Nathaniel v. Greene Motors, Inc.

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VIRGIL NATHANIEL, Plaintiff and Respondent, v. GREENE MOTORS, INC., Defendant and Appellant.

A165056

California Court of Appeals, First District, First Division

May 25, 2023

NOT TO BE PUBLISHED

(Solano County Super. Ct. No. FCS056974)

Humes P.J.

Appellant Greene Motors, Inc., prevailed before the state Labor Commissioner on wage claims brought by respondent employee Virgil Nathaniel. When Nathaniel sought a de novo review of the commissioner's order, Greene Motors filed a petition to arbitrate the matter. The trial court found that the parties' arbitration agreement was procedurally and substantively unconscionable and thus unenforceable, and Greene Motors appealed. We affirm.

I. FACTUAL AND PROCEDURAL BACKGROUND

The record in this case is sparse and contains little detail about Nathaniel's employment relationship with Greene Motors, a car dealership known as Avery Greene Honda in Vallejo. What we know is that Nathaniel applied for a job as a "Service-Advisor" with Greene Motors in fall 2015. He signed an arbitration agreement printed on his form employment application, as all applicants are required to do. The font size of the agreement and the low quality of the copy in the appellate record make it difficult to discern each word of the clause governing alternative dispute resolution.

Nathaniel was hired and in December 2015 he signed a second arbitration agreement as part of the "onboarding process," again because he was required to do so to work for Greene Motors. We gather from the parties' briefing in the trial court that this agreement was identical, "or nearly so," to the one contained in Nathaniel's employment application. A copy of the arbitration agreement Nathaniel signed in December 2015 appears in the record on a single page titled "AGREEMENTS." Nathaniel's signature appears after a paragraph titled "At Will Employment Agreement" that stated he agreed his employment and compensation were terminable at will. The remaining three-quarters of the page is filled with a single paragraph titled "Binding Arbitration Agreement." As with the arbitration agreement Nathaniel signed when he applied for the job, the font size and low quality of the copy of this agreement in the record make it difficult to discern each word of the agreement. No evidence was presented in the trial court describing whether or how the original agreement Nathaniel signed differed from the copy as it appears in the record.

In the petition to compel arbitration, however, the text of the agreement was set forth, and we quote it in its entirety:

