amended opposition to defendants motion to compel arbitration and to sCal. Super. - 1st Dist.April 29, 2021 AMENDED OPPOSITION TO MOTION TO COMPEL ARBITRATION 1 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 Lawrence W. Freiman, Esq. (SBN 288917) lawrence@freimanlegal.com FREIMAN LEGAL, P.C. 100 Wilshire Blvd., Ste. 700 Santa Monica, CA 90401 Telephone: (310) 917-1004 Facsimile: (310) 300-2603 Counsel for Plaintiff Aloma Llanes SUPERIOR COURT FOR THE STATE OF CALIFORNIA COUNTY OF SAN FRANCISCO MEMORANDUM OF POINTS AND AUTHORITIES I. INTRODUCTION By its own terms, the Arbitration Agreement is unenforceable. Contained in Exhibit “A” to the Declaration of Lisa Foley, is a statement that “Neither the contents of this letter nor any TelePacific Communications Policy, procedure or practice…constitutes a…contractual obligation between you and TelePacific Communications.” See Declaration of Lisa Foley, Exhibit “A,” page 1, para 5. Defendant cannot represent to Plaintiff (and under oath to this Court) that there is no contractual obligation between the parties, and also try to enforce a purported contractual obligation. Defendant’s Arbitration Agreement is permeated with unconscionability and thus unenforceable. ALOMA LLANES, Plaintiff, v. U.S. TELEPACIFIC CORP.; and DOES 1 through 20, inclusive, Defendant. CASE NO.: CGC-20-584982 AMENDED OPPOSITION TO DEFENDANT’S MOTION TO COMPEL ARBITRATION AND TO STAY COURT ACTION PENDING ARBITRATION Date of Hearing: 10/8/2020 Time of Hearing: 9:30 am Dept. 302 ELECTRONICALLY F I L E D Superior Court of California, County of San Francisco 09/22/2020 Clerk of the Court BY: RONNIE OTERO Deputy Clerk AMENDED OPPOSITION TO MOTION TO COMPEL ARBITRATION 2 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 The Agreement requires all disputes to be heard before a single arbitration provider, AAA, that Defendant apparently utilizes in all disputes due to the form agreement and AAA has an incentive to side with Defendant to ensure repeat business. Further, the Agreement is completely ambiguous as to what discovery is permitted and only requires that the Arbitrator allow one percipient witness deposition and 15 interrogatories and requests for admission, which is far more restrictive than what Plaintiff is entitled to in Court. It does not specify any requests for production that shall be permitted. This is particularly unconscionable in employment matters since the company generally has all of the email evidence and other documentary evidence on its servers that the employee cannot access. These terms, taken as a whole, evidence an intent to deprive employees of their right to trial by jury while stacking the deck in Defendant’s favor. II. ENFORCEABILITY The Court must use general principles of California contract law to determine the enforceability of an arbitration agreement. Mission Viejo Emergency Medical Associates v. Beta Healthcare Group, (2011) 197 Cal.App.4th 1146, 1153. Code of Civil Procedure section 1281.2 requires a court to order arbitration "if it determines that an agreement to arbitrate . . . exists . . .unless it determines that…grounds exist for revocation of the agreement…." Code Civ. Proc., § 1281.2. Here, there was no Agreement to arbitrate since by Defendant’s own letter sent with the arbitration agreement and that is part of the Arbitration Agreement documents, it specifically says that no contractual obligation was created. Contained in Exhibit “A” to the Declaration of Lisa Foley, is a statement that “Neither the contents of this letter nor any TelePacific Communications Policy, procedure or practice…constitutes a…contractual obligation between you and TelePacific Communications.” See Declaration of Lisa Foley, Exhibit “A,” page 1, para 5. Defendant cannot represent to Plaintiff (and under oath to this Court) that there is no contractual obligation between the parties, and also try to enforce a purported contractual obligation. III. UNCONCSCIONABILITY Civil Code section 1670.5 states: "If the court as a matter of law finds the contract or any clause of the contract to have been unconscionable at the time it was made the court may refuse to enforce the contract, or it may enforce the remainder of the contract without the unconscionable AMENDED OPPOSITION TO MOTION TO COMPEL ARBITRATION 3 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 clause, or it may so limit the application of any unconscionable clause as to avoid any unconscionable result." This provision applies to arbitration agreements. Armendariz v. Foundation Health Psychcare Services, Inc., (2000) 24 Cal.4th 83, 114. "[U]nconscionability has both a "procedural" and a "substantive" element, the former focusing on '"oppression"' or '"surprise"' due to unequal bargaining power, the latter on '"overly harsh"' or '"one-sided"' results. If the illegality were not enough, the oppressiveness of the agreement at issue, renders