Case Number: BC695069 Hearing Date: June 18, 2018 Dept: 32

JORDAN HORTON,

Plaintiff,

v.

MACY’S, INC., et al.

Defendants.

Case No.: BC695069

Hearing Date: June 18, 2018

[TENTATIVE] order RE:

Defendants Macy’s, inc., macy’s west stores, inc., azucena martinez AND DORA RODRIGUEZ’S motion to compel arbitration

DISCUSSION

Defendants Macy’s, Inc., Macy’s West Stores, Inc., Azucena Martinez and Dora Rodriguez (“Defendants”) move to compel arbitration of the complaint filed by Plaintiff Jordan Horton (“Plaintiff”).

“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 a 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….” (CCP § 1281.2.) The right to compel arbitration exists unless the court finds that the right has been waived by a party’s conduct, other grounds exist for revocation of the agreement, or where a pending court action arising out of the same transaction creates the possibility of conflicting rulings on a common issue of law or fact. (CCP § 1281.2(a)-(c).) “The party seeking arbitration bears the burden of proving the existence of an arbitration agreement, and the party opposing arbitration bears the burden of proving any defense, such as unconscionability.” (Pinnacle Museum Tower Assn. v. Pinnacle Market Development (US), LLC (2012) 55 Cal. 4th 223, 236.)

A. Existence of Arbitration Agreement

Defendants assert that, at the outset of his employment, Plaintiff was informed that Defendants maintained an arbitration policy. Plaintiff’s employment was not conditioned on agreeing to arbitrate, and Plaintiff had thirty days to complete a form opting out of arbitration. Defendants argue Plaintiff electronically signed an acknowledgement that he had received information regarding Defendants’ dispute resolution program, including arbitration, and that by not completing the opt out form, he effectively agreed to arbitrate any future disputes. (See Ripak Decl.¶¶ 27-29, Exh. E; Jones Decl. ¶¶ 13-15, Exh. G.)

Plaintiff first argues that Defendants have submitted insufficient evidence that he was ever actually informed of the arbitration policy or his right to opt out. Plaintiff declares that he does not recall being told about the arbitration agreement, and that he does not recall having ever electronically signed the acknowledgement form. (Horton Decl. ¶¶ 3-4.)

Under the Uniform Electronic Transactions Act, an electronic signature “is attributable to a person if it was the act of the person. The act of the person may be shown in any manner, including a showing of the efficacy of any security procedure applied to determine the person to which the electronic record or electronic signature was attributable.” (Civ. Code, § 1633.9, subd. (a).) The effect of such electronic signature “is determined from the context and surrounding circumstances at the time of its creation, execution, or adoption, including the parties’ agreement.” (Civ. Code., § 1633.9, subd. (b).)

Plaintiff relies on Ruiz v. Moss Bros. Auto Group, Inc. to argue Defendants have not submitted sufficient evidence of Plaintiff’s electronic signature on the acknowledgement. In Ruiz, the declaration seeking to authenticate the plaintiff’s electronic signature on the arbitration agreement was deemed insufficient where the declarant “summarily asserted” plaintiff electronically signed the agreement and “did not explain how she arrived at that conclusion or inferred [plaintiff] was the person who electronically signed the agreement” or that the electronic signature “was ‘the act’” of the plaintiff. (Ruiz v. Moss Bros. Auto Group, Inc. (2014) 232 Cal.App.4th 836, 844-845.) Thus, the court found the arbitration agreement at issue was unenforceable. (Id. at 846.)

Here, by contrast, Defendants have gone well beyond ‘summarily asserting’ that Plaintiff signed the agreement. Janis Jones, one of Defendants’ software engineers, testified regarding the unique personal information required to access the online acknowledgement form, the date on which Plaintiff entered this information and clicked on the “I Certify” signature box, and the means by which records of these acknowledgement forms are preserved and accessed. (Jones Decl. ¶¶ 1-14.)

The foregoing is clearly sufficient. In Espejo v. Southern California Permanente Medical Group, the Court concluded the validity of an electronic signature had been proven because “the declaration offered the critical factual connection that the declarations in Ruiz lacked,” by detailing “security precautions regarding transmission and use of an applicant’s unique username and password, as well as the steps an applicant would have to take to place his or her name on the signature line” of the agreement. (Espejo v. Southern California Permanente Medical Group (2016) 246 Cal.App.4th 1047, 1062.) The Jones declaration clearly meets this standard.

In addition, Jones notes that on the same date, Plaintiff signed fifteen other forms, including regarding direct deposit, a W-4, a W2, and health insurance forms. (Jones Decl. ¶ 15.) As noted in reply, Plaintiff does not dispute that his signature as to any of these documents—which appear vital to beginning his employment—merely his signature on the acknowledgement form. This provides additional circumstantial evidence that Plaintiff did, in fact, sign the electronic agreement.

