Judge Upinder S. Kalra, Case Number: 24STCV05154, Date: 2024-10-16 Tentative Ruling

On February 29, 2024, Plaintiff Antonio Tovar (Plaintiff) filed a Complaint against Defendant Kumquat Holdings, LLC with two causes of action for: (1) Age Discrimination; and (2) Wrongful Termination [in violation of public policy]. Plaintiff alleges that he worked for Defendant in their laundry department and was wrongfully terminated due to his age.

On June 12, 2024, Defendant filed the instant motion to compel arbitration. On October 3, 2024, Plaintiff filed an opposition. On October 9, 2024, Defendant filed a reply.

This 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 (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.) As such, this court respectfully declines to rule on any of these objections. This court is well aware of the rules of evidence, and to how much weight, if any, should be given to any of the proposed evidence.

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.)¿¿¿

However, when an arbitration agreement states that the Federal Arbitration Act (FAA) governs enforcement, the FAA governs a motion to compel arbitration. (Victrola 89, LLC v. Jaman Properties 8 LLC (2020) 46 Cal.App.5th 337, 345-346 (Victrola 89).) “A written provision … to settle by arbitration a controversy thereafter arising … or … to submit to arbitration an existing controversy … shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.” [9 U.S.C. § 2 (emphasis added)] A party to an arbitration agreement may seek a court order compelling the parties to arbitrate a dispute covered by the agreement. (9 U.S.C. § 4.)

Under both the FAA and California Law, arbitration agreements are valid, irrevocable, and enforceable, except on such grounds that exist at law or equity for voiding a contract. (Winter v. Window Fashions Professions, Inc. (2008) 166 Cal.App.4th 943, 947.)

“[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.)¿¿

As a threshold matter, the court applies the FAA to interpret the Mutual Arbitration Agreement (MAA) because there is a clear provision stating that it applies. (Hyder Decl., Exhibit A.)

Defendant has met its burden to show the signature on the arbitration agreement was signed by Plaintiff by a preponderance of the evidence. (Ruiz v. Moss Bros. Auto Group, Inc. (2014) 232 Cal.App.4th 836, 843.) Plaintiff does not challenge his signature, rather, he contends he does not remember signing the MAA. (Tovar Decl. ¶ 7.)

The FAA establishes a strong federal policy in favor of arbitration of disputes where a written arbitration agreement exists. Section 2 of the FAA provides, in pertinent part that “[a] written provision . . . to settle by arbitration a controversy thereafter arising out of such contract . . . shall be valid, irrevocable, and enforceable.” (9 U.S.C. §2.) The purpose of the FAA is to “reverse the longstanding judicial hostility to arbitration agreements.” (Gilmer v. Interstate/Johnson Lane Corp. (1991) 500 U.S. 20, 24.) The FAA places arbitration agreements “on an equal footing with other contracts and [requires courts] to enforce them according to their terms.” (AT&T Mobility, LLC v. Concepcion (2011) 563 U.S. 333, 339; see also Rent-A-Center West, Inc. v. Jackson (2010) 561 U.S. 63, 67 [“The FAA reflects the fundamental principle that arbitration is a matter of contract.”].) The FAA will preempt not only a state law that “discriminat[es] on its face against arbitration,” but also a state law that “covertly accomplishes the same objective by disfavoring contracts that (oh so coincidentally) have the defining features of arbitration agreements.” (Kindred Nursing Centers Limited Partnership v. Clark (2017) 137 S.Ct. 1421, 1426.)

The United States Supreme Court has specifically held that the FAA applies to employment contracts: “[A]s a matter of law the answer is clear. In the FAA, Congress has instructed federal courts to enforce arbitration agreements according to their terms.” (Epic Systems Corp. v. Lewis (2018) 138 S.Ct. 1612, 1619, [holding that employees must submit to arbitration agreements including those with collective action waivers].)

The FAA restricts a court’s inquiry related to compelling arbitration to two threshold questions: (1) whether there was an agreement to arbitrate between the parties; and (2) whether the agreement covers the dispute.[1] (Howsam v. Dean Witter Reynolds, Inc. (2002) 537 U.S. 79, 84.)

California law also favors arbitration for dispute resolution. The California Arbitration Act (“CAA”), codified at CCP §1281 et seq., provides, “A written agreement to submit to arbitration an existing controversy or a controversy thereafter arising is valid, enforceable and irrevocable, save upon such grounds as exist for the revocation of any contract.” (CCP §1281; see also Grafton Partners L.P. v. Superior Court (2005) 36 Cal.4th 944, 955 [“[U]nlike predispute jury waivers, predispute arbitration agreements are specifically authorized by statute.”].) The statute mandates arbitration when agreement to do so exists:

On 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 to arbitrate the controversy exists.

“California law, like federal law, favors enforcement of valid arbitration agreements.” (Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83, 97, 99.) The public policy in favor of arbitration is so strong that California courts have held that an employee is “bound by the provisions of the [arbitration] agreement regardless of whether [he] read it or [was] aware of the arbitration clause when [he] signed the document.” (Brookwood v. Bank of America (1996) 45 Cal.App.4th 1667, citing Macaulay v. Norlander (1992) 12 Cal.App.4th 1.) The only prerequisite for a court to order arbitration is a determination that the parties have entered into an agreement to arbitrate the dispute. (United Transportation Union v. Southern Cal. Rapid Transit District (1992) 7 Cal.App.4th 804, 808.) Thus, arbitration must be ordered “unless the agreement clearly does not apply to the dispute in question.” (Vianna v. Doctors’ Management Co. (1994) 27 Cal.App.4th 1186, 1189.)

