Judge Thomas D. Long, Case Number: 22STCV25134, Date: 2023-07-11 Tentative Ruling

On August 3, 2022, Plaintiff Jane Doe filed this action against Defendants Dick’s Sporting Goods Inc., Quincy Gomez, and Jennifer (last name unknown). The Complaint alleges (1) sexual battery; (2) gender violence; (3) civil rights violation; (4) sexual harassment; (5) unlawful retaliation; (6) unlawful discrimination; (7) wrongful termination in violation of public policy; (8) wrongful termination; (9) failure to prevent harassment, discrimination, and retaliation; (10) unlawful retaliation; (11) intentional infliction of emotional distress; (12) negligent supervision and retention; and (13) declaratory and injunctive relief.

On May 3, 2023, Dick’s Sporting Goods Inc. (“Defendant”) filed a motion to compel arbitration.

When seeking to compel arbitration of a plaintiff’s claims, the defendant must allege the existence of an agreement to arbitrate. (Condee v. Longwood Management Corp. (2001) 88 Cal.App.4th 215, 219.) The burden then shifts to the plaintiff to prove the falsity of the agreement. (Ibid.) After the Court determines that an agreement to arbitrate exists, it then considers objections to its enforceability. (Ibid.)

The Court must grant a petition to compel arbitration unless the defendant has waived the right to compel arbitration or if there are grounds to revoke the arbitration agreement. (Ibid.; Code Civ. Proc., § 1281.2.) Under California law and the Federal Arbitration Act, an arbitration agreement may be invalid based upon grounds applicable to any contract, including unconscionability, fraud, duress, and public policy. (Sanchez v. Western Pizza Enterprises, Inc. (2009) 172 Cal.App.4th 154, 165-166.)

Plaintiff electronically signed an Arbitration Agreement in connection with her employment with Defendant. (Forish Decl. ¶¶ 4-6, 11-12.) Defendants provide a copy of the arbitration agreement. (Forish Decl., Ex. B [“Arbitration Agreement”]; see also Forish Decl., Ex. E.) Through the Arbitration Agreement, the parties agreed that “any and all disputes, claims or controversies arising out of Employee’s application for employment, the employment relationship between the parties, or the termination of that relationship shall be resolved by final and binding arbitration and not by way of court or jury trial.” The Arbitration Agreement “covers any claims that the Company may have against Employee, or that Employee may have against the Company or against any of its officers, directors, employees, or agents (all of whom may enforce this Agreement).” Plaintiff electronically signed this agreement. (See Forish Decl. ¶¶ 8-12; Plaintiff Decl. ¶¶ 5, 7.)

Plaintiff argues that she did not actually agree to the Arbitration Agreement because she did not know its terms and Defendant “failed to disclose the ‘contract terms’ by misrepresenting the actual terms, effectively concealing those terms by directing Plaintiff not to read it, and denying Plaintiff the ability to ‘understand’ what she was agreeing to do.” (Opposition at p. 5.) Plaintiff also argues that the Arbitration Agreement is void because it was obtained through fraud or undue influence. (Opposition at pp. 5-6.)

According to Plaintiff, “Lizette was being rushed to complete onboarding and get all of us new hires on the floor.” (Plaintiff Decl. ¶ 3.) While Plaintiff was completing her digital onboarding forms, Lizette described the Arbitration Agreement—“to the best of [Plaintiff’s] memory”—as: “This part is just in case a customer tries suing Dick’s, and you’re someone they are suing as well, Dick’s can represent you. If you don’t agree to this, you won’t be represented by Dick’s, and you’d have to get a lawyer yourself. Since I [Lizette] already went over it with you, you don’t need to read it and can go on to the next section.” (Plaintiff Decl. ¶ 6.) Plaintiff therefore “complied with her instructions and continued to the next section,” but she “did not know what the word ‘arbitration’ meant and had no reason to believe that Lizette was misstating the contents of the Arbitration Agreement.” (Plaintiff Decl. ¶¶ 6-7.)

