Opinion
E076054
09-23-2021
LUZ ALBA et al., Petitioners, v. THE SUPERIOR COURT OF SAN BERNARDINO COUNTY, Respondent HORIZON PERSONNEL SERVICES, INC. et al., Real Parties in Interest.
Milon Pluas, Joshua Milon, and Angel D. Pluas; Hannemann Law Firm and Brian G. Hannemann for Petitioners. No appearance for Respondent. Gordon Rees Scully Mansukhani, Roger M. Mansukhani, Carrie A. Stringham, and Andrew S. Wellman for Real Parties in Interest, Horizon Personnel Services, Inc., and Stay Safe Staffing, Inc. Epstein Becker & Green, Richard J. Frey, David M. Prager, and Devin S. Lindsay for Real Party in Interest, J & J Snack Foods Corp. of California.
NOT TO BE PUBLISHED
ORIGINAL PROCEEDINGS; petition for writ of mandate No. CIVDS1710291. Elia V. Pirozzi, Judge. Petition Denied.
Milon Pluas, Joshua Milon, and Angel D. Pluas; Hannemann Law Firm and Brian G. Hannemann for Petitioners.
No appearance for Respondent.
Gordon Rees Scully Mansukhani, Roger M. Mansukhani, Carrie A. Stringham, and Andrew S. Wellman for Real Parties in Interest, Horizon Personnel Services, Inc., and Stay Safe Staffing, Inc.
Epstein Becker & Green, Richard J. Frey, David M. Prager, and Devin S. Lindsay for Real Party in Interest, J & J Snack Foods Corp. of California.
OPINION
RAPHAEL J.
Petitioner Candelaria Villanueva brought an action against her employers. While the case was pending, the employers allegedly demanded that Villanueva sign an arbitration agreement or be fired. This was despite the fact the employers knew she had counsel, whom she was not allowed to consult with before having to sign. Villanueva signed the agreement, and the employers then successfully used that agreement as the basis for a motion to compel arbitration.
Villanueva seeks writ relief from the order to compel arbitration. Given the allegations about how the arbitration agreement was entered into, we issued an order to show cause. However, because that agreement has a clear and unmistakable delegation clause that Villanueva has not specifically challenged, and because we have no basis to find that mutual assent was lacking, we now deny the writ.
I. FACTUAL AND PROCEDURAL HISTORY
In April 2019, Villanueva filed a complaint against real parties in interest J&J Snack Foods Corp. of California (J&J), Horizon Personnel Services, Inc. (Horizon), and Stay Safe Staffing Inc. (Stay Safe), alleging over a dozen employment-related causes of action. The complaint showed that Villanueva was represented by counsel. Real parties in interest filed their answer the following month, and the case was consolidated with another that had been filed earlier.
In all, there are three consolidated or related cases involving real parties in interest. The first case, Alba v. Horizon Personnel Services, Inc. (Super. Ct. San Bernardino County, No. CIVDS1710291), was filed in May 2017. The second case, Villanueva v. Horizon Personnel Services, Inc. (Super. Ct. San Bernardino County, No. CIVDS1909864), is the one Villanueva brought in April 2019 that was consolidated with the first case. The third case, Najarro v. Horizon Personnel Services, Inc. (Super. Ct. San Bernardino County, No. CIVDS1925797), was filed in August 2019. After the trial court ordered the third case related to the consolidated cases and granted motions to compel arbitration, we issued an order to show cause in that action, and we address the arguments raised there in a separate opinion.
In December 2019, real parties in interest presented Villanueva with a set of documents, including an arbitration agreement. Villanueva contends that they misrepresented to her that she was merely signing updates to “expired” paperwork. She also contends that real parties in interest threatened to fire her and withhold her paychecks if she did not sign the documents. She signed the arbitration agreement and other documents.
