Coughenour v. Del Taco, LLC

57 Cal.App.5th 740

271 Cal.Rptr.3d 602

Sarah COUGHENOUR, Plaintiff and Respondent,

v.DEL TACO, LLC, Defendant and Appellant.

E072772

Court of Appeal, Fourth District, Division 2, California.

Filed November 20, 2020

Manatt, Phelps & Phillips, Andrew L. Satenberg and Benjamin G. Shatz, Los Angeles, for Defendant and Appellant.

Valiant Law, Raymond Babaian and Semarnpreet Kaur, for Plaintiff and Respondent.

OPINION

MILLER, J.

Plaintiff and respondent Sarah Coughenour worked for defendant and appellant Del Taco, LLC, starting when she was 16 years old. When she was first employed by Del Taco, she signed a "Mutual Agreement to Arbitrate" (Agreement). After Coughenour reached the age of 18, she continued working for Del Taco for four months. Coughenour quit and filed a lawsuit against Del Taco for sexual harassment committed by one of their employees, wage and hour claims brought pursuant to the Labor Code, and other claims under the Fair Housing and Employment Housing Act (Complaint). Del Taco filed a motion to compel arbitration against Coughenour (Motion). The trial court denied the Motion, finding that Coughenour's filing of the lawsuit was a disaffirmance of the Agreement within the meaning of Family Code section 6710, which allows a person upon reaching majority age to disaffirm a contract entered into while a minor.

Del Taco appeals the denial of the Motion arguing that by working for Del Taco for four months after she reached the age of majority, she ratified the Agreement, which estopped her power to disaffirm the Agreement. In the alternative, Del Taco argues that Coughenour did not disaffirm the Agreement within a "reasonable time" after reaching the age of 18 as required by Family Code section 6710.

FACTUAL AND PROCEDURAL HISTORY

A. COMPLAINT

On December 6, 2018, Coughenour filed the Complaint alleging: sexual assault; battery, hostile work environment, failure to prevent harassment and aiding and abetting ( Govt. Code, § 12940 ); wrongful constructive termination; negligent hiring, retention and supervision; failing to provide meal and rest breaks ( Lab. Code, § 226.7 ); failure to provide accurate wage statements ( Lab. Code, § 226 ); waiting time penalties ( Lab. Code, § 203 ); violation of Business and Professions Code section 17200 ; intentional infliction of emotional distress; and negligent infliction of emotional distress.

Del Taco was a limited liability company doing business in California. Coughenour had exhausted her administrative remedies by filing a complaint with the Department of Fair Employment and Housing and receiving a "right to sue" letter.

Coughenour worked at a Del Taco restaurant located in Rancho Cucamonga. She was hired in 2016, when she was 16 years old. She alleged that she was subjected to severe sexual harassment, sexual assault and sexual battery by the restaurant's manager. She alleged that she was not provided meal and rest breaks. Coughenour resigned in August 2018. Coughenour sought economic damages, attorney's fees, and injunctive relief.

Del Taco filed an answer to the Complaint denying the allegations.

B. DEL TACO'S MOTION TO COMPEL ARBITRATION

On March 6, 2019, Del Taco filed its Motion. Del Taco alleged that Coughenour signed the Agreement, which required arbitration of all claims against Del Taco, including the claims in the Complaint. Coughenour refused to submit the matter to binding arbitration.

Del Taco alleged that Coughenour electronically signed the Agreement on May 11, 2016. She commenced work with Del Taco on May 25, 2016. Counsel for Del Taco contacted Coughenour on February 5, 2019, advising her of the Agreement she had signed, but she refused to arbitrate her claims. Del Taco claimed that arbitration was compelled under Code of Civil Procedure section 1281.2 because there was a valid agreement to arbitrate.

The Agreement included the following language: "To the maximum extent allowed by law, the Company and I mutually consent to the resolution by binding arbitration of all claims or causes of action that the Company may have against me or that I may have against the Company.... [¶] The claims covered by this Agreement include, but are not limited to: ... claims for discrimination or harassment ... all claims arising under ... the California Fair Employment and Housing Act (and other state's anti-discrimination laws), [and] the California Labor Code."

C. COUGHENOUR'S OPPOSITION

Coughenour filed opposition to the Motion on April 2, 2019. She responded that despite the fact she signed the Agreement, since she was only 16 years old at the time she was not capable of contracting and consenting to the Agreement; she was entitled to disaffirm the Agreement pursuant to Family Code section 6710 ; and the Agreement was unconscionable.

