Judge: Upinder S. Kalra, Case: 22STCV02533, Date: 2022-10-04 Tentative Ruling

Case Number: 22STCV02533    Hearing Date: October 4, 2022    Dept: 51

Tentative Ruling

Judge Upinder S. Kalra, Department 51

HEARING DATE:   October 4, 2022

CASE NAME:            Robert Moya v. Ralphs Grocery Company

CASE NO.:                22STCV02533

DEFENDANT’S MOTION TO COMPEL ARBITRATION

MOVING PARTY: Defendant Ralphs Grocery Company

RESPONDING PARTY(S): Plaintiff Robert Moya

REQUESTED RELIEF:

1.      An order compelling Plaintiff to arbitrate the claims

2.       An order staying the proceedings

TENTATIVE RULING:

1.      Motion to Compel Arbitration is GRANTED.

2.      Motion to Stay the Proceedings is GRANTED.

STATEMENT OF MATERIAL FACTS AND/OR PROCEEDINGS:

On January 21, 2022, Plaintiff Robert Moya (“Plaintiff”) filed a complaint against Defendant Ralphs Grocery Company dba Ralphs Grocery Company of Ohio and Does 1 through 99 (“Defendant”). The complaint alleged ten causes of action: (1) FEHA Discrimination: Disparate Impact, (2) FEHA Discrimination: Failure to Provide a Reasonable Accommodation, (3) FEHA Discrimination: Failure to Engage in Interactive Process, (4) FEHA Retaliation, (5) FEHA Failure to Prevent Discrimination or Retaliation, (6) Wrongful Discharge in Violation of Public Policy, (7) Unpaid Wages, (8) Inaccurate Pay Stubs, (9) Waiting-Time Penalties, and (10) Failure to Indemnify Employee. The complaint alleges that the Plaintiff was hired by Defendants and placed on probation. During his time working for Defendants, the Plaintiff took time off in compliance with COVID-19 protocols. However, Plaintiff was later informed of the Defendant’s intent to terminate based on excessive absences. This was appealed and Plaintiff was reinstated but placed on probation. While at work, Plaintiff suffered an asthma attack at work and paramedics were called. Defendants informed the Plaintiff was to go home and was later terminated.

Defendant’s current Motion to Compel Arbitration was filed on July 8, 2022. Plaintiff’s opposition was filed on September 20, 2022. Defendant’s reply was filed on September 27, 2022.

LEGAL STANDARD

Motion to Compel Arbitration – Under California law, the trial court has authority to compel arbitration pursuant to Code Civ. Proc. §1281.2 where a written agreement for such arbitration exists and one of the parties refuses to arbitrate.  Specifically, the statute provides that, “[o]n petition of a party to an arbitration agreement alleging the existence of a written agreement to arbitrate a controversy and that a party thereto refuses to arbitrate such controversy, the court shall order the petitioner and the respondent to arbitrate the controversy if it determines that an agreement arbitrate the controversy exists.”  The statute further sets forth four grounds upon which the trial court may refuse to compel arbitration: (a) the right to compel arbitration was waived, (b) recission of the agreement, (c) there is a pending action or special proceeding with a third party, arising out of the same transaction; and (d) petitioner is a state or federally chartered depository institution.

“[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. 

ANALYSIS:

As the moving party, Defendant bears the initial burden of establishing the existence of a valid arbitration agreement.  Id. Upon establishing the existence of such an agreement, the burden shifts to the Plaintiff to prove that there are valid grounds for contesting arbitration by a preponderance of the evidence.  Id.

