30-15-787700

Shaw VS Collection Consulting Services, LLC

1. Motion to Compel Arbitration

2. Motion for Leave to Amend Answer

Plaintiff alleges that he was employed as a manager by defendant Collection Consulting Services, LLC (“CSS”) from January 2011 to May 2014. Plaintiff says he routinely worked 12 hours a day but was not paid overtime. He also alleges that he was incorrectly classified and paid as an independent contractor throughout his tenure with the company, but was in fact an employee whose hours and duties were controlled by CSS and two of its owners, defendants James Trent (“Trent”) and Scott Cass (“Cass”).

Plaintiff says he began to suffer stress and anxiety because of his work environment. On 05/19/14, shortly after he had reported his disability, he was terminated. Plaintiff alleges that the reason he was given for his termination was a pretext and the real reason was that he had a disability and had requested accommodations based on that disability.

On 05/14/15, Plaintiff filed his original complaint against all Defendants.

On 06/25/15, Defendants filed a demurrer to the complaint that was set to be heard on 07/31/15.

On 07/09/15, the Court, on its own motion, continued the hearing on the demurrer to 08/14/15.

On 07/31/15, Plaintiff filed a First Amended Complaint (“FAC”) without opposing the demurrer. As a result, the Court took the demurrer off calendar.

On 08/07/15, Defendants served a subpoena duces tecum on Liberty Capital Management, Inc. (“Liberty”), seeking Plaintiff’s personnel records. Defendants say the subpoena was withdrawn after they discovered that Plaintiff was not employed by the company. Ruiz Decl. ¶ 7.

On 09/08/15, Defendants served a subpoena duces tecum on Liberty Capital Services, Inc., seeking Plaintiff’s personnel records. While that subpoena was pending, counsel for both sides met and conferred regarding Plaintiff’s privacy-based objections to the subpoena. Defendants say they agreed to have the deposition officer keep custody of any records produced by the deponent while meet-and-confer talks were ongoing.

On 09/11/15, Defendants filed their answer to the FAC, asserting a general denial and 41 affirmative defenses, including that Plaintiff was an independent contractor (38th Affirmative Defense)) and that none of the Defendants except Platinum Holdings Group, LLC (“PHG”) had an employment relationship with him (41st Affirmative Defense). None of the asserted defenses was based on the existence of an arbitration agreement between the parties.

On 09/21/15, Plaintiff served 28 sets of discovery totaling 931 individual requests on all seven entity Defendants.

On 09/29/15, defendant Collection Consulting Services, LLC (“CSS”) served Plaintiff with a set of 151 requests for production of documents and also noticed Plaintiff’s deposition for 11/04/15. Plaintiff says CCS served the discovery on behalf of all Defendants.

Over the ensuing weeks, counsel for both sides met and conferred regarding discovery disputes. Defendants say they complained about the inclusion of several “improperly named Defendant entities” in the FAC as well as “the burdensome and oppressive volume of discovery propounded” by Plaintiff. Ruiz Decl. ¶ 12. Plaintiff’s deposition did not go forward on 11/04/15 because of scheduling conflicts, and the parties discussed possible date in December 2015.

On 10/02/15, Plaintiff filed a Case Management Statement. On 10/07/15, Defendants filed their Case Management Statement. On 10/20/15, counsel for both sides appeared at a Case Management Conference at which the Court set a trial date of 05/02/16.

On 10/26/15, the parties filed a stipulated protective order governing the disclosure of confidential information produced or obtained in discovery. The stipulation was entered as a Court order the following day.

Defendants say that on 11/06/15, defense counsel was reviewing documents in connection with an upcoming discovery deadline when it was “discovered that Plaintiff had agreed to arbitrate any disputes arising under his independent contractor agreement with defendant Platinum Asset Services, LLC (“PAS”).”

On 11/09/15, Defendants served objections to Plaintiff’s discovery requests, including that an arbitration agreement existed between Plaintiff and Defendants. CSS withdrew all discovery requests that it had propounded on Plaintiff. Defendants also withdrew their subpoena to Liberty Capital Services, Inc., and say they had not received or reviewed any responsive documents from the deposition officer prior to withdrawing the subpoena. Ruiz Decl. 15.

According to Defendants, no discovery has been exchanged by the parties and no determinations have been made on the merits of the case or on any substantive or procedural issues.

