Gomez v. Castro

under the California Arbitration Act (CAA).

Federal Law Regarding Compelling Arbitration

The FAA authorizes enforcement of arbitration clauses unless grounds exist at law or in

equity for the revocation of any contract. (9 U.S.C. § 2.) In contracts governed by the FAA,

conflicting state law is preempted in either state or federal courts. (Volt Info. Sciences, Inc. v. Bd.

of Trustees of Leland Stanford Junior Univ. (1989) 489 U.S. 468, 477.)

Arbitration agreements are contract matters; they provide a mechanism to resolve those

disputes that the parties agreed to submit to arbitration. (First Options of Chicago, Inc. v. Kaplan

(1995) 514 U.S. 938, 943.) Under the FAA, to compel arbitration, a finding must be made that a

valid agreement to arbitrate exists between the parties and that the agreement encompasses the

dispute at issue. (Chiron Corp. v. Ortho Diagnostic Sys. (9th Cir. 2000) 207 F.3d 1126, 1130.) By

its terms, the FAA does not vest courts with discretion but instead mandates that courts shall

direct parties to proceed to arbitration on issues for which an arbitration agreement has been

signed. (Id., at p. 1130.)

California Law Regarding Compelling Arbitration

Under Code of Civil Procedure section 1281.2, a party to an arbitration agreement may move to

compel arbitration if another party to the agreement refuses to arbitrate, and the court shall

compel arbitration if it determines that an agreement to arbitrate exists. The section also

provides for exceptions to arbitration, including where grounds exist for rescission of the

agreement and other grounds not applicable here. (Code Civ. Proc., § 1281.2, subds. (a)-(d).)

A threshold issue for the court in every motion to compel arbitration is whether an arbitration

agreement exists. (Trinity v. Life Ins. Co. of North America (2022) 78 Cal. App. 5th 1111, 1120.)

“The party seeking to compel arbitration bears the burden of producing by a preponderance of

the evidence an agreement to arbitrate a dispute exists.” (Ibid.)

The moving party can meet its initial burden by attaching to its motion a copy of the arbitration

agreement purporting to bear the opposing party’s signature or set forth the agreement’s

provisions verbatim in the motion. (Gamboa v. Northeast Community Clinic (2021) 72

Cal.App.5th 158, 165 (Gamboa); Cal. Rules of Court, rule 3.1330.) For this initial step, it is not

necessary to follow normal procedures of document authentication because the court is only

required to make a finding of the agreement’s existence, not an evidentiary determination of its

validity. (Gamboa, supra, 72 Cal.App.5th at p. 165; Condee v. Longwood Management Corp.

(2001) 88 Cal.App.4th 215, 218-219.)

If the opposing party disputes the agreement, he or she bears the burden of producing evidence

to challenge the authenticity of the agreement. (Gamboa, supra, 72 Cal.App.5th at p. 165.) “The

opposing party can do this in several ways. For example, the opposing party may testify under

oath or declare under penalty of perjury that the party never saw or does not remember seeing

the agreement, or that the party never signed or does not remember signing the agreement.”

(Ibid.)

If the opposing party meets its burden, then the moving party must establish with

admissible evidence a valid arbitration agreement between the parties and must do so by a

preponderance of the evidence. (Gamboa, supra, 72 Cal.App.5th at pp. 165-166.)

If a valid agreement to arbitrate is established, the burden then shifts to the party opposing

arbitration to prove by a preponderance of the evidence any grounds for denial of the petition.

(Rosenthal v. Great Western Financial Securities Corp. (1996) 14 Cal.4th 394, 413.)

Timeliness

There does not appear to be any timing requirement under the FAA or CAA. Defendants’

motion supplied the statutory 16 days’ court notice in advance of the motion. As such, the motion

is brought timely.

Evidentiary Objections

Defendants raise six evidentiary objections to the Gomez’ declaration.

The Court SUSTAINS Objection 1 based on legal conclusion; SUSTAINS Objection 3 based on

hearsay; and OVERRULES Objections 2, 4, 5, 6.

Existence of Valid Arbitration Agreement

Defendants contend that Plaintiff signed arbitration agreements in 2019 and 2021 in

connection with her employment. (Lozano Decl., ¶¶9, 10, Exhs. A, B.) Lozano is WCD’s vice

president of human resources; he does not state the dates when he has held this position.

