Judge: Theresa M. Traber, Case: 23STCV26827, Date: 2024-08-26 Tentative Ruling

Case Number: 23STCV26827    Hearing Date: August 26, 2024    Dept: 47

Tentative Ruling

Judge Theresa M. Traber, Department 47

HEARING DATE:     August 26, 2024                     TRIAL DATE: NOT SET

CASE:                         Brianna Ruelas v. Colley Auto Cars, Inc., et al.

CASE NO.:                 23STCV26827           

MOTION TO COMPEL ARBITRATION

MOVING PARTY:               Defendants Colley Auto Cars, Inc.; Colley Ford, CJ Colley, and Gary Millray

RESPONDING PARTY(S): Plaintiff Brianna Ruelas

STATEMENT OF MATERIAL FACTS AND/OR PROCEEDINGS:

            This is an action, filed on November 1, 2023, alleging employment discrimination and wage and hour violations. Plaintiff alleges that she was sexually harassed by the employee Defendants while working for the corporate Defendants and was retaliated against until she was forced to resign.

Defendants move to compel arbitration of this dispute pursuant to an arbitration agreement.

TENTATIVE RULING:

            Defendants’ Motion to Compel Arbitration is GRANTED.

            The Court orders this matter stayed pending resolution of binding arbitration.

            The Court sets a Status Conference Re: Arbitration for February 26, 2025 at 8:30 AM.

DISCUSSION:

Defendants move to compel arbitration of this dispute pursuant to an arbitration agreement.

Plaintiff’s Evidentiary Objections

            Plaintiff raises several evidentiary objections to the Declaration of CJ Colley in support of the Motion. The Court rules on these objections as follows:

            Objection No. 1: OVERRULED. These statements are matters within the declarant’s personal knowledge on their face and are relevant to lay foundation for subsequent testimony.

            Objection No. 2: OVERRULED. These statements are matters within the declarant’s personal knowledge on their face and are relevant to lay foundation for subsequent testimony.

            Objection No. 3: OVERRULED. These statements are matters within the declarant’s personal knowledge on their face and are relevant to lay foundation for subsequent testimony.

            Objection No. 4: OVERRULED. These statements are facially relevant. The declarant has explained through his personal knowledge how the records are kept. The statements are not hearsay nor are they describing the contents of writings which are at issue on this motion. These statements are not speculative.

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.)

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.) An electronic record or signature is attributable to a person if it was the act of the person. (Civ. Code § 1633.9(a).) The act of the person may be shown in any manner. (Id.) As described by the Court of Appeal, “the burden of authenticating an electronic signature is not great.” (Ruiz v. Moss Bros. Auto Group, Inc. (2014) 232 Cal.App.4th 836, 844.)

            Defendants have provided a copy of a “Comprehensive Agreement: Employment At-Will and Arbitration” between Plaintiff and Defendant Colley Ford which appears to bear Plaintiff’s wet signature dated November 21, 2019. (Declaration of CJ Colley ISO Mot. Exh. A.) Defendants have also presented evidence that Colley Ford is not an independent entity but an alias under which Colley Auto Cars Inc. does business. (Colley Decl. ¶ 2.) Plaintiff does not dispute the genuineness of the agreement. The Court therefore finds that Defendants have demonstrated that Plaintiff signed an agreement to arbitrate with Defendant Colley Auto Cars, Inc., doing business as Colley Ford.

Applicability of 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 arbitration under the agreement shall be conducted “under the Federal Arbitration Act.” (Colley Decl. Exh. A ¶ 2.) 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 substantive 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.

Third-Party Right to Compel Arbitration

            Defendants argue that the employee defendants are also entitled to compel arbitration as intended third-party beneficiaries.

“Someone who is not a party to a contractual arbitration provision generally lacks standing to enforce it.” (Cohen v. TNP 2008 Participating Notes Program, LLC (2019) 31 Cal. App. 5th 840, 856 [Citations omitted].)  A nonsignatory may enforce an arbitration provision “where they are intended third party beneficiaries or are assigned rights under the contract.”  (Ibid. [Citations omitted].)  This enforcement right is “in Civil Code section 1559, which provides: ‘A contract, made expressly for the benefit of a third person, may be enforced by him at any time before the parties thereto rescind it.’”  (San Diego Hous. Comm'n v. Indus. Indem. Co. (2002) 95 Cal. App. 4th 669, 685.)  “It is well settled, however, that Civil Code section 1559 excludes enforcement of a contract by persons who are only incidentally or remotely benefited by the agreement. [Citations.] The Supreme Court has held: ‘A third party should not be permitted to enforce covenants made not for his benefit, but rather for others. He is not a contracting party; his right to performance is predicated on the contracting parties' intent to benefit him. [Citations.]’”  (Harper v. Wausau Ins. Co. (1997) 56 Cal. App. 4th 1079, 1087.)

