Defendants Notice of Motion And Motion To Compel Arbitration Memorandum of Points And AuthoritiesMotionCal. Super. - 4th Dist.November 13, 2018~N O Y a B A W 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 MORGAN, LEWIS & Bockius LLP ATTORNEYS AT LAW LOS ANGELES MORGAN, LEWIS & BOCKIUS LLP J. Warren Rissier, Bar No. 197939 Max Fischer, Bar No. 226003 Brian D. Fahy, Bar No. 266750 Jordan McCrary, Bar No. 288673 300 South Grand Avenue Twenty-Second Floor Los Angeles, CA 90071-3132 Tel: +1.213.612.2500 Fax: +1.213.612.2501 warren.rissier@morganlewis.com max.fischer@morganlewis.com brian.fahy @morganlewis.com jordan.mcrary @morganlewis.com Attorneys for Defendants Cresa Management, LLC, Cresa Partners of Orange ELECTROMICALLY FILED Superior Court of California, County of Orange 03/15/2019 at 04:54:00 FM Clerk of the Superior Court By Giovanni Calon, Deputy Clerk County, LP, Cresa Partners-West, Inc., Jeff A. Manley, Wayne Lamb, Dillon Dummit, Taylor Wood, Richard Martin, Randall S. Parker, Steven T. Card and Savills Studley, Inc. SUPERIOR COURT OF CALIFORNIA COUNTY OF ORANGE KENNETH B. BLYE, an individual, Plaintiff, VS. CRESA MANAGEMENT, LLC; CRESA PARTNERS OF ORANGE COUNTY, LP; CRESA PARTNERS-WEST, INC.; JEFF A. MANLEY, WAYNE LAMB, DILLON DUMMIT, TAYLOR WOOD, RICHARD MARTIN, RANDALL S. PARKER, STEVEN T. CARD, SAVILLS STUDLEY, INC.; and DOES 1 through 50, inclusive, Defendants. Case No. 30-2018-01032177 DEFENDANTS’ NOTICE OF MOTION AND MOTION TO COMPEL ARBITRATION; MEMORANDUM OF POINTS AND AUTHORITIES [Petition to Compel Arbitration, Declarations of Jeff Manley and J. Warren Rissier, Request for Judicial Notice, and Proposed Order filed concurrently herewith] MOTION RES. NO.: 73006915 Date: May 23, 2019 Time: 1:30 P.M. Dept.: C33 Judge: Hon. James Crandall DEFENDANTS’ MOTION TO COMPEL ARBITRATION DB2/ 36076723.9 ~N O Y a B A W 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 MORGAN, LEWIS & Bockius LLP ATTORNEYS AT LAW Los ANGELES NOTICE OF MOTION TO PLAINTIFFS AND THEIR ATTORNEYS OF RECORD: PLEASE TAKE NOTICE THAT that, on May 23, 2019, at 1:30 p.m. in Department C33 of the above-captioned court located at Central Justice Center, 700 Civic Center Drive, Santa Ana, CA, 92701, before the Honorable James Crandall, Defendants Cresa Management, LLC, Cresa Partners of Orange County, LP, Cresa Partners-West, Inc., Jeff A. Manley, Wayne Lamb, Dillon Dummit, Taylor Wood, Richard Martin, Randall S. Parker, Steven T. Card and Savills Studley, Inc. (collectively, “Defendants”), will and hereby do move the Court for an order compelling arbitration and staying or dismissing this action on the grounds that Plaintiff Kenneth Blye (“Plaintiff”) agreed to arbitrate his claims against Defendants. Under the Federal Arbitration Act, California Arbitration Act, and other applicable law, Plaintiff must arbitrate his claims alleged in the complaint, while any inarbitrable claims (and Defendants do not believe there are any in the complaint) should be stayed, pending resolution of Plaintiff’s arbitrable claims. This motion is based upon this Notice of Motion, the Memorandum of Points and Authorities in support thereof, the Petition to Compel Arbitration and exhibit thereto, the Declarations of Jeff Manley and J. Warren Rissier and exhibits thereto, the Request for Judicial Notice and exhibit thereto, all served and filed herewith, on the records and files herein including Plaintiff’s Complaint, and on such evidence and argument as may be presented at the time of the hearing on the motion. Dated: March 15, 2019 MORGAN, LEWIS & BOCKIUS LLP By /s/ J. Warren Rissier J. Warren Rissier Attorneys for Defendants Cresa Management, LLC, Cresa Partners of Orange County, LP, Cresa Partners-West, Inc., Jeff A. Manley, Wayne Lamb, Dillon Dummit, Taylor Wood, Richard Martin, Randall S. Parker, Steven T. Card and Savills Studley, Inc. 2 DB2/ 36076723.9 DEFENDANTS’ MOTION TO COMPEL ARBITRATION ~N O Y a B A W 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 MORGAN, LEWIS & Bockius LLP ATTORNEYS AT LAW Los ANGELES IL. III. IV. TABLE OF CONTENTS Page INTRODUCTION ...outiiiiiiiiiiitit ieee eects sects seas saber ese saaesebeeae esses sree ean 8 FACTUAL BACKGROUND coun ss suuuss smu sn usin asses ss cassis 55a 55 5 5058558 5055540 55 5555558 908548 45.20 9 A. In His Capacity as a Founder and Part Owner, Plaintiff Voluntarily Executed the Independent Contractor ASrEEMETIE . «. cc xsswusssesssassussassssmumsassasmasnsss 9 B. In Violation of the Agreement, Plaintiff Filed Suit Against Defendants................ 9 C. Plaintiff Refused to AThilale cremains rsa: 9 THE COURT SHOULD GRANT DEFENDANTS’ MOTION TO COMPEL ARBITRATION... sects tee sree sabes sree sane ene 10 A. The Agreement Is Enforceable Under the FAA and California Law.................... 10 B. The Agreement Encompasses Plaintiff’s Claims And the Arbitrator Decides Any Questions of Claims’ Arbitrability ..........cccoccecsmeeemsaecessesssmssemsaces 11 Plaintiff Entered into a Valid Agreement to Arbitrate His Claims ............cc.c...... 13 D. The Agreement Is Neither Procedurally Nor Substantively Unconscionable....... 13 I. Plaintiff Cannot Establish Procedural Unconscionability.............ccc....... 14 2. Plaintiff Cannot Establish Substantive Unconscionability ............cc......... 16 E. Non-Signatory Defendants May Compel Plaintiff to Arbitrate His Claims.......... 19 FE. The Court Should Stay Any Inarbitrable ClAaiTIS ws ssssmmessmmsss sm ss 21 G. The Court Should Stay This Matter Pending Resolution of This Motion ............ 22 COC LTS WNIT ccs RA EK EE RES 22 3 DEFENDANTS’ MOTION TO COMPEL ARBITRATION ~N O Y a B A W 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 MORGAN, LEWIS & Bockius LLP ATTORNEYS AT LAW Los ANGELES TABLE OF AUTHORITIES Page(s) CASES 24 Hour Fitness, Inc. v. Super. Ct., 66 Cal. App. 4th 1199 (1998)....cc ieee eee eee sees esate este e eee e ee saee eee 16 Allied Professionals Ins. Co. v. Miller, 2015 WL 12747654 (C.D. Cal. Jan. 29, 2015) ....oooriieiieeieeeeeteesiie cts s te eevee 15 Armendariz v. Found. Health Psychcare Servs., Inc., 24 CAL AEE BF LOOK: 050 5550555 cs vi tis 53 295355 A 7 5 ARGS HBS: 16,17, 18, 19 Baltazar v. Forever 21, Inc., 62 Cal. 4th 1237 (2016) .uveeeiieeiie ects eee e sree etree stra e sae e estas ee sabe ee saae ae ssae ee saseeesaeas 14 Boucher v. Alliance Title Co., Inc., 127 Cal. App. 4th 262 (2005) ....cecueieieieiieeiie eee ee ebteeebeer esses sabe esbeenee esas ssae eens 20 Brennan v. Opus Bank, 796 B:3d 1123 (9th Cite. 20.3) usmmnscnsumnsassnsunssnsusnsassmesnnssss mes sms me som ss sibmess ames 12 Broughton v. Cigna Healthplans of Cal., 21 Cal. 4th 1066 (1999) eee eee eee eres etree sabre estar ee sabe ee sabe ee sabe ae ssse ee ssaeeesreas 10 Bruni v. Didion, 160 Cal. App. 4th 1272 (2008), as modified (Mar. 24, 2008)......ccccecueereirreenienrecneereee nec s 13 Buckhorn v. St. Jude Heritage Med. Group, 121 Cal. App. 4th T40T (2004)... .uiiiiieiieeiie