(Lozano Decl., ¶1.) Lozano attests that Plaintiff entered into the mutual agreement to arbitrate

claims on February 7, 2019 (2019 Agreement). (Lozano Decl., ¶9, Exh. A.) The 2019 Agreement

states it shall be governed by the Federal Arbitration Act. (Id., at p. 2, ¶3.) Lozano further states

that on April 1, 2021, Plaintiff voluntarily signed another arbitration agreement agreeing to

arbitrate claims with Defendants (2021 Agreement). (Lozano Decl., ¶10, Exh. B.) The 2021

Agreement states it shall be governed by the FAA. (Id., at p. 1, ¶1.)

The 2019 Agreement states that arbitrable claims include those based on any federal,

state, or local law, statute, or regulation including FEHA and the California Labor Code. (Lozano

Decl., Exh. A, p. 1, ¶2.) Because Plaintiff’s Complaint alleges such claims, the 2019 Agreement

covers the dispute at issue.

The 2021 Agreement states the parties mutually consent to resolution by arbitration of all

claims whether or not the claims arise out of the employee’s employment or termination,

including claims for discrimination under state or federal law and claims for violation of any

federal, state, or other governmental law, statute, regulation, or ordinance. (Lozano Decl., Exh.

B, p. 1, ¶3.) Because Plaintiff’s Complaint alleges discrimination claims plus claims arising under

FEHA, the Labor Code, and CFRA, the 2021 Agreement encompasses the disputes at issue.

With this evidence, Defendants have met their initial prima facie burden to show the existence of

an arbitration agreement between them and Plaintiff.

In opposition, Plaintiff challenges the authenticity of the 2019 Agreement and 2021

Agreement. First, Plaintiff contends the 2/7/19 signature on the 2019 Agreement predates her

start date and onboarding process. (Gomez Decl., ¶3.) Plaintiff describes being hired on the spot

for a dental assistant position in January 2019, but she could not start right away; Defendants’

regional manager Lucy Gonzalez instructed Plaintiff to report for her first day on February 11,

2019. (Gomez Decl., ¶3.) Plaintiff attests she did not have contact with anyone from WCD or

CMP in the two weeks before her 2/11/19 start date and did not sign any documents on

February 7, 2019. (Gomez Decl., ¶3.) When she started work on 2/11/19, Plaintiff did not review

or sign any documents. (Gomez Decl., ¶4.) With this evidence, Plaintiff successfully challenged

the authenticity of the 2019 Agreement by a preponderance of the evidence, by attesting she did

not start working for Defendants until 2/11/19 and did not sign any documents for Defendants on

2/7/19.

Around February 21, 2019, Plaintiff reported to WCD’s Artesia office for orientation where she

watched videos, completed computer modules, and reviewed and signed documents on a

screen. (Gomez Decl., ¶5.) Plaintiff recalls seeing a document entitled “Arbitration Agreement”

which one of the presenters explained was “nothing, just something saying that if you leave or

aren’t happy, we can settle outside of court but you’re not waiving your right to a court hearing or

anything like that.” (Gomez Decl., ¶5.) After that explanation, Plaintiff was instructed to sign the

document and did so electronically; she was not given the option to opt out. (Gomez Decl., ¶5.)

Plaintiff did not understand that by signing she was waiving her right to a jury trial because she

was told that signing did not waive her right to a court hearing. (Gomez Decl., ¶5.) With this

evidence, Plaintiff challenged the authenticity of the 2019 Agreement by a preponderance of the

evidence by stating that Defendants’ representative told her information that conflicted with the

language in the 2019 Agreement, which states that each side waives the right to a jury trial.

(Lozano Decl., Exh. A, p. 2, second from last paragraph.)

Gonzalez promoted Plaintiff to office manager in April 2021; the only document Plaintiff received

in connection with the promotion was an employment offer letter. (Gomez Decl., ¶6.) Regarding

the 2021 Agreement, Plaintiff states she never read, reviewed, or signed an arbitration

agreement in April 2021 and the document was never presented to her. (Gomez Decl., ¶¶6, 9.)

Plaintiff did not know that continuing to work for ten days constituted assent to the arbitration

agreement because she was never given the document to review and she did not sign it.