On 11/13/15, Defendants filed a motion to compel arbitration and motion for leave to amend their answer to plead an affirmative defense based on the alleged existence of an arbitration agreement between the parties. Plaintiff has opposed both motions.

1. Motion to Compel Arbitration

Evidentiary Objections. Defendants have filed nine objections to the declarations of Plaintiff and his counsel, Ian Silvers, on ground of irrelevance, lack of foundation, and other alleged defects. The Court finds that the objections all go to the weight of the evidence, not its admissibility. Therefore, all the objections are OVERRULED.

Legal Standards. A party may file a petition to compel arbitration based on a written arbitration agreement. See CCP § 1281.2. The moving party must prove by a preponderance of the evidence the existence of an arbitration agreement, and that the dispute is covered by the agreement. See Rosenthal v. Great Western Fin’l Securities Corp. (1996) 14 Cal. 4th 394, 413. Once the moving party meets its initial burden, the opposing party has the burden of establishing that some exception applies, based on admissible evidence, or arbitration may not be refused. See Correctional Peace Officers Ass’n v. State of Calif. (2006) 142 Cal. App. 4th 198, 205; Rowland v. PaineWebber, Inc. (1992) 4 Cal. App. 4th 279, 285.

Merits. To meet the first element — the existence of an arbitration agreement — Defendants have produced a document titled “Independent Contractor Agreement” and dated 09/10/12 (“2012 Agreement”). The 2012 Agreement, which contains an arbitration clause, purports to bear the signatures of Plaintiff and PHG’s Vice President of Human Resources, Danielle Revis.

The 2012 Agreement contains a paragraph titled “Resolving Disputes.” The paragraph reads in its entirety:

If a dispute arises under this Agreement, the parties agree to first try to resolve the dispute with the help of a mutually agreed-upon mediator in Orange County, California. Any costs and fees other than attorney fees associated with the mediation shall be shared equally by the parties. If it proves impossible to arrive at a mutually satisfactory solution through mediation, the parties agree to submit the dispute to a mutually agreed-upon arbitrator in Orange County, California. Judgment upon the award rendered by the arbitrator may be entered in any court having jurisdiction to do so. Costs of arbitration, including attorney fees, will be allocated by the arbitrator.

Montano Decl. Ex. A ¶ 18.

Defendants contend that the above clause is an enforceable arbitration agreement that encompasses Plaintiff’s claims in this lawsuit because all the claims “arise under” the 2012 Agreement. They say that even though the 2012 Agreement is only between Plaintiff and PAS, all Defendants are entitled to enforce it because the causes of action against the non-signatory Defendants are “‘intimately founded in and intertwined’ with the underlying contract obligations.’” Mot. at 8 (quoting Boucher v. Alliance Title Co., Inc. (2005) 127 Cal. App. 4th 262, 271).

Plaintiff contends that he never saw the 2012 Agreement containing the arbitration clause until Defendants filed it as part of their motion. Shaw Decl. ¶ 9. Plaintiff’s declaration states as follows:

Prior to Defendants filing the current motion, I had never seen the alleged Independent Contractor Agreement which Defendants attached as Exhibit A to Tiffany Montano’s Declaration. Additionally, I never authorized Defendants to use my electronic signature for any contact [sic] or agreement between me and Defendants.

Shaw Decl. ¶ 9.

Plaintiff says he did sign an agreement on his first day of employment on 01/10/11 (“2011 Agreement”), but that the 2011 Agreement did not contain an arbitration clause and was entered into with a different entity Defendant, Worldwide Recoveries, LLC. Id. ¶¶ 3-5. The 2012 Agreement, in contrast, purports to have been entered into 20 months later with Premium Asset Services, LLC (“PAS”) and purports to have been signed by Revis acting as Vice President of Human Resources for yet another entity Defendant, Platinum Holdings Group, LLC (“PHG”). (The declaration to which the 2012 Agreement is attached states that PHG buys and sells debt and seeks to collect debt through “numerous umbrella companies,” of which PAS is one. Montano Decl. ¶ 2.)

Thus, not only does Plaintiff deny ever seeing the 2012 Agreement before Defendants’ motion, but the contracting entity named on the first page of the 2012 Agreement (PAS) is different from the entity whose representative signed the 2012 Agreement (PHG). Moreover, the signature page — which is a separate page containing only the signature blocks and does not include any of the 2012 Agreement’s terms — identifies Plaintiff as “President” but do not name the company of which he purportedly is the President. Nor is any company mentioned elsewhere in the 2012 Agreement.