it unenforceable and consequently, the Court should deny Jack in the Box’s Motion. Arbitration agreements that are “permeated” by unconscionability are unenforceable. Such agreements may not be cured through reformation and augmentation. Armendariz v. Foundation Health Psychcare Services, Inc., (2000) 24 C.4th 83, 122, 99 CR2d 745, 773. “An employment arbitration agreement can be considered permeated by unconscionability if it contains more than one unlawful provision.” Murphy v. Check ‘N Go of Calif., Inc., (2007) 156 CA4th 138, 149, 67 CR3d 120, 128; Wherry v. Award, Inc., 192 CA4th 1242, 1250, 123 CR3d 1, 7-8; see also Ontiveros v. DHL Express (USA), Inc., (2008) 164 CA4th 494, 515, 79 CR3d 471, 488-489] Nor is severance appropriate where there are multiple provisions in an arbitration agreement rendering it substantively unconscionable, and no single provision may be stricken in order to remove the “unconscionable taint” from the agreement. Nyulassy v. Lockheed Martin Corp., (2004) 120 CA4th 1267, 1288, 16 CR3d 296, 311-312; Carmona v. Lincoln Millennium Car Wash, Inc., (2014) 226 CA4th 74, 90, 171 CR3d 42, 55. Here, that the Arbitration contains numerous instances of unconscionability and many ambiguities. The Court should construe ambiguous language against the interest of the party that drafted it. Rebolledo v. Tilly’s, Inc., 228 Cal.App.4th 900, 913 (2014). Since Defendant drafted the Agreement, the Court should thus find it unenforceable and keep the case in this Court where Plaintiff can enforce is constitutional right to a trial by jury and not a single arbitrator that is the judge and the jury. A. Procedural Unconscionability "Procedural unconscionability" concerns the manner in which the contract was negotiated and the circumstances of the parties at that time. It focuses on factors of oppression and surprise. The oppression component arises from an inequality of bargaining power of the parties to the contract and AMENDED OPPOSITION TO MOTION TO COMPEL ARBITRATION 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 an absence of real negotiation or a meaningful choice on the part of the weaker party." Morris v. Redwood Empire Bancorp (2005) 128 Cal.App.4th 1305, 1319. An analysis of procedural unconscionability begins by determining whether the agreement was a contract of adhesion. Parada v. Superior Court (2009) 176 Cal.App.4th 1554, 1570. A contract of adhesion is "a standardized contract, 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.” Armendariz, supra, 24 Cal.4th at 113. Defendant does not claim Plaintiff had an opportunity to negotiate or change the terms of the Agreement, and there would be no evidence to support such an argument since it was a form agreement used at onboarding. There is no evidence such as an electronic trail to prove that Plaintiff actually agreed to this agreement and the signature is not authenticated. Further, it appears from Defendant’s Motion that the Agreement is a standard form that it seeks to have all employees sign without allowing any revisions. Any agreement to arbitrate was therefore a contract of adhesion. Additionally, surprise and oppression are present. See Gutierrez v. Autowest, Inc. (2003) 114 Cal.App.4th 77, 87. Further, when taken as a whole, the entire arbitration scheme is unduly confusing, and therefore oppressive to a layperson. Given this needless complexity, the result is oppression in the form of uncertainty, confusion, and failure to notify the employee of their rights. Given both the oppressiveness of the agreement and its adhesive nature, a high level of procedural unconscionability is present and the Court should not enforce it. B. Substantive Unconscionability While procedural unconscionability focuses on how the agreement was obtained and executed, "[s]ubstantive unconscionability focuses on whether the provision is overly harsh or one- sided and is shown if the disputed provision of the contract falls outside the 'reasonable expectations' of the nondrafting party or is 'unduly oppressive.” Gutierrez, 114 Cal.App.4th at p. 88. "Substantively unconscionable terms may take various forms but may generally be described as unfairly one-sided." Little v. Auto Stiegler, Inc., (2003) 29 Cal.4th 1064, 1071. "Where a party with superior bargaining power has imposed contractual terms on another, courts must carefully assess claims that one or more of these provisions are one-sided and unreasonable." Gutierrez, 114 Cal.App.4th at p. 88. "[T]he AMENDED OPPOSITION TO MOTION TO COMPEL ARBITRATION 5 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 paramount consideration in assessing [substantive] conscionability is mutuality." Abramson v. Juniper Networks, Inc. (2004) 115 Cal.App.4th 638, 657. 