Barnes vs. Hoskins Equipment LLC

Here, while he does not specifically recall doing so, plaintiff (ROA 35) does not dispute he hand-signed the “Binding Arbitration Provision” (the “Agreement”) on 02-25-2022. ROA 31 Ex.

3. Accordingly, the court finds the parties formed an agreement to arbitrate.

Applicability of the Federal Arbitration Act

The Agreement states it is governed by the FAA. ROA 31 Ex. 3 (all disputes must be “submitted to and determined exclusively by binding arbitration under the Federal Arbitration Act, in conformity with the procedures of the California Arbitration Act...”). Defendant provides additional evidence that the FAA applies because its business involves interstate commerce. Leidholdt Decl. ¶ 8. Accordingly, the court finds the FAA applies, and plaintiff does not argue otherwise.

Relevant Terms and Whether the Agreement Covers the Dispute

The Agreement applies to “any claim, dispute, and/or controversy...either [employee] or the Company...arising from, related to, or having any relationship or connection whatsoever with my seeking employment with, employment by, or other association with the Company...” ROA 31 Ex.

3. There is no dispute the Agreement covers the claims asserted by plaintiff.

Unconscionability

In OTO, L.L.C. v. Kho (2019) 8 Cal.5th 111, the California Supreme Court recognized that notwithstanding the strong public policy favoring arbitration, “‘generally applicable contract defenses, such as . . . unconscionability, may be applied to invalidate arbitration agreements without contravening” the FAA’ or California law.” Id. at 125; accord AT&T Mobility LLC v. Concepcion (2011) 563 U.S. 333, 339.

To declare an agreement unenforceable, a court must find both procedural and substantive unconscionability. Procedural unconscionability focuses on oppression or surprise due to unequal bargaining power; substantive unconscionability looks at overly harsh or one-sided results. Baltazar v. Forever 21, Inc. (2016) 62 Cal.4th 1237, 1243; see also OTO, L.L.C., supra, 8 Cal.5th at 129-30. “[T]he 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, 24 Cal.4th at 114. Plaintiff bears the burden to demonstrate that the arbitration agreement is procedurally and substantively unconscionable. Sanchez v. Carmax Auto Superstores California, LLC (2014) 224 Cal.App.4th 398, 402.

Procedural Unconscionability

First, plaintiff contends the Agreement was adhesive and/or a condition of employment. Plaintiff states he understood he was “required” to complete the onboarding paperwork in order to begin work. ROA 35. He does not, however, explain how he came to that understanding and defendant offers conflicting evidence. Wendi Leidholdt, the Human Resources representative of defendant states “Hoskins does not communicate to employees that signing the Arbitration Agreement is mandatory. In my experience, employees choose to sign the Arbitration Agreement.”

Leidholdt Decl. ¶ 7. Additionally, as defendant points out, the Agreement states it is voluntary in all caps directly above the signature line. ROA 31 Ex. 3 (“I UNDERSTAND BY VOLUNTARILY AGREEING TO THIIS BINDING ARBITRATION PROVISION, BOTH I AND THE COMPANY GIVE UP OUR RIGHTS TO TRIAL BY JURY OF ANY CLAIM I OR THE COMPANY MAY HAVE AGAINST EACH OTHER.”). Accordingly, the evidence does not support a finding the Agreement is a condition of employment. However, even if the court were to assume the Agreement is adhesive in nature, such evidence demonstrates only a negligible amount of procedural unconscionability.

See Samaniego v. Empire Today, LLC (2012) 205 Cal.App.4th 1138, 1145 (procedural unconscionability presumptively low absent evidence the defendant actively interfered with plaintiff’s ability to review and understand the arbitration clause).

Second, plaintiff argues procedural unconscionability on the basis the Agreement fails to identify the applicable rules and failed to provide them. While that is true, the Agreement states it is governed by the procedures of the California Arbitration Act. ROA 31 Ex. 3 (all disputes must be “submitted to and determined exclusively by binding arbitration under the Federal Arbitration Act, in conformity with the procedures of the California Arbitration Act...”). In such cases, “the absence of a specified forum or set of rules in an arbitration clause does not invalidate the agreement to arbitrate.

Rather, in the absence of such provisions, ‘the parties to the agreement who seek arbitration and against whom arbitration is sought may agree on a method of appointing an arbitrator...’—including the forum and rules that will govern the arbitration—or, if the parties cannot agree, ‘the court, on petition of a party to the arbitration agreement, shall appoint the arbitrator.’” HM DG, Inc. v. Amini (2013) 219 Cal. App. 4th 1100, 1110 (quoting C.C.P. § 1281.6.). Accordingly, because the parties are to agree on an arbitrator without limitation as to affiliation (e.g., JAMS, AAA), it is unsurprising the Agreement fails to identify the controlling arbitration rules.

