Salgado v. Carrows Restaurants Inc. ( 2019 )

Filed 2/26/19; Modified and Certified for Pub. 3/25/19 (order attached)
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION SIX
MAUREEN SALGADO, 2d Civil No. B285756
(Super. Ct. No. 56-2016-
Plaintiff and Respondent, 00489342-CU-WT-VTA)
(Ventura County)
v.
CARROWS RESTAURANTS,
INC., et al.,
Defendants and Appellants.
Carrows Restaurants Group, Inc. and Catalina Restaurant
Group, Inc. (collectively Carrows) appeal an order denying their
motion to compel arbitration. We conclude the language of the
arbitration agreement is sufficient to apply to the current action.
But we remand to determine a factual issue where time is not
relative, but relevant. Did Carrows know that at the time
plaintiff employee signed an arbitration agreement, plaintiff was
represented by counsel? We reverse and remand.
FACTS
Salgado began working at Carrows Restaurant in 1984. On
November 22, 2016, she filed a lawsuit in the Ventura County
Superior Court alleging employment discrimination and violation
of civil rights against Food Management Partners dba Carrows
Restaurant.
On April 18, 2017, Salgado amended her complaint to add
Carrows Restaurants, Inc. and Catalina Restaurant Group, Inc.
as defendants.
On September 5, 2017, Carrows filed a motion to compel
arbitration. In that motion Carrows said Salgado “entered into a
binding and enforceable agreement to arbitrate all claims arising
out of her employment with Defendants, and all causes of action
alleged in her Complaint arise out of such employment.” The
arbitration agreement attached to the motion indicated that
Salgado signed the agreement on December 7, 2016.
The arbitration agreement contained two relevant
provisions. The first provision provided, “The Company and I
agree and acknowledge that we will utilize binding arbitration as
the sole and exclusive means to resolve all disputes which may
arise out of or be related in any way to my application for
employment and/or employment, including but not limited to the
termination of my employment and my compensation.”
The second provision provided, in relevant part, “Both the
Company and I agree that any claim, dispute, and/or controversy
that I may have against the Company . . . or the Company may
have against me, shall be submitted to and determined
exclusively by binding arbitration . . . .”
Salgado filed an opposition to the motion claiming her
lawsuit was filed before she signed the arbitration agreement.
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She contended the agreement “is not retroactive” and was
procedurally and substantively unconscionable. (Capitalization
omitted.)
Carrows responded that they were not added as defendants
in the lawsuit until months after the signing of the arbitration
agreement. Carrows claimed that they did not know of the
existence of Salgado’s lawsuit when the arbitration agreement
was signed and that Salgado voluntarily signed it.
The trial court denied the motion. It did not rule on the
unconscionability issue. The court said, “Defendants have failed
to demonstrate that the arbitration agreement applies to a suit
that was filed prior to its signature.”
DISCUSSION
The Arbitration Agreement Language
Carrows contends the trial court erred because the
language of the arbitration agreement is sufficient to apply to the
current lawsuit. We agree.
An arbitration clause is a contractual agreement. Courts
“interpret a contract to give effect to the parties’ intentions at the
time of contracting.” (Hernandez v. Badger Construction
Equipment Co. (1994) 28 Cal.App.4th 1791, 1814.) “When
language in a contract is clear and explicit, that language
governs interpretation.” (Esparza v. Sand & Sea, Inc. (2016) 2
Cal.App.5th 781, 789.)
Arbitration is a favored procedure. An “ ‘ “arbitration
should be upheld unless it can be said with assurance that an
arbitration clause is not susceptible to an interpretation covering
the asserted dispute.” ’ ” (Cruise v. Kroger Co. (2015) 233
Cal.App.4th 390, 397.) Doubts about the applicability of the
arbitration clause to the dispute should be resolved “in favor of
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sending the parties to arbitration.” (Cione v. Foresters Equity
Services, Inc. (1997) 58 Cal.App.4th 625, 642.)
The First Provision
The first provision of the arbitration agreement provides, in
relevant part, “The Company and I agree and acknowledge that
we will utilize binding arbitration as the sole and exclusive
means to resolve all disputes which [1] may arise out of or [2] be
related in any way to my application for employment and/or
employment . . . .” (Italics and boldface added.)
The trial court ruled, “The language of the agreement
suggest[s] that it applies to future disputes not ones that have
already resulted in a formal lawsuit.”
Salgado contends the trial court was correct because the
arbitration agreement applies to all “disputes which may arise.”
She claims this only applies to future claims.
Carrows notes that the “may arise” language is followed by
the second phrase, “or be related in any way to my application for
employment and/or employment.” (Italics and boldface added.)
