BALTAZAR v. FOREVER 21

Appellants, Forever 21, Inc., Forever 21 Logistics, LLC, Herber Corleto, and Darlene Yu, Answer to Petition for Review

Cal.February 15, 2013

Case No. 8208345 SUPREME COU: IN THE FILE D SUPREME COURT OF CALIFORNIA | | FEB 1 8 2013 MARIBEL BALTAZAR Frank A. McGuire Cle-* Plaintiffand Respondent Deputy VS. FOREVER21, INC., FOREVER 21 LOGISTICS, LLC, HERBER CORLETO, and DARLENE YU Defendants and Appellants. AFTERA DECISION BY THE COURT OF APPEAL, SECOND APPELLATE DISTRICT, DIVISION ONE CASE NO. BC237173 (LOS ANGELES SUPERIOR COURT NO. VC059254 ‘ ANSWERTO PETITION FOR REVIEW GILBERT, KELLY, CROWLEY & JENNETT LLP ARTHUR J. MCKEON,III, BAR NO. 082540 REBECCAJ. SMITH, BAR NO.150428 1055 West 7” Street, Suite 2000 Los Angeles, CA 90017 Telephone: (213) 615-7000 Facsimile: (213) 615-7100 ajm@gilbertkelly.com rjs@gilbertkelly.com Attorneys for Appellants: FOREVER21, INC., FOREVER 21 LOGISTICS, LLC, DARLENE YU AND HERBER CORLETO ANSWERTO PETITION FOR REVIEW IN THE SUPREME COURT OF CALIFORNIA MARIBEL BALTAZAR Plaintiffand Respondent VS. FOREVER21, INC., FOREVER 21 LOGISTICS, LLC, HERBER CORLETO, and DARLENE YU Defendants and Appellants. AFTER A DECISION BY THE COURT OF APPEAL, SECOND APPELLATEDISTRICT, DIVISION ONE CASE NO. BC237173 (LOS ANGELES SUPERIOR COURT NO. VC059254 ANSWERTO PETITION FOR REVIEW GILBERT, KELLY, CROWLEY & JENNETT LLP ARTHURJ. MCKEON,II, BAR NO. 082540 REBECCA J. SMITH, BAR NO. 150428 1055 West 7™ Street, Suite 2000 Los Angeles, CA 90017 Telephone: (213) 615-7000 Facsimile: (213) 615-7100 ajm@gilbertkelly.com rjs@gilbertkelly.com Attorneys for Appellants: FOREVER 21, INC., FOREVER 21 LOGISTICS, LLC, DARLENE YU AND HERBER CORLETO ANSWERTO PETITION FOR REVIEW TABLE OF CONTENTS Page 1. INTRODUCTION.....cccccccccccssssssscseccceceeescceescccsceceesanaesecenseesenenseeseees 1 II. LEGAL DISCUSSION ..........ccceecccceeescceescsececseeseecceeuesceneeeeee sense eesea 5 A. THERE ARE NO GROUNDS FOR SUPREME COURT REVIEW BECAUSETHEPETITION NEITHER ASSERTS AN IMPORTANT QUESTION OF LAW NORPRESENTS A NECESSITY TO SECURE UNIFORMITY OF DECISION.........cccccccecssessecsccccceesssccesseeesecesenenseesesseanecseersersess 5 1. THE BALTAZAR COURT’S CRITICISM OF THE TRIVEDI DECISION DOES NOT CREAT A REVIEWABLEISSUEDBYTHIS COURT......cccccccccccsceccessccccsesscccecceseseceessecsesceeseeeneness 5 2. THE BALTAZAR COURT’S FAILURE TO ADDRESSTHE PINEDO CASE DOES NOT CREATEA SPLIT OF AUTHORITY.........:csccccccccssssssssssseeceecescescescceeceeeensaees 8 3. THE BALTAZAR COURT’S DECISION IS NOT CONTRARY TO THE DECISION IN LITTLE........ce eeeeeeeeeeeeeeees 11 B. CONCLUSION..........cccccesesessescccecesssssesseseeccceeeeeseeceneerenteuses 13 Cases Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal4th 83 oo. ecsceeecreeserseseesesneesesseseeseessesseseneensseess 12 Baltazar v. Forever 21 (2012) 212 Cal.App.4" 221... 2, 3, 4, 5, 6, 7, 8, 9, secueeseeeeseceueesaccauceasenssaeesaeeseeasenecssensessaesasesesessesessesesesssseses 10, 11, 12, 13 Fitz v. NCR Corp. (2004) 118 Cal. App. 4th 702 ....cciccsceeeesseesseseeeeees 2 Little v. Auto Stiegler, Inc. (2003) 29 Cal.4" 1064eee4,11, 12, 13 Mercuro v. Superior Court (2002) 96 Cal. App. 4th 174oes2,5 Pinedo v Premium TobaccoStores, Inc. (2000) 85 CalApp.4? 774 vecsccsssessssecssecssscssesssesseessesesneesnsereessneeesees 2, 3, 8, 9, 10 Trivedi v. Curexo Technology Corp. (2010) 189 Cal.App.4™ BOT ccesscescesscesscessesscsscsessecesecseenseaecesecseceneeeseeesansesesassasonseenaeasans 2, 5,8 Statutes California Code ofCivil Procedure §1281.8 .sccccccsseeceesersetseeeeseens 2,5 Rules California Rules ofCourt, rule 8.500(D)(L) ....ceccesecesseseesesesensereeeeneneeneees 1 -ii- IN THE SUPREME COURT OF CALIFORNIA MARIBEL BALTAZAR Plaintiffand Respondent VS. FOREVER21, INC., FOREVER 21 LOGISTICS, LLC, HERBER CORLETO, and DARLENE YU Defendants and Appellants. AFTER A DECISION BY THE COURT OF APPEAL, SECOND APPELLATEDISTRICT, DIVISION ONE CASE NO. BC237173 (LOS ANGELES SUPERIOR COURT NO. VC059254 ANSWERTOPETITION FOR REVIEW I. INTRODUCTION This answerbrief by Defendants and Respondents FOREVER21, INC., FOREVER 21 LOGISTICS, LLC, HERBER CORLETO and DARLENEYU (hereinafter collectively referred to as “Defendants”) addresses thepetition for review filed by Plaintiff and Petitioner MARIBEL BALTAZAR.