Ian Caston v. Compass Health, Inc.

“The petitioner bears the burden of proving the existence of a valid arbitration agreement by the preponderance of the evidence, and a party opposing the petition bears the burden of proving by a preponderance of the evidence any fact necessary to its defense.” (Engalla v. Permanente Medical Group, Inc. (1997) 15 Cal.4th 951, 972; Knutson v. Sirius XM Radio Inc. (9th Cir. 2014) 771 F.3d 559, 565 [party seeking to compel arbitration has burden of proving existence of agreement to arbitrate].)

II. Discussion

a. Agreement to Arbitrate

Compass contends that Plaintiff signed an arbitration agreement that is governed by the FAA.1 Shawna West, Human Resources Coordinator for Compass authenticated the agreement, which is a stand-alone agreement. (West Decl., ¶ 12; Ex. C.) West declares that she is a custodian of employee records and has knowledge of Compass’s standard practices with regard to employee documents. (Id. ̧¶ 5.) West outlines the details of Plaintiff’s hiring and electronic execution of the onboarding documents through an online Paylocity platform, including the personal email address linked to the account and Plaintiff’s username and the security features. (Id. ̧¶¶ 5-13; Exs. A, B.)

West uploaded Plaintiff’s onboarding documents through the Paylocity platform, providing Plaintiff access on November 20, 2024. (West Decl., ¶ 7.) Plaintiff set up an account and accessed and opened the arbitration agreement on November 24, 2024, through his Paylocity account. (West Decl., ¶ 8.) West declares that Plaintiff electronically signed the arbitration agreement through his private login credentials on the Paylocity platform on November 24, 2024, which were the same credentials he created in connection with setting up an account with Paylocity. (Id., ¶ 11; Exs. B [document history showing date of opening, completion and signer consent]; C [agreement with electronic signature].)

On November 25, 2024, West accessed the arbitration agreement with her administrator access through the Paylocity platform, printed the arbitration agreement, and signed the arbitration agreement on behalf of Compass. (West Decl., ¶ 12; Ex. C.) On November 25, 2024, West also conducted a new employee orientation meeting during which, among other things, she asked Plaintiff if he had any questions or issues with any of the onboarding documents, including the arbitration agreement, and he did not ask any questions. (Id., ¶ 13.)

Plaintiff contends that Compass has not met its burden of showing the existence of an agreement to arbitrate. Plaintiff declares that he does not recall signing any documents on Paylocity and does not recall seeing or reviewing a document titled Mutual Agreement to Arbitrate Claims. (Caston Decl., ¶ 4.) He declares that he would not have signed the alleged arbitration agreement if he knew that it meant he was agreeing to forgo bringing any claims he had against Compass in court. (Id., ¶ 5.)

Plaintiff argues that a party may oppose the existence or authenticity of an electronic signature by denying or failing to recall signing the agreement. (Ruiz v. Moss Bros. Auto Group, Inc. (2014) 232 Cal.App.4th 836, 842-844 (Ruiz).) Plaintiff also claims that the dates he allegedly signed the documents are inconsistent between the exhibits, including that the date at the top of the agreement is November 25, 2024, but the electronic signature shows that he signed it a day earlier on November 24, 2024. However, West signed the agreement on November 25, 2024, for Compass, which aligns with the date at the top of the document. Reviewing the exhibits, the Court does not

1 Plaintiff does not appear to dispute that, to the extent it exists, the agreement is governed by the FAA. 2

find them to be inconsistent; but rather finds that they support the timeline detailed in West’s declaration.

The Court finds that West sufficiently authenticated Plaintiff’s electronic signature and that Compass has met its burden by a preponderance of the evidence to show the existence of an agreement to arbitrate. (Civ. Code, § 1633.9, subd. (a); Espejo v. Southern California Permanente Medical Group (2016) 246 Cal.App.4th 1047, 1062; cf., Ruiz, supra, at pp. 842-845; Garcia v. Stoneledge Furniture LLC (2024) 102 Cal.App.5th 41, 53.) The Court further finds that Plaintiff’s complaint is encompassed by the arbitration agreement.

b. Unconscionability

Next, Plaintiff contends that the “purported” agreement is procedurally and substantively unfair and unconscionable.

“[U]nconscionability has both a ‘procedural’ and a ‘substantive’ element,” the former focusing on “oppression” or “surprise” due to unequal bargaining power, the latter on “overly harsh” or “onesided” results.” (Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal. 4th 83, 114 (Armendariz); see also Sanchez v. Valencia Holding Co., LLC (2015) 61 Cal.4th 899, 910 (citing Cal. Civ. Code § 1670.5, subd. (a).) California courts utilize a “sliding scale” approach where the two elements are analyzed by their degree – “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, supra, at p. 114.)

i. Procedural Unconscionability

The agreement here is adhesive and demonstrates the economic imbalance of power inherent in most employment contracts. (OTO, L.L.C. v. Kho (2019) 8 Cal.5th 111, 127.) Plaintiff was given access to the onboarding documents, including the arbitration agreement, on November 20, and the exhibits show that Plaintiff had until November 25 or 26 to sign them. (West Decl., ¶ 7; Ex. A.) Plaintiff therefore had some time to review the agreement and was not forced to sign the moment the document was put in front of him. The arbitration agreement was a standalone document and was not buried in another contract. Considering all the evidence, the Court finds a moderate level of procedural unconscionability.

ii. Substantive Unconscionability

Plaintiff also argues that the agreement is substantively unconscionable because the agreement is unconscionably overbroad and infinite.