“5. In or around December 8, 2019, I was told by [d]efendants' supervisors that I needed to fill out ‘updated' paperwork, including immigration paperwork that I had previous[ly] filled out numerous times before, and with which there was never issue. Defendants the[n] gave me paperwork that included an [a]rbitration [a]greement along with several documents that appeared to be legal releases and that stated that J & J Snack Foods, Inc. is ‘not my employer' and that I would be voluntarily giving up any rights to bring certain claims against J & J Snack Foods, Inc. Defendants then ordered me to sign every document or be fired. Defendants' supervisors also told me that if I did not sign all of the ‘updated' paperwork that they wanted me to sign, including the releases and the [a]rbitration paperwork, I would be fired, and would also not be allowed to pick up my paycheck until I had signed. “6. I felt intimidated by [d]efendants' threats. Since I live paycheck to paycheck to pay my basic bills and rent and support my family and three children, I was very scared that I would not be able to meet my basic necessities. Therefore, I signed all the paperwork that [d]efendants demanded that I sign. “7. At that time when I signed the documents presented to me in or around December 8, 2019, I did not understand that I was signing an [a]rbitration [a]greement because[d]efendants told me that the documents presented to me that day were merely updates of documents I had previously signed when I was hired, which allegedly had ‘expired' and included immigration status paperwork. When I attempted to read and go over the documents, I was told that the documents needed to be signed ‘today,' stopping me from reading and rushing me into signing. As such, I relied on [d]efendants' representations that the documents were merely updated forms of the exact same documents I had signed at the time of hiring, which did not include an arbitration agreement.” “8. I was not provided the opportunity to consult with my attorney and was not allowed to make copies of the documents I signed.” As part of her opposition to the motion to compel arbitration, Villanueva stated the following:
The arbitration agreement Villanueva signed was in Spanish, but an unsigned, English version accompanied the signed, Spanish version. In her petition and her traverse, Villanueva appears to cite this unsigned, English version. As an exhibit to their return, real parties in interest included a translated version of the signed, Spanish version and cite to this translated version. We cite to the translated version included with the real parties in interest's exhibits below and note that the parties have not contended that there is any substantive difference among any of the versions.
Under the terms of the arbitration agreement, Villanueva agreed to “resolve any claims, disputes or controversies related to” her employment relationship with Horizon. The arbitration agreement stated that its “interpretation and enforcement... shall be governed by the Federal Arbitration Act” and that the “fundamental law governing any claim subject to arbitration” under the agreement “shall be governed by the applicable state or federal law under which the claim was filed.”
The arbitration agreement contained a delegation clause. It stated that, “[e]xcept as expressly provided above with respect to class, collective or representative actions, the arbitrator shall have the exclusive authority to resolve any disputes relating to the interpretation, applicability, enforceability or formation of this [a]greement, including the assumption that this [a]greement is unenforceable.”
Horizon and Stay Safe filed a motion to compel arbitration based on this arbitration agreement, and J&J filed a notice of joinder. The trial court granted the motion, and Villanueva then filed the instant writ petition. We issued an order to show cause.
II. ANALYSIS
Villanueva contends that fraud, duress, and unconscionability render the entire arbitration agreement unenforceable. However, she does not specifically challenge the delegation provision in the arbitration agreement on any unique ground. Under Rent-A-Center, West, Inc. v. Jackson (2010) 561 U.S. 63 (Rent-A-Center), if a delegation clause is clear and unmistakable, a court must enforce it-meaning that any questions regarding the validity of the arbitration agreement as a whole must be submitted to and decided by the arbitrator-unless the court finds that no agreement between the parties was ever concluded. In California, there would be no agreement between the parties if the contract were void for “fraud in the execution, ” but there would be a contract between the parties if the contract were merely voidable for “fraud in the inducement.” (Rosenthal v. Great Western Fin. Securities Corp. (1996) 14 Cal.4th 394, 415 (Rosenthal).) This is because only when “the entire contract is void... because of fraud” is there no agreement to arbitrate any controversy. (Id. at p. 416; see also ibid. [when “a party's apparent assent to a written contract is negated” by fraud in the execution, “there is simply no arbitration agreement to be enforced”].)
As we explain, the delegation clause here was clear and unmistakable. Moreover, Villanueva's contentions regarding fraud, duress, and unconscionability do not show that there is no arbitration agreement at all, even if her contentions are true. At most, such contentions go toward whether the agreement was voidable. Accordingly, questions about the arbitration agreement's enforceability must be submitted to and decided by the arbitrator, not the court.
