Vannytha Harris vs Westmont Living, Inc. et al

Notice: If the tentative is opposed the matter will be heard in D-7 at 8:45 am.

I. Introduction

The instant case arises out of an employment dispute between Plaintiff Vannytha Harris (“Plaintiff’) and Defendants Westmont Living, Inc., Morgan Hill Senior Living LP, and Morgan Hill Senior Living GP, LLC (“Defendants”). On February 8, 2019 Plaintiff filed her Complaint against Defendants asserting four employment-based causes of action. Defendants contend that the causes of action in Plaintiff’s Complaint arise out of, or are directly related to Plaintiffs former employment with Defendants.

On June 6, 2017, when Plaintiff was hired by Defendant, Plaintiff signed a document entitled “Mediation and Arbitration Agreement” (hereinafter “Arbitration Agreement”). Defendant contends that by signing the Arbitration Agreement Plaintiff agreed to arbitrate any and all claims arising out of her employment with Defendant. Defendant has moved for an order that Plaintiff be compelled to resolve the dispute by binding arbitration.

Plaintiff concedes that she entered into the Arbitration Agreement as a condition of her employment. (Pl. Decl., ¶ 3.) However Plaintiff contends that the Arbitration Agreement cannot be enforced because some of the Defendants are non-parties to the Arbitration Agreement. Plaintiff also contends that Plaintiffs claims do not arise out of the Arbitration Agreement. Finally Plaintiff argues that the Arbitration Agreement is unenforceable as a matter of public policy because it does not comply with the minimum standard set forth in Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83, 114 and is both procedurally and substantively unconscionable.

A. The June 27, 2019 Hearing
B.
The matter came on originally for hearing on 6/27/19. The Court issued a tentative ruling granting the motion to compel arbitration because the agreement provided that all issues, including the question of arbitrability, were delegated to the arbitrator. Plaintiff opposed the Court’s tentative. Plaintiff argued that the Court had granted the motion on a theory that had not been raised by the moving party. Plaintiff requested additional time to brief the matter. The Court granted the additional time. Plaintiff and Defendant both filed supplemental briefs and the Court has reviewed and considered them.

C. Supplemental Briefing
D.
Plaintiff first argues that defendant waived arbitration by filing a motion to compel arbitration and not raising the issue of arbitrability. Plaintiff cites generally to the law that a party to a contract can waive a contractual provision that is to their benefit. However, the Court agrees with Defendant that no specific law is cited for the proposition that failing to raise an argument in moving papers is an affirmative waiver of the right to arbitrate. The Court is not persuaded by Plaintiff’s arguments and cited authorities.

Plaintiff next argues that the delegation clause is unenforceable because it was not clear and unmistakable. The Court considered and rejected that position in its tentative ruling. The authorities cited and the additional argument made by Plaintiff on this issue do not change the Court’s tentative.

Plaintiff next attacks the delegation clause as substantively and procedurally unconscionable. The Court considered both questions in its tentative. The only new evidence is from Plaintiff’s declaration that she did not understand what she was signing. The new argument and evidence does not persuade the Court to change its tentative ruling. The Court therefore adopts its prior tentative as follows below:

II. Analysis

Both California and federal law favor enforcement of valid arbitration agreements. (Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83, 97, 99 Cal.Rptr.2d 745, 6 P.3d 669 (Armendariz), abrogated in part on another ground in **233 AT&T Mobility LLC v. Concepcion (2011) 563 U.S. 333, 339–340, 131 S.Ct. 1740, 179 L.Ed.2d 742.) The California Arbitration Act (CAA), Code of Civil Procedure section 1280 et seq., sets forth “a comprehensive scheme regulating private arbitration in this state.” (Moncharsh v. Heily & Blase (1992) 3 Cal.4th 1, 9, 10 Cal.Rptr.2d 183, 832 P.2d 899.) Through this scheme, “the Legislature has expressed a ‘strong public policy in favor of arbitration as a speedy and relatively inexpensive means of dispute resolution.’ [Citations.] Consequently, courts will ‘“indulge every intendment to give effect to such proceedings.” ’ ” (Ibid.) “In cases involving private arbitration, ‘[t]he scope of arbitration is … a matter of agreement between the parties’ [citation], and ‘“[t]he powers of an arbitrator are limited and circumscribed by the agreement or stipulation of submission.” ’ ” (Id. at pp. 8–9, 10 Cal.Rptr.2d 183, 832 P.2d 899.) “A written agreement to submit to arbitration an existing controversy or a controversy thereafter arising is valid, enforceable and irrevocable, save upon such grounds as exist for the revocation of any contract.” (§ 1281.)