Relatedly, plaintiff makes no contention that any arbitration rules that could conceivably apply are substantively unconscionable and fails to provide any authority that the mutual agreement of an arbitrator (and thus the applicable arbitration rules) is somehow unconscionable. See Baltazar v. Forever 21, Inc. (2016) 62 Cal.4th 1237, 1246 (failure to attach the applicable arbitration rules is relevant only where the rules which were hidden are substantively unconscionable).

Third, to the extent plaintiff argues that defendant failed to explain the Agreement, it is not relevant to enforceability whether the Agreement was explained, read, or understood. See Randas v. YMCA of Metro. Los Angeles (1993) 17 Cal.App.4th 158, 163 (“one who accepts or signs an instrument, which on its face is a contract, is deemed to assent to all its terms, and cannot escape liability on the ground that he has not read it.”).

Fourth, to the extent plaintiff argues the onboarding process was oppressive based on the number of documents presented or the font size therein, the evidence does not support that conclusion. The “New Hire Documents” consist of fewer than 10 pages of standardized forms, including government required tax documents. ROA 31 Ex.

2. As to the Agreement, while the court concurs that the font is small, but no smaller than the font used in the other application and onboarding documents. Id. Exs. 1-3. Furthermore, the Agreement consists of a single paragraph on a separate page and contains no legal jargon, technical language, or other aspects likely to result in oppression.

Accordingly, the evidence, at most, demonstrates a low amount of procedural unconscionability based on the presumed adhesive nature of the Agreement.

Substantive Unconscionability

Substantive unconscionability examines the fairness of a contract’s terms to ensure that a contract of adhesion does not impose terms that are overly harsh, unduly oppressive, or unfairly one-sided. OTO, L.L.C. v. Kho (2019) 8 Cal.5th 111, 129-30. The court focuses on terms that unreasonably favor the more powerful party, impair the integrity of the bargaining process, contravene public interest or policy, or attempt to impermissibly alter fundamental legal duties. This includes unreasonable or harsh terms or ones that undermine the nondrafting party’s reasonable expectations. Id. at 130.

First, plaintiff appears to re-argue procedural unconscionability based on the onboarding process. ROA 33 at 10. Those arguments lack merit for the reasons discussed above. Plaintiff also cites various authorities and makes several untethered statements which he fails to apply to this case. See, e.g., id. (“Defendant’s conduct here supports the conclusion that the arbitration agreement ‘appears less as a forum for neutral dispute resolution and more as a means of maximizing employer advantage.’ Defendant attempts to enforce only the parts that benefit them, without taking responsibility for the entire bundle of terms they imposed.”). While plaintiff purports to do so, he fails to point to any part of the Agreement that demonstrates a lack of mutuality.

Second, plaintiff argues that the Agreement’s failure to specify that the employer will pay the costs associated with arbitration is substantively unconscionable. This argument is unavailing. Per the California Arbitration Act, which applies here, employers such as defendant who draft and maintain arbitration agreements are responsible for paying fees and costs to an arbitrator. C.C.P. § 1281.98. Furthermore, as defendant points out, this same argument was rejected by the California Supreme Court in the case upon which plaintiff relies.

Armendariz v. Found. Health Psychcare Servs., Inc. (2000) 24 Cal. 4th 83, 113 (“we interpret the arbitration agreement in the present case as providing . . . that the employer must bear the arbitration forum costs. The absence of specific provisions on arbitration costs would therefore not be grounds for denying the enforcement of an arbitration agreement”).

Accordingly, because there is no apparent substantive unconscionability, the Agreement is enforceable without regard to the negligible amount of procedural unconscionability.

Class Claims

“[A] party may not be compelled under the FAA to submit to class arbitration unless there is a contractual basis for concluding that the party agreed to do so.” Stolt–Nielsen S.A. v. AnimalFeeds International Corp. (2010) 559 U.S. 662, 684. An implicit agreement to authorize class-action arbitration is not a term that may be inferred “solely from the fact of the parties’ agreement to arbitrate. This is so because class-action arbitration changes the nature of arbitration to such a degree that it cannot be presumed the parties consented to it by simply agreeing to submit their disputes to an arbitrator.” Id. at 1775.

Here, the Agreement is silent as to class or collective actions. Accordingly, under the FAA, those claims cannot be arbitrated. See Kinecta Alternative Financial Solutions, Inc. v. Superior Court (2012) 205 Cal.App.4th 506, 518-519 (party cannot be compelled to class action arbitration unless they agreed to authorize class action arbitration). However, just because the class claims cannot be ordered to arbitration, it does not follow that those claims should be dismissed in the absence of contractual language providing for an express waiver of such claims. Accordingly, the court will not, at this time, dismiss plaintiff’s class claims. Those claims will be stayed pending resolution of the individual arbitration.

PAGA Claims

This case does not include any PAGA claims. Plaintiff’s claims in the related PAGA case are not at issue in this motion.

Plaintiff’s Evidentiary Objections

Plaintiff’s objections are overruled. The objections do not comply with the CRC, Rule 3.1354 (“[e]ach written objection must be numbered consecutively”). ROA 37.

Notice

Moving party is ordered to give notice of this ruling.