Judge: Upinder S. Kalra, Case: 22STCV11546, Date: 2022-09-27 Tentative Ruling

Case Number: 22STCV11546    Hearing Date: September 27, 2022    Dept: 51

Tentative Ruling

Judge Upinder S. Kalra, Department 51

HEARING DATE:   September 27, 2022                                       

CASE NAME:            Leslie Alvarenga v. Venbrook Group, LLC, et al.

CASE NO.:                22STCV11546

DEFENDANT’S MOTION TO COMPEL ARBITRATION

MOVING PARTY: Defendants Venbrook Group, LLC and Rosemarie Simmons

RESPONDING PARTY(S): Plaintiff Leslie Alvarenga

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 April 5, 2022, Plaintiff Leslie Alvarenga (“Plaintiff”) filed a complaint against Defendants Venbrook Group, LLC, and Rosemarie Simmons (“Defendants”). The complaint alleged twelve causes of action based on disability and gender discrimination, retaliation, and wrongful termination. The complaint alleges that while working for Defendant, Plaintiff became ill with Covid-19 and required time off work. After recovering from Covid-19, Plaintiff’s doctor provided a note, instructing that Plaintiff return to work on “light duty.” A month later, Plaintiff was injured in a car accident; due to the severity, Plaintiff requested FLMA/CFRA leave. When Plaintiff returned, Plaintiff alleges that she was discriminated against because of her gender and alleges that she was required to do tasks that were not a part of her job. After reporting this behavior to her supervisor, nothing changed, and Plaintiff was abruptly fired.

On June 2, 2022, Defendants filed an Answer.

Defendants filed the current Motion to Compel Arbitration on August 30, 2022. Plaintiff’s opposition was filed on September 13, 2022. Defendant’s reply was filed on September 19, 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. 

Request for Judicial Notice:

Defendant request the Court take judicial notice of the following:

1.      The JAMS Employment Arbitration Rules & Procedures, effective June 1, 2021

2.      Venbrook’s Limited Liability Company Application for Registration that shows it is formed under the laws of Delaware

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.

Defendant requests the court take judicial notice of eight documents, including items such as Minute Orders from the U.S. District Court of Central District of California, Declarations in support of Motion to Compel Arbitration. All the documents involved the same arbitration agreement at issue in this action.

The Request for Judicial Notice is GRANTED.

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 the arbitration agreement Defendant provides the April 20, 2020 arbitration agreement attached to the Declaration of Stephanie Mercado, the Senior Director of Human Resources. (Declaration of Stephanie Mercado, Ex. A, filed 8/29/2022.) She states she is familiar with the onboarding documents and procedures. (Dec. Mercado, ¶ 3.) The Arbitration Agreement contains the following provision:

Except for the claims set forth in paragraph B, below, you are required to arbitrate any and all disputes, claims, or controversies (“claim”) against [Defendants] that could be brought in a court including, but not limited to, all claims arising out of your employment and the cessation of employment, including any claim that could have been presented to or could have been brought before any court. This Agreement to arbitrate includes, but is not limited to, all claims of violation of federal, state, or local law, statute, ordinance, rule, or regulation (e.g., claims of discrimination, including, but not limited to, discrimination based upon race, sex, sexual orientation, religion, national origin, age, marital status, creed, color, medical condition as defined under federal and/or state law, physical or mental disability, and claims relating to leaves of absence mandated by state and/or federal law) breach of any alleged contract or covenant (express or implied), tort claims, wage payment claims, violation of public policy claims, or any other alleged violation of statutory, contractual, or common-law rights (including claims against the Company’s officers, directors, employees, and/or agents), claims under the Age Discrimination in Employment act, Title VII of the Civil Rights Act of 1964; the fair Labor Standards Act; the Family and Medical Leave Act; the Americans with Disabilities Act of 1990; Section 1981 through 1988 of Title 42 of the United States Code; or any other federal, state, or local law, ordinance or regulation , or any claim for costs, fees, or other expenses or relief, including attorney’s fees.

(Dec. Mercado, Ex. A.)

