Judge Upinder S. Kalra, Case Number: 22STCV04724, Date: 2023-10-31 Tentative Ruling

CASE NAME: Valerie Lynn Smith v. The Buffalo Club Limited Partnership, et al.

MOVING PARTY: Defendants The Buffalo Club Limited Partnership and Brayner Ferri

On February 7, 2022, Plaintiff Valerie Lynn Smith (Plaintiff) filed a Complaint against Defendants The Buffalo Club Limited Partnership and Brayner Ferry (Defendants) with seven causes of action for: (1) sexual battery; (2) sexual harassment; (3) sex discrimination; (4) failure to take all reasonable steps necessary to prevent sexual harassment and discrimination; (5) retaliation; (6) intentional infliction of emotional distress; and (7) wrongful constructive termination in violation of public policy.

According to the Complaint, Plaintiff began working for Defendants as a server and bartender in July 2019. Plaintiff alleges that Defendant Ferry began behaving inappropriately towards her at the outset of her employment. Such alleged behavior included unwanted sexually charged comments and touching as well as after-work phone calls and texting. Plaintiff alleges that if she ignored him, he would not schedule her for work. Plaintiff alleges that in May 2021, she was no longer able to endure the harassment and snapped at Defendant Ferry, who then accused her of doing her check out incorrectly and fired her.

Defendant The Buffalo Club Limited Partnership filed an Answer on December 5, 2022.

Defendants filed the instant motion on August 11, 2023. Plaintiff timely filed an opposition on October 18, 2023. Defendants timely filed a reply on October 24, 2023.

Although the court is unaware of any legal authority which requires a court to rule on evidentiary objections on a motion, except as to a motion for summary motion/adjudication, the Court nonetheless, overrules the objections. [Cal. Code Civ. Proc. (CCP) § 437c(q)] or a special motion to strike [CCP § 425.16 (b)(2); see also, Sweetwater Union High School Dist. v. Gilbane Building Co. (2019) 6 Cal.5th 931, 947-949.]

Under California law, the trial court has authority to compel arbitration pursuant to CCP §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¿(Guiliano).)¿“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, supra, at p. 1284.)¿

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).)¿¿¿

The moving party can meet its initial burden of proving the existence of an arbitration agreement by attaching a copy of the Agreement to this motion bearing the signature of the opposing party. (See Bannister v. Marinidence Opco, LLC (2021) 64 Cal.App.5th 541, 541-543 [“The party seeking arbitration can meet its initial burden by attaching to the petition a copy of the arbitration agreement purporting to bear the¿respondent's signature.”].) Alternatively, the moving party can meet its initial burden by setting forth the agreement’s provisions in the motion. (See Cal. Rules of Court, rule 3.1330; see also Condee v. Longwood Management Corp. (2001) 88 Cal.App.4th 215, 219.)

Here, Defendants met their initial burden because they attached a copy of the Mutual Arbitration Policy (MAP) with Plaintiff’s physical signature. (Declaration of Charles Healy (Healy Decl.) ¶ 2, Exhibit A.)

“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 v. Northeast Community Clinic (2021) 72 Cal. App. 5th 158,165 (Gamboa).) The evidence must be sufficient to create a factual dispute to shift the burden back to the arbitration proponent who retains the ultimate burden of proving, by a preponderance of the evidence, the authenticity of the signature. (Iyere v. Wise Auto Group (2023) 87 Cal.App.5th 747, 755 (Iyere).)

Plaintiff argues that Defendants failed to authenticate her signature because Mr. Healey is not qualified to authenticate it and she does not recall signing the MAP.[1] (Opposition p. 12:6-12; Declaration of Valerie Smith (Smith Decl.) ¶¶ 8, 10.) However, Plaintiff does not challenge that the physical signature is hers, just that she does not recall signing the MAP and that she would not have signed it if she knew it limited her ability to sue Defendants.[2] (Smith Decl. ¶¶ 8, 9, 10.) Under Gamboa, Plaintiff produced evidence to challenge the MAP’s authenticity. However, under Iyere, Plaintiff did not produce evidence challenging the MAP’s authenticity because she acknowledged that she signed a stack of documents but does not remember signing the MAP. (Iyere, supra, at p. 756 [finding no conflict between the plaintiff’s statement that they signed a stack of documents and no longer recall signing those documents two years later.]) Since Plaintiff’s signature is physical, not electronic, she “is capable of recognizing . . . her own personal signature” and her “failure to remember signing is of little or no significance.” (Id. at 0. 757.) Additionally, Defendants provided supplemental evidence to compare Plaintiff’s signature on the MAP to other documents, such as the Sexual Harassment Policy and the House Rules. (Supplemental Healy Decl. ¶ 4, Exhibit B.) The Court personally reviewed the signature on the MAP and various other documents attached Exhibit B. The Court finds that the handwritten printed name and cursive signatures are strikingly similar in all of the documents the Court reviewed.

