Judge: Teresa A. Beaudet, Case: 22STCV36700, Date: 2023-05-11 Tentative Ruling

Case Number: 22STCV36700    Hearing Date: May 11, 2023    Dept: 50

Superior Court of California

County of Los Angeles

Department 50

            Background

Plaintiff Ruby Garcia (“Plaintiff”) filed this action on November 21, 2022 against Defendants Pacific Sunwear Stores, LLC and Pacific Sunwear of California, LLC. The Complaint asserts causes of action for (1) FMLA retaliation, (2) race discrimination, (3) disability discrimination, (4) failure to prevent discrimination, (5) FEHA retaliation, (6) failure to engage in the interactive process, (7) wrongful termination, (8) misclassification as exempt, (9) failure to provide meal and rest breaks, (10) failure to pay all wages due upon termination, (11) conversion of wages and illegal backdating, and (12) failure to provide employee file.

Pacific Sunwear of California, LLC and Pacific Sunwear Stores of California, LLC (jointly, “Defendants”) now move for an order compelling arbitration of all of the causes of action in Plaintiff’s Complaint and dismissing, or in the alternative, staying, these proceedings pending completion of the arbitration. Plaintiff opposes.

Request for Judicial Notice

The Court denies Plaintiff’s request for judicial notice.

Evidentiary Objections

            The Court rules on Plaintiff’s evidentiary objections to the Declaration of Scott Mallery as follows:

Objection No. 1: sustained

Objection No. 2: sustained

Objection No. 3: sustained

Legal Standard

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; see 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. § 2, et seq.; Higgins v. Superior Court (2006) 140 Cal.App.4th 1238, 1247.)

            Discussion

A.    Existence of Arbitration Agreement

Defendants contend that Plaintiff entered into an arbitration agreement with Defendants on March 23, 2016, which encompasses Plaintiff’s causes of action asserted in this case. The purported Mutual Agreement to Arbitrate Claims provided by Defendants contains the typed initials “RG” next to the date “3/23/2016.”

In the opposition, Plaintiff states that on March 17, 2016, she received an offer letter from “PAC SUN,” that her “first day of work was April 5, 2016,” and that she “was hired as an Operational Specialist in Human Resources.” (Garcia Decl., ¶¶ 2, 4.)

            Plaintiff also states, “I never signed an arbitration agreement with PACSUN before my employment, at the start of my employment, or during my employment.”  (Garcia Decl., ¶ 6.) Plaintiff further states that “[p]rior to this litigation, I had never seen the arbitration agreement dated March 26, 2016, attached as Exh. A to Defendant’s Declaration of Scott Mallery in Support of its Motion to Compel Arbitration.” (Garcia Decl., ¶ 13.) Plaintiff states that she “did not sign or initial the arbitration agreement dated March 26, 2016, attached as Exh. A to Defendant’s Declaration of Scott Mallery in Support of its Motion to Compel Arbitration.” (Garcia Decl., ¶ 14.)

            Plaintiff cites to Ruiz v. Moss Bros. Auto Group, Inc. (2014) 232 Cal.App.4th 836, 838, where “Defendant and appellant, Moss Bros. Auto Group, Inc. (Moss Bros.), appeal[ed] from an order denying its petition to compel arbitration of the employment-related and putative class action, representative, and individual claims of its service technician employee, plaintiff and respondent, Ernesto Ruiz. The trial court denied the petition on the ground Moss Bros. did not meet its burden of proving the parties had an agreement to arbitrate the controversy.” The Court of Appeal “conclude[d] Moss Bros. did not present sufficient evidence to support a finding that Ruiz electronically signed the 2011 agreement,” and “affirm[ed] the order denying the petition.” (Ibid.)  