Paragraph 1 of the Agreement provides that “The Company and Employee mutually agree to submit to binding arbitration any and all disputes, claims or controversies arising out of or relating to this Agreement or the employment relationship between the Parties, including Employee's application, hire, employment or termination, that are not resolved by mutual

agreement between the Parties, except as to those claims excluded herein.” (West Decl., Ex. C, ¶ 1.)

Paragraph 2 defines arbitrable claims, and includes “all grievances, disputes, claims, or causes of action which either the Company or Employee has or will have against one another, which include, but are not limited to, claims for: disputes arising out of or related to the employment relationship, or the termination of that relationship (including postemployment defamation or retaliation), trade secrets, unfair competition, wrongful termination; breach of any contract or covenant, express or implied; breach of any duty; personal, physical or emotional injuries; fraud, misrepresentation, defamation, negligent or intentional infliction of emotional distress, breach of the covenant of good faith and fair dealing, and any other tort claims...” (West Decl., Ex. C, ¶ 2.)

While paragraph 2 broadly defines arbitrable claims, paragraph 1 limits the parties’ agreement to claims relating to the agreement or the employment relationship. While the Court finds the limitation plain from the language of the contract, to the extent that the two paragraphs are ambiguous, the Court reasonably interprets them in a manner to render the provisions enforceable. (Ayala-Ventura v. Superior Court (2026) 119 Cal.App.5th 241.)

The agreement here is distinguishable from the one at issue in Cook v. University of Southern California (2024) 102 Cal.App.5th 312 (Cook). In Cook, the parties’ agreement provided that the parties agreed to “the resolution by arbitration of all claims, whether or not arising out of Employee's University employment, remuneration or termination, that Employee may have against the University or any of its related entities...” (Id., at p. 317.) It then defined arbitrable claims similar to the agreement here. (Ibid.) The Court in Cook found the agreement at issue to be unconscionably overbroad as the agreement was unlimited in time and scope and not limited to claims arising from the employment relationship.

Here, however, paragraph 1 limits the parties’ agreement to claims arising from the agreement and the employment relationship, and it would therefore necessarily be limited in time by the statute of limitations for those claims. The Court finds that the agreement here is not overly broad in scope or unlimited in time.

Plaintiff further contends that the definition of covered parties is expansive and overly broad as the agreement “includes any claims that the Company may have against Employee, or that Employee may have against the Company, including the Company’s current, former, or future shareholders, officers, directors, employees, representatives, agents, parents, subsidiaries, affiliated entities, successors, or assigns.” (West Decl., Ex. C, ¶ 1.) Compass argues that the plain reading of the clause simply defines individuals or entities that make up the Company, and that the provision is mutual.

Because the Court finds that the claims and controversies the parties have agreed to arbitrate are solely those that rise out of Plaintiff’s employment (including hiring and termination) or the agreement itself, the Court finds that this definition is also not overly broad.

Plaintiff further maintains that the agreement lacks mutuality and is one-sided in favor of Compass, because it provides that “[n]othing in this Agreement shall prohibit or limit either Party from seeking provisional remedies under applicable federal or state law (e.g., California Code of Civil Procedure section 1281.8)—including, but not limited to, emergency injunctive and/or other equitable relief relating to unfair competition or the use and/or unauthorized disclosure of trade secrets or confidential information-when provisional relief is necessary to ensure that the award to which a party may be entitled in an arbitration under this Agreement is not rendered ineffectual.” (West Decl. Ex. C, ¶ 13.5.)

According to Plaintiff that although facially bilateral, the practical effect of this carveout favors Compass because the types of claims realistically requiring provisional judicial relief (such as claims involving trade secrets, confidential information, unfair competition, or protection of proprietary business interests) are claims employers are far more likely to pursue against employees than vice versa. Meanwhile, Plaintiff is broadly restricted to arbitration for the claims he is most likely to bring.

The Court finds this argument unpersuasive. Provisional relief is equally available to Plaintiff, and while the enumerated claims are illustrative, they are not exhaustive. (See, e.g., Baltazar v. Forever 21, Inc. (2016) 62 Cal.4th 1237, 1248; Hasty v. American Automobile Assn. etc. (2023) 98 Cal.App.5th 1041, 1060.)

Plaintiff also argues that the agreement’s treatment of sexual assault and sexual harassment claims is one-sided, because while the agreement excludes sexual assault and sexual harassment disputes pursuant to 9 U.S.C. section 402 from mandatory arbitration, it simultaneously provides that if such claims are filed in court alongside arbitrable claims, the judicial proceeding “shall be stayed” pending arbitration of the remaining claims, which would delay those proceedings. (West Decl. Ex. C, ¶ 5.)

Plaintiff cites to no authority discussing a provision such as this. To the extent that this provision is unconscionable, the requirement that those claims “shall be stayed” is easily severable from the remainder of the document. (West Dec., Ex. C., ¶ 15 [severability clause]; (Ramirez v. Charter Communications, Inc. (2024) 16 Cal.5th 478, 516–517 [severance proper when it furthers the interests of justice].)

The Court does not find that the agreement is permeated with unconscionability nor is it unenforceable.

ORDER

Compass’s motion to compel arbitration is granted. The action is stayed pending arbitration of Plaintiff’s individual PAGA claim. (9 U.S.C. § 3; Code Civ. Proc. § 1281.4; Adolph v. Uber Technologies, Inc. (2023) 14 Cal.5th 1104, 1124-1125.)

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