Judge: Upinder S. Kalra, Case: 22STCV38892, Date: 2023-05-25 Tentative Ruling

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Case Number: 22STCV38892    Hearing Date: May 25, 2023    Dept: 51

Tentative Ruling

 

Judge Upinder S. Kalra, Department 51

 

HEARING DATE:   May 25, 2023                         

 

CASE NAME:           Sandra Polanco v. JPMorgan Chase Bank, National Association

 

CASE NO.:                22STCV38892

 

MOTION TO COMPEL ARBITRATION

 

MOVING PARTY: Defendant JPMorgan Chase Bank, National Association

 

RESPONDING PARTY(S): Plaintiff Sandra Polanco

 

REQUESTED RELIEF:

 

1.      An order compelling arbitration.

2.      An order staying the proceedings.

TENTATIVE RULING:

 

1.      Motion to Compel Arbitration is GRANTED.

2.      Motion to Stay Proceedings is GRANTED.

STATEMENT OF MATERIAL FACTS AND/OR PROCEEDINGS:

On December 14, 2023, Plaintiff Sandra Polanco (“Plaintiff”) filed a complaint against Defendant JPMorgan Chase Bank, National Association (“Defendant.”) The complaint alleged eight causes of action: (1) Pregnancy/Sex Discrimination in Violation of FEHA, (2) Disability Discrimination in Violation of FEHA, (3) Failure to Provide Reasonable Accommodations in Violation of FEHA, (4) Failure to Engage in Good Faith Interactive Process in Violation of FEHA, (5) Retaliation in Violation of FEHA, (6) Failure to Prevent Discrimination and/or Retaliation in Violation of FEHA, (7) Interference with Pregnancy Disability Leave, and (8) Wrongful Termination in Violation of Public Policy.

 

The complaint alleges that Plaintiff began working for Defendant in January 2016. From May 2021 to November 2021, Plaintiff took a protected leave to absence aftr giving birth. Plaintiff became pregnant again in February 2022, and experienced difficulty suiting, standing, and walking to lower back pain and sciatica. After Plaintiff’s doctor provided a note to take a few days off and suggested she seek further evaluation, Plaintiff informed her Manager that she would be taking some time off per her doctor. Plaintiff was told to contact Sedgwick, Defendant’s Claims Administrator and was told to submit a pregnancy leave. Plaintiff was given the wrong form and was told that she needed to fill out a short-term disability form, which was later denied. After this denial, Plaintiff fixed the incorrect dates and submitted anew claim, but the new claim was later denied. In June 2022, prior to Plaintiff’s planned cesarean section, she was informed by her insurance company that she no longer had insurance because she was no longer employed.

 

On January 11, 2023, Defendant filed an Answer.

 

On January 17, 2023, Defendant filed a Notice of Removal to Federal Court.

 

On January 26, 2023, a Notice of Remand from Federal Court was filed.

 

On March 29, 2023, Defendant filed the current Motion to Compel Arbitration. On May 12, 2023, Plaintiff filed an Opposition. On May 18, 2023, Defendant filed a Reply.

 

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 its motion, Defendant submits a copy of the Agreement attached to the Declaration of Charles Van Valkenburg, the Vice President and Human Resources Business Advisor at JPMorgan Chase Bank. The Agreement states in part:

 

JPMorgan Chase believes that if a dispute related to an employee's or former employee's employment arises, it is in the best interests of both the individual and JPMorgan Chase to resolve the dispute without litigation. Most such disputes are resolved internally through the Firm's Open Communication Policy. When such disputes are not resolved internally, JPMorgan Chase provides for their resolution by binding arbitration as described in this Binding Arbitration Agreement ("Agreement"). "JPMorgan Chase" and the "Firm" as used in this Agreement mean JPMorgan Chase & Co. and all of its direct and indirect subsidiaries. (Dec. Van Valkenburg, Ex. A.)

 

Plaintiff argues that Defendant failed to establish the existence of a contract. Specifically, Plaintiff argues that Defendant has failed to establish that the electronic signature on the agreement was “an act by Plaintiff,” and there are not facts to indicate that anyone witnessed Plaintiff sign the agreement. The metadata that was reviewed by Ms. Henderson, as stated in her declaration, does not indicate that the metadata requested was the same as the original version provided by Chase. (Opp. 9: 5-8.)

