Aaron Stewart v. Neptune Society of America, Inc., et al.

26CV01380 Case Type Civil Law & Motion Hearing Date / Time Wed, 08/26/2026 - 10:00 Nature of Proceedings Motion to Compel Arbitration Tentative Ruling For Plaintiff Aaron Stewart: Paul T. Cullen, The Cullen Law Firm, APC For Defendants Neptune Society - Santa Barbara dba Neptune Management Corporation, Trident Society, Inc., and SCI Shared Services, Inc.: Christopher E. Faenza, Jeffrey J. Gordon, Hayden Rexroad, Yoka Smith, LLP RULING For the reasons stated herein, the motion of Defendants Neptune Society - Santa Barbara dba Neptune Management Corporation, Trident Society, Inc., and SCI Shared Services, Inc., to compel arbitration is denied.

The Court confirms the following: Pretrial Conference 5/5/27 at 11:30 am with all trial documents due one week in advance, i.e. in limine motions; witness and exhibit lists; customized jury instructions and jury verdict forms; trial briefs. The jury panel comes over and trial begins on 5/6/27 at 9am. MSC on 4/9/27 in Dept. 5 at 8:30 am via Zoom. Final CMC 1/20/27 to discuss discovery issues, if any.

Background

As alleged in the complaint filed on March 2, 2026, by Plaintiff Aaron Stewart (Plaintiff): Within the past four years, Plaintiff was employed by the Neptune Society of America, Inc., Trident Society, Inc., and SCI Shared Services, Inc., (collectively, Defendants). During his employment with Defendants, Plaintiff was paid on a salaried basis and classified as exempt from overtime pay despite no proper legal basis for such classification; was consistently on "standby on-call" status and required to respond to calls from families needing services at all hours; was admonished for failing to take phone calls while in the bathroom; and routinely worked seven days per week and in excess of eight hours per day and forty hours per week.

Defendants failed to pay Plaintiff any overtime premium pay for those hours. Defendants also utilized Plaintiff's personal license for two separate business locations simultaneously. Plaintiff's employment ended in or about February 2025. Following Plaintiff's departure, Defendants continued to use Plaintiff's personal license and name to operate their business without authorization.

The complaint asserts seven causes of action against Defendants: (1) recovery of unpaid overtime wages (Lab. Code, Sec. 1194); (2) failure to provide meal periods (Lab. Code, Sec. 226.7 & Sec. 512); (3) failure to provide rest periods (Lab. Code, Sec. 226.7); (4) failure to furnish accurate wage statements (Lab. Code, Sec. 226); (5) waiting time penalties (Lab. Code, Sec.Sec. 201-203); (6) misappropriation (Civ. Code, 3344; Bus. & Prof. Code, Sec. 7617 et seq.); and (7) unfair business practices (Bus. & Prof. Code, Sec. 17200).

On June 22, 2026, Neptune Society - Santa Barbara dba Neptune Management Corporation (Neptune), Trident Society, Inc., (Trident), and SCI Shared Services, Inc., (SCI Services), to whom the Court will also refer collectively as "Defendants" for ease of writing, filed a motion for an order to compel Plaintiff to arbitrate his claims against Defendants in accordance with the terms of a Mutual Resolution Process Agreement (the MRPA), and pursuant to the Federal Arbitration Act or "FAA", codified at 9 United States Code section 1 et seq. The motion also seeks an order staying this action. Plaintiff opposes the motion.

Analysis

" 'Arbitration is ... a matter of contract.' [Citation.] 'The policy favoring arbitration cannot displace the necessity for a voluntary agreement to arbitrate. Although the law favors contracts for arbitration of disputes between parties, there is no policy compelling persons to accept arbitration of controversies which they have not agreed to arbitrate. Absent a clear agreement to submit disputes to arbitration, Courts will not infer that the right to a jury trial has been waived.' [Citations]" (Remedial Construction Services, LP v. AECOM, Inc. (2021) 65 Cal.App.5th 658, 663, original italics.)

"Under both federal and state law, the threshold question presented by a petition to compel arbitration is whether there is an agreement to arbitrate." (Cheng-Canindin v. Renaissance Hotel Associates (1996) 50 Cal.App.4th 676, 683.)

"[C]ourts must first apply state law principles in determining whether the parties entered into an agreement to arbitrate." (Garcia v. Stoneledge Furniture LLC (2024) 102 Cal.App.5th 41, 51 (Garcia).)

"Because the existence of the agreement is a statutory prerequisite to granting the petition, the petitioner bears the burden of proving its existence by a preponderance of the evidence." (Rosenthal v. Great Western Fin. Securities Corp. (1996) 14 Cal.4th 394, 409-410, 413.)

"In determining the existence of an agreement to arbitrate, the trial Court must employ a three-step burden shifting process. [Citation.] The party seeking to compel arbitration bears an initial burden to show an agreement to arbitrate; that burden can be met by providing a copy of the alleged agreement. [Citation.] If that initial burden is met, the burden shifts to the party opposing arbitration to identify a factual dispute as to the agreement's existence, thereby shifting the burden back to the arbitration proponent. [Citation.] At that point, and '[b]ecause the existence of the agreement is a statutory prerequisite to granting the petition, the petitioner bears the burden of proving its existence by a preponderance of the evidence.' [Citation.]" (Garcia, supra, 102 Cal.App.5th at p. 51.)