Plaintiff does not set forth any facts to support undue influence by Lizette or excessive pressure to persuade Plaintiff to sign the Arbitration Agreement. Plaintiff only “believed what was represented to [her] and believed [she] was merely executing a document to relieve [her] from getting [her] own attorney if [Defendant] got sued and [Plaintiff] did as well.” (Plaintiff Decl. ¶ 8.) She “complied because [she] was a new hire and trusted Lizette.” (Plaintiff Decl. ¶ 8.) However, this does not show “‘the use of excessive pressure by a dominant person over a servient person resulting in the apparent will of the servient person being in fact the will of the dominant person.’” (Robison v. City of Manteca (2000) 78 Cal.App.4th 452, 457.)

Plaintiff’s declaration is also insufficient to show fraud. Defendant “was under no obligation to highlight the arbitration clause of its contract, nor was it required to specifically call that clause to [Plaintiff’s] attention.” (Sanchez v. Valencia Holding Co., LLC (2015) 61 Cal.4th 899, 914.) “[F]raud does not render a written contract void where the defrauded party had a reasonable opportunity to discover the real terms of the contract. A contract may, however, be held wholly void, despite the parties’ apparent assent to it, when, ‘“‘without negligence on his part, a signer attaches his signature to a paper assuming it to be a paper of a different character.”’” (Rosenthal v. Great Western Fin. Securities Corp. (1996) 14 Cal.4th 394, 419-420 (Rosenthal).) “One party’s misrepresentations as to the nature or character of the writing do not negate the other party’s apparent manifestation of assent, if the second party had ‘reasonable opportunity to know of the character or essential terms of the proposed contract.’ (Rest.2d Contracts, § 163, p. 443.) If a party, with such reasonable opportunity, fails to learn the nature of the document he or she signs, such ‘negligence’ precludes a finding the contract is void for fraud in the execution.” (Id. at p. 423.)

Plaintiff admits that she saw the Arbitration Agreement and had an opportunity to read it. She “ha[s] a distinct recollection of the Arbitration Agreement form because [she] had no idea what it was.” (Plaintiff Decl. ¶ 6.) It is Lizette’s customary and typical practice to allow new hires to take their time to read their onboarding documents, and she does not rush them to finish. (Altamirano Decl. ¶¶ 4, 6.) Lizette declares that the statement attributed to her “are just not words I would use—and it does not make any sense.” (Altamirano Decl. ¶ 9.) She has never told a new associate that they do not need to read the documents. (Altamirano Decl. ¶¶ 10-11.)

Additionally, during meet and confer efforts, Plaintiff’s counsel represented to Defendant’s counsel that Plaintiff had “no recollection” of executing the Arbitration Agreement. (Beckwith Suppl. Decl. ¶¶ 3-4.)

Considering the totality of the evidence, Plaintiff had reasonable opportunity to know of the character or essential terms of the Arbitration Agreement, and she did not learn the nature of the document due only to her own negligence. Accordingly, the Arbitration Agreement is not void, and Plaintiff is bound by her signature and assent to the terms. (See Rosenthal, supra, 14 Cal.4th at p. 423.)

Arbitration agreements for FEHA claims must (1) provide for neutral arbitrators, (2) provide for more than minimal discovery, (3) require a written award, (4) provide for all of the types of relief that would otherwise be available in court, and (5) not require employees to pay either unreasonable costs or any arbitrators’ fees or expenses as a condition of access to the arbitration forum. (Armendariz, supra, 24 Cal.4th at p. 102.) These requirements may apply to non-FEHA employment claims. (See Pinela v. Neiman Marcus Group, Inc. (2015) 238 Cal.App.4th 227, 254 [applying the Armendariz factors in the context of claims under the Labor Code].)

The arbitration agreement provides for arbitration with AAA in accordance with the AAA Employment Arbitration Rules, with a neutral arbitrator. “The arbitrator shall have the authority to order such discovery as the arbitrator considers necessary to a full and fair exploration of the issues in dispute, consistent with the expedited nature of arbitration.” The arbitrator will have the power to “award any remedy or relief available under applicable law that would have been available to the parties in their individual capacity had the matter been heard in a court.” The arbitrator will provide a written award with the reasons for the award. Defendant will pay the AAA and arbitrator fees and costs.

