Case No.: 18CV335817

Defendants American Residential Services, LLC and ARS Acquisition Holdings, LLC (“Defendants”) have filed a motion to compel arbitration, based on an arbitration addendum to the Employee Handbook signed by Plaintiff Emma Ramirez (“Plaintiff”) Plaintiff argues that the motion by Defendants delayed in bringing the motion, and that the arbitration agreement is unenforceable because both procedurally and substantively unconscionable.

In California, “the party seeking arbitration bears the burden of proving the existence of an arbitration agreement by a preponderance of the evidence, and the party opposing arbitration bears the burden of proving by a preponderance of the evidence any defense, such as unconscionability.” (Peng v. First Republic Bank (2013) 219 Cal.App.4th 1462, 1468 (internal citations omitted). With respect to the summary proceedings under Code Civ. Proc. § 1281.2, “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.” (Id., internal quotations omitted).

The Court finds that Defendants have met their burden of establishing the existence of the arbitration agreement. Defendants have provided evidence that Plaintiff signed a detailed and clear “Dispute Resolution Process” agreement (“Arbitration Agreement”) that includes the requirement to arbitrate if other measures, such as mediation, are unsuccessful. The Arbitration Agreement was established by declarations that the signed document is found in Defendants’ business records, and that an employee witnessed Plaintiff’s signature on the Arbitration Agreement.

The Court finds that Defendants did not delay filing the motion and have not waived the right to arbitrate. Plaintiff’s claim that the Defendants were served in October 2018 is not borne out by the court’s records. Plaintiff filed proofs of service for other named Defendants, Atlas-Trillo and Rescue Rooter, referencing service on the “general manager” and “accounting manager” in October 29, 2018. No proofs of service on these Defendants have ever been filed with the Court, and the Court has no basis to dispute the declaration of Defendants that they were first served in January of 2019. Plaintiff was clearly award that these Defendants are Delaware limited liability companies based in Tennessee, as the Complaint so alleges. Defendants have designated agents for service of process, and Plaintiff does not and could not argue that service by delivery to a general or accounting manager for a different entity is valid.

In any event, Defendants have done nothing to pursue litigation except to file an answer, which includes the affirmative defense of an agreement requiring arbitration. Plaintiff has not argued and could not establish that the motion to compel arbitration filed within two months after service was unreasonable or caused any prejudice.

As to Plaintiffs’ claims that the agreement is unconscionable, “[t]he prevailing view is that [procedural and substantive unconscionability] must both be present in order for a court to exercise its discretion to refuse to enforce a contract or clause under the doctrine of unconscionability.” (Armendariz v. Foundation Health Psychcare Services [“Armendariz”] (2000) 24 Cal.4th 83, 114 [internal citation and quotation marks omitted].) Notably, no declaration signed by Plaintiff has been presented to support this argument, and the circumstances as to her signature on the document is undisputed.

There is no dispute that the employment agreement was drafted by Defendants and it appears to be a standard, pre-printed form. However, the Arbitration Agreement contains a clause entitled “AN ASSOCIATE’S RIGHT TO OPT OUT OF ARBITRATION” that states that “arbitration is not a mandatory condition of my employment.”

Substantive unconscionability focuses on the terms of the agreement and whether those terms are “overly harsh” or “one-sided” so as to “shock the conscience.” (See Armendariz v. Foundation Health Psychcare Services, Inc. (“Armendariz”) (2000) 24 Cal. 4th 83, 114; Pardee Construction Co. v. Superior Court (2002) 100 Cal.App.4th 1081, 1090.) In assessing substantive unconscionability, the “paramount consideration” is mutuality of the obligation to arbitrate. (Nyulassy v. Lockheed Martin Corp. (2004) 120 Cal.App.4th 1267, 1287.) The Arbitration Agreement is clear that it requires both parties to participate in arbitration and is not one-sided.

Plaintiff’s other arguments are not based on current law, and are not supported. To the extent that the Armendariz requirements are good law (and the Court notes that the Arbitration Agreement is specifically based on the FAA), the Court finds that the Arbitration Agreement complies with each of the requirements set forth in the California Supreme Court’s decision in Armendariz, supra, 24 Cal.4th, for employment related arbitrations. The Arbitration Agreement requires proceeding to arbitration under the AAA rules for Employment Arbitration and Mediation Procedures, which provide for discovery, payment of the arbitration costs by the employer, requires a written award, and provides for all relief that would be available in court.

Plaintiff has not met her burden to show either procedural or substantive unconscionability, and the motion to compel arbitration is GRANTED, and this action is stayed pending completion of the arbitration. The currently-scheduled CMC date of June 11, 2019 is hereby VACATED, and the matter is set for arbitration status review on December 12, 2019 at 10:00 a.m.

Moving parties shall prepare the order.