Opinion
E064190
03-07-2018
GLORIA QUIROZ MARMOLEJO, Plaintiff and Appellant, v. FITNESS INTERNATIONAL LLC et al., Defendants and Respondents.
Gary Rand & Suzanne E. Rand-Lewis, Suzanne E. Rand-Lewis, and Timothy D. Rand-Lewis for Plaintiff and Appellant. Call & Jensen, Julie R. Trotter, and Melinda Evans for Defendants and Respondents.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. (Super.Ct.No. RIC1216219) OPINION APPEAL from the Superior Court of Riverside County. Craig Reimer, Judge. Affirmed. Gary Rand & Suzanne E. Rand-Lewis, Suzanne E. Rand-Lewis, and Timothy D. Rand-Lewis for Plaintiff and Appellant. Call & Jensen, Julie R. Trotter, and Melinda Evans for Defendants and Respondents.
Gloria Marmolejo sued her former employer, L.A. Fitness International, LLC (L.A. Fitness), for wrongful termination and related claims, after she was fired from a janitorial position she had held for about five years. L.A. Fitness moved to compel arbitration based on an agreement to arbitrate Marmolejo had signed when she submitted her employment application, as a condition to being considered for the job. The trial court granted the motion, the arbitrator ultimately dismissed the action with prejudice, and the trial court entered judgment in favor of L.A. Fitness.
The sole issue on appeal is whether the trial court properly granted the motion to compel arbitration. Marmolejo argues L.A. Fitness failed to prove an arbitration agreement existed and that even if it did, it is unenforceable because she did not understand it and its terms are overly oppressive. We conclude these arguments lack merit and the trial court properly granted the motion to compel.
An order directing parties to arbitrate is nonappealable, but is reviewable on appeal from a judgment confirming the arbitration award. (E.g., Patchett v. Bergamot Station, Ltd. (2006) 143 Cal.App.4th 1390, 1396.)
I
FACTUAL BACKGROUND
In March 2007, Marmolejo applied for a janitorial position with L.A. Fitness. In order to be considered for employment, she had to complete and sign a document entitled "L.A. Fitness International LLC Employment Application and Arbitration Agreement." The first page explains the document is an employment application containing a mandatory "Dispute Resolution Agreement." The next two pages constitute the dispute resolution—or arbitration—agreement (the arbitration agreement), which informs applicants they would not be considered for employment unless they agreed to arbitrate any employment-related disputes.
The arbitration agreement says:
"I recognize that it is in the interest of both L.A. Fitness and me that disputes be resolved in a manner that is fair, private, expeditious, economical, final and less burdensome or adversarial than court litigation. Therefore, the Company and I mutually consent to the resolution by arbitration of all claims or controversies described below, past, present, or future, whether or not arising out of or related to my application, employment, or its termination, that the Company may have against me or that I may have against any of the following (1) the Company, (2) its officers, directors, employees or agents in their capacity as such or otherwise, (3) the Company's parent, subsidiary and affiliated entities, and/or (4) all successors and assigns and any of them." The agreement also stated, in bold font, "I agree that I will resolve any and all claims or controversies between me and L.A. [Fitness] exclusively by final and binding arbitration before a neutral Arbitrator instead of any court action or jury trial which I hereby expressly forever give up."
The agreement informs applicants all arbitration proceedings would be "conducted in accordance with the 'Dispute Resolution Rules and Procedures'" (arbitration procedures), a copy of which was "[i]ncluded with th[e] application." The agreement suggests applicants review the procedures before signing; advises them of their right to consult with an attorney; allows them to take a copy of the arbitration agreement and procedures home and return a signed copy later; and provides a three-day period after signing to withdraw their consent to arbitrate—thereby also withdrawing their application from consideration. Finally, just above the signature line, the agreement says, "I agree and acknowledge receipt of the [arbitration procedures]."
Marmolejo signed the arbitration agreement on March 9, 2007.
The next several pages of the document contain the application itself. Marmolejo filled this portion out by hand, in English, providing her educational background, references, and prior work experience. She indicated although Spanish was her first language, she was proficient in English. She wrote she had taken two and a half years of English classes, and as a result her level of speaking English was "good" and reading it was "fair." She described her responsibilities at her two most recent jobs. As a housekeeper, she "cleaned the entire house, ex., their chores were done by us," and when she worked for a company called Flex, she "put labels on items."