A. Rent-A-Center
In Rent-A-Center, plaintiff Antonio Jackson filed an employment discrimination suit against his former employer. (Rent-A-Center, supra, 561 U.S. at p. 65.) The employer moved to compel arbitration based on an arbitration agreement covering all “‘past, present or future'” disputes arising out of Jackson's employment. (Ibid.) The arbitration agreement also provided that “‘[t]he [a]rbitrator, and not any federal, state, or local court or agency, shall have exclusive authority to resolve any dispute relating to the interpretation, applicability, enforceability or formation of this [a]greement including, but not limited to any claim that all or any part of this [a]greement is void or voidable, '” language commonly referred to as a delegation provision or delegation clause. (Id. at p. 66.) Jackson opposed the motion, arguing that the arbitration agreement was unconscionable under applicable state law. (Ibid.)
After determining that the delegation clause constituted clear and unmistakable evidence that the parties “agreed to arbitrate arbitrability” (Rent-A-Center, supra, 561 U.S. at p. 69, fn. 1), a majority of the United States Supreme Court held that it would treat the entire arbitration agreement as valid and enforceable under the Federal Arbitration Act (9 U.S.C. §§ 1-16), “leaving any challenge to the validity of the [a]greement as a whole for the arbitrator, ” “unless Jackson challenged the delegation provision specifically.” (Rent-A-Center, supra, at p. 72.) Because Jackson had “challenged only the validity of the contract as a whole” and “did not make any arguments specific to the delegation provision, ” it was for the arbitrator to determine whether the arbitration agreement was valid, not the court. (Id. at pp. 72, 74.)
The Court's holding stemmed from earlier cases where it held that “‘[a]s a matter of substantive federal arbitration law, an arbitration provision is severable from the remainder of the contract.'” (Rent-A-Center, supra, 561 U.S. at pp. 70-71, citing Buckeye Check Cashing, Inc. v. Cardegna (2006) 546 U.S. 440, 445.) Because an arbitration provision is severable from the rest of a contract (for example, an employment contract), the fact that the rest of the contract might have “many elements of alleged unconscionability applicable to the entire contract (outrageously low wages, for example) would not affect the agreement to arbitrate alone.” (Rent-A-Center, supra, at p. 71.) A party opposing arbitration must specifically challenge the “agreement to arbitrate before the court will intervene.” (Id. at p. 71; see Prima Paint Corp. v. Flood & Conklin Mfg. Co. (1967) 388 U.S. 395, 403-404.) But unlike in other cases where “the arbitration provisions sought to be enforced... were contained in contracts unrelated to arbitration, ” in Rent-A-Center “the underlying contract [was] itself an arbitration agreement.” (Rent-A-Center at p. 72.) To the majority, this made no difference, as “[a]pplication of the severability rule does not depend on the substance of the remainder of the contract.” (Ibid.) As Justice Stevens, dissenting on behalf of four justices, put it, under Rent-A-Center “[e]ven when a litigant has specifically challenged the validity of an agreement to arbitrate he must submit that challenge to the arbitrator unless he has lodged an objection to the particular line in the agreement that purports to assign such challenges to the arbitrator.” (Id. at p. 76 (dis. opn. of Stevens, J.).)
Aside from the holding itself, two aspects of Rent-A-Center are worth noting. The first is that the dissenting four justices would have found that Jackson's “claim that the arbitration agreement is unconscionable undermines any suggestion that he ‘clearly' and ‘unmistakably' assented to submit questions of arbitrability to the arbitrator. (Rent-A-Center, supra, 561 U.S. at p. 81 (dis. opn. of Stevens, J.).) “In other words, when a party raises a good-faith validity challenge to the arbitration agreement itself, that issue must be resolved before a court can say that he clearly and unmistakably intended to arbitrate that very validity question.” (Id. at p. 82 (dis. opn. of Stevens, J.).) The majority, however, rejected this, noting that what matters is whether “the text of the [a]greement [is] clear and unmistakable on this point.” (Id. at p. 69, fn. 1, italics added; see also ibid. [stating that the “clear and unmistakable” requirement “pertains to the parties' manifestation of intent, not the agreement's validity”], italics removed.)
The second notable aspect is that Rent-A-Center did not change a court's ability to determine “whether any agreement between the parties ‘was ever concluded.'” (Rent-A-Center, supra, 561 U.S. at p. 70, fn. 2.) Such an issue is distinct from an agreement's validity. (Ibid.; see also id. at p. 69, fn. 1 [distinguishing validity of an agreement from “whether it was in fact agreed to”]; Buckeye Check Cashing, Inc. v. Cardegna, supra, 546 U.S. at p. 444, fn. 1.) In determining whether a contract was entered into, courts “should apply ordinary state-law principles that govern the formation of contracts.” (First Options of Chicago, Inc. v. Kaplan (1995) 514 U.S. 938, 944.)
