Judge: Theresa M. Traber, Case: 22STCV26103, Date: 2023-01-23 Tentative Ruling

Case Number: 22STCV26103    Hearing Date: January 23, 2023    Dept: 47

Tentative Ruling

Judge Theresa M. Traber, Department 47

HEARING DATE:     January 23, 2023                   TRIAL DATE: NOT SET

CASE:                         Eden “Edie” Barker v. Mrs. Robinson’s Irish Pub LLC et al.

CASE NO.:                 22STCV26103           

MOTION TO COMPEL ARBITRATION

MOVING PARTY:               Defendants Mrs. Robinson’s Irish Pub LLC and Brett Robinson

RESPONDING PARTY(S): Plaintiff Eden “Edie” Barker

STATEMENT OF MATERIAL FACTS AND/OR PROCEEDINGS:

            This is an action, filed on August 12, 2022, alleging employment discrimination, wrongful termination, and wage and hour claims. Plaintiff alleges that she was subjected to extensive sexual harassment and ultimately terminated on false pretenses.

Defendants move to compel arbitration of Plaintiff’s claims.

TENTATIVE RULING:

Defendants’ motion to compel arbitration is GRANTED. This action is ordered stayed pending resolution of the arbitration. All future hearing dates are vacated and all pending motions are placed off calendar.

The Court sets a hearing on the status of the arbitration for July 19, 2023 at 8:30 AM.

DISCUSSION:

            Defendants move to compel Plaintiff’s claims to arbitration.

Existence of Arbitration Agreement

Under California law, arbitration agreements are valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract. (Blake v. Ecker (2001) 93 Cal.App.4th 728, 741 (overruled on other grounds by Le Francois v. Goel (2005) 35 Cal.4th 1094).) A party petitioning to compel arbitration has the burden of establishing the existence of a valid agreement to arbitrate, and the party opposing the petition has the burden of proving, by a preponderance of the evidence, any fact necessary to its defense. (Banner Entertainment, Inc. v. Superior Court (1998) 62 Cal.App.4th 348, 356-57.)

Defendants have provided a document entitled “Arbitration Agreement,” which states, in block capitals, that it is a “Voluntary Mutual Agreement to Arbitrate Claims.” (Defendant’s Exh. A.) The document bears Plaintiff’s signature and the signature of Defendant Brett Robinson as a company representative of Defendant Mrs. Robinson’s Irish Pub, LLC. (Id.) The document is dated October 10, 2019. (Id.) Defendants have also included a verification from Defendant Robinson stating that the document provided is a true and correct copy of the arbitration agreement. (Defendant’s Exh. B.) Plaintiff does not dispute the veracity of the document or of her signature.

Applicability of the FAA

Defendants argue that the FAA governs the arbitration agreement at issue.

An arbitration clause is governed by the FAA if the agreement is a contract “evidencing a transaction involving commerce.” (9 U.S.C. § 2.) Courts “broadly construe” this phrase, because the FAA “embodies Congress’ intent to provide for the enforcement of arbitration agreements within the full reach of the Commerce Clause.” (Giuliano v. Inland Empire Pers., Inc. (2007) 149 Cal.App.4th 1276, 1286.)

Here, the Agreement expressly states that “except as provided in this Agreement, any arbitration shall be in accordance with the Federal Arbitration Act (FAA), 9 U.S.C. § 1, et seq., in conformity with the procedures of the California Arbitration Act (CAA), California Code of civil Procedure § 1280, et seq.” (Defendant’s. Exh. A. ¶ 5.) Plaintiff argues in opposition that the Federal Arbitration Act does not apply to this matter because Plaintiff was not engaged in interstate commerce. This argument is not relevant where, as here, the parties expressly agreed that the FAA is the governing law. The Court therefore finds that the Federal Arbitration Act applies to this agreement.

Scope of the Arbitration Agreement

            Defendants contend that the scope of the Arbitration Agreement covers Plaintiff’s claims. Plaintiff does not dispute this contention.

            “The scope of arbitration is a matter of agreement between the parties.” (See, e.g., Ericksen, Arbuthnot, McCarthy, Kearney & Walsh, Inc. v. 100 Oak Street (1983) 35 Cal.3d 312, 323.) “A party can be compelled to arbitrate only those issues it has agreed to arbitrate.” (Perez v. U-Haul Co. of California (2016) 3 Cal.App.5th 408, 419.)