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 argues that Defendant has failed to establish a valid agreement. Specifically, Plaintiff contends that she did not agree to arbitrate and does not recall receiving or signing the agreement. (Opp. 4: 19-23, Dec. Alvarenga, ¶ 12-13.) Additionally, Plaintiff states that she searched her email account and could not find a copy of the agreement. (Dec. Alvarenga, ¶ 14.) 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.) Here, Plaintiff argues that Defendant did not lay sufficient foundation that Plaintiff signed the agreement; specifically, the Declaration of Stephanie Mercado is generalized. Moreover, this insufficiency cannot be remedied because “new evidence cannot be offered in a Reply. San Diego Watercrafts, Inc. v. Wells Fargo Bank, N.A. (2002) 102 Cal. App. 4th 308, 316. It would be a violation of Plaintiff’s due process rights to have to oppose for the very first time verbally at the hearing in this matter without any further evidentiary support.” (Opp. 5: 24-28.) However, Plaintiff’s assertion fails because once Plaintiff challenged the validity of the signature, “defendants were then required to establish by a preponderance of the evidence that the signature was authentic.” (Espejo v. Southern California Permanente Medical Group (2016) 246 Cal.App.4th 1047, 1060).

Defendant has sufficiently established the required foundation for the agreement. As Senior Director for Human Resources, Ms. Mercado is “personally familiar and has oversight over the preparation and retention of business records pertaining to agreements between Venbrook and its employees, including agreements to arbitrate, along with overseeing the preparation and/or or retention of personnel files and onboarding documents.” (Dec. Mercado, ¶ 3, filed 8/29/2022). Subsequently, after Plaintiff challenged the validity of the signature, Defendant provided a supplemental declaration of Stephanie Mercado. In it, Ms. Mercado indicates that she reviewed the Plaintiff’s personnel file and has provided documents, such an April 3, 2020 offer letter and employment application , that were in her file and contain Ms. Alvarenga’s signature and acknowledgement that the offer of employment is conditioned on signing an arbitration agreement. (Supp. Dec. Mercado, Ex. A.-C.) Additionally, this supplemental declaration also contains emails that show Plaintiff signed an Acknowledgement Checklist dated April 27, 2020, which is a document that Plaintiff signed acknowledging that she received the documents listed; in that list, under Tab 3, states “Arbitration Agreement.” (Supp. Dec. Mercado, Ex. E.) As to Plaintiff’s argument that she could not find the agreement in her email account, Defendant has successfully refuted that because the emails provided in the Supplemental Mercado Declaration show that Plaintiff was provided with the documents via FedEx, as she was hired during the beginning of the Covid-19 pandemic. (Supp. Dec. Mercado, ¶ 8, Ex. F and G.)

The Court has considered Plaintiff’s assertion that the signature is not hers. Moreover, the Court has considered the supplemental Declaration of Stephanie Mercado, which indicates that personnel files, such as the attached documents, are made at or near the time of the personnel event they record. (Supp. Dec. Mercado ¶ 10.) The Court has personally reviewed the April 20, 2020 agreement that contains Plaintiff’s signature, printed name, initials on page one and date.  Moreover, the Court has compared the signature with other documents Plaintiff filled out in her handwriting. In sum,  the Court is convinced, by a preponderance of evidence, that the signature on the Arbitration Agreement is sufficiently similar to Plaintiff’s signature on other documents signed while on-boarding to demonstrate that Plaintiff signed the Arbitration agreement. 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 disability and sex/gender discrimination, retaliation, failure to provide accommodations, and wrongful termination.

Plaintiff does not contest whether the claims stated in her complaint are covered by the Agreement. Even still, a review of the complaint and the agreement attached to the Mercado Declaration as Exhibit A and stated above, 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 argues that the agreement is procedurally unconscionable because (1) it is a contract of adhesion, (2) there is no opt-out provision, and (3) the rules were not attached.

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—Plaintiff was notified on April 3, 2020 some 17 days before signing the agreement that arbitration was a condition of employment— and the document is stand alone, with Arbitration Agreement at the top in all capital letters. Moreover, the agreement provides the arbitration process.