"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, original italics; see also Bannister v. Marinidence Opco, LLC (2021) 64 Cal.App.5th 541, 543-544 (Bannister) ["[t]he party seeking arbitration can meet its initial burden by attaching to the petition a copy of the arbitration agreement purporting to bear the respondent's signature"]; Condee v. Longwood Management Corp. (2001) 88 Cal.App.4th 215, 219 [moving party may allege the existence of the agreement by reciting its terms in the motion].)

The motion asserts that, during Plaintiff's employment, he was required to access a "Workday" system with a unique user name and password to review and electronically sign documents relating to his employment including the MRPA. According to Defendants, the MRPA covers employees such as Plaintiff and the affiliates of Service Corporation International (SCI) such as Defendants, and specifies a dispute resolution program for those covered persons and entities. Defendants further contend that, pursuant to the MRPA, if an employee cannot resolve a problem using the dispute resolution program procedure, that employee must arbitrate all "Covered Disputes" as that term is specified or described in the MRPA. The motion further asserts that the claims alleged by Plaintiff in these proceedings fall within the definition of "Covered Disputes" contained in the MRPA.

The motion is supported by a declaration of Jessica Crawford (Crawford), who is the Director of HR Compliance & Support for SCI Shared Resources, LLC, (SCI Resources). (Crawford Dec., P. 1.) Crawford states that they have worked in the human resources or "HR" department of SCI Resources, which provides human resources support to Neptune, since 2013. (Ibid.) Crawford's job duties include support for SCI Resources' HR Department in its service to Neptune. (Crawford Dec., P. 2.) Crawford also asserts that SCI Resources and Defendants are affiliates of SCI. (Crawford Dec., P.P. 2, 6.) Attached to the Crawford declaration is a copy of the MRPA. (Crawford Dec., P. 19 & exhibit A.)

Pursuant to the terms of the MRPA, the "Entities and Persons Covered" include the "Company" and the "Associate". (Crawford Dec., exhibit A at pdf p. 8, section I.) The term "Company" is defined to mean "your employer, as shown on your paycheck or earnings statement. In the event you believe that another related entity may be responsible for any claims asserted under this Agreement, then the entities covered under this Agreement will also include [SCI], all of its subsidiaries and affiliates and any successor entities (the 'Entities'). It also includes all officers. directors, associates or agents of the Entities. This definition does not change the fact that your employer is the Company listed on your paycheck or earnings statement." (Ibid.)

The term "Associate" is defined to mean "an applicant for employment or an employee of the Company and anyone else who may assert a claim belonging to, or obtained on behalf of that person. A person remains an Associate for the purpose of [the MRPA] even if the person is not, or is no longer, employed by the Company." (Ibid.)

The MRPA provides that "Associates must bring any Covered Dispute ... they have in arbitration, rather than in Court." (Crawford Dec., exhibit A at pdf p. 8, section I.) The MRPA further states: "All Parties must bring any Covered Disputes, as defined in Section IV in arbitration...." (Crawford Dec., exhibit A at pdf p. 9, section III.)

The definition of "Covered Disputes" is set forth over two pages of the MRPA, and lengthy. (Crawford Dec., exhibit A at pp. 3-4.) Ostensibly relevant here based on the points advanced in the motion, "Covered Disputes" include "present or future claims between an Associate, the Company and the Entities that arise out of or relate in any way to the Associate's ... employment"; "[c]laims under any federal, state or local statute, regulation, wage order or ordinance" including the California Labor Code; "[u]nfair business practice claims"; "[c]laims for non-payment, incorrect payment or late payment of wages"; and "[c]laims alleging noncompliant or missed meal or rest breaks". (Memorandum at p. 4, ll. 5-9 & p. 6, l. 22-p. 7, l. 1; Crawford Dec., exhibit A at pdf pp. 10-11, section IV.)

The MRPA does not contain Plaintiff's signature. The motion asserts that Plaintiff agreed to the MRPA by electronically signing it, and that Plaintiff's electronic signature binds Plaintiff to the MRPA.

"Civil Code section 1633.9, subdivision (a), governs the authentication of electronic signatures." (Bannister, supra, 64 Cal.App.5th at p. 545.) The statute provides: "An electronic record or electronic 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 electronic signature was attributable." (Civ. Code, Sec. 1633.9, subd. (a).) Further, "[t]he effect of an electronic record or electronic 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, Sec. 1633.9, subd. (b).)

A party seeking to authenticate an electronic signature "may present evidence that the signatory was required to use a unique, private login and password to affix the electronic signature, along with evidence detailing the procedures the person had to follow to electronically sign the document and the accompanying security precautions." (Garcia, supra, 102 Cal.App.5th at p. 53.)

Crawford states that they were part of the team that implemented Workday. (Crawford Dec., P. 5.) As part of their job duties and responsibilities, Crawford oversees "Workday" which is the online onboarding system used to communicate with associates of SCI affiliates including the employees of Neptune, and by which those employees electronically sign documents during their onboarding process and employment. (Crawford Dec., P. 4.) Crawford is also a custodian of records for SCI Resources' HR department and the SCI affiliates, and states that they have personal knowledge of how the application tracking and onboarding systems of SCI affiliates operate, including how data or records in those systems are created, maintained, and electronically stored. (Crawford Dec., P.P. 5, 28.)