            As it is undisputed that the Agreement covers Plaintiff’s claims, the Court need not proceed further except to adopt the agreement of the parties as to the scope of the agreement as the conclusion of the Court.

Exclusion of Unpaid Wages Claims from Arbitration

Plaintiff contends, in opposition, that the unpaid wages claims cannot be compelled to arbitration under California law.

Labor Code section 229 entitles a party to maintain an action for the collection of due and unpaid wages without regard to a private agreement to arbitrate. (Labor Code § 229.) However, when the Federal Arbitration Act is applicable, the FAA preempts the effect of section 229, requiring arbitration of claims that could otherwise be resolved in court. (Perry v. Thomas (1987) 482 U.S. 483, 490-92; see also Performance Team Freight Systems, Inc. v. Aleman (2015) 241 Cal.App.4th 1233, 1240.) Here, the FAA applies to the agreement, as explained above. Labor Code section 229 is therefore preempted with respect to this arbitration agreement and does not bar Plaintiff’s unpaid wages claims from arbitration.

Exclusion of Sexual Harassment Claims from Arbitration

            Plaintiff, in opposition, also contends that her claims for sexual harassment are excluded under the recent amendments to the Federal Arbitration Act.

            On March 3, 2022, the President signed the “Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021” into law. (Pub. L. No. 117-90, 136 Stat. 26, codified in 9 U.S.C. §§ 401, 402.) The effect of this provision is to preclude arbitration of disputes relating to conduct alleged to be sexual harassment under applicable law, including state law. (9 U.S.C. §§ 401, 402.) However, section 3 of the Act states that it applies “to any dispute or claim that arises on or after the date of enactment of this Act.” (Pub. L. No. 117-90, 136 Stat. 26 § 3.) Under the Fair Employment and Housing Act, claims accrue when the adverse employment action occurs and the claimant suffers an injury. (McCaskey v. California State Auto Assn. (2010) 189 Cal.App.4th 947, 997.) The Complaint alleges that Plaintiff was terminated on November 29, 2021 and does not allege any injuries after that date. (See Complaint Exh. A.) Thus, as alleged, Plaintiff’s claim accrued on November 29, 2021, before the amendments were enacted. Therefore, these provisions do not apply to this dispute.

Waiver of Procedures Under Labor Code Section 432.6

Plaintiff further contends in opposition that the arbitration agreement is unenforceable under Labor Code section 432.6, which forbids employers from requiring current or prospective employees to waive any right, forum, or procedure for a violation of the Fair Employment Housing Act or the Labor Code. (Labor Code § 432.6(a).) Again, however, subdivision (h) of this statute states that it applies to contracts for employment entered into, modified, or extended on or after January 1, 2020. (Labor Code § 432.6(h).) The employment contract at issue is dated October 10, 2019. (Defendant’s Exh A.) Neither party alleges that there has been any modification or extension of the contract. Section 432.6 is therefore inapplicable to this agreement.

Unconscionability

            Plaintiff also opposes Defendants’ motion to compel arbitration in its entirety on the basis that the agreement is unenforceable because it is unconscionable.

1.      Procedural Unconscionability

“‘To briefly recapitulate the principles of unconscionability, the doctrine has “‘both a “procedural” and a “substantive” element,’ the former focusing on ‘“oppression”’ or ‘“surprise”’ due to unequal bargaining ¿power, the latter on ‘“overly harsh”’ … or ‘“one-sided”’ results.” [Citation.] The procedural element of an unconscionable contract generally takes the form of a contract of adhesion, “‘which, imposed and drafted by the party of superior bargaining strength, relegates to the subscribing party only the opportunity to adhere to the contract or reject it.’” … [¶] Substantively unconscionable terms may take various forms, but may generally be described as unfairly one-sided.’ [Citation.]” (Citation omitted.) 
 
“Under this approach, both the procedural and substantive elements must be met before a contract or term will be deemed unconscionable. Both, however, need not be present to the same degree. A sliding scale is applied so that ‘the more substantively oppressive the contract term, the less evidence of procedural unconscionability is required to come to the conclusion that the term is unenforceable, and vice versa.’ (Citations omitted.) 
 

