Judge: Stephen P. Pfahler, Case: 24STCV11597, Date: 2024-10-29 Tentative Ruling
Case Number: 24STCV11597 Hearing Date: October 29, 2024 Dept: 68
Dept.
68
Date:
10-29-24
Case
#24STCV11597
Trial
Date: Not Set
ARBITRATION
MOVING
PARTY: Defendants, Carson Chevrolet LLC
RESPONDING
PARTY: Plaintiff, Yesenia Gomez
RELIEF
REQUESTED
Motion
to Compel Arbitration
SUMMARY
OF ACTION
Plaintiff Yesenia Gomez was an employee with Defendant
Carson Chevrolet LLC (Chevrolet) and went on medical leave beginning in March
2023, due to pregnancy complications. Chevrolet denied the request for extended
leave until November 2023, and set a deadline of May 30, 2023. Plaintiff
elected to return to work on June 1, 2023, and maintains a number of policy
changes occurred thereby impacting income. Management also purportedly engaged
in disparate and harassing treatment of Plaintiff for taking medical leave.
Plaintiff resigned four days later on June 5, 2023.
On May 8, 2024, Plaintiff filed a complaint against Defendant
1. Interference With and Violations of the Pregnancy Disability Leave Law
(PDLL), In Violation of Government Code § 12945, Et Seq. 2. Interference With and
Violations of The California Family Rights Act Government Code § 12945.2 Et
Seq. 3. Failure To Accommodate in Violation of California Government Code §
12940 Et Seq. 4. Failure To Engage in The Interactive Process in Violation of
California Government Code § 12940 Et Seq. 5. Retaliation In Violation of
Government Code §§ 12940, 12945, 12945.2 Et Seq. 6. Harassment In Violation of
Government Code § 12940, Et Seq. 7. Discrimination In Violation of Government
Code § 12940, Et Seq. 8. Failure to Investigate and Failure to Prevent
Discrimination in Violation of California Government Code §§ 12940(J) And (K)
9. Wrongful Termination in Violation of Public Policy.
RULING: Denied.
Defendant
Carson Chevrolet LLC (Chevrolet) moves to compel arbitration on the complaint
of plaintiff Yesenia Gomez. Defendant moves to compel arbitration based on the “Arbitration
Agreement.” Defendant maintains all claims are subject to arbitration under the
terms of the agreement. Plaintiff in opposition challenge enforcement of the
agreement on grounds of exemption under the Ending Forced Arbitration of Sexual
Assault and Sexual Harassment Act (EFAA), and, unconscionability. Defendant in
reply maintains Plaintiff insufficiently articulates any sexual harassment
claim under state law, thereby supporting preemption. Defendant also reiterates
the denial of unconscionability, and challenges any sexual harassment
preemption.
The
existence and electronic execution of the agreement itself remains undisputed.
[Declaration of Natalie Lusikyan, Ex. A; Declaration of Marie Rosolio, Ex. 1.]
Section 6 of the agreement provides for Federal Arbitration Act (FAA)
governance over the agreement, though Chevy presents no argument or evidence regarding
the applicability of the FAA. (Hoover
v. American Income Life Ins. Co. (2012) 206 Cal.App.4th 1193, 1207.)
The court therefore finds no application of FAA rules.
Even
if applicable, 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, including unconscionability. (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; AT&T
Mobility LLC v. Concepcion (2011) 563 U.S. 333, 339; 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.)
“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.)
The court
considers the terms of the agreement:
Section 4 states: “I understand that this agreement requires
me to pursue all claims I bring against the Company (and any third-party
beneficiaries) through binding arbitration and requires that the Company submit
any claims it has against me to binding arbitration (except for those claims
specifically excluded by this agreement). Our agreement to arbitrate includes
any and all claims which arise out of the employment context or any other
interaction/relationship we had, have or may have in the future. Those claims
include, but are not limited APPLICANT STATEMENT AND AGREEMENT to, any claim,
dispute, and/or controversy that either party brings against the other
(including, but not limited to, any claims of discrimination and harassment,
whether they be based on the California Fair Employment and Housing Act, the
Americans With Disabilities Act, Title VII of the Civil Rights Act of 1964, as
amended, claims pursuant to the California Private Attorneys General Act
(“PAGA”) unless prohibited by controlling law, as well as all other applicable
state or federal laws or regulations) which would otherwise require or allow
resort to any court or other governmental dispute resolution forum between
myself and the Company, as well as any third-party beneficiaries of the
Company. Third-party beneficiaries include the Company’s owners, directors,
officers, managers, employees, agents, partners, attorneys, sister-companies,
subsidiaries, parent companies, joint-venturers, affiliated persons/entities,
independent contractors, and parties affiliated with its employee benefit and
health plans. These claims also include any claims arising from, related to, or
having any relationship or connection whatsoever with my seeking employment
with, employment by, or other association with the Company or third-party
beneficiaries, whether based on tort, contract, statute, equity or otherwise.