Crawford can access the business and personnel records of current and former employees and view, but not modify, the Workday history of all employees including Plaintiff. (Crawford Dec., P.P. 5-6.)

As to the records related to Plaintiff's employment, Crawford states those records were made at or near the time of the act, condition, or event recorded therein and kept in the regular course of the regular business and regularly conducted activities of SCI Resources and all other SCI affiliates. (Crawford Dec., P. 6.) Crawford asserts that, because Defendants are affiliates of SCI, Plaintiff is an associate who was required to complete the Workday onboarding process used by all SCI associates and associates of SCI affiliates. (Crawford Dec., P. 7.)

Based on Crawford's review of the personnel records of Plaintiff, Crawford states that Plaintiff's employment began on or about August 24, 2013, until his separation on or about January 17, 2025. (Crawford Dec., P. 8.) During Plaintiff's employment, the associates of SCI affiliates, including Plaintiff, were required to use the Workday system to review and electronically sign documents relating to their employment. (Crawford Dec., P. 9.)

Crawford explains that, upon an associate's first login to Workday, they are provided with company-issued credentials that includes a temporary password to access their account. (Crawford Dec., P. 10.) The system requires the associate to create a private password such that the associate cannot perform any further actions in Workday until they reset their password. (Crawford Dec., P. 11.) Once the employee resets the password, the password is known only to, and can only be reset by, that specific employee. (Crawford Dec., P. 11.)

If documents require an associate's review and signature in Workday, the associate is notified upon login into the system through an on-screen task or inbox notification directing them to complete the required action. (Crawford Dec., P. 12.) Workday directs the associate to review each onboarding document that must be electronically signed as part of the onboarding process. (Crawford Dec., P. 14.) After reviewing each document, the associate is prompted to electronically sign it by selecting an "I Agree" box, indicating that they have reviewed, acknowledged, and agreed to the terms of the document. (Ibid.)

Additionally, before an associate can acknowledge and electronically sign a document, Workday displays a screen explaining the effect of accepting and agreeing to the terms of the document. (Crawford Dec., P. 15.) Once the associate has reviewed and electronically signed each document, the associate is then prompted to submit the electronically signed document. (Crawford Dec., P. 16.) When the associate clicks "Submit" at the bottom of the screen, the agreement is finalized, and Workday records the associate's name as well as the date and time when the document was electronically signed. (Crawford Dec., P. 17.)

The "Timestamp" for each electronic signature reflects the time the associate submitted the document. (Crawford Dec., P. 18.)

Crawford further explains that, since an associate may review and submit multiple documents in a single Workday session, all documents submitted at the same time will share the same date and time. (Crawford Dec., P. 18.) This occurs when associates are presented with multiple separate documents to review and sign within Workday. (Ibid.) Crawford states that the MRPA and other documents were presented to Plaintiff as individual documents for Plaintiff to sign electronically in Workday. (Crawford Dec., P. 21.)

To electronically sign each document, including the MRPA, Plaintiff would have had to check a box stating "I Agree", indicating that Plaintiff had reviewed, acknowledged, and agreed to the MRPA. (Ibid.) Before Plaintiff could acknowledge and electronically sign the MRPA, a screen appeared informing Plaintiff of the effect of accepting and agreeing to the MRPA, which read: "By selecting the 'I Agree' button, you acknowledge and agree to the [MRPA]. You agree your electronic signature is the legal equivalent of your manual signature." (Ibid.)

Crawford further states that Workday records only those documents that an associate signs by logging into their account with their unique username and password; by manually selecting the "I Agree" box; and by submitting the documents through the Workday system. (Crawford Dec., P. 24.) If the associate signed into Workday but failed to digitally execute the MRPA, Workday records will not indicate the MRPA was executed. (Crawford Dec., P. 25.) Because the document-signing process in Workday required associates to use unique, private usernames and passwords, if Workday records show that an associate digitally executed the MRPA, this indicates that the associate logged into Workday with their personal credentials and clicked the button to agree to the MRPA. (Crawford Dec., P. 26.)

According to Crawford, only individuals with Plaintiff's unique username and password can access and make changes to the data in Plaintiff's Workday account. (Crawford Dec., P. 13.)

Using their read-only access privileges in Workday, Crawford generated a report detailing the documents which Plaintiff electronically signed using Workday, a copy of which is attached to the Crawford declaration. (Crawford Dec., P. 20 & exhibit B.) Crawford asserts that their review of Workday including the report described above, confirms that on May 30, 2019, at 4:51 p.m., while employed, Plaintiff accessed Workday using his unique username and private password to electronically sign the MRPA, which Plaintiff viewed, acknowledged, and signed. (Crawford Dec., P.P. 19-21, 23 & 27.) Once Plaintiff electronically signed the MRPA, an electronic record of his signature on the MRPA, including the time, were entered and stored and recorded in Plaintiff's electronic signature history in the Workday system. (Crawford Dec., P. 22.)