California has a strong public policy in favor of arbitration. Any doubts regarding the arbitrability of a dispute are resolved in favor of arbitration.” (Coast Plaza Doctors Hospital v. Blue Cross of California (2000) 83 Cal.App.4th 677, 686, 99 Cal.Rptr.2d 809 (Coast Plaza).) It is the party opposing arbitration who bears the burden to show the arbitration provision cannot be interpreted to cover the claims in the complaint. (EFund Capital Partners v. Pless (2007) 150 Cal.App.4th 1311, 1321, 59 Cal.Rptr.3d 340; Buckhorn v. St. Jude Heritage Medical Group (2004) 121 Cal.App.4th 1401, 1406, 18 Cal.Rptr.3d 215.) There is no public policy, however, that favors the arbitration of disputes the parties did not agree to arbitrate. (Engineers & Architects Assn. v. Community Development Dept. (1994) 30 Cal.App.4th 644, 653, 35 Cal.Rptr.2d 800 (Engineers & Architects Assn.).

When deciding whether the parties agreed to arbitrate a particular matter (including arbitrability), courts generally “… should apply ordinary state-law principles that govern the formation of contracts.” (First Options of Chicago, Inc. v. Kaplan (1995) 514 U.S. 938, 944, 115 S.Ct. 1920, 131 L.Ed.2d 985 (First Options).) Thus, an arbitration agreement is governed by contract law and is construed like any other contract to give effect to the intention of the parties. (Crowell v. Downey Community Hospital Foundation (2002) 95 Cal.App.4th 730, 734, 115 Cal.Rptr.2d 810; Maggio v. Windward Capital Management Co. (2000) 80 Cal.App.4th 1210, 1214–1215, 96 Cal.Rptr.2d 168 [the ordinary rules of contract interpretation apply to an arbitration provision.]; Civ. Code, § 1636.] ) “If contractual language is clear and explicit, it governs. (Civ. Code, § 1638.)” (Bank of the West v. Superior Court (1992) 2 Cal.4th 1254, 1264, 10 Cal.Rptr.2d 538, 833 P.2d 545.)

“[C]ourts presume that the parties intend courts, not arbitrators, to decide … disputes about ‘arbitrability,’ … such as ‘whether the parties are bound by a given arbitration clause,’ or ‘whether an arbitration clause in a concededly binding contract applies to a particular type of controversy.’ ” (BG Group, PLC v. Republic of Argentina (2014) 572 U.S. 25, [134 S.Ct. 1198, 1206], 188 L.Ed.2d 220, quoting Howsam v. Dean Witter Reynolds, Inc. (2002) 537 U.S. 79, 84, 123 S.Ct. 588, 154 L.Ed.2d 491.) However, “parties can agree to arbitrate ‘gateway’ questions of ‘arbitrability,’ such as whether the parties have agreed to arbitrate or whether their agreement covers a particular controversy.” (Rent–A–Center, West, Inc. v. Jackson (2010) 561 U.S. 63, 68–69, 130 S.Ct. 2772, 177 L.Ed.2d 403 (Rent–A–Center).)

