Louis Richard Ruiz v. Mission Linen Supply

TENTATIVE RULING FOR SEPTEMBER 4, 2026 Department R17 - Judge Kory Mathewson Louis Richard Ruiz v. Mission Linen Supply – CIVRS2506751 Motion(s): (1) Motion to Compel Arbitration and Stay Proceedings (2) Demurrer / Stay PAGA claims Movant(s): Defendant Mission Linen Supply Respondent(s): Plaintiff Louis Richard Ruiz, individually and on behalf of all others similarly situated Ruling: (1) Motion to Compel Arbitration (of Plaintiff’s individual claim) is GRANTED; Plaintiff’s representative PAGA claims are STAYED. Status of Arbitration hearing is set for: March 9, 2027, 9AM, R17. (2) Demurrer is MOOT. DEFENDANT to provide Order and give notice. ______________________________________________________________________________

(1) MOTION TO COMPEL ARBITRATION AND STAY

Plaintiff’s Request for Judicial Notice Plaintiff’s request for judicial notice is denied as unnecessary and not relevant as (1) the ruling made in in the Superior Court in the County of Santa Barbara has no bearing on the Court’s ruling on this motion; and (2) a First Amended Complaint was filed by Azucena Gallegos Perez against Defendant on December 23, 2024, in the Superior Court in the County of Santa Barbara thereby superseding and making the initial Complaint irrelevant.

FAA Applies The Agreement includes language stating that it “is an arbitration agreement governed by the Federal Arbitration Act, 9 U.S.C. sections 1 et seq., and evidences a transaction involving commerce.” (Champagne Decl. ¶ 3, Exh. A at p. 1.) The Agreement further provides that “Mission Linen reserves the right to lawfully seek enforcement of this Agreement ... under the Federal Arbitration Act...” (Champagne Decl. ¶ 3, Exh. A at p. 3.)

Defendant has made a sufficient showing that the parties expressly agreed that the procedural provisions of the FAA would govern the Agreement. (Valencia, supra, 185 Cal.App.4th at pp. 173-174.) Based on the language in the Agreement, the FAA applies. (Cronus Investments, Inc. v. Concierge Services (2005) 35 Cal.4th 376, 394; Davis v. Shiekh Shoes, LLC (2022) 84 Cal.App.5th 956, 964.)

Enforceable Arbitration Provision A contract is formed when there are parties capable of contracting who consent to a lawful objective and there is a sufficient cause or consideration. (Civ. Code, § 1550.) For arbitration agreements, an agreement only needs to be found to exist, not an evidentiary determination of its validity. (Condee v. Longwood Management Corp. (2001) 88 Cal.App.4th 215, 218-219.) The defendant providing an executed copy of the arbitration agreement satisfies the initial burden. (Espejo v. Southern California Permanente Medical Group (2016) 246 Cal.App.4th 1047, 1058-1060 (Espejo).) The burden then shifts to the plaintiff to dispute the signature. (Id. at p. 1059; Ruiz v. Moss Bros. Auto Group, Inc. (2014) 232 Cal.App.4th 836, 846 (Ruiz).) If the plaintiff disputes the signature, then the defendant bears the burden of

authenticating the signature on the agreement, i.e., the signature is the act of the plaintiff. (Espejo, supra, 246 Cal.App.4th at p. 1060; Ruiz, supra, 232 Cal.App.4th at p. 846.) Defendant presents the Dispute Resolution Agreement (Agreement) that Plaintiff executed on May 9, 2018. (Champagne Decl. ¶ 3, Exh. A.) Plaintiff offers no challenge to his signature on the Agreement or that the Agreement does not cover the causes of actions alleges in his FAC.

The Agreement also contains class action and PAGA waivers, which provide in part: Class Action Waiver. There will be no right or authority under this Agreement for any dispute to be brought, heard, or arbitrated as a class or collective action (“Class Action Waiver”). Notwithstanding any other clause contained in this Agreement, this Paragraph is not severable from this Agreement in any case in which the dispute to be arbitrated is brought as a class or collective action.