B. Applying Rent-A-Center to Villanueva's Arbitration Agreement
This case falls squarely under Rent-A-Center. Here, as in Rent-A-Center, a current or former employee is suing while opposing arbitration. Here, as in Rent-A-Center, there is a delegation clause contained in a standalone arbitration agreement. And here, as in Rent-A-Center, the employee challenges the validity of the arbitration agreement as a whole, but asserts no arguments specific to the delegation clause. Thus, absent a determination that no agreement between the parties was ever concluded-an issue we discuss further below-it is for the arbitrator to determine whether the arbitration agreement is valid.
1. Clear and Unmistakable Agreement to Arbitrate Arbitrability
The text of the Villanueva's arbitration agreement clearly and unmistakably assigns gateway arbitrability issues to the arbitrator. The agreement states that “[e]xcept as expressly provided above with respect to class, collective or representative actions, the arbitrator shall have the exclusive authority to resolve any disputes relating to the interpretation, applicability, enforceability or formation of this [a]greement, including the assumption that this [a]greement is unenforceable.”
Villanueva relies on case law that supports a different conclusion where a contract “includes a severability clause stating a court of competent jurisdiction may excise an unconscionable provision.” (Dennison v. Rosland Capital LLC (2020) 47 Cal.App.5th 204, 209-210.) But there is no such severability clause here. The severability clause in the arbitration agreement here states that “[i]n the event that any provision of the JAMS Employment Arbitration Rules and Procedures, the JAMS Employment Arbitration Minimum Standards, or this [a]greement is deemed to be unenforceable, such provision shall be removed or modified without affecting the enforceability of the remaining provisions in the [a]greement.” Unlike the type of severability clause cases such as Dennison refer to, this severability clause does not state that a court may excise an unconscionable provision. Additionally, a court's power under the agreement to excise unconscionable provisions in “class, collective or representative actions”-because such actions are carved out of the delegation clause-does not make the Dennison rule applicable because this is not a class, collective, or representative action. Thus, it is the arbitrator, and not the court, that has the power to excise any invalid provisions of Villanueva's contract. (See also Mohamed v. Uber Technologies, Inc. (9th Cir. 2016) 848 F.3d 1201, 1209 [holding, regarding similar contractual language, that “the delegation provisions clearly and unmistakably delegated the question of arbitrability to the arbitrator for all claims except challenges to the class, collective, and representative actions waivers” in the arbitration agreements].)
Villanueva's characterization of the case as a “multi-plaintiff lawsuit” when discussing the issue supports this. The fact that Villanueva's lawsuit has been consolidated with others (and deemed related to still others) does not make it a class, collective, or representative action. (See, e.g., Alvarez v. City of Chicago (7th Cir. 2010) 605 F.3d 445, 448 [“The Fair Labor Standards Act gives employees the right to bring their [Fair Labor Standards Act] claims through a ‘collective action' on behalf of themselves and other ‘similarly situated' employees. 29 U.S.C. § 216(b) (2006). A collective action is similar to, but distinct from, the typical class action brought pursuant to [Federal Rules of Civil Procedure rule] 23. The principle difference is that plaintiffs who wish to be included in a collective action must affirmatively opt-in to the suit by filing a written consent with the court, while the typical class action includes all potential plaintiffs that meet the class definition and do not opt-out”].)
Villanueva also contends that any dispute about her intent to enter into the arbitration agreement is enough for a finding that clear and unmistakable evidence is lacking. She states, for instance, that “her signature was procured through fraud, duress, coercion, and connivance, ” and that as a result, “the delegation clause cannot be said to be a ‘manifestation of her intent.'” This argument, however, is identical to Justice Stevens's remark in Rent-A-Center that “when a party raises a good-faith validity challenge to the arbitration agreement itself, ” that issue should be decided by a court and not an arbitrator. (Rent-A-Center, supra, 561 U.S. at p. 82 (dis. opn. of Stevens, J.).) A majority of the United States Supreme Court has rejected this argument, and as we are bound by the majority opinion in Rent-A-Center and not the dissent, Villanueva's contention is unmeritorious.
