Ramos v. Superior Court of San Francisco Cnty.

28 Cal.App.5th 1042

239 Cal.Rptr.3d 679

Constance RAMOS, Petitioner,

v.The SUPERIOR COURT OF SAN FRANCISCO COUNTY, Respondent;

Winston & Strawn, LLP, Real Party in Interest.

A153390

Court of Appeal, First District, Division 1, California.

Filed November 2, 2018

As Modified November 28, 2018

Duckworth Peters, Lebowitz Olivier; Law Office of Noah D. Lebowitz, Noah D. Lebowitz for Petitioner.

No appearance for Respondent.

Orrick, Herrington & Sutcliffe, Lynne C. Hermle, Jessica R. Perry and Alexandra Pavlidakis, Menlo Park, for Real Party in Interest.

Margulies, J.Constance Ramos, an experienced litigator and patent practitioner with a doctorate in biophysics, was hired as an "Income Partner" at the law firm Winston & Strawn, LLP (Winston). After allegedly being denied recognition for her work, excluded from opportunities for career advancement, evaluated based on the success of her male colleagues, and denied compensation and bonuses to which she was entitled, Ramos sued Winston, asserting various causes of action under state law for discrimination, retaliation, wrongful termination, and anti-fair-pay practices.

Winston moved to compel arbitration pursuant to the partnership agreement Ramos signed shortly after joining the firm. In opposing the motion, Ramos argued she was an "employee" of Winston, not a partner, and therefore Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83, 99 Cal.Rptr.2d 745, 6 P.3d 669 ( Armendariz ) applied to the arbitration agreement. Ramos further argued the arbitration provision in the partnership agreement failed to meet the minimum requirements set forth in Armendariz for arbitration of unwaivable statutory claims. The trial court disagreed, finding Ramos was "in a partnership relationship" for purposes of the motion to compel. The trial court severed provisions of the arbitration agreement related to venue and cost-sharing, and granted Winston's motion. Ramos sought a writ of mandate, and we granted review.

We conclude the trial court erred in compelling Ramos to submit her claims to arbitration. Under the framework set forth by our Supreme Court in Armendariz , we find the parties' arbitration agreement is unconscionable. Further, because we cannot remove the taint of illegality by severing the unlawful provisions without altering the nature of the parties' agreement, we must void the entire agreement to arbitrate. Accordingly, we grant the petition for writ of mandate to allow Ramos to proceed with her claims in superior court.

I. FACTUAL AND PROCEDURAL BACKGROUND

Ramos filed her complaint asserting various causes of action against Winston for sex discrimination, retaliation, violation of California's Equal Pay Act ( Lab. Code, § 1197.5 ), and wrongful termination in violation of public policy. The following facts are taken from the allegations of the complaint and declarations filed in support of and opposition to Winston's motion to compel arbitration.

Ramos was hired in May 2014 as an income partner¹ in Winston's intellectual property practice group. In addition to her law degree, Ramos holds a bachelor's degree in physics and computer science and a doctorate in biophysics. She is a registered patent practitioner and has been admitted as a solicitor in the United Kingdom. Ramos was the only partner in Winston's Northern California offices with these advanced degrees. When she started at Winston, Ramos had an established career in intellectual property law, having previously worked as a partner at two other law firms, Hogan Lovells US LLP (Hogan Lovells) and Howrey LLP.

Shortly after she began work, Ramos was provided with and signed a copy of the firm's partnership agreement (Partnership Agreement), which contained an arbitration clause. Section 13.11 of the Partnership Agreement, on "Arbitration," provides: "Any dispute or controversy of a Partner or Partners arising under or related to this Agreement ... or the Partnership, shall be resolved first by mandatory, but non-binding, mediation.... If such dispute is not resolved within 60 days after referral to the selected mediator, either party may submit the dispute to binding arbitration before a panel of three arbitrators for resolution under the Commercial Arbitration Rules of the American Arbitration Association, as then in effect...." The arbitration clause further states that, for partners residing in the United States, the venue for any mediation or arbitration shall be Chicago, Illinois. It outlines procedures for the selection of a three-person arbitration panel, comprised of individuals who are partners in law firms headquartered in the United States having not less than 500 lawyers. The arbitration clause also provides, "Each party shall bear its own legal fees," and "Except to the extent necessary to enter judgment on any arbitral award, all aspects of the arbitration shall be maintained by the parties and the arbitrators in strict confidence." The final sentence of section 13.11 states: "The panel of arbitrators shall have no authority to add to, detract from or otherwise modify this Agreement nor will the panel of arbitrators have authority to substitute its judgment for, or otherwise override the determinations of, the Partnership, or the Executive Committee or officers authorized to act in its behalf, with respect to any determination made or action committed to by such parties, unless such action or determination violates a provision of this Agreement."