(hereinafter “Plaintiff’) Plaintiff seeks Supreme Court review pursuant to California Rules ofCourt, rule 8.500(b)(1) which 1 ANSWERTO PETITION FOR REVIEW provides the Supreme Court may order review of an appellate decision “[wJhen necessary to secure uniformity of decision orto settle an important question of law.” Specifically, Plaintiff is seeking review of the Court of Appeal’s reversal ofthe trial court’s denial of a petition to compel arbitration and Court of Appeal’s order that the underlying action be arbitrated pursuantto a written arbitration agreement. Plaintiff asserts that the Court of Appeal decision in Baltazar v. Forever 2] (2012) 212 Cal.App.4" 221 “criticized” the Trivedi Court (Trivedi v. Curexo Technology Corp. (2010) 189 Cal.App.4" 387) and “ignored” the Pinedo Court (Pinedo v Premium Tobacco Stores, Inc. (2000) 85 Cal.App.4™ 774) thereby creating a “split in authority” There is however,no split in authority in that the Pinedo and Trivedicasescited to by Plaintiff are distinguishable from the facts in the present case both in termsof the underlying facts and the languageofthe arbitration agreement. In declining to apply the Trivedi analysis, the Baltazar Court first noted the cases relied on in Trivedi (Mercuro v. Superior Court (2002) 96 Cal. App. 4th 174, and Fitz v. NCR Corp. (2004) 118 Cal. App. 4th 702 do not stand for the proposition asserted in Trivedi. Specifically, the Baltazar Court noted that those cases “do not suggest that the incorporation of section California Code ofCivil Procedure §1281.8 is unconscionable.” Additionally, noting the specific facts in the case before them, the Baltazar Court noted that it could not “say that Forever 21 is more likely to seek 2 ANSWERTO PETITION FOR REVIEW injunctive relief than an employee” as the court had concludedin Trivedi. Finally, since “section 1281.8 would apply evenif it were not expressly mentioned in the agreement” the Baltazar Court concludedthat expressly incorporating what would otherwise be automatically read into the agreement cannotcreate substantive unconscionability. The Trivedi Court, without explanation veered from the line of cases addressing the issue of whether reserving injunctive relief to the court in arbitration agreementscreated unconscionability. The Baltazar Court in their opinion merely held consistent with the previous cases on the subject matter and placed such issue back on course. Plaintiff further argues that the Baltazar Court ignored the Pinedo case and by doing socreated a split in authority. Plaintiff erroneously reads the Pinedo case for the proposition that an arbitration agreement which only itemizes employee-initiated disputes as arbitrable is inherently unfair and unconscionable. In fact, the Pinedo Court did not hold that all arbitration agreements which contain a non-exhaustivelist of arbitrable claims were unconscionable, but rather addressed only the language of the agreementbeforeit. The language in the agreement signed by Baltazaris noticeably different from the language in Pindeo, mostnotably providing that items to be arbitrated included, but were not limited to thoseset forth in the agreement, Plaintiff has failed to identified any conflict between the Pinedo and Baltazar cases which would warrant review. 3 ANSWERTO PETITION FOR REVIEW Plaintiff further asserts that review is warranted in that the Baltazar Court’s opinionis in conflict this court’s opinion in Little v. Auto Stiegler, Inc. (2003) 29 Cal.4" 1064. There is not a conflict between the Baltazar Court’s opinion and the decision in the Little case as the Little case, while standing for the general proposition that substantive unconscionability exists where the terms of an arbitration agreementare written to favor one party, also recognized that asymmetrical provision which are included for purposesother than the employer’s desire to maximizeits advantage are not unconscionable. Review should be denied for the simple reason that Plaintiff's petition neither presents an important question oflaw nor a necessity to secure uniformity of decision. Accordingly, Defendants respectfully request that Plaintiff’s Petition be denied so that the Parties may proceed to arbitration in accordance with the Agreementto which Plaintiff and Defendants agreed to be bound. 