defendants memorandum of points and authorities in support of petition

Cal. Super. - 1st Dist.September 8, 2021

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 DEFENDANT’S MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF PETITION TO COMPEL ARBITRATION PAUL, PLEVIN, SULLIVAN & CONNAUGHTON LLP E. JOSEPH CONNAUGHTON (SBN 166765) jconnaughton@paulplevin.com KRIS M. DARROUGH (SBN 323285) kdarrough@paulplevin.com PAUL, PLEVIN, SULLIVAN & CONNAUGHTON LLP 101 West Broadway, Ninth Floor San Diego, California 92101-8285 Telephone: 619-237-5200 Facsimile: 619-615-0700 Attorneys for Defendant ALLIANT INTERNATIONAL UNIVERSITY SUPERIOR COURT OF THE STATE OF CALIFORNIA COUNTY OF SAN FRANCISCO SUNI PETERSEN, Plaintiff, v. ALLIANT INTERNATIONAL UNIVERSITY and DOES 1-25, Defendants. Case No. CGC-19-580528 DEFENDANT’S MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF PETITION TO COMPEL ARBITRATION Date: February 19, 2020 Time: 9:30 a.m. Judge: Hon. Ethan P. Schulman Dept.: 302 Action Filed: November 5, 2019 Trial Date: Not set Reservation No.: 12090219-05 ELECTRONICALLY F I L E D Superior Court of California, County of San Francisco 12/09/2019 Clerk of the Court BY: MADONNA CARANTO Deputy Clerk 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 2 DEFENDANT’S MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF PETITION TO COMPEL ARBITRATION PAUL, PLEVIN, SULLIVAN & CONNAUGHTON LLP TABLE OF CONTENTS Page I. INTRODUCTION ..................................................................................................................6 II. BACKGROUND FACTS ......................................................................................................6 III. THE PARTIES’ MUTUAL ARBITRATION AGREEMENT SHOULD BE ENFORCED ...........................................................................................................................8 A. California Law Strongly Favors Arbitration ..............................................................8 B. Plaintiff Cannot Avoid an Otherwise Enforceable Arbitration Provision Simply Because She Has Changed Her Mind. ...........................................................9 C. The Arbitration Agreement is Valid and Binding ......................................................9 1. The Parties Entered Into an Enforceable Contract to Arbitrate ...................10 2. The Arbitration Agreement is Conscionable ................................................11 a. There is No Procedural Unconscionability ......................................11 b. There is No Substantive Unconscionability .....................................11 c. The Court can Strike Any Unenforceable Clause ............................13 D. Dr. Petersen’s Claims Fall Squarely Within the Scope of the Arbitration Agreement ................................................................................................................13 E. This Case Should be Stayed Pending the Outcome of the Arbitration ....................15 IV. CONCLUSION ....................................................................................................................15 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 3 DEFENDANT’S MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF PETITION TO COMPEL ARBITRATION PAUL, PLEVIN, SULLIVAN & CONNAUGHTON LLP TABLE OF AUTHORITIES Page(s) FEDERAL CASES AT&T Techs., Inc. v. Commc’n Workers of Am. (1986) 475 U.S. 643 .....................................................................................................................8 Epic Systems Corp. v. Lewis (2018) 138 S.Ct. 1612 ..................................................................................................................8 Marmet Health Care Ctr., Inc. v. Brown (2012) 565 U.S. 530 .....................................................................................................................8 SI V, LLC v. FMC Corp. (N.D. Cal. 2002) 223 F.Supp.2d 1059 .......................................................................................13 STATE CASES 24 Hour Fitness, Inc. v. Sup. Ct. (1998) 66 Cal.App.4th 1199 .................................................................................................10, 12 Armendariz v. Found. Health Psychcare Servs., Inc. (2000) 24 Cal.4th 83 ........................................................................................................... passim Bigler v. Harker School (2013) 213 Cal.App.4th 727 .......................................................................................................11 Bolter v. Sup. Ct. (2001) 87 Cal.App.4th 900 .........................................................................................................13 Buckhorn v. St. Jude Heritage Medical Group (2004) 121 Cal.App.4th 1401 .....................................................................................................14 Burch v. Premier Homes, LLC (2011) 199 Cal.App.4th 730 .......................................................................................................10 Coast Plaza Doctors Hosp. v. Blue Cross of Cal. (2000) 83 Cal.App.4th 677 .........................................................................................................14 CPI Builders, Inc. v. Impco Technologies, Inc. (2001) 94 Cal.App.4th 1167 .........................................................................................................9 Division of Labor Law Enforcement v. Transpacific Transportation Co. (1977) 69 Cal.App.3d 268 ..........................................................................................................10 Fittante v. Palm Springs Motors, Inc. (2003) 105 Cal.App.4th 708 .............................................................................................8, 11, 12 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 4 DEFENDANT’S MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF PETITION TO COMPEL ARBITRATION PAUL, PLEVIN, SULLIVAN & CONNAUGHTON LLP Gravillis v. Coldwell Banker Residential Brokerage Co. (2006) 143 Cal.App.4th 761 .........................................................................................................9 Iskanian v. CLS Transp. LA, LLC (2014) 59 Cal.4th 348 ...................................................................................................................8 Kinney v. United HealthCare Services, Inc. (1999) 70 Cal.App.4th 1322 .......................................................................................................11 Mercury Ins. Group. v. Sup. Ct. (1998) 19 Cal.4th 332 ...................................................................................................................8 Mission Viejo Emergency Med. Associates v. Beta Healthcare Group (2011) 197 Cal.App.4th 1146 .......................................................................................................9 Moncharsh v. Heily & Blasé (1992) 3 Cal.4th 1 .........................................................................................................................8 Morris v. Redwood Empire Bancorp (2005) 128 Cal.App.4th 1305 ...............................................................................................11, 12 Oakland-Alameda County Coliseum Authority v. CC Partners (2002) 101 Cal.App.4th 635 .......................................................................................................13 Pearson Dental Supplies, Inc. v. Sup. Ct. (2010) 48 Cal.4th 665 ...................................................................................................................9 Pinnacle Museum Tower Assn. v. Pinnacle Mkt. Dev., LLC (2012) 55 Cal.4th 223 .......................................................................................................9, 10, 11 Roman v. Sup. Ct. (2009) 172 Cal.App.4th 1462 .....................................................................................................12 San Diego City Firefighters, Local 145 v. Bd. of Admin. (2012) 206 Cal.App.4th 594 .......................................................................................................10 Sanchez v. Carmax Auto Superstores Cal., LLC (2014) 224 Cal.App.4th 398 ...................................................................................................9, 11 Twentieth Century Fox Film Corp. v. Sup. Ct. (2000) 79 Cal.App.4th 188 .........................................................................................................15 Vianna v. Doctors’ Mgmt Co. (1994) 27 Cal.App.4th 1186 .........................................................................................................9 FEDERAL: STATUTES, RULES, REGULATIONS, CONSTITUTIONAL PROVISIONS 9 U.S.C. § 1 ........................................................................................................................................8 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 5 DEFENDANT’S MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF PETITION TO COMPEL ARBITRATION PAUL, PLEVIN, SULLIVAN & CONNAUGHTON LLP STATE: STATUTES, RULES, REGULATIONS, CONSTITUTIONAL PROVISIONS Cal. Civ. Code § 1614 ......................................................................................................................10 Code Civ. Proc. § 1281 ......................................................................................................................8 Code Civ. Proc. § 1281.4 .................................................................................................................15 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 6 DEFENDANT’S MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF PETITION TO COMPEL ARBITRATION PAUL, PLEVIN, SULLIVAN & CONNAUGHTON LLP I. INTRODUCTION Plaintiff Suni Petersen (“Dr. Petersen”) voluntarily resigned her position as a professor with Defendant Alliant International University (“Alliant”) in exchange for a generous severance package. In doing so, she accepted the severance payment and other benefits in exchange for a release of all claims and an agreement to arbitrate any disputes. Yet when a dispute regarding Dr. Petersen’s separation from Alliant arose, Dr. Petersen filed this lawsuit and has refused to submit it to arbitration. Alliant respectfully requests this Court compel Dr. Petersen to do what she agreed to do - arbitrate any disputes. II. BACKGROUND FACTS Alliant is an academic institution that delivers multi-disciplinary education to students seeking undergraduate and graduate degrees and professional certification. Dr. Petersen began working as a professor for Alliant from approximately 2006. (Plaintiff’s Complaint (“Compl.”) ¶ 3.) In 2017, Alliant presented select faculty with the opportunity to participate in a Voluntary Separation Incentive (“VSI”) program. (Declaration of Tracy Heller (“Heller Decl.”) ¶ 3.) The VSI program offered selected faculty a payment of 150% of the faculty’s base salary plus the payment of COBRA premiums in exchange for a voluntary resignation and termination of the faculty member’s then-existing contract. (Notice of Lodgment of Exhibits filed concurrently herewith (“NOL”) Exh. 1.) To participate, the faculty member signed a separation agreement and general release of all claims, which also contained an arbitration agreement. (Heller Decl. ¶ 3; Exh. 1.) The VSI program was purely voluntary. (Heller Decl. ¶ 3.) Dr. Petersen originally did not accept the VSI offer before its expiration. (Heller Decl. ¶ 4.) However, she later approached Alliant after the deadline had passed and specifically requested that she be allowed to accept. (Heller Decl. ¶ 4; Compl. ¶¶ 11, 13.) On or about January 7, 2018, Dr. Petersen voluntarily signed a “Separation Agreement and General Release of All Claims” (the “Separation Agreement”). (Heller Decl. ¶ 4; Exh. 1.) The Separation Agreement contained an arbitration provision (“Arbitration Agreement”), in which Dr. Petersen specifically agreed that: 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 7 DEFENDANT’S MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF PETITION TO COMPEL ARBITRATION PAUL, PLEVIN, SULLIVAN & CONNAUGHTON LLP Any disputes between Employee and Releasee, arising out of or in any way connected to the terms of this Agreement, or the parties' rights or obligations with respect to Employee's separation from the University, shall be resolved by binding arbitration before a single neutral arbitrator pursuant to the then current Employment Arbitration Rules of the American Arbitration Association, which can be viewed at https://www.adr.org. The prevailing party in such arbitration shall be entitled to an award of costs and attorneys' fees in connection with the arbitration. (NOL Exh. 1, ¶ 12.) The Separation Agreement also noted it represented the entire agreement between the parties, and that all other prior agreements were ineffective. (NOL Exh. 1, ¶¶ 6, 15.) On November 4, 2019, Dr. Petersen filed the present action against