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itted Matter
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JUN 28 2020
Clerk the Court
‘Superior Gourt junty of Banta Clara
BY. EPUTY
Kosoler
SUPERIOR COURT OF CALIFORNIA
COUNTY OF SANTA CLARA
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12 ASHLEY GARRETT, Case No. 19CV360744
13 Plaintiffs, ORDER CONCERNING
14 DEFENDANT’S MOTION TO
VS.
STAY/DISMISS THIS CASE
15 PENDING ARBITRATION
16 ACTION DAY NURSERIES & PRIMARY
PLUS, INC. et al.,
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Defendants.
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20 Plaintiff Ashlee Garrett filed this employment discrimination action in 2019. Defendant
21 Action Day Nurseries & Primary Plus, Inc. now moves to dismiss or stay this action in favor of
22 arbitration, citing a contractual arbitration clause. Plaintiff opposes the motion. The Court held
23 oral argument on June 16, 2020, and took the matter under submission. The Court now issues its
24 final order:
25 Here, Plaintiff began working at Defendant in September 2018. On September 6, 2018,
26 she signed a document stating that she had reviewed and agreed to Defendant’s arbitration plan.
27 (Whether or not she actually read it is irrelevant, given that she signed a document saying she
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had reviewed it.) The arbitration plan is quite broad and includes employment discrimination
claims within its scope. The Court therefore finds that the parties agreed to arbitrate this dispute.
At oral argument, Plaintiff's counsel asserted there was no valid arbitration contract,
given that she received and signed the arbitration agreement affer she had started working. But
Plaintiff did received consideration for her agreement to arbitrate: her continued employment
and Defendant’s corresponding commitment to arbitrate certain disputes. Plaintiff cites no cases
in her opposition holding that an arbitration agreement signed after employment began cannot
constitute a valid, binding contract.
2. As for the limited exceptions to enforcement of a contractual arbitration clause under
10 section 1281.2, the only relevant one here is if the Court were to find that the arbitration
11 agreement is invalid. Plaintiff argues that the agreement is invalid as procedurally and
12 substantively unconscionable.
13 An agreement to arbitrate is invalid if it is both procedurally and substantively
14 unconscionable. (Code Civ. Proc., § 1281; Civ. Code, § 1670.5; Armendariz v. Foundation
15 Health Psycare Services, Inc. (2000), 24 Cal.4th 83, 114 (Armendariz).) The two types of
16 unconscionability need not be present in the same degree, and “the more substantively
17 oppressive the contract term, the less evidence of procedural unconscionability is required to
18 come to the conclusion that the term is unenforceable, and vice versa.” (Armendariz, supra, 24
19 Cal.4th at p. 114.) The party opposing arbitration has the burden of proving unconscionability.
20 (Tiri v. Lucky Chances, Inc. (2014) 226 Cal.App.4th 231, 244.)
21 Procedural unconscionability arises in the making of the agreement, focusing on “the
22 oppression that arises from unequal bargaining power and the surprise to the weaker party that
23 results from hidden terms or the lack of informed choice.” (Ajamian v. CantorC02e, L.P. (2012)
24 203 Cal.App.4th 771, 795.) Here, the Court finds some limited procedural unconscionability
25 because Plaintiff had very little choice about signing the arbitration agreement, and that it was a
26 “take it or leave it” agreement. But that alone isn’t enough to invalidate the arbitration
27 agreement.
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As for substantive unconscionability, that doctrine focuses on “overly harsh” or “one-
sided” results that “shock the conscience.” (Armendariz, supra, 24 Cal.4th at p. 114.)
3 Plaintiff attacks the following aspects of the agreement:
a. Jury Trial Waiver: Plaintiff complains she has been forced to give up her jury trial
right. But that is inherent in agreeing to arbitration. This is not substantively unconscionable.
b. Shortened Limitations Period: Plaintiff asserts that the arbitration plan requires her to
have filed an arbitration claim no later than 90 days after the events at issue, and that deadline
has come and gone. But the plan states that a request for arbitration be filed “within ninety (0)
days of the event giving rise to the Dispute or before the expiration of the applicable statute of
10 limitations, whichever is longer.” (italics added.) Plaintiff does not argue that the statute of
11 limitations on any of her claims has expired. This term therefore is not substantively
12 unconscionable.
13 ¢. One-Sided: Plaintiff argues that the agreement requires arbitration of claims employees
14 are likely to bring against the employer, but not the other way around. But if there are good
15 business reasons for the somewhat-asymmetrical treatment, that provision is not necessarily
16 substantively unconscionable. (See Steele v. American Mortg. Management Services (E.D. Cal.,
17 Oct. 26, 2012, No, 2:12-CV-00085 WBS) 2012 WL 5349511, at *8.) Here, there are reasonable
18 business reasons why the arbitration plan excluded certain types of claims (namely, trade secret
19 and non-competition claims), as those claims often involve other entities not subject to the
20 arbitration agreement. The Court finds no substantive unconscionability.
