Judge: Yolanda Orozco, Case: 22STCV06267, Date: 2022-08-09 Tentative Ruling
Case Number: 22STCV06267 Hearing Date: August 9, 2022 Dept: 31
MOTION TO COMPEL ARBITRATION IS GRANTED
Background
On February 18, 2022, Plaintiff Jorge
Medrano filed a Complaint against BYD Coach and Bus LLC (“BYD”) and Does LLC.
The Complaint alleges, wrongful termination, violations of the FEHA and the
California Family Rights Act.
On July 13, 2022, Defendant BYD file this Motion to
Compel Arbitration and Stay Proceeding. Plaintiff filed Opposition papers to
the Motion on July 26, 2022. Plaintiff filed a reply on August 02, 2022.
Legal
Standard
Parties may be
compelled to arbitrate a dispute upon the court finding that: (1) there was a
valid agreement to arbitrate between the parties; and (2) said agreement covers
the controversy or controversies in the parties’ dispute.¿ (CCP § 1281.2; see
also Omar v. Ralphs Grocery Co. (2004)¿118 Cal.App.4th 955, 961.)
A party
petitioning to compel arbitration has the burden of establishing the existence
of a valid agreement to arbitrate and the party opposing the petition has the
burden of proving, by a preponderance of the evidence, any fact necessary to
its defense. (Banner Entertainment, Inc. v. Superior Court¿(1998) 62
Cal.App.4th 348, 356-57.)¿
“If a court of competent jurisdiction . . . has ordered
arbitration of a controversy which is an issue involved in an action or
proceeding pending before a court of this State, the court in which such action
or proceeding is pending shall, upon motion of a party to such action or
proceeding, stay the action or proceeding until an arbitration is had in accordance
with the order to arbitrate or until such earlier time as the court specifies.”
(CCP § 1281.4.)
Discussion
Existence of a Valid Agreement
Defendant BYD Coach & Bus LLC (“BYD”) asserts that a valid arbitration agreement (“Agreement”) was executed between BYD and Plaintiff Jorge Medrano on June 28, 2017. (Li Decl. Exh. A.) BYD asserts that the Agreement covers all of Plaintiff’s employment-related disputes and Plaintiff is thus obligated to arbitrate his claims against BYD.
The Agreement is titled “MUTUAL AGREEMENT TO ARBITRATE CLAIMS” and covers any “disputes that may arise between BYD Coach and Bus LLC.” (Li Decl. Exh. A.) The last portion of the Agreement reads:
“Voluntary Agreement
I ACKNOWLEDGE
THAT I HAVE CAREFULLY READ THIS AGREEMENT, THAT I UNDERSTAND ITS TERMS, THAT
ALL UNDERSTANDINGS AND AGREEMENTS BETWEEN THE COMPANY AND ME RELATING TO THE
SUBJECTS COVERED IN THE AGREEMENT ARE CONTAINED IN IT, AND THAT I HAVE ENTERED
INTO THE AGREEMENT VOLUNTARILY AND NOT IN RELIANCE ON ANY PROMISES OR
REPRESENTATIONS BY THE COMPANY OTHER THAN THOSE CONTAINED IN THIS AGREEMENT
ITSELF.
I UNDERSTAND THAT BY
SIGNING THIS AGREEMENT I AM GIVING UP MY RIGHT TO A JURY TRIAL.
I FURTHER ACKNOWLEDGE
THAT I HAVE BEEN GIVEN THE OPPORTUNITY TO DISCUSS THIS AGREEMENT WITH MY
PRIVATE LEGAL COUNSEL AND HAVE AVAILED MYSELF OF THAT OPPORTUNITY TO THE EXTENT
I WISH TO DO SO.”
(Id. at p. 5.)
Plaintiff does not dispute that his signature is on the Agreement but asserts he did not knowingly assent to arbitrate his claims. Plaintiff asserts that he signed the agreement during a weeklong orientation session that included watching work-related training videos and extensive documents regarding training, employee policies, and onboarding documents, including the Agreement. (Medrano Decl. ¶ 2.)
English is Plaintiff’s second language and Plaintiff’s counsel asserts that Plaintiff struggles to speak and read English. (Opp. at 1:11-13.) Plaintiff asserts that the Agreement as presented to him was “a standardized English-only form document drafted exclusively by Defendant and was filled with long, block paragraphs containing legal jargon” that he did not understand. (Medrano Decl. ¶ 3.)
Plaintiff asserts that Defendant knew he preferred to read and write in Spanish, but Plaintiff was too afraid of losing his employment, that he did not ask for a Spanish version of the documents to review. (Id. ¶ 3.) Plaintiff asserts that he felt rushed into signing all the employment documents provided to him because before staring his job, Defendant told Plaintiff he was required to sign all the documents in order to work for Defendant. (Id. ¶¶ 2, 4.)