PAGA Representative Action Waiver. There will be no right or authority for any dispute to be brought, heard, or arbitrated as a representative action under the California Private Attorney General Act (“PAGA Representative Action Waiver”). (Champagne Decl., Exh. A ¶ 7-8.)

With respect to severability, the Agreement states: Except as provided in paragraph 7, above [“Class Action Waiver”], in the event any portion of this Agreement is deemed unenforceable, the remainder of this Agreement shall be enforceable. If Paragraph 7 [“Class Action Waiver”] or 8 [“PAGA Representative Actions”] is deemed to be unenforceable, Mission Linen and I agree that this Agreement is otherwise silent as to any party’s ability to bring a class, collective, or representative action in arbitration. (Champagne Decl., Exh. A ¶ 9.)

Plaintiff offers no evidence that he did not sign the agreement or that the agreement does not cover the causes of actions alleges in his FAC.

PAGA is split between individual Plaintiff claim subject to arbitration and non-individual claims that subject to litigation. Class arbitration is permissible but only when “there is a contractual basis for concluding that the party agreed to do so.” (Stolt-Nielsen S.A. v. Animal Feeds International Corp. (2010) 559 U.S. 662, 684; Nelson v. Legacy Partners Residential, Inc. (2012) 207 Cal.App.4th 1115, 1128.) Furthermore, in arbitration agreements governed by the FAA, class waivers are enforceable. (Epic Systems Corp. v. Lewis (2018) 138 S. Ct. 1612, 1616.) When an arbitration agreement does not authorize class arbitration of disputes, case law provides for dismissal without prejudice of the class claims. (Id.; Kinecta Alternative Financial Solutions, Inc. v. Superior Court (2012) 205 Cal.App.4th 506, 510-11.) Here, the parties have expressly waived class action arbitrations.

Additionally, the FAA recognizes that PAGA may be divided into an arbitrable individual-representative action, i.e., the Plaintiff’s claim as representative of the state, and the non-arbitrable aggrieved employees’ representative claim. (Viking River Cruises, Inc. v. Moriana

(2022) 596 U.S. 639, 659-62; Adolph v. Uber Technologies (2023) 14 Cal.5th 1104, 1121, 1123 [Adolph].) While Plaintiff’s individual PAGA portion is arbitrated, the aggrieved employees’ PAGA portion is stayed. (Adolph, supra, 14 Cal.5th at pp. 1123-24.)

Procedural Unconscionability Procedural unconscionability concerns the manner in which the contract was negotiated and the party's circumstances at the time of negotiation. (Kinney v. United HealthCare Services (1999) 70 Cal.App.4th 1322, 1329.) “[I]n the case of preemployment arbitration contracts, the economic pressure exerted by employers on all but the most sought-after employees may be particularly acute, for the arbitration agreement stands between the employee and necessary employment, and few employees are in a position to refuse a job because of an arbitration requirement.” (Armendariz, supra, 24 Cal.4th at p. 115.) “Procedural unconscionability focuses on ‘oppression’ or ‘surprise’ due to unequal bargaining power. ‘Oppression arises from an inequality of bargaining power that results in no real negotiation and an absence of meaningful choice.’” (Baxter v.

Genworth North America Corp. (2017) 16 Cal.App.5th 713, 722.)

“When the weaker party is presented the clause and told to ‘take it or leave it’ without the opportunity for meaningful negotiation, oppression, and therefore procedural unconscionability, are present.” (Szetela v. Discovery Bank (2002) 97 Cal.App.4th 1094, 1100; Martinez v. Master Protection Corp. (2004) 118 Cal.App.4th 107, 114.) “[T]he adhesive nature of the contract is sufficient to establish some degree of procedural unconscionability.” (Sanchez v. Valencia Holding Co., LLC (2015) 61 Cal.4th 899, 915.) Courts have found that this element is automatically satisfied if the agreement constitutes a contract of adhesion. (Nyulassy v. Lockheed Martin Corp. (2004) 120 Cal.App.4th 1267, 1280-1281.)

