Motion to Compel Individual Arbitration (Judge Kenneth Freeman)

Case Number: BC597450-B??? Hearing Date: May 12, 2016??? Dept: 310

CIPRES V. ARYZTA, LLC

MOTION BY ARYZTA TO COMPEL INDIVIDUAL ARBITRATION, DISMISS CLASS CLAIMS, AND STAY ALL CIVIL COURT PROCEEDINGS

TENTATIVE RULING

Grant petition to compel arbitration of Plaintiff?s claims, with the exception of PAGA claim; grant motion to dismiss class claims; stay litigation of PAGA claim pending completion of arbitration proceedings

DISCUSSION

I. Background

In this putative wage-and-hour class action, Plaintiff Bernabe Cipres sued his former employers, Defendants Aryzta, LLC (?Aryzta?) and Real Time Staffing Services, LLC d/b/a Select Staffing (?Select Staffing?), for various wage and hour violations. Plaintiff alleges that Defendants have had consistent policies of failing to pay wages, including overtime wages; failing to provide Plaintiff and similarly situated employees/former employees rest periods of at least 10 minutes per four hours worked or major fraction thereof (and failing to provide compensation for such unprovided rest periods); failing to pay Plaintiff and other similarly situated employees the full amount of their wages owed them upon termination and/or resignation. [Complaint, ??2-4.] Plaintiff alleges claims against the Defendants for failure to pay overtime wages; failure to pay minimum wages; failure to provide rest periods; failure to pay all wages upon termination; failure to provide accurate wage statements; and unfair competition in violation of Business & Professions Code ??17200, et seq.

Defendants Aryzta and Real Time have filed separate petitions to compel Plaintiff to arbitrate his claims. Defendants also seek an order dismissing the class claims, and staying all civil court proceedings pending completion of the arbitration.

II. Request for Judicial Notice

Defendant Aryzta?s request for judicial notice is granted pursuant to Evidence Code ?452(c). The charges of discrimination are ?official acts? of an executive agency, and are subject to judicial notice under this section. However, the Court does not judicially notice the truth of the matters stated within the discrimination charges, and the Court?s order judicially noticing the documents is limited to the fact that Plaintiff did file these charges.

III. Evidentiary Objections to Declaration of Angie Botello
Plaintiff has lodged objections to the Declaration of Angie Botello, submitted by Defendant Aryzta in connection with the petition to compel arbitration. The Court?s rulings follow:

1. ?5, l. 24-25: Overruled.

2. ?5, l. 26-27: Overruled.

C. Evidentiary Objections to Cipres and Nourmand Declarations
Defendant Aryzta has lodged objections to the Cipres and Nourmand Declarations submitted in opposition to the petition to compel arbitration. The Court?s rulings follow.

Objections to Cipres Declaration
1. ?3 at 1:20-21: Overruled.

2. ?4 at 1:24-25: Overruled.

3. ?4 at 2:1-2: Overruled.

4. ?4 at 2:2-3: Overruled.

5. ?5 at 2:8-9: Overruled.

6. ?6 at 2:10-11: Sustained.

7. ?6 at 2:14: Sustained.

8. ?6 at 2:14-17: Sustained as to the phrase ?which confirm that this document was not prepared, signed or initialed by me? as constituting improper legal argument. Otherwise, overruled.

9. ?6 at 2:17-3:9: Overruled.

10. ?7 at 3:18-19: Sustained.

11. ?7 at 3:19-21: Sustained.

12. ?7 at 3:24-27: Sustained as to the first sentence beginning with ?My attorneys? and ending with ?Select Staffing?; otherwise, overruled.

13. ?8 at 4:1-2: Overruled.

14. ?8 at 4:2-3: Overruled.

15. ?8 at 4:3-10: Overruled.

16. ?8 at 4:10-11: Overruled.

17. ?8 at 4:11-13: Overruled.

18. ?9 at 4:14-15: Overruled.

19. ?10 at 4:17-20: Overruled.

20. ?10 at 4:20-22: Overruled.

21. ?11 at 4:23-24: Overruled.

22. ?11 at 4:24-28: Sustained.

23. ?11 at 5:1-2: Overruled.

24. ?12 at 5:4-5: Overruled.

25. ?12 at 5:5-8: Overruled.

26. ?12 at 5:8-11: Overruled.

27. ?13 at 5:13-16: Sustained.

28. ?13 at 5:16-20: Overruled.

29. ?13 at 5:20-22: Sustained.

30. ?13 at 5:22-25: Overruled.

31. ?13 at 5:25-27: Sustained as to the first sentence beginning ?Lastly? and ending with ?in writing?; otherwise, overruled.

32. ?13 at 5:27-6:1: Overruled.

33. ?13 at 6:1-2: Sustained.

34. ?14 at 6:3-4: Overruled.

35. ?14 at 6:5: Overruled.

36. ?14 at 6:5-7: Overruled.

37. ?15 at 6:9-10: Overruled.

