TU NGUYEN vs. PRICE CARS SR, LLC

However, arbitration – whether under the California Arbitration Act (“CAA”) or FAA – “is a matter of consent, not coercion ... a party cannot be required to submit to arbitration any dispute which he has not agreed so to submit.” (Pinnacle Museum Tower Assn. v. Pinnacle Market Development (US), LLC (2012) 55 Cal.4th 223, 236 [internal quotations and citations omitted].) The existence of a valid agreement to arbitrate is a “question of arbitrability” to be decided by the court unless the parties expressly agree otherwise. (Howsam v. Dean Witter Reynolds, Inc. (2002) 537 U.S. 79, 83 [questions of arbitrability include whether parties are bound by an arbitration clause or whether binding clause applies to particular case or controversy].)

The party seeking to arbitrate must prove the existence of the agreement. (Pinnacle, supra, 55 Cal.4th at 236.) If it does so, the burden shifts to the party opposing arbitration to “demonstrate that an arbitration provision cannot be interpreted to require arbitration of the dispute” or that the agreement is otherwise unenforceable. (Coast Plaza Doctors Hospital v. Blue Cross of California (2000) 83 Cal.App.4th 677, 686-87.)

Both the FAA and CAA employ the same principles of contract interpretation. Thus, regardless of which act governs the interpretation of the Agreement, the result is the same.” (Valencia v. Smyth (2010) 185 Cal.App.4th 153, 157.) Where the interpretation of an arbitration provision does not turn upon the credibility of extrinsic evidence, interpretation is solely a judicial function and the court should attempt to give effect to the parties' intentions, in light of the usual and ordinary meaning of the contractual language and the circumstances under which the agreement was made. (Gravillis v. Coldwell Banker Residential Brokerage Co. (2006) 143 Cal.App.4th 761, 771.)

B. DISCUSSION

Defendant brings this Motion pursuant to the FAA (9 U.S.C. § 4) and California Code of Civil Procedure section 1281.2 (to the extent that the FAA does not apply) for an order compelling Plaintiff to arbitrate his claims against Defendant. Pursuant to California Code of Civil Procedure section 1281.4, Defendant further moves for a stay of this action pending the outcome of arbitration.

Defendant asserts that all claims raised in the Complaint are subject to a valid and enforceable arbitration agreement between Plaintiff and Defendant, requiring Plaintiff to resolve his claims through arbitration and not in civil court.

1. Existence of Agreement to Arbitrate

Defendant, an automobile dealership in Marin, California, hired Plaintiff in early 2018. (Compl., ¶ 6.) Defendant asserts that during the course of his employment, Plaintiff explicitly agreed twice to the exact same arbitration agreement: the first on August 9, 2024 and the second and most

recently, on March 11, 2025 (hereafter “Arbitration Agreement”). (Sullivan Decl., ¶¶ 10-11, Exhs. 1-2.)

The Arbitration Agreement states in pertinent part:

I agree to utilize binding, individual arbitration to resolve all disputes that might arise out of or be related in any way to my application for employment and/or employment by the Company. Such disputes include, but are not limited to, claims I might bring against the Company for wrongful termination, discrimination, harassment, retaliation, breach of contract, wage and hour violations, any individual claims under the California Private Attorneys General Act (“PAGA”), and torts such as invasion of privacy, assault and battery, or defamation.

Such disputes also include claims that the Company might bring against me such as, for example, theft of money or trade secrets, breach of confidentiality agreement, or breach of contract; the Company and I each specifically waive our respective rights to bring such claims against the other in a court of law and to have a trial by jury. By signing below, I expressly waive the right to bring a class or collective claim seeking any relief on behalf of others unless such waiver is prohibited by controlling law.

(Sullivan Decl., ¶¶ 10-11, Exhs. 1-2, § 1.)