2. Existence of a Specific Challenge to the Delegation Clause
Throughout her petition and her traverse, Villanueva repeatedly asserts that real parties in interest's fraud, duress, and unconscionability render the entire arbitration agreement unenforceable. For example, she contends that her “asserted contract defenses of coercion and fraud would invalidate the entire arbitration agreement, including the delegation clause.” Elsewhere, she claims that the “trial court erred in granting the order to compel arbitration when [she] presented significant evidence of fraud, duress, and unconscionability, which invalidates the agreement under California law.”
Additionally, in the instances where Villanueva specifically refers to the validity of the delegation clause, she states that her arguments as to the clause's invalidity are identical to her arguments as to the entire agreement's invalidity. In her traverse, for example, she emphasizes that “the circumstances regarding the creation of any agreement to arbitrate or delegate are the same because they occurred at the same time. As [a] result, should a court rule that the arbitration agreement is nonexistent or void, this in turn would mean that there never was an accompanying agreement to delegate....” Although Villanueva at one point states that she “has challenged the delegation clause, specifically and as a part of the larger arbitration agreement”-which could be read as suggesting that she has made specific challenges unique to the delegation clause-her petition and traverse reveal no such challenges.
In fact, in her petition, Villanueva notes that the trial court “‘honed in' on the delegation section of the arbitration agreement when ‘determining the unconscionability analysis'”-seemingly treating Villanueva as if she specifically challenged the delegation clause-and then faults the trial court for doing so. She states that “the trial court largely deferred the question of unconscionability of the contract to the arbitrator[, ] focusing solely on the unconscionability of the delegation clause”, but that in this case “Villanueva has asserted the entire arbitration agreement was unconscionable and unenforceable (as well [as] coercive and fraudulent) under California law, including the delegation clause, and thus the court must as a threshold matter rule on those defenses before the delegation clause can be enforced.”
Thus, this case is similar to Rent-A-Center, where the Supreme Court also concluded that the employee did not make any challenges specific and unique to the delegation clause. (See, e.g., Rent-A-Center, supra, 561 U.S. at p. 72 [arbitrator decides arbitrability because “Jackson challenged only the validity of the contract as a whole”].) Accordingly, applying Rent-A-Center here, we similarly conclude that her challenge fails unless she can establish that she never entered into any agreement with real parties in interest at all, an issue we now turn to.
We do not mean to imply that the bottom line result here would have been different had Villanueva specifically challenged the delegation clause. (Cf. Rent-A-Center, supra, 561 U.S. at p. 74 [noting that had Jackson argued that a limitation on discovery specifically rendered the delegation clause unconscionable, it would have been “a much more difficult argument to sustain than the argument that the same limitation renders arbitration of his factbound employment-discrimination claim unconscionable”].)
3. Whether an Agreement Was Ever Concluded
As noted earlier, despite the existence of a clear and unmistakable delegation clause, a court remains able to determine “whether any agreement between the parties ‘was ever concluded.'” (Rent-A-Center, supra, 561 U.S. at p. 70, fn. 2.) In making this determination, courts apply “ordinary state-law principles that govern the formation of contracts.” (First Options of Chicago, Inc. v. Kaplan, supra, 514 U.S. at p. 944.)
“California law distinguishes between fraud in the ‘execution' or ‘inception' of a contract and fraud in the ‘inducement' of a contract. In brief, in the former case ‘“the fraud goes to the inception or execution of the agreement, so that the promisor is deceived as to the nature of his act, and actually does not know what he is signing, or does not intend to enter into a contract at all, mutual assent is lacking, and [the contract] is void. In such a case it may be disregarded without the necessity of rescission.”'” (Rosenthal, supra, 14 Cal.4th at p. 415.) “[C]laims of fraud in the execution of the entire agreement are not arbitrable under either state or federal law. If the entire contract is void ab initio because of fraud, the parties have not agreed to arbitrate any controversy.” (Id. at p. 416.)
“Fraud in the inducement, by contrast, occurs when ‘“the promisor knows what he is signing but his consent is induced by fraud, mutual assent is present and a contract is formed, which, by reason of the fraud, is voidable. In order to escape from its obligations the aggrieved party must rescind.”'” (Rosenthal, supra, 14 Cal.4th at p. 415.) “[F]raud in the inducement relating to other contractual terms does not render the arbitration agreement unenforceable, even when it might justify rescission of the contract as a whole. By entering into the arbitration agreement, the parties established their intent that disputes coming within the agreement's scope be determined by an arbitrator rather than a court; this contractual intent must be respected even with regard to claims of fraud in the inducement of the contract generally.” (Id. at p. 416.)