cites este seb estes se ee sae ssbe esse esses saae anne 11 Chiron Corp. v. Ortho Diagnostic Sys., Inc., 207 F. 3d 1126 (9th Cir. 2000) .......ceiiiiieriieeiie etter eet sete ee estes esas esse anaes see ssee eens 10 Cione v. Foresters Equity Servs., Inc., 58 Cal. APD. 41H BIS {1D )n.co sms ssnsn so sumans nwa on sss 555555.56 5055555 S55555% 18 5555558 S55035.58 35555508 SRH553855 11 Craig v. Brown & Root, Inc., 84 Cal. App. 4th 416 (2000).....cccueieiieitieeieee teeta eters eras eee estes ste e sabe esb as eenteessae sabe anneas 13 Dean Witter Reynolds, Inc. v. Byrd, AT0 U.S. 213 (1985) cei eters eee ete stte settee estes sbbe este anne estas ssbe esse enseasseens 10 Dream Theater, Inc. v. Dream Theater, 124 Cal. As AE, SET {Ob r00r000smmnsoesos soos sso ss sss a8 0000 VA AER SEARS 13 Dryer v. L.A. Rams, 40 Cal. 3d 406 (1985) ..uveeeeieiieciie eects eects eee settee ee er ae eae ae eae e esate ae etree essae ee sabe ee ssaeeensse eases 21 DEFENDANTS’ MOTION TO COMPEL ARBITRATION ~N O Y a B A W 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 MORGAN, LEWIS & Bockius LLP ATTORNEYS AT LAW Los ANGELES TABLE OF AUTHORITIES (continued) Page(s) Engalla v. Permanente Medical Group, Inc., 15 Cal. 4th O51 (1997) ene eb eee eee sbeebs setae atest ee eaae anne 14 Epic Systems Corp. v. Lewis, 138 SCE. 1812 CON RY cn vs snssimsnsinssisissiivinsssss sisson sims 255555 555550 5558 ais R535 5 As 55 S355 5.55 10 Fittante v. Palm Springs Motors, Inc., 105 Cal. App. 4th 708 (2009).....cuuieiiietieeiie eee eters steer e estes sabe ssbe esse eeseeebae anne 16 Franco v. Arakelian Enters., Inc., 234 Cal. APP. 4th 947 (2015) neice eters sta eebe erases eaten 22 Garcia v. Pexco, LL Cal, Apps St TB, TEE {ZO TT sessmsssscnsnsosossnsoonsnsossnensossoianss ss esto css mon es ss as 19, 20, 21 Gilmer v. Interstate/Johnson Lane Corp., S500 U.S. 20 (1991) cite eee este eae este sabes teeta a ebbe este anne ee nseesaee eens 14 Graham v. Scissor-Tail, Inc., 28 Cal. 3d B07 (1981) etic ete eee teeta sbeeeabe eee e tee sb be eebe anne e esas este eens 14 Greenspan v. LADT, LLC, 185 Cal. App. 4th 1413 (2010)..cccuuieiiieiieeiie cites eesti sbeebs ssbe esse ee eeesbae eens 13 Guiliano v. Inland Empire Personnel, Inc., 149 Cal. App. 4th 1276 (2007) ..eecueeeieieeieetie eee eet etter e ste ete e sees sae e sabe seve anne e esas ssae eens 10 Harris v. TAP Worldwide, LLC, 248 Cal. APs A. B73 (OLE) cs swssnsssnsn so sumansn cnssn on mss o5m55.56 5055555 545555515 5555558 55035.50 35555508 SRH5573855 13 Kinney v. United HealthCare Services, Inc., 70 Cal. App. 4th 1322 (1999)... ects ee eee eee sate sabes b ee saan 16 KPMG LLP v. Cocchi, 565 US. I8 (2011) eect eee eerste ete t este sabe e atest ee ebae este anneesnsae este enne 22 Lagatree v. Luce Forward, Hamilton & Scripps, TA Cal, KEP Gi L108 T1000 ownosososesnsssnsssossess oss on ss sa s oi 0h wes 6S A SHAG 14 Marchese v. Shearson Hayden Stone, Inc., 734 F.2d 414 (9th Cir. 1984) ....eeiiieiiiiee ects ste eee esate sates atest ee saan 11 McGill v. Citibank, 2 Cal. 5th 945, 966 (2017) c.eeeeeieeeie eee eee east eebe atest esate este ane ee seessee eens 22 DEFENDANTS’ MOTION TO COMPEL ARBITRATION ~N O Y a B A W 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 MORGAN, LEWIS & Bockius LLP ATTORNEYS AT LAW Los ANGELES TABLE OF AUTHORITIES (continued) Page(s) McManus v. CIBC World Markets Corp., 109 Cal. APP. 4th 76 (2003)....eeeeiieeiiie eee eee ete eee sees eats sabes sabes sabe eesbbe ee aee es 19 Moncharsh v. Heily & Blase, CAL MB. 1 U1 TOZ) x05 msn sss sivas sits sso 535505 255555550505 7 508 A A550 5 AS55555 55 8 Poublon v. C.H. Robinson Co., 846 F.3d 1260 (9th Cir. 2017) cccueieieiieeeiieeeiieeetie etter esses eee est ae sav ee seve ee sass e sss ae ssseaeesseans 14 Ramos v. Superior Court, 28 Cal. App. 4th 1042 (2018) ..ueee ieee ects tees eet e esate sbaeeebe eee sees ssee eens 17 Rent-A-Ctr., W., Inc. v. Jackson, ION TS 03 (LOTT), cn suman soar sesmvnsssamassoosssoesomss sss ss suis uses ss 540 AABEEH5 SHES 34 NHR SARS SHEAR RE 5 12 Roman v. Superior Court, 172 Cal. App. 4th 1462 (2009).......eiiiieiieeiie eee eters stearate sabe sebe eee esas saae eens 17 Ruiz v. Sysco Food Services, 122 Cal. App. 4th 520 (2004) ....ceceieeeieiieeie eee e sate eebe estes st ee sbae esse ene esses esee anne 11 Sanchez v. Valencia Holding Co., 61 Cal. 4th 899 (2015) .eueiiiieiie cites eee este ease ete sate sabe atest ee sh bees e eee bae sateen 16 Sandquist v. Lebo Auto., Inc., 1 Cal. 5th 233,247 (2016) weet eee eects eats sees sates sabes sabe essen es 11 Sonic-Calabasas A, Inc. v. Moreno, 57 Cals AE 1.109 TOUT: 5 m0 55550 i os its assis sss 2555555505005 57585 50 3 85505 SASH 595 14, 16 Tompkins v. 23andMe, Inc., B40 F.3d 1016 (2016) ..cuueiieiiieeiieeeiie eects settee este et ae eate ee eata ee saae ae sase ee sase ee sssesessseseasseanns 19 Valsan Partners Limited Partnership v. Calcor Space Facility, Inc., 25 Cal. App. 4th 809 (1994)......oe ieee eee eee ees eee teste sbae este eee esaeesae eens 11 Vianna v. Doctors’ Mgmt. Co., 27 Cal, APP. Ath 1186 (109) cummssnsumasnssmsmnsssnmnsasisnsssssesnsssns sue sus a Sm sme bases 11 Wagner v. Stratton Oakmont, Inc., 83 F.3d 1046 (9th Cir. 1996).......uiieiieeeiie eet ee eee r essere a saae ee sare ee saae ee ssae ee ssaeeans 13 STATUTES DQ ULS. Cl § Lee eee eee ete etter ee abt ee sates sates sabes sabe essa bees sabe ee aae es 10 DEFENDANTS’ MOTION TO COMPEL ARBITRATION ~N O Y a B A W 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 MORGAN, LEWIS & Bockius LLP ATTORNEYS AT LAW Los ANGELES TABLE OF AUTHORITIES (continued) Page(s) DULS.CL 8 Zee aes sae sae ee sane saan 10 0 U.S.C. § 3 e eee ete eae sheaths hte sheet eee eee be shee sheet eee ene 10 O UIST: 8 Gs comms monn. soma assis im 5 5505855 £5555 53.08 5550555 57555 55.08.5555 405 555 5045 S55 S533570.59 45535 HF 55.5 S458 AVR 5 10 Cal. Civ. Code § 1589 .....uiiiiiiiiiiiiii cece se see 15 Cal. Civ, Code § 1570.51) cvs ssurmmansssvmnsonsssvsnessvens sss snssnss somos smsssss is sys sss sas aisha oss sa uss 16 Cal. Civ. Code § 1717 econ sae sae 19 Cal. Civ. Proc. Code § 128008) ....ccooeevrrreiiieieeieiiiieeeee eee eeeccrre ee ee se s eeerarae esse sees eesasaeae ass sses ennsaneees 10 Cal. Civ. Proc. Code § 1280 €f SEG. «..ueeevuueemiieieiieieie eee eee ee estes test s eee sates sabes eee s 10 Cal. Civ. Proc. Code § 1281.2. oui eee estes ee eee teats eee eset estates esas sere ssnasseeeesenens 8 Cal. Civ. Proc. Code § 1281.4... cco ese 22 California ATDITIAtION ACT ...coiiiiiirieeeeee eset ieee eesti eee sees eee teat erases ee sestasn esse eeserensannenas 8, 10 Federal ATDITIATION AC ......iiiiieeiiiiiieee eee eee ee este teats ee esas ee te ates esse ee sessananeesseesessnsansnnens 8, 10 7 DEFENDANTS’ MOTION TO COMPEL ARBITRATION ~N O Y a B A W 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 MORGAN, LEWIS & Bockius LLP ATTORNEYS AT LAW LOS ANGELES IL. INTRODUCTION The Court should grant this Motion to Compel arbitration because