Plaintiff’s Complaint alleges leave discrimination, retaliation and failure to prevent discrimination and retaliation. The Arbitration Agreement expressly requires the parties to arbitrate “all disputes that might arise out of or be related in any way to [Plaintiff’s] application for employment and/or employment by the Company,” including, without limitation, claims for “discrimination” and “retaliation.” (Sullivan Decl., ¶¶ 10-11, Exhs. 1-2, §1.) Defendant asserts that Plaintiff’s claims “arise out of” and are “related ... to” his employment with the Company and therefore fall squarely within the Arbitration Agreement’s broad scope.

The Court finds Defendant has met its initial burden to demonstrate the existence of the agreement to arbitrate and the burden therefore shifted to Plaintiff to “demonstrate that an arbitration provision cannot be interpreted to require arbitration of the dispute” or that the agreement is otherwise unenforceable. (Coast Plaza Doctors Hospital v. Blue Cross of California, supra, 83 Cal.App.4th at pp. 686-87.)

Plaintiff challenges the Agreement on a number of bases, including that Defendant is not a party to the Agreement, Plaintiff did not sign the Agreement, the FAA does not apply, and to the extent the Agreement exists, it is unconscionable. The Court will address each argument in turn.

2. Challenges to Arbitration

Defendant is a Party to the Agreement

Because arbitration is a matter of contract, the basic rule is that one must be a party to an arbitration agreement to be bound by it or invoke it—with limited exceptions. (Gonzalez v. Nowhere Beverly Hills LLC (2024) 107 Cal.App.5th 111, 118. Internal citations omitted.) An entity seeking to compel arbitration must generally establish it is a party to an arbitration agreement. (Jarboe v. Hanlees Auto Grp. (2020) 53 Cal.App.5th 539, 549. Internal citations

omitted.) However, the party moving to compel arbitration need not make an evidentiary showing of the agreement's validity, and need not provide evidence that it is legally entitled to enforce an agreement signed under a registered fictitious name (“DBA”) unless the DBA is challenged. (Kostandian v. Am. Honda Motor Co. (2026) 120 Cal.App.5th 872. Internal citations omitted.) Nothing shows the fictitious business name statutes create a special evidentiary burden for compelling arbitration when a DBA is used. (Ibid.)

In Kostandian, the Court of Appeal held that while the entity seeking to compel arbitration was not an expressly named party in the document containing the agreement to arbitrate, in its motion to compel, the entity had alleged it was doing business as the party named in the agreement. (Ibid.) Further, the Court held that the complaint contained a judicial admission that the entity was doing business as the party named in the agreement and hence had conceded to the truth of allegations that the named party in the agreement was the registered DBA of the entity, and the entity was thus a party to the lease. (Ibid.)

Similarly here, the Motion to Compel was supported by a declaration stating the party named in the agreement “Toyota Marin” was the DBA of Price Cars SR, LLC (see Stonhaus Decl., ¶ 1), Plaintiff’s Complaint contained a judicial admission alleging the same (see Compl., ¶ 1), and once opposing party challenged the DBA, the moving party provided evidence in Reply demonstrating that the party named in the agreement was the registered DBA of moving party (See Reply RFJN Nos. 1-2).

This is sufficient to show Defendant was a party to the Arbitration Agreement.

Defendant Sufficiently Authenticated Plaintiff’s Signature on the Agreements

A party seeking to compel arbitration is not required to authenticate plaintiff's signature on the arbitration agreement and meets their initial burden by attaching a copy of the purported arbitration agreement bearing plaintiff's electronic signature to their petition. (Espejo v. Southern California Permanente Medical Group (2016) 246 Cal.App.4th 1047, 1060.) However, once plaintiff challenged the validity of that signature in his opposition, defendants were then required to establish by a preponderance of the evidence that the signature was authentic. (Id.)

Here, Plaintiff has challenged the validity of the signature in his opposition. This triggers the burden for Defendant to show by a preponderance of the evidence that the signature was authentic.

