Case Number: BC547300    Hearing Date: October 21, 2014    Dept: 73

Dept. 73
Rafael Ongkeko, Judge presiding

WILLIAMS vs. INSPERITY, etc., et al. (BC547300)

Counsel for defendants/moving party: Theresa Marchlewski (Jackson, etc.)
Counsel for plaintiff/opposing party: Lee Franck (Cummings, etc.)

Defendants’ motion to compel arbitration (filed 9/11/14) is DENIED.

DISCUSSION

Existence of Arbitration Agreement
“[I]n considering a Code of Civil Procedure section 1281.2 petition to compel arbitration, a trial court must make the preliminary determinations whether there is an agreement to arbitrate and whether the petitioner is a party to that agreement (or can otherwise enforce the agreement).” M & M Foods, Inc. v. Pacific American Fish Co. (2011) 196 Cal.App.4th 554, 559; Giuliano v. Inland Empire Personnel, Inc. (2007) 149 Cal.App.4th 1276, 1284 (“‘petitioner bears the burden of proving the existence of a valid arbitration agreement by the preponderance of the evidence….’”). In deciding a petition to compel arbitration, trial courts must decide first whether an enforceable arbitration agreement exists between the parties, and then determine the second gateway issue whether the claims are covered within the scope of the agreement. Omar v. Ralphs Grocery Co. (2004) 118 Cal.App.4th 955, 961.

The present motion seeks an order compelling Plaintiff to arbitrate her complaint based on an arbitration provision contained in a document titled “Employment at Will and Arbitration Agreement.” Gerritsen Decl., Ex. A. Unusual in an employment case, defendant had plaintiff sign this agreement while she was at work, and just hours that same day, defendant laid her off.

Pursuant to CCP §1281.2, a motion to compel arbitration can be denied, inter alia, if grounds exist for revocation of the agreement, which plaintiff has the burden to prove. Here, Plaintiff does not dispute that she signed the Agreement, but argues it is unenforceable because her signature was procured by fraud. Plaintiff’s declaration states that on January 3, 2014, she was presented with the agreement “under surprise” and it was signed on the same day she was terminated, not as part of pre-employment procedures or a hiring agreement. Williams Decl. ¶¶3-4. She states she was tricked/surprised into signing this document by defendant’s HR manager under false pretenses that it was simply an at-will agreement and nothing else. ¶5. She maintains she was tricked because defendant knew it was going to fire her that day and intentionally had her sign this Agreement hours before she was terminated. Id. She alleges she was approached while working, not at a special meeting or work break, and was told everyone needed to sign an agreement stating they were an at will employee. ¶¶6-8. Plaintiff maintains she was given no time to read the document and was just told to sign it right away because there was no need to read it. ¶¶8-9, 13. Thus, she maintains she signed the agreement under “false pretenses.” Plaintiff did as directed, believing she was just signing an at-will agreement. ¶11

Plaintiff’s reliance on the Compton case ignores the fact that Compton is currently on review by the California Supreme Court and thus may not be cited.

The circumstances of the execution of the agreement in this case are unique and hard to overlook. Ordinarily, one who signs a contract is assumed to have read and understood what she signs, particularly where, as here, the disputed provision clearly appears in the document and is not concealed or difficult to find in the agreement. Fraud, coercion and/or excusable neglect are recognized exceptions. Brown v. FSR Brokerage, Inc. (1998) 62 Cal.App.4th 766, 777. The Rosenthal case cited by both sides still requires an evaluation of the factual circumstances of whether the employee was given a “reasonable opportunity” to enter into the agreement. Rosenthal v. Great Western, etc. (1996) 14 Cal.4th 394, 423-5. (“To make out a claim of fraud in the execution, it must be remembered, plaintiffs must show their apparent assent to the contracts–their signatures on the client agreements–is negated by fraud so fundamental that they were deceived as to the basic character of the documents they signed and had no reasonable opportunity to learn the truth. By their claim of fraud in the execution, plaintiffs do not seek equitable relief in the form of rescission or reformation, or damages for being misled, but, rather, a judicial determination they never assented to any contract. Because the facts described above do not establish these plaintiffs lacked a reasonable opportunity to learn the character of the documents they signed, they do not prove fraud sufficient to make the contracts wholly void.”) Here, plaintiff’s evidence regarding the circumstances of her dealings with the HR manager remain uncontradicted, and, despite the binding arbitration provision being in plain sight and the well-settled policies favoring enforcement of arbitration agreements, evidence of fraud, coercion or excusable neglect under these facts preponderates in plaintiff’s favor.

It is true that “ ‘one party’s unreasonable reliance on the other’s misrepresentations, resulting in a failure to read a written agreement before signing it, is an insufficient basis, under the doctrine of fraud in the execution, for permitting that party to avoid an arbitration agreement contained in the contract.’ ” (Metters v. Ralphs Grocery Co. (2008) 161 Cal.App.4th 696, 702.) However, given what the HR manager told her, and the newly-added evidence that plaintiff was also presented with an employee handbook and signed a receipt for it that same day, it was not unreasonable for plaintiff to not read what she was given and just sign as she was told, in reliance on whatever she was told, all occurring as she was still manning the telephones. Notably, the HR manager does not dispute these circumstances at the same time as she does address other issues in rebuttal. In paragraph 3 of her supplemental declaration (filed 10/14/14), Gerritsen, the HR manager, responds to the interstate commerce issue in 2 paragraphs and devotes another 2 paragraphs to the handbook issue, but mentions nothing of plaintiff’s factual testimony regarding statements attributed to Gerritsen herself surrounding the execution of the agreement.

The court finds that moving party has not met its burden to show the enforceability of the agreement and plaintiff has shown that the arbitration agreement should be revoked.

Given this ruling, it is not necessary for the court does not address the other issues each party raises.

Unless waived, notice of ruling by plaintiff.