Alvarez v. AG Force, LLC

By its terms, the agreement is governed by the Federal Arbitration Act (“FAA”), 9 U.S.C. § 1, et seq. Section 2 of the FAA provides for enforcement of arbitration provisions in any contract “evidencing a transaction involving commerce.” (9 U.S.C. § 2.) To determine whether there is an enforceable arbitration agreement, courts apply state law principles related to formation, revocation, and enforcement of contracts. (Banner 4 Entertainment, Inc. v. Alchemy Filmworks, Inc. (1998) 62 Cal.App.4th 348, 357.) Moving defendants are not required to submit evidence of impact on interstate commerce to establish FAA preemption. (See Valencia v. Smyth (2010) 185 Cal.App.4th 153, 157; Cronus Investments, Inc. v. Concierge Services (2005) 35 Cal.4th 376, 387, 394.) Plaintiff does not challenge the governance of the FAA.

Here, defendant has met its burden of showing that there is an agreement to arbitrate the claims that plaintiff has raised in his complaint. Defendant has presented copies of the “Mutual Agreement to Arbitrate Employment Disputes” that plaintiff signed during onboarding upon being hired by defendant in June 2022 and August 2023. ((Rios Decl., ¶¶ 5-8, 111, and Exhibits A and B thereto.) The agreements signed by plaintiff are in Spanish. A copy of the agreement in English is also provided by defendant. (Zall Decl., ¶ 11, Ex.

C.) The agreement states that plaintiff and defendant “mutually agree to resolve any and all claims, disputes or controversies arising out of or relating to Employee’s employment and/or the termination of employment (“Employment Claims”) exclusively by final and binding arbitration to the extent permitted by law.” (Id., at Ex. C, ¶ 1.) The agreement excludes from arbitration those claims for which arbitration is not legally permitted, such as sexual harassment or sexual assault claims or those relating to unemployment or workers ‘ compensation benefits, or those brought by federal, state or local agencies as a result of a complaint by the employee. (Id., at Ex.

C, ¶¶ 3a-b.) However, should that action arising from a complaint brought before an agency be brought by the employee, the agreement specifies that it is subject to the arbitration agreement. (Id., Ex. C, ¶ 3b2.) Thus, the agreement clearly applies to the plaintiff’s claims of violations of the California Fair Employment and Housing Act he is pursuing following his complaint to the California Civil Rights Department.

In his opposition, plaintiff does not deny that he signed the arbitration agreement. Plaintiff argues the agreement is not enforceable due to procedural and substantive unconscionability.

Procedural Unconscionability

1 Plaintiff’s late-filed objections to the declaration of Mayra Rios are overruled for purposes of this motion, as plaintiff is not challenging the authenticity of the arbitration agreement attached thereto. “The arbitration proponent must first recite verbatim, or provide a copy of, the alleged agreement. [Citations.] A movant can bear this initial burden ‘by attaching a copy of the arbitration agreement purportedly bearing the opposing party’s signature.’ [Citation.] At this step, a movant need not ‘follow the normal procedures of document authentication’ and need only ‘allege the existence of an agreement and support the allegation as provided in [California Rules of Court,] rule [3.1330].’ [Citation.]” (Iyere v. Wise Auto Group (2023) 87 Cal.App.5th 747, 755, internal citations omitted.)

2 Plaintiff references this section to argue the agreement lacks mutuality. When read in the context of the agreement, this section distinguishes claims arising from complaints to a government agency brought by the agency against the employer with those brought by the employee against the employer. The inclusion of this language does not support finding a lack of mutuality where the agreement otherwise includes all claims brought by employee or employer arising from the employment relationship. 5

The doctrine of unconscionability 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." (Armendariz v. Foundation Health Psychcare Services (2000) 24 Cal.4th 83, 114.) To invalidate an arbitration agreement, the court must find both procedural and substantive unconscionability. (Id. at p. 122; Stirlen v. Supercuts, Inc. (1997) 51 Cal.App.4th 1519, 1533; Mercuro v. Superior Court (2002) 96 Cal.App.4th 167, 174.)