4 ANSWERTO PETITION FOR REVIEW II. LEGAL DISCUSSION A. THERE ARE NO GROUNDS FOR SUPREME COURT REVIEW BECAUSE THE PETITION NEITHER ASSERTS AN IMPORTANT QUESTION OF LAW NOR PRESENTS A NECESSITY TO SECURE UNIFORMITY OF DECISION. l, THE BALTAZAR COURT’S CRITICISM OF THE TRIVEDI DECISION DOES NOT CREAT A REVIEWABLEISSUED BY THIS COURT. Plaintiff maintains that “The Baltazar Court criticized the Trivedi Court, and now the law is unsettled as to whether or not an arbitration agreement that allows the parties to seek injunctive relief is substantively unconscionable.” (Petition, P. 10) Plaintiffs first basis for seeking review is the erroneous conclusion that substantive unconscionability exists in an arbitration agreement even whenthearbitration agreementallows both the employer and the employeeto seek injunctive relief. Relying on the Trivedi case, plaintiff argues that permitting injunctive relief through the courts in an arbitration agreement favors employers because employers are morelikely too seek injunctive relief than employees. Plaintiff further argues in misplacedreliance on Trivedi that an agreement’s specific incorporation of California Code ofCivil Procedure §1281.8 renders it unconscionable. In declining to apply the Trivedi analysis, the Baltazar Court pointed to two incongruities. First the Baltazar Court indicated that the cases relied on in Trivedi (Mercuro v. Superior Court (2002) 96 Cal. 5 ANSWERTO PETITION FOR REVIEW App.4th 174, and Fitz v. NCR Corp.(2004) 118 Cal. App. 4th 702 “do not suggest that the incorporation ofsection 1281.8 is unconscionable.” Rather, Mercuro andFitz dealt with carve-outs in arbitration agreements that were cherry picked by the employer and wereclearly unilateral. Further the court in Trivediitself specifically noted that the clause under their analysis was substantively unconscionable,in that “[t]he provision regarding injunctive relief also appears to create greater access to injunctiverelief than what is permitted under C[ode of] C[ivil] P[rocedure] section 1281.8 [subdivision] (b)” (Trivedi v. Curexo Tech. Corp., 189 Cal. App. 4th at 396) a claim which is not made in regardto the present case. Accordingly the arbitration provisions in Trivedi and Baltazar significantly differ. Additionally, the Baltazar Court noted thatit could not “say that Forever 21 is more likely to seek injunctiverelief than an employee.” As the Court astutely pointed out, seven of Baltazar’s nine claims were brought under statutes that allow her to seek injunctive relief. Interestingly, Plaintiff argues in her Petition that “she does not sue for any type of injunctive relief pursuantto California Government Code §12965, as the Baltazar Court opines” (Petition, P. 11) Rather, plaintiff argues she sued for Discrimination and Harassment based on variousprotected class under the Fair Employment and Housing Act. (Petition, PP 11-12) What plaintiff fails to address is that California Government Code §12965 provides the mechanism by which anindividual may enforce or address violations of the 6 ANSWERTO PETITION FOR REVIEW Fair Employment and Housing Act. Accordingly, by virtue of bringing the claims under the Fair Employmentand Housing Act, §12965 of the Government Codeis implicated. Since §12965 provides for remedies, including injunctiverelief, the Baltazar Court’s assertion that the injunctive relief provision in the arbitration agreement does not favor employers more so than employees is an appropriate conclusion. Finally, the Court observed that because the agreement is subject to the CAA,not the FAA,“section 1281.8 would apply even if it were not expressly mentioned in the agreement.” Expressly incorporating what would