The motion is also supported by a declaration of Brian Pellegrin (Pellegrin) who has been employed by SCI Resources since 2019, as the Assistant VP of Information Technology for Cloud Applications Support (the IT Department). (Pellegrin Dec., P.P. 1, 3.) Pellegrin states that Shared Resources is indirectly owned by SCI and provides information technology or "IT" services to SCI affiliates including Defendants who use the same Workday onboarding process for each new associate. (Pellegrin Dec., P.P. 1, 2, 4.)

Pellegrin's job duties include providing support for SCI Resources' HR department in its services to Neptune and its associates. (Pellegrin Dec., P. 4.) Pellegrin works on and within the systems implemented for Neptune's associates to electronically review and sign employment related documents which were in place before 2019 and which Pellegrin has worked in and become familiar with. (Pellegrin Dec., P. 4.) Pellegrin also serves as the technical owner for systems relating to enterprise reporting, business intelligence records, and the HR Department for SCI Resources for Neptune associates. (Pellegrin Dec., P. 12.)

Pellegrin is among a limited group of associates who are custodians of records that have authority to access profile activity or audit logs on another employee's account. (Pellegrin Dec., P. 12.) As the IT systems owner and custodian, Pellegrin is sometimes asked to review records about an employee's access to Workday. (Pellegrin Dec., P. 14.) Because Pellegrin has been given proper security authority, Pellegrin can review another employee's Workday activity when the reason for such access and review is part of Pellegrin's job duties, which include supporting the HR department and legal counsel in obtaining information from Workday records maintained digitally by SCI Resources as to Neptune's associates. (Pellegrin Dec., P.P. 13-14.)

Pellegrin states that they were asked to conduct this level of access and review for this case. (Pellegrin Dec., P. 14.)

Pellegrin explains that each login to Workday uses "Single Sign On" to authenticate that the user logging into the system has been authenticated and trusted to be that associate using the unique username and unique password known only to that individual. (Pellegrin Dec., P. 9.) Single Sign On confirms an associate's identity by requiring the associate to complete a multi-factor authentication, such as entering a one-time verification code sent to a registered device (e.g., the associate's personal cell phone). (Pellegrin Dec., P. 10.)

The credentials and verification code are validated through SCI's shared centralized identity management system before access to Workday is granted. (Ibid.) If a Workday login is attempted, the login will not be completed if the employee does not verify their identity using Single Sign On. (Ibid.) Pellegrin further states that each login is tracked by Workday with an audit log which can be reviewed and exported, and that when a Neptune associate completes a task such as electronically signing a document, Workday creates and maintains a timestamped log of the activity conducted under that employee's username. (Pellegrin Dec., P. 11.)

The profile activity records that an associate has been tasked to review is part of a digitally created log and is unique to each associate. (Ibid.) According to Pellegrin, Workday's security settings do not permit an associate to change another associate's username or password or to revise another Workday user's documents or profile activity. (Pellegrin Dec., P. 13.)

By reviewing the files and databases described above, Pellegrin has determined that Plaintiff was assigned two unique work email addresses and a unique username as reflected in a Workday "screenshot" of Plaintiff's account information attached to the Pellegrin declaration. (Pellegrin Dec., P. 15 & exhibit A.) That screenshot is an example of what Plaintiff would see when logging into Workday. (Pellegrin Dec., P. 15.) Using Workday's internal audit controls and Pellegrin's unique username, Pellegrin reviewed Plaintiff's access to the system to determine the dates he logged into Workday and electronically signed employment documents related to his employment with Neptune. (Pellegrin Dec., P. 16.)

Pellegrin states that during a 15 minute session when Plaintiff signed into and accessed Workday on May 30, 2019, using his unique username and password and a desktop computer issued solely to Plaintiff, Plaintiff submitted his electronic signature to, and electronically signed, the Associate Handbook; the California Additional Policies; and the MRPA. (Pellegrin Dec., P.P. 17-19.) Pellegrin asserts that this information is reflected in the screenshot attached to the Pellegrin declaration and described above, which Pellegrin asserts accurately shows what Workday logged of Plaintiff s activity including the dates Plaintiff accessed Workday using his unique username and submitted his electronic signature to the documents listed above. (Pellegrin Dec., P. 19.)

Using Workday's internal audit controls and Pellegrin's unique username, Pellegrin generated a report showing all of Plaintiff's login activity, an excerpt of which is attached to the Pellegrin declaration. (Pellegrin Dec., P. 20 & exhibit B.) Pellegrin asserts that, like the screenshot described above, that report confirms that Plaintiff signed into Workday on May 30, 2019, at 4:50:27 p.m. and ended the session at 5:06:03 p.m. (Ibid.) Pellegrin also submits a copy of a report generated from Workday showing Plaintiffs electronic signature history which, according to Pellegrin, also confirm that Plaintiff electronically signed the MRPA on May 30, 2019. (Pellegrin Dec., P. 21 & exhibit C.)

Pellegrin further states that when Plaintiff logged into his session at 4:50:27 p.m., he was prompted to open each of the three documents described above individually, and that after reviewing each document, Plaintiff was prompted to electronically sign them. (Pellegrin Dec., P. 23.) Upon completion of his session, all of Plaintiff's electronic signatures were submitted simultaneously, with the recorded submission time reflecting the official time of signing. (Ibid.)