The Court of Appeal in Ruiz noted that “[u]nder Civil Code section 1633.7, enacted…as part of the Uniform Electronic Transactions Act…an electronic signature has the same legal effect as a handwritten signature (Civ. Code, § 1633.7, subd. (a) [“A ... signature may not be denied legal effect or enforceability solely because it is in electronic form.”] ).” (Ruiz v. Moss Bros. Auto Group, Inc., supra, 232 Cal.App.4th at p. 843.) However, “any writing must be authenticated before the writing, or secondary evidence of its content, may be received in evidence. Authentication of a writing means (a) the introduction of evidence sufficient to sustain a finding that it is the writing that the proponent of the evidence claims it is or (b) the establishment of such facts by any other means provided by law.” (Ibid. [internal quotations and citations omitted, emphasis in original].) “Civil Code section 1633.9 addresses how a proponent of an electronic signature may authenticate the signature—that is, show the signature is, in fact, the signature of the person the proponent claims it is. The statute states: ‘(a) An electronic record or electronic signature is attributable to a person if it was the act of the person. The act of the person may be shown in any manner, including a showing of the efficacy of any security procedure applied to determine the person to which the electronic record or electronic signature was attributable.’ (Civ. Code, § 1633.9, subd. (a), italics added.)” (Ibid.)
            In Ruiz, Moss. Bros. submitted the declaration of its business manager, Mary K. Main, in support of its petition to compel arbitration. (Id. at p. 839.) The Court of Appeal found that “Main did not explain how she ascertained that the electronic signature on the [arbitration] agreement was ‘the act of’ Ruiz,” citing Civ. Code, § 1633.9, subd. (a). (Id. at p. 844.) After Ruiz stated that he did not recall electronically signing the agreement, Main explained in her reply declaration that the subject arbitration agreement “was part of an employee acknowledgment form that is presented to all Moss Bros. employees as part of a series of changes to the company’s employee handbook, and each employee is required to log into the company’s HR system, using his or her unique login ID and password, to review and sign the employee acknowledgment form.” (Id. at p. 844 [internal quotations omitted].) The Court of Appeal found that “[a]gain, however, Main did not explain how, or upon what basis, she inferred that the electronic signature on the [arbitration] agreement was ‘the act of’ Ruiz,” which “left a critical gap in the evidence supporting the petition.” (Id. at p. 844.) The Court noted that “Main did not explain that an electronic signature in the name of “Ernesto Zamora Ruiz” could only have been placed on the [arbitration] agreement (i.e., on the employee acknowledgement form) by a person using Ruiz’s ‘unique login ID and password’; that the date and time printed next to the electronic signature indicated the date and time the electronic signature was made; that all Moss Bros. employees were required to use their unique login ID and password when they logged into the HR system and signed electronic forms and agreements; and the electronic signature on the 2011 agreement was, therefore, apparently made by Ruiz on September 21, 2011, at 11:47 a.m. Rather than offer this or any other explanation of how she inferred the electronic signature on the 2011 agreement was the act of Ruiz, Main only offered her unsupported assertion that Ruiz was the person who electronically signed the 2011 agreement.” (Ibid.)
            The Court agrees with Plaintiff that under Ruiz, the Declaration of Scott Mallery filed in support of Defendants’ motion is not sufficient to show that the electronic signature on the purported arbitration agreement was the “act of” Plaintiff.    

In support of their reply, Defendants submit the Declaration of Hope Milligan.  Defendants cite to Espejo v. Southern California Permanente Medical Group (2016) 246 Cal.App.4th 1047, 1050, in which the defendants in that case “petitioned to compel arbitration pursuant to [plaintiff’s] employment agreement and associated documents. The trial court denied the petition, finding that defendants failed to establish the existence of an enforceable arbitration agreement between the parties. On appeal, defendants argue[d] the trial court erred in reaching that conclusion, and in striking a supplemental declaration filed in support of their petition.” The Court of Appeal noted that “the issue of timeliness turns on whether defendants were required to authenticate [plaintiff’s] signature…as part of their initial petition to compel arbitration.” (Id. at p. 1056.) The Defendants in Espejo contended that “they were not required to introduce such evidence until the authenticity of the document was challenged,” and the Court of Appeal agreed. (Ibid.) The Court of Appeal noted that “[o]nce [plaintiff] challenged the validity of that signature in his opposition, defendants were then required to establish by a preponderance of the evidence that the signature was authentic.” (Id. at p. 1060.)

In the Declaration of Hope Milligan filed by Defendants in connection with their reply, Ms. Milligan states that she is the VP of Human Resources with Pacific Sunwear Stores, LLC/Pacific Sunwear of California. (Milligan Decl., ¶ 1.) Ms. Milligan states that “[b]eginning in 2016, Defendants adopted a new onboarding process that was completely electronic. The new process required employees, as part of the onboarding process, to ‘provide your signature electronically…by placing your initials in a box.’ Under the new policy, all employees were required to attest to and acknowledge that (1) ‘your initials, in conjunction with your personal password that you used to gain access to the system, will identify that record or transaction as yours,’ (2) ‘because an electronic record or transaction undertaken with your password will be attributed to you, it is essential that you keep it secure. [And] [y]ou also agree that you will not disclose your password to another person,’ and (3) ‘a record or signature may not be denied legal effect or enforceability solely because it is in electronic form.’” (Milligan Decl., ¶ 3.)