 

Both California and Federal law provides that electronic signatures on arbitration agreements are valid. The California Uniform Electronic Transactions Act (“UETA”) indicates that an electronic signature has the same legal effect as handwritten signature. The Defendant’s initial burden to compel arbitration was satisfied. Under Rule of Court Rule 3.1330, a copy of the agreement must be attached and incorporated by reference. Here, Defendant has done so. 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). In Espejo, the supplemental declaration of the systems consultant provided the necessary information to establish the authenticity of the document, specifically how the unique username and password were only accessible to that specific individual. (Id. at 1062). Espejo dealt with an electronic signature, which requires a different type of authentication. Plaintiff cites to Gamboa v. Northeast Community Clinic (2021) 72 Cal. App. 5th 158. There, the Court determined that after the Plaintiff stated she did not remember the agreement, Defendants failed to establish the agreement by a preponderance of evidence. The declaration provided by the director of human resources was insufficient, because the declarant failed to provide facts demonstrating how she had personal knowledge of what she stated. (Gamboa, supra, 72 Cal.App.5th at 169).

 

However, Gamboa is distinguishable from the current matter, and more in line with Espejo. Here, Defendant initially provided 3 different declarations from various individuals who in their employment capacity are familiar with the on-boarding system. For example, the Declaration of Raymond Parker provides that he is a Vice President – Software Engineer, and is familiar with the Taleo system, which was used to send offer letters to prospective employees. (Dec. Parker ¶ 3.) This declaration states that when an individual applies for a position, they provided an email address in the Taleo system and that system would generation a temporary password. After logging on, the prospective employee would have to set up their own password. Once an offer was made, the letter was sent to the applicant’s email address which contained a link to the letter. After clicking the link, the prospective employee would log in and electronically sign the letter. (Dec. Parker ¶¶ 5-7.) Like in Espejo, where the Defendant provided a declaration that discussed the “steps an applicant would have to take to place his or her name on the signature line of the employment agreement,” (Espejo, supra, 246 Cal.App.4th at 1062), the Declaration of Mr. Parker, as well as the Declaration of Sarah Henderson that provided the metadata information, provides sufficient information about the process and how he would know these specifics. Therefore, the Defendant has established that the Arbitration Agreement exists. 

 

2.      The Agreement Covers the Dispute at Issue

As stated above, 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).)  

           

            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, which includes, but is not limited to, pregnancy and disability discrimination, retaliation, and wrongful termination. Plaintiff makes not argument as to whether the agreement covers the dispute at issue.

 

            Here, the agreement, in paragraph 2, provides a list of protected employment claims,

 

claims of employment discrimination or harassment if protected by applicable federal, state or local law, and retaliation for raising discrimination or harassment claims, failure to pay wages, bonuses or other compensation, tortious acts, wrongful, retaliatory and/or constructive discharge, breach of an express or implied contract, promissory estoppel, unjust enrichment, and violations of any other common law, federal, state, or local statute, ordinance, regulation or public policy, including, but not limited to Title VII of the Civil Rights Act of 1964, the Civil Rights Acts of 1866 and 1991, the Age Discrimination in Employment Act of 1967, the Older Workers Benefit Protection Act of 1990, the Rehabilitation Act of 1973, the Americans with Disabilities Act of 1990, the Family and Medical Leave Act of 1993, the Fair Labor Standards Act of 1938, the Equal Pay Act of 1963, Section 1981 of the Civil Rights Act, and the Worker Adjustment and Retraining Notification Act.

 

The language of the Agreement encompasses the types of claims raised in the Complaint.

 

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)).

 

a.      Waiver

Plaintiff contends that Defendant waived the right to compel arbitration. Specifically, Plaintiff argues that Defendant knew about the agreement but has not provided a reason as to why it waited two and half months before providing the agreement to Plaintiff. Even after supplying the agreement, Defendant waited another three and a half months before filing the current motion. Moreover, when Defendant filed its answer and removed the matter to federal court, Defendant waived the right to arbitrate.