L.A. Fitness's arbitration procedures: (1) provide for reciprocal arbitration of all disputes; (2) establish a process for the mutual selection of an arbitrator from the American Arbitration Association; (3) limit the costs employees incur to the equivalent of a court filing fee; (4) authorize the arbitrator to award any remedy that would have been available in court; (5) require a written award; and (6) authorize an appeal to a court "in accordance with the appeal procedures of the Federal Arbitration Act . . . or applicable state statutory law." The procedures also provide for a 90-day discovery period that includes initial disclosures (and a continuing obligation to produce any documents "relevant to any claim or defense"), 30 interrogatories, and five depositions. The procedures allow the arbitrator to permit additional discovery upon a "showing of substantial need."
L.A. Fitness hired Marmolejo and she worked in their maintenance department for about five years, until they fired her in August 2011 when she was 49 years old. In November 2012, she filed a complaint against her former employer in court, alleging wrongful termination and eight other causes of action. She alleged her manager (whom she also named as a defendant) subjected her to unfair treatment, such as harassing her for her gender, age and nationality (she is of Mexican descent); increasing her duties while reducing her hours; and forcing her to clean the men's bathroom, sauna, and showers while they were in use.
She also alleged L.A. Fitness subjected her to unsafe working conditions. She says her doctor had determined she suffered a throat injury due to workplace bleach exposure and recommended she wear a mask at work. When L.A. Fitness did not provide her a mask or take any other actions to reduce bleach exposure, she filed a complaint with Cal/OSHA, a Division of Occupational Safety and Health. Around that same time, she also filed a complaint containing her discrimination allegations with the Equal Employment Opportunity Commission.
Marmolejo alleged L.A. Fitness retaliated against her for these filings, reassigning her to a morning shift when it knew she could only work evenings. Less than a week after she told her manager she could not take a morning shift, L.A. Fitness fired her. She alleged the justification for her termination was pretextual and she was fired for discriminatory and retaliatory reasons.
Her complaint asserted claims for (among other things) breach of contract, wrongful termination, violation of the Fair Employment and Housing Act (FEHA), intentional infliction of emotional distress, and fraud. She sought damages for lost wages and benefits, emotional distress, and general and special damages.
In response to her complaint, L.A. Fitness filed a motion to compel arbitration, which included a copy of the employment application and arbitration agreement Marmolejo had signed and a copy of the arbitration procedures. In a declaration, L.A. Fitness's Director of Human Resources, Mindy Stokesberry, said the document Marmolejo signed was prepared and kept in the ordinary course of business and is the same document L.A. Fitness gives all applicants. She also said her job responsibilities include maintaining and distributing the arbitration procedures and that Marmolejo would have received a copy as part of her application packet.
Marmolejo opposed the motion, arguing she was never told she was agreeing to arbitration, but was instead simply handed paperwork by "a white blonde twenties American who spoke no Spanish" and was told "you must sign to work here." Marmolejo also said she was never given the arbitration rules and procedures. She informed the court she could not read, speak, or understand English, and could not read or write Spanish very well, either—she said she never made it past the 7th grade in Mexico. As a result, she did not know what she was signing when she completed her application. She said she did not know what the word "arbitration" meant, and had she been told, she would never have agreed to give up her right to a jury trial.
Marmolejo also argued L.A. Fitness had failed to authenticate the application and arbitration agreement because it had not provided the declaration of a percipient witness who saw her sign it.
After holding a hearing on the issue and receiving argument from both parties, the trial court granted the motion to compel and ordered L.A. Fitness to bear the costs of arbitration.
II
DISCUSSION
Marmolejo argues it was error to grant the motion to compel because L.A. Fitness presented insufficient evidence she ever entered into a valid arbitration agreement and, in any event, the agreement is unconscionable.
A. Standard of Review
When reviewing a trial court's ruling on a motion to compel arbitration, "'"we review the arbitration agreement de novo to determine whether it is legally enforceable, applying general principles of California contract law."'" (Carmona v. Lincoln Millennium Car Wash, Inc. (2014) 226 Cal.App.4th 74, 82.) To the extent the trial court's determination turned on the resolution of contested facts, we "review the court's factual determinations for substantial evidence." (Ibid.) Because the trial court, not the reviewing court, is in the best position to determine the facts, we accept the evidence most favorable to the ruling as true and discard the unfavorable evidence as insufficiently credible in the trial court's view. (Bickel v. City of Piedmont (1997) 16 Cal.4th 1040, 1053 [appellate court must view the evidence "in the light most favorable to the prevailing party, giving it the benefit of every reasonable inference and resolving all conflicts in its favor"].)
