Cyrus vs. FHP Capital Partners, LLC

If the moving party meets its initial burden, and the opposing party disputes the agreement, then the burden shifts to the opposing party to challenge the authenticity of the agreement.

Finally, if plaintiff presents evidence that no agreement exists, the burden shifts back to the moving party to present admissible evidence of a valid arbitration agreement between the parties by a preponderance of the evidence. Gamboa, supra, 72 Cal.App.5th at 164–67.

Here, it is undisputed plaintiff signed the “Mutual Arbitration Agreement” (the “Agreement”). ROA 30 Ex. A. Accordingly, the court finds the parties formed an agreement to arbitrate.

Delegation to the Arbitrator

Under the FAA, which the parties do not dispute applies here, parties to an arbitration agreement may delegate the issue of enforceability to the arbitrator. See Rent-A-Center, West, Inc. v. Jackson (2010) 561 U.S. 63, 70-72. Such a delegation, however, must be “clear and unmistakable.” Id. at 70 n.1.

Here, the Agreement provides, in pertinent part, that “[T]he Arbitrator, and not any federal, state, or local court, or agency, shall have exclusive authority to resolve any dispute relating to the validity, applicability, enforceability, unconscionability, or waiver of this Agreement.” ROA 30 Ex. A ¶ 6(a). The Agreement (¶ 4) also expressly incorporates the AAA employment rules, which, consistent with the above, provide the “arbitrator shall have the power to rule on their own jurisdiction, including any objections with respect to the existence, scope, or validity of the arbitration agreement or the arbitrability of any claim or counterclaim.”

AAA Emp. Rule R-7(a). Accordingly, the court finds the Agreement for which specific performance is sought reflects the parties’ clear and unmistakable intent to delegate “validity, applicability, enforceability, unconscionability, or waiver” questions “exclusively” to the arbitrator. ROA 30 Ex. A ¶ 6(a); id. ¶ 6(d) (“Other than the Class Action Waiver, the Arbitrator and not any federal, state, or local court, or agency, shall have exclusive authority to resolve any dispute relating to the interpretation, validity, applicability, enforceability, unconscionability, or waiver of this Agreement.”).

As the Agreement’s delegation clause is clear and unmistakable, it is enforceable unless it is revocable on state law grounds such as unconscionability. Rent-A-Center, supra, 561 U.S. at 72; Tiri v. Lucky Chances, Inc. (2014) 226 Cal. App. 4th 231, 243. “Unconscionability analysis begins with an inquiry into whether the contract is one of adhesion. [Citation.] ‘The term [contract of adhesion] signifies a standardized contract, which, imposed and drafted by the party of superior bargaining strength, relegates to the subscribing party only the opportunity to adhere to the contract or reject it.’ [Citation.] If the contract is adhesive, the court must then determine whether ‘other factors are present which, under established legal rules—legislative or judicial—operate to render it [unenforceable].’” Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83, 113. 113.

To declare an agreement unenforceable, a court must find both procedural and substantive unconscionability. Procedural unconscionability focuses on oppression or surprise due to unequal bargaining power; substantive unconscionability looks at overly harsh or one-sided results. Baltazar v. Forever 21, Inc. (2016) 62 Cal.4th 1237, 1243; see also OTO, L.L.C., supra, 8 Cal.5th at 129-30. “[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.” Armendariz, supra, 24 Cal.4th at 114. Plaintiff bears the burden to demonstrate that the arbitration agreement is procedurally and substantively unconscionable.

Sanchez v. Carmax Auto Superstores California, LLC (2014) 224 Cal.App.4th 398, 402.

Plaintiff makes no argument the delegation clause itself (or the Agreement as a whole) is procedurally unconscionable in any way, nor would any argument have merit since the Agreement is expressly voluntary and employees have the ability to opt-out even after it is executed it. ROA 30 Ex. A at 1 (“The execution of this Agreement is not a condition of hire or employment by the Company and is entered by the parties voluntarily.”); id. ¶ 13 (“Right to Opt-Out. Employee has the right to opt-out or cancel this Agreement and/or the Class Action Waiver at any time within thirty (30) days following the execution of this Agreement by Employee.”) (emphasis in original).

