Mummert vs. MetaSource, LLC

7. Failure to Provide Accurate Itemized Wage Statements [Cal. Lab. Code § 226]; 8. Unfair Business Practices [Cal. Bus. & Prof. Code §§ 17200, et seq.]; and 9. Civil Penalties Under PAGA [Cal. Lab. Code § 2698, et seq.]. (ROA 15.)

Plaintiff signed and acknowledged an employee handbook provided by Defendant that stated: “The MetaSource Alternative Dispute Resolution (ADR) Program provides for final and binding arbitration for disputes related to termination of employment, unlawful discrimination, and alleged sexual harassment or other unlawful harassment.” (Bergloff Dec., Ex. C at p. 11 [emphasis added].) Above the signature line for acknowledging the employee’s agreement to the terms of the handbook, it states: “I also acknowledge and agree that in the event employment disputes arise between me and the Company, I will be bound by the MetaSource Alternative Dispute Resolution Program which provides for final and binding arbitration for disputes related to termination of employment, unlawful discrimination, and alleged sexual harassment or other unlawful harassment, as defined in the MetaSource Alternative Dispute Resolution Program.” (Id. at p. 30 [emphasis added].)

The separate document concerning Defendant’s ADR program expressly limits arbitration only to employment-related claims “allowed under applicable law and/or agreed between the parties[.]” (Bergloff Dec., Ex. E at p. 1 [emphasis added].) The law only permits arbitration of claims mutually agreed upon between the parties. (Serafin v. Balco Props. Ltd., LLC (2015) 235 Cal. App. 4th 165, 173 [“An essential element of any contract is the consent of the parties, or mutual assent.”].)

Defendant argues that the language from these documents should be read to mean that the scope of arbitration agreed to by the parties includes, but is not limited to, disputes related to termination of employment, unlawful discrimination, and alleged sexual harassment or other unlawful harassment. However, Defendant provides no basis for the court to read beyond the plain meaning of the unambiguous language used by Defendant in its own handbook. (Elijahjuan, 210 Cal. App. 4th at 20 [“If contractual language is clear and explicit, it governs.”] [citing Civil Code § 1638].)

Defendant argues that Plaintiff agreed to be bound by the terms of Defendant’s ADR Program, but conveniently omits the key portions of the acknowledgment: “I also acknowledge and agree that in the event employment disputes arise between me and the Company, I will be bound by the MetaSource Alternative Dispute Resolution Program which provides for final and binding arbitration for disputes related to termination of employment, unlawful discrimination, and alleged sexual harassment or other unlawful harassment, as defined in the MetaSource Alternative Dispute Resolution Program.” (Bergloff Dec., Ex. D [emphasis added].) Defendant offers no basis for the court to put aside that explicit language.

Moreover, according to defendant’s HR manager, it is the handbook, and not the separate arbitration policy, which is provided to employees upon hiring. Employees should not have to perform a legal analysis of their employer’s arbitration policies when the scope of that arbitration is clear on the face of the document they sign in the onboarding process. Defendant does not explain why a document merely made available to employees should overrule a document provided to them.

In supplemental briefing, Defendant argues that the broader language in the separate document from the handbook should trump the narrower language in the employee handbook, but the authority cited does not support this claim.

Defendant relies on case law interpreting very broad arbitration language which is clearly distinguishable from the limiting language in the employee handbook. (Vianna v. Doctors' Mgmt. Co. (1994) 27 Cal. App. 4th 1186, 1189 [interpreting arbitration agreement that governed “any dispute of any kind whatsoever, regarding the meaning, interpretation or enforcement of the provisions of this Agreement . . .”]; Coast Plaza Drs. Hosp. v. Blue Cross of California (2000) 83 Cal. App. 4th 677, 681 [interpreting arbitration clause that stated: “Any problem or dispute arising under this Agreement and/or concerning the terms of this Agreement, other than a Utilization Review decision as provided for in Article VII, that is not satisfactorily resolved under Section 9.1, shall be arbitrated.”].) Thus, these cases are inapplicable.

