Zullo v. Superior Court of Santa Clara Cnty.

• Decision Date: 21 June 2011
• Docket Number: No. H036242.,H036242.
• Citation: 2011 Daily Journal D.A.R. 10519,11 Cal. Daily Op. Serv. 8814,197 Cal.App.4th 477,112 Fair Empl.Prac.Cas. (BNA) 1584,127 Cal.Rptr.3d 461
• Court: California Court of Appeals Court of Appeals
• Parties: Sharon Elizabeth ZULLO, Petitioner, v. The SUPERIOR COURT of Santa Clara County, Respondent; Inland Valley Publishing Co., Real Party in Interest.

197 Cal.App.4th 477

127 Cal.Rptr.3d 461

112 Fair Empl.Prac.Cas. (BNA) 1584

11 Cal. Daily Op. Serv. 8814

2011 Daily Journal D.A.R. 10,519

Sharon Elizabeth ZULLO, Petitioner,

v. The SUPERIOR COURT of Santa Clara County, Respondent;Inland Valley Publishing Co., Real Party in Interest.

No. H036242.

Court of Appeal, Sixth District, California.

June 21, 2011.

Pierce & Shearer, Palo Alto, Jacquetta May Lannan, for Petitioner Sharon Elizabeth Zullo.

Strazulo Fitzgerald, Dennis D. Strazulo, Sara Wilson, Cody Jaffe, San Francisco, for Real Party in Interest Inland Valley Publishing Co.

PREMO, Acting P.J.

Petitioner Sharon Elizabeth Zullo sued her employer, real party in interest Inland Valley Publishing Co. (Inland) for wrongful termination in violation of California's Fair Employment and Housing Act (Gov.Code, § 12920 et seq. (FEHA)). The superior court granted Inland's petition to compel arbitration and stayed the civil proceedings. Petitioner challenged that ruling by way of a petition for writ of mandate. We temporarily stayed the arbitration and issued an order to show cause why relief should not be granted. We now grant the petition and issue the writ.

I. Facts

Petitioner's complaint states that she began working for Inland, the publisher of a weekly newspaper, in or around 2004. She was promoted to “Account Executive” on September 1, 2009. Her salary was $40,000 per year plus “sales bonuses.” Petitioner claims that her direct supervisor discriminated against her on account of her race and national origin and that she was discharged because she complained about the discriminatory treatment.¹

Inland's petition to compel arbitration was based upon the arbitration policy contained in Inland's employee handbook. Inland maintained that petitioner was given the handbook when she was hired and petitioner signed an acknowledgment of having received a copy of it, the original of which is kept in her personnel file.

The introductory section of the employee handbook states, “Upon joining The Independent [Inland's weekly newspaper], you will be given a copy of our employee handbook and asked to complete personnel, payroll and benefit forms. Except as otherwise set forth in individual contracts, the handbook applies to all exempt and nonexempt employees. [¶] The handbook has been prepared for the information and guidance of employees working at The Independent. The handbook is intended to cover the procedures, rules and policies that most often apply to day-to-day work activities. Some of the information will change from time to time since our policies are under constant review and are revised when appropriate. Such changes will be communicated to you in writing in advance of their implementation.”

Page 54 of the 58–page employee handbook contains an arbitration policy, which reads in full as follows:

“Any dispute arising out of the termination or alleged termination of any employee's employment, (including, but not limited to, purported violations of statute, claims based on any alleged breach of duty arising out of contract or tort, or any other alleged violation of a statutory, contractual or common law right(s), but excluding workers' compensation and unemployment insurance claims and wage and hour matters within the jurisdiction of the State Labor commissioner) or any claim for discrimination or harassment arising out of any employee's employment, which cannot be resolved through either discussion or mediation, shall be submitted to final and binding arbitration before a neutral arbitrator pursuant to the American Arbitration Association Employment Dispute Resolution rules, as may be amended from time to time (attached to this Handbook as Appendix ‘A’). Statutes and laws covered by this policy, include, but are not limited to, equal employment opportunity laws (which include claims for age, race, color, disability, medical condition, marital status, religion, sexual orientation, ancestry, national origin, harassment, pregnancy and sex discrimination), the Federal Civil Rights Acts of 1964 and 1991, as amended, the Age Discrimination in Employment Act, the Americans with Disabilities Act, the California Fair Employment Practices Act and California wrongful discharge law.

