Duran vs. P.F.C. Enterprises, Inc.

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, the “Arbitration Agreement” (the “Agreement”) is presented as Exhibit 1 to the declaration of Sherry Ramirez, Human Resources Manager for defendant P.F.C. Enterprises, Inc. dba Allen Properties (“Allen”). ROA 16. The Agreement includes a cover memorandum that outlines the Agreement that follows. Id. ¶ 3 Ex.

1. Plaintiff signed and dated the cover memorandum and signed, dated, and initialed the Agreement on 01-24-2024. Id. Ms. Ramirez retrieved plaintiff’s handsigned and initialed Agreement from his personnel file. Id. On the day he was hired, Ms. Ramirez personally directed plaintiff to the conference room and presented him with his onboarding materials. Id. ¶ 5. This is sufficient to meet defendant’s initial burden that an agreement to arbitrate exists.

While plaintiff purports to challenge formation of the Agreement, he provides no evidence or authority to support that challenge. As an initial matter, plaintiff relies largely on inapposite authorities which concern authentication of an electronic signature, which are not at issue here. Opp. at 6. Most importantly, plaintiff does not deny he signed the Agreement or that it bears his signature and initials. ROA 31. Accordingly, plaintiff has not presented sufficient evidence to shift the burden back to defendant to challenge formation. “If a party confronted with his or her handwritten signature on an arbitration agreement is unable to allege that the signature is inauthentic or forged, the fact that that person does not recall signing the agreement neither creates a factual dispute as to the signature’s authenticity nor affords an independent basis to find that a contract was not formed.”

Iyere v. Wise Auto Group (2023) 87 Cal.App.5th 747, 755.

Accordingly, the court finds the parties formed an agreement to arbitrate.

Applicability of the Federal Arbitration Act

The Agreement expressly states “it shall be subject to the substantive and procedural provisions of the Federal Arbitration Act.” ROA 16 Ex. 1 ¶ 12. Additionally, defendant provides evidence it is engaged in interstate commerce through its suppliers, marketing and advertising efforts, and out-of-state customers. ROA 16 ¶ 7. This is sufficient to find the FAA applies. Barrera v. Apple American Group LLC (2023) 95 Cal.App.5th 63, 76 (“The [Federal Arbitration Act] applies to contracts that involve interstate commerce (9 U.S.C. §§ 1, 2), but since arbitration is a matter of contract, the FAA also applies if it is so stated in the agreement.”); see also Davis v.

Shiekh Shoes, LLC (2022) 84 Cal.App.5th 956, 963 (same); Victrola 89, LLC v. Jaman Properties 8 LLC (2020) 46 Cal.App.5th 337, 355 (“the presence of interstate commerce is not the only manner under which the FAA may apply...[T]he parties may also voluntarily elect to have the FAA govern enforcement of the Agreement”).

Plaintiff nonetheless challenges application of the FAA. Opp. at 7.

While it need not do so given the express contractual provision, defendant provides evidence its business involves interstate commerce, and it utilizes the instrumentalities of interstate commerce such as communication networks. Specifically, Allen “contracts for goods and services with vendors in states outside of California, and markets and advertises its residential property offerings to people residing outside of

California. Allen Properties attracts residents from states outside of California to live in its offered properties.” ROA 16 ¶ 7. This evidence is more than sufficient to find the FAA applies even in the absence of the express contractual provision. See, e.g., Citizens Bank v. Alafabco (2003) 539 U.S. 52, 56 (“We have interpreted the term ‘involving commerce’ in the FAA as the functional equivalent of the more familiar term ‘affecting commerce’—words of art that ordinarily signal the broadest permissible exercise of Congress’ Commerce Clause power.”); Allied-Bruce Terminix Companies, Inc. v. Dobson (1995) 513 U.S. 265, 273 (The term “involving commerce” has been interpreted by the U.S. Supreme Court to be “broader than the often-found words of art ‘in commerce,’ . . . [and] cover more than ‘only persons or activities within the flow of interstate commerce.’”).