Legal Standard to Authenticate Signature

“Under Civil Code section 1633.7, an electronic signature has the same legal effect as a handwritten signature. [citation.]” (Ruiz v. Moss Bros. Auto Grp. (2014) 232 Cal.App.4th 836, 843.) “Civil Code section 1633.9 addresses how a proponent of an electronic signature may authenticate the signature—that is, show the signature is, in fact, the signature of the person the proponent claims it is. The statute states: ‘(a) An electronic record or electronic signature is attributable to a person if it was the act of the person. The act of the person may be shown in any manner, including a showing of the efficacy of any security procedure applied to determine the

person to which the electronic record or electronic signature was attributable.’ (Civil Code, § 1633.9(a).)” (Ruiz, supra, 232 Cal.App.4th at p. 843.)

In Espejo the parties’ dispute over whether defendants established the existence of an arbitration agreement turned almost exclusively on whether the supplemental declaration sufficiently authenticated plaintiff’s electronic signature on the agreement containing the arbitration provision. (Espejo, supa, 246 Cal.App.4th 1047.)

In that case, plaintiff filed his opposition to the petition arguing that defendants failed to properly authenticate his electronic signature on the agreement. In his accompanying declaration, Espejo stated he did not “recall seeing or accessing the [agreement containing the arbitration provision]... at the time I signed the employment contract,” and did not recall ever signing the [agreement containing the arbitration provision], “electronically or otherwise. (Id., at p. 1054.) I specifically recall that I typed out my name and submitted my electronic signature only once– when I signed the employment contract.” (Ibid.)

Espejo further stated that his “custom and practice” was to “review documents before I sign them,” and he therefore did not believe he would have signed the [agreement containing the arbitration provision], an eight page document, one minute after signing the employment contract. (Id.) Espejo also contended he had never seen the R&R prior to the lawsuit and recalled accessing only the employment contract through the online Applicant Homepage. (Id.)

Defendants replied with additional details regarding the electronic review and signature process for their employee agreements. Specifically, they provided evidence showing an email is generated to the applicant with a link to the applicant homepage. Access to the applicant homepage “requires the use of a private and unique username and password,” both of which are provided by phone “directly and orally to the applicant.” (Id., at 1053) After logging into homepage with this username and password, “the first thing plaintiff would be required to do is re-set his password to one of his own choosing.

He cannot proceed to the next page unless he resets his password.” (Id.) At that point, according to defendants, plaintiff would have to “opt to agree to complete the employment documents using an electronic signature.” (Id.) Once he agreed, he would be directed to the portion of the homepage containing the four hyperlinks to his employment agreement, the [agreement containing the arbitration provision], the R&R, and a benefits handbook. (Id.) “Plaintiff only had access to these documents by logging in and using his unique user name and password.” (Id.)

“On the signature page of the employment agreement plaintiff was prompted to either accept or decline the employment agreement.” (Id., at p. 1054) If he accepted, “he was prompted to complete his name as he would sign it. Whatever name he typed into this entry is what populated on the signature line of the contract.” (Id.) “Once that information was input and accepted by plaintiff, then the employment agreement was finalized, including his name, date, time, and the IP address where he electronically signed the agreement.” (Id.)

The “name Jay Baniaga Espejo could have only been placed on the signature pages of the employment agreement and the DRP by someone using Dr. Espejo's unique user name and password.... Given this process for signing documents and protecting the privacy of the information with unique and private user names and passwords, the electronic signature was made by Dr. Espejo” to the employment agreement and the DRP at the date, time, and IP address listed on the documents. (Id., at p. 1063.) Defendants therefore concluded that the copies of the employee agreement and

the [agreement containing the arbitration provision] attached to defendants' petition were true and correct copies of the documents “electronically signed by Dr. Espejo on May 22, 2011, and kept and maintained in SCPMG's records.” (Id.)

The Espejo court found that given the process for signing documents and protecting the privacy of the information with unique and private usernames and passwords, etc., the details satisfactorily met the requirements articulated in Ruiz and established that the electronic signature on the agreement was “the act of” plaintiff” and therefore provided the necessary factual details to properly authenticate the document. (Espejo, supra, 246 Cal.App.4th at p. 1060–63.)