Carrows contends the “use of the word ‘or’ means the preceding
terms ‘may arise’ are not exclusive or controlling. So long as
[Salgado’s] employment dispute is the type of claim that is
‘related in any way to [her] employment,’ it falls within the terms
of the Agreement.”
Carrows’s interpretation is reasonable. Salgado focuses
only on one phrase in the arbitration agreement. But the word
“or” shows that there is an alternative. (Fiorentino v. City of
Fresno (2007) 150 Cal.App.4th 596, 603 [“the plain and ordinary
meaning of the word ‘or’ is ‘to mark an alternative such as “either
this or that” ’ ”].) Each phrase must be considered. “ ‘Courts
must interpret contractual language in a manner which gives
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force and effect to every provision, and not in a way which
renders some clauses nugatory, inoperative or meaningless.’ ”
(Hemphill v. Wright Family, LLC (2015) 234 Cal.App.4th 911,
915.) The second phrase following “or” broadly applies to “all
disputes” related “in any way” to employment. This language is
“clear and explicit.” (Esparza v. Sand & Sea, Inc., supra, 2
Cal.App.5th at p. 789.) Salgado’s current action is a dispute that
falls within the meaning of this provision.
The Second Provision
Carrows claims the trial court also failed to consider the
second provision of the arbitration agreement. It provides: “Both
the Company and I agree that any claim, dispute, and/or
controversy that I may have against the Company . . . or the
Company may have against me, shall be submitted to and
determined exclusively by binding arbitration . . . .” (Italics and
boldface added.)
This provision is broad in scope. (AT&T Technologies, Inc.
v. Communications Workers of America (1986) 475 U.S. 643, 650
[89 L.Ed.2d 648, 657] [the presumption favoring arbitration “is
particularly applicable” where the arbitration clause is broad].)
Here the language is “clear and explicit.” (Esparza v. Sand &
Sea, Inc., supra, 2 Cal.App.5th at p. 789.) There is no language
containing a limitation or restriction based on the age of the
claim. (Desert Outdoor Advertising v. Superior Court (2011) 196
Cal.App.4th 866, 877.) There is no qualifying language. This
provision unequivocally requires arbitration for “any claim”
Salgado has against Carrows. Her current lawsuit is such a
claim. Salgado’s brief does not discuss this provision. She has
not shown why this language is not sufficient to apply to the
current action.
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Retroactive Application
Salgado contends arbitration is not applicable because the
dispute involved in her lawsuit occurred before the arbitration
agreement was signed.
But the “contention that an agreement to arbitrate a
dispute must pre-date the actions giving rise to the dispute is
misplaced. Such a suggestion runs contrary to contract principles
which govern arbitration agreements.” (Zink v. Merrill Lynch,
Pierce, Fenner & Smith, Inc. (10th Cir. 1993) 13 F.3d 330, 332.)
“[A]n arbitration agreement may be applied retroactively to
transactions which occurred prior to execution of the arbitration
agreement.” (Merrill Lynch, Pierce, Fenner & Smith, Inc. v. King
(M.D.Fla. 1992) 804 F.Supp.1512, 1514; Shotto v. Laub (D.Md.
1986) 632 F.Supp. 516, 522 [“whether plaintiffs signed the
agreements before or after opening their accounts, or even before
or after the claim arose, does not change the fact that they signed
written agreements to arbitrate claims arising out of their
account”]; see also Desert Outdoor Advertising v. Superior Court,
supra, 196 Cal.App.4th at p. 877 [the broad language of the
arbitration agreement applied to a dispute occurring before the
signing of the arbitration agreement]; In re Currency Conversion
Fee Antitrust Litigation (S.D.N.Y. 2003) 265 F.Supp.2d 385, 407
[the broad language – “ ‘any dispute, claim, or controversy . . .
arising out of or relating to this Agreement, your Account . . .’ ” –
required arbitration for claims plaintiff had prior to agreeing to
arbitration].)
Carrows claims it is entitled as a matter of law to an order
requiring the case to be arbitrated. But Salgado correctly notes
there are factual issues the trial court must initially decide before
determining whether the case should be sent to arbitration.
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Unconscionability or Voidability
Courts may refuse to enforce unconscionable contracts and
this doctrine applies to arbitration agreements. (Carbajal v.
CWPSC, Inc. (2016) 245 Cal.App.4th 227, 242.)
“ ‘Unconscionability has procedural and substantive aspects.
[Citation.] “Both procedural and substantive unconscionability
must be present before a court can refuse to enforce an
arbitration provision based on unconscionability . . . .” ’ ” (Ibid.)
