Judge Teresa A. Beaudet, Case 21STCV40016 2022-10-06 Tentative Ruling

Plaintiff Jane Doe (“Plaintiff”) filed this action against Defendants Clay Lacy Aviation, Inc. (“CLA”) and Steven Lee (“Lee”) (jointly, “Defendants”) on October 29, 2021.

In the Complaint, Plaintiff asserts causes of action for (1) sexual battery, (2) gender violence, (3) civil rights violation, (4) sexual harassment, (5) retaliation, (6) discrimination, (7) wrongful termination in violation of public policy, (8) wrongful termination, (9) failure to prevent harassment, discrimination, and retaliation, (10) intentional infliction of emotional distress, (11) negligent supervision and retention, and (12) declaratory and injunctive relief.

Defendants to arbitration and for an order staying the action until the completion of the arbitration. Plaintiff opposes.

On August 15, 2022, Lee filed a joinder to CLA’s motion to compel arbitration.

On June 23, 2022, the Court issued an Order continuing the hearing on the motion, and permitting Plaintiff to file and serve a surreply on or before July 7, 2022. On August 9, 2022, the Court issued an Order continuing the hearing on the motion again due to the voluminous number of objections. In its August 9, 2022 Order, the Court, inter alia, ordered the parties to meet and confer in a good faith effort to resolve and eliminate the objections and set a Hearing on Objections.

On August 18, 2022, the parties filed a Joint Statement Re: Parties’ Objections to Declarations on Defendant’s Motion to Compel Arbitration. On August 29, 2022, the Court issued a minute order following the Hearing on Objections which provides, inter alia, “[t]he parties have sufficiently reduced the objections so that the Court will rule on them along with the motion to compel arbitration.” The August 29, 2022 minute order also provides that “[t]he parties have agreed and the Court orders that the revised declarations in support of the reply and surreply and the revised declarations must be filed on or before 09/27/22. By that date, Plaintiff's counsel has agreed to deliver to Department 50, a compilation of all the operative moving, opposing, reply and surreply papers as well as copy of the Joint Statement re: Objections.”

The Court rules on the parties’ Joint Statement Re: Parties’ Objections to Declarations on Defendant’s Motion to Compel Arbitration as follows:

Objection No. 1: overruled but considered only for the purpose pertinent to the motion as identified by Plaintiff, namely the Defendant’s custom and practice regarding documentation.

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. Securities Corp. (1996) 14 Cal.4th 394, 413-414.)

Generally, on a petition to compel arbitration, the court must grant the petition unless it finds either (1) no written agreement to arbitrate exists; (2) the right to compel arbitration has been waived; (3) grounds exist for revocation of the agreement; or (4) litigation is pending that may render the arbitration unnecessary or create conflicting rulings on common issues. ((Code Civ. Proc., § 1281.2); (Condee v. Longwood Management Corp. (2001) 88 Cal.App.4th 215, 218-219.)

“California has a strong public policy in favor of arbitration and any doubts regarding the arbitrability of a dispute are resolved in favor of arbitration.” ((Coast Plaza Doctors Hospital v. Blue Cross of California (2000) 83 Cal.App.4th 677, 686.) “This strong policy has resulted in the general rule that arbitration should be upheld unless it can be said with assurance that an arbitration clause is not susceptible to an interpretation covering the asserted dispute.” ((Ibid. [internal quotations omitted].) This is in accord with the liberal federal policy favoring arbitration agreements under the Federal Arbitration Act (“FAA”), which governs all agreements to arbitrate in contracts “involving interstate commerce.” (9 U.S.C. section 2, et seq.; (Higgins v. Superior Court (2006) 140 Cal.App.4th 1238, 1247.)

CLA presents evidence that Plaintiff was hired by CLA on or about March 30, 2015. (Jung Decl., ¶ 4.) CLA indicates that Plaintiff was given a copy of CLA’s Mutual Arbitration Agreement (the “Mutual Arbitration Agreement”), and Plaintiff signed this Agreement on March 30, 2015. (Jung Decl., ¶ 5, Ex. A.)[1] The Mutual Arbitration Agreement provides in pertinent part as follows:

“Agreement to arbitrate: Designated Claims: The Employer and the Employee agree to

resolve through binding arbitration any disputes or claims having anything to do

with the employee’s application for employment, employment, or separation from

Arbitration Association (“AAA”) to the extent they do not conflict with this Agreement.” (Jung Decl., ¶ 5, Ex. A.)