Objections to Nourmand Declaration
38. ?3 at 1:10-2:1: Sustained.

39. ?3 at 2:1-3: Sustained.

IV. Motion to Compel Arbitration

a. Applicability of FAA

The FAA provides for enforcement of arbitration provisions in any contract ??evidencing a transaction involving commerce.?? California Practice Guide, Alternative Dispute Resolution, ?5:50 (The Rutter Group 2015) (citing 9 USC ?2; Rent-A-Center West, Inc. v. Jackson (2010) 130 S.Ct. 2772, 276; Rogers v. Royal Caribbean Cruise Line (9th Cir. 2008) 547 F.3d 1148, 1153-1154).

The term ?involving commerce? is functionally equivalent to ?affecting commerce? and ?signals an intent to exercise Congress? commerce power to the full.? California Practice Guide, Alternative Dispute Resolution, ?5:50.1 (The Rutter Group 2014) (citing Allied-Bruce Terminix Cos., Inc. v. Dobson (1995) 513 U.S. 265, 277 (emphasis added by Rutter Guide).

The words ?evidencing a transaction? ?mean only that the transaction must turn out, in fact, to involve interstate commerce. i.e., the parties need not have intended any interstate activity when they entered into the contract.? California Practice Guide, Alternative Dispute Resolution, ?5:50.2 (The Rutter Group 2015) (citing Allied-Bruce Terminix Cos., Inc. v. Dobson, supra, 513 U.S. at 277; Shepard v. Edward Mackay Enterprises, Inc. (2007) 148 Cal.App.4th 1092, 1097). Additionally, the dispute need not arise from the particular part of the transaction involving interstate commerce. The FAA applies if the underlying transaction as a whole involved interstate commerce. Shepard v. Edward Mackay Enterprises, Inc., supra, 148 Cal.App.4th at 1101. A party seeking to enforce an arbitration agreement has the burden of showing FAA preemption. See Lane v. Francis Capital Management, LLC (2014) 224 Cal.App.4th 676, 687 (citing Woolls v. Superior Court (2005) 127 Cal.App.4th 197, 211).

Here, Defendant Aryzta has submitted the Declaration of Angie Botello, a Human Resources Manager for Defendant Aryzta. She was the HR Manager for Defendant?s bakery located at 5500 W. Washington Blvd. from January 2011 to May 2015. [Botello Decl., ?1.] Ms. Botello states that Defendant operates twenty-six bakeries throughout the United States and Canada. [Botello Decl., ?6.] Baked goods produced at Defendant?s facility are derived from ingredients and machinery purchased from suppliers located outside of California. [Id.] Defendant?s baked goods are sold outside of California. [Id.]

In addition to the statements in the Botello Declaration evidencing that Defendant is involved in interstate commerce, the arbitration agreement itself states that the employee and Defendant ?agree that this Agreement shall be enforceable and subject to the substantive and procedural provisions of the Federal Arbitration Act, 9 U.S.C. ??1, et seq.? [See Arbitration Agreement, at 1 (Exhibit 1 to Botello Declaration).] The Agreement further states that the employee and Defendant ?also understand and agree that the Company is engaged in transactions involving interstate commerce.? [Id.]

Based on the statements in the Botello Declaration, as well as the provision in the Arbitration Agreement itself, it is evident that the FAA fully applies to the agreement, and the Court makes that finding.

b. Agreement to Arbitrate

As the party moving for arbitration, the burden is on Defendant Aryzta to prove, by a preponderance of the evidence, that an agreement to arbitrate exists between itself and Plaintiff Cipres.

The Mutual Agreement to Arbitrate (the ?Agreement?) provides that ?[t]his Agreement requires you and the Company to arbitrate any claims or controversies during or following your employment, whether or not they are in any way related to or associated with your employment or the termination of your employment with the Company[.] This Agreement includes Claims?that the Company may have against you, or that you may have against the Company. This Agreement affects your rights to a trial by a jury?.? [Agreement at 1.]

The Agreement defines the ?Claims? covered by the Agreement as including, but not limited to:

[A]ll past, present, future claims, including any pending litigation, for: wrongful termination; breach of any contract or covenant, express or implied; breach of any duty owed to you by the Company or to the Company by you; disclosure of trade secrets or proprietary information, improper use of Company property or equipment; personal, physical, or emotional injury; fraud, misrepresentation, defamation, or any other tort claims, wages or other compensation due; penalties; benefits; reimbursement of expenses; discrimination or harassment, including but not limited to discrimination or harassment based on race, sex, pregnancy, religion, national origin, ancestry, age, marital status, physical disability, mental disability, medical condition, genetic characteristics, gender expression, gender identity, or sexual orientation; retaliation; violation of any federal, state or other governmental constitution, statute, ordinance or regulation (as originally enacted and as amended), including but not limited to Title VII of the Civil Rights Act of 1964?, the Age Discrimination in Employment Act of 1967 (?ADEA?), the Americans With Disabilities Act (?ADA?), THE Fair Labor Standards Act (?FLSA?), the Employee Retirement Income Security Act (?ERISA?), the Consolidated Omnibus Budget Reconciliation Act (?COBRA?), the Family and Medical Leave Act (?FMLA?), the California Fair Employment and Housing Act (?FEHA?), the California Family Rights Act (?CFRA?), the California Labor Code, the California Civil Code, and the California Wage Orders?. [Agreement at 1-2.]

