-after employees may be particularly acute, for the arbitration agreement stands between the employee and necessary employment, and few employees are in a position to refuse a job because of an arbitration requirement.’” (OTO, L.L.C. v. Kho, surpa, 8 Cal.5th at p. 127 accord Armendariz v. Foundation Health Psychcare Services, Inc., supra, 24 Cal.4th at p. 115; Hasty v. American Automobile Association of Northern California, Nevada & Utah (2023) 98 Cal.App.5th 1041 [317 Cal.Rptr.3d 295, 309-311]; see Grand Prospect Partners, L.P. v. Ross Dress for Less, Inc. (2015) 232 Cal.App.4th 1332, 1351.)

While the basis of review exists, the burden still remains on the challenging party to establish the defense. Plaintiff essentially relies on recitation of numerous cases for the argument of procedural unconscionability due to the inability to review the terms, including the option of reviewing with an attorney, before signing the agreement. Plaintiff also maintains the font size and “density” of the text rendered reading and understanding the agreement difficult. Plaintiff admits to applying for the job, while employed in another position, but also seeking a better job opportunity. [Declaration of Christopher Alpert.]

The court finds insufficient support on the textual presentation of the agreement argument. Both clauses in both agreements are in fact in bold type and in ALL CAPS which distinguishes a key portion of the clause from the surrounding text. [Dyer Decl., Ex. A & B.] The opposition otherwise lacks any specific argument challenging the language of the actual agreement, as considered by other courts. (Davis v. TWC Dealer Group, Inc. (2019) 41 Cal.App.5th 662, 674.) The court therefore finds no procedural unconscionability on this basis.

The declaration of Alpert, however, presents facts establishing an adhesion contract, even considering the Dyer declaration regarding company policy allowing employees time to review the agreement. The court can infer under the circumstances that Plaintiff was rightfully seeking improved gainful employment, but again, the opposition lacks contextual facts establishing a disadvantage under the circumstances whereby economic distress forced Plaintiff to accept the terms or risk unemployment. Furthermore, and in conjunction with the total context, the court also finds Plaintiff fails to establish material disadvantage as a result of the purportedly limited time to review the terms.

In other words, even completely disregarding the statement of Dyer regarding company policy allowing for timely review, and accepting the truth of Alpert’s declaration without challenge, the opposition still lacks a fundamental showing of unfairness sufficient to warrant a finding of procedural unconscionability under the totality of the circumstances. (OTO, L.L.C. v. Kho, supra, 8 Cal.5th at pp. 126-127; Hasty v. American Automobile Association of Northern California, Nevada & Utah, supra, 98 Cal.App.5th 1041 [317 Cal.Rptr.3d at pp. 309-311]; Davis v. TWC Dealer Group, Inc. (2019) 41 Cal.App.5th 662, 674; Grand Prospect Partners, L.P. v. Ross Dress for Less, Inc., supra, 232 Cal.App.4th at p. 1349, 1352-1354.)

As addressed above in a different context, the court also notes Plaintiff’s lack of any potential unconscionability arising from the presentation of the second agreement during the course of employment, especially in context of the previously noted lack of articulated impact on the purported modification on the first agreement. (OTO, L.L.C. v. Kho, supra, 8 Cal.5th at p. 127.) The court therefore finds no factually supported basis of procedural unconscionability, as part of the challenging’s party burden.

On substantive unconscionability, Plaintiff again cites to the standard with conclusions of an unfair one-sided agreement and lack of mutuality. Plaintiff follows up however with claims of illegal provisions, such as a required physical examination, drug testing protocols, personality profiling, and a release of all claims against prior employers.

“(b) Post-Offer. An employer or other covered entity may condition a bona fide offer of employment on the results of a medical or psychological examination or inquiries conducted prior to the employee's entrance on duty in order to determine fitness for the job in question. For a job offer to be bona fide, an employer must have either completed all non-medical components of its application process or be able to demonstrate that it could not reasonably have done so before issuing the offer, provided that: (1) All entering employees in similar positions are subjected to such an examination. (2) Where the results of such medical or psychological examination would result in disqualification, an applicant or employee may submit independent medical opinions for consideration before a final determination on disqualification is made.

(3) The results are to be maintained on separate forms and shall be accorded confidentiality as medical records.” (Cal. Code Regs., tit. 2, § 11071.)

Plaintiff denies any necessity of a fitness determination or personality test, though it remains factually unsupported as to any details of the job duties or basis of potential job requirements. Nothing in the opposition in any way suggests that Plaintiff presented to the job with any disability or personality disorder, and/or was potentially subject to disqualification as a result of any physical and psychological examination requirement. While the court finds the argument legally valid, again, the opposition lacks factual support.

