2018-00231166-CU-OE

Crystal Wilson vs. American General Finance Management Corp.

Nature of Proceeding: Motion to Compel Arbitration

Filed By: Garrett, Allison C.

Defendant Onemain General Services Corporation’s (“OGS”) petition to compel arbitration of the claims asserted against it by plaintiff Wilson Gibbons in this putative class action and to stay this action pending completion of arbitration is GRANTED, as follows.

The response filed by plaintiff on 7/5/2018 was not timely filed in accordance with Code of Civil Procedure §1290.6 [response to petition to compel arbitration due within 10 days after service of petition] but was nevertheless considered.

Although Code of Civil Procedure §1290 et seq. does not expressly permit “reply” briefs such as the one filed by OGS, it was considered.

Factual Background

This putative class action was filed on 4/17/2018 by plaintiff Wilson, alleging a variety of violations of the Labor Code’s wage-and-hour provisions as well as Business & Professions Code §17200 et seq.

Moving Papers. OGS asserts that prior to and during her employment, plaintiff Wilson voluntarily entered into an Employee Dispute Resolution Program which not only provides for binding arbitration “on an individual basis” of all claims falling within the purview of the Program pursuant to the Federal Arbitration Act (“FAA”) but also prohibits plaintiff from participating in a class action and further that this agreement is neither unconscionable nor unenforceable on other grounds.

Opposition. Plaintiff opposes, first arguing that OGS cannot enforce an unsigned arbitration agreement she never saw or entered and that OGS has produced “zero evidence” plaintiff is the person who accessed the “electronic documents” on which this motion relies, especially since no password was needed to logon to the computer system. The opposition next contends that even if the court finds plaintiff assented to the arbitration clause, it cannot be enforced due to procedural and substantive unconscionability and admits that the only arbitration agreement bearing plaintiff’s signature is the one in her 2007 job application but she then insists this provision is also unenforceable due to unconscionable provisions which cannot be severed from the agreement. (Oppos., p.3:18-23; p.13:22-24.)

The court notes the opposition is supported only by a declaration from plaintiff herself, which essentially avers that she was told the “HR and IT Departments…could remote access onto my computer at work” without password and also had access to employee passwords, has “never seen” several of the exhibits offered with the moving papers and was never asked to sign or acknowledge them, and at no time did she ever agree to arbitrate any claims against her employer (although the opposition itself states otherwise).

Reply. OGS insists that the opposition concedes plaintiff agreed to arbitrate her employment claims when she signed her application for employment in September 2007 and the opposition does not dispute that plaintiff completed her training during employment “electronically” but merely suggests she does not “recall” either receiving subsequent versions of the arbitration agreement or “electronically acknowledging” them during her employment even while she used the same portal and electronic acknowledgment for both the training and the arbitration agreements. OGS also maintains that plaintiff failed to demonstrate that the arbitration agreement is either unconscionable or unenforceable so the court must order this matter to arbitration on an individual basis and stay this action pending the completion of arbitration.

Objections to Evidence

Plaintiff’s initial written objections to OGS’ moving evidence are overruled. The court notes that the mere fact the evidence offered in opposition purports to vary from or contradict OGS’ moving evidence does not render the latter inadmissible and this is

particularly true with respect to OGS’ moving evidence relating to the existence of and plaintiff’s own agreement to be bound by her employer’s Employee Dispute Resolution Program and its provision for binding arbitration, both of which plaintiff admits to expressly acknowledging in her 2007 job application.

OGS’ written objections to plaintiff’s declaration in opposition are sustained unless plaintiff produces at the hearing on this matter with the declaration containing plaintiff’s original signature. (Provided that the declaration with plaintiff’s original signature is produced at the hearing, OGS’ written objections to evidence will be overruled except for objection No. 8.)

Plaintiff’s objections to the evidence offered in support of OGS’ reply are overruled because this evidence was offered in rebuttal to various assertions made in the opposition papers.

Analysis

Introduction. Under California law, arbitration must be compelled where there is a valid, binding arbitration agreement unless the opposing party proves the agreement is unenforceable on unconscionability or other grounds. (See, e.g., Armendariz v. Foundation Health (2000) 24 Cal.4th 83, 96-100, 114; Gatton v. T-Mobile USA (2007) 152 Cal.App.4th 571, 579.) In fact, Code of Civil Procedure §1281.2 specifically provides in pertinent part:

On petition of a party to an arbitration agreement alleging the existence of a written agreement to arbitrate a controversy and that a party thereto refuses to arbitrate such controversy, the court shall order the petitioner and the respondent to arbitrate the controversy if it determines that an agreement to arbitrate the controversy exists, unless it determines that:
(a) The right to compel arbitration has been waived by the petitioner; or

(b) Grounds exist for the revocation of the agreement.
(Underline added for emphasis.)