Plaintiff contends that the Agreement was a “surprise” because it was buried in a stack of documents. However Plaintiff fails to explain why that made the Agreement inconspicuous. For example, the Agreement includes on its first page a separate heading identifying that document as a “Dispute Resolution Agreement”. (Champagne Decl. ¶ 3, Exh. A.) The Agreement consists of 3 separately numbered pages, and its material terms are set forth in separately numbered and labeled paragraphs with readable text.

The separately numbered paragraphs are also not themselves unreadable, complex, or replete with statutory references or legal jargon. (Cf. OTO, supra, 8 Cal.5th at p. 128 [finding that the agreement contained complex sentences with legal jargon written in “extremely small font”].) Further, based on a review of the Agreement, it is not “unreasonably prolix or complex.” (Davis v. Kozak (2020) 53 Cal.App.5th 897, 907.) For all these reasons, the Agreement is not procedurally unconscionable based on oppression or surprise in its formation.

Notwithstanding that Plaintiff has failed to show why the Agreement was a “surprise,” the present record is sufficient to show that Plaintiff could not opt out of the Agreement. For example, the first line of the Agreement states: “In consideration of my employment by [Mission Linen] and the mutual covenants in this Agreement, Mission Linen and I agree that this [Agreement] will apply to all covered legal claims between Mission Linen and me.” (Champagne Decl., ¶ 3, Exh. A at p. 1.) Defendant also fails to explain why the Agreement authorizes an employee of Mission Linen to opt out of its provisions.

For these reasons, and as the parties do not and cannot reasonably dispute that the Agreement requires a signatory employee to arbitrate the claims or disputes described in that document as a condition of employment with Defendant, the present record is sufficient to show that the Agreement is a contract of adhesion. In the employment context present here, the adhesive nature of the Agreement presented as a condition of Plaintiff’s employment, alone, is sufficient to establish a “modest degree of procedural unconscionability.” (Carbajal v. CWPSC, Inc. (2016) 245 Cal.App.4th 227, 243 (Carbajal).)

The available evidence and information also suggests that Plaintiff was never informed that he could negotiate the adhesive terms of the Agreement or opt out of arbitration, and that Plaintiff is not a “sophisticated business person.” (Carbajal, supra, 245 Cal.App.4th at pp. 245, 246 [noting that procedural unconscionability may not exist to the arbitration agreement was negotiable and the employee was sophisticated].)

For these reasons the Court finds that there is a moderate level of procedural unconscionability based on the adhesive nature of the Agreement, Plaintiff’s lack of business sophistication, and the ostensible inability of Plaintiff to negotiate or opt out of its terms.

Substantive Unconscionability “Substantive unconscionability pertains to the fairness of an agreement’s actual terms and to assessments of whether they are overly harsh or one-sided.” (Pinnacle Museum Tower Assn. v. Pinnacle Market Development (US), LLC (2012)55 Cal.4th 223, 246 (Pinnacle).) A substantive unconscionability analysis “‘ensures that contracts, particularly contracts of adhesion, do not impose terms that have been variously described as”” ‘“overly harsh”’”, “‘unduly oppressive’” “‘so one-sided as to “shock the conscience”’”, or ‘unfairly one-sided”.

All of these formulations point to the central idea that the unconscionability doctrine is concerned not with “a simple oldfashioned bad bargain”, but with terms that are “unreasonably favorable to the more powerful party.”’” (OTO, supra, 8 Cal.5th at pp. 129-130; Pinnacle, supra, 55 Cal.4th at p. 246 [“[a] contract term is not substantively unconscionable when it merely gives one side a greater benefit”].)

Plaintiff contends that the Agreement is substantively unconscionable because it includes contradictory material clauses which are not clear and unmistakable, and which forbid Plaintiff from participating in a class or representative action.

Noted above, the Agreement is governed by the FAA. Thus, any waiver of Plaintiff’s right to bring a class action appearing in the Agreement is valid and enforceable. (Iskanian v. CLS Transportation Los Angeles, LLC (2014) 59 Cal.4th 348, 364 (Iskanian), overruled on another ground in Quach v. California Commerce Club, Inc. (2024) 16 Cal.5th 562, 582-583; Securitas Security Services USA, Inc. v. Superior Court (2015) 234 Cal.App.4th 1109, 1123 (Securitas) [employee’s wavier of right to bring class action claims was valid and enforceable under the FAA]; Marenco v.