In their reply brief, Defendants seek to poke holes in Plaintiff’s contention that he never saw the 2012 Agreement until now. They find it significant that Plaintiff’s declaration does not unequivocally deny that the signature on the last page of the Agreement is his own. Plaintiff states only that he never saw the Agreement before, which Defendants say could simply mean that he does not remember signing the Agreement, and “[l]ack of recollection is not proof that something did not happen.” Reply at 1.

Defendants add that Plaintiff’s signature on the Agreement has been authenticated by Tiffany Montano (“Montano”), identified as the Human Resources and Accounting Manager for PHG, who states in her declaration that “I recognize Mr. Shaw’s signature at the end of the Agreement.” Montano Decl. ¶ 4. However, the Montano declaration does not establish that she has personal knowledge of Plaintiff’s signature. Cal. Prac. Guide Civ. Trials & Evid. § 8:341 (“Witnesses not otherwise qualified to testify as experts may state their opinions that the handwriting is that of the purported writer if they have personal knowledge of the purported author’s handwriting or signature.”) (citing Evid. Code § 1416).

Defendants point out that Plaintiff failed to file a formal objection to Montano’s authentication of his signature, but that even if he had, the Court could compare the signature on the 2012 Agreement with the signature on Plaintiff’s declaration and reach its own conclusion that “[t]he two signatures look the same.” Reply at 2 and n.1 (citing Evid. Code § 1417). The Court declines the invitation because even if were to determine that the signatures appear to be the same, such a finding would still leave room for doubt.

Plaintiff questions why Defendants have sought to authenticate the 2012 Agreement and Plaintiff’s signature through Montano when it was Revis, not Montano, who signed the Agreement on behalf of PHG. Defendants do not address this question in their reply. It may be that Revis is no longer employed by any Defendant, but if that were the case, Defendants easily could have said so in their reply.

There are other troubling gaps in Defendants’ evidence. For example, Defendants do not dispute Plaintiff’s claim that he was hired in January 2011 — a full 20 months before he allegedly signed the 2012 Agreement. Nor do they dispute Plaintiff’s assertions that he was made to sign the 2011 Agreement on his first day of work and that the Agreement did not contain an arbitration clause. Shaw Decl. ¶¶ 2-5. The Montano declaration takes the trouble to describe Plaintiff’s duties under the 2012 Agreement, but somehow fails to mention the date he started work. Nor does she say whether the 2012 Agreement was the first or only agreement signed by Plaintiff. Of course, if Plaintiff did sign an employment agreement in January 2011 as he contends, the question arises why he would have been asked to sign the 2012 Agreement 20 months later into his tenure.

Defendants make no effort to answer these questions.

The 2012 Agreement contains a provision requiring “Contractor” to “invoice Company “by the 13th and the 28th of each for all services rendered pursuant to this Agreement. Invoices shall be submitted on Contractor’s letterhead specifying an invoice number, the dates covered in the invoice, the hours expended, and the work performed in summary during the invoice period.” Montano Decl. Ex. A ¶ 3(B). If Plaintiff agreed to be bound by this Agreement, he presumably would have submitted — and Defendants presumably would have received — invoices entitling him to payment for his services. Documentary evidence showing that Plaintiff complied with the specific requirements of the 2012 Agreement would have been compelling evidence that he agreed to abide by its terms. Yet Defendants have submitted no such invoices — or any other objective indicia of compliance with the 2012 Agreement’s terms — with their moving papers.

Meanwhile, Plaintiff has submitted evidence that appears to contradict the 2012 Agreement’s terms. Attached as Exhibit A to Plaintiff’s declaration is a copy of a health insurance card issued to Plaintiff by defendant CCS on 11/11/13, more than a year after the purported signing of the 2012 Agreement. Yet the 2012 Agreement states that “Contractor understands that neither Contractor nor Contractor’s employees or contract personnel are eligible to participate in any employee pension, health, vacation pay, sick pay, or other fringe benefit plan of the Company.” Montano Decl. Ex. A ¶ 9 (emphasis added).

Given the unexplained gaps and inconsistencies in Defendants’ evidence, they have failed to carry their burden to show the existence of an arbitration agreement and therefore their motion to compel arbitration is DENIED. Their motion for leave to amend their answer to add the affirmative defense of “Arbitration Agreement” is denied as MOOT.