Section 5 identifies National Labor Relations Act claims as
the sole exemption, which is not applicable in the subject complaint. Also not
stated in the agreement or acknowledged by Chevrolet in the motion to compel is
the “Ending Forced Arbitration of Sexual Assault and
Sexual Harassment Act of 2021” (EFAA). Plaintiff maintains said section is both
applicable and preempts arbitration on any and all causes of action.
The court reviews limited sections
of the EFAA.
(4) Sexual harassment dispute. The
term “sexual harassment dispute” means a dispute relating to conduct that is
alleged to constitute sexual harassment under applicable Federal, Tribal, or
State law.
9
U.S.C.A. § 401
The next section continues:
(a) In general.--Notwithstanding
any other provision of this title, at the election of the person alleging
conduct constituting a sexual harassment dispute or sexual assault dispute, or
the named representative of a class or in a collective action alleging such
conduct, no predispute arbitration agreement or predispute joint-action waiver
shall be valid or enforceable with respect to a case which is filed under
Federal, Tribal, or State law and relates to the sexual assault dispute or the
sexual harassment dispute.
9
U.S.C.A. § 402 (West)
(b) Determination of applicability.
An issue as to whether this chapter applies with respect to a dispute shall be
determined under Federal law. The applicability of this chapter to an agreement
to arbitrate and the validity and enforceability of an agreement to which this
chapter applies shall be determined by a court, rather than an arbitrator,
irrespective of whether the party resisting arbitration challenges the
arbitration agreement specifically or in conjunction with other terms of the
contract containing such agreement, and irrespective of whether the agreement
purports to delegate such determinations to an arbitrator.
9
U.S.C.A. § 402
The standard for determining
whether the claim(s) falls within the purview of the arbitration agreement
supports the court examining the underlying allegations in the operative
pleading, as part of the summary review in considering a motion to compel arbitration.
(Engalla v. Permanente Medical Group, Inc. (1997) 15 Cal.4th 951, 972.) A recent case from the
Southern District of New York offers insight into the substantive
considerations for exemption determination. (Yost
v. Everyrealm, Inc. (S.D.N.Y. 2023) 657
F.Supp.3d 563, 585-586.) The court found the language EFAA allows, even
requires, the court to determine the sufficiency of the underlying pleading
itself—a level of review akin to a demurrer— for purposes of establishing a
valid gender/sex harassment claim and therefore EFAA preemption. The court
finds the District Court opinion logical and persuasive. The court agrees with
the interpretation of the EFAA statute as requiring a “plausibly pled” claim as
opposed simple reliance on conclusions of gender/sex based adverse employment
decisions when considering exemption. (Id. at pp. 585-587.)
As
required under the statute, the court review the standard under the state
standard. (9 U.S.C.A. § 401(4).) “[H]arassment refers to bias that is expressed
or communicated through interpersonal relations in the workplace.” (Roby v.
McKesson Corp. (2009) 47 Cal.4th 686, 707.) Harassment claims based on
gender discrimination encompasses a broad base of conduct. (Miller v. Department of Corrections (2005) 36 Cal.4th 446, 462.) “[A] hostile work environment
sexual harassment claim is not established where a supervisor or coworker
simply uses crude or inappropriate language in front of employees or draws a
vulgar picture, without directing sexual innuendos or gender-related language
toward a plaintiff or toward women in general.” (Lyle v. Warner Brothers
Television Productions (2006) 38 Cal.4th 264, 282.)
The operative complaint itself
alleges 1. Interference With and Violations of the Pregnancy Disability Leave
Law (PDLL), in Violation of Government Code § 12945, et seq. 2. Interference with
and Violations of The California Family Rights Act Government Code § 12945.2 et
seq. 3. Failure to Accommodate in Violation of California Government Code §
12940 et seq. 4. Failure to Engage in the Interactive Process in Violation of
California Government Code § 12940 et seq. 5. Retaliation in Violation of
Government Code §§ 12940, 12945, 12945.2 et seq. 6. Harassment in Violation of
Government Code § 12940, et seq. 7. Discrimination In Violation of Government
Code § 12940, et seq. 8. Failure to Investigate and Failure to Prevent
Discrimination in Violation of California Government Code §§ 12940(J) And (K)
9. Wrongful Termination in Violation of Public Policy.
Plaintiff maintains all claims are imbued with gender based
harassment, as a result of pregnancy. The course of conduct presents
allegations of differing treatment based on the request for additional leave
time and certain accommodations caused by the pregnancy itself. Defendant in
extensive discussion in the reply challenges any “sexual harassment” claim on
grounds of mere conclusions to seek evasion of arbitration enforcement.
