Judge: Yolanda Orozco, Case: 22STCV30593, Date: 2023-01-18 Tentative Ruling
Case Number: 22STCV30593 Hearing Date: January 18, 2023 Dept: 31
MOTION
TO COMPEL ARBITRATION AND
STAY/DISMISS
PROCEEDINGS
TENTATIVE RULING
The Defendants’
Motion to Compel Arbitration and Stay/Dismiss Proceedings is DENIED.
Background
On September 19, 2022, Plaintiff Maria Melendez filed a
Complaint against Defendants HCSG West LLC; Hilda Reyes; and Does 1 to 25 for
violations of the Fair Employment and Housing Act (FEHA).
The Complaint alleges causes of action for:
1) Discrimination
Based on National Origin/ Ancestry Under FEHA;
2) Discrimination
Based on Disability Under FEHA;
3) Discrimination,
Violation and Interference with CFRA and/or FMLA and/or FEHA;
4) Failure
to Reasonably Accommodate Under FEHA;
5) Failure
to Engage in an Interactive Process Under FEHA;
6) Harassment
Under FEHA; 7. Retaliation Under FEHA;
7) Violation
of Labor Code § 1102.5; and
8) Failure
to Prevent Discrimination, Retaliation and Harassment Under FEHA.
On November 22,
2022, Defendants filed a Motion to Compel Arbitration and Stay Proceedings or
Dismiss the Case.
On January 04,
2023, Plaintiff filed opposing papers.
On January 10,
2023, Defendants filed a reply.
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.¿(Code Civ. Proc., § 1281.2; 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, whether in this
State or not, 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.” (Code Civ. Proc., § 1281.4.)¿
Request for Judicial Notice
The court may take judicial notice of “official acts of the
legislative, executive, and judicial departments of the United States and of
any state of the United States” under Evidence Code section 452 subdivision
(d). However, the court may only judicially notice the existence of the record,
not that its contents are the truth. (Sosinsky v. Grant (1992) 6
Cal.App.4th 1548, 1565.)
Plaintiff requests Judicial Notice of the following:
1. Certificate of Status of HCSG West, LLC, attached as Exhibit A to the 2 Declaration of Jeffrey C. McIntyre In Support of Plaintiff’s Opposition to Defendants' Motion Compel Arbitration.
2. Certificate of Status of Healthcare Services Group, Inc., attached as Exhibit B to the Declaration of Jeffrey C. McIntyre In Support of Plaintiffs Opposition to Defendants' Motion to Compel Arbitration;
Plaintiff’s request for Judicial Notice is GRANTED.
Evidentiary Objections
Defendants submit
Evidentiary Objections to Plaintiff Maria Melendez’s Declaration filed in
Opposition to this instant motion.
Objections Nos. 1 to 12 are
OVERRULED.
Discussion
1.
Existence of an Agreement¿¿
Defendants assert
that Plaintiff signed a binding arbitration agreement that expressly required
her to arbitrate her employment-related claims against Defendant.
Defendant HCSG
West asserts it is a subsidiary of joint employer Healthcare Services Group,
Inc. (“Healthcare Services”) and that Plaintiff executed an arbitration agreement
whereby she agreed to submit all claims arising out of her employment to
binding arbitration.
Defendants assert
that when Plaintiff was hired, on or about May 01, 2018, she completed an
Employment Application and other new hire paperwork. (Ford Decl. ¶ 3.) Defendants
presented Plaintiff with a copy of its California Employee Handbook upon hire,
which contained a copy of HCSG’s Arbitration Agreement and a document titled
Employee Handbook Acknowledgement. (Id. ¶ 5, Exhibit A.).
Defendants include
a copy of the signed Arbitration Agreement (the “Agreement”) and Plaintiff’s
signature on the Employee Handbook Acknowledgment. (Ford Decl. Ex. A, B.)