Plaintiff Kenneth Blye (“Plaintiff”) agreed to arbitrate the claims alleged in his Complaint. On March 21, 2013, Plaintiff, a Harvard and Berkeley educated financial professional with almost 30 years of experience in the financial services industry, voluntarily executed an Independent Contractor Agreement (“Agreement”) with Cresa Partners of Orange County, LP (“CPOC”). Plaintiff was a founding member of Cresa Management, LLC (“CM”), had been on its Executive Board for almost ten years, and held an indirect ownership interest in CPOC at the time he executed the Agreement. That Agreement contains arbitration provisions requiring Plaintiff to arbitrate his claims in this case. There is no dispute that Plaintiff signed the Agreement, attached as Exhibit B to his Complaint; indeed, Plaintiff’s Complaint seeks enforcement of that Agreement. However, while Plaintiff seeks enforcement of certain rights under the Agreement, he simultaneously attempts to disregard his obligation to arbitrate under that same Agreement. Well-settled law rejects this gambit. The Federal Arbitration Act (“FAA”) and California Arbitration Act (“CAA”) require enforcement of arbitration agreements. See Civ. Proc. Code § 1281.2 (“On petition of a party to an arbitration agreement alleging the existence of a written agreement to arbitrate a controversy and that a party thereto refuses to arbitrate such controversy, the court shall order the petitioner and the respondent to arbitrate the controversy ....”") (emphasis added); see also Moncharsh v. Heily & Blase, 3 Cal. 4th 1, 9 (1992) (noting the strong public policy in favor of arbitration). The applicable arbitration policies are neither “procedurally” nor “substantively” unconscionable. Further, Plaintiff’s allegations in the Complaint permit non- signatory Defendants to enforce the Agreement under principles of equitable estoppel and agency. Thus, all of Plaintiff’s claims against all Defendants must be arbitrated. Before filing this Motion, Defendants requested that Plaintiff stipulate to arbitration and dismiss this lawsuit; he refused. Since Plaintiff will not voluntarily submit his claims to arbitration, the Court should compel Plaintiff to submit his claims to arbitration and dismiss or stay this action in its entirety. 8 DEFENDANTS’ MOTION TO COMPEL ARBITRATION DB2/ 36076723.9 ~N O Y a B A W 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 MORGAN, LEWIS & Bockius LLP ATTORNEYS AT LAW Los ANGELES II. FACTUAL BACKGROUND A. In His Capacity as a Founder and Part Owner, Plaintiff Voluntarily Executed the Independent Contractor Agreement. Defendant CM, previously one of the limited partners of CPOC, is a commercial real estate firm that provides integrated services to its clients covering every aspect of a real estate transaction, from site inspection and financing to project management and relocation services. Plaintiff was a founding member and member of the Executive Board of CM from its inception in January 2004 until 2016, and he maintained an ownership interest in CM until his ownership interest was redeemed by CM in 2017. See Compl., |] 18, 21. The individual defendants are members of CM’s Executive Board. See id. J] 5-11. Defendant CPOC was a limited partnership and Defendant Cresa Partners-West, Inc. was the general partner of CPOC. In February 2017, Savills acquired all the general partnership and limited partnership interests of CPOC from its partners. See id., { 2, 3, 4, 12, Ex. B, p. 94; see also Declaration of Jeff Manley, {{ 3-5. On March 21, 2013, Plaintiff executed an Independent Contractor Agreement with CPOC (“Agreement”). See Compl., 21, Ex. B thereto; Manley Decl., {4. Section 16 of the Agreement, titled “ARBITRATION,” broadly provides for arbitration under the procedures and rules of the American Arbitration Association (“AAA”) as the “sole and exclusive remedy” for “breach, interpretation or application of this Contract, or otherwise arising from the Contract relationship or the termination of the relationship.” See Compl., Ex. B. Section 16 also provides that arbitration is the “sole and exclusive” remedy for “any injury or damage arising out” of the “contract relationship memorialized” by the Agreement. See id. B. In Violation of the Agreement, Plaintiff Filed Suit Against Defendants. On November 13, 2018, Plaintiff filed a complaint in this Court. Plaintiff's Complaint alleges fifteen equitable and legal causes of action against Defendants. Plaintiff seeks damages for “lost profits, lost wages and benefits, and emotional distress,” including recovery of “at least $1,139,676,” (Compl., 28), as well as punitive damages. See id., Prayer for Relief. C. Plaintiff Refused to Arbitrate. After the Complaint was filed but before this Motion was filed, Defendants’ counsel sent 9 DB2/ 36076723.9 DEFENDANTS’ MOTION TO COMPEL ARBITRATION ~N O Y a B A W 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 MORGAN, LEWIS & Bockius LLP ATTORNEYS AT LAW Los ANGELES Plaintiffs counsel a letter requesting that Plaintiff stipulate to arbitrate his claims and dismiss the Complaint. Declaration of J. Warren Rissier, { 2, Ex. A. Plaintiff refused. See id., 2, Ex. B. III. THE COURT SHOULD GRANT DEFENDANTS’ MOTION TO COMPEL ARBITRATION A. The Agreement Is Enforceable Under the FAA and California Law. The FAA, 9 U.S.C. § 1 ef seq., establishes the validity and enforceability of written agreements to arbitrate disputes. An arbitration agreement “shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.” 9 U.S.C. § 2. Where, as here, an action is based on a dispute covered by a valid agreement, a court must compel arbitration. 9 U.S.C. §§ 3, 4; see Dean Witter Reynolds, Inc. v. Byrd, 470 U.S. 213, 218 (1985) (“By its terms, the Act...mandates that district courts shall direct the parties to proceed to arbitration on issues as to which an arbitration agreement has been signed.”) Because Defendants’ operations involve interstate commerce, the FAA applies. Manley Decl., | 6; see also Guiliano v. Inland Empire Personnel, Inc., 149 Cal. App. 4th 1276, 1286-87 (FAA's interstate commerce requirement was met “[g]iven [defendant’s] undisputed interstate business activities”). Recently, in Epic Systems Corp. v. Lewis, 138 S.Ct. 1612, 1632 (2018), the Supreme Court emphatically and definitively held that, under the FAA, arbitration agreements such as the Agreement’s arbitration provisions must be enforced. In deciding a motion to compel arbitration, the Court’s inquiry is limited: (1) does a valid agreement to arbitrate exist; and, if it does, (2) does the arbitration agreement encompass the dispute or claims at issue? If the answer to both of these questions is “yes,” then the Court must compel arbitration. Chiron Corp. v. Ortho Diagnostic Sys., Inc., 207 F. 3d 1126, 1130 (9th Cir. 2000). Here, the answer to both is “yes,” so this Court must compel Plaintiff to arbitrate his claims and stay any inarbitrable claims. California also has a “strong public policy in favor of arbitration,” embodied in the CAA. Cal. Civ. Proc. Code § 1280 ef seq.; see also Broughton v. Cigna Healthplans of Cal., 21 Cal. 4th 1066, 1074-75 (1999). The CAA provides that pre-dispute arbitration agreements between employers and employees are enforceable. Cal. Civ. Proc. Code § 1280(a) (stating that 10 DB2/ 36076723.9 DEFENDANTS’ MOTION TO COMPEL ARBITRATION ~N O Y a B A W 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 MORGAN, LEWIS & Bockius LLP ATTORNEYS AT LAW Los ANGELES agreements to arbitrate include “agreements between employers and employees or between [his or] her respective representatives”).! The Code of Civil Procedure mandates that courts direct the parties to arbitration on issues to which a signed arbitration agreement speaks. Valsan Partners Limited Partnership v. Calcor Space Facility, Inc., 25 Cal. App. 4th 809, 817 (1994). Any doubts as to the scope of arbitrable issues should be resolved in favor of arbitration. See Ruiz v. Sysco Food Services, 122 Cal. App. 4th 520, 538 (2004). As a result, “a heavy presumption weighs the scales in favor of arbitrability.” Cione v. Foresters Equity Servs., Inc., 58 Cal. App. 4th 625, 642 (1997); Buckhorn v. St. Jude Heritage Med. Group, 121 Cal. App. 4th 1401, 1406 (2004) (noting all doubts must be resolved in favor of arbitration); Vianna v. Doctors’ Mgmt. Co., 27 Cal. App. 4th 1186, 1190 (1994) (unless party opposing arbitration shows “that the arbitration clause clearly does not apply . . . the doubt must be resolved in favor of arbitration”). B. The Agreement Encompasses Plaintiff’s Claims And the Arbitrator Decides Any Questions of Claims’ Arbitrability. The arbitration agreements themselves determine the scope of the agreement. Sandquist v. Lebo Auto., Inc., 1 Cal. 5th 233,247 (2016) (noting that state law follows federal law). A claim is subject to arbitration “unless it may be said with positive assurance that the arbitration clause is not susceptible of an interpretation that covers the asserted dispute.” Marchese v. Shearson Hayden Stone, Inc., 734 F.2d 414, 419 (9th Cir. 1984). Plaintiff’s allegations and claims set forth in his Complaint are all subject to the Agreement’s arbitration requirement. Plaintiff claims “injury or damage arising out of” Defendants’ alleged breach and termination of the Agreement. See Compl., q 21-28. First, Plaintiff alleges that Defendants’ alleged wrongdoing occurred subsequent to and in violation of Plaintiff’s rights under the Agreement. See id, e.g., 31, 38, 39, 46, 47, 52, 57, 58, 61, 67, 70, 75,78, 85, 87, 89, 90, 99, 100, 105, 108, 118, 121, 126, 127, 133, 134, 135, 136. Second, Plaintiff’s First through Eighth Causes of Action seek recovery of damages arising out of the Agreement relationship, and Plaintiff alleges that Defendants’ violation of his rights result from ! By citing law regarding employees, Defendants do not concede that Plaintiff is an employee rather than an independent contractor. Instead, Defendants cite this authority for its persuasive value and in light of Plaintiff’s assertions in his Complaint that he is an employee. 11 DB2/ 36076723.9 DEFENDANTS’ MOTION TO COMPEL ARBITRATION ~N O Y a B A W 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 MORGAN, LEWIS & Bockius LLP ATTORNEYS AT LAW Los ANGELES “termination without cause” of the Agreement the day after the sale,” purportedly designed to deprive Plaintiff of his rights and monies owed. See id., 27. Third, Plaintiff’s Ninth through Fifteenth Causes of Action arise out of the Agreement because they assert breach of the Agreement and various related wage and hour claims. Fourth, Plaintiff alleges that he would not have been harmed had he been offered employment with Savills, indicating that termination of the relationship under the Agreement gives rise to Plaintiff’s alleged claims. See id., 61 (alleging “Plaintiff has been damaged additionally in the form of lost wages and lost profits from the continued employment with [Savills] of which he was wrongfully deprived”). Fifth, Plaintiff’s Fourteenth Cause of Action (for breach of the covenant of good faith and fair dealing regarding the Agreement) alleges that the covenant was breached because Defendants “attempted to coerce Plaintiff to accept an unfairly-reduced amount of the sale proceeds by threatening termination of employment and membership” and, further, that “[t]he position taken by Defendants ... was that by terminating Plaintiff's employment they could concurrently terminate Plaintiff’s rights and interests with respect to the sale proceeds.” See id., 135-36. Thus, Plaintiff’s claims fall squarely within the scope of the Agreement. Further, by incorporating the AAA rules, the parties delegated questions of arbitrability to the arbitrator, who decides which of Plaintiff’s claims are subject to arbitration. “[P]arties can agree to arbitrate ‘gateway’ questions of ‘arbitrability,” such as whether the parties have agreed to arbitrate or whether their agreement covers a particular controversy.” Rent-A-Ctr., W., Inc. v. Jackson, 561 U.S. 63, 68-69 (2010). Here, the AAA Commercial Arbitration Rules provide, in relevant part: “The arbitrator shall have the power to rule on his or her own jurisdiction, including any objections with respect to the existence, scope or validity of the arbitration agreement.” See R-7; RIN, Ex. A. In Brennan v. Opus Bank, 796 F.3d 1125, 1130 (9th Cir. 2015), the court held that “incorporation of the AAA rules constitutes clear and unmistakable evidence that contracting parties agreed to arbitrate arbitrability.” Likewise, California courts have similarly held that incorporating arbitration rules, including AAA rules, signifies agreement that the arbitrator, rather 2 Although immaterial to this Motion, Plaintiff was actually terminated on February 6, 2017 before the February 8, 2017 effective closing date, not after. 12 DB2/ 36076723.9 DEFENDANTS’ MOTION TO COMPEL ARBITRATION ~N O Y a B A W 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 MORGAN, LEWIS & Bockius LLP ATTORNEYS AT LAW Los ANGELES than the court, must determine arbitrability of the dispute. See Greenspan v. LADT, LLC, 185 Cal. App. 4th 1413, 1442 (2010) (parties evinced intent to have arbitrator decide arbitrability by incorporating JAMS rules into arbitration agreement); Dream Theater, Inc. v. Dream Theater, 124 Cal. App. 4th 547, 549-50, 557 (2004) (arbitrator was required to decide the issue of arbitrability because the parties had incorporated the AAA Commercial Arbitration Rules, which required the arbitrator, not the court, to decide the issue of arbitrability). Accordingly, this Court need not even address whether Plaintiff’s claims fall within the scope of the Agreement’s arbitration provisions or whether those provisions are enforceable against Plaintiff, as those questions are for the arbitrator to decide. C. Plaintiff Entered into a Valid Agreement to Arbitrate His Claims. In