Plaintiff next argues that, even if he signed the electronic acknowledgment, there was still no agreement to arbitrate, because the process used by Defendants does not satisfy the basic requirements of contract creation, namely offer, acceptance, and consideration.

In support of this, Plaintiff focuses primarily on a federal New York case considering the same arbitration agreement at issue here. In Weiss v. Macy’s Retail Holdings, Inc. (S.D.N.Y. 2017) 265 F.Supp.3d 358, the district court held that Defendants’ procedure did not create a contract because there was no valid offer and acceptance. First, as to offer, the court held the confusing language of the agreement could not constitute an offer because it was misleading regarding the employees preexisting entitlement to litigation. “[T]he Election Form creates the false impression that by signing the document, the recipient employee would be giving up a pre-existing right to be “covered by the benefits of arbitration.” In reality, however, by not signing the form, the employee gives up his or her pre-existing right to litigate in public court. The Election Form thus obfuscates the fact that by doing nothing, the employee is giving up that right. A document this ambiguous and misleading cannot constitute an offer to enter into a binding arbitration agreement.” (Id. at 363.) The Court held that given these ambiguities, there had been no offer.

Second, as to acceptance, the district court held that “an offeror has no power to transform an offeree’s silence into acceptance when the offeree does not intend to accept the offer.” (Id.) The court acknowledged there were exceptions to the rule, but after considering them, concluded that none of them applied.

The Court declines to follow the Weiss case, and concludes a valid offer and acceptance occurred here. First, as to offer, the acknowledgment form signed by Plaintiff states, after explaining four steps for dispute resolution, “I understand that disputes filed under Step 4 are resolved by a professional not affiliated with Macy’s, Inc. in an arbitration proceeding, instead of by a judge or jury in a court proceeding. I can read all about Solutions InSTORE, including the benefits and tradeoffs of Step 4, in the brochure and Plan Document.” (Jones Decl., Exh. G.) Moreover, the plan document provides a relatively thorough discussion of the nature of arbitration, including the fact that “[a]rbitration . . . replaces any right an employee might have to go to court and try their claims before a jury.” (Ripak Decl., Exh. A [p. 5].) Based on the foregoing, the Court concludes the nature of the contract is sufficiently clear and unambiguous. Concerns about the ambiguity of the offer therefore do not apply here.

Second, as to acceptance, the Court disagrees that the alleged acceptance is based solely on Plaintiff’s silence. Plaintiff cites Circuit City Stores, Inc. v. Najd (9th Cir. 2002) 294 F.3d 1104, 1109, for the proposition that “silence or inaction does not constitute acceptance of an offer.” Plaintiff failed, however, to excerpt the next paragraph from Circuit City, which explains clearly why this rule does not apply here, just as it did not apply in the arbitration agreement at issue in that case:

“As a general rule, silence or inaction does not constitute acceptance of an offer.” Golden Eagle Ins. Co. v. Foremost Ins. Co., 20 Cal.App.4th 1372, 25 Cal.Rptr.2d 242, 251 (Ct.App.1993). However, “where circumstances or the previous course of dealing between the parties places the offeree under a duty to act or be bound, his silence or inactivity will constitute his assent.” Beatty Safway Scaffold, Inc. v. Skrable, 180 Cal.App.2d 650, 4 Cal.Rptr. 543, 546 (Ct.App.1960).

Najd and Circuit City were not two typical parties contracting at arm’s length. Rather, Najd, as employee of Circuit City, acknowledged receipt of the DRA in writing and was asked to review it within the course of his employment. In other circumstances acceptance by silence may be troubling, and explicit consent indispensable. Here, however, where the import of Najd’s silence was as apparent as if he signed his consent, we may infer assent. The acknowledgment form that Najd signed clearly set out in writing the significance of his failure to opt out and described in detail the mechanism by which he could express his disagreement. The explicit opportunity to review the agreement with an attorney highlighted the legal effect of the agreement. Circuit City communicated in detail and in writing the effect of Najd’s acceptance on his right to bring claims against his employer. Also, Circuit City made clear that opting out of the agreement would have no effect on the employment relationship. Finally, Najd had thirty days to review the agreement and mull over whether to opt out of it. When, as here, inaction is indistinguishable from overt acceptance, we may conclude that the parties have come to agreement. Thus, the circumstances of this case permit us to infer that Najd assented to the DRA by failing to exercise his right to opt out of the program.

(Id.)

For precisely the same reasons as those discussed in Circuit City, the Court concludes Plaintiff’s knowledge of the consequences of failing to opt-out, and his subsequent failure to opt-out, are sufficient to demonstrate acceptance of the contract.

