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FALAKASSA LAW, P.C.
1 Joshua S. Falakassa, CA Bar No. 295045
2 josh@falakassalaw.com ELECTRONICALLY
3
1901 Avenue of the Stars, Suite 450 F I L E D
Los Angeles, California 90067 Superior Court of California,
County of San Francisco
Tel: (818) 456-6168; Fax: (888) 505-0868
4 10/29/2020
Clerk of the Court
5 BOKHOUR LAW GROUP, P.C. BY: RONNIE OTERO
Mehrdad Bokhour, CA Bar No. 285256 Deputy Clerk
6 mehrdad@bokhourlaw.com
1901 Avenue of the Stars, Suite 450
7 Los Angeles, California 90067
8 Tel: (310) 975-1493; Fax: (310) 675-0861
9 Attorneys for Plaintiff, the Putative Classes, and the Aggrieved Employees
10 SUPERIOR COURT OF THE STATE OF CALIFORNIA
11 FOR THE COUNTY OF SAN FRANCISCO
12
13 ANTHONY WILLIAMS, on behalf of himself CASE NO.: CGC-20-583846
and all others similarly situated, and on behalf
14
of the State of California, as a private attorney PLAINTIFF’S OPPOSITION TO
DEFENDANT’S PETITION TO COMPEL
15 general, ARBITRATION AND STAY
PROCEEDINGS; MEMORANDUM OF
16 Plaintiff, POINTS AND AUTHORITIES IN
SUPPORT THEREOF
17 v.
HEARING DATE
18
SONIC AUTOMOTIVE, INC., a North
Date: November 12, 2020
19 Carolina Corporation; FAA CONCORD H,
Time: 9:30 a.m.
INC. a California Corporation;
20 Dept: 302
FIRSTAMERICA AUTOMOTIVE, INC., a
21 Delaware Corporation and DOES 1-50,
inclusive,
22
Defendants.
23
24
25
26
27
28
PLAINTIFF’S OPPOSITION TO DEFENDANT’S PETITION TO COMPEL ARBITRATION AND STAY
PROCEEDINGS; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT THEREOF
1 TABLE OF CONTENTS
2
I. INTRODUCTION ...................................................................................................1
3 II. STATEMENT OF RELEVANT FACTS ................................................................2
4 A. The Purported Arbitration Agreements .......................................................2
5 III. ARGUMENT ...........................................................................................................3
6 A. Defendants Fail To Prove The Existence Of A Binding And Enforceable
Arbitration Agreement .................................................................................3
7
B. The Purported Arbitration Agreements Are Permeated With
8
Unconscionability ........................................................................................4
9
1. The Purported Arbitration Agreements Are Procedurally
10 Unconscionable .............................................................................4
11 2. The Purported Arbitration Agreements Are Substantively
12 Unconscionable .............................................................................8
a. The Purported Arbitration Agreements Lack Mutuality ......8
13
b. The Terms Of The Purported Arbitration Agreements Would
14
Impermissible Waive Respondent’s Statutory PAGA Rights ........11
15
c. The Purported Arbitration Agreements Require Plaintiff To Share
16 In The Costs Of The Arbitration, Fail To Provide For The
17 Recovery Of Attorneys’ Fees And Limited Plaintiff’s
18 Remedies ............................................................................12
19 3. Because Severing The Unconscionable Provisions Cannot Cure The
Unconscionability, The Purported Arbitration Agreements Must Be
20
Voided .........................................................................................12
21
C. Defendants Cannot Demonstrate That Plaintiff Consented To Execute The
22 Arbitration Agreement By Electronic Means On January 7, 2019 ............13
23 IV. CONCLUSION ......................................................................................................16
24
25
26
27
28 -i-
PLAINTIFF’S OPPOSITION TO DEFENDANT’S PETITION TO COMPEL ARBITRATION AND
STAY PROCEEDINGS; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT THEREOF
1 TABLE OF AUTHORITIES
2 CASES
3 A & M Produce Co. v. FMC Corp.
(1982) 135 Cal.App.3d 473, 489–90..................................................................................... 4
4
Armendariz v. Foundation Health Pyschcare Services, Inc.