ruling on a motion to compel arbitration, courts decide “whether there is a valid agreement to arbitrate between the parties.” Bruni v. Didion, 160 Cal. App. 4th 1272, 1283 (2008), as modified (Mar. 24, 2008). In determining whether there is a valid agreement to arbitrate, courts apply “general state-law principles of contract interpretation, while giving due regard to the federal policy in favor of arbitration.” Wagner v. Stratton Oakmont, Inc., 83 F.3d 1046, 1049 (9th Cir. 1996); see also Craig v. Brown & Root, Inc., 84 Cal. App. 4th 416, 420 (2000) (“[gleneral principles of contract law determine” whether the parties agreed to arbitrate). Here, there is no dispute that Plaintiff and CPOC entered into a valid, binding independent contractor Agreement, which includes the arbitration provisions that Defendants seek to enforce. Plaintiff attached the Agreement bearing his signature as Exhibit B to his Complaint and his Complaint seeks enforcement of the Agreement, so there is no question that Plaintiff assented to the Agreement. Further, by continuing in his independent contractor relationship with CPOC for several years after executing the Agreement, Plaintiff agreed to the Agreement’s terms, including its arbitration provisions. See, e.g., Craig, 84 Cal. App. 4th at 420 (continued employment after notification of changed terms or conditions constitutes acceptance of those new terms or conditions); Harris v. TAP Worldwide, LLC, 248 Cal. App. 4th 373, 384 (2016) (same). D. The Agreement Is Neither Procedurally Nor Substantively Unconscionable. Having shown that an agreement to arbitrate exists and applies to Plaintiff’s claims, it is 13 DB2/ 36076723.9 DEFENDANTS’ MOTION TO COMPEL ARBITRATION ~N O Y a B A W 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 MORGAN, LEWIS & Bockius LLP ATTORNEYS AT LAW Los ANGELES Plaintiff’s burden to prove the agreement is invalid or unenforceable. Mission Viejo Emergency Med. Assoc., 197 Cal. App. 4th 1146, 1154 (2011); Engalla v. Permanente Medical Group, Inc., 15 Cal. 4th 951, 972 (1997) (“a party opposing the petition [to compel arbitration] bears the burden of proving by a preponderance of the evidence any fact necessary to its defense”). California courts apply a “sliding scale” analysis in determining unconscionability: “the 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.” Poublon v. C.H. Robinson Co., 846 F.3d 1260 (9th Cir. 2017) (quotations and citations omitted). Thus, although procedural and substantive unconscionability must both be present, “they need not be present to the same degree.” Baltazar v. Forever 21, Inc., 62 Cal. 4th 1237, 1243 (2016) (quotations and citations omitted). Here, Plaintiff cannot establish unconscionability. 1. Plaintiff Cannot Establish Procedural Unconscionability. The procedural element of unconscionability “focuses on oppression or surprise due to unequal bargaining power.” Sonic-Calabasas A, Inc. v. Moreno, 57 Cal. 4th 1109, 1133 (2013). This element “generally takes the form of a contract of adhesion . . . which, imposed and drafted by the party of superior bargaining strength relegates to the subscribing party only the opportunity to adhere to the contract or reject it.” Id. But the inability to negotiate the terms of an agreement does not render it so procedurally unconscionable to be unenforceable. Lagatree v. Luce Forward, Hamilton & Scripps, 74 Cal. App. 4th 1105, 1127 (1999) (“cases uniformly agree” a “compulsory predispute arbitration agreement” is not unenforceable). Indeed, such agreements are an “inevitable fact of life for all citizens” and do not establish procedural unconscionability sufficient to bar the enforcement of a voluntary agreement. Graham v. Scissor-Tail, Inc., 28 Cal. 3d 807, 817-18 (1981). Further, the Supreme Court has recognized that “there often will be unequal bargaining power between employers and employees.” Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 33 (1991). However, “mere inequality in bargaining power” does not render an employee’s arbitration agreement unenforceable. Id. Nor is a pre-dispute arbitration agreement invalid “merely because it is imposed as a condition of employment.” Lagatree, 74 Cal. App. 4th at 1122-23 (“under Gilmer, the mandatory nature of an arbitration agreement does 14 DB2/ 36076723.9 DEFENDANTS’ MOTION TO COMPEL ARBITRATION ~N O Y a B A W 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 MORGAN, LEWIS & Bockius LLP ATTORNEYS AT LAW Los ANGELES not, by itself, render the agreement unenforceable”). Here, Plaintiff is a sophisticated, experienced business person who was a founder, owner and member of CM’s Executive Board, so he cannot credibly claim any surprise or coercion associated with his execution of the Agreement. He was a founding member of CM and maintained an ownership interest in CM until his ownership interest was redeemed by CM in February 2017. See Compl., {{ 18, 21. Further, Plaintiff was a member of the Executive Board of CM from its inception in January 2004 until 2016, three years after he executed the Agreement. See id., 21; Manley Decl., {{3-5. Given his management and ownership of CM when he executed the Agreement, Plaintiff has not alleged and cannot establish any evidence of procedural unconscionability. Similarly, he cannot credibly argue that he did not understand the Agreement or its effect on his relationship with CPOC, or that he contemporaneously objected to the Agreement or the manner in which he executed it. Further, that Plaintiff concedes he voluntarily signed the Agreement and seeks to enforce it belies any argument as to procedural unconscionability. See Compl., {{ 21, 89, 92-93, 133-34, Ex. B. Moreover, Plaintiff is equitably estopped from arguing against enforcement of the Agreement’s arbitration provisions. ‘“[P]arties cannot claim the benefits of an agreement while at the same time try to avoid the burdens imposed by a different provision of the same.” Allied Professionals Ins. Co. v. Miller, 2015 WL 12747654, at *5 (C.D. Cal. Jan. 29, 2015) (citations omitted) (applying California law, granting motion to compel arbitration, and reasoning in part that it was incongruous for the party seeking to enforce a contract to avoid the contract’s arbitration provision). Where, as here, a party to a contract attempts to enforce certain provisions of that agreement, he must be bound to all of its terms. See Cal. Civ. Code § 1589 (“A voluntary acceptance of the benefit of a transaction is equivalent to a consent to all the obligations arising from it, so far as the facts are known, or ought to be known, to the person accepting.”) (emphasis added). Plaintiff’s voluntarily execution of the Agreement and his effort to enforce it demonstrates “a voluntary acceptance of the benefit” of the Agreement. As such, he is equitably estopped from selectively opposing enforcement of the Agreement’s arbitration provisions. 