Accordingly, notwithstanding Plaintiff’s claim denying remembering signing the MAP, the court finds that Defendants have met their burden by a preponderance of the evidence establishing the existence of a valid agreement between the parties.

Therefore, the Defendant has established that the Arbitration Agreement exists.

Defendants contend the MAP covers the subject dispute because Plaintiff filed an employment action that is not otherwise excluded by the MAP. Plaintiff did not directly oppose this argument.[3]

Here, the MAP applies to the instant dispute. First, the MAP states it covers “any existing and all future disputes between you and the Company that relate in any way to your employment.” [Healy Decl., Exhibit A.] Plaintiff’s claim against Defendants concerns her employment with them and is not otherwise carved out.

Plaintiff argues that the court should not compel arbitration because the MAP is unconscionable and Defendants waived arbitration by moving to compel too late.[4]

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)).

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.4th 82, 114 (Armendariz)).

Defendants contend there is no procedural unconscionability because the MAP is clear on its face, it is a separate stand-alone agreement, and was presented to Plaintiff for consideration along with other new hire documents prior to beginning her employment. Plaintiff argues there is substantial procedural unconscionability because there was unequal bargaining power, she was a low-wage worker who desperately needed a job, she did not negotiate its terms, she has no memory of seeing the MAP, no one explained the terms to her, she did not receive a copy of AAA’s rules, and the MAP did not explain the significance of arbitration.

Courts determine whether an agreement is procedurally unconscionable 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 (Carmona).) Examples of contracts that are procedurally unconscionable are contracts of adhesion, 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, supra, at p. 113). “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. (OTO, L.L.C. v. Kho (2019) 8 Cal.5th 111, 126-27 (OTO).)

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). Plaintiff’s argument that it is “unclear” which AAA Rules apply fails because the MAP clearly states the AAA Employment Arbitration Rules “in place at the time of the dispute will govern the procedures used in arbitration.”[5] (Healy Decl., Exhibit A.) Additionally, Plaintiff’s remaining arguments for procedural unconscionability fail under Oto because she claims she felt rushed to sign the onboarding documents because the restaurant needed to open, but did not claim that Defendants stood over her to ensure she hurried. (Smith Decl. ¶¶ 7,12.) Plaintiff did not claim that Defendants did not give her time to consider the MAP. (Smith Decl. ¶¶ 7, 11, 12, 13, 14, 15.) Finally, the MAP is three pages long and is not convoluted with legalese or other needlessly complex terms. (Healy Decl., Exhibit A.) Plaintiff has not otherwise provided evidence of surprise or oppression.

Plaintiff argues the MAP is substantively unconscionable because it lacks mutuality.[6] Defendants argue that the MAP meets the Armendariz factors and the MAP is mutual.

“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, supra, at p. 85). There are five minimum substantive requirements to an enforceable arbitration agreement: (1) neutral arbitrators, (2) more than minimal discovery, (3) written award sufficient for judicial review, (4) all types of relief otherwise available in court, and (5) no unreasonable costs or fees as a condition of access. (Armendariz, supra, at p.102.) When there is little procedural unconscionability, a party opposing arbitration must show substantial substantive unconscionability. (Id. at 114.)

Here, the court agrees with Defendants that the MAP is not substantively unconscionable. First, it meets the Armendariz factors by providing: (1) “an impartial and independent arbitrator”; (2) Discovery is pursuant to the AAA Rules[7]; (3) “the arbitrator shall render a written decision”; (4) “limited to disputes, claims or controversies that a court of law would be authorized to entertain or would have jurisdiction over to grant relief”; and (5) the employee’s “share of such fees and costs shall not exceed an amount equal to your local court civil filing fee.” (Healy Decl., Exhibit A.) As to mutuality, the MAP provides that “you and the Company forego any right either may have to a jury trial on claims relating in any way to your employment.” (Ibid.)[8]

Accordingly, the MAP is not so substantively unconscionable to warrant unenforcement.

Plaintiff contends that Defendant waived the right to compel arbitration. Specifically, Plaintiff argues that Defendant waited two years before filing the motion.

“California courts may refuse to enforce an arbitration agreement “upon such grounds as exist at law or in equity for the revocation of any contract,” including waiver. (Lewis v. Fletcher Jones Motor Cars, Inc. (2012) 205 Cal.App.4th 436, 444.) Further, “a party may be said to have ‘waived’ its right to arbitrate by an untimely demand, even without intending to give up the remedy.” (Id.)