Section 2 of the FAA is essentially the same:

A written provision in any…contract evidencing a transaction involving commerce to settle by arbitration a controversy thereafter arising out of such contract or transaction…or an agreement in writing to submit to arbitration an existing controversy…shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.

Existence of Agreement to Arbitrate. Although the opposition here suggests OGS has failed to make the threshold showing of an actual agreement by plaintiff to arbitrate her claims, the opposition expressly admits the job application which plaintiff herself signed and submitted in 2007 contained an arbitration provision. This job application provides in pertinent part:

An Employee Dispute Resolution Plan is in place at AGFS. I understand and agree that I will be subject to the Plan. The Plan requires resolution of any applicant or employee dispute covered by the Plan through informal and formal means, including binding arbitration, if necessary. The Plan is the exclusive means for resolving employment disputes…, except as otherwise provided by

law. Under the Plan, employees do not have the right to file a lawsuit in state or federal court, but employees do have the right to file charges with the EEOC and similar state/local agencies… The details of the Plan, including any limitations or exclusions, are furnished to each employee upon hire and can be obtained by applicants upon written request. (Underline added for emphasis.)

In light of this language and the opposition’s admission that it was contained in the job application plaintiff signed and submitted in 2007, OSG has met its initial burden on the question of whether there is an agreement to arbitrate. This conclusion is reinforced by the recent decision of Cruise v. Kroger Co. (2015) 233 Cal.App.4th 390, where the Second District Court of Appeal held that an arbitration clause contained in a job application requiring arbitration of all employment-related disputes was enforceable even if the trial court was not persuaded that the “undated four-page arbitration policy attached to [the] moving papers was extant at the time Cruise read and signed the employment application” and incorporated by reference. In Cruise, the job application stated in relevant part:

“MANDATORY FINAL & BINDING ARBITRATION: I acknowledge and understand that the Company has a Dispute Resolution Program that includes a Mediation & Binding Arbitration Policy (the ‘Policy’) applicable to all employees and applicants for employment … . I acknowledge, understand and agree that the Policy is incorporated into this Employment Application by this reference as though it is set forth in full, that except for claims or disputes arising out of the terms and conditions of any applicable CBA [(collective bargaining agreement)] (‘Excluded Disputes’) the Policy applies to any employment-related disputes that exist or arise between Employees and the Company…(as defined in the Policy) that would constitute cognizable claims or causes of action in a court or government agency under applicable law including individual statutory claims or disputes (‘Covered Disputes’), that Covered Disputes are such claims or disputes that have to do with an Employee’s seeking, attempted, actual, or alleged employment with the Company…other than Excluded Disputes, and that the Policy requires that any Employee who wishes to initiate or participate in formal proceedings to resolve any Covered Disputes must submit the claims or disputes to final and binding arbitration in accordance with the Policy. I acknowledge, understand, and agree that (1) if any Covered Disputes exist or arise between me and the Company…other than any Excluded Disputes, I am bound by the provisions, terms and conditions of the Policy which provides for mediation and mandatory final and binding arbitration of any Covered Disputes…

(Cruise, at 392-393 (italics in original).)

The Court of Appeal found that the language set forth in the job application “eliminates any argument the parties did not agree to arbitrate their employment-related disputes.” Although the job application now before this court which plaintiff admits to signing is somewhat less detailed than the one in Cruise, they are similar in language and comprehensiveness, making clear that employment disputes would not be resolved by court action but rather by binding arbitration. In short, as in Cruise, plaintiff in this instant agreed to resolve any of her “employment claims” against her employer via arbitration, which agreement is enforceable independent of the terms of the Employee Dispute Resolution Plan that is also referenced in the job application.

Unconscionability. As described above, the opposition contends this arbitration

agreement is unenforceable due to unconscionability but it is well established in California that a party seeking to invalidate an arbitration clause on this basis must demonstrate both procedural and substantive unconscionability, although not necessarily to the same degree. (See, e.g., Kinney v. United Healthcare Services (1999) 70 Cal.App.4th 1322, 1329.) However, based on the present record, this court can find no competent evidence of procedural or substantive unconscionability which justifies a determination that the subject agreement to arbitrate is unenforceable.