Toward the bottom of the Agreement, it states in bold capital letters as follows:

BY SIGNING THIS AGREEMENT, THE PARTIES HEREBY WAIVE THEIR RIGHT TO HAVE ANY DISPUTE, CLAIM OR CONTROVERSY DECIDED BY A JUDGE OR JURY IN A COURT.

BY SIGNING THIS AGREEMENT, YOU ACKNOWLEDGE THAT YOU HAVE CAREFULLY READ THIS AGREEMENT, THAT YOU UNDERSTAND ITS TERMS, AND THAT YOU HAVE ENTERED INTO THIS AGREEMENT VOLUNTARILY AND NOT IN RELIANCE ON ANY PROMISES OR REPESENTATIONS BY THE COMPANY OTHER THAN THOSE CONTAINED IN THIS AGREEMENT.

Plaintiff signed the agreement, provided his signature, and dated the document. [See Agreement at 3.]

Here, it is evident that there is an agreement to arbitrate between Plaintiff Cipres on the one hand and Aryzta on the other. Plaintiff agreed to arbitrate ?any? claims or controversies during or following his employment with Defendant Aryzta. This litigation alleges claims arising from Plaintiff?s employment, and claims various violations of the California Labor Code and Unfair Competition Law.

Plaintiff raises several arguments in asserting there was never an agreement to arbitrate. First, Plaintiff contends that Defendant Aryzta obtained his signature by misrepresentation. According to Plaintiff, he was presented several documents in English in August 2013, September 2013, and July 2014 by Ariana Robles, Defendant?s former Human Resources Representative. Despite Plaintiff allegedly telling Ms. Robles that he could not understand English, Ms. Robles told him ?not to worry about it? and that if he wanted to work for Defendant, he needed to sign and date where Ms. Robles indicated. On a related note, Plaintiff claims there was fraud in the inception and/or execution of the agreement, given what he says is his inability to understand English.

In particular, Mr. Cipres states in his translated declaration [attached to the Declaration of court interpreter Julio Mario Medal] that he was born in Mexico and learned Spanish as his first language. [Cipres Decl., ?3.] Mr. Cipres states that the highest level of education he completed was 9th grade in Mexico, and in Mexico, all of his classes were in Spanish. [Id.] He says that he came to the U.S. in 1990 and took some adult English classes. [Id.] However, he says he can only communicate verbally in English for very basic words, and can read basic words in English. [Id.] Mr. Cipres says his primary language is Spanish. [Id.]

With respect to his experiences with Aryzta, Mr. Cipres states that in August 2013, he was called into Ms. Robles? office at Aryzta, who informed him that the company was offering to hire Cipres as a regular employee. [Cipres Decl., ?8.] Cipres says that Robles handed him several documents, all of which were in English. He explained to Ms. Robles that he could not read or understand English. [Id.] Ms. Robles allegedly told him that she would help him fill out the documents. [Id.] Cipres says that he asked Robles to either translate or explain to him the documents that only required his signature and date so he would have an understanding of what he was signing. [Id.] Robles allegedly told Plaintiff Cipres ?not to worry about it? and that if he wanted to work for the company, Cipres needed to sign and date where she indicated. [Id.] Cipres says he asked Robles if he could take the documents home to have someone translate or explain them to me, but Robles says that she again told him that if he wanted to continue working, he needed to sign and date the documents where she indicated. [Id.] Cipres says that at no time did Robles offer the documents to him in Spanish. [Id.] Cipres claims it was his ?understanding? that if he refused to sign the documents, his job would be in jeopardy, and that he had no choice but to sign the documents. [Id.]

Mr. Cipres states that in September 2013, Robles called him into her office and handed him another document in English, and asked him to sign and date the document. [Cipres Decl., ?10.] He says that he reminded Robles he could not read English, and asked Robles if she could translate or explain the document to him. [Id.] Instead, she pointed her finger to where she wanted him to sign and date the document, and at no time did anyone explain the document to Plaintiff or offer him a Spanish version of the document. [Id.] Mr. Robles claims that he was not aware of the arbitration agreement until his attorneys explained it to him. [Cipres Decl., ?11.]

According to Plaintiff Cipres, a similar incident occurred in July 2014, when Robles called him into her office and handed him a stack of documents, all in English, and pointed to where he needed to sign and date the documents. [Cipres Decl., ?12.] Once again, Cipres reminded Robles that he could not speak English. [Id.] In response, Plaintiff Cipres says that Robles told him that in order for him to continue working for the company, he needed to sign and date where she indicated. [Id.] Robles never explained, translated, or offered the documents to him in Spanish, according to Plaintiff. [Id.] He says that it was his understanding that if he refused to sign the documents, his job would be in jeopardy, and thus had no choice but to sign the documents. [Cipres Decl., ?12.]