Plaintiff contends that the arbitration provision is highly procedurally unconscionable as a contract of adhesion, presented without explanation in a group setting where he felt rushed to sign. Plaintiff argues any acceptance of the terms was the product of uninformed consent. Plaintiff cites to OTO, LLC v. Kho (2019) 8 Cal.5th 111 where the court found significant oppression where the employee was presented with an agreement containing an arbitration clause with little time to review the contract and no ability to negotiate its terms. (Id., at pp. 127-128.)

Plaintiff additionally cites to Magno v. The College Network, Inc. (2016) 1 Cal.App.5th 277, Dougherty v. Roseville Heritage Partners (2020) 47 Cal.App.5th 93, and Nelson v. Dual Diagnosis Treatment Center, Inc. (2022) 77 Cal.App.5th 643, in support of his argument that there is significant procedural unconscionablity found where the party is rushed and given little time to review the documents containing the arbitration agreement.

Accepting plaintiff’s attestations that he felt rushed and was not given enough time to read the documents during the onboarding process (Alvarez Decl., ¶¶ 7, 10, 15, 18), the facts here are distinguishable from those cases plaintiff relies upon. In contrast to the employee in OTO, LLC v. Kho, plaintiff was not a current employee presented with an agreement by a low-level employee for immediate signature and without time to review. (OTO, LLC v. Kho, supra, 8 Cal.5th at pp. 127-128.) Plaintiff was presented the document on both occasions he begin working for defendant in a meeting with other new hires and there were employees available to assist with the paperwork. (Alvarez Decl., ¶¶ 4, 6, 12, 13.) Unlike the low level employee sent to deliver the agreement to Kho, plaintiff was in a room with persons to assist him and he did not request assistance.

The circumstances plaintiff attests to are also readily distinguished from the cases where the rush to sign supported a high level of procedural unconscionability. In Magno v. The College Network, Inc., the arbitration provision was on the back of a preprinted enrollment agreement, without any separate signature or initial from the student, and presented by a sales person in connection with a limited time discount. (Magno, supra, 1 Cal.App.5th at p. 286.) In Dougherty v. Roseville Heritage Partners, the arbitration agreement was buried in 70 pages of admissions documents and the facility was told by Dougherty that residence was needed that day after two other facilities would not accept her father which greatly diminished her bargaining power. (Dougherty, supra, 47 Cal.App.5th at pp. 103-104.)

In Nelson v. Dual Diagnosis Treatment Center, Inc., the arbitration agreement was presented to plaintiffs’ son for signature without negotiation and noting he was in an agitated mental state and had issues with concentration. (Nelson, supra, 77 Cal.App.5th at pp. 661-662.) The court analogized the circumstances to presenting a written contract to a visually impaired person. (Id. at p. 662.)

The group setting with office employees available for assistance does not support plaintiff’s argument that there was a high degree of procedural unconscionability in 6 connection with the signing of the agreement. That plaintiff felt rushed, did not read the agreement and that no one explained the agreement to him likewise does not support finding a high degree of procedural unconscionability. The failure to read or understand the arbitration agreement is generally no defense to enforcement. (Bolanos v.

Khalatian (1991) 231 Cal.App.3d 1586, 1590 [immaterial that plaintiff claimed an inability to read English at all and “only limited Spanish...with substantial difficulty,” and that she did not remember signing the document]; Madden v. Kaiser Foundation Hospitals (1976) 17 Cal.3d 699, 710 [general rule is that a party who assents to a contract is bound by its provisions and cannot complain of unfamiliarity with its language]; Gold v. Deutsche Aktiengesellschaft (2d Cir. 2004) 365 F.3d 144, 149 [absent fraud or other wrongful act, employee signing written contract is conclusively presumed to know its contents and assent to them].)

There is some degree of procedural unconscionability where, as here, the contract was drafted by the employer and preprinted for plaintiff’s signature. As such it can be considered a contract of adhesion. However, courts frequently enforce employment arbitration agreements that are contracts of adhesion, as long as they are not also substantively unconscionable. “Arbitration clauses in employment contracts have been upheld despite claims that the clauses were unconscionable because they were presented as part of an adhesion contract on a take-it-or-leave-it basis.