A.     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).)   

1.      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 the existence of an arbitration agreement, Defendant provides the agreement attached to the Declaration of Renee Gonzalez, a Human Resources Manager for the Kroger Co. Supply Chain. (Dec. Gonzlez, Ex. D.)[1] Exhibit D contains the agreement, the “Dispute Resolution Agreement.” It contains the following provisions:

“Except as it otherwise provides, this Agreement applies to any dispute arising out of or related to Employee’s employment with Ralphs Grocery Company or one of its affiliates, subsidiaries or parent companies (“Company”) or termination of employment and survives after the employment relationship terminates.” (Dec. Gonzalez, Ex. D, ¶ 1)

Here, Defendant has met its initial burden because it has attached the agreement. “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.”” (Gamboa v. Northeast Community Clinic (2021) 72 Cal.App.5th 158, 165.) Moreover, under Rule of Court Rule 3.1330, a copy of the agreement must be attached and incorporated by reference. Here, Defendant has done so.

“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.” (Gamboa, supra, 72 Cal.App.5th at pg. 165.) Plaintiff contends that there was no mutual assent to the agreement. Specifically, Plaintiff argues that the agreement was hidden within other safety documents and was misled into signing the documents. (Dec. Moya ¶ 3-7.) Asserting that a party did not sign an agreement is a valid basis to dispute the existence or validity of an agreement (Gamboa, supra, 72 Cal.App.5th at pg. 165.)

After an opposing party successfully refutes the existence of the agreement, such as contesting signing the document, the burden shifts back to the moving party to establish by a preponderance of the evidence that the agreement is valid. (Id.) Plaintiff’s only argument about the validity of the agreement is that he was unaware he signed the agreement.

Defendant has sufficiently established the required foundation for the agreement. In response, the supplemental declaration of Tiffany Villa, an HR Manager, provides a detailed account of the orientation process, including a “page-by-page review of the employee manual.” (Supp. Dec. Villa, ¶ 9.) During this process, each of the documents contained within the manual were reviewed and had to be signed by the employee, a process which takes three to four hours. (Id.) After a reviewing the documents, Ms. Villa gave the employees the same documents again for the new employee to review and to sign. (Id. at ¶ 10.)

The Court has considered the contention that Plaintiff did not recall receiving an arbitration agreement. Moreover, the Court has considered the supplemental declaration of Tiffany Villa, which describes the orientation process in detail. The Court is convinced, by a preponderance of the evidence, that Plaintiff did receive and sign the arbitration agreement during the orientation process. Thus, notwithstanding Plaintiff’s claim denying signing the Arbitration Agreement, the Court finds that Defendant has met its burden by a preponderance of the evidence establishing the existence of a valid agreement between the parties.

2.      Covered by Agreement

Defendant contends that the claims raised in the Plaintiff’s complaint fall within the scope of the arbitration agreement. Plaintiff’s complaint is based on various FEHA violations, such as discrimination, retaliation, wrongful discharge and various wage violations.

Plaintiff’s motion does not contest whether the claims in the compliant are covered by the Agreement. Even still, a review of the complaint and the agreement attached to the Gonzalez Declaration as Exhibit D, the agreement covers disputes that arise out of Plaintiff’s employment. Here, the claims directly arise out of the employment practices and alleged wrongs committed by Defendant while Plaintiff was working for Defendant. Therefore, because the agreement provides that disputes relating to employment and cessation of employment, the claims are covered and fall within the scope of the Agreement.

1.      Defenses to Arbitration

Once it is determined that a valid arbitration agreement exists, the burden shifts to the opposing party to “prove by a preponderance of the evidence any defense to the petition.” (Lacayo v. Catalina Restaurant Group Inc. (2019) 38 Cal.App.5th 244, 257, review denied (Nov. 13, 2019)). Plaintiff argues that the agreement is unconscionable.

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).

a.       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). Plaintiff contends that agreement was procedurally unconscionable because the agreement was presented as a “misleading, take it or leave it option without meaningful negotiation by pressuring Plaintiff to immediately sign the arbitration agreement in a stack of documents.” (Opp. 7: 3-5.)

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). The agreement was not a surprise; the document has a large heading with “Ralphs Grocery Company Dispute Resolution Agreement” in bold at the top. (Dec. Gonzalez, Ex. D.) Further, Defendant has also provided Exhibit C, which is the checklist signed by Plaintiff indicating he received the documents listed, which includes the dispute resolution agreement. (Id. at Ex. C.) Additionally, the supplemental declaration of Tiffany Villa describes the detailed process that Plaintiff, as a new employee, underwent. (Dec. Villa.)

