Case Number: 19STCV13716 Hearing Date: September 17, 2019 Dept: 24

Defendants Apex Bulk Commodities LLC’s motion to compel Plaintiff Martha Maldonado’s claims to arbitration is GRANTED.

Plaintiff Martha Maldonado (“Plaintiff”) brought the instant employment action against her former employer Defendant Apex Bulk Commodities LLC (“Defendant”) on April 22, 2019. The Complaint states 6 causes of action for: 1) retaliation in violation of Lab. Code §§ 6310, 6311, and 232.5; 2) retaliation in violation of Lab. Code §§ 1102.5; 3) defamation; 4) false light; 5) wrongful termination; and 6) unfair business practices.

The Complaint alleges that Plaintiff was employed as a commercial truck driver by Harrison-Nichols Company LLC (“Harrison”) from 2002 to 2017. In January 2018, Defendant acquired Harrison and Plaintiff became an employee of Defendant. Upon beginning to work for Defendant, she observed that Defendant’s trucks had serious safety issues, including leaking trailers, engines in disrepair, and water in the fuel tank. In April 2018, Plaintiff complained repeatedly to multiple dispatchers and to her immediate supervisors about the faulty equipment. Defendant failed to correct the issue. On May 11, 2018, Defendants suspended Plaintiff for three days pending an investigation as to why she was complaining constantly about safety issues. On May 16, 2018, Plaintiff attended a meeting with her direct supervisor and a human resources employee. Defendant terminated Plaintiff during the May 16 meeting, and explicitly told her that she had complained one too many times. During the meeting, Defendant also provided a false Performance Review, stating that Plaintiff was unable to follow instructions and failed to communicate with dispatch.

On August 20, 2019, Defendant filed a motion to compel arbitration of Plaintiff’s claims. On September 4, 2019, Plaintiff filed an opposition. On September 10, 2019, Defendant filed a reply.

Legal Standard

Under California and federal law, public policy favors arbitration as an efficient and less expensive means of resolving private disputes. (Moncharsh v. Heily & Blase (1992) 3 Cal.4th 1, 8-9; AT&T Mobility LLC v. Concepcion (2011) 563 U.S. 333, 339.) Accordingly, whether an agreement is governed by the California Arbitration Act (“CAA”) or the Federal Arbitration Act (“FAA”), courts resolve doubts about an arbitration agreement’s scope in favor of arbitration. (Moncharsh, at 9; Comedy Club, Inc. v. Improv West Assocs. (9th Cir. 2009) 553 F.3d 1277, 1284; see also Engalla v. Permanente Med. Grp., Inc. (1997) 15 Cal.4th 951, 971-972 [“California law incorporates many of the basic policy objectives contained in the Federal Arbitration Act, including a presumption in favor of arbitrability [citation] and a requirement that an arbitration agreement must be enforced on the basis of state law standards that apply to contracts in general [citation]”].) “[U]nder both the FAA and California law, ‘arbitration agreements are valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.’ ” (Higgins v. Sup. Ct. (2006) 140 Cal.App.4th 1238, 1247.)

“Code of Civil Procedure section 1281.2 requires a trial court to grant a petition to compel arbitration ‘if the court determines that an agreement to arbitrate the controversy exists.’” (Avery v. Integrated Healthcare Holdings, Inc. (2013) 218 Cal.App.4th 50, 59, quoting Code Civ. Proc., § 1281.2.) Accordingly, “when presented with a petition to compel arbitration, the court’s first task is to determine whether the parties have in fact agreed to arbitrate the dispute.” (Ibid.) A petition to compel arbitration is in essence a suit in equity to compel specific performance of a contract. (Id. at 71.) As with any other specific performance claim, “a party seeking to enforce an arbitration agreement must show the agreement’s terms are sufficiently definite to enable the court to know what it is to enforce.” (Ibid. [internal citations omitted].) “Only the valid and binding agreement of the parties, including all material terms well-defined and clearly expressed, may be ordered specifically performed.” (Ibid.) An arbitration agreement “must be so interpreted as to give effect to the mutual intention of the parties as it existed at the time of contracting, so far as the same is ascertainable and lawful.” (Civ. Code, § 1636.) The language of the contract governs its interpretation if it is clear and explicit. (Civ. Code, § 1368.) If uncertainty exists, “the language of a contract should be interpreted most strongly against the party who caused the uncertainty to exist.” (Civ. Code, § 1654.)

