Parker vs. AMPCO Contracting Inc.

Plaintiff does not dispute signing the Agreement. Therefore, defendant KML has sufficiently shown the existence of an agreement to arbitrate.

The Complaint alleges wage and hour violations. The Agreement requires arbitration of all claims arising out of Plaintiff’s employment. Therefore, the Agreement also covers the claims alleged in the Complaint.

Enforcement by Non-Signatory: “[T]here are six theories by which a nonsignatory may be bound to arbitrate: ‘(a) incorporation by reference; (b) assumption; (c) agency; (d) veil-piercing or alter ego; (e) estoppel; and (f) third-party beneficiary’ [citation].” (Suh v. Superior Ct. (2010) 181 Cal. App. 4th 1504, 1513.)

AMPCO is not a signatory to the Agreement but moves to compel arbitration under the doctrine of equitable estoppel.

“Under this [equitable estoppel] exception, ‘a nonsignatory defendant may invoke an arbitration clause to compel a signatory plaintiff to arbitrate its claim when the causes of action against the nonsignatory are “intimately founded in and intertwined with” the underlying contract obligations.’ [Citation.] The doctrine applies where the claims are ‘ “ ‘based on the same facts and are inherently inseparable’ ” from the arbitrable claims against signatory defendants.’ [Citation.]” (Garcia v. Pexco, LLC (2017) 11 Cal.App.5th 782, 786 (Garcia); see also Gonzalez v. Nowhere Beverly Hills LLC (2024) 107 Cal.App.5th 111 (Gonzalez).)

Here, the Complaint alleges that “Defendants, and each of them, were the agents, employees, managing agents, supervisors, co-conspirators, parent corporation, joint employers, alter ego, and/or joint ventures of the other Defendants, and each of them, and in doing the things alleged herein, were acting at least in part within the course and scope of said agency, employment, conspiracy, joint employer, alter ego status, and/or joint venture and with the permission and consent of each of the other Defendants.” (Complaint, ¶ 3.)

Further, the Complaint does not allege that each Defendant separately employed Plaintiff at various times, rather the Complaint alleges that they collectively employed her at all relevant times alleged in the Complaint. Moreover, Plaintiff brings the same claims against both KML and AMPCO defendants, based on the same allegations, all of which arise out of Plaintiff’s employment, which is covered under the arbitration agreement.

AMPCO argues that it can enforce the arbitration clause under the doctrine of equitable estoppel because Plaintiff’s claims against AMPCO arise entirely from the same employment relationship and alleged conduct underlying his claims against KML. Here, Plaintiff alleges AMPCO and KML were his joint employers, and since the arbitration agreement controls Plaintiff’s employment, he is equitably estopped from refusing to arbitrate his claims with AMPCO. (Garcia, supra, 11 Cal.App.5th at p. 788.) Therefore, AMPCO may enforce the Agreement under the doctrine of equitable estoppel.

Further, nonsignatory AMPCO may invoke the arbitration agreement under the doctrine of agency. “[A] plaintiff’s allegation of an agency relationship among defendants is sufficient to allow the alleged agents to invoke the benefit of an arbitration agreement executed by their principal

even though the agents are not parties to the agreement. [Citations.] Moreover, it would be unfair to defendants to allow John to invoke agency principles when it is to his advantage to do so, but to disavow those same principles when it is not.” (Thomas v. Westlake (2012) 204 Cal.App.4th 605, 614-615.) Here, the Complaint alleges “Defendants, and each of them, were the agents . . . of the other Defendants . . .” (Complaint, ¶ 3.)

Therefore, AMPCO may enforce the Agreement under both equitable estoppel and agency.