5 (2000) 24 Cal.4th 83 ....................................................................................... 4,8,9,10,12, 13
6 Asmus v. Pacific Bel
(2000) 23 Cal.4th 1, 15-16 ................................................................................................... 9
7
Baxter v. Genworth North America Corp.
8 (2017) 16 Cal.App.5th 713, 732 ........................................................................................... 8
9 Carmona v. Lincoln Millennium Car Wash, Inc.
(2014) 226 Cal.App.4th 74, 85 ................................................................................ 8,9,10,11
10
Davis v. TWC Dealer Group Inc.,
11 (2019) 41 Cal. App. 5th 662...................................................................................... 2,4,5,6,8
12 Engalla v. Permanente Medical Group, Inc.
(1997) 15 Cal.4th 951, 972 ................................................................................................... 3
13
Espejo v. Southern California Permanente Medical Group
14 (2016) 246 Cal.App.4th 1047 ........................................................................................ 14,15
15 Gutierrez v. Autowest, Inc.
(2003) 114 Cal.App.4th 77, 91 ............................................................................................. 4
16
Kinney v. United Healthcare Services, Inc.
17 (1999) 70 Cal.App.4th 1322 ................................................................................................. 8
18 Magno v. College Network, Inc.
(2016) 1 Cal.App.5th 277, 292 ........................................................................................... 12
19
Mitri v. Arnel Mgmt. Co.,
20 157 Cal.App.4th 1164, 1169 (2007) ..................................................................................... 3
21 Nyulassy v. Lockheed Martin Corp.
(2004) 120 Cal.App.4th 1267, 1281 ..................................................................................... 8
22
Oto v. Kho,
23 8 Cal.5th at p. 128 ................................................................................................................. 5
24 Parada, supra,
176 Cal.App.4th at 1586 ..................................................................................................... 12
25
Ruiz v. Moss Bros. Auto Group, Inc.,
26 (2014) 232 Cal.App.4th 836 ..................................................................................... 13,14,15
27 Samaniego, supra, 205
Cal.App.4th at 1146 .............................................................................................................. 7
28 -ii-
PLAINTIFF’S OPPOSITION TO DEFENDANT’S PETITION TO COMPEL ARBITRATION AND
STAY PROCEEDINGS; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT THEREOF
1 Scottsdale Ins. Co. v. Essex Ins. Co.
(2011) 98 Cal.App.4th 86, 95 ............................................................................................... 9
2
Serafin, supra,
3 235 Cal.App.4th at 177 ......................................................................................................... 5
4 Sonic-Calabasas A, Inc. v. Moreno
(2013) 57 Cal.4th. 1109, 1142 .............................................................................................. 4
5
Sparks v. Vista Del Mar Child & Family Services
6 (2012) 207 Cal.App.4th 1511, 1523 ..................................................................................... 7
7 Subcontracting Concepts, supra,
34 Cal.App.5th at 213-214 .................................................................................................. 11
8
Szetela v. Discover Bank
9 (2002) 97 Cal.App.4th 1094 ................................................................................................. 4
10 Tanguilig, supra,
5 Cal.App.5th at 670 ........................................................................................................... 11
11
Trivedi v. Curexo Tech. Corp.
12 (2010) 189 Cal.App.4th 387, 393–94 ................................................................................... 7
13
STATUTES
14
Code Civ. Proc., § 1670.5 .......................................................................................................... 4
15
Code of Civil Procedure §1281.2......................................................................................... 4, 12
16
Civ. Code § 1633.9(a) & (b) ............................................................................................... 13,14
17
18
19
20
21
22
23
24
25
26
27
28 -iii-
PLAINTIFF’S OPPOSITION TO DEFENDANT’S PETITION TO COMPEL ARBITRATION AND
STAY PROCEEDINGS; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT THEREOF
1 I. INTRODUCTION
2 On or about June 12, 2020, Plaintiff Anthony Williams’s (“Plaintiff”) filed a Class
3 Action Complaint alleging various wage and hour claims against Defendant Sonic Automotive
4 Inc. (“Sonic”), FAA Concord H, Inc. (“FAA”), and First America Automotive, Inc. (“First
5 America”) (collectively “Defendants”). Given the facts, circumstances, and/or allegations set
6 forth in Plaintiff’s Class Action Complaint, Plaintiff is not surprised by Defendants obvious
7 desire to prevent Plaintiff from bringing a class and PAGA representative action.