21 d. Excludes Certain Types of Relief: An arbitrator, under this arbitration plan, can award all
22 “monetary or injunctive relief as may be just and reasonable under applicable law.” That
23 includes relief possible under state law. There is no substantive unconscionability.
24 €. Inability to Recover Statutory Attorney Fees and Costs: The plan specifically permits the
25 arbitrator to award attorney fees “in accordance with applicable law.” The Court rejects
26 Plaintiff’s argument.
27 f. Sole Right to Terminate by Employer: An employer has the power to modify or
28 terminate the arbitration agreement without the agreement being deemed substantively
unconscionable. (Serafin v. Balco Properties, Ltd. (2015) 235 Cal.App.4th 165, 175-176.) This
does not demonstrate substantive unconscionability.
8. Plaintiff Has to Pay a Filing Fee: Plaintiff has to pay a $300 filing fee for the arbitration.
This amount is similar or smaller than what she would have to pay in court. The Court is not
aware of a case that would render an arbitration agreement unconscionable because the employee
would have to pay arbitration filing fees similar to what she would have paid in court fees.
In any event, Defendant’s counsel promised the Court at the June 16, 2020 oral argument
that Defendant would pay Plaintiffs $300 filing fee for the arbitration. The Court is confident
Defendant will live up to that promise.
10 h, No Judicial Review: “Generally, an arbitrator's decision in a dispute between partics to
11 an arbitration agreement is subject to only limited judicial review.” (Berglund y. Arthroscopic &
12 Laser Surgery Center of San Diego, L.P. (2008) 44 Cal.4th 528, 534, internal quotation mark
13 omitted.) But where “unwaivable statutory rights” are being arbitrated, they are subject to
14 judicial review “sufficient to ensure that arbitrators comply with the requirements of the statute
15 at issue. [Citation.]” (dd. at p. 534, fn. 2.)
16 Nothing in Defendant’s arbitration plan purports to disturb the above. The use of the
17 phrase “final and binding” is in a summary of the arbitration, not the plan itself. As the summary
18 itself states, “[i]f there are any contradictions or discrepancies between the Summary
19 Explanation and the [Arbitration] Plan, the provisions of the [Arbitration] Plan govern.” (Page iv
20 of Summary Explanation, attached as Exhibit 3 to McIntyre Decl.)
21 4. Overall, the Court does not find the arbitration plan to be substantively unconscionable,
22 and only marginally procedurally unconscionable. Plaintiff hence has not carried her burden to
23 show that the arbitration plan is so unconscionable that it should be revoked or deemed invalid.
24 The Court therefore GRANTS the motion to stay the case pending the outcome of the arbitration.
25 The Court sets a status conference on October 29, 2020, at 10 am so that the parties can update
26 the Court on the arbitration.
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ahs
IT IS SO ORDERED.
The Honorable Sunil R. Kulkarni
Judge of the Superior Court
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SUPERIOR COURT OF CALIFORNIA
Fl ue i COUNTY OF SANTA CLARA
DOWNTOWN COURTHOUSE Pie
EE RCas
i
ey
1g1 NorTH First STREET
‘San JOSE, CALIFORNIA 95113
Satiro: CIVIL DIVISION JUN 2 3 2020
Clerk, of the Court
Superior Court (CA County of Santa Ciara
BY. DEPUTY
RE: Ashlee Garrett vs Action Day Nurseries & Primary Plus, Inc. M ale
Case Number: 19CV360744
PROOF OF SERVICE
Order Concerning Defendant's Motion to Stay/Dis miss This Case Pending Arbitration was delivered to the
parties listed below the above entitled case as set forth in the sworn declaration below.
If you, a party represented by you, or a witness to be called on behalf of that party need an accommodation under the American with
Disabttities Act, please contact the Court Administrator's office at (408) 882-2700, or use the Court's TDD line (408) 882-2690 or the
Voice/TDD California Relay Service (800) 735-2922,
DECLARATION OF SERVICE BY MAIL; | deciare that | served this notice by enclosing a true copy In a sealed envelope, addressed to
each person whose name is shown below, and by depositing the envelope with postage fully prepaid, in the United States Mait at San Jose,
CA on June 23, 2020. CLERK OF THE COURT, by Mark Rosales, Deputy.