(Walnut Producers of California v. Diamond Foods, Inc. (2010) 187 Cal.App.4th 634, 645 (bold emphasis added).) 

            Plaintiff argues that the agreement is procedurally unconscionable because it is a contract of adhesion. This argument presents only a minimal amount of unconscionability:

“The procedural element of the unconscionability analysis concerns the manner in which the contract was negotiated and the circumstances of the parties at that time. [Citation.] The element focuses on oppression or surprise. [Citation.] ‘Oppression arises from an inequality of bargaining power that results in no real negotiation and an absence of meaningful choice.’ [Citation.] Surprise is defined as ‘“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.”’ [Citation.]” (Citation omitted.) 
 
Plaintiffs claim the Agreement is procedurally unconscionable because it is an adhesion contract. An adhesion contract is “a standardized contract … imposed upon the subscribing party without an opportunity to negotiate the terms.” (Citation omitted.) “The term signifies a standardized contract, which, imposed and drafted by the party of superior bargaining strength, relegates to the subscribing party only the opportunity to adhere to the contract or reject it. [Citation.]” (Citation omitted.) 
 
The California Supreme Court has consistently stated that “‘[t]he procedural element of an unconscionable contract generally takes the form of a contract of adhesion … .’ ” (Citations omitted.) 
 
“Whether the challenged provision is within a contract of adhesion pertains to the oppression aspect of procedural unconscionability. A contract of adhesion is “imposed and drafted by the party of superior bargaining strength” and “relegates to the subscribing party only the opportunity to adhere to the contract or reject it.” (Citations omitted.) “[A]bsent unusual circumstances, use of a contract of adhesion establishes a minimal degree of procedural unconscionability notwithstanding the availability of market alternatives.” (Citation omitted.) 

(Walnut Producers of California, supra, 187 Cal.App.4th at 645-46 [bold emphasis added].) Thus, even accepting Plaintiff’s argument as true, this would establish only a minimum of procedural unconscionability.

            Plaintiff also contends that the agreement is procedurally unconscionable because she did not have an opportunity to review or negotiate the terms, because the agreement was presented as a mandatory condition of employment as part of a set of forms she was required to sign, notwithstanding the statement in the contract that the arbitration agreement is voluntary and the statement bearing her initials that she had the opportunity to review the agreement. (See Defendant’s Exh. A. ¶ 15.). Plaintiff offers no evidence of this contention beyond conclusory statements in her declaration that she was not given an opportunity to modify the documents she signed, to review the terms, or consult with an attorney. (Declaration of Eden Barker ISO Opp. ¶ 3.) She does not recount that Defendant denied her request for more time, modified terms or the opportunity to consult with an attorney.  Plaintiff’s bare statement that she was denied such opportunities, without more, is not sufficient to support Plaintiff’s claims of procedural unconscionability.

            Plaintiff further argues that the agreement is procedurally unconscionable because it does not clearly set forth the rules that would apply to any arbitration proceeding under the agreement. Defendants contend, in the moving papers, that the agreement sets forth in “simple terms” the nature of the alternative dispute resolution process. However, a review of the agreement belies this contention. Plaintiff’s central point of contention is that the agreement states that “[t]he parties retain the right to conduct a reasonable amount of discovery guided by the Federal Rules of Civil Procedure. . .” (Defendant’s Exh. A.) Plaintiff argues that this term is procedurally unconscionable because it does not clearly state what discovery rules would govern this proceeding. The Court concurs. A provision allowing for a “reasonable” amount of discovery “guided” by the Federal Rules of Civil Procedure does is not sufficient to provide Plaintiff with adequate notice of what specific rules or procedures would govern an arbitration under this agreement. The Court agrees with Plaintiff that this provision is procedurally unconscionable.

            Thus, Plaintiff has established a degree of procedural unconscionability on the basis that the contract was a contract of adhesion and because it does not set forth with sufficient clarity the rules that would govern discovery under this agreement.

2.      Substantive Unconscionability

            Plaintiff also argues that the agreement is substantively unconscionable.

