2018-00239362-CU-OE

David Allen vs. Basalite Building Products, LLC

Nature of Proceeding: Motion to Compel Arbitration

Filed By: Chan, Phillip

Defendant Basalite Building Products, LLC’s (“Basalite”) motion to compel arbitration is ruled upon as follows.

This is an employment disability discrimination, retaliation, and labor code violation action.

Basalite moves to compel arbitration pursuant to an arbitration provision included in Plaintiff David Allen’s Employment Application and Basalite’s Employee Personnel Manual.

Plaintiff does not dispute whether there is a valid arbitration agreement. Rather, Plaintiff insists that the arbitration agreement is unconscionable.

Legal Standard

The party seeking to compel arbitration bears the burden of proving the existence of a valid arbitration agreement. (Engalla v. Permanente Medical Group (1997) 15 Cal.4th 951, 972.) “Once that burden is satisfied, the party opposing arbitration must prove by a preponderance of the evidence any defense to the petition.” (Sparks v. Vista Del Mar Child and Family Svcs. (2012) 207 Cal.App.4th 1511, 1517.)

An arbitration agreement may be revoked on “such grounds as exist for the revocation of any contract.” (Civ. Code § 1281.) Further, the Court may refuse to enforce any contract or any provision of a contract determined to be unconscionable. (Civ. Code § 1670.5.)

“Unconscionability 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. The prevailing view is that [procedural and substantive unconscionability] must both be present in order for a court to exercise its discretion to refuse to enforce a contract or clause under the doctrine of unconscionability. But they need not be present in the same degree. … [T]he 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.” (Peng v. First Republic Bank (2013) 219 Cal. App. 4th 1462, 1469 [internal citations and quotations omitted.].)

Procedural Unconscionability

In support of the motion, Basalite submits the declaration of Yazmin Martinez (“Martinez”), the Human Resources Generalist at Basalite. Martinez avers that on July 15, 2015, she met with Plaintiff and gave him the Employment Application and Personnel Manual to review and complete. (Declaration of Yazmin Martinez, ¶ 5.) She highlighted different sections of the Personnel Manual, including the Arbitration Agreement sections. (Id.) She informed him that he could take his time to review them over the weekend on his own time. She also told him that he could review them with her in her office to assist him with any questions. Plaintiff initially opted to take these documents back to his workstation. Later that day, Plaintiff returned to her office with both the Employment Application and the Personnel Manual. They reviewed both documents, and he signed the Employment Application and Personnel Manual Acknowledgement & Agreement in her office. (Id.) Notably, Martinez avers that:

If Mr. Allen opted not to sign the arbitration agreement, I would have noted his decision, and he would have been able to begin his employment with Basalite, If Mr. Allen chose to revoke his agreement to the arbitration agreement, Basalite would have allowed him to do so and still begin his employment with Basalite.

(Id. at ¶ 6.)

Plaintiff insists that the arbitration agreement is procedurally unconscionable because it is an adhesion contract. Plaintiff proffers no evidence whatsoever to support his argument that the agreement is an adhesion contract. Plaintiff merely argues that since the agreement provides that all employees are required to agree to arbitration as a condition of employment and of continued employment, that the agreement must be an adhesion contract. Plaintiff fails to dispute Martinez’s declaration that he would have been allowed to begin employment with Basalite even if he chose to revoke or opt out of the arbitration provision. He proffers no evidence that he attempted to negotiate the arbitration agreement and was denied, or that the arbitration agreement was given to him in a “take-it-or-leave-it basis.” Given Plaintiff’s failure to submit any evidence, the Court is skeptical as to whether the arbitration agreement was truly adhesive.

In any event, since the arbitration agreement was in the employment context, the Court concludes there is a sliver of procedural unconsionability.

Substantive Unconscionability

“Substantive unconscionability focuses on overly harsh or one-sided results. In assessing substantive unconscionability, the paramount consideration is mutuality. This does not mean that parties may not choose to exclude particular types of claims from the terms of arbitration. However, an arbitration agreement imposed in an adhesive context lacks basic fairness and mutuality if it requires one contracting party, but not the other, to arbitrate all claims arising out of the same transaction or occurrence or series of transactions or occurrences.” (Fitz v. NCR Corp. (2004) 118 Cal. App. 4th 702, 723.) “An agreement may be unfairly one-sided if it compels arbitration of the claims more likely to be brought by the weaker party but exempts from arbitration the types of claims that are more likely to be brought by the stronger party.” (Id. at 724.)

Plaintiff advances that arbitration agreement is substantively unconscionable because it leaves open the possibility that no discovery will be afforded in the arbitration proceeding. The arbitration agreement provides “[t]he arbitrator may allow discovery and issue subpoenas. Depositions shall not be taken unless leave to

do so is first granted by the arbitrator.” Plaintiff maintains that since the language states that the arbitrator may allow discovery, there is the possibility that the arbitrator may not allow any discovery at all.

The Court notes in the cases cited by Plaintiff, the arbitration agreement limited or restricted the right to discovery. For example, in Fitz v. NCR Corp. (2004) 118 Cal.App.4th 702, the Fourth District found the subject arbitration agreement failed to afford the defendant’s former employee “adequate discovery” inasmuch as discovery was expressly limited to “the sworn deposition statements of two individuals and any expert witnesses expected to testify at the arbitration hearing” and “also requires all exhibits and a list of potential witnesses to be exchanged at least two weeks in advance of the arbitration hearing,” with no other discovery being allowed “unless the arbitrator finds a compelling need to allow it” (i.e., “requir[ing] the arbitrator to limit discovery…unless the parties can demonstrate that a fair hearing would be impossible without additional discovery.” (Id. [italics in original] [underline added for emphasis].) In Kinney v. United Healthcare Servs. (1999) 70 Cal.App.4th 1322, 1326, the arbitration agreement restricted the scope and extent of discovery, providing that interrogatories could be used only to seek the identification of potential witnesses and that each party would be limited to twenty-five document requests and two 8-hour depositions. In Martinez v. Master Protection Corp. (2004) 118 Cal.App.4th 107, 118, the arbitration provision restricted discovery to a single deposition and a document request.

Here, the arbitration agreement does not limit or restrict the right to discovery.

Plaintiff’s argument that the arbitrator may not allow any discovery at all is mere speculation. Indeed, as the Second District Court of Appeal noted in Dotson v. AmGen Inc. (2010) 181 Cal.App.4th 975, 984, the court “assume[s] that the arbitrator will operate in a reasonable manner in conformity with the law. (See, e.g., Booker v. Robert Half International, Inc. (D.C. Cir. 2005) 413 F.3d 77, 86 [provision giving arbitrator broad discretion over discovery not unconscionable based on speculation that arbitrator would impermissibly limit discovery]; Guyden v. Aetna, Inc. (2d Cir. 2008) 544 F.3d 376, 386-387 [provision limiting discovery but permitting arbitrator to allow additional discovery upon a showing that it was “necessary” could not be invalidated based on speculation that arbitrator would not exercise discretion to permit additional discovery].)”

Given the slight level of procedural unconscionablity and no substantive unconscionablity, the Court concludes that the arbitration agreement is not unconscionable.

Accordingly, the motion to compel arbitration is GRANTED. Basalite’s request to stay the civil action is GRANTED. The civil action is stayed pending arbitration.

The minute order is effective immediately. No formal order pursuant to CRC Rule 3.1312 or further notice is required.