Judge Theresa M. Traber, Case Number: 23STCV00457, Date: 2023-09-06 Tentative Ruling

Judge: Theresa M. Traber, Case: 23STCV00457, Date: 2023-09-06 Tentative Ruling

Case Number: 23STCV00457 Hearing Date: September 6, 2023 Dept: 47

Tentative Ruling

Judge Theresa M. Traber, Department 47

HEARING DATE: September 6, 2023 TRIAL DATE: NOT SET

CASE: Diouana Matthews v. Dray Alliance, Inc.

CASE NO.: 23STCV00457

MOTION TO COMPEL ARBITRATION

MOVING PARTY: Defendant Dray Alliance, Inc.

RESPONDING PARTY(S): Plaintiff Diouana Matthews

STATEMENT OF MATERIAL FACTS AND/OR PROCEEDINGS:

This is an action for employment discrimination and wrongful termination that was filed on January 10, 2023. Plaintiff alleges that Defendant terminated her while she was on pregnancy leave without explanation or justification.

Defendant moves to compel this matter to binding arbitration.

TENTATIVE RULING:

Defendant’s Motion to Compel Arbitration is GRANTED.

This matter is hereby stayed pending resolution of the arbitration. The Court sets a hearing for an Order to Show Cause Re: Status of Arbitration for March 6, 2024 at 8:30 AM. All other hearings in this matter are advanced to this date and vacated.

DISCUSSION:

Defendant moves to compel this matter to binding arbitration and stay these proceedings pending resolution of the arbitration.

Plaintiff’s Evidentiary Objections

Plaintiff raises evidentiary objections to every substantive paragraph of each of the declarations filed in support of this motion and each of their supporting exhibits. Plaintiff cites no authority requiring the Court to rule on each of Plaintiff’s dozens of objections. Even if such authority existed, the Court fails to see how the assertion of blanket boilerplate objections to the entirety of Defendant’s evidence is intended to be of any value to the Court in addressing the merits of this motion.

The Court rules on the objections which are relevant to this motion as follows:

Objection No. 11: OVERRULED. The entirety of the declaration does not lack personal knowledge or foundation, nor is it hearsay or irrelevant. “Conclusory” is not a valid objection.

Objection No. 12-13: OVERRULED. Not hearsay, does not lack foundation, not barred by secondary evidence rule. “Conclusory” is not a valid objection.

Objection Nos. 37-39: OVERRULED. Recitation of a business record that is also provided is not barred by the secondary evidence rule, is not hearsay. The witness has laid foundation for this evidence. “Conclusory” is not a valid objection.

Objection No. 47: OVERRULED. Objections go to weight, not admissibility.

Objection No. 50: OVERRULED. Objections go to weight, not admissibility.

Existence of an 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.)

Defendant presents, as a business record, a Worksite Employee Acknowledgement containing an arbitration provision which states:

10. Arbitration. By clicking “I Accept” below, you, on the one hand, and Worksite Employer and Justworks on the other hand, agree to use binding arbitration as the sole and exclusive means to resolve all disputes that may arise between you and Worksite Employer and/or you and Justworks, including, but not limited to, disputes regarding termination of employment and compensation. You specifically waive and relinquish your right to bring a claim against Worksite Employer and/or Justworks, in a court of law...Similarly, Worksite Employer and Justworks specifically waive and relinquish their respective rights to bring a claim against you in a court of law. You, Worksite Employer, and Justworks agree than any claim, dispute, and/or controversy that you may have against Worksite Employer (or its owners, directors, officers, managers, employees, or agents), or Justworks (or its owners, directors, officers, managers, employees, or agents), or that Worksite Employer or Justworks may have against you, shall be submitted to and determined exclusively by binding arbitration under the Federal Arbitration Act (“FAA”).

(Declaration of Anna Fajkowski ISO Mot. Exh. 8 ¶ 10.) “Worksite Employer” is defined in the Acknowledgment as Dray Alliance, Inc. (Id. ¶ 1.) The document bears at its bottom what appears to be an electronic acknowledgment by Plaintiff with a unique ID stamp, dated July 9, 2021 at 6:13 p.m. with an IP address of 99.98.4.179.

The burden of authenticating an electronic signature is “not great.” (Ruiz v. Moss Bros. Auto Group, Inc. (2014) 232 Cal.App.4th 836, 844.) Defendant has provided a declaration from a Senior Product Manager at Justworks, Inc., whom Defendant contracted to provide payroll, benefits, and onboarding services, among others. (Fajkowski Decl. ¶ 2.) Ms. Fajkowski states that her review of Justworks’ records, which includes contemporaneous logs of all activity by employees during their onboarding, shows that this document was electronically signed at the same time as Plaintiff’s I-9, on July 9, 2021, from an IP address of 99.98.4.179. (Id. Exh. 10.) Both documents were also signed using the same unique ID. (Id.)

In opposition, Plaintiff concedes that she signed her I-9 before she started her employment on July 12, 2021, but denies ever signing the Worksite Employee Acknowledgement. (Declaration of Diouana Matthews ISO Opp. ¶¶ 5, 8.) Plaintiff claims that Defendant cannot authenticate her signature on the Acknowledgment. Not so, as the Court has rejected Plaintiff’s evidentiary objections. Further, Defendant has offered evidence of the date and time of the signature, which coincide with the signature of the I-9 that Plaintiff admits took place, and has offered evidence that the signature could only have been placed using Plaintiff’s unique login information. This evidence is, contrary to Plaintiff’s argument, exactly the type of evidence which the Ruiz opinion stated was necessary, and which was absent in that case. (Ruiz, supra, 232 Cal.App.4th at 844.)

