Erik Gregory v. Peraton, et al.

employees under that age beginning around January 2020. [Id. at ¶ 13b.] Plaintiff also alleges that Peraton and the other defendants committed various adverse employment actions and behaved inappropriately toward him. [Id. at ¶¶ 13-14.]

During his tenure with Northrop and Peraton, Plaintiff signed three agreements outlining his obligations regarding employment dispute resolution. In 2002, Plaintiff signed Northrop’s offer letter (the “2002 Agreement”), which included such a provision. [Pierce Decl., Exh. F to Hearne Decl. at ¶ 5 and Exh. 1.] In 2006, Plaintiff was notified that Northrop’s policy was updated (the “2006 Agreement”). [Id. at ¶¶ 8-9 and Exhs. 2-a to 2-c.] In 2021, Plaintiff signed an “Employee Letter of Understanding” (the “2021 Agreement”), which also contained an arbitration clause. [McClennon Decl. at ¶¶ 3-5 and Exh. B.]

On January 13, 2026, this Court sustained the demurrer of Peraton and other defendants to the Second Cause of Action for a hostile work environment. [Order, filed 1/13/26.] Although given 10 days, Plaintiff did not file an amended Complaint.

Legal Standards.

As the party moving to compel arbitration, Peraton bears the burden of proving the existence of a valid arbitration agreement by a preponderance of the evidence. [Rosenthal v. Great Western Fin. Securities Corp. (1996) 14 Cal.4th 394, 413.] If Peraton meets its burden, then the burden shifts to Plaintiff, as the party opposing arbitration, to prove by a preponderance of the evidence any fact necessary to their defense against enforcement of the agreement. [Ding v. Structure Therapeutics, Inc. (N.D. Cal. 2024) 755 F.Supp.3d 1200, 1207.] If it grants Peraton’s motion, the Court must also grant Peraton’s request to “stay the action or proceeding until an arbitration is had in accordance with the order to arbitrate or until such earlier time as the court specifies.” [Code Civ. Proc. § 1281.4.]

Discussion.

1. Plaintiff’s Request for Judicial Notice.

Plaintiff’s request for the Court to judicially notice Government Code section 12940, subdivision (j)(4)(C), is GRANTED. [Evid. Code § 451, subd. (a).] Plaintiff’s remaining requests are DENIED because the motion-to-compel-arbitration orders from unrelated cases are irrelevant. [See Mangini v. R.J. Reynolds Tobacco Co. (1994) 7 Cal.4th 1057, 1063 (“[a]lthough a court may judicially notice a variety of matters, only relevant material may be noticed.”) (original italics; internal citation omitted).]

2. Plaintiff’s Procedural Argument.

Plaintiff first argues that Peraton’s motion is a procedurally improper motion for reconsideration under Code of Civil Procedure section 1008 because it allegedly “made no showing of new or different facts, circumstances, or law, that could not, with reasonable diligence, have been presented before.” [Opp. at 1:5-8 (internal quotes omitted).] However, Plaintiff overlooks that this Court’s prior order regarding Defendants’ Motion to Compel

Arbitration, filed on March 20, 2026, was denied without prejudice. Consequently, section 1008 does not apply: “Denial of a motion without prejudice impliedly invites the moving party to renew the motion at a later date, when he can correct the deficiency that led to the denial.” [Farber v. Bay View Terrace Homeowners Assn. (2006) 141 Cal.App.4th 1007, 1015.]

3. Substantive Arguments.

a. The 2021 Agreement.

