Judge: Upinder S. Kalra, Case: 21STCV47142, Date: 2022-08-17 Tentative Ruling

Case Number: 21STCV47142    Hearing Date: August 17, 2022    Dept: 51

Tentative Ruling

Judge Upinder S. Kalra, Department 51

HEARING DATE:   August 17, 2022                                             

CASE NAME:            Chris Prell v. The Lobster LLC

CASE NO.:                21STCV47142

DEFENDANT’S MOTION TO COMPEL ARBTRATION AND STAY THE PROCEEDINGS

MOVING PARTY: Defendant The Lobster, LLC

RESPONDING PARTY(S): Plaintiff Chris Prell

REQUESTED RELIEF:

1.      An order compelling Plaintiff to arbitration

2.      An order staying the proceedings

TENTATIVE RULING:

The Motion to Compel Arbitration is Granted.

STATEMENT OF MATERIAL FACTS AND/OR PROCEEDINGS:

On December 28, 2021, Plaintiff Chris Prell (“Plaintiff”) filed a complaint against Defendant The Lobster, LLC (“Defendant”). The complaint alleged various FEHA violations, such as discrimination harassment based on age and medical disability, retaliation, and failure to engage in the interactive process, as well as defamation. Plaintiff alleges that while working for Defendant he had a medical condition that required medical leaves of absences. Defendant failed to accommodate Plaintiff’s work modifications, such as a modified schedule of assistance with duties. Additionally, Defendant also discriminated against and wrongful terminated older workers.

ON December 29, 2021, Plaintiff filed a First Amended Complaint.

On May 16, 2022, Defendant filed this current Motion to Compel Arbitration. Plaintiff’s Opposition was filed on August 4, 2022. Defendant’s reply was filed on August 9, 2022.

LEGAL STANDARD

Under CCP §1285, “any party to an arbitration in which an award has been made may petition the court to confirm, correct or vacate the award.  The petition shall name as respondents all parties to the arbitration and may name as respondents any other persons bound by the arbitration award.”  Under CCP §1285.4, “A petition under this chapter shall: (a) Set forth the substance of or have attached a copy of the agreement to arbitrate unless the petitioner denies the existence of such an agreement. (b) Set forth names of the arbitrators. (c) Set forth or have attached a copy of the award and the written opinion of the arbitrators, if any.”   

“[T]he petitioner bears the burden of proving the existence of a valid arbitration agreement by the preponderance of the evidence . . . .”  Giuliano v. Inland Empire Personnel, Inc. (2007) 149 Cal.App.4th 1276, 1284.  “In determining whether an arbitration agreement applies to a specific dispute, the court may examine only the agreement itself and the complaint filed by the party refusing arbitration [citation]. The court should attempt to give effect to the parties' intentions, in light of the usual and ordinary meaning of the contractual language and the circumstances under which the agreement was made.”  Weeks v. Crow (1980) 113 Cal.App.3d 350, 353.  “To determine whether a contractual arbitration clause requires arbitration of a particular controversy, the controversy is first identified and the issue is whether that controversy is within the scope of the contractual arbitration clause.”  Titolo v. Cano (2007) 157 Cal.App.4th 310, 316.  “Doubts as to whether an arbitration clause applies to a particular dispute are to be resolved in favor of sending the parties to arbitration. The court should order them to arbitrate unless it is clear that the arbitration clause cannot be interpreted to cover the dispute.”  California Correctional Peace Officers Ass'n v. State (2006) 142 Cal.App.4th 198, 205.   

“[A] party opposing the petition bears the burden of proving by a preponderance of the evidence any fact necessary to its defense. [Citation.] In these summary proceedings, the trial court sits as a trier of fact, weighing all the affidavits, declarations, and other documentary evidence, as well as oral testimony received at the court's discretion, to reach a final determination.”  Giuliano v. Inland Empire Personnel, Inc. (2007) 149 Cal.App.4th 1276, 1284.

Request for Judicial Notice:

The Court may take judicial notice of the existence of the records, but not the truth of matters asserted in such records. (Sosinsky v. Grant (1992) 6 Cal.App.4th 1548, 1565). As a result, although the court may take judicial notice that the documents exists, the Court may not take judicial notice of the truth of the facts in the documents.

            Additionally, Evidence Code only allows the Court to take judicial notice of certain types of documents. The court may take judicial notice of “official acts of the legislative, executive, and judicial departments of the United States and of any state of the United States,” “[r]ecords of (1) any court of this state or (2) any court of record of the United States or of any state of the United States,” and “[f]acts and propositions that are not reasonably subject to dispute and are capable of immediate and accurate determination by resort to sources of reasonably indisputable accuracy.” (Evid. Code § 452, subds. (c), (d), and (h).) The Evidence Code does not allow the Court to take judicial notice of discovery responses or parts of cases, such as depositions.

Defendants Objections to Declarations:

The Court sustains the following objections:

9 (Declaration of Chris Prell)

18, 20 (Declaration of David Forseth)

21 (Declaration of Michael Cheng)

All other objections are overruled.

