Judge: Stephen P. Pfahler, Case: 24STCV15873, Date: 2024-12-16 Tentative Ruling

Case Number: 24STCV15873    Hearing Date: December 16, 2024    Dept: 68

Dept. 68

Date: 12-16-24

Case #24STCV15873

Trial Date: Not Set

ARBITRATION

MOVING PARTY: Defendants, Township Retail Services, Inc., et al.

RESPONDING PARTY: Plaintiff, Esperanza Figueroa

RELIEF REQUESTED

Motion to Compel Arbitration

SUMMARY OF ACTION

Plaintiff Esperanza Figueroa was employed with Defendant Township Retail Services, Inc. from 2012 to January 2024. Plaintiff alleges wrongful termination following a slip and fall injury, and a negative encounter with a customer on the premises, led to wrongful termination. Plaintiff alleges her age of 50 years old at the time of termination, and Mexican race also constituted a basis for the termination decision.

On May 3, 2024, Plaintiff filed a complaint for 1. Hostile Work Environment Harassment Age; 2. Age Discrimination in Violation of California Government Code § 12940(a); 3. Hostile Work Environment Harassment Race; 4. Race Discrimination in Violation of California Government Code § 12940(a);\ 5. Hostile Work Environment Harassment - Disability; 6. Disability Discrimination in Violation of California Government Code § 12940(a); 7. Failure to Accommodate Disability in Violation of California Government Code § 12940(m); 8. Failure to Engage in Interactive Process in Violation of California Government Code § 12940(n); 9. Failure to Prevent Harassment, Discrimination or Retaliation in Violation of California Government Code §12940(k); 10. Unsafe Work Environment 11. Failure to Provide Rest Breaks in Violation of California Labor Code § 226.7; 12. Failure to Provide Meal Periods in Violation of California Labor Codes §§ 226.7, 512; 13. Failure to Indemnify all Necessary Expenditures or Losses Incurred in Violation of California Labor Code § 2802 14. Whistleblower Retaliation; 15. Violation of Business & Professions Code § 17200, et seq.; 16. Wrongful Termination in Violation of Public Policy.

RULING: Granted.

Evidentiary Objections to the Declaration of Adriana Brown: Overruled.

Declarant establishes existence and responsibility for onboarding policy of new employees, as well as updating terms on new terms or changes impacting existing employees, thereby establishing authenticity of the agreement.

Defendant Township Retail Services, Inc., Jose Duarte, and Nelson Jovel, move to compel arbitration on the complaint filed by Plaintiff Esperanza Figueroa. Defendants maintain all claims are subject to arbitration under the terms of the agreement, and the agreement in no way presents unconscionable terms. Plaintiff in opposition challenges the evidentiary foundation of the motion, and maintains the agreement is unconscionable. Defendants in reply reiterates the existence of the agreement, FAA governance, and denies any unconscionable provisions.

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.)

Defendants present a copy of the arbitration agreement which includes signature on February 15, 2019 (more than five years after employment commenced). [Declaration of Adrianna Brown, Ex. A.] While Plaintiff denies any recollection of the agreement [Declaration of Esparanza Figueroa], the Brown declaration establishes Spanish language employee explanation and proof of a signature. There is no suggestion or evidence of any forgery, and the court accepts the existence of the 2018 policy update presentation to existing employee. The court therefore accepts the existence of the agreement between the parties.

The court first considers application of the Federal Arbitration Act (FAA). Other than an argument for the application of the FAA, the court finds no reference to FAA application in the contract, or any basis of evidence establishing FAA. [Declarations of Adriana Brown & Gabriela Herbin.] (Hoover v. American Income Life Ins. Co. (2012) 206 Cal.App.4th 1193, 1207.)

“This Agreement shall be governed by and shall be interpreted in accordance with the laws of the State of California. The terms of this agreement shall not be orally modified. This Agreement can be modified only by a written document signed by John Gill and the Employee.” The court otherwise declines to allow the application of a non-existent FAA term apply simply based on a declaration of a corporate officer regarding service contracts in other states, which otherwise conflicts with the plain language of the agreement.

Regardless, 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. (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.) As addressed below, however, the lack of FAA preemption impacts the wage and hour claims.

