Case Number: BC550106 Hearing Date: February 17, 2015 Dept: 56
Case Name: Eiseman v. Kabbalah Children’s Academy
Case No.: BC550106
Matter: Defendants’ Motion to Compel Arbitration

Tentative Ruling: Motion is granted.

Plaintiff Edward Eiseman filed this employment action against Defendants Kabbalah Children’s Academy and Kabbalah Centre International, alleging disability discrimination and related claims. Defendants move to compel arbitration pursuant to CCP §§1281 et seq. and 9 USC §2.

The general standards which govern the motion are well settled: A petition to compel arbitration based on a written arbitration agreement must be granted unless grounds exist to revoke the agreement. CCP §1281 & §1281.2(b). The petitioner bears the burden of proving the existence of a valid arbitration agreement, and a party opposing the petition bears the burden of proving any fact necessary to its defense. E.g. Engalla v. Permanente Medical Group (2007) 15 Cal.4th 951, 972.

AGREEMENT

In ruling on a motion to compel arbitration, a trial court must decide whether an enforceable arbitration agreement exists between the parties and whether the claims are within the scope of the agreement. See Omar v. Ralphs Grocery (2004) 118 Cal.App.4th 955, 961. General principles of contract law determine whether the parties have entered into a binding agreement. See Craig v. Brown & Root (2000) 84 Cal.App.4th 416, 420.

Defendants have submitted evidence that Plaintiff and Kabbala Children’s Academy entered into a written employment agreement on 7/31/09. The agreement contains an arbitration clause which requires arbitration of “all disputes, controversies or claims arising out of or relating to this Employment Agreement, including Principal’s employment or termination of employment, except for any action or damages related to KCA’s or its affiliates’ rights with respect to confidentiality, non-disclosure, or non-disparagement”.

The broad language of the arbitration clause encompasses the claims asserted in Plaintiff’s complaint. Defendants have established that the parties entered into a valid arbitration agreement and that Plaintiff’s claims are covered within the scope of the agreement.

DEFENSES

Plaintiff contends the arbitration agreement with Defendants is unconscionable, relying upon cases such as Armendariz v. Foundation Health (2000) 24 Cal.4th 83. Unconscionability has procedural and substantive elements, and both must be found for a court to invalidate an arbitration contract or one of its terms. 24 Cal.4th at 114.

Procedural –
Procedural unconscionability focuses on the elements of oppression (inequality of bargaining power) and surprise (the extent to which the terms are hidden). Armendariz, supra 24 Cal.4th at 114; Little v. Auto Stiegler (2003) 29 Cal.4th 1064, 1071.

The employment agreement which contains the arbitration clause is 8 pages long with single spaced type. It states that Plaintiff was employed as an upper level executive, responsible for supervision of the faculty, administration and staff. In addition to the arbitration clause, the agreement contains detailed provisions regarding compensation, time off, duties, evaluation, length of employment, professional standards, and termination. It was signed by both parties. The agreement was modified on 5/14/10 in a detailed addendum that addresses compensation and other terms of employment.

Despite these objective indications of mutual agreement, Plaintiff has argued that the agreement is unconscionable because it is an adhesion contract that was presented to him on a take it or leave it basis. His declaration provides no support for the argument, as he simply states that “in order to be employed as its principal, I was required to sign Kabbalah Children’s Academy’s standard employment contract.” Plaintiff has presented no evidence that he disagreed with any term of the agreement or attempted to discuss, modify or renegotiate any of its provisions. Defendants have presented evidence that their employees are allowed to negotiate the terms of their employment agreements.

Plaintiff has not established procedural unconscionability.

Substantive –
Substantive unconscionability focuses on the actual terms of the agreement and evaluates whether they create one-sided results. Armendariz, supra 24 Cal.4th at 114; Little, supra 29 Cal.4th at 1071.

Plaintiff has argued that the arbitration clause is one-sided because it excludes any action “related to KCA’s or its affiliates’ rights with respect to confidentiality, non-disclosure, or non-disparagement”. Cases such as Mercuro v. Superior Court (2002) 96 Cal.App.4th 167, 175, have recognized that a carve-out of this kind is an element of substantive unconscionability.

Plaintiff has also argued that the arbitration clause is one-sided because it allocates one-half of the arbitration costs to him and requires the losing party to pay all costs and attorney fees. In Armendariz, the Supreme Court held that a cost and fee allocation of this kind is an element of substantive unconscionability. 24 Cal.4th at 113.

Finally Plaintiff has argued that the arbitration clause is one-sided because it precludes judicial review, but this argument is wrong. Plaintiff’s agreement states that the parties have agreed to “mandatory binding arbitration” but nothing prohibits judicial review of the award. The parties in fact have a statutory right to apply to the court for an order that would confirm, correct or vacate the arbitrator’s award. See CCP §§1285 et seq.

When a trial court finds that an arbitration agreement contains terms that are substantive unconscionable, it “may refuse to enforce the contract as a whole if it is permeated by the unconscionability, or it may strike any single clause or group of clauses which are so tainted or which are contrary to the essential purpose of the agreement, or it may simply limit unconscionable clauses so as to avoid unconscionable results.” Armendariz, supra 24 Cal.4th at 122. In choosing between these alternatives, “the strong legislative and judicial preference is to sever the offending term and enforce the balance of the agreement.” Roman v. Superior Ct. (2010) 172 Cal.App.4th 1462, 1477.

The contract between Plaintiff and Defendants is not “permeated by unconscionability.” The court has found that it is not procedurally unconscionable, but it contains two terms that are substantively unconscionable – the confidentiality carve-out and the allocation of costs and fees. Both terms are purely abstract and hypothetical, as the confidentiality carve-out is not involved in Plaintiff’s case, and Defendants have expressly waived the cost and fee provision. Under these circumstances, it is appropriate to sever the two terms and order the case to arbitration.

RULING

Defendants’ motion to compel arbitration is granted and all of Plaintiff’s claims are ordered to arbitration. The proceedings are stayed pursuant to CCP §1281.4.