15 DB2/ 36076723.9 DEFENDANTS’ MOTION TO COMPEL ARBITRATION ~N O Y a B A W 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 MORGAN, LEWIS & Bockius LLP ATTORNEYS AT LAW Los ANGELES 2. Plaintiff Cannot Establish Substantive Unconscionability. Substantive unconscionability “focuses on the terms of the agreement and whether those terms are so one-sided as to shock the conscience.” Kinney v. United HealthCare Services, Inc., 70 Cal. App. 4th 1322, 1330 (1999) (citations and internal quotations omitted); see also Armendariz v. Found. Health Psychcare Servs., Inc., 24 Cal. 4th 83, 119 (2000) (same). To establish substantive unconscionability, Plaintiff must prove a “substantial degree of unfairness beyond a simple old-fashioned bad bargain.” Sanchez v. Valencia Holding Co., 61 Cal. 4th 899, 911 (2015). The analysis of substantive unconscionability is “highly dependent on context.” Id. Courts analyze the “commercial setting, purpose, and effect” of the contract. Cal. Civ. Code § 1670.5(b); Sonic-Calabasas A, Inc., 57 Cal. 4th at 1147-48. As explained in Sanchez, “[t]he ultimate issue in every case is whether the terms of the contract are sufficiently unfair, in view of all relevant circumstances, that a court should withhold enforcement.” 61 Cal. 4th at 911. There is no evidence of substantive unconscionability here. As the court in Armendariz explained, an arbitration agreement must have some “modicum of bilaterality” to avoid substantive unconscionability. Id. at 116-117. A “modicum of bilaterality” exists when both the employer and the employee are bound to submit their claims to arbitration, are subject to the same rules and procedures and experience the same advantages and disadvantages. Fittante v. Palm Springs Motors, Inc., 105 Cal. App. 4th 708, 725 (2009). Here, the language of the Agreement’s arbitration provisions is bilateral and contains the requisite modicum of bilaterality. “If a dispute arises over the breach, interpretation or application of this Contract, or otherwise arising from the Contract relationship or the termination of the relationship, either party may send a written notice to the other setting forth the nature of the dispute and demanding arbitration.” See Agreement, q16, A (emphasis added). There is no carve out of claims more likely to be brought by the Defendants. See 24 Hour Fitness, Inc. v. Super. Ct., 66 Cal. App. 4th 1199, 1213 (1998) (no substantive unconscionability where the arbitration provision applied equally to employer and employee); compare Sonic-Calabasas A, Inc., 57 Cal. 4th at 1133-34 (noting “the arbitration agreement’s lack of a modicum of bilaterality, wherein the employee’s claims against the employer, but not the employer’s claims against the employee are subject to arbitration”). 16 DB2/ 36076723.9 DEFENDANTS’ MOTION TO COMPEL ARBITRATION ~N O Y a B A W 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 MORGAN, LEWIS & Bockius LLP ATTORNEYS AT LAW Los ANGELES Further, the Agreement incorporates the rules and procedures of AAA, or other rules and procedures agreed to by the parties. “The arbitration shall be conducted according to the procedures and rules of the AAA then currently in effect for commercial disputes, except to the extent the parties agree on different rules or procedures.” See Agreement, 16, B. By incorporating the rules and procedures of AAA,* the Agreement’s arbitration provisions generally afford the parties rights similar to those applicable in California civil cases, including a commensurate right to discovery, damages and relief, dispositive motions and a written decision. Further, the applicable AAA rules permit the parties, “by written agreement, [to] vary the procedures set forth in these rules.” See R-1(a); RIN, Ex. A. Further, if there is any dispute as to which AAA rules apply, such disputes “shall be decided by the AAA.” See R-1(a); RIN, Ex. A. The AAA Commercial Arbitration Rules provide: “Unless the parties agree otherwise, the Procedures for Large, Complex Commercial Disputes shall apply to all cases in which the disclosed claim or counterclaim of any party is at least $500,000 or more, exclusive of claimed interest, attorneys’ fees, arbitration fees and costs.” See R-1(C); RIN, Ex. A. Here, because Plaintiff seeks to recover “at least $1,139,676,” (Compl., { 28), before accounting for any punitive damages, lost wages, and other damages, the AAA Procedures for Large, Complex, Commercial Disputes apply, unless the parties adopt, or the arbitrator orders, other procedures. It is anticipated Plaintiff will argue that the Agreement’s arbitration provisions must meet the requirements of Armendariz because he is purportedly an employee, not an independent contractor. Any such contention is inappropriate, as whether Plaintiff was properly classified as an independent contractor is a key issue in this case, and “[i]n deciding arbitrability, a court does not resolve the merits of the underlying claims.” Ramos v. Superior Court, 28 Cal. App. 4th 1042, 1056 n.6 (2018). Regardless, if this Court considers the Armendariz requirements, the 3 The Agreement incorporates the AAA Commercial Arbitration Rules, but those rules provide: “Any disputes regarding which AAA rules shall apply shall be decided by the AAA.” See R-1(a); RIN, Ex. A. Even if the arbitrator were to decide that the AAA Employment Rules apply, those arbitration procedures comply with Armendariz. See Roman v. Superior Court, 172 Cal. App. 4th 1462, 1476 (2009) (holding arbitration agreement incorporating AAA employment rules complies with Armendariz). 17 DB2/ 36076723.9 DEFENDANTS’ MOTION TO COMPEL ARBITRATION ~N O Y a B A W 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 MORGAN, LEWIS & Bockius LLP ATTORNEYS AT LAW Los ANGELES Agreement’s arbitration provisions satisfy them. First, Armendariz requires that an arbitration agreement must provide for a neutral arbitrator. Armendariz, 24 Cal. 4th at 106, 113. The Agreement does so. It provides: “[T]he parties shall attempt to select a mutually agreeable arbitrator. If the parties have not selected a mutually agreeable arbitrator within 30 days of receipt of the request for arbitration, then the parties shall proceed to select an arbitrator utilizing the procedures and rules of the [AAA].” See Agreement, | 16, Ex. A. Similarly, the AAA Commercial Arbitration Rules for complex matters require the agreement of the parties to select an arbitrator or arbitrators. See L-2; RIN, Ex. A. Second, the AAA Rules provide for adequate discovery. Armendariz, 24 Cal. 4th at 103. The AAA Rules permit the exchange of documents (R-22(b), allow the parties to call witnesses (R-32.