Plaintiff also asserts that the Acknowledgement is unenforceable as an arbitration agreement because Plaintiff’s employment contract is a fully integrated agreement. Plaintiff cites absolutely no authority standing for the proposition that a subsequent agreement to arbitrate claims arising out of an employment contract is invalidated by an integration clause in the contract itself, nor that it is “parol evidence.” This argument is not persuasive.

Finally, Plaintiff claims that the Acknowledgment is not a valid arbitration agreement because Defendant did not sign, and therefore is not a party to the agreement. A cursory review of the Acknowledgment, which expressly named Defendant as Plaintiff’s employer, and professes that it is being presented by Justworks as a contractor—i.e., an agent—of Defendant, belies this contention. (Fajkowski Decl. Exh. 8 ¶ 1.) As Defendant recites in reply, “it is not the presence or absence of a signature which is dispositive, it is the presence or absence of evidence of an agreement to arbitrate which matters.” (Banner Entertainment v. Superior Court (Alchemy Filmworks, Inc. (1998) 62 Cal.App.4th 348, 361.) Here, Defendant has provided considerable evidence of an agreement to arbitrate, which was presented by an acknowledged agent of Defendant. Plaintiff’s reliance on Esparza v. Sand & Sea Inc. is misplaced, as that opinion rejected an arbitration provision in an employee handbook because the handbook expressly disclaimed any intent that it be interpreted as a contract. (Esparza v. Sand & Sea, Inc. (2016) 2 Cal.App.5th 781, 783.) Here, no such language is present.

Defendant has offered evidence of an enforceable arbitration agreement. Plaintiff has failed to demonstrate that no such agreement actually existed. The Court therefore finds that there is an enforceable arbitration agreement between the parties.

Applicability of the Federal Arbitration Act

The Agreement expressly states that:

You, Worksite Employer, and Justworks agree than any claim, dispute, and/or controversy that you may have against Worksite Employer (or its owners, directors, officers, managers, employees, or agents), or Justworks (or its owners, directors, officers, managers, employees, or agents), or that Worksite Employer or Justworks may have against you, shall be submitted to and determined exclusively by binding arbitration under the Federal Arbitration Act (“FAA”).

(Fajkowski Decl. Exh. 8 ¶ 10.) Plaintiff does not dispute that, under the express language of the Arbitration Agreement, the Agreement is governed by the Federal Arbitration Act.

Scope of the Arbitration Agreement

Defendant contends that Plaintiff’s employment discrimination and wrongful termination claims fall within the scope of the arbitration agreement.

“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.)

The Agreement expressly states that it encompasses “disputes regarding termination of employment and compensation.” (Fajkowski Decl. Exh. 8 ¶ 10.) Plaintiff does not dispute Defendant’s characterization of the agreement. The Court therefore determines that Plaintiff’s claims are within the scope of the Agreement.

Unconscionability

Plaintiff argues that, even if there is a binding arbitration agreement, it should not be enforced 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 first argues that the agreement is procedurally unconscionable because it is “buried in a small font in a third party Worksite Employee Acknowledgment form.” (Opposition p. 12:25-26.) To the contrary, the copy of the Acknowledgment does not show that the provision was in “small font,” and Plaintiff offers no explanation for the conclusory assertion that its presence in a “third party” form constitutes impermissible surprise. Plaintiff makes no attempt to analogize the facts of this case to Kenney v. United HealthCare Services, despite citing that opinion to claim impermissible surprise. (See Kenney v. United Healthcare Services (1999) 70 Cal.App.4th 1332, 1330 [finding procedural unconscionability where assent to an arbitration provision was a condition of continued employment, no opportunity for review was given, the acknowledgment omitted key terms, and the agreement was buried in a large three-ring binder].) At best, Plaintiff’s contention that the agreement did not have an option to opt out renders it a contract of adhesion. Contracts of adhesion only demonstrate a minimum amount of procedural 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.

2. Substantive Unconscionability

Plaintiff argues that the agreement is substantively unconscionable. As Plaintiff has only shown, at best a minimal degree of procedural unconscionability, Plaintiff must establish a higher level of substantive unconscionability.

“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 claims that the agreement is substantively unconscionable because Defendant is not a party to the arbitration agreement. As the Court has rejected this claim for the reasons stated above, this is not sufficient to demonstrate substantive unconscionability. Plaintiff also argues that the agreement lacks mutuality because a separate confidentiality agreement purportedly entitles Defendant to pursue injunctive relief in Court. As stated above, other prior agreements do not bear on the effectiveness of an arbitration agreement.

Plaintiff next argues that the agreement is substantively unconscionable because it allows a second arbitrator to review an award. Plaintiff bases this claim on a misinterpretation of Little v. Auto Stiegler, Inc., in which our Supreme Court found that a monetary threshold for second-level review operated to the inordinate benefit of the employer. (Little v. Auto Stiegler, Inc. (2003) 29 Cal.4th 1064, 1071.) Nothing in that opinion stands for the position that merely providing for a second arbitrator to review an award constitutes substantive unconscionability.

Plaintiff’s final argument is that the agreement is unfair because it does not expressly require Defendant to pay all costs of arbitration. As Defendant states in reply, it is well established that employment arbitration agreements that encompass FEHA claims oblige the employer to bear all arbitration costs. (Armendarzi, supra, 24 Cal.4th at 113.)

As Plaintiff has failed to demonstrate that the Arbitration Agreement is substantively unconscionable, the Court finds that Plaintiff has not demonstrate unconscionability.

CONCLUSION:

Accordingly, Defendant’s Motion to Compel Arbitration is GRANTED.

Moving Party to give notice.

IT IS SO ORDERED.

Dated: September 6, 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.