Evidence of Authentication in the Underlying Case

Here, moving party provides evidence that each employee is assigned a unique username and password associated with their individual Paylocity account. (Clevenger Decl., ¶ 5.) These credentials are known only to the employee and are required to access their account. (Ibid.) When an Arbitration Agreement is issued, the employee receives an email notification containing a link directing them to the Paylocity website. (Id., ¶ 6.) To access the Arbitration Agreement, the employee must log into their Paylocity account using their unique username and password. (Ibid.)

Once logged in, the employee can review the Arbitration Agreement. (Ibid.) To electronically sign the Arbitration Agreement, the system requires the employee to complete specific steps, including their name into a designated text field and providing an electronic signature, which may be created by drawing it with a cursor. (Id., at ¶ 7.) Access to the signature mechanism is controlled by Paylocity’s authentication system. (Id., at ¶ 8.) Only a user who has successfully logged in with the employee’s unique credentials can complete the signature fields and affix a name to the signature line. (Ibid.)

This is sufficient to authenticate the signature.

The FAA Applies

Here, Plaintiff challenges the Motion on the ground that moving party has not made a sufficient showing of a transaction evidencing interstate commerce. However, while the FAA does apply to contracts that involve interstate commerce (9 U.S.C. §§ 1, 2), since arbitration is a matter of contract, the FAA also applies if it is so stated in the agreement. (Barrera v. Apple Am. Grp. LLC (2023) 95 Cal.App.5th 63, 76. Internal citations omitted.)

Here, the Arbitration Agreement provides that any arbitration will be governed by the Federal Arbitration Act (“FAA”) and, to the extent not inconsistent, the California Arbitration Act, and that the arbitrator’s decision will be final and binding on the parties. (Sullivan Decl., ¶¶10-11, Exhs. 1-2, §§ 6–7.)

Nor does the exemption in section 1 of the FAA preclude application of the FAA. (9 U.S.C.A. § 1 [nothing herein contained shall apply to contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate commerce].) When the FAA was enacted, to “engage” meant to “take part in” something or to be “employ[ed]” or “involve[d]” in that thing ... And “interstate commerce” meant “[t]raffic,” “intercourse,” or “the

transportation of persons or property between or among the several states ... or from or between points in one state and points in another state.” (Flowers Foods, Inc. v. Brock (2026) 608 U.S., 146 S. Ct. 1358.) In Flowers the court explained that the exemption applies to workers whose work plays a direct and necessary role in the free flow of goods across borders. (Id.) Here, the only evidence is that Plaintiff’s work concerns the processing and servicing of goods, not their interstate movement. There is no evidence that Plaintiff’s work involved transporting goods, loading or unloading shipments, or otherwise participating in the physical movement of goods across state lines, etc.

Accordingly, the FAA applies.

The Agreement is Unconscionable

Unconscionability is a generally applicable contract defense that may render an arbitration agreement unenforceable under the FAA. (Doctor's Assocs., Inc. v. Casarotto (1996) 517 U.S. 681, 687.) It is generally determined according to the laws of the applicable state.

The unconscionability defense has been recognized by the United States Supreme Court as a general contract defense in California, and therefore a defense to an agreement to arbitrate. (Fisher v. MoneyGram Int'l, Inc. (2021) 66 Cal.App.5th 1084, 1093. Internal citations omitted.)

1. Applying the unconscionability defense to an arbitration agreement in California is not preempted by the FAA. (Ibid.)

Unconscionability is commonly defined as “an absence of meaningful choice on the part of one of the parties together with contract terms which are unreasonably favorable to the other party.” (Ibid.) Unconscionability, as the definition suggests, 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. (Ibid.) Procedural and substantive unconscionability must both be present 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 equal parts. (Ibid.)