Ms. Milligan asserts that “Plaintiff assented to the e-signature policy by affixing her initials to the same on March 23, 2016.” (Milligan Decl., ¶ 4.)

Ms. Milligan further states that “[n]ew employees receive their onboarding packet electronically from the third party vendor, which contains copies of all of Defendant’s policies, including the Arbitration Agreement, from a secure internet portal (‘Portal’). The Portal is hosted by a third-party vendor, Equifax.” (Milligan Decl., ¶ 5.) Ms. Milligan indicates that “Plaintiff’s employment records reveal that the third party vendor sent Plaintiff an email with her username and a temporary password on March 23, 2016.” (Milligan Decl., ¶ 9.) In addition, Ms. Milligan states that “Plaintiff’s [sic] was required to utilized [sic] unique log-in credentials to access the Defendants onboarding portal. This process entails the creation of unique log-in credentials in order to utilize the portal to complete and sign onboarding paperwork. The credentials include a unique user name and unique password. Defendants do not ask for and have no way of determining the unique log-in credentials of its employees, including Plaintiff.” (Milligan Decl., ¶ 10.) Further, “[w]hen assenting to company policies through the e-signature policy, Plaintiff was required to accurately enter her initials, otherwise the Portal would automatically prompt the employee to re-enter the correct information.” (Milligan Decl., ¶ 14.) Ms. Milligan asserts that “[i]n the Spring of 2016, as part of the aforementioned electronic onboarding system, Plaintiff signed an arbitration agreement acknowledging that arbitration was the exclusive forum for the resolution of employment related disputes.” (Milligan Decl., ¶ 15.)

Ms. Milligan also asserts that “Defendants’ business records reflect that Plaintiff electronically signed the Arbitration Agreement on March 23, 2016, at 4.57pm PT.” (Milligan Decl., ¶ 17.) She states that “[t]he only way for Defendants’ records to reflect that Plaintiff electronically signed the Arbitration Agreement on this date and time would be for Plaintiff to log into the Portal using her username and unique PIN, and accurately enter her initials on the Arbitration Agreement.” (Milligan Decl., ¶ 18.) Ms. Milligan also states that “Defendants third party vendor, HireXpress, on May 03, 2023 at 4:49 p.m., produced a document reflecting that Plaintiff executed the mutual agreement to arbitrate on March 23, 2016 at 4:57 p.m.” (Milligan Decl., ¶ 20, Ex. 4.)

The Court notes that the foregoing evidence was provided for the first time in connection with Defendants’ reply. On May 10, 2023, Plaintiff filed a response to Defendants’ reply, including evidentiary objections.

In addition, the Court notes that in her declaration in support of the opposition, Plaintiff asserts that “[i]n 2018, HR Manager Misty Nahopo realized the Employee Self Service (ESS) Portal that PACSUN was using was insecure, inefficient and flawed. It allowed others to impersonate employees and login and make changes inside the employees’ online profiles.” (Garcia Decl., ¶ 10.) Plaintiff also states, “I personally witnessed many people access the employee profiles and make changes therein – without employee authorization to do so. During my employment with Defendant, numerous people in HR, including myself, would routinely impersonate employees and login to employees’ company accounts for various reasons.” (Garcia Decl., ¶ 16.) In addition, Plaintiff asserts that “[o]nce logged into the employees account, it was possible to access all documents, including the pre onboarding, onboarding and after onboarding documents. It was possible to alter any documents.” (Garcia Decl., ¶ 19.) In light of the foregoing, as well as the new evidence provided by Defendants in connection with the reply, the Court was inclined to permit Plaintiff to file a surreply. As set forth above, Plaintiff filed a response to Defendants’ reply on May 10, 2023, the day before the May 11, 2023 hearing date. The Court will require additional time to consider Plaintiff’s response to the reply.  

Conclusion

Based on the foregoing, the hearing on Defendants’ motion will be continued. The Court will discuss a continued hearing date with counsel at the May 11, 2023 hearing. 

Defendants are ordered to provide notice of this ruling. 

DATED:  May 11, 2023                                

________________________________

Hon. Teresa A. Beaudet

Judge, Los Angeles Superior Court