Accordingly, plaintiff has not, as he must, shown any amount of procedural unconscionability specific to the delegation clause itself and the delegation provision is thus fully enforceable irrespective of any amount of substantive unconscionability, which plaintiff has also failed to show.

Class and Representative Action Waiver

Per the Agreement, the only remaining issue for the court to resolve is the enforceability of the class action and PAGA waiver. In pertinent part, The Agreement provides:

“Class and Collective Action Waiver. The parties agree that there is no right or authority for any Dispute to be brought, heard, or arbitrated as a class or collective action (‘Class Action Waiver’)...the portion of the Class Action Waiver that is enforceable shall be enforced in arbitration...

[n]othing in this Section 9 or elsewhere in this Agreement shall be construed as a waiver by Employee of Employee’s right to assert a representative claim under the Labor Code Private Attorneys General Act of 2004 (PAGA).” ROA 30 Ex. A ¶ 10 (emphasis in original).

The Agreement, further provides and, in no fewer than three separate provisions, that the court, and not the arbitrator, is to decide whether and to what extent the “Class Action Waiver is enforceable. ROA 30 Ex. A ¶ 6(a) (“Any dispute relating to the interpretation, validity, applicability, enforceability, unconscionability, or waiver of the Class Action Waiver may only be determined by a court of competent jurisdiction and not an arbitrator.”); id. ¶ 6(d) (“Other than the Class Action Waiver, the Arbitrator...shall have exclusive authority to resolve any dispute...”); id. ¶ 10 (“Regardless of anything else in this Agreement or the AAA Rules, the enforceability, applicability and validity of the Class Action Waivers may be determined only by a court of competent jurisdiction and not by an Arbitrator.”).

It is well settled that class action waivers are enforceable, as here, in arbitration agreements governed by the FAA. Epic Systems Corp. v. Lewis (2018) 138 S. Ct. 1612, 1616; Iskanian v. CLS Transportation Los Angeles, LLC (2014) 59 Cal. 4th 348, 364. In such cases, the class claims are dismissed without prejudice. Accordingly, plaintiff’s class claims are dismissed without prejudice.

Per Viking River Cruises, Inc. v. Moriana (2022) 142 S. Ct. 1906, the FAA allows a PAGA claim to be split into individual and representative portions, which the Agreement provides. ROA 30 Ex. A ¶ 10 (“The parties mutually agree to bring any and every Dispute in arbitration on

an individual basis only, and not as a class and/or collective action....Nothing in this Section [] or elsewhere in this Agreement shall be construed as a waiver by Employee of Employee’s right to assert a representative claim under the Labor Code Private Attorneys General Act of 2004 (PAGA).”). Following Viking River, the California Supreme Court held “a plaintiff who files a PAGA action with individual and nonindividual claims does not lose standing to litigate the non-individual claims in court simply because the individual claims have been ordered to arbitration.”

Adolph v. Uber Technologies, Inc. (2023) 14 Cal. 5th 1104, 1125. In such cases, the representative PAGA claim should be stayed and the individual PAGA claim should be ordered to arbitration. Both the FAA and California law provide for a stay of proceedings pending arbitration, the case will be stayed. 9 U.S.C. § 3; C.C.P. § 1281.4.

Accordingly, the individual portion of plaintiff’s PAGA claim will be arbitrated, and the representative portion shall be stayed. Adolph, supra, 14 Cal. 5th at 1125.

Waiver of Arbitration by Conduct

Plaintiff’s argument that it is for the court to decide whether defendant waived arbitration by its conduct is at odds with multiple provisions of the Agreement, which unambiguously state the arbitrator has the exclusive authority to decide whether arbitration has been waived. ROA 30 Ex. A ¶¶ 6(a), (d). Additionally, plaintiff fails to support the argument with persuasive authority as none of the cases cited analyzed an agreement with an express jurisdictional provision that included “waiver,” as does the Agreement.