"I also acknowledge that the Company utilizes a system of alternative dispute resolution which involves binding arbitration to resolve all disputes which may arise out of the employment context. Because of the mutual benefits (such as reduced expense and increased efficiency) which private binding arbitration can provide both the Company and myself I and the Company both agree that any claim, dispute, and/or controversy that either party may have against one another (including, but not limited to, any claims of discrimination and harassment, whether they be based on the California Fair Employment and Housing Act, Title VII of the Civil Rights Act of 1964, as amended, as well as all other applicable state or federal laws or regulations) which would otherwise require or allow resort to any court or other governmental dispute resolution forum between myself and the Company (or its owners, directors, officers, managers, employees, agents, and parties affiliated with its employee benefit and health plans) arising from, related to, or having any relationship or connection whatsoever with my seeking employment with, employment by, or other association with the Company, whether based on tort, contract, statutory, or equitable law, or otherwise, (with the sole exception of claims arising under the National Labor Relations Act which are brought before the National Labor Relations Board, claims for medical disability benefits under the California Workers' Compensation Act, and Employment Development Department claims) shall be submitted to and determined exclusively by binding arbitration. In order to provide for the efficient and timely adjudication of claims, the arbitrator is prohibited from consolidating the claims of others into one proceeding. This means that an arbitrator will hear only my individual claims and does not have the authority to fashion a proceeding as a class or collective action or to award relief to a group of employees in one proceeding. Thus, the Company has the right to defeat any attempt by me to file or join other employees in a class, collective, representative, or joint action lawsuit or arbitration (collectively 'class claims'). I and the Company both agree that any challenge to the prohibition against consolidating the claims of others into a single proceeding, whether as a class, a representative action or otherwise, is a gateway issue and shall be determined by the Superior Court; and any substantive claims shall not be decided by the arbitrator until after the gateway determination is made by the Court. I further understand that I will not be disciplined, discharged, or otherwise retaliated against for exercising my rights under Section 7 of the National Labor Relations Act, including but not limited to challenging the limitation on a class, collective, representative, or joint action. I understand and agree that nothing in this agreement shall be construed so as to preclude me from filing any administrative charge with, or from participating in any investigation of a charge conducted by, any government agency such as the Department of Fair Employment and Housing and/or the Equal Employment Opportunity Commission; however, after I exhaust such administrative process/investigation, I understand and agree that I must pursue any such claims through this binding arbitration procedure. I acknowledge that the Company's business and the nature of my employment in that business affect interstate commerce. I agree that the arbitration and this Agreement shall be controlled by the Federal Arbitration Act, in conformity with the procedures of the California Arbitration Act (Cal. Code Civ. Proc. sec 1280 et seq., including section 1283.05^[1] and all of the Act's other mandatory and permissive rights to discovery). However, in addition to requirements imposed by law, any arbitrator herein shall be a retired California Superior Court Judge and shall be subject to disqualification on the same grounds as would apply to a judge of such court. To the extent applicable in civil actions in California courts, the following shall apply and observed: all rules of pleading (including the right of demurrer), all rules of evidence, all rights to resolution of the dispute by means of motions for summary judgment, judgment on the pleadings, and judgment under Code of Civil Procedure section 631.8. Resolution of the dispute shall be based solely upon the law governing the claims and defenses pleaded, and the arbitrator may not invoke any basis (including, but not limited to, notions of 'just cause') other than such controlling law. The arbitrator shall have the immunity of a judicial officer from civil liability when acting in the capacity of an arbitrator, which immunity supplements any other existing immunity. Likewise, all communications during or in connection with the arbitration proceedings are privileged in accordance with Cal. Civil Code section 47(b). As reasonably required to allow full use and benefit of this Agreement's modifications to the Act's^[2] procedures, the arbitrator shall extend the times set by the Act for the giving of notices and settings of hearings. Awards shall include the arbitrator's written reasoned opinion. If Section 1284.2 of the Code of Civil Procedure conflicts with other substantive statutory provisions or controlling case law, the allocation of costs and arbitrator fees shall be governed by said statutory provisions or controlling case law instead of Section 1284.2. Both the Company and I agree that any arbitration proceeding must move forward under the Federal Arbitration Act (9 U.S.C. §§ 3-4) even though the claims may also involve or relate to parties who are not parties to the arbitration agreement and/or claims that are not subject to arbitration: thus, the court may not refuse to enforce this arbitration agreement and may not stay the arbitration proceeding despite the provisions of California Code of Civil Procedure 1281.2(c)."

Below this paragraph are the following two acknowledgements:

"I UNDERSTAND BY AGREEING TO THIS BINDING ARBITRATION PROVISION, BOTH I AND THE COMPANY GIVE UP OUR RIGHTS TO TRIAL BY JURY."

"Should any term or provision, or portion thereof, be declared void or unenforceable it shall be severed and the remainder of this agreement shall be enforced. I hereby acknowledge that I have read the above statements and understand the same."

A copy of the original one-page agreement is attached as Exhibit A to Greene Motors's petition to arbitrate, and Nathaniel's signature appears at the bottom of the page.

The human resources administrator for Greene Motors attested that Nathaniel "was given all the time he needed to review these documents," and he "was not rushed in signing these arbitration agreements, was provided an opportunity to ask questions about the agreement, and was free to seek outside counsel in connection with signing the arbitration agreement." Nathaniel did not ask questions about the agreements or seek additional advice about signing them.

At some point Nathaniel raised complaints about overtime wages meal-period premium wages, liquidated damages, and waiting-time penalties. All we know about those...