Accordingly, defendant has demonstrated its business, and, in turn, plaintiff’s employment involved interstate commerce. Citizens Bank v. Alafabco, Inc. (2003) 539 U.S. 52, 57 (application of FAA requires only the aggregate economic activity to “bear on interstate commerce in a substantial way”). Plaintiff offers no evidence to dispute these facts. Additionally, the authorities plaintiff relies upon are inapposite. In both cases, the at-issue arbitration agreements, unlike here, did not expressly provide the FAA governed the agreement. Carbajal v. CWPSC, Inc. (2016) 245 Cal.App.4th 227; Hoover v. American Income Life Insurance Co. (2012) 206 Cal.App.4th 1193.

In sum, for the two independent reasons explained above, the FAA applies.

Whether the Agreement Covers the Dispute and Relevant Terms

The Agreement broadly applies to “all disputes, claims or controversies between the Parties...” ROA 16 Ex. 1 ¶ 3. The Agreement contains a “class, collective, and/or representative action waiver,” which provides that all individual claims must be arbitrated, including individual PAGA claims, that class claims shall be dismissed, and any other claims stayed pending the outcome of arbitration. Id. ¶ 10. The Agreement further provides the court, and not the arbitrator, will determine the application of this waiver. Id. The Agreement also contains a severability provision providing for enforcement of all other provisions in the event any are deemed unenforceable. Id. ¶ 12.

Unconscionability

In OTO, L.L.C. v. Kho (2019) 8 Cal.5th 111, the California Supreme Court recognized that notwithstanding the strong public policy favoring arbitration, “‘generally applicable contract defenses, such as . . . unconscionability, may be applied to invalidate arbitration agreements without contravening” the FAA’ or California law.” Id. at 125; accord AT&T Mobility LLC v. Concepcion (2011) 563 U.S. 333, 339.

“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.

Procedural Unconscionability

Defendant concedes the Agreement is a contract of adhesion. However, while it is true virtually all “take it or leave it” contracts carry some degree of procedural unconscionability, that degree is presumptively low absent evidence the defendant actively interfered with plaintiff’s ability to review and understand the arbitration clause. See Samaniego v. Empire Today, LLC (2012) 205 Cal.App.4th 1138, 1145 (procedural unconscionability presumptively low absent evidence the defendant actively interfered with plaintiff’s ability to review and understand the arbitration clause).

Plaintiff fails to provide evidence defendant prevented him from understanding the Agreement. The Agreement is a standalone document and not overly long, technical, or complex and includes an introductory short memorandum which outlines the Agreement’s relevant terms in basic English. ROA 16 Ex.

1. At any rate, it is generally immaterial whether it was explained, read, or understood. Randas v. YMCA of Metro. Los Angeles (1993) 17 Cal.App.4th 158, 163 (“one who accepts or signs an instrument, which on its face is a contract, is deemed to assent to all its terms, and cannot escape liability on the ground that he has not read it.”).

While plaintiff argues his lack of English proficiency and the failure to provide a Spanish translation of the Agreement resulted in procedural unconscionability, the court disagrees. As an initial matter, there is no evidence defendant was aware of plaintiff’s limited understanding of English. This distinguishes the sole authority plaintiff relies upon in which the employer knew the employee could not read English. Carmona v. Lincoln Millennium Car Wash, Inc. (2014) 226 Cal.App.4th 74, 85. Additionally, the employer in Carmona, selectively translated some of the agreement into Spanish, but left other provisions in English.

Id. These “hidden” provisions thus created “surprise,” resulting in procedural unconscionability. Id. at 84. Here, the Agreement was presented in English, and no similar surprise could occur. “Generally, a party may not avoid enforcement of an arbitration provision because the party has limited proficiency in the English language.” Caballero v. Premier Care Simi Valley LLC (2021) 69 Cal. App. 5th 512, 518. “If a party does not speak or understand English sufficiently to comprehend a contract in English, it is incumbent upon the party to have it read or explained to him or her.”

Id. at 518-19. Plaintiff does not, for example, state he asked for a Spanish copy of any onboarding document and was denied,

or that he asked any questions and answers refused, or that defendant otherwise prevented him from understanding the Agreement.