 

“A defendant's removal of a case filed in state court to federal court does not by itself constitute an implicit waiver of the right to compel arbitration. (Halim v. Great Gatsby's Auction Gallery, Inc. (7th Cir.2008) 516 F.3d 557, 562.) But a defendant's removal of a case to federal court, coupled with participation in several months of litigation, waives the right to arbitrate because electing to proceed in federal court on an arbitrable dispute is presumptive waiver of the right to arbitrate.” (Hoover v. American Income Life Ins. Co. (2012) 206 Cal.App.4th 1193, 1205).

 

Here, Plaintiff’s reliance on Guess? Inc., v. Superior Court is misplaced. Plaintiff cites to Guess? arguing that when a party demanding arbitration knew about the arbitration provisions before the lawsuit, arbitration is waived when that party fails to provide an explanation for deferring to demand arbitration after 3 months. However, this authority is inapposite. First, in Guess?, there was no arbitrate raised as an affirmative defense, unlike here, where Defendant raised the right to arbitrate as its first affirmative defense. Second, in Guess?, the parties participated in the discovery process, unlike here, where no discovery has been conducted. Moreover, the Defendant filed an Answer and then removed to Federal Court. There was no other participation in litigation. After the matter was remanded, the Defendants filed the current motion only two months later. As such, the Defendants were not dilatory when moving to compel arbitration. In Khalatian, the Court did not find waiver even after demurrers and a 14-month delay in filing the motion to compel. The Court found that the Plaintiff did not demonstrate prejudice that would require a waiver of arbitration. (Khalatian v. Prime Time Shuttle, Inc. (2015) 237 Cal.App.4th 651). Again, the Defendants only filed an Answer and tried to remove the matter to federal court. Defendant did not waive arbitration.

 

b.      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.4th 82, 114).

 

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). Plaintiff argues that this contract, which is a pre-printed offer letter, is a contract of adhesion.

 

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). Here, while the agreement was included with other information for Plaintiff’s onboarding procedure, each sectIn general, the Parties may take the depositions of all expert witnesses and up to 3 other individuals. Any individual who certifies he/she has no direct knowledge of the facts should not be deposed as a fact witness. At least 10 days' prior notice should be given by the party requesting a deposition and advance efforts should be made to mutually agree on deposition dates, including the time and place for any depositions to be taken. The party requesting the deposition is responsible for all related costs for that deposition. Discovery must be completed at least 20 days before the hearing. The arbitrator may alter the timing and scope of discovery as necessary or upon request of the Parties. The arbitrator will resolve discovery disputes and may expand or restrict the scope of discovery within his or her reasonable discretion, and the rules of AAA consistent with the expedited nature of arbitrationion of the offer letter contains Plaintiff’s electronic signature. Moreover, the arbitration agreement is in all caps and bold letters. This agreement also explains the procedure, including initiating arbitration and the proceedings. Thus, the agreement 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 in three ways. First, it imposes an improper limitation on discovery. Second, the agreement imposes a confidentiality provision. Third, the “overly broad and one-sided severance provision is unfair.”

 

First, the discovery limitation is not grounds for finding the arbitration agreement is unconscionable. “[A]dequate discovery is indispensable for the vindication of FEHA claims.” (Armendariz, supra, 24 Cal.4th at p. 105.) “ ‘Adequate’ does not mean unfettered discovery.” (Mercuro v. Superior Court (2002) 96 Cal.App.4th 167, 184 (Mercuro).) In Mercuro, the arbitration agreement limited the parties to a total of 30 discovery requests, which included three depositions. The Mercuro panel noted that our Supreme Court in Armendariz recognized an arbitration agreement that provides “something less than the full panoply of discovery provided in Code of Civil Procedure section 1283.05” is not grounds for invalidating an arbitration agreement.  (Mercuro v. Superior Court, supra, 96 Cal.App.4th at p. 184.) Ultimately, Mercuro concluded that the arbitration agreement provided for sufficient discovery and, therefore, was not unconscionable. (Ibid.).