However, Ms. Robles, in connection with the reply brief, has submitted a declaration which discusses a different version of the events. Ms. Robles states that on July 16, 2014, she assisted in multiple town hall-style meetings at the West Washington Boulevard Bakery to announce that Aryzta had updated its Employee Handbook and various other policies, including its standard arbitration agreement. [Robles Decl., ?3.] Ms. Robles and her manager presented the new agreement to all employees at the facility, including Plaintiff Cipres. [Id.] She said that she and her manager led multiple meetings at various times throughout the day to ensure that all employees assigned to this location that were not on a leave of absence were able to attend a meeting during their shift. [Robles Decl., ?3.] She said that the agreement was presented in both English and Spanish at all of the meetings she assisted at this location. [Id.]

Robles states that during these town hall meetings, she and her manager described the impact of, procedures associated with, and meaning of the Agreement. [Robles Decl., ?4.] She and her manager announced the Agreement was available in both English and Spanish, and in fact made the Agreement available in Spanish. [Robles Decl., ?4.] Further, Robles states that because there were a number of policy changes presented during the town hall meeting, she and her manager informed employees that they were free to take the new policies and the Agreement home for further review before signing the policy acknowledgments and/or the Agreement. [Robles Decl., ?5.]

Robles states that at the end of the meeting, she and her manager instructed employees to come to the Human Resources office later to personally receive their updated Employee Handbook, related policies, and a copy of the Agreement for signature. [Robles Decl., ?6.] Ms. Robles states that when Mr. Cipres met with her at the HR office later that day, he voluntarily chose to review the English version of the Agreement. [Robles Decl., ?7.] Robles says that he did not request a Spanish version of the Agreement, although she had specifically instructed all employees that they could do so. [Robles Decl., ?7.] Robles says that he did not tell her that he could not understand written English. [Robles Decl., ?7.]

Robles also states that during her employment with Defendant Aryzta, she interacted with Cipres on ?many occasions.? [Robles Decl., ?8.] According to Robles, Mr. Cipres never indicated in any way that he could not understand written or spoken English or that he could not write or speak in English. [Id.] In fact, he completed and signed numerous forms and documents for Aryzta in English, Robles says. [Id.] Robles says that Mr. Cipres ?appeared to be proud of his ability to communicate and complete forms in English? and ?seemed offended whenever it was explained to him that Spanish versions of documents were available.? [Id.]

Ms. Robles says that based on her experience having worked in the same facility as Mr. Cipres and having communicated with him ?numerous times,? Mr. Cipres can communicate in both Spanish and English. [Robles Decl., ?9.]

Importantly, Plaintiff?s own Exhibit 3 (a personnel action form, a new hire personal information form, the employee confidentiality and non-interference agreement, the Code of Business Conduct Policy Acknowledgment, the Relatives List, the memo regarding Work-Related Injuries, the Personal Appearance and Behavior Form, the Sexual Harassment Policy, the Second Meal Period Waiver Form, the acknowledgment of receipt of Medical Provider Network information, and the Good Manufacturing Practices acknowledgment) are all documents in English. Plaintiff signed the bottom of each of these documents.

Further, Defendant Aryzta?s request for judicial notice is a copy of a December 15, 2014 Charge of Discrimination, presented by Plaintiff to the EEOC. In the Charge, Mr. Cipres states that he had a work-related injury on July 31, 2014, and he was told to go home by Ms. Botello, HR Generalist, on October 15, 2014. [See Exh. 6.] In the charge, Mr. Cipres says that the reason he was given to go home was that Ms. Botello ?could not accept my work-limitations as prescribed by my health-provider.? [Id.] He says that he believes he was discriminated against due to his disability. [Id.] These allegations all appear in English. It is signed at the bottom by Mr. Cipres. While the Court cannot judicially notice the truth of the charges, as discussed supra, the Court can judicially notice the existence of this document, as well as the fact that it was presented in English to the EEOC.

On balance, given the Plaintiff?s signature on the bottom of the arbitration agreement, the statements by Ms. Robles regarding the policy changes, the employment forms attached as Exhibit 3 to Plaintiff?s Declaration, and the EEOC application signed by Plaintiff in English, the weight of the evidence shows that Plaintiff understood English, such that an agreement to arbitrate exists. Even so, ??[r]easonable diligence requires the reading of a contract before signing it. A party cannot use his own lack of diligence to avoid an arbitration agreement.’ [Citation.]? 24 Hour Fitness, Inc. v. Superior Court (1998) 66 Cal. App. 4th 1199, 1215.
Given that Defendant has shown an agreement to arbitrate exists (and that Plaintiff understood English so as to sign the agreement and the other employment forms), there was no fraud in the inception and/or execution of the arbitration agreement. The very case Plaintiff relies on ? Rosenthal v. Great Western Fin. Securities Corp. (1996) 14 Cal.4th 394, 423 specifically noted that ?one party?s unreasonable reliance on the other?s misrepresentations, resulting in a failure to read a written agreement before signing it, is an insufficient basis, under the doctrine of fraud in the execution, for permitting that party to avoid an arbitration agreement.?