The Agreement is
titled:
“EXHIBIT
A TO EMPLOYEE HANDBOOK
ARBITRATION
AGREEMENT
In consideration of the employment
relationship between Healthcare Services Group, Inc. (“Company”) and
[Plaintiff] (“Employee”) (collectively the “Parties”), and the mutual desire of
the Parties to enter into this Arbitration Agreement (the “Agreement”), the
Parties hereby agree that any all disputes, claims, or controversies between
the Parties arising out of or relating to this Agreement, the employment
relationship between the Parties, or the formation or termination of the
employment relationship, that are not resolved by mutual agreement, shall be
resolved by final and binding arbitration, including any claims that Company
may have against Employee or that Employee may have against Company.
[. . .]
This Agreement shall be enforceable
under and subject to the Federal Arbitration Act, 9 U.S.C. Sec. 1, et seq.
CLAIMS SUBJECT TO ARBITRATION
The Claims coved by this Agreement
(the “Claims”) include, but are not limited to, claims for: . . the California
Fair Employment and Housing Act (“FEHA”) . . ..”
(Ford Decl. Ex.
A.)
The Court agrees
that that Agreement governs this instant controversy and is governed by the
Federal Arbitration Act (“FAA”). (See Victrola 89, LLC v. Jaman Properties 8 LLC (2020) 46 Cal.App.5th 337, 346 [where an
arbitration provision invokes the FAA with regard to ‘enforcement’ of the
provision, the FAA and not the California Arbitration Act (CAA) controls for
purposes of compelling arbitration].)
2. Defendants
Have the Right to Enforce Agreement under the Agency Exception
Defendants assert
that HCSG West is a wholly owned subsidiary of Healthcare Services, and that
Plaintiff was jointly employed by HCSG West and Healthcare Services. (Ford
Decl. ¶ 8.) HCSG west paid Plaintiff’s wages and supervised and directed her
work on a day-to-day basis via Defendant Hilda Reyes while Healthcare Services,
exercised control over the operations, policies, and practices to which
Plaintiff was subject. (Id.) All employees who had the power to hire,
terminate, or set Plaintiff’s pay rate or approve changes to her schedule,
including approving overtime, were all employed by Healthcare Services. (Id.)
For this reason,
HCSG West and Defendant Reyes assert they have standing to enforce the
Agreement as third-party beneficiaries of the Agreement and under the doctrine
of equitable estoppel.
The Court need
not decide if Defendants have standing to enforce the Agreement as third-party
beneficiaries or under the doctrine of equitable estoppel because the agency
exception applies to the Agreement.
“The agency exception is another exception to
the general rule that only a party to an arbitration agreement may enforce
it. (Citation).) The exception applies, and a defendant may enforce
the arbitration agreement, ‘when a plaintiff alleges a defendant acted as an
agent of a party to an arbitration agreement....’ (Citation.).” (Garcia v.
Pexco, LLC (2017) 11 Cal.App.5th 782, 788; see also Dryer v. Los
Angeles Rams (1985) 40 Cal.3d 406, 418.)
Here, the operative Complaint alleges an agency
relationship between the signatories of the Agreement and the Defendants named
in the Complaint: “defendants, including officers, directors or managing agents
of defendants, who had knowledge of and authorized and ratified said conduct .
. . .” (Compl. ¶¶ 15, 27, 37, 47, 56, 66, 75, 85, 94.) Thus, Defendants are all
agents of Healthcare Services, both by Defendants’ own admission and by
Plaintiff’s allegations in the Complaint. Even if Defendants are not
signatories to the Agreement, “they are entitled to benefit from the
arbitration provisions” and the dispute can be compelled to arbitration. (See Dryer,
30 Cal.3d at 418 [“If, as the complaint alleges, the individual defendants,
though not signatories, were acting as agents for the Rams, then
they are entitled to the benefit of the arbitration provisions. (Citation.)
Thus, our conclusion that this entire dispute be referred to arbitration
applies to the individual defendants as well as to the Rams.”].)