“‘Ordinarily, one who accepts or signs an instrument, which on its face is a contract, is deemed to assent to all its terms, and cannot escape liability on the ground that he has not read it. If he cannot read, he should have it read or explained to him.” (1 Witkin, Summary of Cal. Law (9th ed. 1987), § 120, p. 145.) This is not only the California but the general rule. (3 Corbin, Contracts (1960) § 607, pp. 668–669 [“One who signs an instrument when for some reason, such as illiteracy or blindness, he cannot read it, will be bound by its terms in case the other party acts in good faith without trick or misrepresentation. The signer should have had the instrument read to him.’”] as cited in Randas v. YMCA of Metropolitan Los Angeles (1993) 17 Cal.App.4th 158, 163.)
Plaintiff has not asserted sufficient facts to show that Defendant’s acted in bad faith when they presented Plaintiff with the Arbitration agreement. First, Plaintiff did not ask that the agreement be given to him in Spanish. Defendant’s knowledge of Plaintiff’s alleged limited English skills does not obligate Defendant to accommodate Plaintiff by presenting him with an arbitration agreement in Spanish when Plaintiff has not made such a request. Moreover, Defendants Sr. HR Generalist, Kimberly McFerguson, states that in communications with Plaintiff over HR-related matters, they spoke in English. (McFerguson Decl. ¶ 3.) McFerguson attests that since July 2017, Plaintiff never asked for documents to be translated into Spanish or a Spanish interpreter. (Id. ¶¶ 4, 5.) Secondly, Plaintiff did not ask that someone explain the agreement to him. Third, the orientation was weeklong, and Plaintiff did not ask nor was he prevented by Defendant from asking for more time to read and understand the agreement or seek outside help in this regard.
For these reasons, Defendants have proven the existence of a valid Agreement, and the burden shifts to the Plaintiff to prove by a preponderance of the evidence, that the agreement is invalid and/or unenforceable. (Banner Entertainment, Inc., supra, 62 Cal.App.4th at 356-357.)
Unconscionability
Plaintiff asserts that the Agreement should not be enforced because it is unconscionable. California courts analyze unconscionability as having a procedural and a substantive element.” (Kinney v. United Healthcare Services, Inc. (1999) 70 Cal. App. 4th 1329.) “[B]oth elements must be present before a contract or contract provision is rendered unenforceable on grounds of unconscionability.” (Id.) The doctrine of unconscionability refers to “an absence of meaningful choice on the part of one of the parties together with contract terms which are unreasonably favorable to the other party.” (Sonic-Calabasas A, Inc. v. Moreno (2013) 57 Cal.4th 1109, 1133.) It consists of procedural and substantive components, “the former focusing on oppression or surprise due to unequal bargaining power, the latter on overly harsh or one-sided results.” (Id.)
Although both components of unconscionability must be present to invalidate an arbitration agreement, they need not be present in the same degree. (Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83, 114.) “Essentially a sliding scale is invoked which disregards the regularity of the procedural process of the contract formation, that creates the terms, in proportion to the greater harshness or unreasonableness of the substantive terms themselves. [Citations.] In other words, the more substantively unconscionable the contract term, the less evidence of procedural unconscionability is required to come to the conclusion that the term is unenforceable, and vice versa.” (Id.) “The party resisting arbitration bears the burden of proving unconscionability.” (Pinnacle Museum Tower Assn. v. Pinnacle Market Dev. (US), LLC (2012) 55 Cal.4th 223, 247.)
i.
Procedural Unconscionability
Plaintiff argues the Agreement is
procedurally unconscionable because it is a contract of adhesion given to
him “take it or leave it basis” without
opportunity for meaningful negotiation. However, an arbitration agreement
offered on a “take it or leave it basis” does not render the agreement
unenforceable. (See Legaltree v. Luce,
Forward Hamilton & Scripps (1999) Cal.App.4th 1105, 1127.
Moreover, the fact Plaintiff felt he had
to sign the Agreement as a condition of employment does not render the
agreement unenforceable. Courts have upheld arbitration agreements, even if
they were a contract of adhesion, “[w]hen, as here, there is no other indication of oppression
or surprise, ‘the degree of procedural unconscionability of an adhesion
agreement is low, and the agreement will be enforceable unless the degree of
substantive unconscionability is high.’” (Serpa
v. California Surety Investigations, Inc. (2013)
215 Cal.App.4th 695, 704 [internal citation omitted].) Plaintiff states that
one of the reasons he felt pressured into signing the agreement was because he
could not afford to lose his employment and he desperately needed the income.
(Medrano Decl. ¶ 4.)
“When a party pleads economic duress, that party must
have had no ‘reasonable alternative’ to the action it now seeks to avoid
(generally, agreeing to a contract). If a reasonable alternative was available,
and there hence was no compelling necessity to submit to the coercive demands,
economic duress cannot be established.” (CrossTalk Productions, Inc.
v. Jacobson (1998) 65 Cal.App.4th 631, 644.)