            The California Supreme Court addressed the circumstances when a nonsignatory has standing to assert rights under a contract as a third-party beneficiary in Goonewardene v. ADP, LLC (2019) 6 Cal.5th 817.  Under Goonewardene, a non-party to a contract is a third party beneficiary if demonstrates “not only (1) that it is likely to benefit from the contract, but also (2) that a motivating purpose of the contracting parties is to provide a benefit to the third party, and further (3) that permitting the third party to [assert rights under the contract] against a contracting party is consistent with the objectives of the contract and the reasonable expectations of the contracting parties.”  (Id., at p. 821.) 

            Here, the Arbitration Agreement expressly states that it encompasses “any claim, dispute, and/or controversy that either [Plaintiff] may have against [Colley Ford] (or its owners, directors, officers, managers, employees agents), or [Colley Ford] may have against [Plaintiff.]” (Colley Decl. Exh. A ¶ 2.)  This language plainly establishes all three Goonewardene factors on its face since Plaintiff’s claims against Defendants Colley, Millray, and Doe arise entirely out of their relationship as fellow employees of the same company. (See generally, Complaint.)  

Exclusion of Sexual Harassment Claims from Arbitration

            Plaintiff also contends that her claims for sexual harassment may not be compelled to arbitration 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.) 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.)

            Defendants urge the Court to adopt the view that a dispute or claim arises when the alleged sexual harassment occurred. (Reply p.5:20-22.) In opposition, Plaintiff relies on Kader v. Southern California Medical Center, Inc. (2024) 99 Cal.App.5th 214 to argue that when a dispute arises is a “fact-specific inquiry” based on the standard that “[a] dispute arises when one party asserts a right, claim, or demand, and the other side expresses disagreement or takes an adversarial posture.” (Id. at p.222, quoting Famuyide v. Chipotle Mexican Gril, Inc. (D.Minn., Aug. 31, 2023, No. CV 23-1127 (DWF/ECW) 2023 WL 5651915, at *3, *8; see also Hodgin v. Intensive Care Consortium, Inc. (S.D. Fla., Mar. 31 2023, No. 22-81733-CV) 666 F.Supp.3d 1326, 1329-30 [relied on in Kader]; Silverman v. DiscGenics, Inc. (D. Utah, Mar. 13, 2023, No. 2:2CV000354-JNP-DAO) 2023 WL 2480054, at *2[relied on in Kader].)

            The Court need not resolve the conflict about how to interpret the EFAA, because even under the most liberal Kader standard, Plaintiff’s sexual harassment dispute arose before the enactment of the Act. As her Complaint makes clear, Plaintiff reported the harassment and discriminatory treatment she allegedly suffered to Defendants’ human resources officer on February 3, 2021. (Complaint ¶ 21.) Defendants responded to that complaint, and to her request to be placed on leave until her transfer took effect, by revoking her promotion, sending her home, and writing her up. (Complaint ¶¶ 23-26.) Consequently, Plaintiff resigned from her position on March 19, 2021. (Complaint ¶ 27.) Applying the fact-specific inquiry dictated by the Kader court, the Court concludes that Plaintiff asserted her rights to fair treatment by complaining to Defendants’ human resources office about harassment and discrimination, and Defendants took an adversarial stance that same month. (Id.) Thus, the Court concludes that the dispute arose between the parties no later than March 2021 – about one year before the EFAA was enacted. Therefore, the EFAA does not apply to this dispute.  

            As Plaintiff offers no other basis for challenging enforcement of the arbitration agreement, Defendants are entitled to compel this matter to binding arbitration.

CONCLUSION:

            Accordingly, Defendants’ Motion to Compel Arbitration is GRANTED.

            The Court orders this matter stayed pending resolution of binding arbitration.

            The Court sets a Status Conference Re: Arbitration for February 26, 2025 at 8:30 AM.

            Moving Parties to give notice.

IT IS SO ORDERED.

Dated:  August 26, 2024                                 ___________________________________

                                                                                    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.