The information and evidence presented in the motion as further detailed above shows that the "Covered Disputes" described in the MRPA include the type of claims and causes of action alleged in the complaint filed by Plaintiff in this action, each of which, on their face, arise out of Plaintiff's employment. The information and evidence also shows that Plaintiff was required to use a unique, private login and password to affix their electronic signature on the MRPA. Crawford and Pellegrin have also sufficiently detailed the procedures Plaintiff had to follow to electronically sign the MRPA, and the security precautions which accompany those procedures.

For all reasons discussed above, the Court finds that the motion is sufficient to meet the requirements of Evidence Code section 1271 in regard to the electronic viewing and signing of the MRPA by Plaintiff; and to explain "how [Plaintiff's] electronic signature ... came to be placed on the [MRPA]" and was the act of Plaintiff. (Ruiz v. Moss Bros. Auto Group, Inc. (2014) 232 Cal.App.4th 836, 844-845 (Ruiz); Jones v. Solgen Construction, LLC (2024) 99 Cal.App.5th 1178, 1190; Evid. Code, Sec. 1401; Civ.

Code, Sec. 1633.9, subd. (a).) For these reasons, Defendants have met their initial prima facie burden of producing evidence of a written agreement to arbitrate the present controversy.

In their opposition to the motion, Plaintiff contends that Defendants have failed to prove mutual assent to the MRPA because the declarations described above show only that three separate documents were reviewed and then batch-submitted together at the end of a single Workday session, and because Defendants rely on generalized descriptions of Single Sign-On rather than a transaction-level audit trail tying the display of the MRPA to Plaintiff's affirmative, informed acceptance of that specific document as distinct from the handbook and the policies acknowledged in the same sitting.

Plaintiff does not present information or evidence to challenge the existence of the MRPA, or the authenticity of Plaintiff's electronic signature on the MRPA. (Ramirez v. Golden Queen Mining Co., LLC (2024) 102 Cal.App.5th 821, 832 [a Plaintiff must "present admissible evidence to support the existence" of any factual dispute identified by that Plaintiff].) For example, Plaintiff does not assert that they did not sign or do not recall signing the MRPA; that they never received copies of the MRPA; or that had they been presented with an arbitration agreement they would not have signed it. (Opp. at p. 4, ll. 12-24; cf.

Ruiz, supra, 232 Cal.App.4th at pp. 845-846 [general discussion].)

Instead, the opposition of Plaintiff is largely directed to whether the MRPA is unconscionable; whether the question of unconscionability must be decided by the Court or by the arbitrator; or whether any non-signatories may enforce the MRPA. It also not appear to the Court that Defendants seek to delegate the question of whether the MRPA is unconscionable pursuant to any delegation clause in that agreement a Plaintiff contends. Further, the complaint expressly alleges that Defendants are the co-employers of Plaintiff. (Complaint, P.P. 5-7.)

Apart from generally asserting that Defendants have not identified which entity employed Plaintiff or established a recognized basis for non-signatory enforcement by the remaining entities, the opposition presents no information or evidence to show why Defendants are not Plaintiff's "employer, as shown on [Plaintiff's] paycheck or earnings statement" for purposes of the MRPA. (See Thomas v. Westlake (2012) 204 Cal.App.4th 605, 614 [discussing exception to general rule that a nonsignatory may not enforce an agreement to arbitrate].)

In addition, though the opposition of Plaintiff asserts that representative claims under the Labor Code Private Attorneys General Act of 2004 or PAGA, codified as Labor Code section 2698 et seq.; that claims for "temporary, preliminary or interim injunctive relief", and that any challenges to any class or representative waivers remain before this Court, Plaintiff fails to explain why those claims or causes of action are at issue in these proceedings. The opposition also presents no reasoned factual or legal argument showing why the claims or causes of action asserted in the complaint do not fall within the definition of "Covered Disputes" set forth in the MRPA.

Under the totality of the circumstances present here, and for all reasons discussed above, Defendants have met their burden to show that electronic signature of Plaintiff on the MRPA was authentic and the act of Plaintiff, and that the MRPA requires arbitration of the controversies alleged in the complaint.

The motion further asserts that the FAA governs the MRPA. Pursuant to the MRPA, "[t]he Parties agree that the [FAA] governs the interpretation, enforcement and all proceedings pursuant to this Agreement and the Associate's relationship with the Company and/or the Entities." (Crawford Dec., exhibit A at pdf p. 9.) The parties to an agreement to arbitrate "may ... voluntarily elect to have the FAA govern enforcement of the Agreement...." (Victrola 89, LLC v. Jaman Properties 8 LLC (2020) 46 Cal.App.5th 337, 355.)

The FAA also "provides for the enforcement of arbitration provisions in any contract evidencing a transaction involving interstate commerce." (Mount Diablo Medical Center v. Health Net of California, Inc. (2002) 101 Cal.App.4th 711, 717.) "[I]f a contract involves interstate commerce, the FAA's substantive provision [citation] applies to the arbitration. But the FAA's procedural provisions [citation] do not apply unless the contract contains a choice-of-law clause expressly incorporating them." (Valencia v.