CLA also asserts that the Mutual Arbitration Agreement extends to Lee despite the fact that he was not a signatory to the Mutual Arbitration Agreement. Plaintiff alleges that Lee was Plaintiff’s direct supervisor. (Compl., ¶ 4.) Plaintiff also alleges that Lee was “at all times relevant, acting in his capacity and within the course and scope as a managing agent of Defendant CLA and on its behalf.” (Compl., ¶ 14.) Plaintiff indicates that “[i]t is well established that a nonsignatory beneficiary of an arbitration clause is entitled to require arbitration.” ((Harris v. Superior Court (1986) 188 Cal.App.3d 475, 478.)

Plaintiff argues that she never entered into the Mutual Arbitration Agreement because the terms of the agreement were never disclosed to her. (Doe Decl., ¶ 8.) Plaintiff indicates that on March 30, 2015, she recalls being handed several signature pages to sign, which did not have accompanying documents or pages preceding the signature pages. (Doe Decl., ¶ 7.) Plaintiff also indicates that at the time of her execution of the signature page of the Mutual Arbitration Agreement, she was rushed and told that the documents she was signing were merely employee payroll and benefits documents. (Doe Decl., ¶ 9.)

In connection with the reply, CLA presents the Amended Declaration of Laura Jung, CLA’s current Vice President of Human Resources. (Amended Jung Decl., ¶ 1.) Ms. Jung asserts that “[i]n 2015, CLA’s custom and practice with new hires was to provide employees with paper copies of their New Employee Checklist and onboarding documents prior to their start date, which includes the Mutual Arbitration Agreement, employee handbook, IRS W-4 form, etc.” (Amended Jung Decl., ¶ 4.) Ms. Jung also states that CLA’s custom and practice is to give employees the entirety of any document they are given to sign, including the Mutual Arbitration Agreement, rather than only portions of documents or only signature pages. (Amended Jung Decl., ¶ 5.) In addition, Ms. Jung asserts that “[a]t the time of Plaintiffs hire, Plaintiff should have been provided with her New Employee Checklist and each and every page of all onboarding documents she was given to review and sign, including the Mutual Arbitration Agreement.” (Amended Jung Decl., ¶ 6.)

In her revised/amended supplemental declaration in support of the surreply, Plaintiff indicates that Ms. Jung never served as Plaintiff’s contact for initial hiring or transitioning. (Revised/Amended Suppl. Doe Decl., ¶ 8.) Plaintiff states that Ms. Jung was not there when Plaintiff received pages to sign, or when Plaintiff signed any of the documents. (Revised/Amended Suppl. Doe Decl., ¶ 8.) However, Plaintiff still acknowledges in her original declaration in support of her opposition to the motion that she executed the signature page of the Mutual Arbitration Agreement. (Doe Decl., ¶ 9.) Plaintiff’s revised/amended supplemental declaration also indicates that Plaintiff signed the documents. (Revised/Amended Suppl. Doe Decl., ¶ 8.) The Court notes that a party moving to compel arbitration can establish that an arbitration agreement exists simply by attaching a copy of the agreement to its petition without necessarily following the “normal procedures of document authentication.” ((Espejo v. Southern California Permanente Medical Group (2016) 246 Cal.App.4th 1047, 1058); see also Condee v. Longwood Management Corp., supra, 88 Cal.App.4th at p. 219 [“A plain reading of the statute indicates that as a preliminary matter the court is only required to make a finding of the agreement’s existence, not an evidentiary determination of its validity.”].)

Further, Plaintiff does not dispute that the Mutual Arbitration Agreement covers the claims made in the Complaint. Therefore, the burden now shifts to Plaintiff to prove a ground for denial.

First, Plaintiff contends that the Mutual Arbitration Agreement is void because it was obtained through fraud. Plaintiff notes that “[g]enerally applicable contract defenses…may be applied to invalidate arbitration agreements without contravening the FAA or California law.” (OTO, L.L.C. v. Kho (2019) 8 Cal.5th 111, 125 [internal quotations omitted.) Plaintiff cites to CACI No. 335, which concerns “Affirmative Defense-Fraud.” Per CACI 335, a defendant must prove the following to show that no contract was created because the defendant’s consent was obtained by fraud: (1) that plaintiff made a fraudulent statement; (2) that plaintiff knew that the representation was not true; (3) that plaintiff made the representation to persuade defendant to agree to the contract; (4) that defendant reasonably relied on this representation; and (5) that defendant would not have entered into the contract if defendant had known that the representation was not true.