Here,
Plaintiff has not established that he had no reasonable alternative but to take
the job or that he could not find employment elsewhere. Nor has Plaintiff
stated he would not have signed the Agreement had he known what rights he was
giving up in exchange for employment. Thus, Plaintiff’s assertion that he felt economically
pressured to sign the Agreement, is insufficient to render the agreement
procedurally unconscionable. Plaintiff has not articulated facts that show
Defendant took action to prevent Plaintiff from fully reading and understanding
the Agreement, from asking for the Agreement in Spanish or an interpreter, from
asking that the Agreement be explained to him, or from asking for copies of the
Agreement.
Lastly, the fact Defendant did not attach
the arbitration rules, but only provided a link to the rules, is not sufficient
evidence of procedural unconscionability. (See Peng v. First Republic Bank
(2013) 219 Cal. App. 4th 1462, 1472 [“[W]e find the failure to attach the
[arbitration] rules, standing alone, is insufficient grounds to support a
finding of procedural unconscionability.”].)
Therefore, the Court does not find the
Agreement to be procedurally unconscionable.
ii.
Substantive Unconscionability
Substantive unconscionability focuses on the terms of the agreement and whether those terms are “so one sided as to “’shock the conscience.’” (Kinney v. United Healthcare Services, Inc. (1999) 70 Cal. App.4th 1329, 1330.) “To reiterate, we assess unconscionability with a sliding scale approach. [Citation] In light of the high degree of procedural unconscionability, even a low degree of substantive unconscionability could render the arbitration agreement unconscionable.” (Carmona v. Lincoln Millennium Car Wash, Inc. (2014) 226 Cal.App.4th 74, 85.)
Plaintiff alleges that the Agreement is
substantively unconscionable because it restricts the discovery Plaintiff may
conduct and fails to describe how Plaintiff may initiate arbitration. The
discovery provision in question states:
“Discovery
Each party shall have the right to take
depositions of three fact witnesses and any expert witness designated by
another party. Each party also shall have the right to make requests for
production of documents to any party and to subpoena documents from third
parties. Requests for additional depositions or discovery may be made to the
Arbitrator selected pursuant to this Agreement. The Arbitrator may grant such
additional discovery if the Arbitrator finds that the party has demonstrated
that it needs that discovery to adequately arbitrate the claim, taking into
account the parties' mutual desire to have a speedy, less-formal,
cost-effective dispute-resolution mechanism.”
(Li Decl. Exh. A at p. 2.)
The Discovery provision in question is mutually binding on both Parties and gives the Arbitrator the discretion to afford more discovery if needed. Moreover, courts have upheld limited discovery provisions in arbitration agreements. In Armendariz, the Supreme Court of California asserted that an employee is “entitled to discovery sufficient to adequately arbitrate their statutory claim, including access to essential documents and witnesses, as determined by the arbitrator(s)” and not unfettered discovery. (Armendariz, supra, 24 Cal.4th at 106; see also Mercuro v. Superior Court (2002) 96 Cal.App.4th 167, 184 [“Ultimately it is up to the arbitrator and the reviewing court to balance the need for simplicity in arbitration with the discovery needs of the parties.].) The fact Plaintiff’s discovery is limited does not render the Agreement substantively unconscionable.
Lastly, Plaintiff’s assertion that the agreement lacks clarity as to how he can initiate his claims is without merit given that the Agreement states how Plaintiff is to give notice:
“Time
Limits for Commencing Arbitration and Required Notice of All Claims
The Company and I agree that the aggrieved
party must give written notice of any claim to the other party no later than
the expiration of the statute of limitations (deadline for filing) that the law
prescribes for the claim. Otherwise, the claim shall be deemed waived. The
filing of a government complaint shall not extend the statute of limitations
for presenting any claim to arbitration. I understand that the aggrieved party
is encouraged to give written notice of any claim as soon as possible after the
event or events in dispute so that arbitration of any differences may take
place promptly.
Written notice to the
Company, or its officers, directors, employees or agents, shall be sent to
Human Resourced Department at the Company's then-current address. I will be
given written notice at the last address recorded in my personnel file.
The written notice
shall identify and describe the nature of all claims asserted, the facts upon
which such claims are based and the relief or remedy sought. The notice shall
be sent to the other party by certified or registered mail, return receipt
requested.”
(Li Decl. Exh. A at p. 2.)
Furthermore, any failure by Defendant to initiate arbitration could be deemed as a waiver of their right to compel arbitration. Accordingly, the Court finds that the Agreement is not substantively unconscionable. Thus, Defendant’s Agreement is valid and enforceable.
Conclusion
Defendant BYD Coach and Bus LLC’s Motion to Compel Arbitration and Stay the Action is GRANTED.
Moving Party to give notice.
The
parties are strongly encouraged to attend all scheduled hearings virtually or
by audio. Effective July 20, 2020, all matters will be scheduled virtually
and/or with audio through the Court’s LACourtConnect technology. The parties
are strongly encouraged to use LACourtConnect for all their matters. All masking
protocols will be observed at the Courthouse and in the courtrooms.