18-CIV-03384 JAN KOEHLER VS. THOUGHT STREAM, LLC, ET AL.

JAN KOEHLER THOUGHT STREAM, LLC
MARC C. LE CLEC

MOTION TO COMPEL ARBITRATION AND TO STAY TENTATIVE RULING:

The motion to compel arbitration and stay proceedings is granted.

The Federal Arbitration Act (FAA) “applies to any contract evidencing a transaction involving commerce that contains an arbitration provision.” The Declaration of Tavana does not sufficiently demonstrate that Plaintiff’s employment involves interstate commerce. The Court concludes that the FAA does not apply to the Arbitration Agreement. The Court grants the motion under Code of Civil Procedure sections 1280 et seq.

It is undisputed that an Agreement to Arbitrate exists and was signed by both parties. The Court grants the motion to compel arbitration because Plaintiff fails to show that the agreement is procedurally and substantively unconscionable. A. The Agreement Is not Procedurally Unconscionable.

Plaintiff argues that the Agreement was one of adhesion, but adhesion alone is insufficient to invalidate an arbitration agreement. (Lane v. Francis Capital Mgmt. LLC (2014) 224 Cal. App. 4th 676, 689; Graham v. Scissor–Tail, Inc. (1981) 28 Cal.3d 807, 819.) Plaintiff also argues that the Arbitration Agreement does not attach the rules of JAMS. Failure to include the arbitration rules could be a factor supporting a finding of procedural unconscionability where the failure would result in surprise to the party opposing arbitration. (Lane, supra, at 690.) However, the failure to attach a copy of the JAMS rules does not render the Agreement procedurally unconscionable, since the rules referenced in the agreement were easily accessible to the parties, such as being available on the internet. (Id. at 691. Both procedural and substantive unconscionability must exist in order to deny a motion to compel arbitration. Plaintiff fails to establish that the Arbitration Agreement is procedurally unconscionable. Therefore, the motion is granted.

B. The Agreement Is not Substantively Unconscionable. 1. The Class Action Waiver Does not Render the Arbitration Agreement Unconscionable.

Class action waivers are not per se unenforceable. Regardless, even if the class action waiver is unenforceable, the court may sever that provision and enforce the remainder of the arbitration agreement. (See Gentry v. Sup. Ct. (2007) 42 Cal.4th 443.) The existence of a class-action waiver does not render the entire Arbitration Agreement substantively unconscionable.

2. The Waiver of Berman Hearings Does not Render the Arbitration Agreement Unconscionable.

Plaintiff argues that the language bars Berman hearings is unconscionable because waiver of right to a Berman hearing is unconscionable. That clause, however is only “to the greatest extent permitted by law.” (See Agreement ¶ 5.) Rights to Berman hearings are not waivable. (Sonic Calabasas-A v. Moreno (2011) 51 Cal.4th 659, 684 (“Sonic I”) The waiver of Berman hearings in Plaintiff’s Arbitration Agreement is not enforceable, since that waiver is only “to the greatest extent permitted by law.” Here, “the greatest extent permitted by law” does not permit the Berman waiver. Since the waiver of Berman hearings is not enforceable, it is not unconscionable.

Sonic I was partly reversed on the ground that the FAA preempts a state-law rule categorically requiring arbitration to be preceded by a Berman hearing. (Sonic-Calabasas A, Inc. v. Moreno, 57 Cal. 4th 1109, 1142 (Sonic II).) However, since the FAA does not apply to this case, the preemption does not apply.

3. The JAMS Rules Do not Preclude Sufficient Discovery.

Plaintiff argues that the JAMS Rules fail to permit sufficient discovery and that discovery limitations far more generous than that of JAMS have been held to be unconscionable. (Opp. at 12 [citing Baxter v. Genworth N. Am. Corp., 16 Cal. App. 5th 713].) In Baxter, however, the Court noted that simply claiming insufficient discovery is not enough. Rather, it was necessary to make “a factual showing” that the discovery limitations would thwart the employee’s ability to prove his or her particular claims. (Baxter v. Genworth v. Am. Corp. (2017) 16 Cal. App. 5th 713, 729.) The plaintiff in Baxter set forth the quantity of discovery she needed and the reasons for it. The Court concluded that the discovery limitations of the employee dispute resolution program were inadequate. Here, Plaintiff does not identify the type or quantity of discovery she desires to take.

Further, the discovery limitations in Baxter provided that the arbitrator could permit additional discovery, “for good and sufficient cause shown.” The Court held that the requirement of showing “good and sufficient cause” for discovery was too vague and too stringent, compared with a mere “showing of need” for discovery, which was held to be not unduly stringent. (See Dotson v. Amgen, Inc. (2010) 181 Cal. App. 4th 975, 978 [“language permitting the arbitrator to expand discovery upon a showing of need removes any taint of ‘unconscionability’ from the agreement”].)

Here, the JAMS Rules permit the arbitrator to expand discovery upon showing of “reasonable need.” (JAMS Rules, attached as Exhibit B to Moving Declaration of Wang at p.17.) The Court concludes that requiring a showing of “reasonable need” for discovery is not unduly onerous.

Finally, the Code of Civil Procedure provides that the discovery provisions of the California Arbitration Act are incorporated into “every” arbitration agreement that pertains to personal injury. (Code of Civ. Proc. Sect. 1283.1, subd. (a).) Those provisions include “all of the same rights, remedies, and procedures . . . as if the subject matter of the arbitration were pending” in court. (Id. sect. 1283.05). A FEHA harassment claim is an “injury to … a person” within the meaning of Code of Civil Procedure section 1283.1, subdivision (a). (Bihun v. AT & T Information Systems, Inc. (1993) 13 Cal.App.4th 976, 1005.) Four of Plaintiff’s six causes of action are FEHA claims. The discovery provisions of section 1283.05 are available to Plaintiff. 4. The Agreement Does not Require Plaintiffs to Pay for Any Costs of Arbitration.

Finally, Plaintiff argues that the agreement does not expressly provide that Plaintiff shall not pay costs of arbitration. An arbitration agreement is not required to explicitly set forth the arbitration costs. (Little v. Auto Stiegler, Inc. (2003) 29 Cal. 4th 1064.)

C. The Action Is Stayed.

The motion to stay this action until completion of arbitration is granted.

D. Conclusion

The motion to compel arbitration and stay proceedings of the civil action is granted. If the tentative ruling is uncontested, it shall become the order of the Court. Thereafter, counsel for Defendant shall prepare a written order consistent with the Court’s ruling for the Court’s signature, pursuant to California Rules of Court, Rule 3.1312, and provide written notice of the ruling to all parties who have appeared in the action, as required by law and the California Rules of Court.