otherwise be automatically read into the agreement cannotcreate substantive unconscionability. Plaintiff appears to argue that including injunctive relief for both parties is unconscionable, regardless of the fact that a statute (1281.8) provides support for the inclusion of such terms within. This argument is unsupported by any authority. Further,plaintiff argues that the Baltazar Court’s opinion that “section 1281.8 would apply even if it were not expressly mentioned in the agreement” is incorrect since in Plaintiff's analysis the CAA appliesonly after the arbitration agreement is deemed enforceable. Plaintiffs argumentin essenceis that if the contract is deemed unconscionable, the CAA is inapplicable. Plaintiff's argue is unsupported by authority andis an irrationalinterpretation of the law. Plaintiff concedes that the agreementat issue is governed by the CAA.Plaintiff also concedes that the CAA provides for injunctiverelief 7 ANSWERTOPETITION FOR REVIEW during the arbitration process. Plaintiff; however argues that since the agreement in question is unconscionable because it provides for mutual injunctive relief hat the CAA will never comeinto play to help resolve that issue in that the agreement must be deemed “conscionable”first. Simply stated, the CAA doesnot apply only after the agreement is deemed enforceable, but rather the CAA is one of the mechanism by which the agreementis evaluated Thecriticizing by the Baltazar Court of the Trivedi opinion does not create a reviewable issue by this Court. The 7rivedi Court, without explanation veered from the line of cases addressing the issue of whether reserving injunctive relief to the court in arbitration agreements created unconscionability. The Baltazar Court in their opinion, merely held consistent with the previous cases on the subject matter and placed such issue back on course. 2. THE BALTAZAR COURT’S FAILURE TO ADDRESS THE PINEDO CASE DOES NOT CREATE A SPLIT OF AUTHORITY. Plaintiff asserts that the Baltazar Court ignored the Pinedo case and by doing so created a split in authority. Plaintiff cites the Pinedo case for the proposition that an arbitration agreement which only itemizes employee-initiated disputes as arbitrable is inherently unfair and unconscionable. There are two problems with this argument. First, this is 8 ANSWERTO PETITION FOR REVIEW not what the Pinedo opinion holds and second,the arbitration agreement at issue in the Baltazar case is noticeable distinguishable from the language in the Pinedo case. In Pinedo, the court was confronted with an arbitration provision which included languagethat the arbitrable disputes were: Any controversy or dispute arising out ofor relating to this Agreementorrelating to Employee's employment by Employer including any changesin position, conditions of employment or pay, or the end of employment thereof (Pinedo, 85 Cal.App.4™ at 776). The agreementfurther provided: Employee recognizes that by agreeing to arbitrate all disputes,it is knowingly and willingly waivingits right to a trial by jury and waiving any other statutory remedy it might have concerning any such dispute including, but not limited to, disputes concerning claims for harassmentor discrimination dueto race, religion, sex or age.” (Id) Relying on that language, the court in Pinedo heldthat the agreement was one-sided in that “it addresses only claims involving terms of employment described as claims based on ‘changesin position, conditions of employmentor pay, or the end of the employment.” (/d) The Pinedo Court howeverdid not hold that all arbitration agreements which contain a non-exhaustivelist of arbitrable claims were unconscionable. Citingthe list included in her agreement as to the disputes which must be arbitrated, Baltazar argues that the agreement wasset up to force only claims brought by employeesinto arbitration. While the list did consist of claims that employees would mostlikely bring against their employer, the Baltazar Court recognized that adjacent language in the 9 ANSWERTO PETITION FOR REVIEW agreementdestroyedplaintiffs argument and clearly distinguishesthe