ce: Nichelle Denine Jones 4340 Leimert Blvd #200 Los Angeles CA 90008
John F Melntyre Shea & Mcintyre 2166 The Alameda San Jose CA 95126-1144
CW-9027 REV 12/0816 PROOF OF SERVICE
Preview
itted Matter pecision on $00 rr Fite JUN 28 2020 Clerk the Court ‘Superior Gourt junty of Banta Clara BY. EPUTY Kosoler SUPERIOR COURT OF CALIFORNIA COUNTY OF SANTA CLARA 10 11 12 ASHLEY GARRETT, Case No. 19CV360744 13 Plaintiffs, ORDER CONCERNING 14 DEFENDANT’S MOTION TO VS. STAY/DISMISS THIS CASE 15 PENDING ARBITRATION 16 ACTION DAY NURSERIES & PRIMARY PLUS, INC. et al., 17 Defendants. 18 19 20 Plaintiff Ashlee Garrett filed this employment discrimination action in 2019. Defendant 21 Action Day Nurseries & Primary Plus, Inc. now moves to dismiss or stay this action in favor of 22 arbitration, citing a contractual arbitration clause. Plaintiff opposes the motion. The Court held 23 oral argument on June 16, 2020, and took the matter under submission. The Court now issues its 24 final order: 25 Here, Plaintiff began working at Defendant in September 2018. On September 6, 2018, 26 she signed a document stating that she had reviewed and agreed to Defendant’s arbitration plan. 27 (Whether or not she actually read it is irrelevant, given that she signed a document saying she 28 had reviewed it.) The arbitration plan is quite broad and includes employment discrimination claims within its scope. The Court therefore finds that the parties agreed to arbitrate this dispute. At oral argument, Plaintiff's counsel asserted there was no valid arbitration contract, given that she received and signed the arbitration agreement affer she had started working. But Plaintiff did received consideration for her agreement to arbitrate: her continued employment and Defendant’s corresponding commitment to arbitrate certain disputes. Plaintiff cites no cases in her opposition holding that an arbitration agreement signed after employment began cannot constitute a valid, binding contract. 2. As for the limited exceptions to enforcement of a contractual arbitration clause under 10 section 1281.2, the only relevant one here is if the Court were to find that the arbitration 11 agreement is invalid. Plaintiff argues that the agreement is invalid as procedurally and 12 substantively unconscionable. 13 An agreement to arbitrate is invalid if it is both procedurally and substantively 14 unconscionable. (Code Civ. Proc., § 1281; Civ. Code, § 1670.5; Armendariz v. Foundation 15 Health Psycare Services, Inc. (2000), 24 Cal.4th 83, 114 (Armendariz).) The two types of 16 unconscionability need not be present in the same degree, and “the more substantively 17 oppressive the contract term, the less evidence of procedural unconscionability is required to 18 come to the conclusion that the term is unenforceable, and vice versa.” (Armendariz, supra, 24 19 Cal.4th at p. 114.) The party opposing arbitration has the burden of proving unconscionability. 20 (Tiri v. Lucky Chances, Inc. (2014) 226 Cal.App.4th 231, 244.) 21 Procedural unconscionability arises in the making of the agreement, focusing on “the 22 oppression that arises from unequal bargaining power and the surprise to the weaker party that 23 results from hidden terms or the lack of informed choice.” (Ajamian v. CantorC02e, L.P. (2012) 24 203 Cal.App.4th 771, 795.) Here, the Court finds some limited procedural unconscionability 25 because Plaintiff had very little choice about signing the arbitration agreement, and that it was a 26 “take it or leave it” agreement. But that alone isn’t enough to invalidate the arbitration 27 agreement. 28 As for substantive unconscionability, that doctrine focuses on “overly harsh” or “one- sided” results that “shock the conscience.” (Armendariz, supra, 24 Cal.4th at p. 114.) 3 Plaintiff attacks the following aspects of the agreement: a. Jury Trial Waiver: Plaintiff complains she has been forced to give up her jury trial right. But that is inherent in agreeing to arbitration. This is not substantively unconscionable. b. Shortened Limitations Period: Plaintiff asserts that the arbitration plan requires her to have filed an arbitration claim no later than 90 days after the events at issue, and that deadline has come and gone. But the plan states that a request for arbitration be filed “within ninety (0) days of the event giving rise to the Dispute or before the expiration of the applicable statute of 10 limitations, whichever is longer.” (italics added.) Plaintiff does not argue that the statute of 11 limitations on any of her claims has expired. This term therefore is not substantively 12 unconscionable. 