Alliant in the California Superior Court for the County of San Francisco, bypassing her arbitration obligations. In her verified Complaint, Dr. Petersen asserts causes of action for (1) retaliation for assertion of rights (Fair Employment & Housing Act (“FEHA”)); (2) age discrimination (FEHA); and (3) promissory estoppel. Each of these claims are premised on the Separation Agreement: Dr. Petersen alleges Alliant promised her teaching positions, that she signed the Separation Agreement in reliance of that promise, and that Alliant’s decision to select other candidates instead of her was discriminatory and retaliatory. (See Compl., ¶¶ 26, 40.) Alliant contacted Dr. Petersen’s counsel, who acknowledged the terms of the Separation Agreement, including the arbitration provision, and indicated willingness to consider submitting the matter to arbitration. (Declaration of Kris M. Darrough (“Darrough Decl.”) ¶ 2.) However, Dr. Petersen refused to stipulate to arbitration unless Alliant answered the verified Complaint and denied Alliant’s request for an extension of time for the initial response. (Id.) Alliant expressed its desire to pursue an amicable agreement but informed Dr. Petersen of its intent to pursue a petition to compel arbitration. (Darrough Decl. ¶ 3; NOL Exhs. 2, 3.) Dr. Petersen did not respond. (Darrough Decl. ¶ 4.) / / / / / / / / / 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 8 DEFENDANT’S MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF PETITION TO COMPEL ARBITRATION PAUL, PLEVIN, SULLIVAN & CONNAUGHTON LLP III. THE PARTIES’ MUTUAL ARBITRATION AGREEMENT SHOULD BE ENFORCED Dr. Petersen and Alliant entered into a valid, binding, and mutual arbitration agreement. The Arbitration Agreement is clear and unambiguous, and provides for a fair mechanism for the resolution of employment disputes. (NOL Exh. 1.) Moreover, Dr. Petersen’s claims are squarely within the scope of the Arbitration Agreement. Under these circumstances, California law compels Dr. Petersen to arbitrate her claims. A. California Law Strongly Favors Arbitration The California Arbitration Act (“CAA”) (Code Civ. Proc. § 1281, et seq.) governs enforcement of the Arbitration Agreement because Dr. Petersen and Alliant specifically agreed that California law will govern the Separation Agreement.1 (NOL Exh. 1, ¶ 11.) “California law, like federal law, favors enforcement of valid arbitration agreements.” (Armendariz, supra, 24 Cal.4th at 97.) The CAA makes written agreements to arbitrate valid, enforceable, and irrevocable and reflects a favorable policy toward arbitration, even in the employment context. (Code Civ. Proc. § 1281; Epic Systems Corp., supra, 138 S.Ct. at 1619; Armendariz, supra, 24 Cal.4th at 97- 98; Fittante v. Palm Springs Motors, Inc. (2003) 105 Cal.App.4th 708, 720; Mercury Ins. Group. v. Sup. Ct. (1998) 19 Cal.4th 332, 342.) In enacting the CAA, the California legislature “expressed a ‘strong public policy in favor of arbitration as a speedy and relatively inexpensive means of dispute resolution.’” (Moncharsh v. Heily & Blasé (1992) 3 Cal.4th 1, 9.) In Iskanian, the California Supreme Court restated its liberal policy favoring arbitration, and that policy should apply here. (Iskanian v. CLS Transp. LA, LLC (2014) 59 Cal.4th 348, 366.) As such, “where [a] contract contains an arbitration clause, there is a presumption of arbitrability,” and any “[d]oubts should be resolved in favor of coverage.” (AT&T Techs., Inc. v. Commc’n Workers of Am. (1986) 1 Even if the Arbitration Agreement were governed by the Federal Arbitration Act (“FAA”)(9 U.S.C. § 1 et seq.) rather than the CAA, the outcome would be the same. “State and federal courts must enforce the Federal Arbitration Act (FAA), 9 U.S.C. § 1 et seq., with respect to all arbitration agreements covered by that statute.” (Marmet Health Care Ctr., Inc. v. Brown (2012) 565 U.S. 530, 530-31.) The California Supreme Court has specifically held that it need not determine whether the FAA or CAA applies to employment contracts because both California and federal law “favor[] enforcement of valid arbitration agreements” and, under either, “an arbitration agreement may only be invalidated for the same reasons as other contracts.” (Epic Systems Corp. v. Lewis (2018) 138 S.Ct. 1612, 1619; Armendariz v. Found. Health Psychcare Servs., Inc. (2000) 24 Cal.4th 83, 98.) