CASE NO.: BC596278

HEARING DATE: 4/29/16

DEPARTMENT: 37

CALENDAR NO.: 8

TRIAL DATE: None

NOTICE: OK

SUBJECT: Motion to Compel Arbitration

MOVING PARTY: Defendants Citibank, N.A., Citigroup, Inc., Citicorp, and Rosa Deanda-Boone

OPPOSING PARTY: Plaintiff Yolanda Morales

COURT’S TENTATIVE RULING

The motion is granted. Counsel for Defendants to give notice.

STATEMENT OF THE CASE

This action follows Defendants’ discharge of Plaintiff, who prior to her discharge was employed as an assistant branch manager. In the complaint, Plaintiff asserts causes of action for violations of the Fair Employment and Housing Act, whistleblower retaliation in violation of Labor Code section 1102.5, wrongful termination in violation of public policy, various wage-and-hour claims, fraud, defamation, and intentional infliction of emotional distress. Defendants move to compel arbitration of the dispute based on an arbitration agreement Plaintiff signed in connection with her employment. For the reasons set forth below, the motion is granted.

EVIDENTIARY OBJECTIONS

Plaintiff objects to certain statements made in the declaration of Marilyn Burman. Ms. Burman is an Employee Relations Advisor employed by Citigroup Management Corp., an affiliate of Defendants. She states that the facts set forth in her declaration are based on her own personal knowledge or her review of Citi records maintained in the ordinary course of business. She states that she is familiar with the manner in which Citi maintains its employee data, the procedure for new hire “onboarding,” and the process for employees to review and acknowledge company policies. She also states that she has reviewed the personal records and related employment records for Plaintiff, and that the information she reviewed was stored in Citi’s human resources applications in the ordinary course of business.

Plaintiff contends that certain statements in Ms. Burman’s declaration lack foundation and/or are speculative, conclusory, or hearsay. Plaintiff also contends that the documents attached to Ms. Burman’s declaration are not properly authenticated. After reviewing Plaintiff’s objections and Ms. Burman’s declaration, the court overrules objections 1-36. Ms. Burman has established a sufficient foundation for the statement she makes in her declaration. She states that she is familiar with the way in which Citi

maintains employee records by virtue of her position with Citigroup Management Corp., and that she has reviewed the records pertaining to Plaintiff’s employment. Having established the basis for her personal knowledge of the records pertaining to Plaintiff, Ms. Burman also authenticates the records she presents as exhibits to her declaration. The court may properly consider the declaration and accompanying documents in ruling on Defendants’ motion to compel arbitration.

DISCUSSION

I. Applicable Legal Principles

As an initial matter, in California and under federal law, public policy favors arbitration as an efficient and relatively less expensive means of resolving private disputes. (Moncharsh v. Heily & Blase (1992) 3 Cal.4th 1, 8-9; AT & T Mobility LLC v. Concepcion (2011) 563 U.S. 333, 339.) Accordingly, whether an agreement is governed by the California Arbitration Act or the Federal Arbitration Act, courts resolve doubts about the scope of arbitration agreement in favor of arbitration. (Moncharsh, at p. 9; Comedy Club, Inc. v. Improv West Associates (9th Cir. 2009) 553 F.3d 1277, 1284.) To the extent Plaintiff suggests that policy generally disfavors enforcement of private agreements to arbitrate, these authorities suggest otherwise.

II. The Agreement to Arbitrate

The effect of the court’s ruling on the evidentiary objections is that Defendants have established that Plaintiff entered into an agreement to arbitrate the causes of action asserted in her complaint. In her declaration, Ms. Burman attests to the manner in which new employees are presented documentation in connection with their employment. In Plaintiff’s case, her letter of employment included an arbitration provision as a condition of employment. Following her initial interview, Plaintiff entered into an online “onboarding” process, which requires new employees to complete and electronically acknowledge certain documents as part of their employment. As part of the process, Plaintiff electronically acknowledged an arbitration policy contained within an employee handbook. These arbitration provisions are the basis for Defendants’ motion to compel arbitration.