Ramos arrived at Winston with two other attorneys, Korula "Sunny" Cherian and Scott Wales, both men with whom she had worked at the Hogan Lovells firm. After she began work, Ramos sought to take advantage of Winston's "Lateral Partner Integration Program," which was supposed to help her develop her practice and assist in business development efforts. Her efforts to pursue integration activities and matters with firm management, however, were rebuffed. Firm leaders showed little interest in her business development or her efforts to contribute to the firm's intellectual property work.

In January 2016, after Cherian and Wales had both left Winston, the office managing partner told Ramos that Winston wanted her to leave. Ramos was directed to immediately stop working on any billing matter and was told the firm would give her six months to search for other employment. Though she had experienced almost a complete victory on the active litigation matter she brought over to Winston with Cherian, and was the highest billing income partner in the San Francisco office in 2016, she received no bonus for 2016. A short time later the firm managing partner told her if she did not file a withdrawal letter by March 5, the compensation committee would substantially reduce her salary. When she did not do so, the compensation committee cut her salary by 33 percent.

Over the course of the rest of the year, Ramos continued her efforts to generate business and work on client origination and proliferation. Despite her efforts and qualifications, she was left out of pitch meetings and left off cases in favor of less-qualified, less-experienced male attorneys. She also complained repeatedly to firm management that she felt she was being treated differently based on her gender and that her career at Winston was being tied to whether or not certain male partners remained with the firm.

As a result of being told to stop billing in early 2016, being forced to withdraw from the litigation matter, and being denied opportunities to develop new business, Ramos had low billings in the following year. In early 2017, the compensation committee cut her salary again. By that point, Ramos had experienced a 56 percent reduction in pay from her original compensation with the firm.

In July 2017, Ramos submitted a letter of resignation under protest to the firm, summarizing her experiences to "explain why no reasonable attorney would be able to stay at Winston under these hostile circumstances." The same month, she filed a complaint of discrimination with the California Department of Fair Employment and Housing (DFEH) and received a right-to-sue letter. Her lawsuit followed.

Winston moved to compel arbitration of Ramos's claims pursuant to the Partnership Agreement she signed upon joining Winston. In its motion to compel, Winston argued Ramos had voluntarily agreed to arbitration, her claims came within the scope of the arbitration clause, and because she was a "partner," not an "employee," the requirements for arbitration clauses in mandatory employment agreements outlined in Armendariz did not apply. Winston also argued that Armendariz was no longer good law, but even if it was, the Partnership Agreement complied with the Armendariz requirements. To the extent any provision was unconscionable, Winston argued it should be severed and the remainder of the arbitration agreement should be enforced.

Ramos opposed the motion to compel, asserting her claims were outside the scope of the arbitration agreement because the language of the arbitration clause was limited to disputes about the Partnership Agreement. Ramos further argued that even assuming her claims came within the scope of the agreement, the motion to compel should be denied because she was an "employee" for purposes of antidiscrimination protections afforded by the California Fair Employment and Housing Act (FEHA; Gov. Code, § 12900 et seq. ) and the Labor Code, Winston's arbitration agreement failed to comply with Armendariz , and the arbitration agreement was procedurally and substantively unconscionable.

The trial court granted the motion to compel arbitration. In its order, the court stated: "It is undisputed that the parties agreed to the arbitration agreement. All of the claims alleged by plaintiff Ramos fall within the broad scope of the arbitration clause. For the purpose of this motion, the Court finds that Winston & Strawn LLP and Ms. Ramos had a partnership relationship. However, the Court finds that the provisions related to...