Plaintiff contends that fraud is established here because: (1) CLA represented that the documents being executed were related to employee payroll and benefits; (1) CLA knew that the representation was not true; (3) CLA made the representation to persuade or induce Plaintiff to unknowingly agree to the Mutual Arbitration Agreement; (4) Plaintiff reasonably relied on CLA’s false representation; and (5) Plaintiff would not have entered into the Mutual Arbitration Agreement if she had known that the representation was not true.

Plaintiff indicates that at the time of her execution of the signature page of the Mutual Arbitration Agreement, she was rushed and told that the documents she was signing were merely employee payroll and benefits documents. (Doe Decl., ¶ 9.) Plaintiff indicates that she relied on that representation, and believed she was merely executing documents related to payroll and benefits so that she could become an employee. (Doe Decl., ¶¶ 9, 10.) Plaintiff also indicates that she was fresh out of college and that her only prior job experience was her college job. (Doe Decl., ¶ 11.) Plaintiff asserts that she had no reason to believe or understand that the documents she was signing were different than what CLA represented them to be. (Doe Decl., ¶ 11.)

CLA counters that Plaintiff is well-educated and capable of comprehending routine hiring documents. CLA notes that Plaintiff indicates she attended a four-year university and obtained a Bachelor of Science degree. (Doe Decl., ¶ 2.) But CLA does not address Plaintiff’s claim that she was told that the documents she was signing were merely employee payroll and benefits documents. CLA does not provide evidence, for instance, that Plaintiff was not told that the documents she was signing were merely employee payroll and benefits documents. CLA offers the conclusory statement that “[t]here was no fraud by CLA and Plaintiff cannot be believed.” (Amended Reply at p. 4:4-4:5.)

Plaintiff also asserts that CLA acted to conceal the Mutual Arbitration Agreement by not including page numbers in the agreement, by including the title “Mutual Arbitration Agreement” at the top of each page to induce the belief that the third page was the entire document, and by only providing the signature page for the agreement. (Opp’n at p. 7:6-10; see also Jung Decl., ¶ 5, Ex. A.) Plaintiff indicates that on March 30, 2015, she recalls being handed several signature pages to sign, which did not have accompanying documents or pages preceding the signature pages, as discussed above. (Doe Decl., ¶ 7.) CLA simply counters that Plaintiff “should have been provided with her New Employee Checklist and each and every page of all onboarding documents she was given to review and sign, including the Mutual Arbitration Agreement.” (Amended Jung Decl., ¶ 6, emphasis added.) CLA does not provide evidence from any person indicating that they were present when Plaintiff was purportedly provided with the entire Mutual Arbitration Agreement. CLA also does not address Plaintiff’s arguments concerning the lack of page numbers on the agreement or the fact that the title “Mutual Arbitration Agreement” was included at the top of each page of the agreement.

Based on the foregoing, the Court agrees with Plaintiff that CLA does not sufficiently address Plaintiff’s claim of fraud. The Court finds that Plaintiff has met her burden of demonstrating grounds to deny arbitration. Accordingly, the Court finds it unnecessary to consider the merits of Plaintiff’s remaining arguments concerning unconscionability.

[1]Plaintiff’s name has been redacted from the Mutual Arbitration Agreement in order to protect her privacy, as she filed this action under a pseudonym. (Jung Decl., ¶ 5.)

JANE DOE, Plaintiff, vs. CLAY LACY AVIATION, INC., et al., Defendants.	Case No.:	21STCV40016
	Hearing Date:	October 6, 2022
	Hearing Time:	2:00 p.m.
	[TENTATIVE] ORDER RE: MOTION TO COMPEL ARBITRATION OF DEFENDANT CLAY LACY AVIATION, INC.; JOINDER BY DEFENDANT STEVEN LEE TO DEFENDANT CLAY AVIATION, INC.’S, MOTION TO COMPEL ARBITRATION

Superior Court of California

County of Los Angeles

Department 50