Together, the letter of employment and employee handbook create an agreement to arbitrate the causes of action at issue here. The letter of employment made Plaintiff’s agreement to the arbitration procedure a condition of her employment. It provides, “Any controversy or dispute relating to your employment with or separation from Citi will be resolved in accordance with Citi’s Employment Arbitration Policy as set forth in the Principles of Employment which you will be required to sign as a condition of your Citi employment.” (Burman Decl., Exh. D, p. 4.) In turn, the Employment Arbitration Policy “makes arbitration the required and exclusive forum for the resolution of all disputes arising out of or in any way related to employment based on legally protected rights . . . that may arise between an employee or former employee and Citi . . . .” (Burman Decl., Exh. A, p. 1.) By accepting employment with Defendants and

acknowledging the Employment Arbitration Policy, Plaintiff agreed to arbitrate any controversy or dispute relating to or arising out of her employment. Thus, Plaintiff agreed to arbitrate the causes of action asserted in her complaint.

The court notes that while Plaintiff raises a number of issues in opposition to this motion, she acknowledges the relevant documents she received at her initial interview and during the onboarding process. Accordingly, the court considers these documents as a valid basis for compelling arbitration pursuant to a private agreement.

II. Mutual Assent

Plaintiff first contends that the arbitration agreement fails for lack of mutuality. The general rule is that mutual assent to a contract is determined by an objective standard. Thus, courts look to “ ‘the outward manifestations or expressions of the parties, i.e., the reasonable meaning of their words and acts, and not their unexpressed intentions or understandings.’ ” (American Employers Group, Inc. v. Employment Development Dept. (2007) 154 Cal.App.4th 836, 847.) Here, Plaintiff contends that she did not assent to the arbitration agreement because Defendants never explained the terms of the agreement, filled the agreement with legalese, and made acceptance of the agreement a condition of employment. Plaintiff also takes issue with the title “Employment Arbitration Policy,” which she contends failed to adequately convey to her that she was entering into an agreement to arbitrate. However, under an objective standard, Plaintiff’s arguments fail to show lack of mutual assent. The plain language of the employment letter and Employment Arbitration Policy makes clear that employees are agreeing to arbitrate disputes arising out of their employment. As discussed, Plaintiff does not dispute that she acknowledged these documents, and her suggestion that she did not understand the terms of the agreement does not show lack of mutual assent. (Atlas Assurance Co. v. McCombs Corp. (1983) 146 Cal.App.3d 135, 144.)

III. Mutuality

Plaintiff also contends that the agreement is not mutual in the obligations it imposes on her and Defendants. For instance, she argues that the agreement permits Defendants to bring to court certain claims for injunctive relief while requiring her to submit all claims to arbitration. However, the agreement states that “all disputes” arising from Plaintiff’s employment are subject to arbitration, regardless of who raises them. The only exception is that Defendants may seek injunctive relief in court in connection with an employee’s improper use and disclosure of confidential information. The California Supreme Court recently addressed this issue, noting that “[a]greements to protect sensitive information are a regular feature of modern litigation, and they carry with them no inherent unfairness.” (Baltazar v. Forever 21, Inc. (2016) 367 P.3d 6, 15.) Accordingly, the provision for injunctive relief is by itself not sufficient to show a lack of mutuality in obligation.

Plaintiff also argues that the agreement permits Defendants to serve as the “gatekeeper” of which claims should be submitted to arbitration. However, the

agreement expressly provides that Defendants “shall” submit any demand for arbitration to arbitration within 30 days of receipt or as soon as possible thereafter. (Burman Decl., Exh. A, p. 2.)

Plaintiff argues that the agreement lacks mutuality because it permits Defendants to unilaterally revise the arbitration policy with 30 days’ written notice. However, California law permits employers to unilaterally alter the terms of an employment agreement so long as the changes do not run afoul of the Labor Code. (Schachter v. Citigroup, Inc. (2009) 47 Cal.4th 610, 619.) Accordingly, this provision generally reaffirms the rights already secured by California law.

The agreement does not deprive Plaintiff of the discovery she is entitled to. The AAA rules provide Plaintiff the legally prescribed amount of discovery given the nature of her dispute. (See Roman v. Superior Court (2009) 172 Cal.App.4th 1462, 1476.) Similarly, the agreement does not deprive Plaintiff of the right to select an arbitrator. Rather, under the AAA rules, the parties jointly participate in the process of selecting an arbitrator. (See Declaration of Kimpo Ngoi, Exh. A, Rule 12.)

For these reasons, the agreement does not lack mutuality.

IV. Unconscionability

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.) The doctrine 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.’ ” (Ibid.) Although both components of unconscionability must be present to invalidate an arbitration agreement, they need not be present in the same degree. (Armendariz, supra, 24 Cal.4th at p. 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.’ ” (Ibid.)