DirecTV LLC (2015) 233 Cal.App.4th 1409, 1420-1421 [rule established by case law that “that certain class action waivers in employment arbitration agreements are invalid under state law -- is preempted by the FAA”].) The Court finds that the Agreement is not substantively unconscionable based on any class action waiver appearing in its provisions.

The Agreement also includes the following provision: There will be no right or authority for any dispute to be brought, heard, or arbitrated as a representative action under the California Private Attorney General Act (“PAGA Representative Action Waiver”)”. (Champagne Decl. ¶ 3, Exh. A at p. 2, ¶ 8.)

“[A] predispute categorical waiver of the right to bring a PAGA action is unenforceable.” (Adolph v. Uber Technologies, Inc. (2023) 14 Cal.5th 1104, 1117 (Adolph); Iskanian, supra, 59 Cal.4th at p. 360 [“the FAA does not preempt a state law that prohibits waiver of PAGA representative actions in an employment contract”].)

It is unclear on what basis Defendant contends that the “PAGA Representative Action Waiver” (the PAGA Waiver) “entirely lawful.” Nevertheless, Defendant asserts that to the extent it is unenforceable, it is severable from the Agreement. Plaintiff simply argues that the PAGA Waiver is not separable from the Agreement.

The question of whether the Agreement prohibits or permits severance of the PAGA Waiver “is one of contract interpretation” which constitutes “an issue of law....” (Securitas, supra, 234 Cal.App.4th at p. 1125.)

The Agreement expressly provides that the PAGA Waiver “shall be severable from this Agreement in any case in which (1) the dispute is filed as a PAGA representative action; and (2) a court of competent jurisdiction finds this PAGA Representative Action Waiver is unenforceable. In such instances, the PAGA representative action must be litigated in a court of competent jurisdiction.” (Champagne Decl. ¶ 3, Exh. A at p. 2, ¶ 8.) The Agreement further states that, if the PAGA Waiver “is deemed to be unenforceable, Mission Linen and [Plaintiff] agree that this Agreement is otherwise silent as to any party’s ability to bring a class, collective, or representative action in arbitration.” (Champagne Decl. ¶ 3, Exh. A at pp. 2-3, ¶ 9.)

Though Plaintiff asserts that the Agreement includes non-severable provisions requiring Plaintiff to give up his right to bring a representative action under PAGA, considering the clear and explicit meaning of the express language of the provisions set forth above, the Agreement reflects that the parties intended that, to the extent a dispute is filed as a PAGA representative action and the court determines that the PAGA Waiver is unenforceable, the PAGA Waiver is severable from the remainder of the Agreement.

Here, the Court finds the PAGA waiver is severable as Plaintiff fails to show why the Agreement may not be cured by its removal, nor why the interests of justice would not be served by enforcing the balance of the Agreement by requiring Plaintiff to submit his individual PAGA claims to arbitration and allowing Plaintiff to maintain his non-individual or representative claims in court. (Adolph, supra, 14 Cal.5th at p. 1123.) Accordingly, the PAGA Waiver does not render the Agreement substantively unconscionable.

““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.” 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.” In other words, the 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.” (Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83, 114, citations omitted.)

Plaintiff fails to show the agreement was substantively unconscionable or to a degree whereby severance could not cure any issues. Therefore, the Agreement is not unconscionable and arbitration is compelled. Plaintiff’s representative PAGA claims are stayed pending completion of his individual arbitration.

(2) DEMURRER

Defendant has filed the declaration of Christina M. Behrman reflecting compliance with the meet and confer requirements. (Behrman Decl. ¶¶ 2-4.)

In light of the Court’s ruling staying Plaintiff’s representative PAGA claims as part of Defendant’s motion to compel arbitration, the Demurrer is currently moot and will not be considered at this time as Defendant has received the alternative relief that it requested - a stay of the PAGA action via the Arbitration Ruling.

Dated: September 4, 2026

____________________________ Judge Kory Mathewson

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