B. A Valid Arbitration Agreement Exists
Marmolejo makes two arguments as to why no valid arbitration agreement exists. First, she argues L.A. Fitness failed to authenticate the agreement. Second, she argues she is not bound by the agreement because she is Spanish-speaking and therefore could not understand it. We disagree in both regards.
The moving party, here L.A. Fitness, bears the burden of proving a valid arbitration agreement exists by a preponderance of the evidence. (Rosenthal v. Great Western Fin. Securities Corp. (1996) 14 Cal.4th 394, 413-414; Evid. Code, § 115.) L.A. Fitness provided such evidence in the form of a copy of the agreement Marmolejo had signed, along with the declaration of Stokesberry, the Director of Human Resources, who was familiar with employee applications and how they were stored within the company. Stokesberry said the application Marmolejo had completed and the arbitration agreement she had signed were the same documents all applicants receive.
Marmolejo presented no evidence in rebuttal. She simply asserted Stokesberry's declaration was insufficient to authenticate the agreement because Stokesberry herself was not present when she signed it. Marmolejo cites no authority for this point, because there is none. A party seeking to prove the existence of an agreement is not required to produce the testimony of a percipient witness to the agreement's signing. Such a rule would make it unduly difficult to prove the existence of a signed contract, especially for large corporations like L.A. Fitness that likely enter into thousands of them every month.
Instead, when moving "to compel arbitration, it is not necessary to follow the normal procedures of document authentication." (Condee v. Longwood Management Corp. (2001) 88 Cal.App.4th 215, 218.) A party can prove the existence of an arbitration agreement simply by attaching a copy of it to the motion to compel or by including its provisions in the motion. (Id. at p. 219; Code Civ. Proc., § 1281.2 [procedures for moving to compel arbitration].) L.A. Fitness satisfied this requirement and, tellingly, Marmolejo does not argue the arbitration agreement is a fake or her signature was forged. We therefore conclude the trial court properly determined the document L.A. Fitness submitted with its motion to compel was an arbitration agreement with Marmolejo.
We find Marmolejo's next argument—that even though she signed the agreement, she did not understand it and therefore cannot be bound to it—similarly unpersuasive. As a general rule of contracting, the law assumes a party who signs an agreement has read and understood it. (Mission Viejo Emergency Medical Associates v. Beta Healthcare Group (2011) 197 Cal.App.4th 1146, 1156; Marin Storage & Trucking, Inc. v. Benco Contracting & Engineering, Inc. (2001) 89 Cal.App.4th 1042, 1049.) A language barrier is no excuse from an agreement's obligations unless the party with the barrier can show the other party knew of it and tricked or deceived them into signing the agreement. (Randas v. YMCA of Metropolitan Los Angeles (1993) 17 Cal.App.4th 158, 163.) Marmolejo presented no evidence of deceit on L.A. Fitness's part.
Marmolejo's reliance on the exception described in Metters v. Ralphs Grocery Co. (2008) 161 Cal.App.4th 696 is misplaced. That exception applies only when the document the party signed did not appear to be a contract, for example, because the contractual provision is so confusing or is buried in small font on the reverse side of a form. (Id. at p. 702.) Having reviewed L.A. Fitness's arbitration agreement, we can confidently conclude it looked like a contract and contained understandable provisions.
Second, and more importantly, Marmolejo's own application estops her from claiming she does not understand English. She wrote—in English—that she could read, speak, and write the language. Proving this to be true, she completed the application in English, providing full and coherent answers to questions about her qualifications and prior work experience. We therefore conclude the record contains sufficient evidence of a valid and binding arbitration agreement.
C. The Arbitration Agreement Covers the Entire Dispute
Marmolejo argues arbitration would force a waiver of her Labor Code and FEHA claims. She is incorrect.
Marmolejo relies on Labor Code section 229, which states in relevant part, "Actions to enforce the provisions of this article for the collection of due and unpaid wages claimed by an individual may be maintained without regard to the existence of any private agreement to arbitrate." (Lab. Code, § 229, italics added.) However, this prohibition against arbitration applies only to unpaid wages claims brought under Labor Code sections 200 through 244. (Lane v. Francis Capital Management LLC (2014) 224 Cal.App.4th 676, 684.) Because Marmolejo has not brought a claim for unpaid wages, Labor Code section 229 is irrelevant.