For an arbitration agreement to be unenforceable as unconscionable, both procedural and substantive unconscionability must be present. (Armendariz, supra, 24 Cal.4th at p. 114.) “[T]he 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.” (Ibid.)

“The relevant factors in assessing the level of procedural unconscionability are oppression and surprise.” (Orcilla v. Big Sur, Inc. (2016) 244 Cal.App.4th 982, 997.) “‘The oppression component arises from an inequality of bargaining power of the parties to the contract and an absence of real negotiation or a meaningful choice on the part of the weaker party.’” (Abramson v. Juniper Networks, Inc. (2004) 115 Cal.App.4th 638, 656.) “The circumstances relevant to establishing oppression include, but are not limited to (1) the amount of time the party is given to consider the proposed contract; (2) the amount and type of pressure exerted on the party to sign the proposed contract; (3) the length of the proposed contract and the length and complexity of the challenged provision; (4) the education and experience of the party; and (5) whether the party’s review of the proposed contract was aided by an attorney.” (Grand Prospect Partners, L.P. v. Ross Dress for Less, Inc. (2015) 232 Cal.App.4th 1332, 1348, fn. omitted.) “The component of surprise arises when the challenged terms are ‘hidden in a prolix printed form drafted by the party seeking to enforce them.’” (Ibid.) “The adhesive nature of the employment contract requires [the court] to be ‘particularly attuned’ to [Plaintiff’s] claim of unconscionability [citation], but [the court] do[es] not subject the contract to the same degree of scrutiny as ‘[c]ontracts of adhesion that involve surprise or other sharp practices’ [citation].” (Baltazar v. Forever 21, Inc. (2016) 62 Cal.4th 1237, 1245 (Baltazar).)

Plaintiff contends that the Arbitration Agreement is “a misleading adhesion contract because it was a standardized, pre-drafted digital form, made a condition of employment, and offered by [Defendant] on an accept basis only, as instructed by Lizette.” (Opposition at p. 8.) That is incorrect. The Arbitration Agreement states, in all capital letters in the final two paragraphs above the employee signature, “EMPLOYEE OPT-OUT RIGHT: EMPLOYEE HAS THIRTY (30) DAYS AFTER RECEIVING THIS AGREEMENT TO OPT OUT OF ARBITRATION. EMPLOYEE’S DECISION TO OPT-OUT OR NOT OPT-OUT OF THIS AGREEMENT IS COMPLETELY VOLUNTARY. . . .” (Arbitration Agreement at pp. 3-4.) Defendant did not receive an opt-out from Plaintiff. (Forish Decl. ¶ 16.)

Plaintiff argues that the element of surprise “cannot be disputed here” because it is “‘filled with statutory references and legal jargon,’ a multitude of lines, and lengthy sentences up to 17 lines long and over 250 words that are confusing to a layperson . . . [and] is difficult to read and understand for a high school graduate.” (Opposition at p. 9.) The references to statutes and acts are only in the context of what claims are covered. The Arbitration Agreement is a stand-alone document that is clearly titled “AGREEMENT TO ARBITRATE CLAIMS.” (See Sanchez v. Carmax Auto Superstores California, LLC (2014) 224 Cal.App.4th 398, 403 [no oppression or surprise when “[t]he stand-alone arbitration agreement was not hidden, but prominently featured as part of the employment application”].) It uses an easy-to-read font style and size, even in the embedded box in the new hire software. (Forish Decl., Ex. C.) The text fills about three and a quarter standard pages. There is no element of surprise when an Arbitration Agreement is “but three pages long and was in a conventional font. Its title, in large and bold font, was in plain English.” (Torrecillas v. Fitness International, LLC (2020) 52 Cal.App.5th 485, 493.)

Plaintiff also argues that the “reference to the AAA Employment Arbitration Rules is the same as offering Plaintiff the Code of Civil Procedure and asking her to figure it out.” (Opposition at p. 9.) When a challenge to the enforcement of an arbitration agreement has nothing to do with the particular rules, the failure to attach the rules does not affect unconscionability. (Baltazar, supra, 62 Cal.4th at p. 1246.) Here, the challenge has nothing to do with the particular rules. And in any event, the Arbitration Agreement states that the employee can obtain a copy of the rules at the AAA website, via Google, or through a written request to Defendant’s Chief Human Resources Officer. (Arbitration Agreement at p. 2.)