Notably, with regard to whether an agreement is void for fraud in the execution, our Supreme Court has held that “[o]ne party's misrepresentations as to the nature or character of the writing do not negate the other party's apparent manifestation of assent, if the second party had ‘reasonable opportunity to know of the character or essential terms of the proposed contract.' (Rest.2d Contracts, § 163, p. 443.) If a party, with such reasonable opportunity, fails to learn the nature of the document he or she signs, such ‘negligence' precludes a finding the contract is void for fraud in the execution.” (Rosenthal, supra, 14 Cal.4th at p. 423; see also Duick v. Toyota Motor Sales, U.S.A., Inc. (2011) 198 Cal.App.4th 1316, 1321 [finding fraud in the execution because “[r]easonable readers of the terms and conditions would not have understood that they were agreeing to be victims of a prank”].)
On the record before us, we find no fraud in the execution of the arbitration agreement. Villanueva's claims of duress and unconscionability would show at most that the arbitration agreement is rescindable (i.e., voidable). (See IMO Development Corp. v. Dow Corning Corp. (1982) 135 Cal.App.3d 451, 458 [“It is well settled that ‘a contract entered into by reason of... duress or economic compulsion may be rescinded by the injured party'”]; Marin Storage & Trucking, Inc. v. Benco Contracting and Engineering, Inc. (2001) 89 Cal.App.4th 1042, 1049 [“The doctrine of unconscionability is a defense to the enforcement of a contract or a term thereof.... No such defense arises without a contract”].) Accordingly, it does not matter whether we would agree that the arbitration agreement was the result of duress or that it contains unconscionable terms, as such holdings would not negate the mutual assent needed for the existence of a contract in the first place.
Moreover, Villanueva's claims of fraud do not show fraud in the execution. Her fraud claims are based on real parties in interest's misrepresentations that the documents were merely updates of expired paperwork that she was not given time to review (or an opportunity to have reviewed by counsel) before signing. Such claims, however, are of the same type our Supreme Court held in Rosenthal to be insufficient for fraud in the execution.
In Rosenthal, the California Supreme Court considered whether statements to the effect that a contract was “unimportant” or that a party “need not read” it could show fraud in the execution. (Rosenthal, supra, 14 Cal.4th at pp. 423-424.) It held that “[s]uch statements, even if falsely and fraudulently made, do not void a written contract, because it is generally unreasonable, in reliance on such assurances, to neglect to read a written agreement before signing it. One party's making of such an assurance does not, by itself, deprive the other party to a prospective contract of the reasonable opportunity to discover the character and essential terms of the agreement.” (Id. at p. 424, fn. omitted.) The Court also considered whether statements that the other contracting party “‘did not give me any time' to read the agreement... or that they felt ‘rushed'... or ‘pressured'” could show a lack of mutual assent. (Id. at p. 424, fn. 12.) It concluded that “[w]ithout evidence that [the other party] actually took some action or said something to hurry or pressure” the party, however, such claims would “add nothing” to the required showing. (Ibid.)
Villanueva's claims fare no better. She stated that the documents presented to her in December 2019 “were merely updates of documents” she had previously signed, “which allegedly had ‘expired.'” When she attempted to read the documents, she stated that she was told “that the documents needed to be signed ‘today,' stopping [her] from reading and rushing [her] into signing.” She goes on to state that she was “not provided the opportunity” to consult with her attorney. The alleged misrepresentations about the documents being updates of expired ones did not, by themselves, deprive Villanueva of an opportunity to read the documents and discover their essential terms. In addition, the fact that she was told she needed to sign sometime that day, along with a conclusory statement that she was not provided an opportunity to consult with her attorney, do not make Villanueva's statements substantially different from those held in Rosenthal to be insufficient.