 

In Fitz v. NCR Corp. (2004) 118 Cal. App. 4th 702 (Fitz), the agreement limited discovery as follows:

 

“To prepare for the arbitration hearing, both NCR and the employee have the right to take the sworn deposition statements of two individuals and, in addition, any expert witnesses expected to testify at the hearing. All documents to be used as exhibits and a list of all potential witnesses will be exchanged at least two weeks in advance of the hearing. No other ‘discovery’ (i.e., depositions or demands for documents/information ) will be permitted unless the arbitrator finds a compelling need to allow it. In determining whether a compelling need exists, the arbitrator will balance the interests of fairness and expediency; the arbitrator will only override the goal of achieving a prompt and inexpensive resolution to the dispute if a fair hearing is impossible without additional discovery.” (Id. at p. 709, Italics added.)

 

Here, the agreement limits discovery as follows:

 

“In general, the Parties may take the depositions of all expert witnesses and up to 3 other individuals.  . . . The arbitrator may alter the timing and scope of discovery as necessary or upon request of the Parties. . . .The arbitrator will resolve discovery disputes and may expand or restrict the scope of discovery within his or her reasonable discretion, and the rules of AAA consistent with the expedited nature of arbitration.”(Motion, Ex. A: Arbitration Agreement ¶ 7(d), emphasis added.)

 

Here, the facts mirror Mercuro. First, similar to Mercuro, the agreement allows for three depositions.  Second, this is the general procedure. In other words, this is a guideline and not a hard and fast rule. Third, this standard is subject to modification, either being expanded or restricted, upon the sound discretion of the arbitrator. Fourth, Defendant’s reliance on Fitz is misplaced. The discovery limitation in Fitz was a hard and fast rule. Moreover, the arbitrator could not alter this fixed rule absent a compelling showing. Here in contrast, the three-person deposition guide could be altered without a heightened showing. As such, under the holdings of Armendariz and  Mercuro, it appears that these general guidelines are not unconscionable.

 

Second, the confidentiality provision is valid. Plaintiff relies on Ramos, arguing that courts have found that “arbitration provisions requiring all aspects of the arbitration be maintained in strict confidence are unconscionable.” (Opp. 15: 9-10, citing to Ramos v. Superior (2018) 28 Cal.App.5th 1042.) However, in Ramos, the confidentiality agreement was “Except to the extent necessary to enter judgment on any arbitral award, all aspects of the arbitration shall be maintained by the parties and the arbitrators in strict confidence.” (Ramos v. Superior Court (2018) 28 Cal.App.5th 1042, 1065.) Here, however, the agreement only involves hearings. “The arbitrator, the Parties and their representatives must maintain the confidentiality of the hearings unless the law provides otherwise.” (Dec. Valkenburg, Ex. A, ¶ 7(c), pg. 14.) The language in the Ramos arbitration agreement would prevent the party from engaging in informal discovery or contact witnesses without violating the prohibition against revealing an “aspect of the arbitration.”” (Ramos, supra,  28 Cal.App.5th at 1065.) Here, maintaining confidentiality of the hearings would not prevent Plaintiff from obtaining informal discovery, contrary to the plaintiff in Ramos.

 

Lastly, Plaintiff argues that the severability section is one-sided because it “unfairly forces employees to agree that all unconscionable and unenforceable terms can be severed without impacting Chase’s ability to enforce the remainder of the agreement.” Plaintiff cites to Armendariz. However, in Armendariz, the court found the agreement substantively unconscionable because there were multiple unlawful provisions. With multiple defects, the court would not be severing the provisions, but reforming the contract through augmentation. (Armendariz, supra, 24 Cal.4th at 125.) Here, the two provisions raised by Plaintiff are not substantively unconscionable. Thus, the severability clause is valid. This Court would not be augmenting the contract, had the provisions been deemed unconscionable.

 

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.

 

Motion to Compel Arbitration is GRANTED.

 

MOTION TO STAY THE PROCEEDINGS

 

Defendant argues that under CCP § 1281.4, a court shall tay the proceeding until the arbitration is determined.

 

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 May 22, 2024 at 8:30 AM.

 

Moving party is to give notice.

 

IT IS SO ORDERED.

 

Dated:             May 25, 2023              __________________________________                                                                                                                Upinder S. Kalra

                                                                                    Judge of the Superior Court