Plaintiff also argues that the agreement is void because it was entered into under duress, undue influence, and/or by the use of excessive pressure (because Defendant allegedly required him to sign the agreement as a condition of continued employment, Defendant did not translate or explain the agreement to Plaintiff, and Plaintiff was not allowed to consult with counsel about the agreement). Here again, Ms. Robles says that Defendant made a Spanish version of the Agreement available to Plaintiff, and explained that employees were free to take the agreement home for further review before signing it. [Robles Decl., ??4-5.] Further, Defendant represents while it required Plaintiff to sign the Agreement as a condition of employment, Defendant required Plaintiff to opt out of it within ten days. The Agreement at Section 12 is entitled ?Opt Out Rights,? and gives the employee ten (10) days to opt out of the arbitration requirement. This stands in contrast to Plaintiff?s argument that Defendant employed undue influence in getting him to sign the agreement.

For all of these reasons, Defendant Aryzta has demonstrated the existence of an agreement to arbitrate, that there was no fraud in the inducement/execution of the agreement, and that the agreement was not entered into under duress, undue influence, and/or by the use of excess pressure.

c. Unconscionability

Alternatively, Plaintiff argues that the arbitration agreement is unconscionable. Unconscionability in the arbitration context is something that denies ?minimum levels of integrity? to the process. Graham v. Scissor-Tail (1981) 28 Cal.3d 807, 820. ?[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.? Armendariz v. Foundation Health Psychcare Servs. (2000) 24 Cal.4th 83, 114. If both elements of unconscionability are present, the Court must decline to enforce the arbitration agreement. Id. The Armendariz court also noted, however, that substantive and procedural unconscionability need not be present to the same degree, and that a ?sliding scale? is invoked (i.e., the more substantively unconscionable the contract term, the less evidence of procedural unconscionability need be shown, and vice-versa). Id.

Parties opposing arbitration have the burden to prove any fact necessary to a defense to enforcement. Gatton v. T-Mobile USA, Inc. (2007) 152 Cal.App.4th 571, 579. In this case, the burden to demonstrate unconscionability falls on Plaintiff Palacios.

AT&T Mobility LLC v. Concepcion (2011) 131 S.Ct. 1740 does not preempt Armendariz and its ?benchmarks? on unconscionability. Armendariz has not been overturned or superseded.

Moreover, Sonic-Calabasas A, Inc. v. Moreno (2013) 57 Cal.4th 1109 held that ?after Concepcion, unconscionability remains a valid defense to a petition to compel arbitration.? Sonic-Calabasas A, Inc., 57 Cal.4th at 1142 (emphasis added). Concepcion itself has recognized that the FAA ?permits arbitration agreements to be declared unenforceable ?upon such grounds as exist at law or in equity for the revocation of any contract.?? Concepcion, 131 S.Ct. at 1746 (citing 9 U.S.C. ?2). Such grounds for revocation under 9 U.S.C. ?2?s saving clause include ?generally applicable contract defenses, such as fraud, duress, or unconscionability[.]? Id. at 1746.

Thus, Concepcion specifically preserved state law defenses to arbitration agreements, so long as the defense did not invalidate a particular type of arbitration agreement (i.e., arbitration agreements appearing in employment contracts). As such, until a higher court says otherwise, the Armendariz factors are still applicable with respect to the unconscionability analysis, and these are discussed below.

(1) Procedural Unconscionability

?The procedural element focuses on two factors: ?oppression? and ?surprise.? [Citations.] ?Oppression? arises from an inequality of bargaining power which results in no real negotiation and ?an absence of meaningful choice.?[Citations.] ?Surprise? involves the extent to which the supposedly agreed-upon terms of the bargain are hidden in a prolix printed form drafted by the party seeking to enforce the disputed terms.? A & M Produce Co. v. FMC Corp. (1982) 135 Cal. App. 3d 473, 486. When the weaker party is presented the clause and told to “take it or leave it” without the opportunity for meaningful negotiation, oppression, and therefore procedural unconscionability, are present. Kinney v. United HealthCare Services, Inc. (1999) 70 Cal. App. 4th 1322, 1329; see also Thompson v. Toll Dublin, LLC (2008) 165 Cal.App.4th 1360, 1372.