Finally, Plaintiff argues, “Oppression is also significant and bolstered by [Defendant] failing to provide Plaintiff the Arbitration Agreement or copies of any of the other forms she completed that day.” (Opposition at p. 9.) When completing the paperwork, there is an option to click a link for a standalone copy of the Arbitration Agreement, and employees were allowed to print a copy to take home. (Forish Decl. ¶ 8; see Forish Decl., Ex. C.)

“‘Substantive unconscionability pertains to the fairness of an agreement’s actual terms and to assessments of whether they are overly harsh or one-sided. [Citations.] A contract term is not substantively unconscionable when it merely gives one side a greater benefit; rather, the term must be “so one-sided as to ‘shock the conscience.’”’ [Citation.]’” (Carmona v. Lincoln Millennium Car Wash, Inc. (2014) 226 Cal.App.4th 74, 85.)

Plaintiff argues that the Arbitration Agreement lacks mutuality and is one-sided. (Opposition at pp. 9-11.) “[A]n arbitration agreement imposed in an adhesive context lacks basic fairness and mutuality if it requires one contracting party, but not the other, to arbitrate all claims arising out of the same transaction or occurrence or series of transactions or occurrences.” (Armendariz, supra, 24 Cal.4th at p. 120.)

Plaintiff argues the Arbitration Agreement lacks mutuality because “Plaintiff would be subject to an extremely broad list of claims that must be arbitrated, virtually every claim imaginable,” and “absent from the lengthy list of ‘Covered Disputes,’ are claims concerning theft, embezzlement, misappropriation, or other criminal matters,” which “are more typical against employees and not against employers.” (Opposition at p. 10.) However, the Arbitration Agreement actually provides for arbitration of “any claims that the Company may have against Employee, or that Employee may have against the Company . . . .” The next paragraph sets forth a list of Covered Disputes that “include, but are not limited to” various claims. Only claims for workers’ compensation benefits, claims for state disability insurance, claims for unemployment insurance benefits, claims that are statutorily precluded from pre-dispute arbitration agreements, and representative PAGA actions are expressly excluded.

The Arbitration Agreement does not lack mutuality, and it is not unconscionable on this ground.

When a valid arbitration agreement exists, the court must grant the motion to compel arbitration unless a party to the arbitration agreement is also a party to a pending court action with a third party arising out of the same transaction and there is a possibility of conflicting rulings on a common issue of law or fact. (Code Civ. Proc., § 1281.2, subd. (c).) If the court does determine that subdivision (c) applies, the court may order arbitration among the parties who have agreed to arbitration and stay the pending court action or special proceeding pending the outcome of the arbitration proceeding, or may stay arbitration pending the outcome of the court action. (Code Civ. Proc., § 1281.2.)

The first, second, third, fourth, and eleventh causes of action are brought against all Defendants, including non-moving Gomez and Jennifer. Plaintiff’s and Defendant’s arbitration of these issues therefore creates a possibility of conflicting rulings on a common issue of law or fact.

Accordingly, the Court orders that the action against Gomez and Jennifer also be stayed pending the resolution of the arbitration between Plaintiff and Defendant.

The motion to compel arbitration is GRANTED. The entire action is STAYED pending the arbitration of Plaintiff’s claims against Defendant Dick’s Sporting Goods Inc.

A Status Conference re: Arbitration is scheduled for 01/11/2024 at 8:30 AM in Department 48 at Stanley Mosk Courthouse (January 11, 2024). Five court days before, the parties are to file a joint report stating the name of their retained arbitrator and the status of arbitration.

Parties who intend to submit on this tentative must send an email to the Court at SMCDEPT48@lacourt.org indicating intention to submit. Parties intending to appear are encouraged to appear remotely and should be prepared to comply with Dept. 48’s new requirement that those attending court in person wear a surgical or N95 or KN95 mask.

Hon. Thomas D. Long

Judge of the Superior Court