Case Number: 19STCV27179 Hearing Date: January 21, 2020 Dept: 74

19STCV27179 ROY YOO vs REALTY CENTER MANAGEMENT, INC

Defendant’s Motion Compel Arbitration & Stay Proceedings

TENTATIVE RULING: The motion is GRANTED.

Defendant Realty Center Management, Inc. (“RCMI”) moves for an order compelling arbitration of the claims asserted by Plaintiff Roy Yoo (“Plaintiff”) in this action and staying the case pending completion of arbitration. The court sets a Post Arbitration Status Conference for July 20, 2020 at 8:30 a.m. Today’s Case Management Conference and OSC re Dismissal for Failure to Serve Unserved Defendants are continued to July 20, 2020 at 8:30 a.m.

In deciding a motion to compel arbitration, trial courts must first decide whether an enforceable arbitration agreement exists between the parties, and then determine the second gateway issue of whether the claims are covered within the scope of the agreement. (Omar v. Ralphs Grocery Co. (2004) 118 Cal.App.4th 955, 961.) “The petitioner bears the burden of proving the existence of a valid arbitration agreement by the preponderance of the evidence, and a party opposing the petition bears the burden of proving by a preponderance of the evidence any fact necessary to its defense. [Citation] 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. [Citation] No jury trial is available for a petition to compel arbitration. [Citation]” (Engalla v. Permanente Medical Group, Inc. (1997) 15 Cal.4th 951, 972.) (See also Chiron Corp. v. Ortho Diagnostic Systems, Inc. (9th Cir. 2000) 207 F. 3d 1126, 1130 (“The court’s role under the [FAA] is therefore limited to determining (1) whether a valid agreement to arbitrate exists and, if it does, (2) whether the agreement encompasses the dispute at issue. [Citations]”).

Arbitration Agreement

RCMI proved the existence of an arbitration agreement with Plaintiff. RCMI submitted evidence Plaintiff signed an Agreement Regarding Arbitration of Disputes (“Arbitration Agreement”) on November 18, 2015. (Declaration of Martinez ¶¶2-4; Exhibit A.) The Arbitration Agreement provides, in pertinent part, as follows:

This Agreement is entered into by and between Realty Center Management, Inc. (the “Company”) and the undersigned associate (“Associate”).

It is hereby agreed that any dispute arising out of or in any way related to Associate’s employment with the Company will be decided exclusively by final and binding arbitration pursuant to the procedures required by state law [CALIFORNIA ASSOCIATES – California law, including the California Arbitration Act, California Code of Civil Procedure §1281, et seq. and governing case law including Armendariz v. Foundation Health Psychcare Servs., Inc. 24 Cal.4th 83, 90-91 (2000)].

The Claims covered by this Agreement include, but are not limited to, claims for wages or other compensation due…; tort claims; claims for discrimination…or harassment…; and claims for violation of any federal, state or other governmental constitution, statute, ordinance, regulation, or public policy. This Agreement shall not be deemed to apply to any dispute if an agreement to arbitrate such a dispute is prohibited by law. Each party hereto voluntarily and knowingly waives any rights to have any such dispute heard or adjudicated in any other forum, including the right to trial by jury.

(Declaration of Martinez ¶¶2-4; Exhibit A.)

In opposition, Plaintiff argues the one-page Arbitration Agreement is incomplete and, therefore, unenforceable. According to Plaintiff, the Arbitration Agreement incorporates the associate handbook and RCMI did not provide a copy of the handbook. (Opposition, pgs. 1-2.) However, as argued by RCMI, the Arbitration Agreement is a stand-alone agreement. (Reply, pgs. 1-2.) The Arbitration Agreement merely includes an acknowledgment that Plaintiff has read and received a copy of the Associate Handbook. (Declaration of Martinez ¶¶2-4; Exhibit A.) The Arbitration Agreement does not state that any terms of the Associate Handbook modify, alter, or add to the agreement in any way. Moreover, the “handbook has no bearing on the Agreement because it does not modify, alter or add to the agreement in any way…[T]he handbook only states there is an Arbitration of Disputes Agreement that is required as a condition of employment…” (Reply, pg. 2.) (Supplemental Declaration of Martinez ¶3; Exhibit C, Associate Handbook, pg. 92.)

Covered Claims

Plaintiff’s employment-related claims are covered by the Arbitration Agreement. Plaintiff filed a complaint on August 2, 2019, asserting causes of action for race/color/national origin/ancestry discrimination in violation of the FEHA, gender/sex discrimination in violation of the FEHA, hostile work environment in violation of the FEHA, retaliation for opposing practices forbidden by the FEHA, wrongful adverse actions in violation of public policy, negligent hiring and retention, failure to do everything reasonably necessary to prevent discrimination, harassment, and retaliation from occurring in violation of the FEHA, intentional infliction of emotional distress, violation of Business & Professions Code §17200, and retaliation for whistleblowing under Labor Code §1102.5. As discussed above, the Arbitration Agreement covers any disputes arising out of or in any way related to Plaintiff’s employment with RCMI, including claims for wages or other compensation, tort claims, claims for discrimination or harassment, and claims for violation of statutes or public policy.