8 Defendants’ Petition to Compel Arbitration and Stay Proceedings (“Defendants’
9 Petition”) asserts that the claims brought by Plaintiff in his Class Action Complaint are subject
10 to arbitration pursuant to various (yet suspicious) arbitration provisions alleged therein.1 More
11 specifically, Defendant alleges as follows: (1) Plaintiff allegedly agreed to arbitration upon
12 submitting his application for employment with Defendants on or about December 27, 2018 by
13 way of the Applicant Statement and Agreement; (2) in the following days, Plaintiff was sent a
14 link to his personal email in which he allegedly agreed to arbitration upon electronically signing
15 the document titled Mutually Binding Arbitration Agreement; (3) upon hire for employment
16 with Defendants, Plaintiff allegedly agreed to arbitration again by signing a document titled
17 Comprehensive Agreement At-Will and Arbitration (which was included in the new hire
18 paperwork); and (4) Plaintiff was allegedly aware of company policy (by way of his
19 employment) which required alternative dispute resolution.
20 As set forth more fully herein below, each of the arbitration provisions above does not
21 constitute a valid basis for this Court to grant Defendants’ Petition. Defendants have entirely
22 failed to authenticate the alleged arbitration agreements, and on that basis alone, Defendants’
23 Petition should be denied. Even if Defendants’ were to prove the existence of a valid arbitration
24 agreement with some form of additional evidence – which they cannot, the purported arbitration
25 provisions are procedurally and substantively unconscionable.
26 1
It must be noted that an actual copy of the relevant arbitration agreements were not even attached to Defendants’
27 Petition. Instead, Defendants strategically placed the various provisions into the body of Defendants’ Petition—
preventing this Court from being able to analyze and consider the alleged arbitration document themselves.
28 Suspiciously, Defendants also does not even purport to attach the alleged arbitration agreement signed by Plaintiff
on December 27, 2018.
PLAINTIFF’S OPPOSITION TO DEFENDANT’S PETITION TO COMPEL ARBITRATION AND STAY
PROCEEDINGS; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT THEREOF
1
1 Critically, the alleged arbitration agreements at issue herein are almost identical to the
2 ones at issue in Davis v. TWC Dealer Group Inc., (2019) 41 Cal. App. 5th 6622, wherein the
3 Court denied the TWC Dealer Group, Inc.’s petition to compel arbitration on the basis that the 3
4 agreements were confusing/contradictory, one-sided, and thus highly procedurally and
5 substantively unconscionable.
6 II. STATEMENT OF RELEVANT FACTS
7 As a preliminary matter, from December 27, 2018 to January 13, 2019, Plaintiff
8 allegedly signed and/or acknowledged three separate arbitration agreements in connection with
9 the acceptance and/or continuation of his employment with Defendants. The agreements
10 themselves have not been included in Defendants’ Petition. To the contrary, the various
11 “arbitration language” was copy and pasted into the body of Defendants’ Petition. Plaintiff
12 does not recall ever signing any of the alleged arbitration agreements. If Plaintiff had in fact
13 been presented with an arbitration agreement, he would have taken the time to seek out
14 assistance from a family friend who is an attorney. (See Decl. of Anthony Williams ¶¶ 7-9.)
15 A. Sonic’s Three Purported Arbitration Agreements
16 As set forth above, there are three supposed arbitration agreements at issue in
17 Defendants’ Petition all of which contain different arbitration provisions. These three
18 documents containing the supposed arbitration provisions include: (1) the Applicant Statement
19 and Agreement dated December 27, 20183 (“Agreement No. 1”); (2) the Mutually Binding
20 Arbitration Agreement, dated January 7, 2019 (“Agreement No. 2”); and (3) the Comprehensive
21 Agreement Employment At Will and Arbitration, dated January 13, 2019 (“Agreement No. 3”)
22 (collectively the “Agreements”).