Rather, California courts employ a sliding scale to determine unconscionability, the more substantively oppressive the contract terms, the less evidence of procedural unconscionability is required to conclude the terms are unenforceable, and vice versa. (Ibid.)

2. Procedural Unconscionability

Procedural unconscionability exists when the stronger party drafts the contract and presents it to the weaker party on a take-it-or-leave-it basis. (Carlson v. Home Team Pest Def., Inc. (2015) 239 Cal.App.4th 619, 631. Internal citations omitted.) However, the fact that the arbitration agreement is an adhesion contract does not render it automatically unenforceable as unconscionable. (Ibid.) Instead, to determine whether an arbitration agreement satisfies the “procedural element of unconscionability,” courts focus on “two factors: oppression and surprise.” (Ibid.) “Oppression” arises from an inequality of bargaining power which results in no real negotiation and “an absence of meaningful choice.” (Ibid.) “Surprise” involves the extent to which the supposedly agreed-upon terms of the bargain are hidden in the prolix printed form drafted by the party seeking to enforce the disputed terms. (Ibid.)

Plaintiff argues the Agreements are procedurally unconscionable because they are standardized, pre-printed forms purportedly presented on a take-it-or-leave-it basis after Plaintiff states that he accepted employment with Defendant and as a condition to retaining his employment. (See Oppo. p. 14:21-24; See Plaintiff’s Decl., ¶ 8 [From time to time throughout my employment, PRICE CARS SR, LLC would present me documents to sign. There was never any room to negotiate to any of the terms of the documents. Rather, I was told I had to sign the documents as a condition of my employment].) The court has no reason to believe that this statement from the employee is untrue.

Defendant counters that the Arbitration Agreement here was not a mandatory condition of employment because Plaintiff was not required to sign it to obtain or keep his job. (Sullivan Decl., ¶13 [Plaintiff could have elected not to sign the arbitration agreement as it was not a condition of employment]; Clevenger Decl., ¶9 [Employees are not required or forced to sign the agreement, and no adverse action is taken if an employee declines to sign].) Here too, the court has no reason to believe that this statement from the employer is untrue.

Defendant does not provide any facts demonstrating Plaintiff knew he did not have to sign, nor does the Agreement itself state that signing was optional and Plaintiff could continue his employment without signing.

On this basis the Court does find a small degree of procedural unconscionability. Nevertheless, “procedural unconscionability alone does not invalidate a contract.” (Nelson v. Dual Diagnosis Treatment Ctr., Inc. (2022) 77 Cal.App.5th 643, 662.)

3. Substantive Unconscionability

“Substantive unconscionability” addresses the fairness of the term in dispute; substantive unconscionability traditionally involves contract terms that are so one-sided as to shock the conscience, or that impose harsh or oppressive terms. (Brown v. Wells Fargo Bank, N.A. (2008) 168 Cal.App.4th 938, 956.)

Here, Plaintiff challenges the agreement as substantively unconscionable because of scope and mutuality. The agreement provides:

1. TOYOTA MARIN (“the Company”) and I agree to utilize binding, individual arbitration to resolve all disputes that might arise out of or be related in any way to my application for employment and/or employment by the Company. Such disputes include, but are not limited to, claims I might bring against the Company for wrongful termination, discrimination, harassment, retaliation, breach of contract, wage and hour violations, any individual claims under the California Private Attorneys General Act (“PAGA”), and torts such as invasion of privacy, assault and battery, or defamation.

Such disputes also include claims that the Company might bring against me such as, for example, theft of money or trade secrets, breach of confidentiality agreement, or breach of contract; the Company and I each specifically waive our respective rights to bring such claims against the other in a court of law and to have a trial by jury. By signing below, I expressly waive the right to bring a class

or collective claim seeking any relief on behalf of others unless such waiver is prohibited by controlling law.