The next argument involves a purported potential violation of any disclosure of physical examination results from a physician to the employer. Plaintiff lacks reference to any specific section of the regulation, but the section itself apparently accounts for potential third party examination with confidentiality protections. Again, the court finds a lack of specific support.

Plaintiff next challenges the drug testing policy. “Drug or Alcohol Testing. An employer or other covered entity may maintain and enforce rules prohibiting employees from being under the influence of alcohol or drugs in the workplace and may conduct alcohol or drug testing for this purpose if they have a reasonable belief that an employee may be under the influence of alcohol or drugs at work. (Cal. Code Regs., tit. 2, § 11071, subd. (d)(2).) Plaintiff maintains the subject clause violates the regulation: “I understand that the Company reserves the right to require me to submit to a test for the presence of drugs in my system prior to employment and at any time during my employment, to the extent permitted by law.” Again, the language regarding compliance with the law indicates intended compliance with the applicable regulation rather than the advocated improper open-ended basis for testing.

Plaintiff otherwise raises no other substantive factually supported challenges on unconscionability. The court finds the terms, including limitations on discovery and arbitrator neutrality, proper. The agreement therefore complies with the applicable standard for employer arbitration agreements.

The court, in its discretion therefore finds no need to discuss severance.  “(a) If the court as a matter of law finds the contract or any clause of the contract to have been unconscionable at the time it was made the court may refuse to enforce the contract, or it may enforce the remainder of the contract without the unconscionable clause, or it may so limit the application of any unconscionable clause as to avoid any unconscionable result.” (Civ. Code, § 1670.5.) The terms neither offend, nor permeate the entire agreement rendering potential severance unfeasible. (Hasty v. American Automobile Association of Northern California, Nevada & Utah, supra, 98 Cal.App.5th 1041 [317 Cal.Rptr.3d at pp. 316-317.]

The court however remains unconvinced as to the basis compelling arbitration amongst all parties, especially non-signatory party KSL. Defendants seek to designate KSL as a third-party beneficiary. Defendants represent that non-signatory party KSL provides administrative services to Emerald Court. The court finds the dependence on the language binding “owners, directors, officers, managers, employees, agents, and parties affiliated with its employee benefit and health plans” lacking factual support establishing any such legal a relationship between the parties for purposes of compelling arbitration. [Dyer Decl., ¶¶ 6, 8.]

“Every California case finding nonsignatories to be bound to arbitrate is based on facts that demonstrate, in one way or another, the signatory's implicit authority to act on behalf of the nonsignatory.” (Jensen v. U-Haul Co. of California (2017) 18 Cal.App.5th 295, 304; Harris v. Superior Court (1986) 188 Cal.App.3d 475, 478–479; Rowe v. Exline (2007) 153 Cal.App.4th 1276, 1290.) “A nonsignatory can be compelled to arbitrate when a preexisting relationship existed between the nonsignatory and one of the parties to the arbitration agreement, making it equitable to compel the nonsignatory to arbitrate as well.” (JSM Tuscany, LLC v. Superior Court (2011) 193 Cal.App.4th 1222, 1240.) “Examples of the preexisting relationship include agency, spousal relationship, parent-child relationship and the relationship of a general partner to a limited partnership. (Citations.) In the absence of such a relationship, or third party beneficiary status, courts will generally not compel a nonsignatory to arbitrate.” (Crowley Maritime Corp. v. Boston Old Colony Ins. Co. (2008) 158 Cal.App.4th 1061, 1070.) “A nonsignatory plaintiff can be compelled to arbitrate a claim even against a nonsignatory party, when the claim is itself based on, or inextricably intertwined with, the contract containing the arbitration clause.” (JSM Tuscany, LLC v. Superior Court, supra, 193 Cal.App.4th at p. 1241.)

Nothing in the motion expressly addresses the legal relationship with KSL, and therefore sufficient basis for a joinder of the KSL defendant to the arbitration. While Plaintiff designates it as an employer, the burden still remains on the moving party to establish the basis compelling arbitration for all parties. The court finds no contractual basis for arbitration as to this party.

The court, as a matter of policy, avoids potential piecemeal adjudication of cases, and maintains all parties either participate in arbitration or remain with the court. (Code Civ. Proc., § 1281.2, subd. (c-d).) The court, in its discretion, therefore, denies the motion to arbitrate, due to the failure of defendants to establish a basis of arbitration joining all parties.

Case Management Conference will be concurrently held. Defendants are ordered to answer the complaint within 10 days of this order.

Moving parties to give notice to all parties.