Armendariz

Plaintiff argues the Arbitration Agreement violates the requirements set forth in Armendariz. (See Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83, 90-91 (“We conclude that such claims are in fact arbitrable if the arbitration permits an employee to vindicate his or her statutory rights. As explained, in order for such vindication to occur, the arbitration must meet certain minimum requirements, including neutrality of the arbitrator, the provision of adequate discovery, a written decision that will permit a limited form of judicial review, and limitations on the costs of arbitration.”).) Specifically, Plaintiff argues he is required to pay unreasonable fees and costs and to pay the arbitrator’s fees, the Arbitration Agreement does not require more than minimal discovery, and the Arbitration Agreement does not require a written award. (Opposition, pgs. 5-7.) However, as discussed below in detail, the Arbitration Agreement does not violate Armendariz.

The Arbitration Agreement clearly states that arbitration will be pursuant to California law, including the California Arbitration Act, and governing case law, including Armendariz. (Declaration of Martinez ¶¶2-4; Exhibit A.) The California Arbitration Act provides a process for the appointment of a neutral arbitrator, adequate discovery, and a written award. (See C.C.P. §§1281.6 (Appointment of arbitrator), 1282.6 (Attendance of witnesses and production of evidence; Subpoenas), 1283 (Depositions for use as evidence), 1283.05 (Depositions and discovery), 1283.4 (Requisites and sufficiency of award).) (See also Armendariz at 105 (“Adequate provisions for discovery are set forth in the CAA at Code of Civil Procedure section 1283.05, subdivision (a).”).)

Moreover, the Arbitration Agreement adequately limits fees and costs. The Arbitration Agreement provides, in pertinent part, as follows:

Where applicable by state and federal laws, Associate’s responsibility for payment of the neutral arbitrator’s fees and expenses in connection with claims to enforce non-contractual rights shall be limited to an amount equal to the filing fee that would be required for a Superior Court action. With respect to such non-contractual claims, associate’s expenses shall be limited to those expenses Associate would have incurred in a Superior Court action, and the Company shall pay all remaining fees of the neutral arbitrator. [CALIFORNIA ASSOCIATES – With respect to all claims based on purely contractual rights, the parties shall each pay their pro rata share of the neutral arbitrator’s expenses and fees, pursuant to the California Code of Civil Procedure §1284.2.] Any controversy regarding the payment of fees and expenses under this Agreement shall be decided by the arbitrator.

(Declaration of Martinez ¶¶2-4; Exhibit A.)

The Arbitration Agreement does not require Plaintiff to “bear any type of expenses that [Plaintiff] would not be required to bear if he…were free to bring the action in court.” (Armendariz at 110-111.) Even assuming, arguendo, the fees and costs provision is unclear, which it is not, the provision can be severed and RCMI agreed “to bear all fees and costs unique to the arbitration of this matter, excluding Plaintiff’s attorney fees and costs.” (Declaration of Martinez ¶8.)

Unconscionability

“Unconscionability has both procedural and substantive elements. [Citation] Although both must appear for a court to invalidate a contract or one of its individual terms [Citations], 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.’ [Citations]” (Roman v. Superior Court (2009) 172 Cal.App.4th 1462, 1469.)

“Procedural unconscionability focuses on the elements of oppression and surprise. [Citations] ‘‘‘‘Oppression arises from an inequality of bargaining power which results in no real negotiation and an absence of meaningful choice…Surprise involves the extent to which the terms of the bargain are hidden in a ‘prolix printed form’ drafted by a party in a superior bargaining position.’’’’ [Citations]” (Id.)

“Substantive unconscionability focuses on the actual terms of the agreement and evaluates whether they create ‘‘‘overly harsh’’’ or ‘‘‘one-sided’’ results’ [Citations] that is, whether contractual provisions reallocate risks in an objectively unreasonable or unexpected manner. [Citation] Substantive unconscionability ‘may take various forms,’ but typically is found in the employment context when the arbitration agreement is ‘one-sided’ in favor of the employer without sufficient justification, for example, when ‘the employee’s claims against the employer, but not the employer’s claims against the employee, are subject to arbitration.’ [Citations]” (Id. at 1469-1470.)

Plaintiff argues the Arbitration Agreement is unconscionable.

The Arbitration Agreement is procedurally unconscionable. The Associate Handbook suggests Plaintiff was required to sign the Arbitration Agreement as a condition of employment. The Associate Handbook provides, in pertinent part, as follows: “The Associate Handbook includes an Arbitration of Disputes Agreement. The Acknowledgement Forms must be signed by all Associates as acceptance of the agreement is a requirement of employment with RCMI.” (Supplemental Declaration of Martinez ¶3; Exhibit C, Associate Handbook, pg. 92.) (See Roman at 1470 (“The Supreme Court has acknowledged that adhesion contracts in the employment context typically contain some measure of procedural unconscionability. [Citations]”).)

However, the Arbitration Agreement is not substantively unconscionable. Plaintiff argues the Arbitration Agreement is substantively unconscionable because it requires Plaintiff “to pay for fees and costs associated with the arbitration forum and the arbitrator,” does not provide for minimal discovery, and does not provide for a written award. (Opposition, pgs. 8-9.) However, as discussed above, the Arbitration Agreement complies with Armendariz.

Based on the foregoing, the Court finds the Arbitration Agreement is not unconscionable.

Conclusion

RCMI’s motion to compel arbitration is granted. The case is stayed pending completion of arbitration.