23
24
25 2
Davis v. TWC Dealer Group Inc., (2019) 41 Cal. App. 5th 662 [“The trial court denied the employer's
petition to compel, finding that the arbitration provision was procedurally and substantively
26 unconscionable. We affirmed, including with reference to several reasons why the arbitration process
was substantively unconscionable. . .].)
27 3
Defendants do not even purport to attach a copy of this alleged Agreement. However, Plaintiff has
28 provided the Court with a copy he obtained from Defendant in his employee personnel file. (See
Declaration of Anthony Williams, Ex. A.)
PLAINTIFF’S OPPOSITION TO DEFENDANT’S PETITION TO COMPEL ARBITRATION AND STAY
PROCEEDINGS; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT THEREOF
2
1 Defendants expressly admit that each of the Agreements were provided on a take-it-or-
2 leave-it basis to Plaintiff. Stated differently, Defendants required Plaintiff (and all of their
3 employees) to sign these documents as a condition of their employment or continuing
4 employment. (See Declaration of Raquel Gonzalez in Support of Petition to Compel Arbitration,
5 ¶ 4-5 (“Gonzalez Decl.”)) Further, each of the Agreements buries its arbitration language amid
6 other terms. For example, in Agreement No. 1, the supposed arbitration language is hidden in
7 the middle of the “applicant statement” submitted during the application process. In Agreement
8 No. 2, the arbitration language is included with Plaintiff’s “At Will Employment Agreement” in
9 a document that states “At Will Arbitration Agreement.” Finally, in Agreement No. 3 the
10 alleged arbitration language is hidden among Plaintiff’s pay plan and Associate Handbook. (See
11 Gonzalez Decl., ¶ 8); (Declaration of Anthony Williams in Support of Opposition to Motion to
12 Compel Arbitration, ¶ 12, Ex. A (“Williams Decl.”).)
13 III. ARGUMENT
14 A. Defendants Fail To Prove The Existence Of A Binding And Enforceable
15 Arbitration Agreement
16 As the party seeking arbitration, Defendants bear the burden of proving the existence of
17 a valid agreement to arbitrate. (Engalla v. Permanente Medical Group, Inc. (1997) 15 Cal.4th
18 951, 972.) Because the existence of the Agreement is a prerequisite to granting the petition,
19 Defendant bears the burden of proving its existence by a preponderance of the evidence. (Id;
20 Mitri v. Arnel Mgmt. Co., 157 Cal.App.4th 1164, 1169 (2007).
21 Defendants have entirely failed to authenticate the existence of a valid agreement to
22 arbitration. More specifically, Defendants have failed to provide all of the alleged Agreements
23 themselves in connection with Defendants’ Petition. The mere copying/pasting of language
24 from alleged arbitration agreements does not provide Plaintiff or this Court with sufficient
25 evidence to support a valid and enforceable agreement and certainly does not meet the
26 preponderance of the evidence standard. Accordingly, this Court must deny Defendant’s
27 Petition. Additionally, even if Defendants are permitted to include the alleged Agreements,
28 Defendants still failed to authenticate the electronic signature of Plaintiff as discussed in Section
PLAINTIFF’S OPPOSITION TO DEFENDANT’S PETITION TO COMPEL ARBITRATION AND STAY
PROCEEDINGS; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT THEREOF
3
1 C below.
2 B. The Purported Arbitration Agreements Are Permeated With
3 Unconscionability
4 In California, courts may refuse to enforce an arbitration agreement if it is
5 unconscionable. (Code Civ. Proc., § 1670.5.) The rules of unconscionability apply to all
6 contracts and have application under Code of Civil Procedure §1281.2. (Sonic-Calabasas A,
7 Inc. v. Moreno (2013) 57 Cal.4th. 1109, 1142.) Courts assess unconscionability with a sliding
8 scale approach. In the case of high degree of procedural unconscionability, even a low degree of
9 substantive unconscionability could render the arbitration agreement unconscionable.
10 (Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83, 114-115.)
11 “Unconscionability is determined as of the time the contract was entered into, not in light of
12 subsequent events.” (Gutierrez v. Autowest, Inc. (2003) 114 Cal.App.4th 77, 91.) (emphasis
13 added)
14 1. The Purported Arbitration Agreements Are Procedurally Unconscionable
15 “Unconscionability analysis begins with an inquiry into whether the contract was one of
16 adhesion. The term [contract of adhesion] signifies a standardized contract, which imposed and
17 drafted by the party of superior bargaining strength, relegates to the subscribing party only the
18 opportunity to adhere to the contract or reject it.” (Armendariz, supra, 24 Cal.4th at 113.)
