Defendant’s Motion to Compel Arbitration
is not unconscionable.
Fourth, Plaintiff argues the 2016 Agreement is unconscionably non-mutual. Specifically, he complains that the 2016 Agreement allows Defendant to seek equitable relief from a court (1) under CCP §§ 527.6 and 527.8 and (2) under the Uniform Trade Secrets Act (2016 Agreement at p. 1), while requiring employees to arbitrate the claims they are most likely to bring. This argument is flawed for two reasons. First, Plaintiff omits the beginning of the carve-out, which excludes workers’ compensation and unemployment claims from arbitration.
These claims are most likely to be brought by employees, not employers. Second, employees are allowed to seek restraining orders just as employers are. (See CCP § 527.6(a)(1) (allowing “a person who has suffered harassment” to seek a restraining order).) Plaintiff makes no showing that employers are more likely to seek such restraining orders than employees. Plaintiff is correct about the non-mutuality of interim relief on trade secret claims, but interim relief on such claims is routinely exempted from arbitration without creating substantive unconscionability.
C. Severability
As noted above, the 2016 Agreement contains a severability clause. Exercising its discretion, the Court concludes severing the two unconscionable fee provisions is proper. The central purpose of the 2016 Agreement is to require arbitration of nearly all disputes between the parties. The fee provisions, while unconscionable, are ancillary to that purpose. Severing them removes any unconscionability from the 2016 Agreement, and the remainder of the 2016 Agreement can be enforced as written.
IV. Class Claims and Further Proceedings
Again, the 2016 Agreement is silent on classwide arbitration. However, because the FAA applies, “a party may not be compelled . . . to submit to class arbitration unless there is a contractual basis for concluding that the party agreed to do so.” (Stolt-Nielsen S.A. v. AnimalFeeds International Corp. (2010) 559 U.S. 662, 684
Looking for case law or statutes not cited here? Search published authorities
Examples: “Why did the court rule this way?” · “What were the procedural grounds?” · “Is appearance required?”
6 Nubia vs. Defendant's Motion to Compel Arbitration Caremeridian, LLC. The Motion to Compel Arbitration brought by Defendants 2025-01533125 CareMeridian, LLC and National Mentor Holdings, Inc. is
GRANTED pursuant to 9 U.S.C. § 2 and CCP § 1281.2. Plaintiff is ordered to arbitrate her claims (including the individual portion of her PAGA claim) on an individual basis. Her class claims are dismissed without prejudice pursuant to the class action waiver in the Arbitration Agreement. This action, including the nonindividual portion of her PAGA claim, shall be stayed pending completion of arbitration. (See CCP § 1281.4; 9 U.S.C. § 3; and Adolph v. Uber Technologies, Inc. (2023) 14 Cal.5th 1104, 1123- 1124.) An arbitration review conference will be held on May 12, 2027 at 8:30 a.m.
1. OVERVIEW
Initially, it is undisputed that the Arbitration Agreement is governed by the FAA. (¶ 8 of Perez Declaration and Exhibit 2 thereto, at ¶ 1; See also Victrola 89, LLC v. Jaman Properties 8 LLC (2020) 46 Cal.App.5th 337, 355.) Under both the Federal Arbitration Act (“FAA”) and the California Arbitration Act (“CAA”) the existence of a valid arbitration agreement is required before arbitration can be compelled. (See 9 U.S.C. §2 and CCP §1281.2.)
The moving party bears the burden of proving the existence of an applicable agreement and the party opposing arbitration bears the burden of proving any defense. (Engalla v. Permanente Medical Group, Inc. (1997) 15 Cal.4th 951, 972 (CAA); See also Ashbey v. Archstone Property Management, Inc. (9th Cir. 2015) 785 F.3d 1320, 1323 and Installit, Inc. v. Carpenters 46 Northern California Counties Conference Board (N.D. Cal. 2016) 214 F.Supp.3d 855, 859 (FAA).
Regardless of whether the FAA applies, “we apply general California contract law to determine whether the parties formed a valid agreement to arbitrate their dispute.” (Avery v. Integrated Healthcare Holdings, Inc. (2013) 218 Cal.App.4th 50, 59-60.)