Yet ‘a finding of procedural unconscionability does not mean that a contract will not be enforced, but rather that courts will scrutinize the substantive terms of the contract to ensure they are not manifestly unfair or one-sided.’” (Sanchez v. Valencia Holding Co., LLC (2015) 61 Cal.4th 899, 915).

b.      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 fails to comply with the Armendariz requirements of fairness. Specifically, the agreement does not provide for neutral arbitrator because “it limits the location of the arbitration proceeding to a location within 45 miles of the place where Plaintiff last worked.” (Opp. 5: 16-17.) Additionally, the agreement does not provide for adequate discovery. (Id. at 20-21.) Further, the agreement denies Plaintiff “availability of all types of relief…[as it] den[ies] Plaintiff the opportunity to bring  PAGA claim.” (Opp. 6: 9-11.) “With respect to FEHA claims, our Supreme Court has outlined certain minimum requirements which must be met to ensure the preservation of statutory rights in an arbitral forum: (1) the agreement must provide for neutral arbitrators, (2) the agreement may not limit remedies provided under the statute, (3) there must be sufficient discovery to adequately arbitrate the employee's statutory claim, (4) there must be a written arbitration decision and judicial review sufficient to ensure the arbitrator complied with the statutory requirements, and (5) the employer must pay all costs unique to arbitration.” (Ramos v. Superior Court (2018) 28 Cal.App.5th 1042, 1059, as modified (Nov. 28, 2018)).

The requirements in Armendariz and Ramos have been met. The agreement provides for a neutral arbitrator; the argument that limiting the distance to 45 miles is disingenuous as there are many potential arbitrators within that area. (Dec. Gonzalez, Ex. D, Sec. 1.) Plaintiff’s only argument concerning discovery that the agreement only provides for “adequate” discovery also fails. The Court in Mercuro stated, ““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.) Thus, the agreement allows for adequate discovery. (Dec. Gonzalez, Ex. D, Sec. 2.) Lastly, Plaintiff’s claim concerning PAGA remedies is irrelevant because Plaintiff did not raise a PAGA claim. Moreover, the other requirements have been met: there is no limitation of remedies (Dec. Gonzalez, Ex. D, Sec. 5), judicial review of the written award is provided (Id.), and Defendant will pay for the costs of arbitration. (Id. at Sec. 4.)

Even if the adhesive nature of the contract is sufficient to establish some procedurally unconscionability, the lack of substantive unconscionability is dispositive. Employing the sliding scale that this court must utilize, the minimal amount of procedural unconscionability coupled with the lack of substantive unconscionability, is not sufficient to render the arbitration agreement invalid. In other words, the arbitration agreement is valid and enforceable.

B.     AB 51 Preclusion

Lastly, Plaintiff argues that Assembly Bill 51 precludes the agreement. This bill has determined that arbitration agreements that are required as a condition of employment are a crime. However, on its face, “Nothing in this section is intended to invalidate a written arbitration agreement.” (Labor Code section 432.6, subdivision (f).)

MOTION TO STAY THE PROCEEDINGS

Defendant argues that under CCP 1281.4, an action must be stayed to resolve whether the matter should be subject to arbitration. If the matter is subject to arbitration, then that proceedings must be stayed until the arbitration is complete.

Because the arbitration is valid and the motion to compel arbitration is GRANTED, the Motion to Stay the Proceedings is GRANTED.

Conclusion:

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

Motion to Compel Arbitration is GRANTED.

            Motion to Stay the Proceedings is GRANTED. OSC re: Status of Arbitration April 12, 2023 at 8:30 AM.

Moving party is to give notice.

IT IS SO ORDERED.

Dated:             October 4, 2022                      _________________________________                                                                                                                  Upinder S. Kalra

                                                                                    Judge of the Superior Court