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 9 DEFENDANT’S MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF PETITION TO COMPEL ARBITRATION PAUL, PLEVIN, SULLIVAN & CONNAUGHTON LLP 475 U.S. 643, 650.) B. Plaintiff Cannot Avoid an Otherwise Enforceable Arbitration Provision Simply Because She Has Changed Her Mind. Dr. Petersen may not avoid her agreement to arbitrate simply because she has had a change of heart. (CPI Builders, Inc. v. Impco Technologies, Inc. (2001) 94 Cal.App.4th 1167, 1173 [that party later communicated a desire to avoid arbitration is not determinative once the offer to arbitrate had been accepted and consideration provided]; Mission Viejo Emergency Med. Associates v. Beta Healthcare Group (2011) 197 Cal.App.4th 1146, 1154-55 [“‘[i]t is the objective intent, as evidenced by the words of the contract, . . . that controls interpretation’”].) Here, Dr. Petersen has not provided any valid reason for avoiding the Arbitration Agreement. Thus, if Alliant establishes that the parties entered into an enforceable contract, this Court must enforce the Arbitration Agreement as written. C. The Arbitration Agreement is Valid and Binding Under either the FAA or CAA, the Court’s role is limited to assessing whether the parties entered into a valid, enforceable agreement. (Armendariz, supra, 24 Cal.4th at 99; Pinnacle Museum Tower Assn. v. Pinnacle Mkt. Dev., LLC (2012) 55 Cal.4th 223, 236.) Put differently, if the essential elements of a contract are present, an arbitration agreement shall be enforced so long as it is conscionable. (Armendariz, supra, 24 Cal.4th at 114; Sanchez v. Carmax Auto Superstores Cal., LLC (2014) 224 Cal.App.4th 398, 402.) The party seeking arbitration bears the initial burden of proving the existence of an arbitration agreement; the party opposing the agreement bears the burden of proving any enforceability defense. (Pinnacle Museum Tower, supra, 55 Cal.4th at 236.) “A heavy presumption weighs the scales in favor of arbitrability.” (Gravillis v. Coldwell Banker Residential Brokerage Co. (2006) 143 Cal.App.4th 761, 771; accord Vianna v. Doctors’ Mgmt Co. (1994) 27 Cal.App.4th 1186, 1189; see also Pearson Dental Supplies, Inc. v. Sup. Ct. (2010) 48 Cal.4th 665, 682 [“When an arbitration provision is ambiguous, we will interpret that provision, if reasonable, in a manner that renders it lawful, both because of our public policy in favor of arbitration … and because of the general principle that we interpret a contractual provision in a manner that renders 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 10 DEFENDANT’S MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF PETITION TO COMPEL ARBITRATION PAUL, PLEVIN, SULLIVAN & CONNAUGHTON LLP it enforceable rather than void”].) Here, there is no doubt the Arbitration Agreement is enforceable. 1. The Parties Entered Into an Enforceable Contract to Arbitrate The elements necessary to form a contract are mutual assent (offer and acceptance) and consideration. (Division of Labor Law Enforcement v. Transpacific Transportation Co. (1977) 69 Cal.App.3d 268, 275.) “[M]utual assent exists when a reasonable person would conclude from the outward conduct of the parties that there was mutual agreement regarding their intent to be bound.” (Burch v. Premier Homes, LLC (2011) 199 Cal.App.4th 730, 746.) Under California contract law, a “written instrument is presumptive evidence of a consideration,” and “all the law requires for sufficient consideration is the proverbial ‘peppercorn.’” (Cal. Civ. Code § 1614; San Diego City Firefighters, Local 145 v. Bd. of Admin. (2012) 206 Cal.App.4th 594, 619.) An employee cannot escape an otherwise valid arbitration agreement by claiming she did not read the agreement. (24 Hour Fitness, Inc. v. Sup. Ct. (1998) 66 Cal.App.4th 1199, 1215; Pinnacle Museum Tower, supra, 55 Cal.4th at 236.) Alliant offered the VSI program to certain professors, including Dr. Petersen. Dr. Petersen originally rejected the VSI offer, but later, after the terms of the offer had expired, she specifically requested that she be allowed to accept. Thus, Dr. Petersen made the decision to voluntarily participate in the VSI program after having time to consider the terms. Dr. Petersen then signed the Separation