Although Rosenthal held that misrepresentations by themselves would not deprive the other party of a reasonable opportunity to discover the essential terms of an agreement, it also held that misrepresentations made to a party who had a limited understanding of English might warrant a different result. (Rosenthal, supra, 14 Cal.4th at p. 428 [“In light of plaintiffs' prior relationship with [the corporation], which they were led to believe was also the employer of Divine and Daikovich, their limited ability to understand English, and Divine and Daikovich's representations that their oral recitals accurately reflected the terms of the agreements, plaintiffs would not have been negligent in relying on the [corporation's] representatives instead of reading the agreements themselves”].) Here, however, we note that Villanueva signed a Spanish version of the arbitration agreement, not an English version. Along with Villanueva's statement that she was told to sign the arbitration agreement and other documents that day, the fact that she signed a non-English version of the arbitration agreement further suggests that she had a “‘reasonable opportunity to know of the character or essential terms of the proposed contract.'” (Rosenthal, supra, 14 Cal.4th at p. 423, citing Restatement (Second) of Contracts, § 163.)
Accordingly, we find that Villanueva has not shown fraud in the execution of the arbitration agreement. We next turn to whether real parties in interest's knowledge that Villanueva had counsel when she signed the agreement provides another means of demonstrating lack of mutual assent.
C. Litigation Conduct
Villanueva emphasizes the unique circumstances surrounding the arbitration agreement here; namely, that she was told to sign the agreement without the benefit of counsel after the lawsuit had already commenced and even though real parties in interest knew (or should have known) that she was represented. Indeed, our decision to issue an order to show cause was based on the troubling nature of the alleged circumstances. Having reviewed the parties' submissions, however, we conclude that these circumstances do not merit a different result.
Villanueva principally relies on two cases in contending that real parties in interest's litigation conduct warrant writ relief, one from the Court of Appeal and one from the federal Ninth Circuit. Both, however, are distinguishable.
In Salgado v. Carrows Restaurants, Inc. (2019) 33 Cal.App.5th 356 (Salgado), an employee filed a lawsuit against her employer and then signed an arbitration agreement she later claimed was both inapplicable and unenforceable. (Id. at pp. 358-359.) The Court of Appeal held that the arbitration agreement was broad enough to include the employee's lawsuit and that it applied retroactively to lawsuits initiated before the agreement. (Id. at pp. 360-362.) It remanded the matter back to the trial court, however, so that it could “determine whether [the employer] knew or should have known [the employee] was represented by counsel when she signed the arbitration agreement, ” and, if so, “whether the arbitration agreement is enforceable.” (Id. at p. 363.)
Despite the similarities between this case and Salgado, however, there is a crucial distinction: only our case involves a delegation clause. Because that delegation clause is clear and unmistakable (and because Villanueva has not challenged the delegation clause specifically), we may only determine whether the agreement “‘was ever concluded'” before ordering the parties to arbitration. (Rent-A-Center, supra, 561 U.S. at p. 70, fn. 2.) The distinction makes a difference here because Salgado's discussion of why remand was warranted referred only to voidability, not mutual assent. (See Salgado, supra, 33 Cal.App.5th at p. 362 [stating that “[c]ourts may refuse to enforce unconscionable contracts” and that a “‘petition to compel arbitration is not to be granted when there are grounds for rescinding the agreement'”], italics added.) Salgado did not suggest that knowledge of a party's representation could, without more, render an arbitration agreement void ab initio. We therefore find Salgado distinguishable.
Accordingly, we also deny Villanueva's motion to augment the record with exhibits supporting her arguments on retroactivity. The fact that Salgado did not involve a delegation clause is also why the court was empowered to decide whether or not the arbitration agreement applied retroactively. (See Salgado, supra, 33 Cal.App.5th at pp. 361-362.) Although our order to show cause asked the parties to brief the issue of retroactivity, we now conclude that, under Rent-A-Center, such a question must be decided by the arbitrator in light of the delegation clause. Once we have applied the Rent-A-Center framework and determined that the parties entered into an arbitration agreement with a clear and unmistakable delegation clause, we may not override the agreement because we believe, for instance, that a party's arguments about the agreement's applicability in a specific case are unconvincing, or even “wholly groundless.” (Henry Schein, Inc. v. Archer and White Sales, Inc. (2019) 586 U.S. __, 139 S.Ct. 524, 529.) “[P]arties may agree to have an arbitrator decide not only the merits of a particular dispute but also ‘“gateway” questions of “arbitrability, ” such as whether the parties have agreed to arbitrate or whether their agreement covers a particular controversy, '” and “[j]ust as a court may not decide a merits question that the parties have delegated to an arbitrator, a court may not decide an arbitrability question that the parties have delegated to an arbitrator.” (Id. at pp. 529-530.)