Here, Defendant met their burden that the MAA is enforceable. First, as noted above, Defendant demonstrated that the MAA exists. (Hyder Decl., Exhibit A.) Second, the MAA applies to the instant dispute because it covers “all potential claims relating to employment and termination of employment . . . .” (Ibid.) Plaintiff does not challenge that the MAA covers the subject dispute.

Plaintiff argues the court should not enforce the MAA for several reasons. Notably, Plaintiff contends the MAA is void because he could not understand it since he cannot read English and that no one explained to him, in Spanish, what he was signing.[2] Defendant contends the MAA is not unconscionable because it meets the Armendariz factors and Plaintiff did not show that he ever sought explanation of the MAA.

A contract may be voided for fraud in the execution when the “‘“promisor is deceived as to the nature of his act, and actually does not know what he is signing, or does not intend to enter into a contract at all.”’” (Rosenthal v. Great Western Fin. Securities Corp. (1996) 14 Cal.4th 394, 415 (Rosenthal).) Fraud in the execution involves “‘a misrepresentation as to the character or essential terms of a proposed contract [that] induces conduct that appears to be a manifestation of assent by one who neither knows nor has a reasonable opportunity to know of the character or essential terms of the proposed contract.’” (Id. at 420 [quoting Rest.2d Contracts, § 163, coms. a & c, pp. 443-444].)

“[M]utual consent is gathered from the reasonable meaning of the words and acts of the parties, and not from their unexpressed intentions or understanding.” (1 Witkin, Summary 11th Contracts § 116 (2019).) “The failure to read an agreement, because of inability to read, or an inability to understand English, are not cognizable grounds to avoid contracts, because parties are expected to have others read or explain the contracts to them.” (Randas v. YMCA of Metropolitan Los Angeles (1993) 17 Cal.App.4th 158, 163; Ramos v. Westlake Services LLC (2015) 242 Cal.App.4th 674, 686-687.) The party opposing arbitration must prove fraud by a preponderance of the evidence. (Rosenthal, supra, 14 Cal.4th at 413.)

Here, Plaintiff did not establish fraud warranting voiding the MAA. The MAA is undisputably in English and Plaintiff cannot read or functionally speak English. (Hyder Decl., Exhibit A; Tovar Decl. ¶ 5.) Defendant has offered no evidence to controvert Plaintiff’s declaration. However, Plaintiff failed to provide sufficient evidence that there was fraud in the inception or execution of the contract. In Najarro v. Superior Court, the Court of Appeal indicated that an employee who could not read English (or Spanish) and who relied on her employer to explain what she was signing lacked the requisite assent to enforce the arbitration agreement. (70 Cal.App.5th 871, 886-887.) Unlike Najarro, Plaintiff here did not provide evidence that he asked what he was signing and he either relied on his employer to explain what he was signing or was affirmatively misled on what the documents stated. Instead his evidence indicates he worked for some iteration of Defendant since 1985, spoke with his co-workers in Spanish, and was directed to sign English document by his supervisor during his employment. (Tovar Decl. ¶¶ 4, 5, 9.) Plaintiff failed to offer any evidence on the circumstances surrounding the execution of the arbitration documents. Rather, Plaintiff does not recall even signing the documents. As such, there is insufficient evidence supporting a finding of fraud in the inducement or execution.

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)).¿¿Each do not need to be present to the same degree. (Najarro, supra, 70 Cal.App.5th at p. 882.)

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 is some degree of procedural unconscionability. Plaintiff is correct that failing to attach the AAA Rules is procedurally unconscionable. (Najarro, supra,70 Cal.App.5th at p. 885.) Plaintiff’s remaining argument for surprise is not well taken. Notably, the MAA is a separate, three-page, standalone agreement, that is not densely legalese. (Hyder Decl., Exhibit A.) For similar reasons, there is no evidence of oppression.

“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, Plaintiff has not shown substantive unconscionability. First, the MAA does have a severability clause, so, to the extent any of the terms are substantively unconscionable, the court may sever them.[3] (Hyder Decl., Exhibit A.) Second, the MAA meets the Armendariz factors. It provides for “a single neutral arbitrator,” “sufficient discovery to adequately arbitrate their claims and defenses,” an “award . . . issued in writing,” that the arbitrator “shall have the power to enter any award that could be entered by any court having competent jurisdiction,” and the Defendant bears the arbitrator’s costs. (Ibid.)

Therefore, the MAA is not so unconscionable that it cannot be enforced. The court thus GRANTS Defendant’s motion to compel arbitration and to stay proceedings pending arbitration.

2. The matter is STAYED pending arbitration. Post Arbitration Status Conference on October 16, 2025 at 8:30 a.m.

[1] The result is the same under California law because Defendant attached a copy of the MAA and it applies to Plaintiff’s dispute. (See, e.g., mar v. Ralphs Grocery Co. (2004) 118 Cal.App.4th 955, 961; 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.”])

[2] Plaintiff argues this supports the “surprise” component of procedural unconscionability.

[3] The court declines to discuss the scope of the purported unconscionable provisions.