Judge Stephen P. Pfahler, Case Number: 24STCV02042, Date: 2024-08-29 Tentative Ruling

Judge: Stephen P. Pfahler, Case: 24STCV02042, Date: 2024-08-29 Tentative Ruling

Case Number: 24STCV02042 Hearing Date: August 29, 2024 Dept: 68

Dept. 68

Date: 8-29-24

Case #24STCV02042

Trial Date: Not Set

ARBITRATION

MOVING PARTY: Defendants, TNH Motors, Inc., et al.

RESPONDING PARTY: Plaintiff, Marcelo Campiani

RELIEF REQUESTED

Motion to Compel Arbitration

SUMMARY OF ACTION

Plaintiff Marcelo Campiana, a 62-year old employee alleges discriminatory conduct while employed and working with Defendants TNH Motors, Inc., Hankey Investment Company, LP (“HIC”) and Arnold Guevara.

On January 25, 2024, Plaintiff filed a complaint against Defendants for (1) Age Harassment in Violation of the Fair Employment and Housing Act; (2) Age Discrimination in Violation of the Fair Employment and Housing Act; (3) Retaliation in Violation of the Fair Employment and Housing Act; (4) Failure to Prevent Harassment, Discrimination and Retaliation in Violation of the Fair Employment and Housing Act; (5) Retaliation in Violation of Labor Code Section 1102.5; (6) Retaliation in Violation of Labor Code Section 6310; (7) Wrongful Termination in Violation of Public Policy. On February 7, 2024, Plaintiff filed a 170.6 preemption. On February 8, 2024, the case was reassigned from Department 69 to Department 68.

On February 16, 2024, Plaintiff filed a first amended complaint for (1) Age Harassment in Violation of the Fair Employment and Housing Act; (2) Age Discrimination in Violation of the Fair Employment and Housing Act; (3) Retaliation in Violation of the Fair Employment and Housing Act; (4) Failure to Prevent Harassment, Discrimination and Retaliation in Violation of the Fair Employment and Housing Act; (5) Retaliation in Violation of Labor Code Section 1102.5; (6) Retaliation in Violation of Labor Code Section 6310; (7) Wrongful Termination in Violation of Public Policy; (8) Noncompliant Wage Statements in Violation of Labor Code Section 226. Defendants answered the complaint on March 29, 2024.

RULING: Granted.

Defendants TNH Motors, Inc., (TNH) Hankey Investment Company, LP (“HIC”) and Arnold Guevara move to compel arbitration on the complaint of plaintiff Marcelo Campiani. Defendants move to compel arbitration based on the arbitration provision in the “Dispute Resolution Agreement” (DRA). Defendants maintain all claims are subject to arbitration under the terms of the agreement and under Federal Arbitration Act (FAA) rules; the agreement includes the non-signatory employees; and any claims regarding arbitrability must be decided by the arbitrator. Plaintiff in opposition strenuously denies any proof of an executed agreement; denial of any knowledge of any such agreement; unconscionability based on the presentation of the agreement; and, a challenge to any delegation of the determination of arbitrability by an arbitrator. The court electronic filing system shows no reply on file at the time of the tentative ruling publication cutoff. Defendants in reply reiterate the electronically signed agreement, denies any unconscionability, and maintains TNH is a party to the agreement.

The court first considers the application of the FAA. “This agreement is governed by the FAA and the substantive law of the state in which the claim arose, where not preempted by the FAA.” [Declaration of Nicholas Moss, Ex. 1; Declaration of Tonia Douglas, Ex. A-B.] Defendants maintain the corporate entities engage in interstate commerce presumably through the sale of new and used vehicles obtained from the Toyota international distributor. [Douglas Decl.]

Barring a conflict supporting a preemption of a specific provision under FAA, the court adheres to the California standard for compelling arbitration in that FAA and California adhere to the same standards for review of arbitration agreements. The court finds no conflict with the FAA under the terms of the agreement. (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; see Adolph v. Uber Technologies, Inc. (2023) 14 Cal.5th 1104, 1119; Viking River Cruises, Inc. v. Moriana (2022) 142 S.Ct. 1906.) Plaintiff submits no opposition. Defendants present no conflicting provision thereby preempting application of California law. The court addresses the standard.

“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 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.)

Defendants present both a copy of the “Employment Application,” whereby initials appear next to the section entitled: Agreement to Arbitrate and Class Action Waiver. [Douglas Decl., Ex. A.] Defendants also incorporate a copy of the arbitration agreement which indicates a digital signature on May 12, 2023. [Moss Decl., Ex. 1; Douglas Decl., Ex. B.] Plaintiff categorically denies ever signing said agreement. The declaration constitutes two sentences: “I have no recollection of reviewing or signing Defendant’s arbitration agreement. At the time of accepting employment, I was unaware of any arbitration agreement.” [Declaration of Marcelo Campiani, ¶ 2.]