While the opposition suggests the arbitration clause was adhesive inasmuch as it was presented on a take-it-or-leave-it basis, there is no competent evidence which bears out this suggestion. Instead, plaintiff’s declaration in opposition at best only establishes that she was not told whether she had a choice about being subject to the Employee Dispute Resolution Plan referenced in the job application but this vague and conclusory statement does not, without more, affirmatively establish that the arbitration clause either was, without exception, non-negotiable or was otherwise presented on take-it-or-leave-it basis. Notably, plaintiff has offered no evidence that she ever attempted to negotiate any term of the arbitration provision but was categorically rebuffed or that her assent to the arbitration provision was entirely voluntary. Accordingly, this court is unable to discern any genuine procedural unconscionability in connection with the arbitration clause in the 2007 job application which plaintiff signed and as such, there is no need to consider the opposition’s claims of substantive unconscionability.

Nevertheless, the court will address plaintiff’s claim that the arbitration clause is substantively unconscionable because it does not provide for (1) a neutral arbitrator,

(2) more than minimal discovery, (3) a written decision by the arbitrator, (4) the same remedies as are available to an employee in court, and (5) an employee to bear any cost unique to arbitration, as well as requiring on the employee to waive the right to file suit in state or federal court while the employer retains the right to do so (Oppos., p.13:19-p.14:12) but none of these affirmatively demonstrates any substantive unconscionability that could nullify the arbitration clause to which plaintiff assented. As an initial matter, the language contained in the job application was by its own terms clearly not intended to set forth every provision relating to the Employee Dispute Resolution Plan as a whole or the arbitration provisions in particular. After all, the last sentence of the above-cited language from the job application states, “The details of the Plan, including any limitations or exclusions, are furnished to each employee upon hire….” (Underline added for emphasis.) As such, it is unreasonable to expect this job application would set forth all of the provisions about how arbitration is to proceed and what claims are subject to arbitration or exempt and to be sure, the inclusion of such details would make the application unduly complicated and burdensome for both the employer and the prospective employee. Notably, plaintiff’s declaration in opposition nowhere suggests she did not receive the full details of the Plan upon being hired in 2007.

Additionally, the court finds plaintiff has offered no evidence whatsoever which lends support to her claim that arbitration pursuant to the Employee Dispute Resolution Plan fails to require (1) a neutral arbitrator, (2) more than minimal discovery, (3) a written decision by the arbitrator, (4) the same remedies as are available to an employee in court, or (5) an employee not having to bear any cost unique to arbitration.

Finally, although it is true the language in the job application does not expressly state that the employer is precluded from filing suit in state or federal court, the court finds

no language which affirmatively suggests that the employer is not equally bound by this provision particularly when the job application does explicitly state, “The Plan is the exclusive means for resolving employment disputes…,” which this court construes as applying to both the employer and the employee.

Consequently, even if plaintiff had presented evidence of some degree of procedural unconscionability, there has been no genuine showing of any substantive unconscionability which could be considered sufficient to conclude that the subject arbitration agreement is “permeated” with unconscionability so as to render it unenforceable.

2012 Version of Program Sought to be Enforced Here. Based on the evidence offered with the moving papers, the Employee Dispute Resolution Plan in effect when plaintiff was hired in 2007 was amended in April 2008 and a letter was mailed to each employee at their home address of record along with a copy of the amended version of the Plan, which was also available on the company’s intranet. The Plan was again amended in 2012 and all branches were notified by email that the amended documents were available for review via the intranet. OSG contends that in both 2013 and 2015 plaintiff reviewed and electronically acknowledged she was bound by the Plan’s arbitration provision which encompasses the causes of action asserted in the case at bar, adding that plaintiff’s continued employment constituted her implied-in-fact acceptance of the terms of the revised Plan particularly since the both the 2008 and 2012 versions explicitly state in the opening paragraph that “Employment or continued employment after the Effective Date of this Program constitutes consent by both the Employee and the Company to be bound by this Program both during employment and after termination of employment.”

As noted above, plaintiff’s primary contention is that she never saw the “electronic” version of the 2012 amendment and never acknowledged her acceptance of its terms. However, without more, these denials do not establish a valid ground to escape the provisions of the Employee Dispute Resolution Plan given that (1) plaintiff signed the job application in 2007 and thereby acknowledged her employment would be “subject to the Plan” which “is the exclusive means for resolving employment disputes…, except as otherwise provided by law” and she would be given the full details of the Plan once hired, and (2) both the 2008 and 2012 versions make clear that “Employment or continued employment after the Effective Date of this Program constitutes consent by both the Employee and the Company to be bound by this Program both during employment and after termination of employment,” regardless of plaintiff’s signature or formal acknowledgment of the electronic documents.