(Gomez Decl., ¶6.) With this evidence, Plaintiff challenged the authenticity of the 2021

Agreement by a preponderance of the evidence by stating that she was never provided an

arbitration agreement to review or sign in connection with her promotion.

Plaintiff states she never met with nor interacted with Defendants’ witness Lozano, and he was

not present during her onboarding process. (Gomez Decl., ¶7.) Plaintiff contradicts Lozano’s

statement that Gomez’s signature could only be placed on the agreements using her unique

username and password. (Lozano Decl., ¶15.) Plaintiff states she was able to contact human

resources to unlock her account or reset her password. (Gomez Decl., ¶15.)

In Gamboa, the plaintiff met her burden to challenge an arbitration agreement’s authenticity by

filing an opposing declaration saying she did not recall the agreement and would not have

signed it if she had been aware of it. (Gamboa, supra, 72 Cal.App.5th at p. 167.) Not

remembering an arbitration agreement is a challenge to its signature; in the face of such

evidence, the party compelling arbitration has the burden of proving by a preponderance of

evidence that a signature was authentic. (Id., at pp. 167-168.)

Because Plaintiff met her burden to challenge the authenticity of the 2019 and 2021 Agreements,

the burden shifts back to Defendants to establish with admissible evidence a valid arbitration

agreement between the parties, by a preponderance of evidence. (Gamboa, supra, 72

Cal.App.5th at pp. 165-166.) Defendants’ evidence must contain foundational facts (including

relevance, personal knowledge, or authentication of a writing) to be admissible. (Id., at p. 169;

Evid. Code, § 403, subd. (a)(1)-(3).)

In Ruiz v. Moss Bros. Auto Group, Inc. (2014) 232 Cal.App.4th 836 (Ruiz), a defendant employer

filed a reply declaration attempting to authenticate the plaintiff’s signature on an arbitration

agreement, but the court found the manager’s declaration was insufficient to support such a

finding with respect to an electronic signature. (Ruiz, supra, 232 Cal.App.4th at pp. 844-846.)

Civil Code section 1633.9, subdivision (a), states that an electronic record or 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 signature was attributable. The effect of an electronic

record or signature attributed to a person under subdivision (a) is determined from the context

and surrounding circumstances at the time of its creation, execution, or adoption, including the

parties’ agreement, if any and otherwise as provided by law. (Civ. Code, § 1633.9, subd. (b).)

In the Ruiz reply declaration, the defendant’s employee explained the agreement was part of an

employee acknowledgment form presented to all defendant employees and each employee is

required to log into the company’s HR system using his unique login ID and password to review

and sign the form. (Ruiz, supra, 232 Cal.App.4th at p. 844.) But the Ruiz court observed that the

defendant employee did not explain how or upon what basis she inferred that the electronic

signature on the agreement was “the act of” Ruiz, which left a critical gap in the evidence

supporting the petition to compel arbitration. (Ibid.)

If the defendant employee explained that an electronic signature in Ruiz’s name could only have

been placed on the agreement by a person using Ruiz’s unique login ID and password, that the

date and time printed next to the electronic signature indicated the date and time the signature

was made, that all defendant employees were required to use their unique login ID and

password to log into the HR system to sign electronic forms, and therefore the electronic

signature on the agreement was apparently made by Ruiz on 9/21/11 at 11:47 am, that could

have supported an inference that Ruiz was the person who electronically signed the agreement.

(Ruiz, supra, 232 Cal.App.4th at p. 844.)

Here, in Lozano’s supplemental declaration submitted with Defendants’ reply brief, he states that

Gomez’s electronic signature and name could only be placed on the 2019 and 2021 Agreements

through ADP WorkforceNow/DocuSign as accessed by Gomez’s unique username and

password. (Lozano Supp. Decl., ¶11.) Lozano states that when completing onboarding

documents, WCD employees are asked to sign into their ADP WorkforceNow account using their

unique personal login information and password to open and review onboarding documents

including the arbitration agreements. (Lozano Supp. Decl., ¶7.) Consistent with the Ruiz court’s

analysis, this evidence supports Lozano’s inference that Gomez was the person who

electronically signed the 2019 and 2021 Agreements.

