Case Number: BC537132    Hearing Date: September 16, 2014    Dept: 56

Case Name: Garnica v. Arroyo Developmental Services, et al.
Case No.: BC537132
Matter: Petition to Compel Arbitration

Tentative Ruling: Petition is granted.

Plaintiff Gina Garnica filed this employment action against Defendant Arroyo Developmental Services, alleging disability discrimination and related claims. Defendant petitions to compel arbitration pursuant to CCP §§1281 et seq.

The general standards which govern the petition 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. Engalla v. Permanente Medical Group, Inc. (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. 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. Craig v. Brown & Root (2000) 84 Cal.App.4th 416, 420.

Defendant has submitted evidence that Plaintiff entered into a written arbitration agreement on 1/23/12. The agreement requires arbitration of “[a]ny controversy, dispute or claim between Employer and Employee arising out of and/or involving the termination of their employment relationship”. The agreement also contains an express waiver of a trial before a jury or judge. The broad language of the agreement encompasses the claims asserted in Plaintiff’s complaint.

Defendant has 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 Defendant 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 unconscionability focuses on the elements of oppression (inequality of bargaining power) and surprise (the extent to which the terms are hidden); substantive unconscionability focuses on the actual terms of the agreement and evaluates whether they create one-sided results. 24 Cal.4th at 114; Little v. Auto Stiegler (2003) 29 Cal.4th 1064, 1071.

Procedural –
The agreement signed by Plaintiff is entitled “Arbitration Agreement”, contains clear language requiring binding arbitration of all claims arising from employment, and contains a clear waiver of a judge or jury trial. Plaintiff nevertheless argues that the agreement is unconscionable because it was presented to her as part of a packet of papers that she was required to sign and did not include a copy of the arbitration rules referenced in the agreement. These factors support a minor degree of procedural unconscionability. See Roman v. Superior Court (2009) 172 Cal.App.4th 1462, 1470. The agreement must therefore be enforced unless the degree of substantive unconscionability is high. E.g. Ajamian v. CantorCO2e (2012) 203 Cal.App.4th 771, 796.

Substantive –
Plaintiff has made several arguments in support of substantive unconscionability.

Employee vs. Employer Claims: Plaintiff asserts that the arbitration agreement limits the types of claims in arbitration to those only an employee would bring. This argument is wrong. The agreement applies to “[a]ny controversy, dispute or claim between Employer and Employee arising out of and/or involving the termination of their employment relationship”. This encompasses all claims arising out of the employment relationship, specifically including those relating to termination of employment. It does not exclude any kind of dispute or favor Defendant. This does not establish substantive unconscionability.

Statute of Limitations: Plaintiff argues that the agreement shortens the statute of limitations. The agreement states that arbitration claims must be made within 90 days. This is sufficient to support substantive unconscionability. E.g. Martinez v. Master Protection (2004) 118 Cal.App.4th 107, 117-18.

“Repeat Player” Effect: Plaintiff argues that the arbitration agreement limits the selection of arbitrators to a select group, so that neutrality is suspect. The agreement provides for arbitration by the America Arbitration Association, a respected and longstanding organization. Plaintiff has not provided any evidence to establish that the arbitrator selection provision favors Defendant. See Mercuro v. Superior Court (2002) 96 Cal.App.4th 167, 178. This does not establish substantive unconscionability.

Costs: Plaintiff argues that the agreement imposes costs upon her, citing a provision which states that “Judgment upon the award rendered by the arbitrator shall be paid equally both parties.” This language says nothing about costs, and is entirely ambiguous. The agreement refers to the AAA rules, which specifically impose arbitration costs on the employer [Rule 48]. This does not establish substantive unconscionability.

Judicial Review: Plaintiff argues that the arbitration agreement improperly limits judicial review of the award. The agreement provides that “The decision of the arbitrator shall be binding and conclusive on the parties and unreviewable for error of law or legal reasoning of any kind.” The grounds for vacating an arbitration award are narrowly prescribed by statute; see CCP §§1286.2 et seq. It is well settled that “Courts may not review the merits of the controversy, the sufficiency of the evidence supporting the award, or the validity of the arbitrator’s reasoning.” Dept. of Personnel Admin. v. Cal. Correctional Peace Officers Assn. (2007) 152 Cal.App.4th 1193, 1200. The agreement in our case does not limit the permissible scope of judicial review, and this does not establish substantive unconscionability.

RULING
Defendant has established the existence of a valid arbitration agreement, and Plaintiff has established a minor degree of procedural unconscionability and a single element of substantive unconscionability relating to the period of limitations.

When a trial court finds an arbitration clause 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, supra 172 Cal.App.4th at 1477.

The contract between Plaintiff and Defendants is not “permeated by unconscionability.” The one area of unconscionablility relates to the period of limitations, which will be severed and stricken.

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