“Just as the arbitrability of the merits of a dispute depends upon whether the parties agreed to arbitrate that dispute, … so the question ‘who has the primary power to decide arbitrability’ turns upon what the parties agreed about that matter.” (First Options, supra, 514 U.S. at p. 943, 115 S.Ct. 1920; see also Sandquist v. Lebo Automotive, Inc. (2016) 1 Cal.5th 233, 243, 205 Cal.Rptr.3d 359, 376 P.3d 506 (Sandquist) [“No universal one-size-fits-all rule allocates that question to one decision maker or the other in every case. Rather, ‘who decides’ is a matter of party agreement”].) “Although threshold questions of arbitrability are ordinarily for courts to decide in the first instance under the FAA [citation], the ‘[p]arties to an arbitration agreement may agree to delegate to the arbitrator, instead of a court, questions *892 regarding the enforceability of the agreement.’ ” (Pinela v. Neiman Marcus Group, Inc. (2015) 238 Cal.App.4th 227, 239, 190 Cal.Rptr.3d 159 (Pinela).) **235 The examination of who has the primary power to determine arbitrability is conducted, at least initially, through the prism of state law. (Sandquist, supra, 1 Cal.5th at p. 243–244, 205 Cal.Rptr.3d 359, 376 P.3d 506.)

“There are two prerequisites for a delegation clause to be effective. First, the language of the clause must be clear and unmistakable. [Citation.] Second, the delegation must not be revocable under state contract defenses such as fraud, duress, or unconscionability.” (Tiri, supra, 226 Cal.App.4th at p. 242, 171 Cal.Rptr.3d 621; see also Rent–A–Center, supra, 561 U.S. at pp. 68, 69, fn. 1, 130 S.Ct. 2772.) The “clear and unmistakable” test reflects a “heightened standard of proof” that reverses the typical presumption in favor of the arbitration of disputes. (Ajamian v. CantorCO2e, L.P. (2012) 203 Cal.App.4th 771, 787, 137 Cal.Rptr.3d 773 (Ajamian).)

The Arbitration Agreement is attached to the declaration of Andrea Martin as Exhibit “A”. It is signed and initialed by Plaintiff. The Arbitration Agreement provides in paragraph 1 that:

Any dispute, claim or controversy arising out of or relating to his/her employment with Westmont Living (or any of its subsidiary or affiliated entities, officers or directors whether acting in an official or personal capacity), this Agreement or the breach, termination, enforcement, interpretation or validity thereof, including the determination of the scope, arbitrability or applicability of this agreement to arbitrate shall be determined by arbitration in San Diego, California before one arbitrator who is a retired judge. The arbitration shall be administered by JAMS pursuant to its Comprehensive Arbitration Rules and Procedures and in accordance with the Expedited Procedures in those Rules. Judgment on any decision of the arbitrator may be entered in any court having jurisdiction, as necessary. The decision of the arbitrator shall be without appeal. This clause shall not preclude the parties from seeking provisions remedies, as discussed below, in aid of arbitration from a court of appropriate jurisdiction. (emphasis added)

The Arbitration Agreement is clearly identified as such in bold print at the top. It is written in plain English and is comprised of two typed pages and a third signature page. At the bottom of the second page and continuing to the top of the third page above the signature block the Arbitration Agreement states in bold print that:

I acknowledge that I have received and read or have had the opportunity to read this Agreement. I understand, acknowledge and agree that this Agreement requires that disputes that involve the matters subject to the Agreement be submitted to binding Arbitration pursuant to the Agreement rather than to a judge and jury In court, I have been given ample time and opportunity to consider this Agreement or have It reviewed by an attorney of my choosing, and agree to execute this Agreement as my free and voluntary act.

The Court finds that the delegation clause in the Arbitration Agreement is clear and unmistakable. The language in paragraph 1 delegates to the arbitrator questions of arbitrability and is clear and unmistakable evidence that the parties intended to arbitrate arbitrability. (See, e.g., Malone v. Superior Court (2014) 226 Cal.App.4th 1551, 1560, 173 Cal.Rptr.3d 241 [noting delegation clause that provided “[t]he arbitrator has exclusive authority to resolve any dispute relating to the interpretation, applicability, or enforceability of this binding arbitration agreement” was clear and unmistakable]; Momot v. Mastro (9th Cir. 2011) 652 F.3d 982, 988 [language that delegated authority to arbitrator to determine “the validity or application of any of the provisions of” the arbitration clause was a clear and unmistakable agreement to arbitrate the question of arbitrability].) Nothing in the language of the PPA suggests that the terms of the arbitration provision in the PPA are revocable.