A. Procedural Unconscionability

Plaintiff contends that the agreement was procedurally unconscionable because it was presented to her as a contract of adhesion and because the AAA Rules were not attached to the agreement.1 By itself, the adhesive nature of the agreement presents only a minor degree of procedural unconscionability. As a practical matter, employers

use pre-employment arbitration contracts to exert economic pressure on employees to sign a contract, since few employees are in a position to be able to refuse a job because of an arbitration clause. (Fitz v. NCR Corp. (2004) 118 Cal.App.4th 702, 722.) However, adhesion contracts in the employment context have become commonplace, and the absence of an ability to negotiate the arbitration agreement is not in and of itself determinative. Thus, “the finding that [an] arbitration provision was part of a nonnegotiated employment agreement establishes, by itself, some degree of procedural unconscionability.” (Ajamian v. CantorCO2e, L.P. (2012) 203 Cal.App.4th 771, 796; Roman, supra, 172 Cal.App.4th at p. 1470 [“adhesion contracts in the employment context typically contain some measure of procedural unconscionability”].)

On the second point, while some courts have found that the failure to attach arbitration rules may support a finding of procedural unconscionability (Trivedi v. Curexo Technology Corp. (2010) 189 Cal.App.4th 387, 393), the failure to do so represents only one factor in the analysis and is not determinative (Lane v. Francis Capital Management LLC (2014) 224 Cal.App.4th 676, 690). Because the AAA Rules are readily available on the Internet, their incorporation by reference into the agreement likely did not result in surprise to Plaintiff, who could have accessed and retrieved a copy of the referenced rules. (Id. at p. 691.)2

In sum, Plaintiff has shown only some degree of procedural unconscionability.

B. Substantive Unconscionability

Plaintiff fails to show that any term of the agreement is substantively unconscionable. On this issue, Plaintiff again contends that the agreement lacks mutuality of obligation. However, for the reasons already discussed, the agreement does not lack mutuality. Accordingly, Plaintiff fails to show that the agreement is unconscionable and therefore unenforceable.

IV. Waiver

Plaintiff contends that Defendants have waived their right to compel arbitration by virtue of their conduct in connection with Plaintiff’s dispute and this litigation. In light of the policy favoring arbitration, courts do not lightly infer waiver. (Bower v. Inter-Con Security Systems, Inc. (2014) 232 Cal.App.4th 1035, 1042.) Consequently, the party seeking to prove waiver of the right to arbitrate bears a heavy burden, and all doubts will be resolved in favor of arbitration. (Ibid.) The party asserting waiver must demonstrate (1) knowledge of an existing right to compel arbitration, (2) acts inconsistent with that existing right, and (3) prejudice to the party opposing arbitration. (Ibid.) In addition,

courts consider a number of factors to determine whether waiver has occurred. These include “ ‘whether the party’s actions are inconsistent with the right to arbitrate; whether the litigation machinery has been substantially invoked and the parties were well into preparation of a lawsuit before the party notified the opposing party of an intent to arbitrate; whether a party delayed for a long period before seeking a stay; whether important intervening steps (e.g., taking advantage of judicial discovery procedures not available in arbitration) had taken place; and whether the delay affected, misled, or prejudiced the opposing party.’ ” (Ibid.)

Plaintiff fails to carry her burden on this issue. She argues that Defendants were dilatory in seeking to compel arbitration, noting that the parties had spent more than four months litigating this case before Defendants filed this motion. During that time, Plaintiff notes that she had begun conducting discovery and filed a discovery motion with the court. Plaintiff argues that Defendants essentially waited to compel arbitration until Plaintiff had filed her discovery motion. However, participating in litigation does not by itself demonstrate a waiver of the right to compel arbitration. (See Groom v. Health Net (2000) 82 Cal.App.4th 1189, 1196 [the filing of her demurrer does not necessarily amount to a waiver of the right to compel arbitration].) Here, Plaintiff initiated the discovery and filed the discovery motion. Defendants then moved to compel arbitration, only four months after Plaintiff filed suit.3 Accordingly, Defendants have not waived the right to bring this motion.

V. Injunctive Relief

Plaintiff’s final argument is that at the very least her demand for injunctive relief and reinstatement should remain in this court. However, this relief also is subject to the arbitration agreement, which authorizes the arbitrator to grant such relief. The authorities on which Plaintiff relies do not require a different result, since those cases involved conduct affecting the public at large. (See Broughton v. Cigna Healthplans of California (1999) 21 Cal.4th 1066, 1082.) Accordingly, Plaintiff must arbitrate this aspect of her complaint as well.

For these reasons, the motion to compel arbitration is granted.