“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 notes the existence of the sentence regarding court authority to interpret the agreement: “Any question regarding the enforceability or interpretation of this paragraph will be decided by a court and not the arbitrator.”

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.)

On procedural unconscionability, Plaintiff relies on the circumstances regarding the presentation of the arbitration agreement, yet denies ever executing the agreement. Given the direct denial of the existence of said arbitration agreement, 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 on this basis.

Even considering the terms, and assuming an actual review occurred, nothing in the opposition regarding the terms waiving a right to jury trial and concerns for time to review the indicates unconscionable circumstances. The opposition lacks sufficient support demonstrating true concern for time to review the document, time to consider alternatives or fear of job loss without agreement. The court therefore finds no factual basis of support 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; see 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.) “[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].) Plaintiff apparently continued with employment after execution of the agreement.

The agreement also provides sufficient reference to the arbitration process via the American Arbitration Association. The relevant section explains the process, and directs Plaintiff to the information. While extrinsic reference to the relevant information can arguably constitute a basis for challenge, the opposition lacks any elementary support for this position. (Baltazar v. Forever 21, Inc. (2016) 62 Cal.4th 1237, 1246.).) The court therefore finds no basis of substantive unconscionability on this basis.

On costs, Plaintiff takes issue with potential expert fees, though the agreement otherwise requires employer pay all other costs, as required under the substantive standard. While it remains categorically unchallenged, an employee will not be responsible for arbitration costs, it remains unclear whether expert fees constitute a “unique” cost to arbitration. Nothing in the opposition indicates a concern for expert witness costs, impacts to discovery rights, or basis for this challenge thereby presenting as a potentially substantively unconscionable term. (Ontiveros v. DHL Express (USA), Inc. (2008) 164 Cal.App.4th 494, 511 disapproved of by Ramirez v. Charter Communications, Inc., supra, 16 Cal.5th 478.) Even if the subject matter were potentially impactful, the court defers to the arbitrator to determine any potential unconscionable conflict under the authority to determine costs in compliance with California law, if applicable. Plaintiff may also challenge any potential award in a post award motion, if deemed necessary.

The court overall finds insufficient evidence and legal support of unconscionability. The court therefore finds no defense to arbitration on this basis.

On the class action waiver clause, while the provision may violate current law, and the contract lacks a severance clause, nothing in the action establishes any form of class action status. The court declines to consider a facially nonexistent evidentiary basis of challenges regarding the class-action waiver to the arbitrator.

Finally, neither party addresses the wage and hour causes of action. “Actions to enforce the provisions of this article for the collection of due and unpaid wages claimed by an individual may be maintained without regard to the existence of any private agreement to arbitrate.” (Lab. Code, § 229; Ware v. Merrill Lynch, Pierce, Fenner & Smith, Inc. (1972) 24 Cal.App.3d 35, 45; see see Kirby v. Immoos Fire Protection, Inc. (2012) 53 Cal.4th 1244, 1256-1257.) State law exclusions are preempted where Federal Arbitration Act (FAA) preemption occurs. (Carbajal v. CWPSC, Inc. (2016) 245 Cal.App.4th 227, 238; Hoover v. American Income Life Ins. Co. (2012) 206 Cal.App.4th 1193, 1207-1208; see Lane v. Francis Capital Management LLC (2014) 224 Cal.App.4th 676, 68-688.) Again, the lack of established FAA applicability precludes submission of all claims into arbitration under California law.

The court, as a matter of policy, generally seeks to avoid potential piecemeal adjudication of cases, and prefers all claims submitted into 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.)

In the instant action, all claims except for certain wage and hour claims are subject to arbitration. Given wage and hour claims constitute separate and distinct claims from the wrongful termination claims however, the court finds no concern for a conflicting ruling and therefore any basis for denial of arbitration on the applicable claims. The court will defer to the arbitrator to determine which of the wage and hour claims may be subject to arbitration and which shall return to the court.

The motion is therefore GRANTED. The court stays the action. (Code Civ. Proc., § 1281.4.) The Case management conference and OSC set for January 7, 2025, will go off-calendar, and the court will set an OSC re: Arbitration Status at the time of the Hearing.

Defendants to provide notice.