Agreement, therein agreeing to arbitrate any disputes arising out of or in any way connected to the terms of the Agreement, or the parties’ rights or obligations with respect to Dr. Petersen’s separation from Alliant. (Heller Decl., ¶ 4; NOL Exh. 1, ¶ 12.) As a result, Alliant paid Dr. Petersen 150% of her salary for one year in addition to paying her COBRA premiums. In exchange, Dr. Petersen released all claims against Alliant and agreed to resign from the university. In short, the circumstances demonstrate Dr. Petersen accepted the offer to be bound by the Separation Agreement, which contained the Arbitration Agreement. In return, Dr. Petersen received monetary compensation and payments for her benefits. These facts satisfy the offer, acceptance, and consideration requirements for contract formation. Thus, the Arbitration Agreement is enforceable. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 11 DEFENDANT’S MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF PETITION TO COMPEL ARBITRATION PAUL, PLEVIN, SULLIVAN & CONNAUGHTON LLP 2. The Arbitration Agreement is Conscionable If the essential elements of a contract are present, courts must enforce an arbitration agreement as long as it is conscionable. (Armendariz, supra, 24 Cal.4th at 114; Carmax Auto, supra, 224 Cal.App.4th at 402.) To avoid the arbitration provision, Dr. Petersen must prove the Arbitration Agreement is both procedurally and substantively unconscionable. (Id.) She can do neither. a. There is No Procedural Unconscionability Procedural unconscionability focuses on two elements: oppression and surprise due to unequal bargaining power. (Bigler v. Harker School (2013) 213 Cal.App.4th 727, 736-37; Fittante, supra, 105 Cal.App.4th at 722-723.) Oppression “arises from an inequality of bargaining power of the parties to the contract and an absence of real negotiation or a meaningful choice on the part of the weaker party.” (Kinney v. United HealthCare Services, Inc. (1999) 70 Cal.App.4th 1322, 1329.) The element of surprise “occurs where the allegedly unconscionable provision is hidden with a prolix printed form.” (Pinnacle Museum Tower, supra, 55 Cal.4th at 247.) Here, Alliant presented Dr. Petersen with an opportunity to participate in the VSI program. There were no consequences for rejecting the offer and keeping her then-existing employment contract. In fact, Dr. Petersen initially decided not to participate in the VSI program and kept her then-existing employment contract; she did not face any consequence. (Compl., ¶ 11.) In fact, it was Dr. Petersen - not Alliant - who revisited the idea of participating in the VSI program and contacted Alliant, requesting to participate. (Compl., ¶ 13.) Moreover, this Separation Agreement is a four-page document with easy to read text. The Arbitration Agreement is not hidden and uses plain English. After considering the matter for weeks, Dr. Petersen affirmatively requested participation in the VSI program. Dr. Petersen cannot establish procedural unconscionability. b. There is No Substantive Unconscionability The Arbitration Agreement is also enforceable because it is not substantively unconscionable. Substantive unconscionability focuses on overly harsh or one-sided results, and “whether a contractual provision reallocates risks in an objectively unreasonable or unexpected manner.” (Armendariz, supra, 24 Cal.4th at 114; Carmax Auto, supra, 224 Cal.App.4th at 402; Morris v. Redwood 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 12 DEFENDANT’S MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF PETITION TO COMPEL ARBITRATION PAUL, PLEVIN, SULLIVAN & CONNAUGHTON LLP Empire Bancorp (2005) 128 Cal.App.4th 1305, 1317.) In order to prove the Arbitration Agreement is substantively unconscionable, Dr. Petersen must prove its terms are so extreme or unfair so as to “shock the conscience.” (24 Hour Fitness, supra, 66 Cal.App.4th at 1213 [finding arbitration agreement enforceable where the employee failed to demonstrate “concrete reason why the terms of the agreement are unduly harsh, oppressive or one-sided”]; Morris, supra, 128 Cal.App.4th at 1322-23 [“With a concept as nebulous as ‘unconscionability’ it is important that courts not be thrust in the paternalistic role of intervening to change contractual terms that the parties have