Plaintiff contends that the agreement is procedurally unconscionable on grounds that it is both oppressive and contains an element of surprise. Here, there is no dispute that Plaintiff was presented the arbitration agreement as a condition of employment. While this and of itself is not reason to find the agreement invalid (see Sonic-Calabasas, supra, 57 Cal.4th at 1124-1125), it is clear that there was an disparity in bargaining power between Plaintiff and Defendant Aryzta, and there was no meaningful choice in Plaintiff signing the agreement. The agreement was essentially presented on a take-it-or-leave-it basis, and procedural unconscionability was present. Szetela v. Discovery Bank (2002) 97 Cal.App.4th 1094, 1100; Martinez v. Master Protection Corp. (2004) 118 Cal.App.4th 107, 114. As such, the agreement represents a contract of adhesion. Procedural unconscionability was therefore present.

Plaintiff further contends the arbitration agreement is procedurally unconscionable because Aryzta allegedly did not provide Plaintiff a copy of the Employment Arbitration Rules of the American Arbitration Association (?AAA Rules?). While some cases suggest that the failure to provide a copy of the arbitration rules in advance is evidence of procedural unconscionability (see Samaniego, supra, 205 Cal.App.4th at 1146; Zulo v. Sup.Ct. (Inland Valley Publishing Co.) (2011) 197 Cal.App.4th at 485-486), more recent cases suggest that incorporation of rules without attaching them is not evidence of procedural unconscionability. See Peng v. First Republic Bank (2013) 219 Cal.App.4th 1462, 1469-1472; Bigler v. Harker School (2013) 213 Cal.App.4th 727, 737. Here, while the actual rules were not provided, the agreement does provide that the Plaintiff may obtain a copy of the AAA Rules by accessing the AAA website at www.adr.org, or by requesting a copy from Defendant?s Director of Human Resources. Under the circumstances, the failure to provide Plaintiff a copy of the AAA Rules is not evidence of procedural unconscionability, given the fact Defendant specifically states that a copy of the rules would be made available (and given the fact the agreement provides a link by which the rules could be accessed).

With respect to ?surprise,? the arbitration agreement at issue is a stand-alone agreement that was presented to Plaintiff in both English and Spanish. [Botello Decl., ?5.] There is nothing unusual about the font size. As noted above, the agreement also gave Plaintiff the right to opt-out of it after ten days. As such there was not any ?surprise? present.

In Samaniego v. Empire Today LLC (2012) 205 Cal.App.4th 1138, the Court of Appeal held that the arbitration provision in the independent contractor agreement provided by a carpet installation company to its workers was procedurally unconscionable, where the workers performed manual labor, did not speak English as a first language, had limited or no literacy in English, were told the agreement was only available in English, were told they could not continue employment if they did not sign the agreements, and were not provided with a copy of the relevant arbitration rules. Here, however, as discussed supra, the weight of the evidence shows that the agreement was available in both English and Spanish, and that Plaintiff could understand English.

Accordingly, Court determines that while there was no surprise present, there was oppression present, given this was a contract of adhesion presented on a ?take it or leave it? basis. As such, Plaintiff has demonstrated the agreement is procedurally unconscionable to a small degree.

(2) Substantive Unconscionability

?No precise definition of substantive unconscionability can be proffered. Cases have talked in terms of ?overly harsh? or ?one-sided? results. [Citations.] One commentator has pointed out, however, that ?. . . unconscionability turns not only on a ‘one-sided’ result, but also on an absence of ‘justification’ for it.? [citation], which is only to say that substantive unconscionability must be evaluated as of the time the contract was made. [Citation.] The most detailed and specific commentaries observe that a contract is largely an allocation of risks between the parties, and therefore that a contractual term is substantively suspect if it reallocates the risks of the bargain in an objectively unreasonable or unexpected manner.? A & M Produce Co. v. FMC Corp., supra, 135 Cal. App. 3d at 487.

Further, pursuant to Armendariz and a line of other authorities, claims brought under the Fair Employment and Housing Act (FEHA) are subject to arbitration if there are provisions for arbitrator neutrality, discovery, written decisions, and expense limits. O’Hare v. Municipal Resource Consultants (2003) 107 Cal. App. 4th 267, 273; Fittante v. Palm Springs Motors, Inc. (2003) 105 Cal. App. 4th 708, 716; Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83, 96-121; Craig v. Brown & Root, Inc. (2000) 84 Cal.App.4th 416, 422-23; Blake v. Ecker (2001) 93 Cal.App.4th 728, 433, overruled in part on other grounds by Le Francois v. Goel (2005) 35 Cal.4th 1094. This rule has also been extended to non-FEHA employment claims. Mercuro v. Sup. Ct. (2002) 96 Cal. App. 4th 167, 180 n. 26 (Armendariz scrutiny also applies to non-FEHA employment claims).

Turning to the Armendariz ?substantive unconscionability? benchmarks, the agreement states that the arbitration is to be conducted under the Employment Arbitration Rules of the American Arbitration Association then in effect. The Agreement requires that the arbitration is to be conducted before one neutral arbitrator selected by the parties. This is therefore evidence that the agreement is not substantively unconscionable.