Despite Plaintiff’s challenge to the authenticity of the 2019 and 2021 Agreements, Defendants

met their burden by a preponderance of evidence to show that a valid arbitration agreement

exists between the parties.

The Court FINDS a valid arbitration agreement exists between Plaintiff and Defendants.

Unconscionability

Plaintiff contends the 2019 and 2021 Agreements are procedurally and substantively

unconscionable and therefore unenforceable. Unconscionability requires both procedural and

substantive elements; both must be present but are evaluated on a sliding scale. (Armendariz v.

Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83, 114 (Armendariz).) “[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.” (Id., at p. 114.) Procedural unconscionability focuses on “oppression” or “surprise” due to

unequal bargaining power whereas substantive unconscionability considers “overly harsh” or

“one-sided” results. (Ibid.)

Procedural Unconscionability

“Unconscionability analysis begins with an inquiry into whether the contract is one of

adhesion.” (Armendariz, supra, 24 Cal.4th at p. 113 (Armendariz).) An adhesion contract

signifies a standardized contract imposed and drafted by the party of superior bargaining

strength and gives the weaker party only the opportunity to adhere to the contract or reject it.

(Ibid.)

There is no evidence that Gomez participated in drafting the 2019 and 2021 Agreements and

each appears to be a standardized, form contract. (Lozano Decl., Exhs. A, B.) For the latter

point, in the 2019 Agreement, the name “Sandra Gomez” is inserted into the first line of the

agreement on a blank space labeled “Employee.” (Lozano Decl., Exh. A, p. 1, ¶1.) In the 2021

Agreement, Gomez’s name is not even included in the body of the agreement; instead, the first

paragraph states the agreement is made between WCD and “an employee of the Company (the

“Employee”).” (Lozano Decl., Exh. B, p. 1, ¶1.) These facts support the conclusion that the 2019

and 2021 Agreements are standardized, form contracts drafted by WCD and imposed upon the

weaker party, Gomez.

For the 2019 Agreement, Gomez states that one of WCD’s presenters at the orientation on

2/21/19 told her the document was nothing and it meant the parties could settle out of court but

Gomez was not waiving her right to a court hearing or anything like that. (Gomez Decl.,

¶5.) Then, Gomez was instructed to sign and move to the next document; Gomez did so and

states she was not given the choice to opt out. (Ibid.) These facts support the conclusion that

the 2019 Agreement was presented to Gomez in a take-it-or-leave-it fashion, another indicator

that it was an adhesive contract.

The Armendariz Court found that, generally, preemployment contracts that are imposed on

employees as a condition of employment with no opportunity to negotiate are adhesion

contracts. (Armendariz, supra, 24 Cal.4th at pp. 114-115.) The evidence here shows that the

2019 and 2021 Agreements are each an adhesion contract which means there is some degree

of procedural unconscionability present. (Armendariz, supra, 24 Cal.4th at pp. 113-114.)

Here, the Court FINDS a moderate degree of procedural unconscionability present in the

2019 and 2021 Agreements.

Substantive Unconscionability

Plaintiff advances two reasons why the 2019 and 2021 Agreements are substantively

unconscionable: 1) they fail to provide for a truly neutral arbitrator and 2) they provide minimal

discovery.

Neutral Arbitrator: A neutral arbitrator is essential to ensuring the integrity of the

arbitration process. (Armendariz, supra, 24 Cal.4th at p. 103.) Plaintiff raises the “repeat player

effect” as a reason to question the integrity of the arbitration process here. In Mercuro v. Super.

Ct. (2002) 96 Cal.App.4th 167 (Mercuro), the court acknowledged that an employer repeatedly

appearing before the same group of arbitrators conveys distinct advantages over the individual

employee, including knowledge of the arbitrators’ temperaments, procedural preferences, styles

and the like, and the arbitrators’ cultivation of further business by taking a “split the difference”

approach to damages. (Mercuro, supra, 96 Cal.App.4th at p. 178.)

Here, Gomez does not supply any evidence that the “repeat player effect” is a factor

here. For example, there is no evidence about the number of times that Defendants have

appeared before JAMS to conduct employment-related arbitrations. As such, there is no

evidence that Defendants have knowledge of the JAMS arbitrators’ temperaments, procedural

preferences, or styles. Therefore, Plaintiff’s failure to provide a neutral arbitrator argument is not

persuasive and Plaintiff has not shown that this type of substantive unconscionability exists here.