In Martin v. Yasuda (9th Cir. 2016) 829 F.3d 1118 (Martin), the federal Ninth Circuit Court of Appeals held that a party waived its right to compel arbitration by its “litigation conduct.” (Id. at pp. 1119-1120.) Although the isolated phrase “litigation conduct” may appear broad enough to include real parties in interest's alleged conduct here, when properly read, Martin was a case about whether a party's delay or inconsistent behavior in demanding arbitration in an ongoing case could constitute waiver of the right to arbitrate. (See id. at p. 1124 [“‘[a] party seeking to prove waiver of a right to arbitration must demonstrate: (1) knowledge of an existing right to compel arbitration; (2) acts inconsistent with that existing right; and (3) prejudice to the party opposing arbitration resulting from such inconsistent acts”]; see also 9 U.S.C. § 3 [court may stay trial pending arbitration “providing the applicant for the stay is not in default in proceeding with such arbitration”]; Hong v. CJ CGV America Holdings, Inc. (2013) 222 Cal.App.4th 240 [discussing waiver of right to arbitration under California and federal law].) In other words, it was a case focused on how a party acts after it has obtained a right to compel arbitration and whether its actions are inconsistent with that right. Martin does not stand for the proposition that any bad behavior can constitute the kind of “litigation conduct” that will lead to a denial of a motion to compel arbitration. And there is no claim similar to Martin here; Villanueva does not, for instance, claim that real parties in interest sat on their right to compel arbitration in a way that prejudiced her, or that they acted in a way inconsistent with a right to compel arbitration once they had obtained it. Accordingly, we find Martin distinguishable as well.
Martin did involve a delegation clause. In holding that the clause nevertheless did not require the arbitrator to decide the issue of waiver, the Ninth Circuit relied exclusively on Cox v. Ocean View Hotel Corp. (9th Cir. 2008) 533 F.3d 1114 (Cox). (Martin, supra, 829 F.3d at p. 1124.) Cox also involved a delegation clause (Cox, supra, at p. 1117), but at no point did the Cox court discuss or cite the delegation clause in its analysis. (See id. at pp. 1119-1126.) Martin, however, reasoned that because Cox's delegation clause did not require the case to be sent to arbitration, so too would the delegation clause in Martin. (Martin, supra, at p. 1124.) In doing so, Martin appears to have neglected the possibility that the parties in Cox simply did not raise the delegation clause as an issue. Because Martin placed exclusive reliance on a case where the delegation clause was never discussed, we decline to follow Martin's analysis regarding the delegation clause.
Villanueva's remaining arguments concerning real parties in interest's litigation conduct likewise do not lead us to grant relief. She observes that California courts have stated that bad faith or willful misconduct may constitute waiver (see Iskanian v. CLS Transportation Los Angeles, LLC (2014) 59 Cal.4th 348, 375), but she does not cite (and we have not found) any cases finding waiver on these grounds under the Federal Arbitration Act. Villanueva also invokes the equitable doctrine of unclean hands, which “‘prevents “a wrongdoer from enjoying the fruits of his transgression.”'” (Jay Bharat Developers, Inc. v. Minidis (2008) 167 Cal.App.4th 437, 445.) Absent an indication in the arbitration agreement that non-interim equitable issues are carved out from the delegation provision, however, the arbitrator must rule on unclean hands, not the court. (Cf. Brennan v. Opus Bank (9th Cir. 2015) 796 F.3d 1125, 1128 [arbitration agreement contained exception for “‘claim[s] for equitable relief'”].) And finally, even assuming the doctrine of “connivance” were somehow carved out of the scope of the delegation clause, the case Villanueva cites in invoking the doctrine involved a statute that expressly used the word “‘connivance, '” and there is no such statute here. (County of Los Angeles v. Financial Casualty & Surety, Inc.(2013) 216 Cal.App.4th 1192, 1194, citing Pen. Code, § 1305, subd. (d).) Villanueva accordingly raises no grounds for us to find a lack of mutual assent or other means of denying arbitration here.
DISPOSITION
The petition is denied. The order to show cause is discharged and the stay previously ordered by this court is lifted when this opinion becomes final.
Real parties in interest to recover their costs.
We concur: CODRINGTON Acting P. J., SLOUGH J.