19 California case law has consistently found that “take it or leave it” contracts implicate
20 procedural unconscionability. (See, Szetela v. Discover Bank (2002) 97 Cal.App.4th 1094.) This
21 is especially true in the employment context, regardless of the level of sophistication of the
22 parties. (Armendariz, supra, 24 Cal.4th at 115; A & M Produce Co. v. FMC Corp. (1982) 135
23 Cal.App.3d 473, 489–90; Davis v. TWC Dealer Group Inc., (2019) 41 Cal. App. 5th 662.)
24 Here, the undisputed evidence demonstrates that each of the Agreements are
25 procedurally unconscionable in that: (1) they constitute adhesion contracts, (2) the terms of the
26 purported arbitration agreements are contradictory, (3) the characteristics of the purported
27 agreements make then unconscionable, and (4) the purported agreements fail to include a
28 reference to arbitration “rules,” provide statutory language describing the arbitration process, do
PLAINTIFF’S OPPOSITION TO DEFENDANT’S PETITION TO COMPEL ARBITRATION AND STAY
PROCEEDINGS; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT THEREOF
4
1 not state which statute controls and do not indicate where the applicable rules and procedures
2 are available.
3 First and foremost, each of the three Agreements constitute adhesion contracts. The
4 accompanying declaration from Ms. Gonzalez (See “Gonzalez Decl. ¶ 4) confirms that Plaintiff
5 and other employees were required to sign the Agreements as a necessary condition of their
6 initial and employment with Defendants. The terms of the Agreements were on a “take-it-or-
7 leave-it” basis, without a chance to meaningfully negotiate the terms and conditions. All
8 employees were required to “agree” to the arbitration agreement. (Williams Decl. ¶ 3-4;
9 Gonzalez Decl. ¶ 4). Further, and given Defendants’ status as a large conglomerate of car
10 dealerships, Defendants were and continue to be in the superior bargaining position. Plaintiff, in
11 contrast, was an individual seeking employment as a car salesman. (Williams Decl. ¶ 3-4.)
12 Secondly, the terms of the arbitration provisions, which are comprised of three separate,
13 non-identical documents, are dense, unclear and often contradictory in that they contain
14 conflicting provisions about the scope of the arbitrator’s authority to make decisions and
15 conflict as to whether class or representative actions may be filed at all, amongst other
16 contradictions. (See Davis v. TWC Dealer Group Inc., (2019) 41 Cal. App. 5th 662.) Further,
17 Plaintiff had no clear opportunity to understand the actual terms of the arbitration provision
18 prior to agreeing. (Gonzalez Decl. ¶ 7-10.) This element of surprise supports a finding that the
19 Agreements were procedurally unconscionable. (See, Serafin, supra, 235 Cal.App.4th at 177.)
20 Some examples of the notable conflicts in the Agreements are as follows: (1) Agreement
21 No. 3 contains an integration clause stating that it is the only agreement between the parties
22 with regard to dispute resolution, while Agreement No. 2 does not; (2) Agreement No. 2 does
23 not have an explicit waiver of the right to a jury trial, yet Agreement No. 3 does; and (3)
24 Agreement No. 2 states that it contains all of the terms of the parties’ agreement, but clearly
25 fails to include the waiver of the jury trial – suggesting that this provision was intentionally
26 removed – i.e., no jury trial waiver can be seen to have been given.