agreement from that in the Pinedo case. Specifically, the fact that the list wasprefaced by the phrase “include butare not limited to” and the fact that the paragraph immediately following stated that “each ofthe parties voluntarily and irrevocably waives any and all rights to have any Dispute heard or resolved in any forum other than through arbitration”led the Baltazar Court to correctly recognize that the agreement wasbilateral, rather than unilateral and as such distinguishable from the agreement and therefore the holding in the Pinedo case. Plaintiff attempts to argue that the language in Pinedoparallels that in the agreementsigned byplaintiff. Specifically, plaintiff states that the Pinedo agreement included “similar language” to the Baltazar agreement citing to the Pinedo provision which provided “any controversy or dispute arising outofor relating to this Agreementor relating to Employee’s employment by employer.” (Petition, P. 15) This languageis not similar to that in Baltazar andis not clear and explicit in regard to the claimsto be arbitrated whereas the language in the Baltazar agreementis. Significantly, nowhere in the Pinedo agreementis there any language which indicatesthat the list is not limited to those outlined. Unlike the Pinedo language the languagein the agreementsigned by Baltazar indicatedthat the matters which wereto be arbitrated “included” but were “not limited to” those enumerated. Thus expressly including claims beyond those which were 10 ANSWERTO PETITION FOR REVIEW articulated in the agreement. Equally as important the language ofPinedo specifically provided that the Employee recognized that it was waiving its right to a jury trial; while the language in Baltazar clearly indicated that “each of the parties” were bound by the arbitration agreement and were waiving their right to a jury trial. 3. THE BALTAZAR COURT’S DECISION IS NOT CONTRARY TO THE DECISION IN LITTLE. Finally, plaintiff argues that the Baltazar Court contravenesthis Court’s decision in Little v. Auto Stiegler, Inc. (20030 29 Cal.4™ 1064.) Again, the argumentis forced and contrived and does nothing to establish grounds for requesting review from this Court. Plaintiff argues that the Little case stands for the proposition that substantive unconscionablyrefers to terms that unreasonably favor one party. The Little case does stand for such proposition However,plaintiff goes on to assert that the Little case supports a conclusion that requiring an employeeto take all necessary steps during arbitration to preserve an employer’s confidential information imposes a one-sided obligation sufficient to conclude that there is unconscionability. The Little case DOES NOTstand for such proposition. Plaintiff has taken issue with the provision of the agreement which stated: Both parties agree that the Company hasvaluable trade secrets and proprietary and confidential information. Both parties agree that in the course of any arbitration proceeding all necessary steps will be taken to protect from public disclosure such trade secrets and propriety and confidential information. 11 ANSWERTO PETITION FOR REVIEW It is not clear from either the Respondent’s Brief at the Court of Appeals or the present petition how the employee’s agreeing to protect the employer’s trade secrets or proprietary and confidential information” renders the agreement unconscionable. Plaintiff merely argues that because an obligation is imposed upon the employeethat the terms “favor” one party and as such the agreement is unconscionable. The Baltazar Court held otherwise, finding that this provision was sufficiently narrow and consistent with both the Uniform Trade Secrets Act and general confidentiality and non-disclosure agreements. This holding is not inconsistent with Little, but rather is ultimately consistent based on the Little Court’s own language. In Little the court, citing to Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83 specifically confirmed that parties may justify an asymmetrical arbitration agreement whenthereis a legitimate commercial need. Little, 29 Cal.4" 