Based on the
foregoing, the Court finds that Defendants can enforce the Agreement and compel
Plaintiff to arbitrate her claims under the agency exception.
3.
Plaintiff’s Opposition to Enforcing Agreement
Plaintiff does
not dispute that she signed the Agreement but asserts that her consent to the
Agreement was obtained due to undue influence, and the Agreement is thus
unenforceable due to lack of mutual assent. On a motion to compel arbitration, “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. No jury trial is available
for a petition to compel arbitration.” (Engalla v. Permanente Medical Group,
Inc. (1997) 15 Cal.4th 951, 972 [citations omitted].)
Plaintiff asserts
that she cannot read or write English and that she could not read or understand
the documents that were provided to her in or about May 2018. (Melendez Decl.
¶¶ 6, 8, 9.) Plaintiff asserts that on May 2018, she and about six other workers
were called into the office and told that if they wanted to stay, they needed
to fill out certain paperwork. (Id. ¶ 6.) None of the paperwork was in
Spanish and when Plaintiff asked the supervisor running the meeting, who was
also the only Spanish-speaking person present from management if she could
review the Spanish version of the documents, she and the other employees were
informed that there was no Spanish translation available, and that he did not
have time to translate the documents, that the documents were “routine
paperwork” and if she signed she would receive Spanish copies at a later time.
(Id. ¶ 8.)
Plaintiff asserts
that she did not know what she was signing, but that she signed the documents
because she did not want to get in trouble and that she never received a
Spanish translation of the documents, despite having requested a copy and
having been promised to receive one. (Melendez Decl. ¶¶ 10, 12.)
“Although it is true that when a person with the ability to read and understand an instrument signs it, he is bound by the provisions of such instrument, in the absence of fraud or imposition, it is likewise true that a party to a contract will not be bound by it unless he assents to it and, if he did not in reality assent, such want of assent may be shown in order to avoid the effect of his signature.” (Wetzstein v. Thomasson (1939) 34 Cal.App.2d 554, 559.)
Plaintiff has presented her own declaration, signed under
oath, that she speaks limited English and that she could not read or understand
the Agreement, that she requested that the agreement be translated, or that a
Spanish version of the Agreement be provided to her. Defendants have not
presented any evidence to rebut Plaintiff’s assertion that she could not read
or understand the agreement or that upon her request, the Agreement was
explained to her.
Plaintiff has presented
evidence that the Agreement was not explained to her, she was told that she
needed to fill out certain papers that were “routine paperwork,” but was not
told the purpose of the documents she was signing, despite her request for a
translation. (Melendez Decl. ¶¶ 6, 8.) Moreover, Plaintiff presents evidence
that Defendants acted in bad faith in refusing to translate the documents and
then promising to provide Spanish copies at a later time if she signed the
documents first. (Melendez Decl. ¶ 8.) No Spanish translations of the documents
were ever provided. (Melendez Decl. ¶ 11.) Defendant failed to provide evidence
to rebut Plaintiff’s assertion that the Agreement lacked mutual assent.
While it is true that nothing
prevented Plaintiff from taking the documents home and having someone else
translate them, there is no evidence that Plaintiff was informed of this
option. Although Plaintiff does not directly state that she was told she had to
sign the Agreement on the spot, Plaintiff does state that her request to have
the documents translated was denied by the only Spanish-speaking manager who
stated he had no time and Spanish copies would be provided at a later time if
Plaintiff signed. (Melendez Decl. ¶ 9.)
Fraud in the “execution” or “inception” of a contact “goes to the inception or execution of the agreement, so that 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, mutual assent is lacking, and the contract is void.” (Rosenthal v. Great Western Fin. Securities Corp. (1996) 14 Cal.4th 394, 415 [italics original].) Here, Plaintiff alleges sufficient facts to show that her consent to the agreement was fraudulently induced based on Defendants’ representations that the Agreement was routine paperwork and that a Spanish copy of the Agreement would be provided if she signed first. (Melendez Decl. ¶¶ 6, 8.) Defendants fail to present any evidence to rebut Plaintiff’s declaration.