The party seeking to compel arbitration bears the burden of proving the existence of a valid arbitration agreement by the preponderance of the evidence. (Engalla v. Permanente Medical Group, Inc. (1997) 15 Cal.4th 951, 972.) It would then be plaintiff’s burden, in opposing the motion, to prove by a preponderance of the evidence any fact necessary to her opposition. (See Ibid.) “In these summary proceedings, the trial court sits as a trier of fact, weighing all the affidavits, declarations, and other documentary evidence, as well as oral testimony received at the court’s discretion, to reach a final determination.” (Ibid.)

Evidentiary Objections

Defendant’s objections nos. 1-5 are OVERRULED.

Existence of a Valid Arbitration Agreement

As with any contract, mutual assent or consent is necessary for the formation of a valid arbitration agreement. (Civ. Code, §§ 1550, 1565.) “Consent is not mutual, unless the parties all agree upon the same thing in the same sense.” (Civ. Code, § 1580.) The moving party bears the initial burden of showing the existence of an agreement to arbitrate by a preponderance of the evidence. (Mitri v. Arnel Mgmt. Co. (2007) 157 Cal.App.4th 1164, 1169 (Mitri) [“Because the existence of the agreement is a statutory prerequisite to granting the petition, the petitioner bears the burden of proving its existence by a preponderance of the evidence.”].)

Defendant provides a copy of the arbitration agreement signed by Plaintiff. (Fuller Decl., Ex. 1.) The agreement indicates in bold, capitalized and off-set language that “I [Plaintiff] UNDERSTAND BY VOLUNTARILY AGREEING TO THIS BINDING ARBITRATION PROVISION, BOTH THE COMPANY AND I GIVE UP OUR RIGHTS TO TRIAL BY JURY.” (Ibid.) Plaintiff does not dispute signing this.

Plaintiff argues that no contract was formed between the parties because of the circumstances of the signature. Particularly, she argues that this occurred during a training session wherein Defendant’s employee handed her stacks of papers throughout the day in between training videos and expected her to sign it on the spot. Further, the employee indicated that it was standard paperwork that needed to be signed and did not indicate that it was an arbitration agreement. Plaintiff also observes that the arbitration agreement contains other provisions, and argues that the arbitration provision is hidden and ambiguous.

Plaintiffs cite to Metters v. Ralphs Grocery Co. (2008) 161 Cal.App.4th 696, which states an exception to the general rule that a party is presumed to be aware of the provisions of a contract regardless of whether they read them:

“[a]n exception to [this] general rule exists when the writing does not appear to be a contract and the terms are not called to the attention of the recipient. In such a case, no contract is formed with respect to the undisclosed term.” In Windsor Mills, Inc. v. Collins and Aikman Corp. (1972) 25 Cal.App.3d 987, 101 Cal.Rptr. 347, the court found an arbitration provision unenforceable because it was buried in small print on the reverse side of a form on which a carpet manufacturer acknowledged receipt of yarn shipments from the yarn distributor. The court found an offeree was not bound by “inconspicuous contractual provisions of which he was unaware, contained in a document whose contractual nature is not obvious. This principle of knowing consent applies with particular force to provisions for arbitration.”

(Id. at 702 [citations omitted].)

The Court disagrees with Plaintiff’s assessment on this point. The agreement is not artfully hidden, as it comprises a third of the single page document. Further, the terms of the agreement actually call attention to the fact that it is an arbitration agreement. Even if only skimmed, as Plaintiff testifies she did, a reasonable person would be aware that it contains an arbitration agreement. The agreement, while containing other provisions, does fairly delineate that it is an arbitration agreement. Specifically, the one-page agreement states, in offset, bolded, and capitalized language, that it is an arbitration provision, and that Plaintiff should sign the agreement after reading the statement and agreement. The remainder of Plaintiff’s objections on this point pull more towards the unconscionability analysis. This will be discussed at length below.