Plaintiff next argues that the agreement is procedurally unconscionable because the agreement fails to provide an opt-out provision. Plaintiff cites to Steele, arguing that because “a preemployment contract that did not contain an opt-out clause, it is procedurally unconscionable.” (Steele v. American Mortg. Management Services (E.D. Cal., Oct. 26, 2012, No. 2:12-CV-00085 WBS) 2012 WL 5349511, at *5.) An opt-out provision, or lack thereof, coincides with a contract being adhesive, in that it makes the contract one that is “take it or leave it.” As such, even though there is no opt out provision in this employment contract, it, like above, is low because most employment contract contain inherent “economic pressure on the employee to accept arbitration.” (Cisneros, supra, 60 Cal.App.5^th at pg. 591.) Thus, there is little procedural unconscionability.

Third, while failure to attach rules could be a factor in finding procedural unconscionability if it was truly a surprise, as the court in Lane 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). Further, the Court in Cisneros Alvarez indicated, “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)). Cases that indicated procedurally unconscionability based on the failure to attach rules, also involved substantively unconscionable provisions in the omitted rules. Here, under Subsection E of the Agreement, the JAMS rules are available by either contacting the Human Resources Department or going to the JAMS website, which is also provided. (Dec. Mercado, Ex. A, ¶ E.) In today’s electronic day an age, the rules were readily available.

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 (1) it allows Defendant to recover attorneys’ fees and (2) the delegation clause itself is unconscionable. However, this argument fails because the language in the agreement states that Defendant will pay costs, such as filing fees, travel lodging, and other fees associated with arbitration. Further, if Defendant were to prevail, “it shall not seek or pursue costs from you, even if at law it would otherwise be entitled to pursue such costs, however distinct from costs the Company retains any rights it may have to recover it’s attorneys’ fees: e.g., for frivolous claims.” (Dec. Mercado, Ex. A, ¶ H.) Thus, the agreement provides only a particular circumstance where the law allows Defendant to recover attorneys’ fees.

Further, the requirements under Armendariz and Ramos have also been met. “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)). Here the agreement satisfies these requirements: (1) there is a neutral arbitrator provided through JAMS (Dec. Hackett, Ex. A, Rule 7; Dec. Mercado, Ex. A, ¶ E), (2) the agreement does not limit remedies or relief available (Dec. Mercado, Ex. A, ¶ E), (3) the agreement does not limit discovery (Dec. Hackett, Exh. A (Rule 16(a), (b), Rule 17), (4), (4) the agreement requires a written award (Dec. Mercado, Ex. A, ¶ F), and (5) Defendant has agreed to pay costs (Dec. Mercado, Ex. A, ¶ H.) Thus, there is no substantive unconscionability.

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.     Delegation of Arbitrability to an Arbitrator

Plaintiff also asserts that the agreement does not “clearly and mistakably delegate arbitrability issues to the arbitrator. First, the delegation clause does not mention arbitrability. Second, the agreement contemplates court review. And lastly, the Defendants reliance on JAMS rules to delegate is severely misplaced.

As Defendant asserts, the delegation clause, Paragraph D of the Agreement, specifically states that the arbitrator, not the court, “shall have exclusive authority to resolve any dispute relating to the interpretation, applicability, enforceability, or formation of this Agreement…” (Dec. Mercado, Ex. A, ¶ D.) Even the provision pointed out by Plaintiff that a “court or arbitrator shall interpret or modify this Agreement…” still indicates that an arbitrator shall interpret the agreement if the arbitrator finds the provision of the Agreement unenforceable.” (Id.) The Court finds that the Agreement sufficiently delegates the arbitration to the arbitrator.

MOTION TO STAY THE PROCEEDINGS

Defendant argues that under both the CAA and FAA, 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. Order to Show Cause on Status of Arbitration will be held on March 28, 2023 at 8:30 AM.  

Moving party is to give notice.

IT IS SO ORDERED.

Dated:             September 27, 2022                __________________________________                                                                                                                Upinder S. Kalra

                                                                                    Judge of the Superior Court