agreed to merely because the court believes the terms are unreasonable. The terms must shock the conscience”].) Specifically, the California Supreme Court permits arbitration of employment-related disputes if the agreement: “(1) provides for neutral arbitrators, (2) provides for more than minimal discovery, (3) requires a written award, (4) provides for all of the types of relief that would otherwise be available in court, and (5) does not require employees to pay either unreasonable costs or any arbitrators’ fees or expenses as a condition of access to the arbitration forum.” (Armendariz, supra, 24 Cal.4th at 102; accord Fittante, supra, 105 Cal.App.4th at 716.) In addition, the agreement must have a “modicum of bilaterality” to be enforceable, that is, it must require both the employee and employer to arbitrate claims against each other and must apply equally to both parties. (Armendariz, supra, 24 Cal.4th at 117-18; see also Fittante, supra, 105 Cal.App.4th at 723-24 [arbitration agreement is enforceable when it is equally applicable to both parties]; 24 Hour Fitness, supra, 66 Cal.App.4th at 1213 [same].) Here, the Arbitration Agreement explicitly states arbitration is according to “the then current Employment Arbitration Rules of the American Arbitration Association,” and specifically provides the address of a website containing those procedures. (NOL Exh. 1, ¶ 12.) Incorporating the American Arbitration Association rules and procedures by reference is sufficient to make those rules part of the arbitration agreement. (See Roman v. Sup. Ct. (2009) 172 Cal.App.4th 1462, 1476 [finding no meaningful difference between the scope of discovery approved in Armendariz and that authorized by the AAA employment dispute rules].) The Arbitration Agreement further states that any disputes will be resolved by binding arbitration before a single neutral arbitrator, and that the prevailing party will be entitled to an award of costs and attorneys’ fees in connection with the arbitration. (NOL Exh. 1, ¶ 12.) It also requires both parties to arbitrate any disputes. (Id.) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 13 DEFENDANT’S MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF PETITION TO COMPEL ARBITRATION PAUL, PLEVIN, SULLIVAN & CONNAUGHTON LLP Simply put, the terms are fair and reasonable. The VSI program was entirely voluntary. Dr. Petersen was not required to accept the VSI benefits, or sign the Separation Agreement, nor was the Arbitration Agreement a mandatory term of her employment. Rather, she made the decision herself to seek out the contract even after the deadline passed. There is zero evidence of substantive unconscionability. c. The Court Can Strike Any Unenforceable Clause Even if the Court determines that the Separation Agreement is unenforceable, it should modify or sever the offending portion. (Armendariz, supra, 24 Cal.4th at 121-24; Bolter v. Sup. Ct. (2001) 87 Cal.App.4th 900, 910-11 [“It is not necessary to throw the baby out with the bath water, i.e., the unconscionable provisions can be severed and the rest of the agreement enforced”].) To prevent severance (in the event any provision were deemed unconscionable), Dr. Petersen would need to show that the Agreement is “permeated” with illegality. (Bolter, supra, 87 Cal.App.4th at 910-11.) A court is particularly apt to sever an objectionable clause where the parties have agreed in the arbitration agreement to modify or interpret any clause found to be invalid or unenforceable. (See Oakland-Alameda County Coliseum Authority v. CC Partners (2002) 101 Cal.App.4th 635, 646, disapproved of on other grounds; SI V, LLC v. FMC Corp. (N.D. Cal. 2002) 223 F.Supp.2d 1059, 1063.) Here, the Separation Agreement contains a provision that reads as follows: “[i]n the event that any provision of this Agreement shall be found to be unenforceable, that provision shall be deemed deleted, and the validity and enforceability of the remaining provisions shall not be affected.” (NOL Exh. 1, ¶ 14.) Thus, while the entirety of the Separation Agreement is enforceable, any unenforceable provision can be modified or interpreted to be enforceable. D. Dr. Petersen’s Claims Fall Squarely Within the Scope of the Arbitration Agreement Just as it is clear that the Arbitration Agreement is valid and enforceable, it