Accordingly, the Court finds that the parties did enter into an arbitration agreement.

Unconscionability

Plaintiff argues that the agreement cannot be enforced because it is unconscionable.

The doctrine of unconscionability refers to “an absence of meaningful choice on the part of one of the parties together with contract terms which are unreasonably favorable to the other party.” (Sonic-Calabasas A, Inc. v. Moreno (2013) 57 Cal.4th 1109, 1133.) It consists of procedural and substantive components, “the former focusing on oppression or surprise due to unequal bargaining power, the latter on overly harsh or one-sided results.” (Ibid.) Although both components of unconscionability must be present to invalidate an arbitration agreement, they need not be present in the same degree. (Armendariz v. Found Health Psychcare Servs., Inc. (2000) 24 Cal.4th 83, 114 (Armendariz).) “Essentially a sliding scale is invoked which disregards the regularity of the procedural process of the contract formation, that creates the terms, in proportion to the greater harshness or unreasonableness of the substantive terms themselves. [Citations.] In other words, the more substantively unconscionable the contract term, the less evidence of procedural unconscionability is required to come to the conclusion that the term is unenforceable, and vice versa.” (Ibid.) “The party resisting arbitration bears the burden of proving unconscionability.” (Pinnacle Museum Tower Assn. v. Pinnacle Market Dev. (US), LLC (2012) 55 Cal.4th 223, 247.)

Procedural Unconscionability

As to procedural unconscionability, Plaintiff highlights the previously identified issues with the training session, the hidden nature of the agreement, and the fac that she was given no time to review it. Additionally, Plaintiff raises that this is a contract of adhesion, typical of the employment context.

In part, Plaintiff relies on a newly decided case from the Supreme Court, OTO, L.L.C. v. Kho (Cal., Aug. 29, 2019, No. S244630) 2019 WL 4065524 (“Kho”). Plaintiff draws the Court’s attention to that case in a supplemental brief, field after the time for opposition. The Court observes that the case actually came down prior to the deadline for filing an opposition, and Plaintiff does not explain why this new case law was not discussed in the opposition proper. In any event, the ruling Kho does not appear to be a far departure from previous case law on this issue.

In Kho, the plaintiff (Kho), principally a Chinese speaker, was hired as a service technician for One Toyota of Oakland (“Toyota”) in January 2010. (Kho, supra, 2019 WL 4065524 at 1-2.) Three years into his employment, a human resources “porter” approached Kho in his workstation and asked him to sign several documents. Kho was required to sign them immediately and return them to the porter, who waited in the workstation. It took Kho three or four minutes to sign them all. He had no opportunity to read them, nor were their contents explained. He was not given copies of the documents, neither in English nor his native Chinese. One document was titled “Comprehensive Agreement—Employment At-Will and Arbitration.” The Court of Appeal and High Court noted that, notwithstanding its designation as a comprehensive employment contract, the one and one-quarter page contract is merely an arbitration clause grafted onto an acknowledgment of at-will employment. Further, the arbitration clause was contained in a “dense, single-spaced paragraph, written in a very small typeface that fills almost an entire page.” (Ibid.) Upon these facts, and after an extensive discussion of each factor, the Court held that the contract was oppressive, surprising, and contained certain unconscionable terms.

Upon an examination of the facts of Kho, the case does provide some guidance on the level of procedural unconscionability present in the instant case. However, this case is not precisely analogous. Several factors are not present, including the language barrier, the nature of the contract language, and how the documents were presented. Thus, the Court will use Kho and the other familiar case law to discuss what particular level of procedural unconscionability Plaintiff’s evidence presents.