“Specifically, the St. Agnes court identified the following as “factors [that] are relevant and properly considered in assessing waiver claims”: “(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.” ' [Citations.]” (St. Agnes, supra, 31 Cal.4th at p. 1196, 8 Cal.Rptr.3d 517, 82 P.3d 727.) No one of these factors predominates and each case must be examined in context.

In Davis v. Shiekh Shoes, LLC (2022) 84 Cal.App.5th 956 (Davbis), the Court of Appeal affirmed the trial court’s finding of waiver. The Court found that Shiekh’s lengthy delay in moving to compel arbitration, coupled with its request for trial, active participation in discovery, acquiescence to the trial and discovery schedule, and court appearances, the trial court had ample evidence from which to conclude Shiek’s actions were inconsistent with an intent to arbitrate.”(Id. at p. 970.)

A comparison of the facts here to the facts in Davis is warranted. While the delay between the filing of the complaint and the filing of this motion is 18 months, at least ten months of the delay is attributable to Plaintiff for failing to timely serve Corporate Defendant with the Summons on Complaint. As such, the motion was filed by Corporate Defendant nine months after appearing and by the individual two days after appearing.

Defendant has offered a further explanation that explains the delay. In their reply, Corporate Defendant explains that since they filed their answer, the parties were participating in private mediation and had not conducted discovery. (Foster Dec. ¶¶2-3,9.) Moreover, the Court observes that Defendant did indicate in their Answer, in their eighteenth affirmative defense, that they were seeking arbitration. A closer examination of Plaintiff’s December 1, 2022 and August 29, 2023 Case Management Statements corroborate Defendant’s position that mediation was scheduled for May 23, 2023. It appears that shortly after the mediation failed, this motion was filed. Lastly, the Court notes that there have been no other motions filed or litigated by either party.

In sum, Defendant’s reasoned explanation for the delay and their participation in mediation justifiably supports the delay in filing this motion. Most significantly, after mediation failed, Defendants move expeditiously to file this motion. Accordingly, the Court finds that Defendant’s conduct here is substantially different than Sheik’s in Davis, and as such, this record does not support a finding of waiver of the arbitration clause.

[1] The court disagrees with Plaintiff that Mr. Healy cannot authenticate Plaintiff’s signature. Mr. Healy is the custodian of employee records and has been for the past 10 years. (Healy Decl. ¶ 2.)

[2] Plaintiff argues that Defendants have a heightened showing to authenticate her signature. However, the authority she cites pertains to electronic signatures, not physical signatures, because “an individual cannot confirm or deny the authenticity of an electronic signature by viewing a computer printout of the person’s name followed by the word electronic signature.” (Iyere, supra, at p. 757.) Additionally, “[w]hile handwritten and electronic signatures once authenticated have the same legal effect, there is considerable difference between the evidence needed to authenticate the two.” (Id. at 758.) Therefore, the court rejects this argument.

[3]Plaintiff included a footnote that her claims for sexual harassment should be excluded because the Legislature intended to exclude such claims from arbitration. Defendants contend that the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2022 does not apply because it is not retroactive. Plaintiff did not further develop this argument in her opposition, which the court interprets as conceding.

[4] The court agrees with Defendants that Plaintiff has not shown Defendants motion to compel is “unreasonable” because Plaintiff has not claimed to expend resources she would have saved by arbitrating the dispute instead or that Defendants otherwise took advantage of the judicial processes that are not available at arbitration. (Quach v. Cal. Commerce Club, Inc. (2022) 78 Cal.App.5th 470, 484.)

[5] Plaintiff’s citation to cases finding procedural unconscionability for failing to attach the rules also involved substantively unconscionable provisions in the omitted rules. In fact, the weight to be given such a procedural violation has been significantly limited by the California Supreme Court which has instructed trial courts to “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.” (Baltazar v. Forever 21, Inc., (2016) 62 Cal.4th 1237, 1246.) Stated otherwise, “the law requires more than the simple failure to provide the employee with a copy of the rules.” (Cisneros Alvarez v. Altamed Health Services Corporation (2021) 60 Cal.App.5th 572, 590, as modified (Mar. 4, 2021)). Further, Defendants cite to Peng v. First Republic Bank (2013) 219 Cal.App.4th 1462 and Bigler v. Harker School (2013) 213 Cal.App.4th 727 for the proposition that failure to attach the AAA Rules standing alone is insufficient to find procedural unconscionability.

[6] Plaintiff also argues that the MAP is substantively unconscionable because Defendants did not sign it.

[7]Plaintiff has not challenged any particular aspect of the AAA Rules as limiting her discovery right.

[8]Plaintiff’s reliance on Najarro v. Superior Court (2021) 70 Cal.App.5th 871, 883, is misplaced. There there were multiple agreements and the Court ultimately concluded that at least as to one of the agreements, there was fraud in the execution.