(a)), subpoena documents or witnesses (R-34(d)), retain experts (R-35(a)), and the arbitrator to make an inspection or investigation (R-36). The AAA Rules also permit depositions. See RIN Ex. A at 9 (noting [b]road arbitrator authority to order and control the exchange of information, including depositions”). Additionally, Plaintiff’s ability to seek discovery is not limited in the Agreement or the AAA Rules, and as noted, the parties may adopt other procedures. Third, an arbitration agreement must require the arbitrator to issue a written decision that reveals the essential findings and conclusions on which the award is based. Armendariz, 24 Cal. 4th at 103. The AAA Rules are compliant, providing that “[a]Jny award shall be in writing and signed by a majority of the arbitrators. It shall be executed in the manner required by law.” See R-45, RIN, Ex. A. Also, the parties may request a reasoned award if desired, and the arbitrator may also issue a reasoned award if the arbitrator determines one is appropriate. See id. Fourth, an arbitration agreement “may not limit statutorily imposed remedies such as punitive damages and attorneys’ fees.” Armendariz, 24 Cal. 4th at 103-4. Here, the AAA Rules provide that “[t]he arbitrator may grant any remedy or relief that the arbitrator deems just and equitable and within the scope of the agreement of the parties, including, but not limited to, specific performance of a contract.” R-47(a), RIN, Ex. A. Thus, the Agreement does not limit statutorily imposed remedies. Fifth, an arbitration agreement that covers statutory claims “impliedly obliges the 18 DB2/ 36076723.9 DEFENDANTS’ MOTION TO COMPEL ARBITRATION ~N O Y a B A W 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 MORGAN, LEWIS & Bockius LLP ATTORNEYS AT LAW Los ANGELES employer to pay all types of costs that are unique to arbitration.” Armendariz, 24 Cal. 4th at 113 (emphasis added). Here, the Agreement provides: “Each party shall bear his/her own expenses associated with the arbitration, including attorneys’ fees, except that the fee for the arbitrator shall be split equally between the parties.” See Agreement, J 16, C. Such a provision is appropriate under the facts here, i.e., where there is a highly-compensated, independent contractor who was a part owner of the company and a member of its Executive Board and who asserts claims, based on contract and statute, in excess $1,139,676. However, the AAA Rules note that AAA “will apply the Employment Fee Schedule to any dispute between an individual employee or an independent contractor (working or performing as an individual and not incorporated) and a business or organization and the dispute involves work or work-related claims, including any statutory claims and including work-related claims under independent contractor agreements.” R-1; RIN, Ex. A. The Employment Fee Schedule provides: “The employer or company shall pay the arbitrator’s compensation unless the employee or individual, post dispute, voluntarily elects to pay a portion of the arbitrator’s compensation.” See RIN, Ex. B.* In sum, the Agreement’s arbitration provisions are not substantively unconscionable. And, even if the Court determined that any provisions were unconscionable, they should be severed and the remainder enforced. See McManus v. CIBC World Markets Corp., 109 Cal. App. 4th 76, 102 (2003) (severance is appropriate unless the agreement is so permeated with unconscionable provisions that it cannot be saved). E. Non-Signatory Defendants May Compel Plaintiff to Arbitrate His Claims. First, California courts recognize that a nonsignatory to an arbitration agreement may compel arbitration against a signatory on equitable estoppel grounds. See Garcia v. Pexco, 11 Cal. App. 5th 782, 788 (2017). Under this doctrine, “a nonsignatory defendant may invoke an arbitration clause to compel a signatory plaintiff to arbitrate its claims when the causes of action * With respect to the fee provision in J 16, D, under both California case law and Civil Code section 1717, bilateral prevailing party fee-shifting provisions are enforceable and do not render a contract unconscionable in the arbitration context. Tompkins v. 23andMe, Inc., 840 F.3d 1016 (2016). Here, this provision is bilateral, imposing a reciprocal obligation on both Plaintiff and Defendants. See id. Had Defendants initiated suit in court, Plaintiff would be eligible to recover his fees incurred in enforcing the Agreement’s arbitration provisions. 19 DB2/ 36076723.9 DEFENDANTS’ MOTION TO COMPEL ARBITRATION ~N O Y a B A W 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 MORGAN, LEWIS & Bockius LLP ATTORNEYS AT LAW Los ANGELES against the nonsignatory are ‘intimately founded in and intertwined’ with the underlying contract obligations.” Boucher v. Alliance Title Co., Inc., 127 Cal. App. 4th 262, 271 (2005). The Garcia plaintiff signed an arbitration agreement with his employer and was assigned to work for one of his employer’s customers. Garcia, 11 Cal. App. 5th at 784. He thereafter filed suit against his employer and the nonsignatory employer for Labor Code violations. The operative complaint alleged “each and every one of the acts and omissions alleged herein was performed by, and/or attributable to, all DEFENDANTS, each acting as agents and/or employees, and/or under the direction and control of each of the other DEFENDANTS, and that said acts and failures to act were within the course and scope of said agency, employment and/or direction and control.” Id. at 785. The appellate court affirmed the trial court’s ruling that the plaintiff’s arbitration agreement was properly enforceable as to a non-signatory client employer. Id. at 786. Garcia is factually analogous and confirms Defendants’ ability to enforce Plaintiff's agreement to arbitrate. Plaintiff signed an agreement with CPOC containing binding and enforceable arbitration provisions, and all causes of action in his Complaint are alleged against all Defendants. Also, the plaintiff in Garcia and Plaintiff here agreed to be bound by similarly- worded arbitration provisions. The Garcia agreement covered actions “arising out of” the employment relationship. Id. at 795. Similarly, Plaintiff here is bound to arbitrate “any injury or damage arising out of the Contract relationship.” The relevant arbitration provisions provide as follows: “The sole and exclusive remedy for breach interpretation or application of this Contract, or for any injury or damage arising out of the Contract relationship memorialized by this Contract (or the termination of such relationship), shall be through the arbitration process designed below.” See Agreement, {16 (emphasis added). As in Garcia, Plaintiff attributes all of the alleged Labor Code violations and other claims pled in the Complaint jointly to all Defendants, and, in fact, does not distinguish between their alleged contributions, choosing instead to refer to them jointly as simply “DEFENDANTS.” See Compl, |] 16, 25, 28. Likewise, here, the allegations against Defendants are intertwined, interdependent, and identical. The claims arise out of the exact same factual allegations. Thus, Plaintiff is required to arbitrate his claims against all Defendants to avoid duplicative litigation. 