is equally clear that Dr. Petersen’s claims fall within the Arbitration Agreement’s scope. Dr. Petersen agreed to arbitrate any dispute regarding the terms of the Separation Agreement or the parties’ rights or obligations with respect to Dr. Petersen’s separation from Alliant. Allegations that Alliant was required to hire Dr. Petersen, and that Alliant discriminated or harassed her as a result of the 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 14 DEFENDANT’S MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF PETITION TO COMPEL ARBITRATION PAUL, PLEVIN, SULLIVAN & CONNAUGHTON LLP Separation Agreement certainly fall within the scope of the Arbitration Agreement. “California has a strong public policy in favor of arbitration and any doubts regarding the arbitrability of a dispute are resolved in favor of arbitration.” (Coast Plaza Doctors Hosp. v. Blue Cross of Cal. (2000) 83 Cal.App.4th 677, 686.) “This strong policy has resulted in the general rule that arbitration should be upheld “unless it can be said with assurance that an arbitration clause is not susceptible to an interpretation covering the asserted dispute.” (Id.) The party opposing arbitration bears the burden of demonstrating “that an arbitration clause cannot be interpreted to require arbitration of the dispute.” (Id. at 686-687, original italics.) Buckhorn v. St. Jude Heritage Medical Group (2004) 121 Cal.App.4th 1401 is particularly instructive. The plaintiff in Buckhorn argued that the arbitration agreement entered into during his employment did not encompass his tort claims for defamation and interference with prospective business advantage because the claims were based on events occurring after his termination. (Id. at 1407.) The court rejected this argument, noting “the issue turns on whether the tort claims are ‘rooted’ in the contractual relationship between the parties, not when they occurred.” (Id. at 1407.) In submitting all of the plaintiff’s claims to arbitration, the court explained: For example, [the plaintiff’s] claims for intentional and negligent interference with prospective economic advantage were based on an expectation of future income from his patients. But [the plaintiff’s] patients consulted him in his capacity as an employee of the [defendant’s medical group] and therefore the employment agreement would inform the extent of any economic interest. Because [the plaintiff] failed to demonstrate his tort claims were “wholly independent” of the employment agreement, and any doubts must be resolved in favor of arbitration. (Id. at 1407-1408.) Here, Dr. Petersen alleges Alliant owed an obligation to re-hire her after she signed the Separation Agreement (even though there is no obligation requiring that in the agreement), that Alliant promised her that she would be hired as an adjunct professor if she signed the Separation Agreement (same), and that Alliant discriminated and retaliated against her. Each of Dr. Petersen’s claims arise directly out of the terms of the Separation Agreement and the parties’ rights or obligations with respect to Dr. Petersen’s separation from Alliant. The Complaint’s repeated references to the Separation Agreement is further direct evidence that Dr. Petersen’s 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 15 DEFENDANT’S MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF PETITION TO COMPEL ARBITRATION PAUL, PLEVIN, SULLIVAN & CONNAUGHTON LLP claims are squarely and fundamentally “rooted” in the Separation Agreement. As such, all of Dr. Petersen’s claims are subject to arbitration. E. This Case Should be Stayed Pending the Outcome of the Arbitration The CAA requires the Court stay pending litigation once a petition for arbitration has been made and the petitioner seeks a stay. (Code Civ. Proc. § 1281.4; Twentieth Century Fox Film Corp. v. Sup. Ct. (2000) 79 Cal.App.4th 188, 192.) Thus, this case should be stayed pending the conclusion of the required arbitration. IV. CONCLUSION For all of the reasons set forth above, Alliant respectfully requests the Court to enter an Order compelling this case to arbitration and staying this case pending its completion. Dated: December 9, 2019 PAUL, PLEVIN, SULLIVAN & CONNAUGHTON LLP By: E. JOSEPH CONNAUGHTON KRIS M. DARROUGH Attorneys for Defendant ALLIANT INTERNATIONAL UNIVERSITY