Finally, Plaintiff argues the contract is void because it lacked consideration. Plaintiff argues that, because his employment was not contingent on his agreement to sign the form, he received nothing by entering or not entering the agreement, rendering it illusory. This position is meritless. The arbitration agreement is mutual, meaning it requires Defendants to proceed in arbitration for any claim they have against their employees, just as it requires their employees to proceed in arbitration against Defendants. (See Ripak Decl., Exh. A [p. 6].) This mutuality is, itself, sufficient consideration. (Beggs Bros. Fruit Co. v. United Farmers Ass’n California (1940) 41 Cal.App.2d 766, 770 [“It is next claimed the arbitration agreement was unenforceable against the appellant as it was unilateral and therefore lacking in consideration. We find no merit in that claim. The agreement was not unilateral. It was made by one party with each of more than three hundred other parties. Each party made the same promise to each and every other party. Furthermore, such promise constituted a consideration.”]; Strotz v. Dean Witter Reynolds, Inc. (1990) 223 Cal.App.3d 208, 216 [“Where an agreement to arbitrate exists, the parties’ mutual promises to forego a judicial determination and to arbitrate their disputes provide consideration for each other. Both parties give up the same rights and thus neither gains an advantage over the other.”].)

Based on the foregoing, the Court concludes Defendants have carried their burden of establishing the existence of an arbitration agreement.

B. Unconscionability

Plaintiff next argues that even if it exists, the agreement is unenforceable because it is unconscionable.

“The party resisting arbitration bears the burden of proving unconscionability.” (Pinnacle Museum Tower Assn. v. Pinnacle Market Development (US), LLC (2012) 55 Cal.4th 223, 247.) “‘[U]nconscionability has both a “procedural” and a “substantive” element,’ the former focusing on ‘oppression’ or ‘surprise’ due to unequal bargaining power, the latter on ‘overly harsh’ or ‘one-sided’ results.” (Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83, 114 [citations omitted].) These elements are evaluated on a “sliding scale”: “the more substantively oppressive the contract term, the less evidence of procedural unconscionability is required to come to the conclusion that the term is unenforceable, and vice versa.” (Id.)

1. Procedural Unconscionability

Plaintiff provides no argument regarding procedural unconscionability. Indeed, although generally, “absent unusual circumstances, use of a contract of adhesion establishes a minimal degree of procedural unconscionability notwithstanding the availability of market alternatives” (Gatton v. T-Mobile USA, Inc. (2007) 152 Cal. App. 4th 571, 585), even this minimal level of procedural unconscionability does not appear to apply here, because the agreement was not a condition of Plaintiff’s employment. (Ripak Decl., Exh. A [p. 5 [“Whether an employee choose[s] to remain covered by arbitration or to exclude himself or herself has no negative effect on the employee’s employment”]].) Plaintiff has therefore failed to satisfy his burden as to this prong.

2. Substantive Unconscionability

As to substantive unconscionability, Plaintiff argues the agreement improperly requires that unfair competition claims be waived, in violation of McGill v. Citibank, N.A. (2017) 2 Cal.5th 945; improperly bars PAGA representative claims, in violation of Iskanian v. CLS Transportation Los Angeles, LLC (2014) 59 Cal.4th 348, and improperly bars class action claims and other multi-party claims.

Each of Plaintiff’s claims are meritless. First, McGill did not hold that it was unconscionable to arbitrate unfair competition claims. It holds only that unfair competition claims constitute public injunctive relief, and that an arbitration provision is invalid “insofar as it purports to waive [a party’s] statutory right to seek public injunctive relief in any forum.” (McGill v. Citibank, N.A., supra, 2 Cal.5th at 966 [emphasis added].) Here, unlike the arbitration provision at issue in McGill, the arbitration agreement does not prohibit Plaintiff from seeking injunctive relief from the arbitrator. (See Exh. A [p. 18 [“Upon a finding that a party has sustained its burden of persuasion in establishing a violation of applicable law, the Arbitrator shall have the same power and authority as would a judge to grant any relief, including costs and attorney’s fees, that a court could grant in conformance with applicable principles of common, decisional and statutory law in the relevant jurisdiction.”]].)

Second, while Iskanian does limit arbitration agreements that bar the assertion of PAGA claims, Plaintiff is not asserting any PAGA claims. This argument is therefore irrelevant. In any event, there is no apparent reason why the Court could not sever any PAGA claims if they did exist. (See, e.g., Cobarruviaz v. Maplebear, Inc. (N.D. Cal. 2015) 143 F.Supp.3d 930, 946.)

Finally, Plaintiff cites no authority regarding the enforceability of arbitration agreements that bar class or multiparty claims. In reply, Defendants properly note that the U.S. Supreme Court recently affirmed that arbitration agreements barring class actions are valid under the Federal Arbitration Act. (Epic Systems Corp. v. Lewis (2018) — U.S. — [2018 WL 2292444].) In any event, as with the PAGA claims, Plaintiff is not attempting to assert any class or multiparty claims, and this issue is irrelevant to the enforceability of the arbitration agreement here.

For the foregoing reasons, the Court concludes Plaintiff failed to make any showing of substantive unconscionability.

C. Conclusion

The motion to compel arbitration is GRANTED.

The action is stayed pending completion of arbitration, pursuant to CCP § 1281.4.