First, the Court agrees that this does present a typical contract of adhesion. Generally, courts do not recognize that the “adhesive” arbitration agreements in the employment context establish a high degree of procedural unconscionability absent “surprise or other sharp practices.” (Baltazar v. Forever 21 Inc. (2016) 62 Cal.4th 1237, 1246; Nguyen v. Applied Medical Resources Corp. (2016) 4 Cal.App.5th 232, 248; [the fact that an arbitration agreement is presented as a “take-it-or-leave-it” contract of adhesion in the employment context, alone only establishes a modest degree of procedural unconscionability].) A ‘surprise’ involves the extent to which the supposedly agreed-upon terms of the bargain are hidden in the prolix printed form drafted by the party seeking to enforce the disputed terms.” (Carlson v. Home Team Pest Defense, Inc. (2015) 239 Cal.App.4th 619, 631.)

Plaintiff notes that the arbitration clause also fails to include any arbitration rules that supposedly govern the provision, much less attach those rules. Plaintiff contends that forcing employees to go to another source to learn the complete ramifications of the agreement constitutes procedural unconscionability. (See Zullo v. Superior Court (2011) 197 Cal.App.4th 477, 485-86; Trivedi v. Curexo Tech. Corp. (2010) 189 Cal.App.4th 387, 393 (disapproved of by Baltazar, supra, 62 Cal.4th at 2359); Fitz v. NCR Corp. (2004) 118 Cal.App.4th 702, 721; Harper v. Ultimo (2003) 113 Cal.App.4th 1402, 1406-07.) However, courts have recognized that an employer’s failure to attach the arbitration rules to an arbitration agreement requires courts to scrutinize the substantive unconscionability of terms that were “artfully hidden” –but does not otherwise add to the procedural unconscionability of the agreement. (Baltazar, supra, 62 Cal.4th 1237, 1246; Nguyen, supra, 4 Cal.App.5th 232, 248 -249.) As will be discussed below, there are some terms that curtail discovery rules, though they are present in the body of the document itself.

As to the presentation of the documents, Plaintiff declares that the arbitration agreement was presented during an all-day training program in between video sessions. (Maldonado Decl., ¶¶ 4-9.) Indeed, this provided Plaintiff little time to review the documents, as Plaintiff asserts that she could only “skim” the contents of the agreements. This adds to the procedural unconscionability of the adhesive contract.

Critically different from Kho, the agreement at issue contains bold, capitalized and off-set language that “I [Plaintiff] UNDERSTAND BY VOLUNTARILY AGREEING TO THIS BINDING ARBITRATION PROVISION, BOTH THE COMPANY AND I GIVE UP OUR RIGHTS TO TRIAL BY JURY.” (Fuller Decl., Ex. 1 ¶ 5.) This does much to vitiate Plaintiff’s claim of surprise as to the arbitration agreement itself. As discussed above, even if Plaintiff only skimmed the document, she should have been aware that it was an arbitration agreement considering the off-set bolded type.

Accounting for all of the factors discussed by plaintiff, and upon an examination of the presented case law, the Court finds that there is a moderate degree of procedural unconscionability.

Substantive Unconscionability

An agreement is substantively unconscionable if it imposes terms that are “overly harsh,” “unduly oppressive,” “unreasonably favorable,” or “so one-sided as to ‘shock the conscience.’ ” (Sanchez v. Valencia Holding Co., LLC (2015) 61 Cal.4th 899, 910-911.) “All of these formulations point to the central idea that unconscionability doctrine is concerned not with ‘a simple old-fashioned bad bargain’ [citation], but with terms that are ‘unreasonably favorable to the more powerful party.’ [Citation.]” (Id. at p. 911.) “These include ‘terms that impair the integrity of the bargaining process or otherwise contravene the public interest or public policy; terms (usually of an adhesion or boilerplate nature) that attempt to alter in an impermissible manner fundamental duties otherwise imposed by the law, fine-print terms, or provisions that seek to negate the reasonable expectations of the nondrafting party, or unreasonably and unexpectedly harsh terms having to do with price or other central aspects of the transaction.’ ” (Id. at p. 911.)

Here, Plaintiff presents three significant terms that she deems unconscionable. First, is the “lack of mutuality” between the parties. Second, is the limitations on discovery. Third, is the terms related to review of the arbitration decision.

