Iyere v. Wise Auto Grp., A163967

• Court: California Court of Appeals
• Writing for the Court: POLLAK, J.
• Parties: LEROY IYERE et al., Plaintiffs and Respondents, v. WISE AUTO GROUP, Defendant and Appellant.
• Docket Number: A163967
• Decision Date: 19 January 2023

LEROY IYERE et al., Plaintiffs and Respondents,
v.
WISE AUTO GROUP, Defendant and Appellant.

A163967

California Court of Appeals, First District, Fourth Division

January 19, 2023

Superior Court Marin County No. CIV2101151 Honorable James Chou judge

Counsel for plaintiffs and respondents: J. WRIGHT LAW GROUP, P.C.

Counsel for defendant and appellant: Jamie Wright, Esq. Laurie E. Sherwood Mary Watson Fisher

POLLAK, J. ^[*]

Wise Auto Group, doing business as Infiniti of Marin (hereafter Wise), appeals an order denying its motion to compel Leroy Iyere, Phillip Derbigny, and Michael Worlow (collectively plaintiffs) to arbitrate their employment-related claims. Plaintiffs asserted that they did not recall signing the arbitration agreement bearing their purported handwritten signatures and that the asserted agreement is unconscionable. The court concluded that Wise had not borne its burden of proving the authenticity of the signatures and, alternatively, that the agreement is unconscionable. We shall reverse.

FACTUAL AND PROCEDURAL HISTORY

Plaintiffs began working for Wise on separate dates in 2018 and 2019. Worlow and Derbigny were sales consultants; Iyere was a sales manager. With its motion to compel arbitration, Wise submitted, among other things, copies of a binding arbitration agreement (the agreement) with the purported

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handwritten signature of each plaintiff, hand-dated on their respective start dates.^[1]

The copies of the agreement bearing the signatures of Iyere and Worlow state that "any claim, dispute, and/or controversy arising from, or relating in any way to, Employee's employment relationship . . . with the Company, including without limitation, any claim or controversy brought on behalf of or against the Company or [related entities] which would otherwise be brought in court . . . shall be submitted to, and . . . resolved through, final and binding arbitration before an arbitrator selected in accordance with the procedures of the arbitration service selected by the party against whom the claim is brought from among the following: Alternative Dispute Resolution Services, Judicial Arbitration and Mediation Services, or such other service to which the parties agree." The agreement states that it is "governed by the Federal Arbitration Act (9 U.S.C. § 1, et seq.) ('FAA') and to the extent not inconsistent with the FAA, the procedures set forth in . . . Code of Civil Procedure [section] 1280, et seq.," and that it is "controlled by the [FAA], in conformity with the procedures of the California Arbitration Act (Code Civ. Proc. §§ 1280 et seq including section 1283.05 and all of the Act's other mandatory and permissive rights to discovery)." The agreement covers "all claims, allegations and

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charges of violation of federal[,] state or local law[,] statute[,] ordinance[,] rule or regulation (e.g., claims of discrimination . . ., breach of . . . contract[,] tort claims, wage payment claims, violation of public policy claims, or any other alleged violation of statutory, contractual or common-law rights."^[2] It bans class arbitration, waives the employees' right to join class litigation, and sets forth in capitalized letters that the parties waive the right to a jury trial of any covered claim, noting that such right "is of value" and that the employee "may wish to consult with an attorney prior to signing this agreement."

The agreement ends with admonitions that a decision to agree to arbitration is important and is the employee's to make, and that he or she should conduct research and consult with others including an attorney about its consequences. There follows an acknowledgement that the employee has read the agreement carefully and understands that it is voluntary and that he or she "can choose not to sign this agreement and still become or remain employed by the company," without retaliation.

The copy of the agreement bearing Derbigny's signature differs in some respects,^[3] but none material to resolution of this appeal.

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Wise fired plaintiffs in 2019. In 2021, they filed a joint complaint asserting 25 causes of action against Wise and its employee Dino Ricci, including claims for discrimination, harassment, retaliation, breach of contract, torts, violation of statutory rights, and wrongful termination in violation of public policy. Wise filed a motion to sever the complaints and compel each plaintiff to submit his claims to individual arbitration pursuant to the agreement (see p. 1 & fn. 1, ante).^[4] Accompanying the motion, Wise submitted a declaration from George Allen, its HR director and custodian of personnel records since January 2020, authenticating the documents, including the agreement bearing the purported handwritten signature of each plaintiff.