According to Douglas, the context of signatures arises from the employee onboarding process. [Douglas Decl., ¶¶ 7-8.] On the electronic signature, the declaration attests to the creation of a unique password based access system under the undisputed email of Plaintiff. [Id., ¶¶ 8-9.] Defendants represent Plaintiff executed the agreement on May 12, 2023. [Id., ¶¶ 10-12.]

Other than a denial, and lack of recall, Plaintiff relies on the paucity of documentary evidence of the actual electronic process. While the declaration of Douglas filed with the motion lacks a copy of proof of the actual electronic transactions itself from the third party computer system provider, Ultimate Kronos Group (UKG), Douglas specifically articulates the process required by the service provider The electronic signature cannot exist without an employee logging in via their unique password accessed through the preferred email address.

Defendants additionally provide a supplemental declaration with the reply in response to the challenges regarding the denial of any electronic signature. The court considers the supplemental declaration. (Espejo v. Southern California Permanente Medical Group (2016) 246 Cal.App.4th 1047, 1060.) The declaration of Mirna Garcia confirms the UKG signature process via email, as well as further documentary proof of the electronic transactions generated by the system. [Garcia Decl., Ex. I.]

Plaintiff offers no factual dispute to the represented process. Plaintiff offers no evidentiary objections to the declaration of Douglas. Plaintiff offers NO address, even in the form of denial, regarding the validity of the email. The court finds no basis to factually dispute the represented security protocols and electronic signature process requirements for execution or the audit report confirming the represented process. The court concludes Plaintiff executed the electronic signature on May 12, 2022, via the UKG process. (Civ. Code, § 1633.9; Trinity v. Life Ins. Co. of North America (2022) 78 Cal.App.5th 1111, 1116, 1123-1125; Gamboa v. Northeast Community Clinic (2021) 72 Cal.App.5th 158, 168-169; Espejo v. Southern California Permanente Medical Group, supra, 246 Cal.App.4th at p. 1062; Ruiz v. Moss Bros. Auto Group, Inc. (2014) 232 Cal.App.4th 836, 843-845.) Further, the continued employment by Plaintiff constitutes a basis for a finding of acceptance of the arbitration agreement. (Gorlach v. Sports Club Co. (2012) 209 Cal.App.4th 1497, 1508 accord Craig v. Brown & Root, Inc. (2000) 84 Cal.App.4th 416, 420-421.)

Plaintiff makes no request for an evidentiary hearing, the court sua sponte declines to order further review or make any further arguments on behalf of Plaintiff.

The court considers the terms of the agreement:

“The parties shall submit to binding arbitration before a neutral arbitrator all disputes and claims arising out of submission of any employment application or any and all disputes that may arise out of or already exist related to employee’s employment or relationship with Company, whether during or after that employment, including, but not limited to claims for wages or other compensation due; claims for breach of any contract or covenant, express or implied; tort claims; claims for discrimination, including but not limited to discrimination based on race, sex, religion, national origin, age, marital status, sexual orientation, handicap, disability or medical condition; claims for benefits, except as excluded in the following paragraph; and claims for violation of any federal, state or other governmental constitution, statute, ordinance or regulation. This provision to Arbitrate applies to claims that pre-exist or may preexist the date of the execution of this Agreement. The claims will be submitted to binding arbitration before a neutral arbitrator.” The court finds all claims addressed by the subject clause.

The burden therefore shifts to Plaintiff to establish a lack of enforceability of the arbitration agreement. (Rosenthal v. Great Western Fin'l Securities Corp., supra, 14 Cal.4th at pp. 413-414; Gamboa v. Northeast Community Clinic, supra, 72 Cal.App.5th at pp. 164–165; Hotels Nevada v. L.A. Pacific Ctr., Inc., supra, 144 Cal.App.4th at p. 758.) Plaintiff presents a summary of law regarding an effective unfair adhesion contract based on reliance on the sole two sentence denial of knowledge of the agreement as the basis of support.

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. (2019) 41 Cal.App.5th 662, 674 accord OTO, L.L.C. v. Kho (2019) 8 Cal.5th 111, 129-130.)

Cases addressing unconscionability offer guidance on the standard of the employment adhesion contract—an agreement substantively presented as “take or it leave it” the circumstances of which potentially impose a 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, supra, 8 Cal.5th at pp. 126-127 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, 1055-1056; Serafin v. Balco Properties Ltd., LLC (2015) 235 Cal.App.4th 165, 179-181; see Grand Prospect Partners, L.P. v. Ross Dress for Less, Inc. (2015) 232 Cal.App.4th 1332, 1351; Serpa v. California Surety Investigations, Inc. (2013) 215 Cal.App.4th 695, 705; see also Ramirez v. Charter Communications, Inc. (Cal., July 15, 2024, No. S273802) 2024 WL 3405593, at *4.)