Her complaint sought damages for lost wages under a breach of contract theory, but lost wages are not the same as unpaid wages under the Labor Code. The former are based in an expectation interest ("if you had not unlawfully fired me, I would still be working hours and earning wages at your company"), whereas the latter have already been earned ("you have not compensated me for hours I have worked").
Regarding FEHA, Marmolejo blatantly misstates the law when she argues her discrimination, harassment, and retaliation claims under that statute cannot be arbitrated. The California Supreme Court has held FEHA claims may be arbitrated, so long as the preemployment arbitration agreement "permits an employee to vindicate his or her statutory rights." (Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83, 90 (Armendariz); see also id. at p. 96 ["nothing in [FEHA] prohibits mandatory employment arbitration agreements that encompass state and federal antidiscrimination claims"].) Such vindication occurs when the arbitration agreement satisfies the following minimum requirements: (1) provides for a neutral arbitrator; (2) authorizes "more than minimal" discovery; (3) requires a written award; (4) authorizes the same type of relief available in court; and (5) limits the amount of fees the employee must pay to those commensurate with a court action. (Id. at p. 102.) L.A. Fitness's arbitration agreement satisfies each of these requirements, and nothing in the agreement prohibits Marmolejo from asserting FEHA claims in arbitration. In other words, the agreement allows Marmolejo to vindicate her FEHA rights.
D. The Arbitration Agreement Is Not Unconscionable
Lastly, Marmolejo argues that even if the arbitration agreement exists and covers all of her claims, it is unconscionable and therefore unenforceable. We disagree.
The doctrine of unconscionability "'"refers to '"an absence of meaningful choice on the part of one of the parties together with contract terms which are unreasonably favorable to the other party."'" (Baltazar v. Forever 21, Inc. (2016) 62 Cal.4th 1237, 1243.) There is both a procedural and substantive aspect of unconscionability; the former focuses on "oppression" or "surprise" due to unequal bargaining power, the latter on "overly harsh" or "one-sided" results. (Armendariz, supra, 24 Cal.4th at p. 114.)
Under the prevailing view, "'both [must] be present in order for a court to exercise its discretion to refuse to enforce a contract or clause under th[is] doctrine.'" (Armendariz, supra, 24 Cal.4th at p. 114.) But they need not be present in the same degree. Courts may use a "sliding scale" approach "'which disregards the regularity of the procedural process of the contract formation, that creates the terms, in proportion to the greater harshness or unreasonableness of the substantive terms themselves.'" (Ibid., citing 15 Williston on Contracts (3d ed. 1972) § 1763A, pp. 226-227.) "In other words, the more substantively oppressive the contract term, the less evidence of procedural unconscionability is required to come to the conclusion that the term is unenforceable, and vice versa." (Armendariz, at p. 114.) Because "unconscionability is a reason for refusing to enforce contracts generally, it is also a valid reason for refusing to enforce an arbitration agreement." (Ibid.)
1. Procedural unconscionability
"Unconscionability analysis begins with an inquiry into whether the contract is one of adhesion"—that 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 p. 113.) It is clear L.A. Fitness's arbitration agreement is an adhesion contract. "It was imposed on [Marmolejo] as a condition of employment [and being considered for employment] and there was no opportunity to negotiate." (Id. at p. 115.) However, for the agreement to be unenforceable, it must also be substantively unconscionable to some degree.
2. Substantive unconscionability
As our high court explained in Armendariz, "in the case of preemployment arbitration contracts, the economic pressure exerted by employers on all but the most sought-after employees may be particularly acute, for the arbitration agreement stands between the employee and necessary employment, and few employees are in a position to refuse a job because of an arbitration requirement. While arbitration may have its advantages in terms of greater expedition, informality, and lower cost, it also has, from the employee's point of view, potential disadvantages: waiver of a right to a jury trial, limited discovery, and limited judicial review. 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 award that an employee is likely to get, particularly if the employer is a 'repeat player' in the arbitration system. [Citation.] It is perhaps for this reason that it is almost invariably the employer who seeks to compel arbitration." (Armendariz, supra, 24 Cal.4th at p. 115.) Recognizing the procedural one-sidedness of preemployment arbitration contracts like the one here, our Supreme Court has cautioned we "must be particularly attuned to claims that employers with superior bargaining power have imposed one-sided, substantively unconscionable terms as part of an arbitration agreement." (Ibid., italics added [acknowledging the "lack of choice and the potential disadvantages that even a fair arbitration system can harbor for employees"].)
