Case Number: 19STCV34236 Hearing Date: February 28, 2020 Dept: 78

Superior Court of California

County of Los Angeles

Department 78

EDMOUND DAVOUDIAN;

Plaintiff,

vs.

KEYVAL, INC., et al.;

Defendants.

Case No.:

19STCV34236

Hearing Date:

February 28, 2020

[TENTATIVE] RULING RE:

Defendant keyval, inc.’s Motion to Compel Arbitration

Defendant Keyval, Inc’s Petition to Compel Arbitration is GRANTED.

FACTUAL BACKGROUND

This is an action for disability discrimination. The First Amended Complaint (“FAC”) alleges as follows. Plaintiff Edmound Davoudian (“Davoudian”) was employed by Defendant Keyval, Inc. (“Keyval”) beginning around February 2017 as a Sales Representative. (FAC ¶5.) Davoudian began experiencing panic attacks and was placed on short-term disability from October 2018 to April 2019. (FAC ¶ 7.) When attempting to return to work in April 2019, Davoudian was informed by the general manager that he had been terminated in January 2019. (FAC ¶ 9.)

procedural history

Davoudian filed the Complaint on September 26, 2019, alleging eight causes of action:

Disability Discrimination

Failure to accommodate

Failure to engage in a good faith interactive process

Retaliation

Wrongful termination

Failure to produce personnel file and employment records

Retaliation in violation of CFRA

Davoudian filed a FAC on October 17, 2019, alleging eleven causes of action:

Disability Discrimination

Failure to accommodate

Failure to engage in a good faith interactive process

Failure to take reasonable steps to prevent discrimination in the workplace

Retaliation

Wrongful termination

Failure to produce personnel file and employment records

Retaliation in violation of CFRA

Failure to provide meal periods and rest periods or compensation in lieu

Knowing and intentional failure to comply with itemized wage statement provisions

Failure to timely pay wages due at termination

Keyval filed the present Petition to Compel Arbitration on November 22, 2019.

Davoudian filed an Opposition on February 3, 2020.

Keyval filed a Reply on February 21, 2020.

Discussion

MOTION TO COMPEL ARBITRATION

On petition of a party to an arbitration agreement to arbitrate a controversy, a court must order the petitioner and respondent to arbitrate the controversy if it determines the arbitration agreement exists, unless (1) the petitioner has waived its right to arbitrate; (2) grounds exist for the revocation of the agreement; or (3) “[a] party to the arbitration agreement is also a party to a pending court action or special proceeding with a third party, arising out of the same transaction or series of related transactions and there is a possibility of conflicting rulings on a common issue of law or fact.” (Code Civ. Proc., § 1281.2.)

“[T]he party moving to compel arbitration bears the burden of establishing the existence of a valid agreement to arbitrate, and the party opposing arbitration bears the burden of proving by a preponderance of the evidence any fact necessary to its defense. The role of the trial court is to sit as a trier of fact, weighing any affidavits, declarations, and other documentary evidence, together with oral testimony received at the court’s discretion, to reach a determination on the issue of arbitrability.” (Hotels Nevada v. L.A. Pacific Center, Inc. (2006) 144 Cal.App.4th 754, 758.)

Keyval seeks to compel arbitration based on a signed arbitration agreement within the Employee Acknowledgement and Agreement. (Motion at p. 2.) The first paragraph is regarding termination rights of the employer and at-will employment. (Motion, Exh. A.) The second paragraph of this agreement, which is not denoted with a specific heading, states: “I and the Dealership agree to utilize binding arbitration as the sole and exclusive means to resolve all disputes that may arise out of or be related in any way to my employment, including not limited to the termination of my employment and my compensation.” (Motion, Exh. A.)

The Court finds thatan arbitration agreement exists between Davoudian and Keyval The Courtwill therefore evaluate whether the agreement is not binding because it is unconscionable.the validity of the agreement.

Unconscionability

“Unconscionability requires a showing of both procedural unconscionability and substantive unconscionability.” (Ajamian v. CantorCO2e, L.P. (2012) 203 Cal.App.4th 771, 795.) Arbitration contracts presented to employees on a take-it-or-leave-it basis are at least minimally procedurally unconscionable. (See Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83, 113.) The failure to include arbitration rules that are incorporated into an agreement likewise contributes to a finding of procedural unconscionability. (See Carbajal v. CWPSC, Inc. (2016) 245 Cal.App.4th 227, 244.)

1. Procedural Unconscionability

When a contract is an adhesion contract, that is, drafted and imposed by the party with the superior bargaining power, the adhesive nature of the contract is evidence of procedural unconscionability, but this fact alone is insufficient for a finding of procedural unconscionability. (Sanchez v. Carmax Auto Superstores California, LLC (2014) 224 Cal.App.4th 398, 402-403.) Instead, procedural unconscionability turns on oppression and surprise. (Id. at 402.) California courts have held that arbitration agreements presented as a condition of employment on a “take-it-or-leave-it” basis are standard adhesion contracts, but enforceable unless there is a showing of oppression or surprise. (Id.)