In Naranjo v. Superior Court
(2021), the Appeal Court found plaintiff’s arbitration agreement showed a lack
of mutual assent because although the Plaintiff did not describe any difficulty
understanding Spanish, she informed the defendant that she “did not understand
some of the documents” she was signing, and nobody attempted to explain the
documents to her. (Najarro v. Superior Court (2021)
70 Cal.App.5th 871, 887.) “Defendants just
flipped to the signature page, put their hand over the document and had me
sign, stating, ‘it's just a requirement to work for the company,’ and did
not permit me to read it.” (Id.) In Naranjo, the
Appeal Court found fraud in the execution of the agreement because the
Plaintiff could not understand the arbitration agreement, communicated that
fact to the defendant but no explanation was provided, was told the agreement
was a requirement to work for the defendant and was prevented from reading the
agreement. (Id.)
In Rosenthal v. Great Western Fin. Securities Corp. (1996), the California Supreme Court held that although misrepresentations about the nature or character of the agreement “do not negate the other party's apparent manifestation of assent, if the second party had reasonable opportunity to know of the character or essential terms of the proposed contract.’ (Rest.2d Contracts, § 163.)” (Rosenthal v. Great Western Fin. Securities Corp. (1996) 14 Cal.4th 394, 423 [italics added].) However, a party’s limited ability to understand English may warrant a different result when the plaintiff relies on the defendant’s representations as to what the “terms of the agreements” are such that “plaintiffs would not have been negligent in relying on the [defendants’] representatives instead of reading the agreements themselves.” (Id. at 428; see also C.I.T. Corp. v. Panac (1944) 25 Cal.2d 547, 560 [plaintiff’s illiteracy and their reliance on the representations regarding the character of the contract was sufficient to support a finding of fraud in the execution.].)
Plaintiff has presented evidence that she was unable to understand what she was signing, and that she communicated her inability to understand to Defendants, who refused to translate or explain the terms of the Agreement or the nature of the Agreement. (Melendez Decl. ¶ 8.) Defendants offer no evidence to rebut Plaintiff’s declaration and fail to show that the Agreement was explained to her, that she never requested that the Agreement be explained to her, or that she never requested a Spanish version of the documents she signed on or about May of 2018. (Melendez Decl. ¶ 6.)
In the absence of contradicting evidence, Plaintiff’s declaration is sufficient to show that the Agreement was never explained to her or that she was informed that she was signing an arbitration agreement waiving her right to a jury trial. Instead, she signed the Agreement based on the Defendants’ representations that “if she wanted to stay she would need to fill out certain paperwork” and that the documents she was signing were “routine paperwork.” (Melendez Decl. ¶¶ 6, 8.) Moreover, Plaintiff could not discover the nature of the Agreement because no Spanish copy was provided to her despite the promise that one would be provided at a later time. (Melendez Decl. ¶ 8.) Plaintiff sufficiently alleged that she would only be entitled to a Spanish translation of the documents if she signed the documents. (Id.)
Accordingly, Plaintiff presented sufficient evidence of fraud in the execution because she relied on Defendants’ representation as to the nature of the Agreement being only routine paperwork rather than an arbitration agreement, was induced into signing the agreement based on that representation and the promise that a Spanish translation would be provided if she signed, and since no translation was provided, Plaintiff could not discover the nature of the agreement. (Melendez Decl. ¶ 8.) Furthermore, Defendants have failed to present any evidence to rebut Plaintiff’s declaration.
Based on the foregoing, the Defendants’ Motion to Compel Arbitration is DENIED.
Conclusion
The Defendants’ Motion to Compel Arbitration and Stay/Dismiss Proceedings is DENIED.
Moving party to give notice.