Peraton has satisfied its initial burden of demonstrating, by a preponderance of the evidence, the existence of an arbitration agreement. [Gamboa v. Northeast Community Clinic (2021) 72 Cal.App.5th 158, 164-165.] Peraton’s motion is based on the 2021 Agreement. [2021 Agreement, Exh. A to McLennon Decl.] In her declaration supporting the motion, Peraton’s Human Resources Director, Katrina McLennon, states that Peraton intended the 2021 Agreement to be a new, valid, and enforceable agreement to arbitrate all employment disputes. [McLennon decl. at ¶¶ 2, 4, 7.] Peraton characterizes the 2021 Agreement as a novation, replacing all prior agreements. [Id. at ¶ 7.] Plaintiff does not deny he signed the 2021 Agreement. [Id. at ¶ 5 and Exh. B; Plaintiff’s Decl., Exh. D to Hearne Decl. at ¶ 3.]

Because Peraton met its initial burden, Plaintiff now bears the burden of proving by a preponderance of the evidence any fact necessary to their defense against enforcing the 2021 Agreement. Plaintiff has done so because the 2021 Agreement is an unconscionable contract, characterized by a low level of procedural unconscionability related to the contract of adhesion and a high level of substantive unconscionability due to the broad carve-out clause for Peraton. This clause allowed Peraton to file lawsuits for “injunctive relief and other remedies," permitted Peraton to proceed without posting a bond for such relief, and included an overly broad confidentiality clause related to the arbitration. [2021 Agreement, Exh.

A to McLennon Decl. at ¶¶ 4C and 5.] An agreement that binds only the employee—with no reciprocal obligation of the employer—lacks the mutuality required by California. [See Armendariz v. Foundation Health Psychare Services, Inc. (2000) 24 Cal.4th 83, 117-118; Mercuro v. Superior Court (2002) 96 Cal.App.4th 167, 175-176; Fitz v. NCR Corp. (2004) 118 Cal.App.4th 702, 723-725; Hasty v. American Automobile Assn. of Northern Cal. (2023) 98 Cal.App.5th 1041, 1061-1062.]

Furthermore, severance cannot resolve the issues described in the previous paragraph because unconscionability exists throughout the 2021 Agreement. [Armendariz, 24 Cal.4th at 124-127; Ramirez v. Charter Communications, Inc. (2024) 16 Cal.5th 478, 519-521; Hasty, 98 Cal.App.5th at 1067-1069; Fitz, 118 Cal.App.4th at 727.] The interests of justice would not be served by such reform because the 2021 Agreement demonstrates that Peraton and other defendants engaged in a systemic effort to impose arbitration on the weaker party—not merely as an alternative to litigation, but to secure a forum that favors the stronger party. [See Ramirez, 16 Cal.5th at 516-517.]

Therefore, the arbitration clause in the 2021 Agreement is unconscionable and overall invalid. As explained below, the Court’s review does not conclude with this.

b. The 2006 Agreement.

Alternatively, Peraton argues that even if the 2021 Agreement is unconscionable, the arbitration clause in the 2006 Agreement controls. The Court agrees. Because Plaintiff agreed to the arbitration clause in the 2002 Agreement, which was updated in the 2006 Agreement, it is fair and in the interests of justice to require Plaintiff to arbitrate employment disputes based on those earlier, uncontested agreements. “If, however, the substituted agreement is voidable for fraud or other reasons, even when a novation is claimed, and the power of avoidance is exercised, the avoided contract is nullified as a discharge, and the prior contract again becomes enforceable.” [14A Cal.

Jur. 3d Contracts § 283 (citing Airs v. Scents Distributions, Ltd. (N.D. Cal. 1995) 902 F.Supp. 1141, 1148).] As applied here, because the 2021 Agreement is voidable for unconscionability, even if a novation is claimed, the updated arbitration provision in the 2006 Agreement becomes enforceable again. [Ibid.; see also Rejuso v. Brookdale Senior Living Communities, Inc. (C.D. Cal., Nov. 13, 2018, No. CV 17-5227-DMG (RAO)) 2018 WL 6173384, at **4-5.]