Given the direct denial of ever even seeing said arbitration agreement at all, the court lacks facts determining any factual context for time to review the document or consider alternatives. The court therefore finds no factual basis of support for the argument of unconscionability. (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.)

Even if court considered the circumstances whereby Plaintiff was deprived of the opportunity to review the agreement, the court still finds a lack of support for procedural unconscionability. Nothing in the opposition establishes Plaintiff appearing in a position of desperation for the position, thereby necessitating Plaintiff take the job or risk dire economic consequences. Again, the burden falls on the challenging party to establish a failure of enforceability. As for the substantive challenges, the terms themselves comply with all standards for a finding of compliance.

Plaintiff next challenges the lack of individual defendant Guevara and Hankey Investment Company LP. The court relies on the terms of the contract. Rules of contract interpretation govern arbitration agreements. (Jones v. Jacobson (2011) 195 Cal.App.4th 1, 17.) Contracts are interpreted under certain rules.

“‘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 agreement itself provides no reference to any other parties. The agreement itself only contemplates two parties: “Either party may bring an action in any court of competent jurisdiction to compel arbitration under this provision and to enforce and/or confirm an arbitration award.”

“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.)

Defendants cite to the allegations in the first amended complaint without any substantive support from the contract itself or any declaration in support. Plaintiff raises a challenge on a parent-subsidiary basis, but no such position is presented to the court by moving party. (See Waste Management, Inc. v. Superior Court (2004) 119 Cal.App.4th 105, 110; Sonora Diamond Corp. v. Superior Court (2000) 83 Cal.App.4th 523, 548.) The motion also lacks any specific support for an agency argument. (See Hernandez v. Meridian Management Services, LLC (2023) 87 Cal.App.5th 1214, 1220.)

The argument in reply regarding a fictitious business operation lacks sufficient legal argument and evidentiary support. The court declines to make the argument and compensate for Defendants failure to raise the issue in the motion based on a declaration filed in reply and attached “Seller’s Permit” submitted without a basis of authentication. The court accepts Garcia as the human resources person responsible for the onboarding agreement, but declines to consider an undated permit without further context. Even if TNH were a valid party, the motion lacks discussion as to the individual defendant, Arnold Guevara.

The court therefore finds no contractual basis for arbitration as to either defendant for purposes of the instant motion. The motion to compel arbitration is denied on this basis as to the Guevara and Hankey Investment Company, LP.

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. “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: … (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...” (Code Civ. Proc., § 1281.2.)

The right of a trial court to refuse arbitration on the possibility of conflicting rulings remains an upheld statutory rule. (Whaley v. Sony Computer Entertainment America, Inc. (2004) 121 Cal.App.4th 479, 485-486; Henry v. Alcove Investment, Inc. (1991) 233 Cal.App.3d 94, 101-102.) The court finds no conflict with FAA provisions. (Cronus Investments, Inc. v. Concierge Services (2005) 35 Cal.4th 376, 394.) The motion is therefore denied in its entirety on this basis, due to the inability to compel all parties to arbitration. Normally this would conclude a motion to compel arbitration.

Nevertheless, the court considers last item—the delegation clause. The court again relies on California law given no FAA preemption on the subject. (Tiri v. Lucky Chances, Inc. (2014) 226 Cal.App.4th 231, 240.) “There are two prerequisites for a delegation clause to be effective. First, the language of the clause must be clear and unmistakable. (Citation.) Second, the delegation must not be revocable under state contract defenses such as fraud, duress, or unconscionability.” (Id. at p. 242.)

Defendants rely on section five (5) of the agreement: “Any issue or dispute concerning the formation, applicability, interpretation or enforceability of this Arbitration provision, including any claim or contention that all or any part of this provision is void or voidable, shall be subject to arbitration as provided herein. The arbitrator, and not any federal, state or local court or agency, shall have authority to decide any such issue or dispute.” Plaintiff cites back to the unconscionability argument as a defense to enforcement.

The court finds the language clear and unambiguous. Because the court previously found Plaintiff fails to establish unconscionability, nothing precludes the court from enforcing the delegation clause. The motion to compel arbitration is therefore GRANTED.

The court orders the parties to proceed with arbitration for purposes of determining the arbitrability of the subject action. The parties are to select an individual arbitrator with the American Arbitration Association pursuant to the terms of the agreement.

“If a court of competent jurisdiction, whether in this State or not, has ordered arbitration of a controversy which is an issue involved in an action or proceeding pending before a court of this State, the court in which such action or proceeding is pending shall, upon motion of a party to such action or proceeding, stay the action or proceeding until an arbitration is had in accordance with the order to arbitrate or until such earlier time as the court specifies.” (Code Civ. Proc., § 1281.4.) The action is stayed.

The court will set an OSC re: Status of Arbitration and Stay at the time of the hearing concurrent with the Case Management Conference.

Moving Defendants to give notice.