Judge: Upinder S. Kalra, Case: 23STCV17003, Date: 2024-04-26 Tentative Ruling
Case Number: 23STCV17003 Hearing Date: April 26, 2024 Dept: 51
Tentative Ruling
Judge Upinder S.
Kalra, Department 51
HEARING DATE: April
26, 2024
CASE NAME: Shane
Lichterman v. Baxter of California LLC, et al.
CASE NO.: 23STCV17003
MOTION
TO COMPEL ARBITRATION
MOVING PARTY: Defendants
Baxter of California LLC and AMBI Enterprises LLC
RESPONDING PARTY(S): Plaintiff Shane Lichterman
REQUESTED RELIEF:
1. An
Order compelling arbitration and an Order staying the matter pending
arbitration.
TENTATIVE RULING:
1. Motion
to Compel Arbitration is GRANTED;
2. The
court ORDERS this action STAYED pending arbitration.
STATEMENT OF MATERIAL FACTS AND/OR PROCEEDINGS:
On July 20, 2023, Plaintiff Shane Lichterman (Plaintiff)
filed a Complaint against Defendants Baxter of California, LLC and Ambi
Enterprises Inc. (Defendants) with three causes of action for: (1) Retaliation
in Violation of Labor Code §98.6, (2) Retaliation in Violation of Labor Code §1102.5,
and (3) Wrongful Termination.
Plaintiff alleges that he worked for Defendants as a Barber
from approximately August 13, 2021, to about April 2023. He claims that he was
wrongfully terminated based on his engagement in protected activities by raising
his employer’s potential legal violations of state law and filing a complaint
with the state Labor Commission.
Defendants jointly filed their Answer to the Complaint on
September 20, 2023.
On March 18, 2024, Defendants brought the instant motion to
compel arbitration. On April 15, 2024, Plaintiff filed an opposition. On April 19,
2024, LHC filed a reply.
LEGAL STANDARD:
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.)¿¿
ANALYSIS:
Defendants contend there is a valid written arbitration
agreement because Plaintiff signed the Arbitration Agreement (AA) when he began
his employment with Defendant Baxter. Defendants assert that the AA covers
claims presented in Plaintiff’s complaint and that Plaintiff refuses to submit
to arbitration. Plaintiff argues the agreement is unenforceable on the grounds
of unconscionability.
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:
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 AA with Plaintiff’s physical signature. (Declaration of Kerri
Joyner (Joyner Decl.) ¶ 8, Exhibit 1.)
“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 disputes his signature, declaring that “he does
not recall ever” seeing it before. (Lichterman Dec. ¶4.) Plaintiff’s counsel
argues that the weight of the evidence makes it more likely that Plaintiff’s
signature on the AA was manufactured after the plaintiff was defrauded into
signing the agreement. However, Defendants have provided overwhelming evidence
that Plaintiff did indeed sign the agreement. Joyner’s declaration states that on
March 23, 2022, a person logged into Insperity’s portal using Plaintiff’s
unique login credentials, opened, and electronically executed the AA. (Joyner
Decl. ¶¶ 7-8.) Joyner further declares that Baxter employees receive an email
with instructions on creating their unique username and password to access
Insperity's portal. (Id. ¶ 4.) These
credentials are not accessible to anyone else, and employees are instructed to
keep them confidential. (Id.) Joyner provided
the Court with copies of various documents as well as evidence that Plaintiff
logged in on two separate occasion to review and sign the online onboarding documents.
(Joyner Supp. Dec. ¶¶8-9.) According to Defendant’s
business records, Plaintiff spent a total of 50 minutes over a two-day period
and specifically executed the arbitration agreement at 2:24:41 PM on March 23, 2022,
approximately 20 minutes after logging in. (Joyner Supp. Dec. ¶¶8-13.) Plaintiff
also acknowledges accessing and signing numerous onboarding personnel documents
on the Insperity Portal that he does not deny seeing and signing. (Lichterman
Dec. P¶12-13.) Thus, based on this, Defendant met their burden by a preponderance
of the evidence that Plaintiff signed the AA.
Therefore, the Defendants have established that the
Arbitration Agreement exists.
2. The Agreement Covers the Dispute at Issue:
Applicability of AA
to Subject Dispute
Defendants contend that the AA covers the subject dispute
because Plaintiff filed an employment action not otherwise excluded by the AA.
Plaintiff did not directly oppose this argument.
Here, the AA applies to the instant dispute. First, the AA
states it covers “all claims or disputes related to or arising out of my
application for employment, my employment, or the termination of my employment
with lnsperity and/or Client Company, (b) all claims that lnsperity and/or
Client Company may have against me, and/or (c) all claims that I may have
against Covered Persons.” [Joyner Decl., Exhibit 1.]