See Opp. at 5-6. Indeed, even in the absence of the Agreement’s express language, relevant authority points in the opposite direction. See, e.g., BG Group PLC v. Republic of Argentina (2014) 572 U.S. 25, 34-35 (“courts presume that the parties intend arbitrators, not courts, to decide disputes about the meaning and application of particular procedural preconditions for the use of arbitration...[which] include claims of waiver...”).

Condition Precedent

Plaintiff argues defendant failed to satisfy a condition precedent of the Agreement, i.e., pre-arbitration mediation, and thus cannot compel arbitration. However, plaintiff provides no authority that this issue is for the court to decide, and the court finds the argument at odds with the Agreement’s delegation provision, which limits the court’s jurisdiction, as discussed above. Additionally, the Supreme Court has consistently held that arbitrators, and not courts, must decide whether a condition precedent to arbitrability has been fulfilled.

See, e.g., BG Group PLC v. Republic of Argentina (2014) 572 U.S. 25, 34-35 (courts presume arbitrators decide “the satisfaction of...conditions precedent to an obligation to arbitrate”); John Wiley & Sons v. Livingston (1964) 376 U.S. 543, 557 (“whether grievance procedures or some part of them apply to a particular dispute, whether such procedures have been followed or excused, or whether the unexcused failure to follow them avoids the duty to arbitrate” should be decided by the arbitrator). Accordingly, whether mediation was a condition precedent to arbitration, and whether plaintiff has no duty to arbitrate because defendant “failed” to seek mediation before moving to compel arbitration, are issues to be decided by the arbitrator, not the court.

Further Proceedings

Plaintiff is ordered to arbitrate his individual claims. The class claims are dismissed. All other issues have been delegated to the arbitrator and are thus preserved. This case is otherwise stayed pending completion of the arbitration.

Plaintiff to give notice, including to the LWDA. 108 Duran vs. P.F.C. Enterprises, Inc.

2025-01525657 1. Motion to Compel Arbitration 2. Case Management Conference

Defendant P.F.C. Enterprises, Inc. dba Allen Properties’ motion to compel arbitration is GRANTED. Plaintiff Jose Duran is ordered to arbitrate his individual claims. The class claims are dismissed without prejudice. This case is otherwise STAYED pending completion of arbitration. An ADR Review Hearing is scheduled for March 4, 2027 at 9:30AM. The parties must file a Joint Status Report at least 16 court days before the hearing and may request a continuance if arbitration is not yet complete. Existence of Arbitration Agreement The right to arbitration depends upon contract; a petition to compel arbitration is simply a suit in equity seeking specific performance of that contract.

Little v. Pullman (2013) 219 Cal.App.4th 558, 565. 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. Id.; Perry v. Thomas (1987) 482 U.S. 483, 492 n.9 (State law applicable to contracts generally governs whether a valid arbitration agreement exists.)

While the burden of persuasion is always on the moving party, the burden of production may shift in a three-step process. First, the moving party must present “prima facie evidence of a written agreement to arbitrate the controversy”, which is satisfied by attaching a copy of the arbitration agreement purporting to bear the opposing party’s signature. Gamboa v. Ne. Cmty. Clinic (2021) 72 Cal.App.5th 158, 164–67. At this step, a movant need not follow the normal procedures of document authentication. Condee v. Longwood Management Corp. (2001) 88 Cal.App.4th 215, 218-219.

If the moving party meets its initial burden, and the opposing party disputes the agreement, then the burden shifts to the opposing party to challenge the authenticity of the agreement.

Finally, if plaintiff presents evidence that no agreement exists, the burden shifts back to the moving party to present admissible evidence of a valid arbitration agreement between the parties by a preponderance of the evidence. Gamboa, supra, 72 Cal.App.5th at 164–67.