Davoudian argues that the arbitration agreement was presented as a “take or leave it” perquisite to employment. (Opposition at pp. 7-8.) Davoudian also argues that the governing rules were not attached to the agreement. (Opposition at pp. 8-9.)

In Reply, Keyval argues that adhesion “is not the end of the procedural unconscionability analysis” and that Davoudian cannot demonstrate surprise because bolded and capitalized letters just above the signature line state that “I further understand that this agreement requires me to arbitrate any and all disputes that arise out of my employment.” (Reply at p. 8.)

The contract here is adhesive and the arbitration agreement is contained in the second paragraph of an agreement that begins with an agreement regarding a different legal issue.There is no separate differently-labeled heading.but the agreement Davoudian signed clearly disdlosed that he was agreeing to arbitrate all claims. The arbitration rules were not provided, nor was a link to the rules or the source of the rules for Davoudian to look-up the rules himself. However, the agreement states that the arbitration shall be in accordance with the procedure of the California Arbitration Act, including Code of Civil Procedure section 1283.05. Taking all these factors together, there are some indicia of procedural unconscionability though they are fairly weak. The Court will next address the substantive unconscionability claims.

Substantive Unconscionability

Davoudian argues that the agreement is unconscionable because it violates Armendariz due to the fact that it restricts Davoudian’s right to discovery and it imposes on him the obligation to pay the arbitration fees and costs. (Oppo. at pp. 9-10.)

In Reply, Keyval argues that discovery is not restricted because the agreement here does provide for discovery pursuant to Code of Civil Procedure section 1282.05. (Motion, Exh. A, ¶ 2.) Keyval also points out that although the agreement is silent as to who will bear the cost of arbitration, California law under Armendariz requires the employer to bear all costs uniquely attributable to arbitration and Keyval intends to do so in this case. Further, Davoudian’s argument regarding attorneys’ fees has been rejected by the Supreme Court: a costs provision such as this will not limit “the availability of expert investigation expenses that are otherwise recoverable as damages,” and is generally not substantive unconscionability. (Pinnacle Museum Tower Assn. v. Pinnacle Market Development (US), LLC (2012) 55 Cal.4th 223, 249.)

Davoudian also argues that the agreement contains an unenforceable PAGA waiver. (Oppo. at p. 6.) The Court finds that the arbitration agreement, here, cannot compel the waiver of any PAGA claim. (Iskanian v. CLS Transportation Los Angeles, LLC (2014) 59 Cal.4th 348, 391.) The California Supreme Court addressed a similar issue, but failed to resolve whether it is appropriate to bifurcate claims, with individual claims going to arbitration and the representative PAGA claim to litigation. (Id. at 392.) California appellate courts have held that in such a case, the petition for arbitration is to be granted, however, the arbitration agreement cannot be enforced for any claims under PAGA. (Franco v. Arakelian Enterprises, Inc. (2015) 234 Cal.App.4th 947, 965-966, as modified (Mar. 11, 2015).) As such, “[b]ecause the issues subject to litigation under the PAGA might overlap those that are subject to arbitration of [plaintiff’s] individual claims, the trial court must order an appropriate stay of trial court proceedings” to “preserve the status quo until the arbitration is resolved.” (Id. at 966.) If Davoudian had brought any PAGA claims, such claims would need to be bifurcated from the remaining causes of action. However, because Davoudian has not brought PAGA claims, this argument is moot and does not make the agreement substantively unconscionable.

Accordingly, with all factors considered, the Court finds that the arbitration agreement is not unconscionable.

Keyval further argues in its Motion that Davoudian renewed his agreement to be bound by arbitration when he signed a second document entitled “Salesperson Compensation Plan.” (Motion, Exh. B.) This agreement, just above the signature line states: “I further acknowledge and agree that any disputes regarding this Pay Plan or any other aspect of my employment relationship will be decided by binding arbitration, pursuant to the procedures outlined in the arbitration agreements I have executed with the Dealership.” (Motion, Exh. B, p. 4.)

Davoudian contends that the Salesperson Compensation Plan is illusory and thus that it cannot bind him to arbitration. The Court declines to determine whether the Salesperson Compensation Plan is illusory because the arbitration agreement as found in the Employee Acknowledgement and Agreement is enforceable on its own. Further, the Salesperson Compensation Plan’s disclosure regarding arbitration serves to reduce any claim by Davoudian of surprise as to the previous arbitration agreement.

The Petition to Compel Arbitration is GRANTED.

DATED: February 28, 2020

______________________________

Hon. Robert S. Draper

Judge of the Superior Court