1. The Agreement only Permits One Deposition, 15 Special Interrogatories and Requests for Admission and Not a Single Request for Production and Thus Impermissibly Limits Discovery in Violation of Armendariz and its Progeny In the case of imposed arbitrations of employment discrimination claims under the Fair Employment and Housing Act, employers are deemed to have impliedly consented to sufficient discovery to enable employees to vindicate such claims. Armendariz v. Foundation Health Psychcare Services, Inc., (2000) 24 C4th 83, 104-106, 99 CR2d 745, 760-761-[includes access to essential documents and witnesses, as determined by the arbitrator, subject to limited judicial review]. Here, the Agreement is completely ambiguous regarding discovery and what is actually required and should thus be construed against Defendant, its drafter. The Agreement provides for one percipient witness deposition. In an employment case, there are many depositions that an employee needs to take including the bad actors, co-workers, supervisors, persons most qualified/knowledgeable regarding their employment, custodians of records, executives and possible even the CEO/CFO for punitive damages purposes. Defendant knows this and is intentionally trying to limit Plaintiff’s ability to prove his case. The Agreement provides for 15 Special Interrogatories and Requests for Admission but it is ambiguous whether a party gets 15 of each tool or 15 total for both tools. Further, the agreement does not provide for a single request for production. In employment cases, this is unconscionable since the company generally has all of the documentary evidence in its possession and the employee may have saved very little from when he/she worked for the employer. In these document intense cases, this stacks the deck in the employer’s favor because they don’t have to produce the very evidence that the employee needs to prove his/her claims. Surely Plaintiff would not have access to Defendant’s servers after he is no longer employed. Thus, not only is it ambiguous as to what discovery is allowed, but that the Arbitrator must allow only this limited discovery is unconscionable. Regardless, it is clearly ambiguous as to what discovery is actually permitted. The Court should construe ambiguous language against the interest of the party that drafted it. Rebolledo v. Tilly’s, Inc., 228 Cal.App.4th 900, 913 (2014). This is violative of Plaintiff’s AMENDED OPPOSITION TO MOTION TO COMPEL ARBITRATION 6 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 due process rights and is unconscionable as the parties are entitled to adequate discovery under the law. The unconscionable provisions regarding discovery should thus render the agreement unenforceable since Defendant drafted it. 2. The Agreement States that the Parties Are Required to Utilize AAA Further Stacking the Deck in Its Favor as it Continues to line AAA’s pockets. Since Defendant utilizes a form Arbitration Agreement for its employees to adjudicate disputes, Plaintiff believes that AAA has an incentive to side with Defendant because the arbitrator is more likely to obtain repeat business from a satisfied employer (and is less likely to see repeat business from an individual employee). Ontiveros v. DHL Express (USA) Inc. (2008) 164 CA.4th 494, 505, 79 CR.3d 471, 480-481 (noting that arbitrator may have self interest in deciding that dispute is arbitrable because employer may be a “repeat player” in arbitration). Various studies show that arbitration is advantageous to employers not only because it reduces the costs of litigation, but also because it reduces the size of the ward that an employee is likely to get, particularly if the employer is a ‘repeat player’ in the arbitration system.” Armendariz, 24 C.4th at 115. Since the Agreement requires that the parties utilize AAA only, the Agreement is unconscionable and the Court should not enforce it. IV. CONCLUSION Based on the foregoing, the Court should deny Defendant’s Motion to Compel Arbitration and keep this case in this Court as the Agreement is both procedurally and substantively unconscionable, and at the very least, ambiguous. The Court should construe all ambiguities against the drafter and decline to enforce the Agreement. Dated: September 22, 2020 By: FREIMAN LEGAL, P.C. ____________________________ Lawrence W. Freiman, Esq. Counsel for Plaintiff Aloma Llanes AMENDED OPPOSITION TO MOTION TO COMPEL ARBITRATION 7 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 CERTIFICATE OF SERVICE I, Mackenzie Clark, declare: I am a resident of the State of California and over the age of eighteen years and represent the Plaintiff in the within action. My business address is 100 Wilshire Blvd., Suite 700, Santa Monica, CA 90401. On September 22, 2020, I served the within documents, entitled AMENDED OPPOSITION TO DEFENDANT’S MOTION TO COMPEL ARBITRATION AND TO STAY COURT ACTION PENDING ARBITRATION by emailing the documents addressed to: Kelsey L. Wong Linh Hua Soo Arvizu klwong@grsm.com lhua@grsm.com sarvizu@grsm.com By: Mackenzie Clark