Plaintiff’s claim against Defendants concerns his employment with them,
specifically the circumstances of his termination, and is not otherwise carved
out.
Therefore, the AA applies to the subject dispute.
Defenses to
Arbitration
Plaintiff argues that the court
should not compel arbitration because Defendants fraudulently obtained his
signature on the AA. Upon closer review of Plaintiff’s briefing, the court
interprets this argument as challenging the AA as procedurally unconscionable. Plaintiff's
assertions that the Defendants waived their right to enforce the AA fail,
particularly since Defendants noted both mediation and BINDING PRIVATE
ARBIRATION in their 11/6/23 Case Management Statement thereby indicating that
they never intended to waive enforcing the AA. (See 11/6/23 CMS). Any
argument to the contrary is disingenuous at best.
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)).¿
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 (Armendariz)).¿¿
a. Procedural
Unconscionability
Defendants contend there is no procedural unconscionability
because the AA is clear on its face, it is a separate stand-alone agreement, included
an opt-out procedure, and was presented to Plaintiff for consideration along
with other documents during his employment. Plaintiff argues there is
substantial procedural unconscionability. Plaintiff was never told that any of
the documents in the portal were optional, nor was he ever told there was an
arbitration agreement. Rather, it was communicated that Plaintiff needed
to sign what was in the portal to be paid. Defendants
replies that Plaintiff acknowledged receipt of the AA and other signed
onboarding documents and that his declaration is self-serving.
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, there may be minimal
procedural unconscionability. “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). There is no
dispute that this was a contract of adhesion as Defendants used the same AA for
all employees. That alone will satisfy the procedural element of the analysis
as a matter of law. (Lane v. Francis
Capital Management LLC (2014) 224 Cal.App.4th 676, 689.) However, it bears emphasizing
that unconscionability is examined on a sliding scale – the stronger the
procedural issues, the less prominent the substantive issues need to be, and
vice versa. The adhesive nature of a contract does not weigh strongly on the
procedural side of the scale. (Baltazar
v. Forever 21, Inc. (2016) 62 Cal.4th 1237, 1245; Nguyen v. Applied Medical Resources Corp. (2016) 4 Cal.App.5th 232,
248-249.)
Plaintiff’s
arguments for procedural unconscionability appears to succeed but ultimately
fail under OTO because his claims that
he was pressured to complete the paperwork quickly or faced not
being paid yet per the AA, only raise a limited procedural unconscionability.
As noted in Joyner’s declaration, the AA was optional, and Plaintiff did have
time to later change his mind. Specifically, the AA provided Plaintiff with 30 days to
opt out later if he chose to do so. Plaintiff states he was not
offered a computer, so he had to access the portal and sign whatever documents
were in it using only his cell phone. (Declaration of Shane Lichterman
(Lichterman Decl.) ¶ 3.) Plaintiff further states that no one discussed the
advantages and/or disadvantages of agreeing to the AA with him. (Id. ¶ 9, 12.) However, this does not seem
persuasive as the AA was an optional document, and Plaintiff could have
downloaded a copy of the AA. Additionally, Plaintiff’s signature on the AA
appears on the 6th page as the clearly labeled opt-out provision. (Joyner
Decl., Exhibit 1.) The court is not persuaded that Plaintiff did not at least
see the opt-out clause. Finally, the AA is only eight pages long and is written
in English and Spanish. (Joyner Decl., Exhibit 1.) Plaintiff has not otherwise
provided evidence of surprise or oppression.
Thus, the
agreement is at most minimally
procedurally unconscionable.¿
b. Substantive Unconscionability
Plaintiff has not addressed whether the AA is substantively
unconscionable. Defendants contend it is not.
“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, AA is not substantively unconscionable. First, it
meets the Armendariz factors by
providing: (1) “The parties will mutually select a mediator”; (2) Discovery allows for two witness depositions, any
expert witness depositions, requests for production and subpoenas, as well as
additional discovery by mutual agreement or pursuant request to the Arbitrator;
(3) “The Arbitrator is required to issue a reasoned written award and
opinion.”; (4) The Arbitrator may award any
party any remedy to which that party is entitled under applicable law and must
be in the party's individual capacity.; and (5) “Each
party will pay the fees for his/her or its own attorneys, subject to any
remedies to which that party may later be entitled under applicable law.” (Joyner Decl., Exhibit 1.) The AA mutually applies to
both parties. (Id.)
Accordingly, the AA lacks substantive unconscionability.
CONCLUSION:
For
the foregoing reasons, the Court decides the pending motion as follows:
1.Motion to Compel Arbitration is
GRANTED;
2.The court ORDERS this action
STAYED pending arbitration.
Moving party is to give notice.
IT IS SO ORDERED.
Dated: April 26, 2024 __________________________________ Upinder
S. Kalra
Judge
of the Superior Court