“Arbitration will be the exclusive means of resolving any dispute described above. No other action will be brought by any employee in any court or other forum except those claims specifically excluded in the arbitration procedures, or as otherwise provided by law. If any dispute should arise, Employee agrees to deliver a written request for arbitration to Janet Armantrout or Joan Seppala within one (1) year of the date the dispute occurred. The request for arbitration shall describe the dispute in sufficient detail to advise the Company of the nature of the dispute, the date when the dispute first arose and the remedies sought. Employees must respond within ten (10) calendar days to each communication regarding the selection of an arbitrator and scheduling of the hearing. If Employee does not file a written request for arbitration within one year of the date of said occurrence or does not respond to any communication about the arbitration proceeding within ten (10) calendar days, such claims will be untimely and therefore barred. The limitations period set forth herein shall not be subject to tolling. Employees shall not have the right to raise any claims, in any forum, arising out of any controversy that is subject to arbitration.”

Inland also submitted an acknowledgement of receipt of the handbook, allegedly signed by petitioner, which stated, “I understand and acknowledge that this handbook contains an arbitration policy requiring me to submit any and all disputes described therein to final and binding arbitration and that I cannot pursue such claims before a judge or a jury or in any other forum.”

Petitioner challenged the motion to compel arbitration on two grounds. She maintained that the arbitration agreement was unconscionable and, therefore, unenforceable. She also challenged the authenticity of the acknowledgement of receipt Inland submitted in support of its motion. She did not submit a declaration of her own in support of her objections. The superior court rejected the evidentiary challenge and found the agreement was not unconscionable.

II. Issue and Standard of Review

“A writ of mandate may be issued by any court to any inferior tribunal, corporation, board, or person, to compel the performance of an act which the law specially enjoins ...” (Code Civ. Proc., § 1085, subd. (a)) where “there is not a plain, speedy, and adequate remedy, in the ordinary course of law” ( id. § 1086). Although mandamus cannot be issued to control a court's discretion, in unusual circumstances the writ will lie where, under the facts, that discretion can be exercised in only one way. ( Hilmer v. Superior Court (1934) 220 Cal. 71, 73, 29 P.2d 175;Babb v. Superior Court (1971) 3 Cal.3d 841, 851, 92 Cal.Rptr. 179, 479 P.2d 379.)

Petitioner argues that under the facts of this case, the superior court was bound to deny Inland's petition to compel. She maintains the arbitration agreement is a contract of adhesion and is unfairly one-sided. She further maintains that the superior court erred in overruling her objection that the acknowledgement of receipt was not properly authenticated.

Under Code of Civil Procedure section 1281.2, a court must compel arbitration of a dispute “if it determines that an agreement to arbitrate the controversy exists.” In determining whether there is an enforceable agreement to arbitrate a particular dispute, the court must examine and, to a limited extent, construe the underlying agreement. ( United Public Employees v. City and County of San Francisco (1997) 53 Cal.App.4th 1021, 1025–1026, 62 Cal.Rptr.2d 440.) In so doing, the court applies settled rules for interpreting contracts. And, as with any other contract, interpreting a purported arbitration agreement is solely a judicial function unless it turns upon the credibility of extrinsic evidence. ( Stirlen v. Supercuts, Inc. (1997) 51 Cal.App.4th 1519, 1527, 60 Cal.Rptr.2d 138;Duffens v. Valenti (2008) 161 Cal.App.4th 434, 443, 74 Cal.Rptr.3d 311;City of Los Angeles v. Superior Court (2011) 193 Cal.App.4th 1159, 1167, 123 Cal.Rptr.3d 610.) We are concerned here with the language of the arbitration policy, the employee handbook within which it is contained, and the acknowledgement petitioner is alleged to have signed. To the extent there is any extrinsic evidence necessary to the decision, it is not in dispute. Accordingly, our review is de novo. ( Parsons v. Bristol Development Co. (1965) 62 Cal.2d 861, 866, 44 Cal.Rptr. 767, 402 P.2d 839.)

III. Discussion

The invalidity of an arbitration agreement may be proved “upon such grounds as exist for the revocation of any contract.” (Code Civ. Proc., § 1281.) Unconscionability is one such a ground. (Civ.Code, § 1670.5.) ²

Unconscionability has both procedural and substantive elements. “ ‘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 the prolix printed form drafted by the party seeking to enforce the disputed terms.’ ” ( Stirlen v. Supercuts, Inc., supra, 51 Cal.App.4th at p. 1532, 60 Cal.Rptr.2d 138, quoting A & M Produce Co. v. FMC Corp. (1982) 135 Cal.App.3d 473, 486, 186 Cal.Rptr. 114.) Substantive unconscionability refers to overly harsh or unjustifiable one-sided results. A contract is largely an allocation of risks between the parties. A contractual term is substantively suspect if, viewed at the time the contract was formed, it allocates the risks in an unreasonable or unexpected manner. ( A & M Produce Co. v. FMC Corp., supra, at p. 487...