The second Armendariz benchmark is whether, in fact, Plaintiff?s discovery rights are protected. Armendariz held that employees ?are at least entitled to discovery sufficient to adequately arbitrate their statutory claim, including access to essential documents and witnesses, as determined by the arbitrator(s) and subject to limited judicial review pursuant to Code of Civil Procedure section 1286.2.? Armendariz, 24 Cal.4th at 106. Adequate discovery does not mean ?unfettered? discovery, and an arbitration agreement may require something less than the full panoply of discovery provided in the CAA. Here, the agreement, as noted supra, provides that the arbitration is to be conducted under the Employment Arbitration Rules of the AAA. The rules state that the arbitrator ?shall have the authority to order such discovery, by way of deposition, interrogatory, document production, or otherwise, as the arbitrator considers necessary to a full and fair exploration of the issues in dispute, consistent with the expedited nature of arbitration.? [Declaration of Robert Mussig, ?6; Exh. 2 at 19.] The fact the arbitrator has the authority to order such discovery by way of deposition, interrogatory, document production, or otherwise, as the arbitrator considers necessary to a full and fair exploration of the issues in dispute satisfies the Armendariz standard. The fact discovery is to be conducted in accordance with the AAA Employment Arbitration rules demonstrates that this benchmark is satisfied in the agreement.

Third, the agreement explicitly states that the decision of the arbitrator shall be in writing and shall provide the reasons for the arbitrator?s award, unless the parties otherwise agree in writing.

With respect to expense limits, the agreement states that the employee ?shall not be required to pay any cost or expense of the arbitration that [the employee] would not be required to pay if the matter had been heard in court.? [Agreement at 2.] The Agreement states that Aryzta will pay for arbitrator compensation and any other administrative fees unique to arbitration. [Id.] This satisfies the Armendariz benchmark.

The agreement states that the arbitrator ?shall have the authority to provide for the award of attorneys? fees and costs to the prevailing party if such award is authorized by applicable law.? This Armendariz benchmark is satisfied.

Finally, Armendariz requires the arbitration agreement include a ?modicum of bilaterality.? Armendariz, supra, 24 Cal.4th at 117. The Armendariz court noted that ?[g]iven the disadvantages that may exist for plaintiffs arbitrating disputes, it is unfairly one-sided for an employer with superior bargaining power to impose arbitration on the employee as plaintiff but not to accept such limitations when it seeks to prosecute a claim against the employee, without at least some reasonable justification for such one-sidedness based on ?business realities.?? Armendariz, 24 Cal.4th at 117. Here, as discussed supra, the agreement provides a comprehensive definition of ?claims? that are subject to arbitration at Section 4. There is no provision within the arbitration agreement itself which permits Defendant to bring certain claims in court, to the exclusion of an employee?s right to do the same.

With that said, however, Defendant required Plaintiff to sign an agreement entitled ?Employee Confidentiality and Non-Interference Agreement.? [See Plaintiff?s Exhibit 5 at ARYZTA 000009] This Confidentiality Agreement states that any breach of any of the promises contained within that agreement ?may result in legal proceedings against me and the subsequent employer of any employee that I directly or indirectly recruited, raided, or solicited to leave. Such legal proceedings may result in an award of damages, attorneys? fees and/or injunctive relief.? [Id.] The implication is that Defendant is entitled to bring a suit in court to enforce the confidentiality agreement. However, the arbitration agreement itself requires all such disputes to be arbitrated, and the Confidentiality Agreement does not change that provision.

Plaintiff contends that the AAA Rule providing that the arbitrator ?shall maintain the confidentiality of the arbitration and shall have the authority to make appropriate rulings to safeguard that confidentiality, unless the parties agree otherwise or the law provides to the contrary? [Exh. 2 to Mussig Decl., AAA Rules at 24] is substantively unconscionable pursuant to Ting v. AT&T (9th Cir. 2003) 319 F.3d 1126. The Ting court, as Plaintiff notes, recognized that the arbitration process tends to favor companies because they are ?repeat players,? and that ?if the company succeeds in imposing a gag order, plaintiffs are unable to mitigate the advantages inherent in being a repeat player.? Ting at 1151-1152. However, in Mercuro v. Superior Court (2002) 96 Cal.App.4th 167, 179 noted that, without more evidence, the ?repeat player effect? is not enough to render an arbitration agreement unconscionable. Here too, the confidentiality provision within the AAA Employment rules does not render the agreement substantively unconscionable For these reasons, Plaintiff has not demonstrated that the agreement is substantively unconscionable.

