Judge: Thomas S. Mcconville, Case: 2022-01291105, Date: 2023-07-31 Tentative Ruling

Defendants Tesla, Inc.’s & Ra’Na Ilkhan’s Motion to Compel Arbitration and Stay Action is GRANTED. (See Code Civ. Proc. § 1281.2.)

Defendants met their initial evidentiary burden to show: (1) The existence of written agreement to arbitrate; (2) A demand to arbitrate and refusal by the party opposing arbitration; and (3) Proof that the arbitration agreement covers the dispute at issue. (Flesch Dec. Exh. A;  Mansouri v. Superior Court (2010) 181 Cal.App.4th 633).    

Plaintiff failed to meet her shifted burden to establish, based on admissible evidence, that any of the exceptions to arbitration apply. (See Correctional Peace Officers Ass’n v. State of Calif. (2006) 142 Cal.App.4th 198, 205, and Rowland v. PaineWebber, Inc. (1992) 4 Cal.App.4th 279, 285).

Plaintiff’s evidence of her lack of understanding  of the on-boarding documentation is without merit.     

“Mutual assent is determined under an objective standard applied to the outward manifestations or expressions of the parties…” (Alexander v. Codemasters Group Limited (2002) 104 Cal.App.4th 129, 141). “A party’s acceptance of an agreement to arbitrate may be express, as where a party signs the agreement.” (Pinnacle Museum Tower Assn. v. Pinnacle Market Development (US), LLC (2012) 55 Cal.4th 223, 236).

Thus, “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.” (Randas v. YMCA of Metropolitan Los  Angeles (1993) 17 Cal.App.4th 158, 163 [internal quotations marks and citations omitted]).

Plaintiff provides no evidence establishing that she asked anyone at Tesla to explain the agreement, or that she was not given sufficient to time to consult with legal counsel or anyone else concerning the terms in the offer letter that she did not understand. Likewise, she fails to present evidence establishing that she advised Tesla that she did not understand any of the offer letter terms before signing it. (See Fields v. Blue Shield of California (1985) 163 Cal.App.3d 570, 578 [“It is a general rule a party is bound by contract provisions and cannot complain of unfamiliarity of the language of a contract”]).

As for unconscionability, there are 2 parts:  procedural and substantive.  The court finds that it is essentially undisputed that the plaintiff’s employment with Tesla was conditioned upon her execution of an arbitration agreement, and therefore susceptible to procedural unconscionability challenges. However, the degree of procedurally unconscionability is minimal and the mere fact that it is a contract of adhesion does not alone render it unenforceable. (See McManus v. CIBC World Markets Corp. (2003) 109 Cal.App.4th 76, 91.) Thus the court finds a minimal amount of procedural unconscionability.

Plaintiff fails to make an evidentiary showing of substantive unconscionability. In the employment arbitration setting, the California Supreme Court in Armendariz v Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83, set forth five requirements for the enforcement of agreements requiring the arbitration of statutory claims in the employment context: (1) a neutral arbitrator; (2) more than minimal discovery; (3) a written award; (4) availability of all types of relief that would otherwise be available in court; and (5) that employees not be required to pay unreasonable costs or arbitration fees. (Armendariz, 24 Cal.4th at 102.)  The court finds that the arbitration clause in the offer letter to plaintiff complies with the requirements of Armendariz.

Plaintiff points to an “Employee Non-Disclosure and Inventions Assignment Agreement” attached to her declaration as the basis for a finding of substantive unconscionability. (Katouzian Dec. Exh. 1.) Plaintiff does not testify that she agreed to or signed the “Employee Non-Disclosure and Inventions Assignment Agreement,” and the exhibit is not signed by anyone.

The Offer Letter refers to a “Proprietary Information and Inventions Agreement”, not a “Employee Non-Disclosure and Inventions Assignment Agreement.” (Offer Letter pg. 3). Thus, it is unclear whether: (i) plaintiff agreed to or executed the document upon which her arguments are based, and (ii) whether the Offer Letter is referring to the same additional on-boarding document. As plaintiff has the burden on proving both procedural and substantive unconscionability, she fails to show that the Offer Letter containing the arbitration agreement is substantively unconscionable.

Even if the plaintiff could establish that she executed the “Employee Non-Disclosure and Inventions Assignment Agreement” and that the “Employee Non-Disclosure and Inventions Assignment Agreement” and “Proprietary Information and Inventions Agreement” referenced in the Offer Letter are the same agreement, plaintiff still cannot show substantive unconscionability.

The court finds that Civil Code § 1642 does not require the court to treat the Offer Letter and  “Employee Non-Disclosure and Inventions Assignment Agreement” as a single contract. Whether two agreements constitute a single contract, made as part of substantially one transaction, so as to be taken together, depends on the circumstances and intent of the parties. (See Subaru of America, Inc. v. Putnam Automotive, Inc. (2021) 60 Cal.App.5th 829, 842-43). Plaintiff’s evidence fails to show that the two agreements were made as part of substantially one transaction.

Additionally, the two agreements address fundamentally different matters. The Offer Letter contains the terms and conditions of plaintiff’s employment with Tesla, including arbitration of any employment dispute. The “Employee Non-Disclosure and Inventions Assignment Agreement” has the purpose of protecting Tesla’s rights in its intellectual property. Plaintiff’s claims of violation of state and federal laws governing her employment have nothing to do with Tesla’s rights in its IP.  Finally, the Offer Letter expressly says that plaintiff and Tesla can go to court, instead of arbitration, should a dispute arise under the “Proprietary Information and Inventions Agreement”—distinguishing the facts of this case from Lange v. Monster Energy Co. (2020) 46 Cal. App. 5^th 436. 

But even if plaintiff did show somehow that the Offer Letter and the “Employee Non-Disclosure and Inventions Assignment Agreement” constituted a single agreement, then the court would refuse to enforce the unconscionable provisions.  (Cal Civ. Code 1670.5(a); Armendariz, 24 Cal. at 121-122.).  Plaintiff’s arguments on unconscionability take aim at the “Employee Non-Disclosure and Inventions Assignment Agreement” (Opp. at 8-14), so the court would order that section stricken.

Based upon the foregoing, plaintiff fails to meet her burden to demonstrate grounds to deny arbitration.

Plaintiff’s request for judicial notice is granted as to Item No. 2 and denied as to Item No. 1.

Defendant’s request for judicial notice is denied, except as to Item No. 4. (EC 451(a)[court shall take notice of decisional law]).

The rulings of state and federal trial courts have no precedential value here. A document must be relevant for the court to take judicial notice of it.  (See Superior Court v. County of Mendocino (1996) 13 Cal.4th 45, 59, fn. 7.) Here the rulings of various trial courts on similar motions, but with different parties and different evidence are really not relevant to the issues framed by this motion. Judicial notice is limited to the existence of, filing of, and legal effect of the appellate opinion, but not as to the truth of factual matters stated therein.

This action is ordered stayed pending conclusion of arbitration. The court sets an arbitration status conference for January 22, 2024 at 9:00 a.m. in Department C-28.

Defendants shall give notice.