20 DB2/ 36076723.9 DEFENDANTS’ MOTION TO COMPEL ARBITRATION ~N O Y a B A W 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 MORGAN, LEWIS & Bockius LLP ATTORNEYS AT LAW Los ANGELES Second, the non-signatory Defendants are entitled to enforce the Agreement’s arbitration provisions because Plaintiff alleges that all Defendants were agents of each other. See id., 16. Courts routinely hold that alleged agents of a party to an arbitration agreement can compel arbitration so long as (1) the alleged wrongful acts of the agents relate to or are done in their alleged capacities as agents, and (2) the claims against the alleged agents arise out of or relate to the contract containing the arbitration clause. Garcia, 11 Cal. App. Sth at 788 (nonsignatory defendant may enforce an arbitration agreement “when a plaintiff alleges a defendant acted as an agent of a party to an arbitration agreement”); accord Dryer v. L.A. Rams, 40 Cal. 3d 406, 418 (1985). Here, both criteria are met. Plaintiff’s Complaint alleges that “Defendants, and each of them, were the agents, servants and employees of the remaining Defendants, and of each other, and that at all times herein mentioned, except as specifically noted herein, Defendants, and each of them, were acting in the course and scope of such agency and employment.” See Compl., q 16. Further, Plaintiff’s allegations and claims against the non-signatory Defendants, whom Plaintiff alleges are agents of signatory CPOC, arise out of or relate to Plaintiff’s Agreement with CPOC containing the arbitration provisions. See id., {{21-28. Moreover, the Agreement’s arbitration provisions broadly cover “any injury or damage arising out of the Contract relationship memorialized by this Contract (or the termination of such relationship) ....” See Agreement, q 16. Here, Plaintiff’s claims relate to his alleged failure to receive certain profits distributions related to his services rendered under the Agreement, and Defendants’ alleged wrongful conduct in relation to the Agreement, including Defendants’ alleged threat of termination if he did not sign the necessary sale documents. See Compl., {f21-28. Indeed, Plaintiff alleges that the day after the sale of CPOC to Savills, Defendants wrongfully terminated the Agreement and sought to “deprive Plaintiff of his rights and monies owed from the sale.” See id., {27, Ex. C. Thus, Plaintiff’s claims against the non-signatories, whom Plaintiff alleges are agents of CPOC, arise out of or relate to the Agreement. Further, judicial efficiency and avoiding inconsistent rulings also require compelling arbitration in foto. F. The Court Should Stay Any Inarbitrable Claims. Where a plaintiff asserts arbitrable and non-arbitrable claims, courts should compel all 21 DB2/ 36076723.9 DEFENDANTS’ MOTION TO COMPEL ARBITRATION ~N O Y a B A W 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 MORGAN, LEWIS & Bockius LLP ATTORNEYS AT LAW Los ANGELES arbitrable claims to arbitration, and stay proceedings of any non-arbitrable claims until arbitration is completed. McGill v. Citibank, 2 Cal. 5th 945, 966 (2017) (“case law establishes that a stay of proceedings as to any inarbitrable claims is appropriate until arbitration of any arbitrable claims is concluded”); Franco v. Arakelian Enters., Inc., 234 Cal. App. 4th 947, 966 (2015) (staying inarbitrable PAGA claim pending arbitration); see also KPMG LLP v. Cocchi, 565 U.S. 18, 19 (2011) (“if a dispute presents multiple claims, some arbitrable and some not, the former must be sent to arbitration even if this will lead to piecemeal litigation”). While Defendants do not believe that any claims asserted in the Complaint are inarbitrable (and, as noted, questions of arbitrability are for the arbitrator), if the Court determines that any claims in the Complaint are inarbitrable, the Court should stay any such claims, pending completion of arbitration. G. The Court Should Stay This Matter Pending Resolution of This Motion. Pursuant to Code of Civil Procedure section 1281.4, a stay of this action is mandatory upon a party’s application for order compelling arbitration. Civ. Proc. Code § 1281.4 (providing that the Court “shall, upon motion of a party to such action or proceeding, stay the action or proceeding until the application for an order to arbitrate is determined and, if arbitration of such controversy is ordered, until an arbitration is had ...”). Defendants respectfully request that this action be stayed pending the Court’s resolution of the instant motion. IV. CONCLUSION Defendants respectfully request that the Court compel Plaintiff’s claims to arbitration and stay or dismiss this action. Dated: March 15, 2019 MORGAN, LEWIS & BOCKIUS LLP By /s/ J. Warren Rissier J. Warren Rissier Attorneys for Defendants Cresa Management, LLC, Cresa Partners of Orange County, LP, Cresa Partners-West, Inc., Jeff A. Manley, Wayne Lamb, Dillon Dummit, Taylor Wood, Richard Martin, Randall S. Parker, Steven T. Card and Savills Studley, Inc. 22 DB2/ 36076723.9 DEFENDANTS’ MOTION TO COMPEL ARBITRATION 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 MORGAN, LEWIS & Bockius LLP ATTORNEYS AT LAW LOS ANGELES PROOF OF SERVICE I, Vicki Anderson, declare: I am a citizen of the United States and employed in Los Angeles County, California. Iam over the age of eighteen years and not a party to the within entitled action. My business address is 300 South Grand Avenue, Twenty-Second Floor, Los Angeles, CA 90071-3132. On March 8, 2019, I served a copy of the within document: DEFENDANTS’ NOTICE OF MOTION AND MOTION TO COMPEL ARBITRATION; MEMORANDUM OF POINTS AND AUTHORITIES sg [VIA ELECTRONIC FILING] through One Legal at which time electronic service was simultaneously transmitted to all participating parties in One Legal’s system for Case No. 30-2018-01032177-CU-BC-CIJC in the Superior Court of the State of California, County of Orange. ig [COURTESY COPY VIA MAIL] by placing the document listed above in a sealed envelope with postage thereon fully prepaid, in the United States mail at Los Angeles, California addressed as set forth below. Iam readily familiar with the firm’s practice of collection and processing correspondence for mailing. Under that practice it would be deposited with the U.S. Postal Service on that same day with postage thereon fully prepaid in the ordinary course of business. I am aware that on motion of the party served, service is presumed invalid if postal cancellation date or postage meter date is more than one day after date of deposit for mailing in affidavit. Richard W. Millar, Jr. Attorneys for Plaintiff, KENNETH B. BLYE Christopher D. Lee FRIEDMAN STROFFE & GERARD, P.C. Phone: 949.265.1100 19800 MacArthur Blvd., Ste. 1100 Fax: 949.265.1199 Irvine, CA 92612 Emails: rmillar@fsglawyers.com clee@fsglawyers.com Executed on March 15, 2019, at Los Angeles, California. I declare under penalty of perjury under the laws of the State of California that the above is true and correct. hd ere VICKI ANDERSON PROOF OF SERVICE DB2/36108939.1