27 Thirdly, the Agreements relevant here almost identical to the one analyzed by the
28 California Supreme Court in Oto v. Kho, wherein the highest court of the state explained:
PLAINTIFF’S OPPOSITION TO DEFENDANT’S PETITION TO COMPEL ARBITRATION AND STAY
PROCEEDINGS; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT THEREOF
5
“The agreement is a paragon of prolixity, only slightly more than a page long but written
1 in an extremely small font. The single dense paragraph covering arbitration requires 51
2 lines. As the Court of Appeal noted, the text is ‘visually impenetrable’ and ‘challenge[s]
the limits of legibility.’[¶] The substance of the agreement is similarly opaque. The
3 sentences are complex, filled with statutory references and legal jargon. The second
sentence alone is 12 lines long. The arbitration paragraph refers to: the California Fair
4
Employment and Housing Act; title VII of the Civil Rights Act of 1964; other
5 unspecified ‘local, state or federal laws or regulations’; the National Labor Relations
Act; the California Workers’ Compensation Act; ‘California Small Claims’ actions; the
6 Department of Fair Employment and Housing; the Employment Development
Department; the ‘Equal Opportunity Commission’, the federal and California arbitration
7 acts; and six different sections of California’s Civil Code and Code of Civil Procedure.
8 A layperson trying to navigate this block text, printed in tiny font, would not have an
easy journey.” (Kho, supra, 8 Cal.5th at p. 128; see also Davis v. TWC Dealer Group
9 Inc., (2019) 41 Cal. App. 5th 662) (See Gonzalez Decl., Ex. A and B.)
10 Indeed, the single dense paragraph covering arbitration requires 51 lines contained in the
11 midst of agreements regarding other topics, each contains very dense legal language with no
12 line or paragraph breaks, in very small font. Further, each of the arbitration provisions is buried
13 within other documents and provided along with “new hire paperwork” including pay plans,
14 policies and procedures, Associate Handbook, and Application for Employment. (Gonzalez
15 Decl. ¶ 5-7; Williams Decl. ¶ 12, Ex. A and B.) Also of importance is the fact that the
16 arbitration clauses only refer to examples of potential claims an employee would bring against
17 an employer involving “any claims of discrimination and harassment, whether they be based on
18 the California Fair Employment and Housing Act, Title VII of the Civil Rights Act of 1964, . .
19 .” (Williams Decl. ¶ 12, Ex. A.) and allows for an array of employer friendly defense tools
20 including, “right of demurrer, . . .motions for summary judgment, judgment on the pleadings, . .
21 .” while denying the parties to the right to seek equitable relief such as “just cause,” which are
22 claims more likely brought by employees in positions of lesser bargaining power. (Gonzalez
23 Decl. Ex A. and B.) These agreements further provide that “[t]he Company retains the right to
24 add, change or delete wages, benefits, policies and all other working conditions at any time
25 (except the policy of ‘at-will employment’ and Arbitration Agreement, which may not be
26 changed, altered, revised or modified without a writing signed by the President of the
27 Company).” (Williams Decl. ¶ 12, Ex. A) In other words, Defendants have the unilateral right to
28 change or modify the agreement at any time, and without notice to Plaintiff.
PLAINTIFF’S OPPOSITION TO DEFENDANT’S PETITION TO COMPEL ARBITRATION AND STAY
PROCEEDINGS; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT THEREOF
6
1 Courts have found such characteristics contributed to an agreement’s unconscionability.
2 (See, e.g., Samaniego, supra, 205 Cal.App.4th at 1146 [agreement “was comprised of 11 pages
3 of densely worded, single-spaced text printed in small typeface. The arbitration clause is the
4 penultimate of 37 sections which ... were neither flagged by individual headings nor required to
5 be initialed”].)
6 Finally, the Agreements do not indicate that arbitration would be subject to any third-
7 party arbitration organization rules such as AAA or JAMS, but confusingly state that both the
8 Federal Arbitration Act (“FAA”) and California Arbitration Act (“CAA”) generally govern the
9 arbitration proceedings. The Agreements, however, do not state which act governs or what
10 procedures or rules control in the event of a conflict between the FAA and CAA. More
11 specifically, the Agreements reference “The Federal Arbitration Act (9 U.S.C. §§ 3-4)”, but
12 sections 3 and 4 of the FAA have nothing to do the with rules or procedures that would govern
13 an arbitration. To be sure, 9 U.S.C. § 3 states that a trial will be stayed pending arbitration and 9
14 U.S.C. § 4 permits a party to petition the court to order arbitration if the other party refuses to
15 arbitrate.