As to the first point, she contends that the “I agree” language found in the body of ¶ 4 indicates that only she is bound to the arbitration clause, and that the language suggesting otherwise found in other paragraphs do not refer to the arbitration agreement. On this point, the Court disagrees. The Court need not look further than the previously identified bold and all caps warning that “BOTH THE COMPANY AND I [Plaintiff] GIVE UP OUR RIGHTS TO TRIAL BY JURY.” (Fuller Decl., Ex. 1 ¶ 5 [underline emphasis added].) This explicit warning obviously refers to the arbitration agreement, which covers claims arising from Plaintiff’s employment. Thus, the arbitration agreement is mutual based on a plain reading of the contract.

Plaintiff’s second contention, however, is meritorious. The agreement completely curtails discovery by its terms. The applicable terms state as follows:

“I voluntarily agree that any claim, dispute, and/or controversy […] arising from, related to, or having any relationship or connection whatsoever with my seeking employment with, employment by, or other association with the Company, whether based on tort, contract, statutory, or equitable law, or otherwise […] shall be submitted to and determined exclusively by binding arbitration under the Federal Arbitration Act, in conformity with the procedures of the laws in the state the action is brought forth and all other Acts other than mandatory and permissive rights to discovery…”

Defendant contends that this language merely puts permissible limitations on discovery. Defendant asserts that under Armendariz, the parties may agree to “less than the full panoply of discovery” provided by the CAA. (Armendariz, supra, 24 Ca1.4th at 105-06.) This is because when parties agree to arbitrate statutory claims, “they also implicitly agree, absent express language to the contrary, to such procedures as are necessary to vindicate that claim.” (Id. at 106.) Defendant explains that by agreeing to arbitrate Plaintiffs claims, the parties implicitly agreed to sufficient discovery on that claim. However, the language does not explain what these limitations are, beyond the fact that the arbitration will not provide “mandatory and permissive rights to discovery” in conformity with the law. Thus, a plain reading of the language does not imply that any discovery is provided, it expressly disclaims that both mandatory and permissive rights to discovery will not be allowed. This, of course, encompasses all discovery. This is not simply “less than the full panoply of discovery” provided under law, but a complete destruction of it. The Court cannot enforce that term.

That being said, this term is easily severed from the agreement per the severance clause. The Court will therefore strike out the term: “other than mandatory and permissive rights to discovery.”

As to the third point, Plaintiff argues that although the arbitration clause calls for a “written reasoned opinion” from the arbitrator, it further provides, “at either party’s written request within 10 days after the issuance of the award, [the arbitrator’s opinion] shall be subject to affirmation, reversal, or modification, following review of the record and arguments of the parties by a second arbitrator, who shall, as far as practicable, proceed according to the law and procedures applicable to appellate review by the Court of Appeal of civil judgment following court trial.” (Fuller Decl., Ex. 1, ¶ 4.) She reasons that the provision completely ignores the CAA’s mandate that “Any party to an arbitration in which an award has been made may petition the court to confirm, correct or vacate the award.” (CCP §1285.) However, on the face of the provision, the contract does not curtail the rights expressed in CCP section 1285. Instead, it appears to offer an additional review by an arbitrator. This makes no mention that CCP section 1285 or similar provision would not apply. Notably, the agreement provides for arbitration under the FAA, “in conformity with the procedures of the laws in the state the action is brought forth….” (Ex. 1 at ¶ 4.) Both the FAA and CAA provide for judicial review of any final arbitration award. (9 U.S.C. § 10; CCP § 1284.) Thus, this term does not appear substantively unconscionable. No other unconscionable terms are cited by Plaintiff.

Conclusion

Defendant meets its burden to demonstrate the existence of an arbitration agreement between the parties that covers Plaintiff’s claims. Plaintiff, in turn, fails to demonstrate that the agreement is unconscionable, a part from the severed term discussed above. Defendant’s motion is therefore GRANTED and the Court orders Plaintiff’s claims to arbitration, as discussed above. The entire action is STAYED pending the completion of the arbitration. (CCP § 1281.4.)

Moving party is ordered to give notice.