3. My agreement to arbitrate claims against the Company includes claims I might bring against the Company’s parent, subsidiaries, affiliates, customers, or client entities as well as against owners, directors, officers, managers, employees, agents, contractors, attorneys, benefit plan administrators, and insurers of the Company or of its parent, subsidiaries, affiliates, customers, or client entities. I also agree to arbitrate claims pursuant to the terms of this Agreement against any person or entity I allege to be a joint employer with the Company as well as claims brought against staffing companies, employee leasing companies, professional employer organization or payroll processing vendors that the Company has utilized.

(Sullivan Decl., Exs. 1, 2.)

In Cook the agreement required Cook to arbitrate any and all claims she may have against [employer] “or any of its related entities, including but not limited to faculty practice plans, or its or their officers, trustees, administrators, employees or agents, in their capacity as such or otherwise.” (Cook v. Univ. of S. California (2024) 102 Cal.App.5th 312, 326. The arbitration agreement at hand also includes independent entitles that are not the employer.

SCOPE. The disparity of influence between and employer over its employee has been recognized in that employment contracts provide a “margin of safety” that grants extra protections to the party with superior bargaining power if there is a legitimate commercial need to do so. (See, Stirlen v Supercuts (1997) 51 Cal.App.4th 1519, 1536.)

The arbitration agreement at hand goes beyond protecting the Defendant however in that, based on the express language, it also forces the Plaintiff to “arbitrate claims” it has against joint employers with the company, as well as staffing companies, leasing companies, professional employer organizations and payroll companies the Defendant has used. The phrase “arbitrate claims” in ¶3 is limited to “claims brought against the company”. The paragraph does not explain if those same claims also apply to the list of third parties listed in ¶3.

It is difficult to understand how, as a condition of employment, the Plaintiff must give up the right to sue entities that are independent of the Defendant. A lawsuit against a joint employer may target that joint employer alone for example, and not involve the Defendant at all. Also the phrase “professional employer organization” is not defined. Does this mean that if the employee is assaulted while attending a car-sales training seminar provided by a “professional employer organization” sponsored by the Defendant, that the arbitration language would force the tortfeasor into arbitration pursuant to ¶¶ 1 and 3 of the agreement?

On this basis, the broad scope of the agreement renders arbitration clause unconscionable.

LACK OF MUTUALITY. In Cook, the agreement required Plaintiff to arbitrate any and all claims she may have against the Defendant “or any of its related entities, including but not limited to faculty practice plans, or its or their officers, trustees, administrators, employees or

agents, in their capacity as such or otherwise.” However, the agreement did not require the employer’s “related entities” to arbitrate their claims against Plaintiff. Cook at 327.

Here too, the employer requires the Plaintiff to “arbitrate claims” against possible joint employers and other independent entities, and it is unclear whether it requires those joint employers and other vendors to arbitrate claims against the Defendant’s employees.

On this basis, the lack of mutuality of the agreement renders arbitration clause unconscionable.

The Motion to Compel Arbitration is DENIED.

Plaintiff to prepare the order.

Parties must comply with Marin County Superior Court Local Rules, Rule 2.10(A), (B), which provides that if a party wants to present oral argument, the party must contact the Court at (415) 444-7046 and all opposing parties by 4:00 p.m. the court day preceding the scheduled hearing. Notice may be by telephone or in person to all other parties that argument is being requested (i.e., it is not necessary to speak with counsel or parties directly.) Unless the Court and all parties have been notified of a request to present oral argument, no oral argument will be permitted except by order of the Court. In the event no party requests oral argument in accordance with Rule 2.10(B), the tentative ruling shall become the order of the court.

IT IS ORDERED that evidentiary hearings shall be in-person in Department L. For routine appearances, the parties may access Department L for video conference via a link on the court website. Kindly turn your camera on when your case is called and make sure the party or lawyer making the appearance is properly identified on the screen.

FURTHER ORDERED that the parties are responsible for ensuring that they have a good connection and that they are available for the hearing while using the virtual remote courtroom. If the connection is inadequate, the Court may proceed with the hearing in the party’s absence. If it is determined that you are diving your car during the hearing, you will be removed from the virtual courtroom. (Yes, this happens).