Here, there is no dispute that Plaintiff executed the Arbitration Agreement attached as Exhibit 2 to the Declaration of Sheila Perez. (See ¶ 8 of Perez Declaration; See also ¶ 9 of Nubia Declaration.) Similarly, there is no dispute the Agreement applies to “any dispute arising out of or related to Employee’s...application or selection for employment, employment, and/or termination” and is enforceable by National Mentor Holdings, LLC and “[a]ll applicable corporate entities who constitute direct and indirect subsidiaries of National Mentor Holdings, Inc.” (¶ 8 of Perez Declaration and Exhibit 2 thereto.) Per the Declaration of Sheila Perez, “CareMeridian is an indirect subsidiary of National Mentor Holdings, LLC.” (¶ 4 of Perez Declaration.)
Plaintiff does not challenge the application of the above agreement to her claims or Defendants’ ability to enforce the Agreement, generally. Instead, Plaintiff challenges enforcement of the Agreement on two bases: (1) The Agreement was procured via fraud; and (2) The Agreement is unconscionable. As discussed below, each of these arguments fails.
2. FRAUD
Plaintiff’s contention that her signature on the Arbitration Agreement was procured by fraud requires her to establish that she was misled into signing the agreement without having the opportunity to discover its actual terms. While “[f]raud is one of the grounds on which a contract can be rescinded,” Plaintiff has not established her consent was acquired by fraud. (Engalla v. Permanente Medical Group, Inc. (1997) 15 Cal.4th 951, 973.)
Per Plaintiff’s declaration, she was approached by “Regional Director Elizabeth Talavera” and the following occurred: “I informed Ms. Talavera that I did not want to sign the arbitration agreement, as I wanted to preserve my ability to go to court should anything happen during my employment. In response to my concerns, Ms. Talavera said, ‘You can still sue. It just won’t go through a third party. It will be one on one.’ Relying on that representation, I believed signing the arbitration agreement would not prevent me from going to court. Thus, I immediately signed the agreement.” (¶¶ 8-9 of Nubia Declaration.)
The above statements are contradicted by Ms. Talavera, who declares: “I never told Ms. Nubia that ‘[y]ou can still sue. It just won’t go through a third party. It will be one-on-one,’ nor did I ever tell her anything similar.” (¶ 5 of Talavera Declaration.) Moreover, the evidence establishes that Talavera was not present at the actual signing of the Agreement. Rather, only Human Resources Operations Manager Sheila Perez and her colleague, Pamela Hill, were present for the signing. (Perez Decl. ¶ 8 [misnumbered as a second ¶ 2]). Plaintiff does not state when the alleged conversation with Talavera took place or what was said by Perez or Hill when the Agreement was signed on January 13, 2025. According to Plaintiff, the alleged conversation with Talavera took place “several months” after she opted out of the Arbitration Agreement in August 2024. (Nubia Decl. ¶ 8)
Regardless, Plaintiff’s declaration does not establish fraud: “A necessary element of the defense of fraud in the execution is reasonable reliance. That is, when a plaintiff asserts that the
defendant misrepresented the nature of the contract, the contract is not considered void due to the fraud if the plaintiff had a reasonable opportunity to discover the true terms of the contract. The contract is only considered void when the plaintiff’s failure to discover the true nature of the document was without negligence on the plaintiff’s part.” (Brown v. Wells Fargo Bank, N.A. (2008) 168 Cal.App.4th 938, 958-959, citing Rosenthal v. Great Western Fin. Securities Corp. (1996) 14 Cal.4th 394, 419- 420.)
“This issue usually arises when the plaintiff failed to read the terms of the contract, relying instead on the defendant’s representation as to the effect of the contract. Generally, it is not reasonable to fail to read a contract; this is true even if the plaintiff relied on the defendant’s assertion that it was not necessary to read the contract.” (Brown v. Wells Fargo Bank, N.A. (2008) 168 Cal.App.4th 938, 959.)