ANALYSIS:

Defendant moves to compel the Plaintiff to arbitration.

1.      Existence of Arbitration Agreement:

In determining the enforceability of an arbitration agreement, the court considers “two ‘gateway issues’ of arbitrability: (1) whether there was an agreement to arbitrate between the parties, and (2) whether the agreement covered the dispute at issue.”  (Omar v. Ralphs Grocery Co. (2004) 118 Cal.App.4th 955, 961 (Omar).)   

A.    Agreement Between Parties:

“Arbitration is a product of contract.  Parties are not required to arbitrate their disagreements unless they have agreed to do so.  [Citation.]  A contract to arbitrate will not be inferred absent a ‘clear agreement.’  [Citation.]  When determining whether a valid contract to arbitrate exists, we apply ordinary state law principles that govern contract formation.  [Citation.]  In California, a ‘clear agreement’ to arbitrate may be either express or implied in fact.  [Citation.]”  (Davis v. Nordstrom, Inc. (9th Cir. 2014) 755 F.3d 1089, 1092-1093 (Davis).)   

In support of its motion, Defendant submits a copy of both the 2015 and 2020 Agreement, attached to the Declaration of Luis Garcia, the Operations Manager of Defendant. The Agreement contains the following provision:

Without limitation of the foregoing scope of arbitration and for elucidation purposes, claims subject to arbitration shall include any and all claims for wages, overtime, bonuses, or other compensation; claims for breach of an express or implied contract or covenant, including the duty of good faith and fair dealing; tort claims, including fraud, defamation, malicious prosecution, wrongful discharge, wrongful arrest/wrongful imprisonment, and intentional/negligent infliction of emotional distress; statutory or common law claims for unlawful employment discrimination or harassment (including, without limitation, discrimination or harassment based on race, color, sex, sexual orientation, religion, national origin, ancestry, age, marital status, medical condition, handicap, disability, uniformed service, genetic information, or other unlawful basis); claims for sexual or other unlawful harassment; claims for violation of federal or state constitutional rights; claims for benefits (except where the applicable benefit plan has specified that its claim procedure shall culminate in an arbitration procedure different from this one) and claims for violation of any federal, state or other governmental law, statute, regulation, order, ordinance, or provision, except claims expressly excluded under paragraph 2 of this Agreement.

This evidence is sufficient to establish an agreement to arbitrate the dispute at issue in this action.   

Plaintiff raises various objections. Plaintiff first contends that the 2015 agreement was superseded by the 2020 Agreement. Moreover, the provision under the 2020 agreement is unenforceable under Labor Code § 432.6, which prevents an employment contract from including a waiver of a right, forum, or procedure under a FEHA violation. Because this 2020 agreement, which supersedes the 2015 agreement, was made as a condition of Plaintiff’s employment, it is invalid. Plaintiff also asserts that the FAA does not preempt Labor Code § 432.6, citing to Bonta, where § 432.6 was upheld and the Court determined that Labor Code § 423.6 was not preempted by the FAA. (Chamber of Commerce of United States v. Bonta (9th Cir. 2021) 13 F.4th 766, 775). Lastly, Plaintiff asserts that Defendant has failed to establish the authentication of the agreements; Mr. Garcia’s declaration does not explain how he has personal knowledge of the agreements.

Plaintiff’s contentions fail. On it face, Labor Code § 432.6 has no application to this motion.  “Nothing in this section is intended to invalidate a written arbitration agreement that is otherwise enforceable under the Federal Arbitration Act.” (Cal. Lab. Code § 4326(f).) Not only is the agreement authenticated by Garcia, Plaintiff himself has authenticated it in his declaration and Plaintiff readily admits to signing the agreement.

a.       Unconscionability

In Armendariz, the California Supreme Court stated that when determining whether an arbitration agreement was unconscionable, there is both a procedural and a substantive element. (Armendariz v. Foundation Health Psychcare Service, Inc. (2000) 24 Cal.4^th 82, 114). Plaintiff argues that the agreement is procedurally unconscionable because it is (1) a contract of adhesion and (2) the rules were not attached.

i.                    Procedurally

Courts determine whether an agreement is unconscionable procedurally by looking at surprise and oppression. Oppression is an “inequality of bargaining power, when one party has no real power to negotiate or a meaningful choice. Surprise occurs when the allegedly unconscionable provision is hidden.” (Carmona v. Lincoln Millennium Car Wash, Inc. (2014) 226 Cal.App.4th 74, 84). Examples of contracts that are procedural unconscionable are contracts of adhesions, which is a “standardized contract, which, imposed and drafted by the party of superior bargaining strength, relegates to the subscribing party only the opportunity to adhere to the contract or reject it.” (Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83, 113).

