Judge Thomas D. Long, Case Number: 22STCV37753, Date: 2024-03-12 Tentative Ruling

On December 2, 2022, Plaintiff Juan Carlos Barahona filed this action against Defendant arising from his employment.

Defendant’s y Objections to Declaration of Plaintiff Juan Carlos Barahona are overruled.

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 (“FAA”), 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 argues that Defendant delayed bringing this motion and has waived its right to arbitrate. (Opposition at p. 11.)

“‘In determining waiver, a court can consider “(1) whether the party’s actions are inconsistent with the right to arbitrate; (2) whether the ‘litigation machinery has been substantially invoked’ and the parties ‘were well into preparation of a lawsuit’ before the party notified the opposing party of an intent to arbitrate; (3) whether a party either requested arbitration enforcement close to the trial date or delayed for a long period before seeking a stay; (4) whether a defendant seeking arbitration filed a counterclaim without asking for a stay of the proceedings; (5) ‘whether important intervening steps [e.g., taking advantage of judicial discovery procedures not available in arbitration] had taken place’; and (6) whether the delay ‘affected, misled, or prejudiced’ the opposing party.” ’ [Citation.]” (St. Agnes Med. Ctr. v. PacifiCare of Cal. (2003) 31 Cal.4th 1187, 1196 (St. Agnes).) Recently, the United States Supreme Court resolved a circuit split and “held that under the FAA, courts may not ‘condition a waiver of the right to arbitrate on a showing of prejudice.’” (Davis v. Shiekh Shoes, LLC (2022) 84 Cal.App.5th 956, 965 (Davis), quoting Morgan v. Sundance, Inc. (2022) 142 S.Ct. 1708, 1713 (Morgan).) Accordingly, the St. Agnes factors “‘minus the prejudice requirement’ are unaffected by Morgan and remain proper considerations in the waiver inquiry.” (Davis, supra, 84 Cal.App.5th at p. 966.)

Defendant’s conduct is not inconsistent with the right to arbitrate, and the “litigation machinery” has not been substantially invoked. Defendant’s January 20, 2023 answer raised the arbitration agreement as its third affirmative defense. Defendant’s April 12, 2023 Case Management Statement indicated that it was willing to participate in binding private arbitration; Defendant did not check any other boxes in Item 10(c). In Item 15, Defendant stated that it “intends to file a Motion to Compel Arbitration based on Plaintiff’s signed arbitration agreement if Plaintiff’s counsel does not stipulate to same,” and in Item 18, Defendant stated, “This matter is subject to an arbitration agreement. Defendant will move to compel arbitration unless Plaintiff stipulates that no motion to compel is necessary.” Defendant’s August 7, 2023 Case Management Statement contained similar representations. The only discovery propounded in this case has been propounded by Plaintiff, and Defendant objected to the discovery. (Hunter Decl. ¶ 4.) Defendant has not propounded any discovery or filed any motions besides this one. (Hunter Decl. ¶ 5.)

Additionally, some of Defendant’s delay in filing this motion was brought on by Plaintiff’s conduct. In March 2023, Plaintiff’s counsel “conveyed, in both email and during at least one telephone conversation regarding the same, that Plaintiff would agree to stipulate to arbitration without the need to file a motion to compel if Aperto attended the Settlement Conference.” (McBride Decl. ¶ 5.) After the Settlement Conference did not result in a resolution, Plaintiff refused to submit the matter to arbitration and proceeded with discovery. (McBride Decl. ¶ 7.) Plaintiff’s counsel stated that Plaintiff would agree to arbitration if Defendant would agree to a “global mediation” involving parties from other related cases. (McBride Decl. ¶ 8.) Even after that, Plaintiff would not stipulate to arbitration. (McBride Decl. ¶ 9.) Plaintiff cannot rightly contend that Defendant delayed when the delay was caused by Plaintiff’s misrepresentations about his willingness to stipulate after settlement discussions.

The Court concludes that Defendant has not waived its right to compel arbitration.

Defendant contends that on July 30, 2021, Plaintiff electronically signed a Binding Mutual Agreement to Arbitration Claims in connection with his employment onboarding. (Mendiola Decl. ¶ 6.) Defendant provides a copy of the arbitration agreement. (Mendiola Decl., Ex. A [“Arbitration Agreement”].) Through the Arbitration Agreement, the parties agreed to arbitrate “any controversy, claim or dispute between [employee] and Aperto Property Management, Inc. . . . as the sole and exclusive remedy, regardless of whether such dispute is initiated by Company or [employee].” The Arbitration Agreement is electronically signed by Plaintiff and a representative of the company using DocuSign.

Plaintiff argues that he does not recall seeing or signing the Arbitration Agreement. (Opposition at pp. 2-3; Barahona Decl. ¶ 7.) Plaintiff declares that he is unaware of anyone from Defendant contacting him about documents that he needed to sign. (Barahona Decl. ¶ 8.)

When a plaintiff does not recall signing or agreeing to an electronic agreement, the defendant has the burden of proving by a preponderance of the evidence that an electronic signature or acceptance is authentic, i.e., that it was the act of the plaintiff. (Ruiz v. Moss Bros. Auto Group, Inc. (2014) 232 Cal.App.4th 836, 846.)