To the extent plaintiff complains he did not receive a copy of the applicable JAMS Employment Arbitration Rules & Procedures (the “JAMS Rules”) which apply, that argument does not concern formation, but procedural unconscionability. ROA 16 Ex. 1 ¶ 4. However, the California Supreme Court has made clear that a failure to attach arbitration rules is relevant only where the rules which were allegedly hidden are substantively unconscionable. Baltazar v. Forever 21, Inc. (2016) 62 Cal.4th 1237, 1246. Plaintiff does not argue the JAMS Rules or any portion thereof, which govern the Agreement, are themselves substantively unconscionable and this argument fails.

Accordingly, the evidence, at most, demonstrates a low amount of procedural unconscionability based on the adhesive nature of the Agreement.

Substantive Unconscionability

Substantive unconscionability examines the fairness of a contract’s terms to ensure that a contract of adhesion does not impose terms that are overly harsh, unduly oppressive, or unfairly one-sided. OTO, L.L.C. v. Kho (2019) 8 Cal.5th 111, 129-30. The court focuses on terms that unreasonably favor the more powerful party, impair the integrity of the bargaining process, contravene public interest or policy, or attempt to impermissibly alter fundamental legal duties. This includes unreasonable or harsh terms or ones that undermine the non-drafting party’s reasonable expectations. Id. at 130.

Plaintiff argues the agreement is substantively unconscionable based on its “discovery caps” and while the section title also indicates a “conditional fee provision,” plaintiff does not discuss any “fee” provision. Opp. at 7-8. Accordingly, the court will only address the Agreement’s limitation on discovery.

Plaintiff argues the Agreement is substantively unconscionable based on a lack of adequate discovery, but the Agreement provides each party with up to 50 special interrogatories, 50 document requests, arbitratorissued subpoenas, and up to three depositions per side, with a provision for additional depositions upon a showing of necessity. ROA 16 Ex. 1 ¶ 8. Plaintiff provides no authority this amount and/or type of discovery fails to meet minimum standards under Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83.

Moreover, an arbitrator’s discretion as to the scope of discovery is not unconscionable. The JAMS Rules (¶ 17(b)) provide for the arbitrator’s discretion to determine whether additional discovery is reasonably necessary. The California Supreme Court has found a similar provision giving ultimate deference to the arbitrator to order additional discovery as needed renders the discovery limitation valid and “eliminates any unconscionability.” Ramirez v. Charter Communications, Inc. (2024) 16 Cal. 5th 478, 507.

Significantly, adequate discovery in arbitration does not equal unfettered discovery, and parties may agree to something less than what is available under the Code of Civil Procedure. Sanchez v. Carmax Auto Superstores Cal, LLC (2014) 224 Cal.App.4th 398, 404 (citing Armendariz v. Foundation Health Psycare Servs., Inc. (2000) 24 Cal.4th 83, 105-060). “[A]rbitration is meant to be a streamlined procedure. Limitations on discovery...is one of the ways streamlining is achieved.”

Dotson v. Amgen, Inc. (2010) 181 Cal.App.4th 975, 983. “In striking the appropriate balance between the desired simplicity of limited discovery and an employee’s statutory rights, courts assess the amount of default discovery permitted under the arbitration agreement, the standard for obtaining additional discovery, and whether the plaintiffs have demonstrated that discovery limitations will prevent them from adequately arbitrating their statutory claims.” De Leon v. Pinnacle Property Management Services, LLC (2021) 72 Cal.App.5th 476, 487. Plaintiff has made no such demonstration here.

Accordingly, because there is no apparent substantive unconscionability, the Agreement is enforceable without regard to the negligible amount of procedural unconscionability.

Class and Representative Action Waiver

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 16 Ex. 1 ¶ 10.

Following Viking River, the California Supreme Court held “a plaintiff who files a PAGA action with individual and non-individual 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. 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 provides no evidence to show defendant waived the right to arbitrate plaintiff’s claims and the reason for the inclusion of this section, like many in the opposition brief, is entirely unclear. Opp. at 9-10.

Plaintiff to give notice, including to the LWDA.