Jesse Bailey vs. Arthur Freeman

“The moving party bears the burden of proving the existence of an arbitration agreement by a preponderance of the evidence, and the party opposing arbitration bears the burden of proving by a preponderance of the evidence any defense, such as unconscionability.” (Serafin v. Balco Properties Ltd., LLC (2015) 235 Cal.App.4th 165, 172-173 (Serafin), quoting Peng v. First Republic Bank (2013) 219 Cal.App.4th 1462, 1468; Engalla v. Permanente Medical Group, Inc. (1997) 15 Cal.4th 951, 972 [internal citations and quotation omitted].) General principles of

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contract law govern arbitration agreements. (Serafin, supra, 235 Cal.App.4th at p. 173.)

The Court must grant a petition to compel arbitration if it determines that the parties agreed to arbitrate the controversy, unless it determines that: (a) the petitioner waived the right to compel arbitration; (b) grounds exist to revoke the agreement; or (c) a party to the arbitration agreement is also a party to a pending court action or special proceeding with a third party, arising out of the same transaction or series of related transactions and there may be conflicting rulings on a common issue of law or fact. (Code Civ. Proc., § 1281.2; Rosenthal v. Great Western Fin. Securities Corp. (1996) 14 Cal.4th 394, 413.)

Discussion

Here, Defendant argues that on or about May 18, 2021, Defendant and Plaintiff entered into the Indoor Restore Network Partner Agreement for Inspectors (“Agreement”). (Ulmer Decl., ¶ 2.) Mr. Ulmer purports to attach the Agreement as Exhibit 1; however, no such document is attached. Counsel is expected to exercise care and diligence in preparing materials for the Court’s review.

In opposition, Plaintiff does not dispute the existence of the Agreement or that he signed it. In fact, Plaintiff’s Counsel attaches a copy of the Agreement and argues that the Agreement is unconscionable and unenforceable. (Bronski Decl., ¶ 2, Exh. 1.[1])

The Agreement provides in pertinent part as follows:

18. ARBITRATION Any dispute arising from or growing out of this agreement shall be submitted to arbitration, in Sacramento CA, or the county determined by the company under the Commercial Dispute Resolution Rules of the American Arbitration Association, and paid for by the independent contractor. In addition to damages, the prevailing party shall be entitled to recover all costs, including reasonable attorney’s fees.

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Arbitration Resolution Agreement

Indoor Restore (otherwise known as or “Company’[sic]) has established an Arbitration Resolution Program for any subcontractor, independent contractor and/or employee related legal claims, disputes, etc. The arbitration program provides for the fair, private, quick, final and binding resolution of all legal claims before a neutral Arbitrator, rather than in the courts. All legal

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claims arising under federal, state, or local statutory law or common law shall be subject to arbitration under this agreement. This arbitration shall be pursued in place of any legal claims, court action, civil suits, public slander, or related action against Indoor Restore or its customers, vendors, affiliates, employees, management, or owners.

For illustration purposes only, such claims include all claims of discrimination, harassment or retaliation whether brought under federal, state or local law, as well as common law claims, such as wrongful termination, breach of contract, payment disputes, or tort claims. You must agree to pursue any and all legal claims via arbitration in order to be an independent contractor with Indoor Restore or its affiliate companies. Arbitration must be pursued for any legal issue during as well as after the contract period with Indoor Restore. The arbitrator and arbitration location will be chosen by Indoor Restore and paid for by the independent contractor.

Independent Contractor Agreement

I, Jesse Bailey (print name) agree to arbitrate any and all legal issues and disputes that I may have with Indoor Restore or any of its affiliated companies through a neutral third party arbitrator that will be selected by Indoor Restore.

(Agreement, pp. 5-6.)