Defendant’s Human Resources Manager has reviewed Plaintiff’s personnel file. (Mendiola Decl. ¶¶ 2, 5-6.) Plaintiff signed the Binding Mutual Agreement to Arbitrate Claims using DocuSign, the link to which was sent to Plaintiff’s personal email address that he provided. (Mendiola Decl. ¶ 7.) Defendant also provides the DocuSign Certificate of Completion for the Arbitration Agreement, showing that Plaintiff’s electronic signature was from “Juan Carlos Barahona Murillo” with the email address jcarlos197516@yahoo.com. (Mendiola Decl., Ex. B.) Plaintiff did not deny that this is his personal email address. (See Barahona Decl.) Defendant has shown, by a preponderance of evidence, that the electronic signature is from Plaintiff.

Plaintiff also declares that he has a very limited understanding of written English. (Barahona Decl. ¶ 4.) But a party who signed a contract in a language he may not have completely understood cannot avoid enforcement of the arbitration agreement on this basis. (Ramos v. Westlake Services LLC (2015) 242 Cal.App.4th 674, 687 [“If Ramos did not speak or understand English sufficiently to comprehend the English Contract, he should have had it read or explained to him.”]; see also Randas v. YMCA of Metropolitan Los Angeles (1993) 17 Cal. App. 4th 158, 163 [“‘Ordinarily, one who accepts or signs an instrument, which on its face is a contract, is deemed to assent to all its terms, and cannot escape liability on the ground that he has not read it. If he cannot read, he should have it read or explained to him.’ [Citation.]”].)

Defendant has satisfied its burden of showing the existence of an agreement to arbitrate.

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 JAMS in accordance with the JAMS Employment Arbitration Rules and Procedures, using a neutral arbitrator. The parties may conduct discovery to the same extent as would be permitted in a court of law. The arbitrator will issue a written decision and will have full authority to award all remedies that would be available in court. Defendant will pay all arbitrator fees and any arbitration administrative expenses.

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 argues that the arbitration agreement is procedurally unconscionable because it is a contract of adhesion. (Opposition at pp. 4-5.) Arbitration agreements that are “take it or leave it” have some degree of procedural unconscionability. (Ajamian v. CantorCO2e, L.P. (2012) 203 Cal.App.4th 771, 796.) Here, however, the Arbitration Agreement was not a condition of employment, and it states, “I understand that this Agreement is voluntary and my decision to accept or reject it will not impact my employment in any way.” The Arbitration Agreement was not mandatory, even it Plaintiff could not negotiate the terms therein.

Plaintiff also argues that the agreement is complicated and filled with legal jargon, and it does not explain what the FAA is. (Opposition at p. 8.) The Arbitration Agreement is a stand-alone document that is clearly titled “BINDING MUTUAL 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. There are no references to statutes and acts. It is a single page. (See Torrecillas v. Fitness International, LLC (2020) 52 Cal.App.5th 485, 493 [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.”].)

“‘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 is substantively unconscionable because it does not include a copy of the arbitration rules. (Opposition at pp. 8-9.) In Trivedi and the cases cited therein, the unconscionability arguments depended on the arbitration rules in question. (Baltazar, supra, 62 Cal.4th at p. 1246.) Those cases “thus stand for the proposition that courts will more closely scrutinize the substantive unconscionability of terms that were ‘artfully hidden’ by the simple expedient of incorporating them by reference rather than including them in or attaching them to the arbitration agreement.” (Ibid.) 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. (Ibid.) Here, the challenge has nothing to do with the particular rules. And in any event, the Arbitration Agreement states that copies of the rules are available from Defendant’s Human Resources Department, and it includes a link to obtain a copy of the JAMS rules.

Plaintiff argues that Defendant is a repeat player in arbitration. (Opposition at pp. 9-10.) “Various studies show that arbitration is advantageous to employers not only because it reduces the costs of litigation, but also because it reduces the size of the award that an employee is likely to get, particularly if the employer is a ‘repeat player’ in the arbitration system.” (Armendariz, supra, 24 Cal.4th 83, 115.) However, Armendariz dealt with this concern when concluding that when there is mandatory arbitration, the employer cannot generally require the employee to bear any type of expense that the employee would not be required to bear in court. (Id. at pp. 110-111.) As discussed above, the Arbitration Agreement here satisfies this and all other Armendariz factors. There are also “sufficient institutional safeguards, such as scrutiny by the plaintiff’s bar and appointing agencies like the AAA, to protect against corrupt arbitrators.” (Id. at p. 111.)

Finally, Plaintiff argues that the agreement is unconscionable because of the waiver of representative actions, including PAGA actions. (Opposition at p. 10.) But Plaintiff does not bring this action as a representative action under PAGA or as a class action. Even if he had, Plaintiff’s characterization of the Arbitration Agreement is not accurate. The representative waiver is only “to the extent permitted by applicable law, including the Federal Arbitration Act, to utilize representative action procedures in asserting a claim subject to this Agreement.” If the law does not permit waiver of certain representative actions, then those claims cannot be arbitrated pursuant to this agreement. Additionally, “If any provision of this Agreement is found to be unenforceable, the remainder of this Agreement shall remain in full force and effect, as if the unenforceable or invalid provision did not exist.”

In sum, Plaintiff has not shown any procedural or substantive unconscionability, and the Arbitration Agreement should not be invalidated.

Defendant’s motion to compel arbitration is GRANTED. The entire action is STAYED pending the conclusion of the arbitration.

A Status Conference re: Arbitration is scheduled for March 13, 2025 at 8:30 a.m. in Department 48 at Stanley Mosk Courthouse. 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. If all parties in the case submit on the tentative ruling, no appearances before the Court are required unless a companion hearing (for example, a Case Management Conference) is also on calendar.

Hon. Thomas D. Long

Judge of the Superior Court