Smyth (2010) 185 Cal.App.4th 153, 173-174 (Valencia), original italics.) Apart from arguing that the FAA does not preempt an unconscionability finding, the opposition of Plaintiff does not dispute, and appears to concede, that the FAA governs enforcement of the MRPA. (Opp. at p. 13, ll. 17-19 [asserting that "[e]nforcing the MRPA's own choice of the FAA therefore changes nothing"].) For these and all further reasons discussed above, the present record is sufficient to show that the parties expressly agreed the FAA would govern the MRPA. (Valencia, supra, 185 Cal.App.4th at pp. 173-174.)

Relevant here, the FAA provides that "an agreement in writing to submit to arbitration an existing controversy ... shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract ...." (9 U.S.C. Sec. 2.) " '[G]enerally applicable contract defenses, such as ... unconscionability, may be applied to invalidate arbitration agreements without contravening' the FAA. [Citations.]" (Pinnacle Museum Tower Assn. v. Pinnacle Market Development (US), LLC (2012) 55 Cal.4th 223, 246.)

Noted above, Plaintiff asserts in their opposition that the MRPA is unconscionable. "Unconscionability can take different forms depending on the circumstances and terms at issue. However, the doctrine's application to arbitration agreements must rely on the same principles that govern all contracts. [Citation.] The degree of unfairness required for unconscionability must be as rigorous and demanding for arbitration clauses as for any other contract clause. "The general principles of unconscionability are well established.

A contract is unconscionable if one of the parties lacked a meaningful choice in deciding whether to agree and the contract contains terms that are unreasonably favorable to the other party. [Citation.] Under this standard, the unconscionability doctrine ' "has both a procedural and a substantive element." ' [Citation.] 'The procedural element addresses the circumstances of contract negotiation and formation, focusing on oppression or surprise due to unequal bargaining power. [Citations.] Substantive unconscionability pertains to the fairness of an agreement's actual terms and to assessments of whether they are overly harsh or one-sided.' [Citation.] "Both procedural and substantive unconscionability must be shown for the defense to be established, but 'they need not be present in the same degree.' [Citation.]

Instead, they are evaluated on ' "a sliding scale." [Citation.]' '[T]he more substantively oppressive the contract term, the less evidence of procedural unconscionability is required to' conclude that the term is unenforceable. [Citation.] Conversely, the more deceptive or coercive the bargaining tactics employed, the less substantive unfairness is required. [Citations.] A contract's substantive fairness 'must be considered in light of any procedural unconscionability' in its making. [Citation.] 'The ultimate issue in every case is whether the terms of the contract are sufficiently unfair, in view of all relevant circumstances, that a Court should withhold enforcement.' [Citation.] "The burden of proving unconscionability rests upon the party asserting it." (OTO, L.L.C. v.

Kho (2019) 8 Cal.5th 111, 125-126 (OTO).)

Plaintiff contends that that the MRPA is a procedurally unconscionable contract of adhesion because the agreement was compelled by the beginning or continuing of employment without an opportunity to opt-out and presented as one of several documents in a rapid Workday onboarding session where three documents were signed and batch-submitted together in a single sitting; and because relevant rules were not furnished to Plaintiff or buried. "A procedural unconscionability analysis 'begins with an inquiry into whether the contract is one of adhesion.' [Citation.]" (OTO, supra, 8 Cal.5th at p. 126; see also Little v.

Auto Stiegler, Inc. (2003) 29 Cal.4th 1064, 1071 [procedural unconscionability "generally takes the form of a contract of adhesion"].) In the employment context, a contract of adhesion is one that is "imposed on employees as a condition of employment [with] no opportunity to negotiate." (Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83, 114-115 (Armendariz).)

Though Defendants assert in their reply that Plaintiff presents no evidence to show that he tried or was given no opportunity to negotiate the MRPA; that Plaintiff requested more time to review the MRPA or sought assistance in understanding its terms; or that Plaintiff expressed concerns about the MRPA, Defendants offer no information or evidence to show whether the MRPA was imposed as a condition of Plaintiff's employment, or whether employees were offered any meaningful opportunity to negotiate or opt out of its provisions. (OTO, supra, 8 Cal.5th at p. 126 [arbitration contracts "imposed as a condition of employment are typically adhesive"]; Armendariz, supra, 24 Cal.4th at p. 115 ["the arbitration agreement stands between the employee and necessary employment"].)

For all reasons discussed above, the MRPA contains the hallmarks of an adhesion contract which relegated to Plaintiff "only the opportunity to adhere to the contract or reject it." (Neal v. State Farm Ins. Companies (1961) 188 Cal.App.2d 690, 694; accord, Armendariz, supra, 24 Cal.4th at p. 113.)

"By itself, however, adhesion establishes only a 'low' degree of procedural unconscionability. [Citation.]" (Davis v. Kozak (2020) 53 Cal.App.5th 897, 907, disapproved on another ground in Ramirez v. Charter Communications, Inc. (2024) 16 Cal.5th 478, 505-506 (Ramirez).) In the employment context, if there exist no other indication of oppression or surprise, the agreement will be enforceable unless the degree of substantive unconscionability is high. (Serpa v. Cal. Sur. Investigations, Inc. (2013) 215 Cal.App.4th 694, 704.)