16 Next, the Agreements reference the “Act” throughout the Agreement, but the word
17 “Act” is not defined anywhere in the Agreements. It remains unclear if the word “Act” refers to
18 the FAA, CAA or other statute. Further, the Agreements fail to provide the specific code
19 sections that apply to arbitration proceeding and fail to indicate where Plaintiff can locate them.
20 Indeed, “[n]numerous cases have held that the failure to provide a copy of the arbitration rules
21 to which the employee would be bound, supported a finding of procedural unconscionability.
22 (Trivedi v. Curexo Tech. Corp. (2010) 189 Cal.App.4th 387, 393–94; Carmon, supra, 226
23 Cal.App.4th at 84; Sparks v. Vista Del Mar Child & Family Services (2012) 207 Cal.App.4th
24 1511, 1523) Defendants have entirely failed to state whether the FAA or CAA controls, failed
25 to define the word “Act”, and referred to code sections under the FAA that have nothing to do
26 with the rules or procedures that would govern the arbitration.
27 Taken together, each of the foregoing reasons provided by Plaintiff herein above support
28 a finding of procedural unconscionability. Indeed, Defendants were in a far superior bargaining
PLAINTIFF’S OPPOSITION TO DEFENDANT’S PETITION TO COMPEL ARBITRATION AND STAY
PROCEEDINGS; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT THEREOF
7
1 position than Plaintiff and was well aware of the provisions of the Agreements and which rules
2 and procedures would or would not apply. Plaintiff is an individual with no legal experience
3 who we are hired by Defendant to work in its sales department. Plaintiff has no knowledge of
4 the FAA or CAA, nor does he know how arbitration works. Moreover, Plaintiff would have to
5 go to other sources to find the rules and procedures in the FAA and CAA, and, even if he were
6 to locate them, he would not know which law would control in the event of a conflict.
7 Accordingly, Plaintiff had no way of forming a reasonable expectation regarding the conflicting
8 Agreements and/or a waiver of his fundamental rights, or of the other contradictory terms. The
9 lack of clarity on this issue provides yet more evidence of procedural unconscionability. It goes
10 without saying that there is a “high degree of oppressiveness” and undoubtedly support for a
11 finding of procedural unconscionability. (See, Baxter v. Genworth North America Corp. (2017)
12 16 Cal.App.5th 713, 732).
13 2. The Purported Arbitration Agreements Are Substantively Unconscionable
14 “Given the lack of choice and the potential disadvantages that even a fair arbitration
15 system can harbor for employees, we must be particularly attuned to claims that employers with
16 superior bargaining power have imposed one-sided, substantively unconscionable terms as part
17 of an arbitration agreement.” (Carmona v. Lincoln Millennium Car Wash, Inc. (2014) 226
18 Cal.App.4th 74, 85; Armendariz, supra, 24 Cal.4th at 115.)
19 Plaintiff (and other employees) are disadvantaged by the terms of these Agreements. As
20 set forth more fully herein below, the purported Agreements lack mutuality, force Plaintiff to
21 waive his right to a PAGA claim and fail to allow for the recovery of attorney’s fees, amongst
22 other issues. Accordingly, each of the purported arbitration agreements are substantively
23 unconscionable per Davis v. TWC Dealer Group Inc., (2019) 41 Cal. App. 5th 662.
24 a. The Purported Arbitration Agreements Lack Mutuality
25 A “paramount consideration in assessing substantive conscionability is mutuality.”
26 (Carmona, supra, 226 Cal.App4th at 85-86, citing Nyulassy v. Lockheed Martin Corp. (2004)
27 120 Cal.App.4th 1267, 1281.) Consequently, an agreement to arbitrate is illusory if the
28 employer can unilaterally modify the agreement. (Kinney v. United Healthcare Services, Inc.
PLAINTIFF’S OPPOSITION TO DEFENDANT’S PETITION TO COMPEL ARBITRATION AND STAY
PROCEEDINGS; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT THEREOF
8
1 (1999) 70 Cal.App.4th 1322 – an arbitration agreement compelling the employee, but not the
2 employer, to submit to arbitration, was unconscionable.) Several other cases have also held that
3 a contract is unenforceable as illusory when one of the parties has the unfettered or arbitrary
4 right to modify or terminate the agreement or assumes no obligations thereunder. (Asmus v.