Defenses to the Arbitration Agreement: Plaintiff argues the Agreement is unconscionable. Procedural and substantive unconscionability “must both be present in order for a court to exercise its discretion to refuse to enforce a contract or clause under the doctrine of unconscionability.” (Armendariz v. Foundation Health Psychcare Servs., Inc. (2000) 24 Cal.4th 83, 114.) However, they need not be present in the same degree. (Ibid.) A sliding scale approach is used and the more substantively oppressive the contract term, the less evidence of procedural unconscionability is required. (Ibid.)

a. Procedural Unconscionability: “Procedural unconscionability focuses on the elements of oppression and surprise.” (Serafin v. Balco Properties Ltd., LLC (2015) 235 Cal.App.4th 165, 177.) “Oppression arises from an inequality of bargaining power which results in no real negotiation and an absence of meaningful choice. Surprise involves the extent to which the terms of the bargain are hidden in a prolix printed form drafted by a party in a superior bargaining position.” (Ibid.) “[A] finding of procedural unconscionability does not mean that a contract will not be enforced, but rather that courts will scrutinize the substantive terms of the contract to ensure they are not manifestly unfair or one-sided.” (Baltazar v. Forever 21, Inc. (2016) 62 Cal.4th 1237, 1244 (Baltazar).)

Since the Agreement was offered to Plaintiff on a take-it-or-leave-it basis it is a contract of adhesion. Therefore, there is some minimal degree of procedural unconscionability.

a. Substantive Unconscionability: “Substantive unconscionability focuses on the actual terms of the agreement and evaluates whether they create ‘overly harsh’ or ‘one-sided’ results.’” (Serafin, supra, 235 Cal.App.4th at 177.)

Plaintiff argues that the Agreement contains two substantively unconscionable provisions.

First, Plaintiff argues that paragraph 4 of the Agreement is substantively unconscionable because it strips him of his statutory right under Labor Code 98.2 to appeal to the court. Paragraph 4 provides in pertinent part, “The parties agree that any appeal of an order, decision or award issued by the Labor Commissioner with respect to any such claim, may be made to an arbitrator pursuant to the Expedited Procedures of the AAA Commercial Arbitration Rules, and not to a court of law. The arbitrator

empowered to hear any such appeals shall have experience in arbitrating wage and hour claims. The provisions of this Agreement, and not Labor Code section 98.2, shall otherwise apply to any such appeal.” (Vitta Decl., Ex. A, ¶ 4.)

Plaintiff contends the Agreement requires Plaintiff to appeal a decision of the Labor Commissioner to an arbitrator which eliminates Plaintiff’s statutory right under section 98.2 to appeal a Labor Commissioner determination to the Superior Court. However, Plaintiff fails to cite any authority holding that an agreement to arbitrate a section 98.2 appeal renders an arbitration agreement substantively unconscionable. Further, here, not only is Plaintiff not alleging any Section 98.2 claim, but Section 98.4 expressly allows for arbitration of 98.2 claims. Accordingly, the Agreement is not substantively unconscionable on this ground.

Second, Plaintiff argues that paragraph 5 of the Agreement is substantively unconscionable because it contains a blanket waiver of representative and class actions. Paragraph 5 provides: “To the fullest extent permitted by law, the parties agree that they shall not join or consolidate claims submitted for arbitration under this Agreement with those of any other persons, and that no form of class, collective, or representative action shall be maintained without the mutual consent of the parties.” (Vitta Decl., Ex. A, ¶ 5.)

Plaintiff argues the blanket waiver is substantively unconscionable as applied to representative claims available under California law. Defendant does not dispute the unconscionability of the provision as it applies to PAGA claims but contends Plaintiff has not asserted a PAGA claim or any class claims in this action. (Reply, 4:16-17.) Because there is no PAGA claim involved, here, the Court finds that any PAGA waiver would not render the entire agreement unenforceable, because of the severance provision in paragraph 10 of the Agreement. (See Mohamed v.

Uber Technologies, Inc. (9th Cir. 2016) 848 F.3d 1201, 1213 [concluding that PAGA waiver in arbitration agreement was invalid under California law but severable from the remainder of the agreement].) “[W]hile a trial court has considerable discretion with respect to severability, the statute contemplates that refusal to enforce an agreement altogether should be limited to situations where the agreement is ‘ “permeated” ’ by unconscionability.” (Farrar v. Direct Com., Inc. (2017) 9 Cal.App.5th 1257, 1274.)

To the extent Plaintiff alleges a cause of action seeking restitution under Business and Professions Code section 17200, the Agreement’s waiver language does not prevent Plaintiff from pursuing the claim as alleged.

Accordingly, the Court finds Plaintiff has not shown that the arbitration agreement is unenforceable.

The motion is GRANTED, and the action is stayed, pending the completion of arbitration.

Defendants to give notice. 1.