Amendariz and Baxter v. Genworth North America Corporation (2017) 16 Cal.App.5th 713 (Baxter) are instructive for determining whether a preemployment arbitration agreement is substantively unconscionable. As a bright line rule, if the agreement is not mutual—that is, it requires the employee to submit to arbitration but allows the employer its choice of forum, or it limits the type of damages an employee can recover in arbitration but contains no similar limitation on the employer—it is substantively unconscionable. (Amendariz, supra, 24 Cal.4th at pp. 117, 121.)
Baxter highlights other ways in which the terms of a preemployment arbitration agreement can unfairly favor the employer. There, the appellate court found the arbitration agreement substantively unconscionable because it: (1) limited the employee's ability to informally investigate a claim (e.g., by questioning coworkers) but contained no similar limitation for the employer (Baxter, supra, 16 Cal.App.5th at pp. 725-726); (2) authorized only 10 interrogatories and two depositions (id. at p. 727); (3) shortened the deadline for initiating arbitration of FEHA claims to one year, which is the limitations period for filing an administrative FEHA claim (i.e., the deadline for remedy exhaustion) (Baxter, at pp. 730-731); and (4) limited the employee's ability to seek administrative remedies on a FEHA claim before initiating arbitration (Baxter, at pp. 733-734).
Having reviewed L.A. Fitness's arbitration procedures cautiously and being sensitive to the fact Marmolejo had no real choice but to accept them, we find nothing about them oppressively unfair. Under L.A. Fitness's procedures, the obligation to arbitrate is mutual; there are no one-sided discovery limitations; the amount of discovery—30 interrogatories and 5 depositions—is reasonable; and there are no unfair limitations on the deadline for filing claims or the type of relief available. Marmolejo disagrees about discovery and argues the agreement's cap on interrogatories and depositions unreasonably limits her ability to pursue her claims. But her contention is contrary to our precedent. Recognizing discovery limitations help streamline arbitration, courts have approved more drastic limitations than those at issue here. (E.g., Dotson v. Amgen, Inc. (2010) 181 Cal.App.4th 975, 983.) For example, in Sanchez v. Carmax Auto Superstores California, LLC (2014) 224 Cal.App.4th 398, the court rejected the idea that arbitration agreements must permit "unfettered" discovery and found the limitation of 20 interrogatories and three depositions both reasonable and "liberal." (Id. at pp. 404-405.)
Marmolejo makes a handful of additional arguments as to why L.A. Fitness's arbitration agreement is substantively unconscionable, but we find them unpersuasive. She contends the agreement is substantively unfair because it: (1) forces her to waive her FEHA claims; (2) "fails to identify any statutory basis for an arbitration agreement"; (3) "fails to identify the set of arbitration rules that would purportedly apply to the dispute"; and (4) "fails to contain appropriate language giving notice of the jury waiver." As just explained, the agreement does not prohibit arbitration of FEHA claims—instead, it allows Marmolejo to assert any FEHA claims she may have and meets the minimum requirements for permitting her to vindicate her FEHA rights in the arbitral forum.
As to her next argument, the statutory basis for L.A. Fitness's arbitration agreement is Code of Civil Procedure section 1281, which provides "[a] written agreement to submit to arbitration an existing controversy or a controversy thereafter arising is valid, enforceable and irrevocable, save upon such grounds as exist for the revocation of any contract." There is no requirement that an arbitration agreement contain a citation to Code of Civil Procedure section 1281 in order to be fair or enforceable.
Finally, L.A. Fitness's arbitration agreement does identify the applicable rules and does contain a clear waiver of the right to a jury trial. The agreement states "any arbitration under this Agreement will be conducted in accordance with the '[arbitration procedures]'" and also contains a provision acknowledging receipt of those procedures. The agreement also states, in bold lettering, "I agree that I will resolve any and all claims or controversies between me and L.A. [Fitness] exclusively by final and binding arbitration before a neutral Arbitrator instead of any court action or jury trial which I hereby expressly forever give up." While we understand Marmolejo's frustration in having to agree to arbitration before L.A. Fitness would even consider her application, California law endorses such contracts of adhesion if—as is the case here—the terms are not oppressive.
III
DISPOSITION
We affirm the judgment. The parties shall bear their own costs on appeal.
NOT TO BE PUBLISHED IN OFFICIAL REPORTS
SLOUGH
J. We concur: RAMIREZ
P. J. MILLER
J.