13 ¢. One-Sided: Plaintiff argues that the agreement requires arbitration of claims employees 14 are likely to bring against the employer, but not the other way around. But if there are good 15 business reasons for the somewhat-asymmetrical treatment, that provision is not necessarily 16 substantively unconscionable. (See Steele v. American Mortg. Management Services (E.D. Cal., 17 Oct. 26, 2012, No, 2:12-CV-00085 WBS) 2012 WL 5349511, at *8.) Here, there are reasonable 18 business reasons why the arbitration plan excluded certain types of claims (namely, trade secret 19 and non-competition claims), as those claims often involve other entities not subject to the 20 arbitration agreement. The Court finds no substantive unconscionability. 21 d. Excludes Certain Types of Relief: An arbitrator, under this arbitration plan, can award all 22 “monetary or injunctive relief as may be just and reasonable under applicable law.” That 23 includes relief possible under state law. There is no substantive unconscionability. 24 €. Inability to Recover Statutory Attorney Fees and Costs: The plan specifically permits the 25 arbitrator to award attorney fees “in accordance with applicable law.” The Court rejects 26 Plaintiff’s argument. 27 f. Sole Right to Terminate by Employer: An employer has the power to modify or 28 terminate the arbitration agreement without the agreement being deemed substantively unconscionable. (Serafin v. Balco Properties, Ltd. (2015) 235 Cal.App.4th 165, 175-176.) This does not demonstrate substantive unconscionability. 8. Plaintiff Has to Pay a Filing Fee: Plaintiff has to pay a $300 filing fee for the arbitration. This amount is similar or smaller than what she would have to pay in court. The Court is not aware of a case that would render an arbitration agreement unconscionable because the employee would have to pay arbitration filing fees similar to what she would have paid in court fees. In any event, Defendant’s counsel promised the Court at the June 16, 2020 oral argument that Defendant would pay Plaintiffs $300 filing fee for the arbitration. The Court is confident Defendant will live up to that promise. 10 h, No Judicial Review: “Generally, an arbitrator's decision in a dispute between partics to 11 an arbitration agreement is subject to only limited judicial review.” (Berglund y. Arthroscopic & 12 Laser Surgery Center of San Diego, L.P. (2008) 44 Cal.4th 528, 534, internal quotation mark 13 omitted.) But where “unwaivable statutory rights” are being arbitrated, they are subject to 14 judicial review “sufficient to ensure that arbitrators comply with the requirements of the statute 15 at issue. [Citation.]” (dd. at p. 534, fn. 2.) 16 Nothing in Defendant’s arbitration plan purports to disturb the above. The use of the 17 phrase “final and binding” is in a summary of the arbitration, not the plan itself. As the summary 18 itself states, “[i]f there are any contradictions or discrepancies between the Summary 19 Explanation and the [Arbitration] Plan, the provisions of the [Arbitration] Plan govern.” (Page iv 20 of Summary Explanation, attached as Exhibit 3 to McIntyre Decl.) 21 4. Overall, the Court does not find the arbitration plan to be substantively unconscionable, 22 and only marginally procedurally unconscionable. Plaintiff hence has not carried her burden to 23 show that the arbitration plan is so unconscionable that it should be revoked or deemed invalid. 24 The Court therefore GRANTS the motion to stay the case pending the outcome of the arbitration. 25 The Court sets a status conference on October 29, 2020, at 10 am so that the parties can update 26 the Court on the arbitration. 27 28 ahs IT IS SO ORDERED. The Honorable Sunil R. Kulkarni Judge of the Superior Court 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 SUPERIOR COURT OF CALIFORNIA Fl ue i COUNTY OF SANTA CLARA DOWNTOWN COURTHOUSE Pie EE RCas i ey 1g1 NorTH First STREET ‘San JOSE, CALIFORNIA 95113 Satiro: CIVIL DIVISION JUN 2 3 2020 Clerk, of the Court Superior Court (CA County of Santa Ciara BY. DEPUTY RE: Ashlee Garrett vs Action Day Nurseries & Primary Plus, Inc. M ale Case Number: 19CV360744 PROOF OF SERVICE Order Concerning Defendant's Motion to Stay/Dis miss This Case Pending Arbitration was delivered to the parties listed below the above entitled case as set forth in the sworn declaration below. If you, a party represented by you, or a witness to be called on behalf of that party need an accommodation under the American with Disabttities Act, please contact the Court Administrator's office at (408) 882-2700, or use the Court's TDD line (408) 882-2690 or the Voice/TDD California Relay Service (800) 735-2922, DECLARATION OF SERVICE BY MAIL; | deciare that | served this notice by enclosing a true copy In a sealed envelope, addressed to each person whose name is shown below, and by depositing the envelope with postage fully prepaid, in the United States Mait at San Jose, CA on June 23, 2020. CLERK OF THE COURT, by Mark Rosales, Deputy. ce: Nichelle Denine Jones 4340 Leimert Blvd #200 Los Angeles CA 90008 John F Melntyre Shea & Mcintyre 2166 The Alameda San Jose CA 95126-1144 CW-9027 REV 12/0816 PROOF OF SERVICE