In opposition, each plaintiff signed a materially identical declaration alleging that, on his first day of work, he "met with a female [Wise] employee who handed me a large stack of documents to fill out"; he "was not given any time to review the documents because the [m]anager of [Wise] rushed me to get to work . . . [and] specifically told [me] to quickly sign the documents so I could get to work"; and he "signed the stack of documents immediately and returned them." Each plaintiff alleged that Wise never gave him a copy of the documents he signed and that he first saw the agreement when his lawyer showed him the declaration of Allen, whom he had never met. Each plaintiff added, "In fact, I do not recall ever reading or signing any document entitled

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Binding Arbitration Agreement or Employment Acknowledgment. I do not know how my signature was placed on [either document]."

Each declaration alleged that the plaintiff believed that, in order to work for Wise, he had "no choice but to sign the documents presented to me" and "no power to negotiate or modify the terms of [the agreement]." When he first read the agreement in the course of this action, he found it "confusing" and his lawyer explained that it bars him from suing Wise. "This is the first time I was made aware of this. If I had known I was giving up my rights to file a lawsuit against [Wise,] I would have refused to sign the document. I would never agree to waive my rights to file a lawsuit against [Wise] or participate in this consolidated action with [my co-plaintiffs]."

The declarations continue, "[N]o one ever told me or explained to me what I was signing and that I was agreeing to arbitrate any disputes with [Wise] and . . . giving up my rights to file a lawsuit against them in court.... [¶] . . . I do not have any legal training, so I do not understand what [the agreement] means because it is complicated and [cites] laws and codes that I have never heard of. [¶] . . . No one . . . afforded me the opportunity to opt-out of [the agreement] or [said] that I had the right to [do so]. If I had known that I could opt-out, I would have definitely opted-out. Instead, I was told to hurry up and sign a large stack of documents on my first day of work."

Plaintiffs also contended that the agreement is procedurally and substantively unconscionable. They based the latter claim on its failure to specify that the arbitration will afford them various rights. They also contended that, because the agreement states that it is governed by the FAA, it violates Labor Code section 925 (section 925), which bars contractual terms that require employees who live and work in California to waive, as a condition of employment, the substantive protections of California law.

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The trial court ultimately denied the motion.^[5] It held that Wise failed to bear its burden of proving the authenticity of the signatures, and that the agreement is procedurally and substantively unconscionable. The court based the latter ruling on its determination that the agreement violates section 925 by stating it is governed by the FAA, and that its provision allowing the party against whom the claim is made to choose between two arbitration providers unfairly favors Wise, which is more likely to be that party. Wise timely appealed the order.

DISCUSSION

1. Standard of Review

If a party to a civil action asks the court to compel arbitration of the pending claim, the court must determine in a summary proceeding whether an "agreement to arbitrate the controversy exists." (Code Civ. Proc., §§ 1281.2, 1290.2; Rosenthal v. Great Western Fin. Securities Corp. (1996) 14 Cal.4th 394, 412-413 (Rosenthal).) "Because the existence of the agreement is a statutory prerequisite to granting the petition, the petitioner bears the burden of proving its existence by a preponderance of the evidence. If the party opposing the petition raises a defense to enforcement . . . that party

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bears the burden of producing evidence of, and proving by a preponderance of the evidence, any fact necessary to the defense." (Rosenthal, supra, at p. 413.) The parties here dispute both the existence of an agreement (i.e., the authenticity of plaintiffs' signatures) and a defense to its enforcement (i.e., plaintiffs' claim that it is unconscionable (Fisher v. MoneyGram International, Inc. (2022) 66 Cal.App.5th 1084, 1094 ["unconscionability is a defense to enforcement of a contract"] (Fisher)). On the defense of unconscionability, plaintiffs bore the burden of proof. (Ibid.) As to the existence of an agreement, Wise bore the ultimate burden of proof, but the court was obliged to resolve the dispute using a three-step burden-shifting process. (Espejo v. Southern California Permanente Medical Group (2016) 246 Cal.App.4th 1047, 1056 (Espejo).)

The arbitration proponent must first recite verbatim, or provide a copy of, the alleged agreement. (Cal. Rules of Court,^[6] rule 3.1330; Condee v. Longwood Management Corp. (2001) 88 Cal.App.4th 215, 219.) A movant can bear this initial burden "by attaching a copy of the arbitration agreement purportedly bearing the opposing party's...