Defendant excludes any claim of sexual harassment based on quid pro quo demands,
and otherwise diminishes the allegations of “rude” behavior as insufficiently
indicative of a hostile working environment. (Jones v. Department of
Corrections & Rehabilitation (2007) 152 Cal.App.4th 1367, 1377.)
The course of conduct sufficiently alleges a gender based
motivation due to the pregnancy itself rather than more neutral management
based decisions impacting employees regardless of gender. (See Roby v. McKesson Corp., supra, 47
Cal.4th at p. 710; Miller v. Department of
Corrections, supra, 36 Cal.4th at
p. 462.) While the adjectives describing managerial conduct may not equal terms
in other published cases on the subject matter, the circumstances and content
of the commentary uniquely pertain to Plaintiff’s pregnancy. Such conduct
constitutes a form of specific biologically determined treatment. The complaint
therefore alleges claims well within the defined terms of the agreement, as
well as a basis for a finding of EFAA preemption under the substantive standard
of review.
The court therefore DENIES the motion to compel arbitration
on this basis.
On the unconscionability arguments as a defense to
enforcement of the agreement, Plaintiff relies on an adhesion contract
position, as well as an issue with the potential joinder of any and all
potential future claims. Defendant maintains the agreement is “substantively
fair” because in that the terms comply with California standards, lacks
circumstances of repression, and applies “equally to both parties.”
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.)
Following Armendariz, California law offers further
guidance into the adhesion contract circumstances (e.g. 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; Ramirez v. Charter Communications, Inc.
(2024) 16 Cal.5th 478 [322 Cal.Rptr.3d 825, 837]; 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.)
While
the basis of review exists, the burden still remains on the challenging party
to establish the defense. (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
essentially relies on a conclusion of unconscionability based being “rushed” to
sign the agreement in order to facilitate a drug test with fellow coworkers.
Plaintiff maintains pressure to sign in order to keep her position with the
employer. [Declaration of Yesenia Gomez.] The circumstances while “rushed” lack
sufficient support demonstrating true concern 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.) “[A]lthough
adhesion alone generally indicates only a low degree of procedural
unconscionability, the potential for overreaching in the employment context
warrants close scrutiny of the contract's terms.” (Ramirez v. Charter
Communications, Inc., supra, 16 Cal.5th 478 [322 Cal.Rptr.3d at p.
838].) The declaration of Plaintiff supports a finding for a “low” level of
procedural unconscionability, but as addressed further below the combined
support in the substantive unconscionability claim renders the agreement
unconscionable.
On
substantive unconscionability, Plaintiff specifically cites to the language in
section 4 requiring arbitration for any “future” claims as well. The specific
language was recently and specifically addressed, where the court rejected such
a clause based on the failure to factually establish the need for such a
restriction. Thus, the agreement lacked a “legitimate justification” for the
broad relief sought. (Cook v. University of Southern California (2024)
102 Cal.App.5th 312, 324-325.) The court also finds the third party beneficiary
language supports the finding of substantive unconscionability. (Id. at
p. 328.) This section is therefore substantively unconscionable.
Plaintiff also challenges administrative remedy
limitations, but section 5 appears to exclude such a restriction. The court
therefore finds no basis of denial from this section. (Hasty v. American
Automobile Assn. etc. (2023) 98 Cal.App.5th 1041, 1060.)
The fee payment language in section 8 violates
California standards, which constitutes an additional basis of
unconscionability. (Armendariz
v. Foundation Health Psychcare Services, Inc., supra, 24 Cal.4th at pp. 110-111.)
The court finds at least certain provisions constitute unconscionable
provisions.
The
motion in DENIED on grounds of EFAA preclusion and limited unconscionable
provisions as well. Section 12 provides for a severance clause, but given the
statutory preclusion and lack of argument for severance, the court declines to
make the arguments for Defendant.
Defendant is ordered to file a responsive pleading within 10 days
of the order. This order is appealable. (Code Civ. Proc., § 1294, subd. (a).)
Defendant to give notice.