Because the Court finds that the parties clearly and unmistakably intended that the issue of arbitrability be determined by the arbitrator, it must now address the issue of whether the delegation clause is unconscionable. An agreement to arbitrate is invalid if it is both procedurally and substantively unconscionable. (§ 1281; *895 Civ. Code, § 1670.5; Armendariz, supra, 24 Cal.4th at p. 114, 99 Cal.Rptr.2d 745, 6 P.3d 669) (emphasis added.) The two types of unconscionability need not be present in the same degree, and “the 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.” (Armendariz, at p. 114, 99 Cal.Rptr.2d 745, 6 P.3d 669.) The party opposing arbitration has the burden of proving unconscionability. (Tiri, supra, 226 Cal.App.4th at p. 244, 171 Cal.Rptr.3d 621.) When determining whether a delegation clause is unconscionable, any claim of unconscionability must be specific to the delegation clause. (Ibid., citing Rent–A–Center, supra, 561 U.S. at p. 73, 130 S.Ct. 2772.)

Procedural unconscionability arises in the making of the agreement, focusing on “the oppression that arises from unequal bargaining power and the surprise to the weaker party that results from hidden terms or the lack of informed choice.” (Ajamian, supra, 203 Cal.App.4th at p. 795, 137 Cal.Rptr.3d 773.) Plaintiff contends that the delegation clause is part of a contract of adhesion, as it was drafted by Defendant and presented to Plaintiff on a take-it-or-leave-it basis. (Armendariz, supra, 24 Cal.4th at p. 113, 99 Cal.Rptr.2d 745, 6 P.3d 669.) Plaintiff’s complaint does not allege that she was an unsophisticated party or that she was not given sufficient time to review the Arbitration Agreement before she signed it. To the contrary, the Arbitration Agreement states in bold print that “I have been given ample time and opportunity to consider this Agreement or have It reviewed by an attorney of my choosing …”. The Court is not convinced that the Arbitration Agreement is procedurally unconscionable.

Even if the delegation clause were procedurally unconscionable, the Court would still have to consider whether or not is substantively unconscionable. Substantive unconscionability focuses on “ ‘ “overly harsh” ’ or ‘ “one-sided” ’ results.” (Armendariz, supra, 24 Cal.4th at p. 114, 99 Cal.Rptr.2d 745, 6 P.3d 669.) Plaintiff attacks the entire agreement on the grounds that it is substantively unconscionable. However, with respect to the manner in which the arbitration is to be conducted she specifically takes issue with the cost of the arbitration and what she contends are procedural shortcomings in the arbitration process. The JAMS rules by which this case is to be arbitrated appear to the Court to be in accord with the requirements of Armendariz. The objection to the cost of the arbitration appears to stem from the cost of attending the arbitration. That relates more to the forum selection clause as opposed to the rules by which the arbitration is to be conducted.

Plaintiff also argues that some of the claims she is making do not arise out of the Arbitration Agreement and that some of the Defendants are not parties to the agreement. The allegations in Plaintiff’s Complaint all state that they relate to her employment with Westmont Living, Inc., which is expressly covered by the Agreement. The Agreement also expressly encompasses any subsidiaries or affiliated entities of Westmont. Non-signatories may enforce an arbitration agreement where, inter alia, the non-signatory is a third-party beneficiary of the agreement. (Marenco v. DirecTV LLC (2015) 233 Cal.App.4th 1409, 1417; see also Valley Casework, Inc. v. Comfort Constr, Inc. (1999) 76 Ca1.App.4th 1013, 1021; Cal. Civ. Code § 1559.) It would appear that the non-signatories in this case are third party beneficiaries. Nevertheless, since the parties have agreed that all disputes are to be determined by the arbitrator, the Court believes question of who are parties or beneficiaries to the agreement may be raised with the arbitrator.

Based upon the above analysis the Court finds that the delegation clause is not procedurally or substantively unconscionable. Accordingly, Defendant’s motion to compel arbitration is GRANTED. This case is STAYED pending completion of the arbitration. (Code Civ. Proc., § 1281.4.)

To keep track of the case, an arbitration review hearing is set on December 5, 2019 at 10 am in Department 8.