Plaintiff's opposition further asserts that the MRPA is substantively unconscionable because it shortens the limitations period to one year from discovery and bars any later filed claim; makes all aspects of the arbitration process and any award confidential; requires an employee to pay an initial case management fee while Defendants pay nothing extra when they initiate arbitration; deletes certain arbitration rules; and contains a "poison pill" reinstatement clause that provides for any stricken term to be reinstated retroactively. (Opp. at pp. 7-9.)

Relevant here, the MRPA contains the following provision: "The Parties have one (1) year from the date they knew or should have known of the Covered Dispute to provide the written Demand required by Section VI. Covered Disputes not initiated in that time period are barred." (Crawford Dec., exhibit A at p. 8, section E, capitalization and punctuation unchanged.) In their reply, Defendants argue that they "will not be contesting or seeking to shorten any statute pertaining to any of the claims asserted in the Complaint", and that even if the shortened limitations period provided in the MRPA is unconscionable, the following provision demonstrates that the provision at issue can be severed from the MRPA: "If the above paragraph is determined to be unenforceable, then the time period is the expiration of the statute of limitations (deadline for filing) that the law prescribes for the claim." (Reply at p. 7, ll. 12-13; Crawford Dec., exhibit A at p. 8, section E.)

Defendants fail to explain why the passing, unverified statement offered in the memorandum in support of the motion, in which Defendants state that they will not enforce the limitations period contained in the MRPA, is effective to conform that agreement to law as of the moment it was entered into by Plaintiff and Defendants. (Martinez v. Master Protection Corp. (2004) 118 Cal.App.4th 107, 115-117 (Martinez).) Furthermore, considering the statutes of limitations which generally apply to the claims asserted in Plaintiff's complaint, the present record is sufficient to show that the provisions of the MRPA "undermine statutory protections ...." (Samaniego v.

Empire Today LLC (2012) 205 Cal.App.4th 1138, 1147; see also Martinez, supra, 118 Cal.App.4th at p. 117 [noting that "the Labor Code, which provides the bases for [Plaintiff's] causes of action for unpaid wages and penalties, affords an employee three or four years to assert the claims sued upon"].) For these and all further reasons discussed above, the one year limitations period contained in the MRPA "render[s] it substantively unconscionable." (Ramirez, supra, 16 Cal.5th at p. 502.)

The MRPA also provides that the arbitration proceedings, "including any award made, shall be confidential, except to the extent that disclosure is required by law or applicable professional standards, or necessary in a later proceeding between the Parties." (Crawford Dec., exhibit A at pdf p. 14, section VIII(A).) The MRPA further states that the confidentiality provision "shall not prevent either party from seeking witnesses to participate in the Arbitration proceeding. Parties can only disclose information from the arbitration (including pleadings, documents obtained, testimony, proceedings, or the award) upon permission from the arbitrator, upon written permission by the other party, or as the law may require." (Ibid.)

"[A] confidentiality provision in an arbitration agreement is not per se unconscionable when it is based on a legitimate commercial need (such as to protect trade secrets or proprietary information)." (Hasty v. American Automobile Assn. etc. (2023) 98 Cal.App.5th 1041, 1061-1062, original italics.) The reply of Defendants does not identify any commercial need for the arbitration proceedings required by the MRPA to remain confidential. (Cf. Baltazar v. Forever 21, Inc. (2016) 62 Cal.4th 1237, 1250 [noting that the "basis for the extra measure of protection" was a need to protect "'valuable trade secrets and proprietary and confidential information'"].)

Instead, Defendants assert in their reply that the confidentiality provision described above does not prevent the discovery of evidence; does not bar Plaintiff from conducting informal discovery; and does not prevent the publication of arbitration awards provided the parties agree or obtain the arbitrator's permission. (Reply at pp. 7-9.) For these reasons, Defendants argue, the confidentiality provision does not render the MRPA substantively unconscionable.

The Court is not persuaded by the points advanced by Defendants in regard to the effect of the confidentiality provision described above which, on its face, "serves no purpose other than to benefit" Defendants. (Murrey v. Superior Court (2023) 87 Cal.App.5th 1223, 1255 (Murrey).) For example, the provision effectively prevents future employees from "tak[ing] advantage of findings in past arbitrations", such as to show or prove any relevant patterns of conduct by Defendants. (Ibid.) "In addition, 'keeping past findings secret undermines an employee's confidence in the fairness and honesty of the arbitration process and thus potentially discourages that employee from pursuing a valid ... claim.' [Citation.]" (Ibid.)

Furthermore, to the extent the MRPA requires Plaintiff to keep all aspects of the arbitration proceedings confidential, and notwithstanding whether the MRPA permits Plaintiff to seek the identity of witnesses, Defendants fail to explain why Plaintiff would not be in violation of the MRPA should Plaintiff attempt to informally contact or interview any witnesses outside the formal discovery process, or why Plaintiff's costs would not be unnecessarily increased as a result of the confidentiality provision thus "defeat[ing] the purpose of using arbitration as a simpler, more time-effective forum for resolving disputes." (Ramos v.