Delegation to the Arbitrator

“[C]ourts presume that the parties intend courts, not arbitrators, to decide ... disputes about ‘arbitrability.’ These include questions such as ‘whether the parties are bound by a given arbitration clause,’ or ‘whether an arbitration clause in a concededly binding contract applies to a particular type of controversy.’” (BG Group plc v. Republic of Arg. (2014) 572 U.S. 25, 34 [quoting Howsam v. Dean Witter Reynolds, Inc. (2002) 537 U.S. 79, 84].) However, “parties can agree to arbitrate ‘gateway’ questions of ‘arbitrability,’ such as whether the parties have agreed to arbitrate or whether their agreement covers a particular controversy.” (Rent-A-Center, W., Inc. v.

Jackson (2010) 561 U.S. 63, 68-69.) Further, “[a]n arbitration provision’s reference to, or incorporation of, arbitration rules that give the arbitrator the power or responsibility to decide issues of arbitrability may constitute clear and unmistakable evidence that parties intended the arbitrator to decide those issues.” (Aanderud v. Superior Court (2017) 13 Cal.App.5th 880, 892- 893 [collecting cases].)

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“There are two prerequisites for a delegation clause to be effective. First, the language of the clause must be clear and unmistakable. [Citation.] Second, the delegation must not be revocable under state contract defenses such as fraud, duress, or unconscionability.” (Tiri v. Lucky Chances, Inc. (2014) 226 Cal.App.4th 231, 242.) “The ‘clear and unmistakable’ test reflects a ‘heightened standard of proof that reverses the typical presumption in favor of the arbitration of disputes. [Citation.]” (Aanderud, supra, 13 Cal.App.5th at p. 892 [emphasis in original].)

In Aanderud, the arbitration provision stated that the parties “agree to arbitrate all disputes, claims and controversies arising out of or relating to ... (iv) the interpretation, validity, or enforceability of this Agreement, including the determination of the scope or applicability of this Section 5 [the ‘Arbitration of Disputes’ section]. ...” (Aanderud, supra, 13 Cal.App.5th at p. 892.) The court concluded that “[t]his language delegates to the arbitrator questions of arbitrability and is clear and unmistakable evidence that the parties intended to arbitrate arbitrability.” (Ibid.)

Moreover, the court also found it relevant that the arbitration provision called for JAMS to administer the arbitration “pursuant to its Streamlined Rules and Procedures” which “provides that ‘[j]urisdictional and arbitrability disputes, including disputes over the formation, existence, validity, interpretation or scope of the agreement under which Arbitration is sought, shall be submitted to and ruled on by the Arbitrator. The Arbitrator has the authority to determine jurisdiction and arbitrability issues as a preliminary matter.’” (Id., at p. 893.)

The court concluded that this “reference to the JAMS Rules further evidences the parties’ clear and unmistakable intent to submit issues of arbitrability to the arbitrator.” (Ibid.) Similarly, in Dream Theater, Inc. v. Dream Theater (2004) 124 Cal.App.4th 547, the court concluded that the agreement’s incorporation of the AAA commercial arbitration rules, which specify that that the arbitrator will decide disputes over the scope of the agreement, was “clear and unmistakable evidence of the intent that the arbitrator will decide whether a [claim] is arbitrable.” (Id., at p. 557.)

Defendant argues that the Parties vested the arbitrator with the power to determine arbitrability by specifying that claims would be brought “under the Commercial Dispute Resolution Rules of the American Arbitration Association.” (Agreement, p. 5.) Rule 7 of AAA’s commercial arbitration rules provides as follows: “The arbitrator shall have the power to rule on his or her own jurisdiction, including any objections with respect to the existence, scope, or validity of the arbitration agreement or to the arbitrability of any claim or counterclaim, without any need to refer such matters first to a court.” (Commercial Arbitration Rules and Mediation Procedures, R- 7(a) (2022 Edition), American Arbitration Association.; Ulmer Decl., ¶ 3.)

As such, Defendant maintains that the Parties “have expressed a ‘clear and unmistakable intent’ to have an arbitrator decide issues of arbitrability and jurisdiction, not the Court.” (Mot., p. 5:23-24.)