1064, 1073 citing Armendariz, supra, 24 Cal.4th at p. 117. What the law allows, according to Little is that the asymmetrical provision must be “other than the employer's desire to maximize its advantage”in the arbitration process. Little, 29 Cal.4" at 1073 citing Armendariz, supra, 24 cal.4" at p. 120. There have been no facts or argument placed before any ofthe courts (Trial, Court of Appeal, or Supreme Court) that the confidentiality provision wasintended to or in any manner maximizes Defendants 12 ANSWERTO PETITION FOR REVIEW advantagein the arbitration process. Accordingly, there is no conflict between the Little decision and the Baltazar decision. B. CONCLUSION For the foregoing reasons, the Court of Appeal properly reversed the trial court’s Order denying Defendants’ Motion to Compel Arbitration and ordered that thetrial court enter an order granting Defendant’s Motion and ordering arbitration. Thus, Defendants’ respectfully request this Court deny review ofPlaintiff's Petition so that the Parties may proceed to arbitration on Plaintiffs claims in accordance with the Agremened4tto which Plaintiff and Defendants agreed to be bound. Dated: February 14, 2013 GILBERT, KELLY, CROWLEY & JENNETT LLP REBECCA J. SMYTH Attorneys for Defendants and Appellants FOREVER 21, INC., FOREVER 21 LOGISTICS, LLC, HERBER CORLETOand DARLENE YU 13 ANSWERTO PETITION FOR REVIEW CERTIFICATE OF WORD COUNT The undersignedcertifies, in accordance with Rule 8.204(c)(1) of the California Rules of Court, that the computer generated word count of Defendants’ Answerto Petition for Review, generated by Microsoft Word, is 3,237 words. Dated: February 14, 2013 Gilbert, Kelly, Crowley & Jennett LLP By: BAWGOSmith Rebedca J. Smith Attorneys for Defendant/Respondent FOREVER21, INC., FOREVER 21 LOGISTICS, LLC, DARLENE YU AND HERBER CORLETO. 14 ANSWERTO PETITION FOR REVIEW DECLARATION OF SERVICE STATE OF CALIFORNIA, COUNTY OF LOS ANGELES I, the undersigned, declare that I am employed in the aforesaid County, State of California. I am over the age of 18 and not a party to the within action. My business address is 1055 W. Seventh Street, Suite 2000, Los Angeles, California 90017. On February 14, 2013, I served upon the interested parties in this action the following documentdescribed as: ANSWERTO PETITION FOR REVIEW By placing a true and correct copy thereof enclosed in sealed envelopes addressed as stated on the attached service list for processing by the following method: (BY MAIL) Byplacing a true copy of the foregoing document(s) in a sealed envelope addressedasset forth on the attached mailing list. I placed each such envelope for collection and mailing following ordinary business practices. I am readily familiar with this Firm's practice for collection and processing of correspondence for mailing. Underthat practice, the correspondence would be deposited with the United States Postal Service on that same day, with postage thereon fully prepaid at Los Angeles, California, in the ordinary course of business. I am aware that on motion of the party served, service is presumedinvalid if postal cancellation date or postage meter date is more than one day after date of deposit for mailing in affidavit. I declare under penalty of perjury under the lawsofthe State of California that the foregoing is true and correct. Executed on February 14, 2013, at Los Angeles, California. i Cty)rLCfé> (a / q ‘) Jeannine D. Tillman { 2691763.1 28876-00014 GKC SERVICE LIST By U.S. Mail Counsel for Plaintiff and Mark Joseph Valencia Respondent Law Offices of Mark Joseph Valencia 633 West 5th street, 26th floor U.S. Bank Tower Los Angeles, California 90071 By U.S. Mail California Court of Appeal Attn: Clerk Court of Appeal Second Appellate District Division One 300 S. Spring Street, Suite 2217 Los Angeles, CA 90013 By U.S. Mail Superior Court of California, Clerk County of Los Angeles Los Angeles Superior Court Norwalk Courthouse 12720 Norwalk Blvd., Norwalk, CA 90650 By U.S. Mail Attorney General Office of the Attorney General 1300 "I" Street Sacramento, CA 95814-2919. 2691763.1 28876-00014 GKC