Unconscionability of 2012 Version. Plaintiff again argues the 2012 version of the arbitration agreement is unenforceable on account of both procedural and substantive unconscionability but the court disagrees. Although there can be no dispute the 2012 version of the Employee Dispute Resolution Program appears to have an element of procedural unconscionability in that it appears to have been unilaterally imposed by the employer on a take-it-or-leave-it basis, no substantive unconscionability is manifest in its provisions. The opposition asserts first that attorney fees and costs are not guaranteed to an employee prevailing on Labor Code claims such as those alleged in this case but this assertion is premised on a dubious interpretation of a simple provision which plainly grants the arbitrator “authority to determine and implement the applicable law and to order any and all relief…, including punitive damages, attorneys’ fees, and costs which a Party could obtain from a court…on the basis of the claims…

submitted to and decided by the arbitrator.” While this provision may not expressly state the arbitrator is “required” to award fees and costs to an employee prevailing on a Labor Code claim, the court construes this provision as effectively mandating such a result especially in light of Paragraph 28 (“[T]he arbitrator shall be bound by and shall apply applicable law…[and] shall not have the authority to either abridge or enlarge substantive rights available under existing law.”] (Of course, should an arbitrator fail to award fees or costs to a prevailing employee otherwise entitled to such an award, the latter remains free to petition the court for appropriate relief.)

The opposition’s only other argument regarding substantive unconscionability is that the employer has the unilateral right to modify or terminate the mandatory arbitration provision but the only authorities cited for this proposition are non-binding federal decisions from the Fourth and Tenth Circuits. Curiously, plaintiff appears to concede that California courts have affirmed an employer’s right to modify an agreement to arbitrate and then suggests this is only permitted when employees are given advance notice of modifications. However, the Casas v. CarMax Auto Superstores decision plaintiff cited for this suggestion actually indicates California law permits modification clauses that do not require advance notice because the implied covenant of good faith and fair dealing independently prohibits a party to a contract (i.e., the employer) from unfairly interfering with the other party’s rights under the contract. (Casas, at 1237.) Regardless, 2012 version of the Employee Dispute Resolution Program plainly provides for advance notice to employees, as Paragraph 5 states in its entirety:

The Program, the Description, and the Rules may be amended by the Company by giving 30 days[’] notice to current Employees. No amendment shall apply to a Dispute that has accrued or for which a Party has filed a charge or claim with a regulating agency, court or the AAA, prior to the effective date of the amendment. (Underline added for emphasis.)

Finally, while plaintiff maintains that she was never provided notice of the 2012 amendment to the Employee Dispute Resolution Program, the evidence offered by OGS establishes the procedures which were followed in order to provide all employees with notice of the modifications in 2008 and 2012 and the court is not persuaded that these amendments are unenforceable merely because plaintiff, who was at the time of being hired in 2007 on notice of the Employee Dispute Resolution Plan, now claims she was until now simply unaware of both the 2008 and 2012 amendments.

In the end, the opposition has failed to demonstrate the existence of any substantive unconscionability which precludes the enforcement of the 2012 version of the Employee Dispute Resolution Program.

Class Action Waiver. The court notes that the opposition does not specially raise any question as to the enforceability of the class action waiver found in the 2012 Employee Dispute Resolution Program. However, it is worth noting here that the Supreme Court of the United States recently revisited the enforceability of class action waivers under the FAA (which governs the arbitration clause being enforced here) in Epic Systems Corp. v. Lewis (2018) ___ U.S. ___, 138 S.Ct. 1612, affirming its earlier holding in AT&T Mobility LLC v. Concepcion (2011) 563 U.S. 333 that the FAA preempted the California Supreme Court’s ruling that class action waivers in consumer contracts are unenforceable on grounds of unconscionability and that enforcement of the state law would impermissibly create an obstacle to the overarching purpose of the FAA (i.e., to ensure enforcement of arbitration agreements according to their terms).

Conclusion

For the reasons explained above, OGS’ motion to compel arbitration is granted and the present action shall be stayed pending completion of the arbitration.

In light of the class action waiver found in the 2012 Employee Dispute Resolution Program and the aforementioned authority permitting enforcement of same, the court will also dismiss plaintiff from the present lawsuit which purports to be a class action against her prior employer.

Pursuant to CRC Rule 3.1312, moving counsel to prepare a judgment of dismissal of plaintiff from the present class action lawsuit.