Here, while this may have been a contract of adhesion, as most employment contracts are, this alone does not mean the whole agreement is procedurally unconscionable. “When arbitration is a condition of employment, there is inherently economic pressure on the employee to accept arbitration. This alone is a fairly low level of procedural unconscionability.” (Cisneros Alvarez v. Altamed Health Services Corporation (2021) 60 Cal.App.5th 572, 591). Baltazar v. Forever 21, Inc. (2016) 62 Cal4th 1237 is particularly instructive. There, the plaintiff was presented with a preprinted arbitration agreement that she initially declined to sign but after being told, “ ‘[S]ign it or no job,’ ” (Id. at p. 1241), she signed the agreement. Nonetheless, our Supreme Court found the while the contract was adhesive in nature, the lack of surprise or other offensive practices did not require that the contract did not fall in the range of the spectrum of that require a high degree of scrutiny, noting that “ordinary contracts of adhesion . . .  are generally enforced.”(Id. at p. 1244.) Similarly, this contract falls under the ordinary contract of adhesion. As in, Baltazar, Plaintiff actively tried “sought to avoid it, [but] ultimately decided to accept it because [his employer] was not willing to offer the job on other terms.” (Id. at p. 1245.) Just as in Baltazar, Plaintiff was not lied to, manipulated or subject to duress.  He knew what it was, did not want to sign it, but recognizing that he was in risk of losing his job, he agreed to the terms. It may have been a bad bargain, but he knew that at the time. There simply was no surprise as evidenced by the title “Arbitration Agreement” in bold letters at the top and Plaintiff’s active attempt to avoid signing the agreement. And, as Lane v. Francis Capital LLC (2014) 224 Cal.App.4th 676, 691, noted,  “there could be no surprise” when the rules are easily accessed by the Internet. (Lane v. Francis Capital LLC (2014) 224 Cal.App.4th 676, 691).The Agreement provides the URL link to the JAMS rules and procedures and a copy was attached to the actual agreement. (Dec. Garcia, Ex. A and B). Thus, any minimal surprise is negated. Plaintiff’s reliance on Harper v. Ultimo is misplaced (2003) 113 Cal.App.4th 1402, 1407. There, the court found the failure to attach the rules was oppressive in light of significant substantive and procedural unconscionable factors that are absent here. To be sure, here, the agreement explains the procedure as well as what is covered under this agreement. Thus, the agreement while admittedly adhesive in nature, is minimally procedurally unconscionable.

ii.                  Substantively

“Substantive unconscionability pertains to the fairness of an agreement's actual terms and to assessments of whether they are overly harsh or one-sided.” (Carmona v. Lincoln Millennium Car Wash, Inc. (2014) 226 Cal.App.4th 74, 85).

Plaintiff contends that the agreement is substantively unconscionable because (1) the agreement is one-sided, (2) precludes class-wide claims, (3) provides for inadequate discovery, and (4) limit’s attorney’s fees relief.

Plaintiff’s arguments fail. First, the agreement is hardly one-sided and the express language of the agreement does not exclude the claims that Plaintiffs contend are not included. Second, employment arbitration agreements that contains class action waivers are not unconscionable. (AT&T Mobility LLC v. Concepcion (2011) 563 U.S. 333.) Third, the agreement expressly allows for fair and adequate discovery. As the Court stated in Mercuro, “'adequate’ discovery does not mean unfettered discovery and Armendariz itself recognizes an arbitration agreement may require “something less than the full panoply of discovery provided in Code of Civil Procedure section 1283.05.” (Mercuro v. Superior Court (2002) 96 Cal.App.4th 167, 184). Plaintiff’s self-serving declarations of  Prell and Chang that there are more than 10 witnesses that need to be deposed. without an offer of proof is insufficient to demonstrate the discovery rules are unconscionable, particularly in light of the JAMS rule that the arbitrator can grant additional depositions based upon a showing of  “reasonable need.” Plaintiff has not demonstrated a need in counsel’s declaration nor is there a showing that the arbitrator would deny such a request if a need was demonstrated. Fourth, as for Plaintiff’s attorneys’ fees contention, this argument too fails. Plaintiff’s reliance on Trivedi v. Curexo Technology Corp. (2010) 189 Cal.App.4th 387, 394,which was disapproved by our Supreme Court for other reasons in Baltazar, is misplaced.  The Trivedi court disapproved of a mandatory attorney fee and cost provision in favor of the prevailing party since it placed the plaintiff at greater risk than if he litigated in court. Here, this agreement does not include such a provision. Moreover, the JAMS policy indicates that the remedies that are available in law are available under arbitration. In sum, the agreement lacks elements of substantive unconscionability.

Conclusion:

            For the foregoing reasons, the Court decides the pending motion as follows:

The Motion to Compel Arbitration is Granted.

Action is stayed and an OSC Re status of arbitration and/or dismissal is set for March 14, 2023, at 8:30 a.m. in Dept. 51

Moving party is to give notice.

IT IS SO ORDERED.

Dated:             August 17, 2022                      _________________________________                                                                                                                  Upinder S. Kalra

                                                                                    Judge of the Superior Court