Defendant then contends that the court must apply the broader language in the separate document because it is incorporated by reference. The court concurs that Defendant may

incorporate the terms of a separate arbitration procedure document into the employee handbook. The issue is whether the broader scope of the separate document overrides the language in the employee handbook that explicitly states that arbitration is limited to only certain claims.

Defendant relies upon Slaught v. Bencomo Roofing Co. (1994) 25 Cal. App. 4th 744, 748, but that case is distinguishable. In that case, there was no language in the subject subcontracts limiting the scope of the arbitration agreement between the parties. The subcontract simply stated: “Subcontractor shall be bound by all of the terms and conditions of the Contract Documents [the general contract], and shall strictly comply therewith.” (Id.) In that case, the arbitration procedures outlined in the subcontracts and the general contract conflicted, and the appellate court held that the arbitration procedures of the general contract governed because the trial court in that case decided that “[i]n a dispute involving the owner, general contractor, and subcontractor, the arbitration procedures specified in the general contract controlled.” (Id.)

In Slaught, there was no limiting language regarding the situations in which the arbitration provisions in the general contract would apply. Further, the Slaught court depended on a rule specific to contractor arbitration agreements to determine which contract’s arbitration terms should govern when there was a conflict. Defendant did not cite to any similar rule in the employment context. Shaw v. Regents of Univ. of California (1997) 58 Cal. App. 4th 44, 56, is also distinguishable from the facts here as there was no conflict in that case between the contract and the document incorporated by reference. (Id. [“[W]e conclude that the patent agreement signed by Shaw incorporates the Patent Policy, and the University may not refuse to allocate the 50 percent net royalty payments attributable to Shaw's inventions in accordance with the terms of the document.”].)

Thus, the only employment-related claims subject to arbitration—and the only claims that Plaintiff agreed would be subject to arbitration—are claims “related to termination of employment, unlawful discrimination, and alleged sexual harassment or other unlawful harassment.” The Labor Code violation claims (and related unfair business practices and PAGA claim) at issue in this action are not encompassed within the scope of the parties’ arbitration agreement.

Accordingly, this Motion is denied.

The court declines to reach the issue of unconscionability.

Defendant is ordered to give notice of this ruling.

9 30-2025-01483626 Cross-Defendant David Joseph Watermeier’s (“Cross- Forsythe vs. ACW Defendant” or “Watermeier”) Demurrer to Cross- Escape LLC Complainants Jorin Andresen and Christina Compani’s (collectively, “Cross-Complainants”) First Amended Cross- Complaint (“FAXC”) is OVERRULED. IT IS ORDERED THAT Cross-Defendant file an Answer to the FAXC within thirty (30) days of this ruling.

“A demurrer tests the legal sufficiency of the factual allegations in a complaint.” (Redfearn v. Trader Joe’s Co. (2018) 20 Cal. App. 5th 989, 996.) The court must determine “whether the complaint alleges facts sufficient to state a cause of action or discloses a complete defense.” (Id.) The court assumes “the truth of the properly pleaded factual allegations, facts that reasonably can be inferred from those expressly pleaded and matters of which judicial notice has been taken.” (Id.) Courts “give the complaint a reasonable interpretation, reading it as a whole and its parts in their context.” (Goncharov v. Uber Techs., Inc. (2018) 19 Cal. App. 5th 1157, 1165.) Courts “construe the complaint ‘liberally ... with a view to substantial justice between the parties[.]’” (Id.) “A demurrer must dispose of an entire cause of action to be sustained.” (Fremont Indem. Co. v. Fremont Gen. Corp. (2007) 148 Cal. App. 4th 97, 119.)

In this action, Plaintiffs assert a single Private Attorneys General Act of 2004 (“PAGA”) claim against Defendants and Cross-Complainants Jorin Andresen and Christina Compani, along with ACW Escape LLC, arising from certain Labor Code violations. (ROA 2.) Cross-Complainants filed the operative First Amended Cross-Complaint against Watermeier and Escape Room Era, LLC, alleging negligence, equitable indemnification, and contribution, essentially arguing that Cross-Defendants are liable for the Labor Code violations at issue in the Complaint. (ROA 118.)

Here, Watermeier’s demurs on the grounds of failure to state each claim. (See Notice of Demurrer.) However, Watermeier’s demurrer does not address the nature of the claims asserted