Coughenour alleged that she was not capable of contracting and consenting to the Agreement because she was 16 years old at the time she signed it. No one from Del Taco explained the documents she was signing. Although Coughenour acknowledged that in California a minor has the capacity to contract, Family Code section 6710 provides for a minor's "right of disaffirmance" allowing for a minor to disaffirm a contract before reaching majority age or within a reasonable time afterward. Coughenour claimed that the filing of the instant lawsuit was a disaffirmance of the Agreement made within a reasonable time after she reached majority age. As such, the trial court should accept that Coughenour disaffirmed the Agreement and was not required to submit her claims to arbitration.

Further, the Agreement was procedurally unconscionable because it was a contract of adhesion. Coughenour had no opportunity to negotiate or change the terms of the Agreement. Coughenour was forced to sign the Agreement or she would not be hired. Del Taco never explained the Agreement to Coughenour despite her being 16 years old and it being her first job. Del Taco made an effort to obscure and prevent knowledge of the Agreement because it was wordy and was hidden in the middle of numerous other documents.

The Agreement was also substantively unconscionable because it was "unfairly one-sided." The Agreement required arbitration of claims that are more commonly brought by employees and not those brought by employers. The Agreement in totality was confusing, convoluted and fundamentally unfair.

Coughenour signed a declaration. She began her employment with Del Taco when she was 16 years old. Working at Del Taco was her first job. She was subjected to sexual harassment, assault and battery by her supervisor while working for Del Taco. She filed a formal complaint before she quit and was assured that she would not have to work with the supervisor, but she was scheduled with him. She formally resigned on August 2018. She had turned 18 years old on April 20, 2018. She had to electronically sign her employment documents at a kiosk in the Del Taco store and was never given copies of the documents or the Agreement. The employment documents were never explained to her and she believed that if she did not sign the documents, she would not be hired.

D. REPLY TO OPPOSITION

Del Taco filed their reply on March 25, 2019. Del Taco insisted that Coughenour ratified her consent to arbitrate after she reached the age of 18 by continuing to work for Del Taco.

Del Taco relied upon Hastings v. Dollarhide (1864) 24 Cal. 195 ( Hastings ) to support its claim that by working for Del Taco after Coughenour reached majority age, she ratified the Agreement. Moreover, even if she was not found to have ratified the Agreement, she did not disaffirm the Agreement within a reasonable time as required by Family Code section 6710. Again, relying on Hastings , Del Taco argued that a "reasonable time" depended upon the circumstances of each case. Del Taco argued that eight months after reaching majority was not a reasonable time. Finally, she had not met her burden of establishing the Agreement was unconscionable.

E. HEARING AND RULING

The hearing was conducted on April 2, 2019, after the trial court had issued a tentative ruling to deny the Motion. Del Taco argued that the trial court needed to address ratification of the Agreement by Coughenour, because of her continuing to work for Del Taco. Disaffirmation could not take place after ratification. Coughenour's counsel argued that Coughenour was unaware of the Agreement based on it never being explained to her, and she never received a copy of the Agreement that she signed. Del Taco disagreed that she never received a copy of her employment documents; they were emailed to her. She was not denied access to her employment documents.

The trial court questioned whether Coughenour would be automatically subject to an employment contract she signed as a minor by continuing her employment. Coughenour's counsel argued that her disaffirmance of the Agreement was made in a reasonable time because she was only working part time at Del Taco and was inexperienced. The matter was taken under submission.

The trial court issued a written ruling denying the Motion. It first noted an unpublished California district court case found that disaffirmance of an arbitration agreement within one month after reaching the age of majority was reasonable. The trial court found, "However, this does not mean that a longer period of time than one month is unreasonable."

The trial court further explained, "Here, the declaration of Coughenour reflects she was made to sign all initial hiring documents in a kiosk and was never given any electronic documents to take home, nor were the documents explained, and she was not given the opportunity to read and understand the documents or negotiate the terms. (Coughenour Decl. at 6-7.) There is no evidence in either the declaration of Coughenour or of the Del Taco representative that Coughenour was requested to reaffirm her agreement to the arbitration provision upon reaching the age of majority. Del Taco does not argue, and there would be no basis for such an...