Stated similarly, “our law is clear that misrepresentation does not render the contract void unless the misled party, before making the agreement, lacked a reasonable opportunity to learn its terms.” (Rosenthal v. Great Western Fin. Securities Corp. (1996) 14 Cal.4th 394, 421.) “It follows that one party’s unreasonable reliance on the other’s misrepresentations, resulting in a failure to read a written agreement before signing it, is an insufficient basis, under the doctrine of fraud in the execution, for permitting that party to avoid an arbitration agreement contained in the contract.” (Id. at p. 423.)
Here, while Plaintiff declares Talavera misrepresented the terms of the Arbitration Agreement, she offers no testimony which indicates she was prevented from reading the agreement or otherwise discovering its true terms. Indeed, when the same agreement was presented to Plaintiff in August 2024, she refused to agree to it, writing “I am opting out of arbitration.” (Perez Decl. Exh. 1) By opting out, Plaintiff plainly understood what the Agreement was about and its limitations and requirements. In her words, “I wanted to preserve my right to have any future legal disputes decided in court before a judge or jury.” (Nubia Decl. ¶ 6) Of course, as noted by Defendants, the Agreement clearly provides, in bolded print on the first page: “All disputes covered by this Agreement will be decided by a single arbitrator through final and binding arbitration and not by way of court or jury trial.” (¶ 8 of Perez Declaration and Exhibit 2 thereto, at ¶ 1.)
Consequently, any reliance by Plaintiff on the alleged statement of Talavera was not reasonable and this is an insufficient basis upon which to void the Arbitration Agreement.
3. UNCONSCIONABILITY
Plaintiff contends the Arbitration Agreement is unconscionable, and therefore unenforceable. “‘The prevailing view is that [procedural and substantive unconscionability] must both be present in order for a court to exercise its discretion to refuse to enforce a contract or clause under the doctrine of unconscionability.’ [Citation.] But they need not be present in the same degree.
‘Essentially a sliding scale is invoked which disregards the regularity of the procedural process of the contract formation, that creates the terms, in proportion to the greater harshness or unreasonableness of the substantive terms themselves.’” (Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83, 114.)
A. Procedural Unconscionability
“Both procedural and substantive unconscionability must be present for a court to refuse to enforce a contract provision under the doctrine of unconscionability.” (Parada v. Superior Court (2009) 176 Cal.App.4th 1554, 1570.) “The procedural element of an unconscionable contract generally takes the form of a contract of adhesion, ‘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.’” (Little v. Auto Stiegler, Inc. (2003) 29 Cal.4th 1064, 1071.)
Plaintiff declares the Arbitration Agreement was presented to her on a “take-it-or-leave it basis,” that she “was not given any opportunity to negotiate or modify its terms” and that she understood she “had to sign it in order to continue my employment with CareMeridian.” (Nubia Decl. ¶ 12)
The above sufficiently establishes a modest degree of procedural unconscionability. (See Nguyen v. Applied Medical Resources Corp. (2016) 4 Cal.App.5th 232, 248.)
Plaintiff also asserts procedural unconscionability exists inasmuch as Defendant failed to attach the applicable arbitration rules to the Agreement. However, the California Supreme Court in Baltazar v. Forever 21, Inc. (2016) 62 Cal.4th 1237, found that a failure to attach applicable arbitration rules does not increase
procedural unconscionability. (Id. at p. 1246; See also Nguyen v. Applied Medical Resources Corp. (2016) 4 Cal.App.5th 232, 248- 250.)
B. Substantive Unconscionability
“A provision is substantively unconscionable if it involves contract terms that are so one-sided as to shock the conscience, or that impose harsh or oppressive terms.” (Parada v. Superior Court (2009) 176 Cal.App.4th 1554, 1573 [internal quotations omitted.]) To establish substantive unconscionability, Plaintiff asserts the carve-out for injunctive relief is inappropriately one-sided, as it is likely to favor an employer. Significantly, the carve-out is limited to a request for “temporary or preliminary injunctive relief in connection with an arbitrable controversy in accordance with applicable law.” Such relief is contemplated in arbitration pursuant to CCP § 1281.8(b).