Although the 2006 Agreement is in effect, the next issue is whether Peraton has standing to enforce it. The Court finds that it does. As stated above, it is undisputed that Plaintiff worked for and under Peraton and its related entities, including its predecessor Northrop, for 21 years. Peraton acquired Northrop’s rights and interests in the business group employing Plaintiff. [McClennon Decl. at ¶ 2.] Peraton intended for the 2021 Agreement to be a new contract that maintained an agreement to arbitrate all employment disputes. [Id. at ¶ 7.]

However, it was not Peraton’s intention to revoke or cancel the employees’ prior arbitration agreements without a valid replacement. [Ibid.] A succeeding organization (Peraton) can enforce an agreement made with the predecessor organization (Northrop). [Marenco v. DirecTV LLC (2015) 233 Cal.App.4th 1409, 1419-1420.] Therefore, contrary to Plaintiff’s arguments, Peraton has the standing to enforce the updated arbitration clause in the 2006 Agreement.

Now that Peraton has standing to enforce the 2006 Agreement, the next issue is whether Peraton has met its initial burden of proving, by a preponderance of the evidence, the existence of an arbitration agreement. [Gamboa, 72 Cal.App.5th at 164-165.] Through the Declaration of Aishia Pierce, a Human Resources Business Partner at Northrop, Peraton has established the existence of the updated arbitration agreement in the 2006 Agreement, which is not contradicted in Plaintiff’s declaration.

Because Peraton met its initial burden, Plaintiff now bears the burden of proving by a preponderance of the evidence any fact necessary to his defense against enforcing the 2006 Agreement. His arguments regarding procedural unconscionability (contract of adhesion) are insufficient as a defense to enforcement, and his claims concerning substantive unconscionability (such as the 2006 Agreement allowing the entire network to compel arbitration against the Plaintiff without genuine reciprocity, being unlimited in scope, and having indefinite duration) are legally and factually unfounded.

The 2006 Agreement requires the “Company” to arbitrate, and “Company” is defined in Policy H103A Page 1 as “Northrop Grumman, its subsidiaries, and its other affiliated entities.” Additionally, the 2006 Agreement here is factually distinct from the unlimited-scope-and-duration agreement discussed in Cook v. U. of Southern Cal. (2024) 102 Cal.App.4th 312, 321.

The operative Complaint does not include a sexual harassment claim because this Court sustained the defendants’ demurrer with leave to amend. Plaintiff chose not to amend. Therefore, the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021 does not apply here, as there is no sufficiently detailed claim of sexual harassment. [Doe v. Second Street Corp. (2024) 105 Cal.App.5th 552, 577.]

4. Sanctions.

Plaintiff’s request for sanctions is DENIED. First, as explained above, Peraton did not file an improper motion for reconsideration, so no sanctions are justified. Additionally, the Plaintiff fails to show that it satisfied the safe-harbor provisions of the Code of Civil Procedure sections 128.5, subdivision (f), and 128.7, subdivision (c), by (1) serving the sanctions motion on Peraton without filing it, (2) waiting 21 days for Peraton to withdraw the motion to compel, and (3) filing the sanctions motion at the end of that period. [See Casale Decl., passim.] “[T]he safe harbor period is mandatory and the full 21 days must be provided absent a court order shortening that time if sanctions are to be awarded.” [Li v. Majestic Industry Hills LLC (2009) 177 Cal.App.4th 585, 595.] Therefore, the Plaintiff’s request for sanctions is DENIED.

Conclusion.

Peraton’s motion is GRANTED, and Plaintiff must arbitrate his claims against it. Consequently, the Motion for Protective Order is MOOT because this action is STAYED “until an arbitration is had in accordance with the order to arbitrate or until such earlier time as the court specifies.” [Code Civ. Proc. § 1281.4.] Plaintiff’s Request for Judicial Notice is GRANTED IN PART AND DENIED IN PART, and his sanctions request is DENIED.

This matter is set for a Status Conference on May 4, 2027, at 9:00 a.m. in Department 14, with a Joint Status Conference Statement due 15 days prior.

Peraton shall prepare the Proposed Order consistent with this Tentative Ruling.

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