5 Pacific Bel (2000) 23 Cal.4th 1, 15-16; Scottsdale Ins. Co. v. Essex Ins. Co. (2011) 98
6 Cal.App.4th 86, 95.)
7 There are two reasons why the Agreements lacks mutually. First, none of the
8 Agreements are signed by Defendants. Stated differently, Defendants have technically not
9 agreed to anything. This is identical to the agreement at issue in Carmona, which the court held
10 that there was a lack of mutuality and the agreement was substantively unconscionable. In
11 Carmona, only the employees initialed next to the arbitration clause and only the employees
12 signed the arbitration agreement. (See Carmona, supra, 226 Cal.App.4th at 86.) The only party
13 clearly agreeing to the clause was the employee. As noted in Armendariz, ‘the lack of mutuality
14 can be manifested as much by what the agreement does not provide as by what it does.” (Id.)
15 Here, just as in Carmona, none of the three Agreements are signed by Defendants. The
16 Agreements are only signed by Plaintiff. While the Agreements appear to be mutual, the only
17 party required to agree to the arbitration provision is Plaintiff. On the same note, the agreements
18 only cover claims that are likely brought by the employees and are permeated with language
19 such as: “I understand,” “I agree,” “I also acknowledge,” “I must” which shows the intent to
20 only bind the employee signing the agreement. (Id.) As a result, the Agreements are lacking in
21 mutuality in that it “require[s] arbitration only for the claims of the weaker party but a choice of
22 forums for the claims of the stronger party.” (Id., citing Armendariz, supra, 226 Cal.App.4th at
23 119.) The arbitration clauses only refer to examples of potential claims an employee would
24 bring against an employer involving “any claims of discrimination and harassment, whether
25 they be based on the California Fair Employment and Housing Act, Title VII of the Civil Rights
26 Act of 1964, .. .” (Williams Decl. ¶ 12, Ex. A.) and allows for an array of employer friendly
27 defense tools including, “right of demurrer, . . .motions for summary judgment, judgment on the
28 pleadings, . . .” while denying the parties to the right to seek equitable relief such as “just
PLAINTIFF’S OPPOSITION TO DEFENDANT’S PETITION TO COMPEL ARBITRATION AND STAY
PROCEEDINGS; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT THEREOF
9
1 cause,” which are claims more likely brought by employees in positions of lesser bargaining
2 power. (Gonzalez Decl. Ex A. and B.)
3 Nevertheless, assuming arguendo that Defendants did sign the Agreements, they still
4 lack mutuality. Notably, the modification provision contained in the “Associate
5 Acknowledgment and Agreement” attached to the Declaration of Anthony Williams, which
6 Defendant fails to attach to its Petition, provides that “[a]ny and all benefits, policies, practices,
7 and/or terms and conditions of employment may be changed, added or deleted at any time by
8 the Company, except for the “at-will” nature of my employment and the arbitration agreement.”
9 (Gonzalez Decl. ¶ 12, Ex. A) Agreement 3 then provides that “it is further agreed an understood
10 that any agreement contrary to the foregoing must be entered into, in writing, by the President
11 of the Company, and that the President has the “authority to enter into any agreement contrary
12 to the foregoing.” (See Gonzalez Decl. Pg. 7, Ex. B)
13 Taken together the Agreements give Defendant has the right to change, alter, revise or
14 modify the agreement and there is no provision that limits a potential modification to future
15 disputes, requires agreement by the employees subject to the arbitration provision, or even
16 requires that Defendants notify the employees of such a change. To the contrary, the language
17 makes it clear that there are no limitations on Defendants’ ability to modify the agreement.
18 The practical effect of these provisions is to give Sonic a choice of forums for its claims,
19 but not Plaintiff. (See, Armendariz, supra, 226 Cal.App.4th at 119.) This is because Sonic has
20 the ability to opt-out of the arbitration provision by modifying the Agreements, “in writing, by
21 the President of the Company.” Thus, the only party clearly agreeing to submit any dispute to
22 arbitration is Plaintiff. (See, Carmona, supra, 226 Cal.App.4th at 86.) As the court in Peleg v.
23 Neiman Marcus Group, Inc. (2012) 204 Cal.App.4th 1425 put it, “the employe