Judge: Theresa M. Traber, Case: 23STCV04181, Date: 2023-10-18 Tentative Ruling

Case Number: 23STCV04181    Hearing Date: October 18, 2023    Dept: 47

Tentative Ruling

Judge Theresa M. Traber, Department 47

HEARING DATE:     October 18, 2023                   TRIAL DATE: NOT SET

CASE:                         Tinisha Gooden v. The Cheesecake Factory Restaurants, Inc.

CASE NO.:                 23STCV04181           

MOTION TO COMPEL ARBITRATION

MOVING PARTY:               Defendants The Cheesecake Factory Restaurants, Inc. and The Cheesecake Factory, Inc.

RESPONDING PARTY(S): Plaintiff Tinisha Gooden

STATEMENT OF MATERIAL FACTS AND/OR PROCEEDINGS:

            This is an action for employment discrimination and whistleblower retaliation that was filed on February 27, 2023. Plaintiff alleges Defendants reduced her working hours because she took medical leave, and terminated Plaintiff for her repeated whistleblowing complaints regarding threats made against her by another employee.

Defendants move for an order compelling this matter to binding arbitration and staying all proceedings pending resolution of the arbitration.

TENTATIVE RULING:

Defendants’ Motion to Compel Arbitration is DENIED.

DISCUSSION:

Defendants move for an order compelling this matter to binding arbitration and staying all proceedings pending resolution of the 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 persuasion to establish 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.)

However, as to the burden of production, rather than persuasion, courts have articulated a three-step burden shifting process:

First, the moving party bears the burden of producing “prima facie evidence of a written agreement to arbitrate the controversy.” [citation] The moving party “can meet its initial burden by attaching to the [motion or] petition a copy of the arbitration agreement purporting to bear the [opposing party’s] signature.” [citation] Alternatively, the moving party can meet its burden by setting forth the agreement’s provisions in the motion. [citations] For this step, “it is not necessary to follow the normal procedures of document authentication.” [citation] If the moving party meets its initial prima facie burden and the opposing party does not dispute the existence of the arbitration agreement, then nothing more is required for the moving party to meet its burden of persuasion.

If the moving party meets its initial prima facie burden and the opposing party disputes the agreement, then in the second step, the opposing party bears the burden of producing evidence to challenge the authenticity of the agreement. [citation] The opposing party can do this in several ways. For example, the opposing party may testify under oath or declare under penalty of perjury that the party never saw or does not remember seeing the agreement, or that the party never signed or does not remember signing the agreement. [citations]

If the opposing party meets its burden of producing evidence, then in the third step, the moving party must establish with admissible evidence a valid arbitration agreement between the parties. The burden of proving the agreement by a preponderance of the evidence remains with the moving party. [citation].

(Gamboa v. Northeast Community Clinic (2021) 72 Cal.App.5th 158, 165-66.)

Here, Defendants seek to compel arbitration based on a Mutual Agreement to Arbitrate Claims executed by Plaintiff on July 26, 2020. Defendants have provided a copy of the agreement which appears to bear Plaintiff’s handwritten signature. (Declaration of Laurie Lamber-Gaffney ISO Mot. ¶ 5, Exh. A.) Plaintiff, in opposition, does not dispute that she signed an arbitration agreement.

The Court therefore finds that there is an agreement to arbitrate between Defendants and the Plaintiff.

Applicability of the FAA

            The Agreement states categorically that “this Agreement shall be controlled and governed by the Federal Arbitration Act.” (Lamber-Gaffney Decl. Exh. A p.1.) Plaintiff does not dispute that the Federal Arbitration Act governs the arbitration agreement.

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 parties agree that Plaintiff’s claims as alleged in the Complaint are within the scope of the arbitration agreement. As this matter is not in dispute, the Court need not address this matter further.

Statutory Waiver of Right to Compel Arbitration

            Plaintiff’s sole challenge to the Arbitration Agreement is that Defendants waived their right to compel arbitration by failing to timely pay arbitration fees.

(1) In an employment or consumer arbitration that requires, either expressly or through application of state or federal law or the rules of the arbitration provider, the drafting party to pay certain fees and costs before the arbitration can proceed, if the fees or costs to initiate an arbitration proceeding are not paid within 30 days after the due date the drafting party is in material breach of the arbitration agreement, is in default of the arbitration, and waives its right to compel arbitration under Section 1281.2.

(2) After an employee or consumer meets the filing requirements necessary to initiate an arbitration, the arbitration provider shall immediately provide an invoice for any fees and costs required before the arbitration can proceed to all of the parties to the arbitration. The invoice shall be provided in its entirety, shall state the full amount owed and the date that payment is due, and shall be sent to all parties by the same means on the same day. To avoid delay, absent an express provision in the arbitration agreement stating the number of days in which the parties to the arbitration must pay any required fees or costs, the arbitration provider shall issue all invoices to the parties as due upon receipt.

(Code Civ. Proc. § 1281.97(a).) If the drafting party is in default under subdivision (a), the employee may withdraw the claim from arbitration and proceed in a court of appropriate jurisdiction. (Code Civ. Proc. § 1281.97(b).) The thirty-day period to respond begins to run upon receipt of the invoice by the drafting party unless the parties expressly agree to the contrary. (Espinoza v. Superior Court (2022) 83 Cal.App.5th 761, 774.) A drafting party must strictly comply with the statute to avoid waiver of the right to arbitration. (Id. at 775.)  