Plaintiff's opposition fails to address the issue of delegation, which the Court treats as a concession on the merits. (See D.I. Chadbourne, Inc. v. Super. Ct. (1964) 60 Cal.2d 723, 728, fn. 4 [where nonmoving party fails to oppose a ground for a motion “it is assumed that [nonmoving

SUPERIOR COURT OF CALIFORNIA COUNTY OF SACRAMENTO

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party] concedes” that ground].) “When determining whether a delegation clause is unconscionable, any claim of unconscionability must be specific to the delegation clause.” (Aanderud, supra, 13 Cal.App.5th at p. 895.) While Plaintiff challenges the Agreement as unconscionable, Plaintiff does not argue that delegation is unconscionable or otherwise revocable. (See generally, Opp.; Reply, p. 2:9-18.) Accordingly, the Court concludes that the delegation clause is enforceable.

Having so concluded, the Parties’ remaining disputes regarding the validity and/or enforceability of the Agreement must be decided by the arbitrator.

Accordingly, Defendant’s motion to compel arbitration is GRANTED.

Stay Pending Completion of Arbitration

Defendant argues that this action must be stayed pending the completion of arbitration. (Mot., pp. 7:23-8:18.) Plaintiff’s opposition does not address whether a stay is appropriate.

The Court finds that a stay is appropriate pursuant to Code of Civil Procedure section 1281.4.

Disposition

Defendant’s motion to compel arbitration of Plaintiff’s claims and stay this action pending arbitration is GRANTED. Upon completion of the arbitration, any party may seek to lift the stay.

[1] The Court notes that the Agreement appears to contain Plaintiff’s full social security number.

Pursuant to California Rules of Court rule 1.201, parties and attorneys must redact social security numbers from all pleadings and other papers filed in the Court’s public file. (CRC, rule 1.201.) Plaintiff may wish to take appropriate measures to protect that information.

The case is ordered stayed pending binding arbitration as to the entire action.

To request oral argument on this matter, you must call Department 22 at (916) 874-5762 by 4:00 p.m., the court day before this hearing and notification of oral argument must be made to the opposing party/counsel. If no call is made, the tentative ruling becomes the order of the court. (Local Rule 1.06.)

Parties requesting services of a court reporter may arrange for private court reporter services at their own expense, pursuant to Government code §68086 and California Rules of Court, Rule 2.956. Requirements for requesting a court reporter are listed in the Policy for Official Reporter Pro Tempore available on the Sacramento Superior Court website at

SUPERIOR COURT OF CALIFORNIA COUNTY OF SACRAMENTO

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https://www.saccourt.ca.gov/court-reporters/docs/crtrp-6a.pdf. The list of Court Approved Official Reporters Pro Tempore is available at https://www.saccourt.ca.gov/courtreporters/docs/crtrp-13.Pdf.

If you are not using a reporter from the Court’s Approved Official Reporter Pro Tempore list, a Stipulation and Appointment of Official Reporter Pro Tempore (CV/E-206) must be signed by each party, the private court reporter, and the Judge. The signed form must be filed with the clerk prior to the hearing.

If a litigant has been granted a fee waiver and requests a court reporter, the party must submit a Request for Court Reporter by a Party with a Fee Waiver (CV/E-211). The form must be filed with the clerk at least 10 days prior to the hearing or at the time the hearing is scheduled if less than 10 days away. Once approved, the clerk will forward the form to the Court Reporter’s Office and an official reporter will be provided.

If oral argument is requested, the Parties are encouraged to appear via Zoom with the links below:

To join by Zoom link - https://saccourt-ca-gov.zoomgov.com/my/sscdept22 To join by phone dial (833) 568-8864 ID 16184738886

Counsel for Defendant is directed to notice all parties of this order.

Please note that the Complex Civil Case Department now provides information to assist you in managing your complex case on the Court website at https://www.saccourt.ca.gov/civil/complex-civil-cases.aspx. The Court strongly encourages parties to review this website regularly to stay abreast of the most recent complex civil case procedures. Please refer to the website before directly contacting the Court Clerk for information.