In finding the arbitration clause in Lagatree was not unconscionable, the court noted that, ‘as Gilmer and its progeny make clear, the compulsory nature of a predispute arbitration agreement does not render the agreement unenforceable on grounds of coercion or for lack of voluntariness.’” (Giuliano v. Inland Empire Personnel, Inc. (2007) 149 Cal.App.4th 1276, 1292, citations omitted.) That the plaintiff had the opportunity to opt out of the arbitration agreement by its terms reduced the degree of procedural unconscionability.

The evidence presented by plaintiff supports minimal procedural unconscionability.

Substantive Unconscionablity

Mandatory arbitration clauses in employment contracts are enforceable if they provide essential fairness to the employee. (Armendariz v. Foundation Health Psychcare Services, Inc., supra, 24 Cal.4th at pp. 90-91; see also 24 Hour Fitness v. Superior Court (1998) 66 Cal.App.4th 1199, 1212 [arbitration clause in employee handbook was not unconscionable where it provided all parties with substantially same rights and remedies].) In the employment context, an agreement must include the following five minimum requirements designed to provide necessary safeguards to protect unwaivable statutory rights where important public policies are implicated: 1) a neutral arbitrator; 2) adequate discovery; 3) a written, reasoned, opinion from the arbitrator; 4) identical types of relief as available in a judicial forum; and 5) that undue costs of arbitration will not be placed on the employee. (Armendariz, supra, 24 Cal.4th at p. 102.)

Plaintiff argues these minimum standards are not met because if fails to provide for all types of relief that would otherwise be available in court and fails to limit the costs of the arbitration to the employee. Plaintiff argues the agreement’s silence on the remedies available to claims must be interpreted as failing to guarantee all available remedies and thus, is not compliant with the requirements of Armendariz. The court 7 disagrees. The agreement specifies that issues of state law will be governed by the law of the state in which the claim arose. (Zall Decl., Ex. C, ¶ 4b.) As such, plaintiff’s claims for violations of California’s Fair Employment and Housing Act will be governed by California law. Plaintiff’s argument would have the court assume the arbitrator will rule inconsistent with the laws of California governing the claims.

Plaintiff argues the arbitration agreement allows the arbitrator to shift fees to the employer, inconsistent with Government Code section 12965, subdivision (c)(6), which limits an employer’s entitlement to attorney fees to where the court finds the action was frivolous, unreasonable, or groundless when brought. (See Zall Decl., Ex. C, ¶ 8.) Again, plaintiff’s interpretation assumes an order will be made inconsistent with the law governing plaintiff’s claims. However, to the extent the terms of the agreement could be considered in conflict with FEHA’s fee shifting provisions and take precedence, this can be remedies by severing the fee shifting provision from the arbitration agreement.

The fee shifting provision can be fairly regarded as collateral to the purpose of the contract, and the provision can be stricken without affecting any of the other provisions. With that adjustment, there is no substantive unconscionability, and the agreement must be enforced.

Defendant has met its burden of demonstrating the existence of a valid arbitration agreement covering the claims of plaintiff’s complaint. Plaintiff has not met his burden of showing that the agreement is unconscionable. (Rosenthal v. Great Western Fin. Securities Corp. (1996) 14 Cal.4th 394, 413.) The motion to compel plaintiff to arbitrate his claims is granted.

Request for Evidentiary Hearing

The court declines to order an evidentiary hearing for examination of Mr. Zall and Ms. Rios. Plaintiff is not challenging the authenticity of his signature on either of the two arbitration agreements. To the extent plaintiff challenges their attestations as to the circumstances of the onboarding for purposes of his procedural unconscionability arguments, the court considered only plaintiff’s declaration in determining whether the circumstances of his signing supported finding procedural unconscionability. There are no credibility or evidentiary issues to resolve.

Request for Judicial Notice

Defendant requests judicial notice of several ruling on other motions to compel arbitration to demonstrate that similar arbitration agreements have been enforced by this court. Although the rulings themselves are appropriately a subject of judicial notice, and the request is granted, the rulings are the product of the moving papers and facts specific to each case and have no bearing on whether the arbitration agreement before the court in this case is enforceable.

Pursuant to California Rules of Court, rule 3.1312(a), and Code of Civil Procedure section 1019.5, subdivision (a), no further written order is necessary. The minute order adopting this tentative ruling will serve as the order of the court and service by the clerk will constitute notice of the order.

Tentative Ruling

Issued By: SMC on July 20, 2026. (Judge’s initials) (Date) 9