Plaintiff’s argument was rejected by the California Supreme Court in Baltazar v. Forever 21, Inc. (2016) 62 Cal.4th 1237. As explained in Baltazar: “[T]he provisional relief clause does no more than recite the procedural protections already secured by section 1281.8(b), which expressly permits parties to an arbitration to seek preliminary injunctive relief during the pendency of the arbitration.” (Id. at p. 1247.) “[A]n arbitration agreement is not substantively unconscionable simply because it confirms the parties’ ability to invoke undisputed statutory rights.
And the clause confirming the availability of provisional relief under section 1281.8(b) confers no advantage on the drafting party that would otherwise be unavailable in the litigation context.” (Id. at pp. 1247-1248.) “Thus, regardless of whether [employer] is, practically speaking, more likely to seek provisional remedies than its employees, simply reciting the parties’ rights under section 1281.8 does not place [plaintiff] at an unfair disadvantage.” (Ibid.)
As a second basis for her substantive unconscionability argument, Plaintiff cites the discovery limitations articulated in the Arbitration Agreement. As noted by Plaintiff, “parties to an arbitration clause can agree ‘to something less than the full panoply of discovery provided’ in the Code of Civil Procedure,” however, “adequate discovery is indispensable for the vindication of FEHA claims.” (Ramirez v. Charter Communications, Inc. (2024) 16 Cal.5th 478, 504.)
Citing Ontiveros v. DHL Express (USA), Inc. (2008) 164 Cal.App.4th 494 (Ontiveros) and Fitz v. NCR Corp. (2004) 118 Cal.App.4th 702 (Fitz), Plaintiff asserts the discovery restrictions herein are substantively unconscionable. However, an important distinction
exists between the above cases and the instant action. Ontiveros and Fitz both expressly limited the Arbitrator’s ability to order additional discovery. In Ontiveros, for example, the Arbitrator could order additional discovery only “upon a showing of substantial need.” (Ontiveros, supra, 164 Cal.App.4th at p. 511.) In Fitz, the Arbitrator could order additional discovery only where a “compelling need” was found. (Fitz, supra, 118 Cal.App.4th at p. 709.)
No similar limitations are placed on the Arbitrator in this case. Here, the agreement, in addition to certain minimum discovery guarantees, provides: “Additional discovery may be conducted by mutual stipulation, and the Arbitrator will have exclusive authority to entertain requests for additional discovery, and to grant or deny such requests based on the circumstances of a particular case.”
As recently explained by the California Supreme Court in Ramirez v. Charter Communications, Inc. (2024) 16 Cal.5th 478: “Allowing the arbitrator to deviate from agreed-upon default discovery limits ensures that neither party will be unfairly hampered in pursuing a statutory claim based on circumstances that arise post formation. We note that giving the arbitrator authority to expand discovery based on Armendariz’s requirement is one way the adequacy concern can be addressed.” (Id. at p. 506.)
Additionally worth noting: “[We] infer that when parties agree to arbitrate statutory claims, they also implicitly agree, absent express language to the contrary, to such procedures as are necessary to vindicate that claim.” (Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83, 106.) Further, “we assume the arbitrator will act reasonably and in conformity with the law.” (Ramirez v. Charter Communications, Inc. (2024) 16 Cal.5th 478, 506.)
“Where a contract is susceptible to two interpretations, one which renders it valid and the other which renders it void, a court should select the interpretation that makes the contract valid.” (Ramirez v. Charter Communications, Inc. (2024) 16 Cal.5th 478, 507.) Where a discovery provision is “construed to allow the arbitrator to order additional discovery as needed to allow a full and fair exploration of the issues in dispute,” the discovery provision is valid and any unconscionability is eliminated. (Ibid.)
Here, while discovery limitations are stated within the Arbitration Agreement, the Agreement expressly provides that an Arbitrator may order additional discovery, “based on the circumstances of a particular case.” (¶ 8 of Perez Declaration and Exhibit 2 thereto,
at ¶ 7.) In contrast to Ontiveros and Fitz, there are no express limitations on the Arbitrator’s ability to order additional discovery and, in the absence of the same, the Court can interpret the provision as sufficiently protecting Plaintiff’s right to discovery.
Accordingly, there is no substantive unconscionability.