Minimal Discovery: The Armendariz Court set forth five minimum requirements for lawful

arbitration in the context of mandatory employment arbitration agreements; one requirement is

that the arbitration agreement “provides for more than minimal discovery.” (Armendariz, supra,

24 Cal.4th at p. 102.)

Plaintiff argues that the 2019 Agreement does not mention discovery procedures at all

but merely states that any arbitration proceeding shall be conducted per current JAMS

employment arbitration rules and procedures. (Lozano Decl., Exh. A, ¶1.) Gomez attests she

never received a copy of the 2019 or 2021 Agreements; therefore, she would not have had

access to or knowledge of the JAMS rules regarding discovery. But Gomez does not supply any

legal authority that the consideration of whether an arbitration agreement provides more than

minimal discovery hinges on whether the employee was provided a copy of the arbitration

forum’s rules or a copy of the arbitration agreement.

Plaintiff did not attach a copy of the JAMS employment arbitration rules and procedures,

nor did she describe the discovery procedures therein. In their moving papers, Defendants

supplied a copy of the current JAMS employment arbitration rules. (Zakariaie Decl., ¶9, Exh.

D.) Rule 17 states the parties shall cooperate in good faith in the voluntary and informal

exchange of all non-privileged documents and other information including electronically stored

information relevant to the dispute or claim immediately after commencement of arbitration. (Id.,

Rule 17, subd. (a).) The informal exchange includes copies of all documents in their possession

or control on which they rely in support of their positions, witness names, expert names and

expert reports, which must be exchanged within 21 calendar days after all pleadings or notice of

claims have been received. (Ibid.)

Each party may take at least one deposition, and the arbitrator may grant a request for additional

depositions based upon reasonable need, availability, and burdensomeness. (Zakariaie Decl.,

Exh. D, Rule 17, subd. (b).) The parties are under a continuing obligation to provide relevant,

non-privileged documents to supplement their identification of witnesses and experts. (Id., at

Rule 17, subd. (c).) Parties may undertake third-party discovery with approval of the arbitrator.

(Id., at Rule 17, subd. (e).)

Contrary to Plaintiff’s characterization of minimal discovery, the JAMS employment rules indicate

that significant discovery is available; importantly, each side must engage in a voluntary and

informal exchange of documents, witnesses, and expert reports within 21 days of when the

pleadings are submitted. As such, Plaintiff has not presented evidence of substantive

unconscionability in the form of minimal or inadequate discovery.

Hence, the Court FINDS that Plaintiff did not present evidence establishing substantive

unconscionability in the 2019 and 2021 Agreements.

Both procedural and substantive unconscionability must be present in order for a court to

exercise its discretion to refuse to enforce an arbitration agreement under the unconscionability

doctrine. (Armendariz, supra, 24 Cal.4th at p. 114.) Here, only procedural unconscionability is

present. Therefore, there is no basis to find that the 2019 and 2021 Agreements are

unconscionable. Because valid arbitration agreements exist between Plaintiff and Defendants

and Plaintiff did not meet her burden to show that the agreements are unenforceable, it is

appropriate to compel arbitration in these circumstances.

Thus, the Court GRANTS Defendants’ motion to compel arbitration and ORDER the parties to

arbitrate the claims before JAMS. The Court also GRANTS Defendants’ request to stay the

instant action pending completion of arbitration.

RULING

For all the reasons set forth above, the Court rules as follows:

1) SUSTAINS Defendants’ Objection 1 based on legal conclusion; SUSTAINS Objection

3 based on hearsay; OVERRULES Objections 2, 4, 5, 6.

2) FINDS that a valid arbitration agreement exists between Plaintiff and Defendants.

3) FINDS there is a moderate degree of procedural unconscionability present in the

2019 and 2021 Agreements.

4) FINDS that Plaintiff did not present evidence establishing substantive

unconscionability in the 2019 and 2021 Agreements.

5) GRANTS Defendants’ motion to compel arbitration and ORDER the parties to

arbitrate the claims before JAMS. GRANTS Defendants’ request to stay the instant

action pending completion of arbitration.