Conclusion on Unconscionability

While there is evidence of procedural unconscionability, there is no evidence of substantive unconscionability in the agreement. Since both elements must be present to deem an arbitration agreement unconscionable under the Armendariz ?sliding scale,? Plaintiff Cipres has not demonstrated the arbitration agreement is unconscionable.

d. Arbitrability of PAGA Claim

The California Supreme Court has definitively addressed the arbitrability of PAGA claims in Iskanian v. CLS Transp. of Los Angeles, LLC (2014) 59 Cal.4th 348. In Iskanian, the Supreme Court commented:

[T]he Legislature’s purpose in enacting the PAGA was to augment the limited enforcement capability of the Agency by empowering employees to enforce the Labor Code as representatives of the Agency. Thus, an agreement by employees to waive their right to bring a PAGA action serves to disable one of the primary mechanisms for enforcing the Labor Code. Because such an agreement has as its ?object, ? indirectly, to exempt [the employer] from responsibility for [its] own ? violation of law,? it is against public policy and may not be enforced. [Citation.]

Such an agreement also violates Civil Code section 3513’s injunction that ?a law established for a public reason cannot be contravened by a private agreement.? (Ibid.) The PAGA was clearly established for a public reason, and agreements requiring the waiver of PAGA rights would harm the state’s interests in enforcing the Labor Code and in receiving the proceeds of civil penalties used to deter violations. Of course, employees are free to choose whether or not to bring PAGA actions when they are aware of Labor Code violations. (See Armendariz, supra, 24 Cal.4th at p. 103, fn. 8 [waivers freely made after a dispute has arisen are not necessarily contrary to public policy].) But it is contrary to public policy for an employment agreement to eliminate this choice altogether by requiring employees to waive the right to bring a PAGA action before any dispute arises.
?.
We conclude that where, as here, an employment agreement compels the waiver of representative claims under the PAGA, it is contrary to public policy and unenforceable as a matter of state law. Iskanian, 59 Cal.4th at 383-384 (emphasis added).

Thus, the Plaintiff?s representative PAGA claim may not be sent to arbitration, and the motion to compel arbitration of the PAGA claim is denied. The Court stays litigation of the PAGA claim, pending completion of the arbitration proceeding of the remainder of the action.
Franco v. Arakelian Enterprises, Inc. (2015) 234 Cal.App.4th 947, 966 specifically determined that because the issues subject to litigation under PAGA might overlap those that are subject to a plaintiff?s individual claims, the trial court must order an appropriate stay of trial court proceedings, pending completion of the arbitration. The stay?s purpose ?is to preserve the status quo until the arbitration is resolved, preventing any continuing trial court proceedings from disrupting and rendering ineffective the arbitrator’s jurisdiction to decide the issues that are subject to arbitration.? Id.
e. Class arbitration

In AT&T Mobility LLC v. Concepcion, supra, 131 S.Ct. 1740, the U.S. Supreme Court essentially reversed Discover Bank v. Superior Court (2005) 36 Cal.4th 148. The Court commented that ?[t]he overarching purpose of the FAA, evident in the text of ?? 2, 3, and 4, is to ensure the enforcement of arbitration agreements according to their terms so as to facilitate streamlined proceedings. Requiring the availability of classwide arbitration interferes with fundamental attributes of arbitration and thus creates a scheme inconsistent with the FAA.? Concepcion, 131 S.Ct. at 1748. Significantly, the arbitration provision in that case specifically required a waiver of any class arbitration claims.

Concepcion referenced Stolt-Nielsen S.A. v. AnimalFeeds Int?l. Corp. (2010) 130 S.Ct. 1758. In Stolt-Nielsen, the Supreme Court held in pertinent part that ?a party may not be compelled under the FAA to submit to class arbitration unless there is a contractual basis for concluding that the party agreed to do so.? Stolt-Nielsen, 130 S.Ct. at 1775 (emphasis in original). See also Kinecta Alternative Financial Solutions, Inc. v. Sup.Ct. (2012) 205 Cal.App.4th 506, 517.

Here, there is no contractual basis for concluding that Defendant Aryzta agreed to class arbitration. To the contrary, the arbitration agreement specifically includes a provision which provides in pertinent part that ?[a]ll Claims covered by this Agreement must be submitted on an individual basis. No claims may be arbitrated on a class or collective basis. The parties expressly waive any right with respect to any covered Claims to submit, initiate, or participate in a representative capacity as a plaintiff, claimant or member in a class action, collective action or other representative or joint action, regardless of whether the action is filed in arbitration or in court. PAGA claims are not governed by this provision unless allowable by law.? [Agreement at 2.] Thus, under Stolt-Nielsen, there is no contractual basis for concluding that the parties agreed to class arbitration.

Accordingly, the Court strikes the class allegations, and declines to enforce the class claims in arbitration.

This is an appropriate decision for the Court to make, as opposed to the arbitrator. The Court of Appeal has determined that the question whether an arbitration agreement permits class and/or representative arbitration is a gateway issue, and is thus reserved ??for judicial determination [u]nless the parties clearly and unmistakably provide otherwise.?[Citation.]? Garden Fresh Restaurant Corp. v. Superior Court (2014) 231 Cal.App.4th 678, 689. The Court finds that, as a gateway issue, it has the authority to determine class arbitrability. For the reasons discussed above, the Court strikes the class allegations.