“A provision is substantively unconscionable if it ‘involves contract terms that are so one-sided as to “shock the conscience,” or that impose harsh or oppressive terms.’ [Citation.] The phrases ‘harsh,’ ‘oppressive,’ and ‘shock the conscience’ are not synonymous with ‘unreasonable.’ Basing an unconscionability determination on the reasonableness of a contract provision would inject an inappropriate level of judicial subjectivity into the analysis. ¿‘With a concept as nebulous as “unconscionability” it is important that courts not be thrust in the paternalistic role of intervening to change contractual terms that the parties have agreed to merely because the court believes the terms are unreasonable. The terms must shock the conscience.’ [Citations.]”  

(Walnut Producers of California v. Diamond Foods, Inc. supra, 187 Cal.App.4th at 647-48.)

Plaintiff first contends that the agreement is substantively unconscionable because it lacks mutuality insofar as it requires Plaintiff to arbitrate her most likely claims, but not for Defendants to arbitrate their claims. An arbitration agreement is substantively unconscionable when it compels arbitration of claims an employee is most likely to bring against an employer, but exempts from arbitration claims the employer is most likely to bring against its employees. (See, e.g., Mercuro v. Sup. Ct. (Countrywide Secur. Corp. (2002) 96 Cal.App.4th 167, 175-76.) However, the mere fact that certain provisions give one side a greater benefit does not make those terms substantively unconscionable. (Pinnacle Museum Tower Assn. v. Pinnacle Market Development (US), LLC (2012) 55 Cal.4th 223, 246.)  Plaintiff argues specifically that the contract is unconscionable because it requires Plaintiff’s most likely claims, such as employment claims, to be compelled to arbitration, while not requiring Defendants to arbitrate claims for injunctive relief.

The Court is not persuaded by Plaintiff’s argument in this respect. First, the agreement also provides that worker’s compensation or unemployment compensation claims, which are arguably some of the most likely claims to be brought by an employee, may not be compelled to arbitration under the agreement. (Defendant’s Exh. A. ¶ 3.) Second, Plaintiff offers no basis for the assertion that Defendants are most likely to pursue claims for injunctive relief over other claims which are governed by the agreement. A conclusory assertion is not sufficient for the Court to conclude that the agreement is substantively unconscionable on this basis.

Plaintiff next argues that the agreement is unconscionable because it is it is contrary to law and public policy insofar as it requires Plaintiff to give up a right to a “Berman” hearing, and requires Plaintiff to waive her protections under the Ralph Civil Rights Act (Civil Code § 41.7) and the Bane Act (Civil Code § 52.1) A provision requiring a party to give up a right to a Berman hearing under Labor Code section 98 is not categorically unconscionable under the Federal Arbitration Act. (Sonic-Calabasas A, Inc. v. Moreno (2013) 57 Cal.4th 1109, 1124-25.) Further, agreements subject to the Federal Arbitration Act are exempt from the restrictions on waiver of the right to pursue relief in a civil action under the Ralph and Bane Acts, because the Federal Arbitration Act preempts those provisions. (Saheli v. White Mem. Med. Ctr. (2018) 21 Cal.App.5th 308, 313, 323.) Plaintiff has therefore not established that the agreement is substantively unconscionable on this basis.

As Plaintiff has not established that the agreement is substantively unconscionable, Plaintiff’s defense of unconscionability fails, notwithstanding the Court’s finding of procedural unconscionability.

Plaintiff’s Prospective PAGA Claims

Plaintiff asks the Court not to dismiss Plaintiff’s prospective PAGA claims. As these claims have not yet been pled in this action, the Court declines to address any additional claims that Plaintiff may wish to add at this time.

CONCLUSION:

Accordingly, Defendants’ motion to compel arbitration is GRANTED. This action is ordered stayed pending resolution of the arbitration. All future hearing dates are vacated and all pending motions are placed off calendar.

The Court sets a hearing on the status of the arbitration for July 19, 2023 at 8:30 AM.

IT IS SO ORDERED.

Dated: January 23, 2023                                 ___________________________________

                                                                                    Theresa M. Traber

                                                                                    Judge of the Superior Court

            Any party may submit on the tentative ruling by contacting the courtroom via email at Smcdept47@lacourt.org by no later than 4:00 p.m. the day before the hearing. All interested parties must be copied on the email. It should be noted that if you submit on a tentative ruling the court will still conduct a hearing if any party appears. By submitting on the tentative you have, in essence, waived your right to be present at the hearing, and you should be aware that the court may not adopt the tentative, and may issue an order which modifies the tentative ruling in whole or in part.