Judge Upinder S. Kalra, Case Number: 24STCV08229, Date: 2024-10-09 Tentative Ruling

CASE NAME: Leslie Handy v. Allied Universal Security Services Universal Protection, et al.

MOVING PARTY: Defendants Universal Protection Service, LP dba Allied Universal Security Services and DOE 1 Universal Services of America LP

On April 2, 2024, Plaintiff Leslie Handy (Plaintiff) filed a Complaint against Defendants Allied Universal Security Services Universal Protection and Universal Protection Service, LP (Defendants) with seven causes of action for: (1) perceived and/or race harassment, discrimination and retaliation in violation of Cal. Gov. Code §§ 12940 et seq [FEHA]; (2) violation of Cal. Lab. Code §§ 226.7 and 500 et seq. (break violations); (3) violation of Cal. Lab. Code §§ 200 et seq. (wages and overtime); (4) violation of Cal. Bus. & Prof. Code § 17200 et seq. (unfair business practices); (5) violation of Cal. Lab. Code § 1102.5 (whistleblower); (6) wrongful termination in violation of public policy; and (7) declaratory relief.

According to the Complaint, Plaintiff worked for Defendants as a Security Guard until they wrongfully terminated her on August 26, 2023. Plaintiff further alleges various employment violations and discrimination based on his race.

On July 3, 2024, Defendants filed the instant motion to compel arbitration. On September 24, 2024, Plaintiff filed an opposition. On October 1, 2024, Defendants filed a reply.

A “party asserting the FAA applies to an agreement has ‘the burden to demonstrate FAA coverage by declarations and other evidence.’” (Evenskaas v. California Transit, Inc. (2022) 81 Cal.App.5th 285, 292 [internal citation omitted].) “‘The FAA’s basic coverage provision, section 2, makes the FAA applicable to contracts “evidencing a transaction involving commerce.” (9 U.S.C. § 2.) Courts broadly construe section 2 to “provide for the enforcement of arbitration agreements within the full reach of the Commerce Clause.” [Citation.] “Accordingly, in most cases, the FAA mandates arbitration when contracts involving interstate commerce contain arbitration provisions.” ’ [Citations.]” (Mendoza v. Trans Valley Transport (2022) 75 Cal.App.5th 748, 761-762; 9 U.S.C. § 2 [“A written provision in . . . a contract evidencing a transaction involving commerce” to arbitrate a controversy shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for revocation of any contract].)

“The United States Supreme Court has identified ‘three categories of activity that Congress may regulate under its commerce power: (1) “the use of the channels of interstate commerce”; (2) “the instrumentalities of interstate commerce, or persons or things in interstate commerce, . . .”; and (3) “those activities having a substantial relation to interstate commerce, . . . i.e., those activities that substantially affect interstate commerce.” ’ [Citations.]” (Evenskaas, supra, 81 Cal.App.5th at p. 293.) “[A]ctivities in [the] third category—those that ‘substantially affect’ commerce—may be regulated so long as they substantially affect interstate commerce in the aggregate, even if their individual impact on interstate commerce is minimal.” (Ibid.)

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.)¿¿¿

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.)

Plaintiff does not actually oppose going to arbitration. Rather, Plaintiff seeks to revise the terms of the agreement. Defendant replies that there is no such requirement to compel arbitration.

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.) Civil Code §1633.7 requires the court give an electronic signature the same legal effect as a handwritten signature. (Civ. Code §1633.7(a); Espejo v. Southern California Permanente Medical Group (2016) 246 Cal.App.4th 1047, 1061, citing Ruiz, supra, 232 Cal.App.4th at pg. 843.) “An electronic record or electronic signature is attributable to a person if it was the act of the person. The act of the person may be shown in any manner, including a showing of the efficacy of any security procedure applied to determine the person to which the electronic record or electronic signature was attributable.” (Civ. Code §1633.9(a).)

In Ruiz, the Court held that the employer was unable to establish that the signature of the plaintiff was an “act of” the Plaintiff; and provided instructions on how to establish same:

Main did not explain that an electronic signature in the name of “Ernesto Zamora Ruiz” could only have been placed on the 2011 agreement (i.e., on the employee acknowledgement form) by a person using Ruiz’s “unique login ID and password”; that the date and time printed next to the electronic signature indicated the date and time the electronic signature was made; that all Moss Bros. employees were required to use their unique login ID and password when they logged into the HR system and signed electronic forms and agreements; and the electronic signature on the 2011 agreement was, therefore, apparently made by Ruiz on September 21, 2011, at 11:47 a.m.

Here, Plaintiff agreed to arbitrate his employment claims on December 5, 2022, when he electronically acknowledged acceptance of the Agreement. (Bhangoo Decl. ¶¶ 6, 8, 9, 10(d), 11, 12.) Plaintiff needed a unique login and password to access the Agreement. (Bhangoo Decl. ¶ 10(a), (b), (c), (d).) The signed Agreement indicates the date and time that Plaintiff accepted it. (Bhangoo Decl., Exhibit A.) Plaintiff is the only person who could have electronically signed via acceptance. (Bhangoo Decl. ¶ 21.) What is more, Plaintiff does not deny that he signed the Agreement.

Additionally, the Agreement applies to each Defendant because it covers Allied Universal Services of America LP and its subsidiaries, affiliates, and/or related companies. (Bhangoo Decl. ¶ 14.) Defendant Universal Protection Service, LP dba Allied Universal Security Services is a subsidiary of Universal Services of America LP. (Ibid.) Plaintiff does not take issue with this either. Instead, Plaintiff complains that Defendant did not quickly provide this information.

Federal law provides for enforcement of this Arbitration Agreement. (Bhangoo Decl., Exhibit A ¶ 8.) 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 Federal Arbitration Act, 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.)

Defendants met this burden, too. First, as discussed above, Defendant showed that the Agreement exists. Second, the Agreement covers the instant dispute because it covers “claims for discrimination and/or harassment; claims for wrongful termination;” as well as various other employment law claims and is not otherwise carved out. (Bhangoo Decl. Exhibit A, ¶¶ 3, 6.) Plaintiff does not dispute this either.

California law also favors arbitration for dispute resolution. The California Arbitration Act (“CAA”), codified at C.C.P. §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.” (C.C.P. §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.)

Plaintiff does not argue that the court should not enforce the Agreement because it is unconscionable. Lack of a complete stipulation to proceed to arbitration is not a defense to enforcement. As such, the court will not analyze other defenses.[2]

[1] The result is the same under California law because Defendant attached a copy of the Agreement 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] The court also declines to develop Defendants’ request for sanctions.