Superior Court (2018) 28 Cal.App.5th 1042, 1066 (Ramos).) "The notion that Courts should condone requirements keeping the outcome of forced arbitration proceedings confidential is out of step with federal and sister state case authority." (Murrey, supra, 87 Cal.App.5th at p. 1254.) For these and all further reasons discussed above, the Court finds that the confidentiality provision contained in the MRPA and described above adds to that agreement's substantive unconscionability.

Also relevant here, the arbitration of workplace rights pursuant to a mandatory employment arbitration agreement "is lawful if it '(1) provides for neutral arbitrators, (2) provides for more than minimal discovery, (3) requires a written award, (4) provides for all of the types of relief that would otherwise be available in Court, and (5) does not require employees to pay either unreasonable costs or any arbitrators' fees or expenses as a condition of access to the arbitration forum. Thus, an employee who is made to use arbitration as a condition of employment "effectively may vindicate [his or her] statutory cause of action in the arbitral forum." ' [Citation.]" (Armendariz, supra, 24 Cal.4th at p. 102.)

In circumstances where an employee demands arbitration, the MRPA requires that employee "to pay the equivalent of an initial Case Management Fee charge of JAMS." (Crawford Dec., exhibit A at pdf pp. 13-14, section VII.) For reasons further discussed above, a mandatory employment arbitration agreement may not require an employee to pay any arbitrator fees or expenses as a condition of access to the required arbitration forum. Furthermore, the motion presents no information or evidence to show the amount of that fee as of the time the parties entered into the MRPA. "[W]hen an employer imposes mandatory arbitration as a condition of employment, the arbitration agreement or arbitration process cannot generally require the employee to bear any type of expense that the employee would not be required to bear if he or she were free to bring the action in Court." (Armendariz, supra, 24 Cal.4th at pp. 110-111.)

Because the MRPA requires the employees of Defendants to pay an undisclosed amount of arbitrator fees as a condition of access to the arbitration forum upon a demand by that employee for arbitration of any Covered Disputes, and absent any reasoned argument showing why an employee would be required to bear that expense if they were free to bring the action in Court, the MRPA bears the indicia of substantive unconscionability.

"In sum, the [MRPA] as applied to [Plaintiff's] claims contains [three] unconscionable terms." (Ramos, supra, 28 Cal.App.5th at pp. 1068-1069.) As further discussed above, those terms require that Plaintiff demand arbitration of any Covered Disputes within a limitations period that is far shorter than the general statutes of limitations applicable to Plaintiff's claims; that Plaintiff pay an undisclosed amount arbitrators' fees or expenses as a condition of access to the required arbitration forum; and that the arbitration proceedings remain confidential. Thos provisions, for all reasons discussed above, inhibit Plaintiff's ability to pursue their statutory claims.

Defendants contend that the Court can sever an unconscionable terms contained in the MRPA. "There is no magic number of unconscionable provisions that will preclude a Court from deeming the entire agreement unenforceable. 'If the central purpose of the contract is tainted with illegality, then the contract as a whole cannot be enforced. If the illegality is collateral to the main purpose of the contract, and the illegal provision can be extirpated from the contract by means of severance or restriction, then such severance and restriction are appropriate.' [Citation.]" (Murrey, supra, 87 Cal.App.5th at pp. 1255-1256.)

"In this case, two factors weigh against severance of the unlawful provisions. First, the arbitration agreement contains more one unlawful provision .... Such multiple defects indicate a systematic effort to impose arbitration on an employee not simply as an alternative to litigation, but as an inferior forum that works to the employer's advantage." (Armendariz, supra, 24 Cal.4th at p. 124.) "Second, ... there is no single provision [the] Court can strike or restrict in order to remove the unconscionable taint from the [MRPA].

Rather, the Court would have to, in effect, reform the contract, not through severance or restriction, but by augmenting it with additional terms. Civil Code section 1670.5 does not authorize such reformation by augmentation, nor does the arbitration statute. Code of Civil Procedure section 1281.2 authorizes the Court to refuse arbitration if grounds for revocation exist, not to reform the agreement to make it lawful. Nor do Courts have any such power under their inherent, limited authority to reform contracts." (Armendariz, supra, 24 Cal.4th at pp. 124-125.)

Considering the multiple procedural and substantively unconscionable provisions of the MRPA together, and for all reasons discussed above, the Court finds that the MRPA is "permeated by an unlawful purpose." (Armendariz, supra, 24 Cal.4th at pp. 124, 126.) As the substantively unconscionable provisions cannot be cured by the mere striking or limiting the applicability of its unenforceable provisions, the Court would be required to reform the MRPA by augmenting it with terms that conform to law (such as by, among other things, adding terms that permit employees to demand arbitration of Covered Disputes within an appropriate or lawful time period). For these and all further reasons discussed above, the Court will deny the motion.

Tentative Ruling: Anthony Ornano v. Coastal Dispensary, LLC Tentative Ruling: Anthony Ornano v. Coastal Dispensary, LLC Case Number 26CV02042 Case Type Civil Law & Motion Hearing Date / Time Wed, 09/02/2026 - 10:00 Nature of Proceedings