Defendants do not dispute that they did not pay the filing fees within the time requested, but instead argue that the time to do so had not yet begun to run because Plaintiff improperly listed Defendants’ Chief People Officer, Dina Barmasse-Gray, as Defendants’ representative, rather than its general counsel, contrary to the terms of the agreement. (See Lamber-Gaffney Decl., Exh. A., see also Declaration of Dina Barmasse-Gray ISO Mot. ¶ 6.) Defendants also claim that Plaintiff did not comply with the service requirements in the arbitration agreement because she did not serve the demand for arbitration by certified or registered mail, return receipt requested. Defendants thus contend that Plaintiff did not meet the filing requirements to initiate an arbitration.  In addition, Defendants appear to contend that they were never given proper notice of the AAA Invoice because Ms. Barmasse-Gray considered the email demand for payment to be suspicious. 

The Court is not persuaded by Defendants’ arguments. The evidence before the Court demonstrates Defendants’ knowledge of Plaintiff’s demand for arbitration and its assignment of AAA Arbitration Case Number 01-23-000-0061.  Plaintiff submitted her counsel’s January 2, 2023 email to Dina Barmasse-Gray and another Cheesecake Factory employee with her Demand for Arbitration, Plaintiff’s DFEH Complaint and Right to Sue Letter, the Arbitration Agreement, and the filing fee Receipt and AAA Arbitration Case Number.  (Declaration of Robert Zavala ISO Opp., Exh. 1.)  There is no dispute that Ms. Barmasse-Gray received this Demand and forwarded it to Defendants’ Legal Department.  (Barmasse-Gray Decl., ¶ 4.)  Defendants have offered no evidence that Defendants’ Legal Department responded to this demand by challenging the manner of its filing or her notice to Defendants.  The record is undisputed, therefore, that Defendants and their Legal Department were given notice of Plaintiff’s arbitration demand and the AAA Arbitration Case Number that was assigned to it.

Nor is there any dispute that Defendants received notice of their obligation to pay arbitration fees.  Plaintiff provided an invoice from the American Arbitration Association dated January 6, 2023, demanding initial fees from Defendants in the amount of $2,100 by February 5, 2023. Exh. C.) The Invoice indicates on its face that it was sent to Dina Barmasse-Gray by email and overnight mail to The Cheesecake Factory’s address in Calabasas Hills, which is the same address listed for Defendants’ General Counsel in the arbitration agreement.  (Id.; Lamber-Gaffney Decl. Exh. A p. 3.)  An executive who manages Defendants’ Human Resources Department, Ms. Barmasse-Gray admits that she received the email but claims to have disregarded it as mere spam, despite its subject line referencing an AAA Payment Link for Case 01-23-000-0061, its request for a payment of arbitration fees in connection with that case, and its instructions to contact Employmentfilling@adr.org with any questions about the payment request.  She also asserts she received no AAA invoice or correspondence in the mail and was unaware that the AAA was “attempting to contact [her] in order to commence the arbitration.”  (Id., ¶ 7.)  That Ms. Barmasse-Gray decided not to open the email or click on its link does not explain why she failed to notify Defendants’ Legal Department of the apparent demand for arbitration fees from AAA or contact the AAA herself to inquire about the email’s bona fides.  Even if the overnight mailing to Defendants was somehow misdirected or misplaced, the email to Ms. Barmasse-Gray plainly notified Defendants of their obligation to pay the requisite arbitration fees and triggered their obligation to make a timely payment. 

 Although the issue of whether the plaintiff had complied with the notice requirements in the arbitration agreement were not at issue in Espinoza, the Court of Appeal in that case unambiguously held that the time to pay arbitration fees begins to run from receipt of the invoice. (Espinoza, supra, 83 Cal.App.5th at 774.) Moreover, the prerequisite that the employee must meet the filing requirements necessary to initiate arbitration before an invoice must be issued refers in context to the requirements set by the arbitration provider, not the arbitration agreement. In fact, the entirety of subdivision (a)(2) on its face imposes duties on the provider to ensure full and complete invoices are timely provided. Defendants cite no authority standing for the position that they are relieved of their obligations under this statute because of some error by Plaintiff. No such provision is present in the statute, and to the contrary, Espinoza categorically states that the triggering event under section 1281.97 “is nothing more than nonpayment of fees within the 30-day period.” (Espinoza, supra, 83 Cal.App.5th at 776.) Applying a strict construction to the statute, the Espinoza Court rejected the employer’s argument that it should be excused from the harsh consequences of the statute because its late payment was inadvertent and due to a clerical error.  (Id., at pp. 776-777.) 

Under Espinoza, the result here is straightforward. Defendants received the invoice on January 6, 2023, and failed to pay the arbitration fees within 30 days. The excuse offered based on Ms. Barmasse-Gray’s skepticism about the email’s authenticity amounts to nothing more than the same kind of “clerical error” that was disregarded by the Court in Espinoza.  Defendants have therefore waived their right to compel arbitration as a matter of law.  

CONCLUSION:

            Accordingly, Defendants’ Motion to Compel Arbitration is DENIED.

            Moving Parties to give notice.

IT IS SO ORDERED.

Dated:  October 18, 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.