Substantive unconscionability relates to the fairness of the
agreement’s terms. Procedural unconscionability involves the
“circumstances of contract negotiation and formation.” (Id. at
p. 243.) The trial court must “ ‘examine the totality of the
agreement’s substantive terms as well as the circumstances of its
formation to determine whether the overall bargain was
unreasonably one-sided.’ ” (Id. at p. 242.)
In addition, “the petition to compel arbitration is not to be
granted when there are grounds for rescinding the agreement.”
(Engalla v. Permanente Medical Group, Inc. (1997) 15 Cal.4th
951, 973.)
Carrows requests that we find that there are no grounds to
preclude an arbitration based on unconscionability or any
conduct on its part. But the trial court never made factual
findings on these issues. Carrows notes that Salgado did not
present evidence showing unconscionability by submitting a
declaration. Only Salgado’s counsel filed a declaration.
In that declaration Salgado’s counsel said that “defendants
confronted [Salgado]” at work and “forced her to sign” the
arbitration agreement. But her counsel concedes that he was not
present when Salgado signed the arbitration agreement. He
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consequently could not state facts on his personal knowledge
about this event.
But Salgado’s counsel also stated other facts. He said he
was representing Salgado in this lawsuit. It had been filed and
served on Carrows’s “restaurant manager” before the arbitration
agreement was signed. He did not have a chance to consult with
Salgado before she signed it, and he did not know she had signed
it until “late Spring 2017.” Whether these or other facts support
a claim that the arbitration agreement is unenforceable should be
decided by the trial court.
DISPOSITION
The order is reversed. The matter is remanded to the trial
court to determine whether Carrows knew or should have known
Salgado was represented by counsel when she signed the
arbitration agreement. If so, it shall then determine whether the
arbitration agreement is enforceable. The parties shall bear their
own costs on appeal.
GILBERT, P. J.
We concur:
YEGAN, J.
TANGEMAN, J.
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Kevin G. DeNoce, Judge
Superior Court County of Ventura
______________________________
Spencer C. Skeen, Sarah A. Williams and Nikolas T.
Djordjevski for Defendants and Appellants.
Law Office of Ruben M. Ruiz, Ruben M. Ruiz for Plaintiff
and Respondent.
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Filed 3/25/19
CERTIFIED FOR PUBLICATION
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION SIX
MAUREEN SALGADO, 2d Civil No. B285756
(Super. Ct. No. 56-2016-
Plaintiff and Respondent, 00489342-CU-WT-VTA)
(Ventura County)
v.
ORDER MODIFYING
CARROWS RESTAURANTS, OPINION AND
INC., et al., CERTIFYING OPINION FOR
PUBLICATION
Defendants and Appellants. [NO CHANGE IN
JUDGMENT]
THE COURT:
It is ordered that the opinion filed herein on February 26, 2019,
be modified as follows:
1. On page 1, the following paragraphs are to be inserted at the
beginning of the opinion:
An employer and its employee sign an agreement to
submit all disputes to arbitration. Does the agreement
apply to disputes that have occurred prior to the execution
of the agreement?
The employee’s counsel does not know his client signed
the arbitration agreement. Does the employer know or
should it have known the employee was represented by
counsel when the arbitration agreement was signed?
The answer to these questions concerns time. Here
time is relevant, but not relative.
2. On page 1, the opening paragraph (which will become the
fourth paragraph in the opinion) is changed to read:
Carrows Restaurants Group, Inc. and Catalina
Restaurant Group, Inc. (collectively Carrows) appeal an
order denying their motion to compel arbitration. We
conclude the language of the arbitration agreement is
sufficient to apply to the current action. But we remand
to determine whether Carrows knew that at the time
plaintiff employee signed the arbitration agreement,
plaintiff was represented by counsel. We reverse and
remand.
3. On page 2, in line 2 in the third paragraph, the words “In that
motion” are deleted.
4. On page 2, the last two lines are changed to read:
Salgado’s opposition to the motion said her lawsuit was
filed before she signed the arbitration agreement.
5. On page 3, the first line is changed to read:
She contended the agreement was “not retroactive” and
was ….
6. On page 3, the first paragraph under DISCUSSION, is deleted
and the following paragraph is inserted in its place:
Carrows contends the language of the arbitration
agreement applies to the current lawsuit. We agree.
7. On page 4, in the first paragraph under the heading The First
Provision, the boldface (on the words “may arise” and “or”) is
removed (but the italicization is to remain); therefore, the
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parenthetical at the end of the paragraph is changed to read:
(Italics added.)
8. On page 4, in line 2 in the fourth paragraph under the heading
The First Provision, the boldface (on the word “or”) is removed
(but the italicization is to remain); therefore, the parenthetical on
line 3 in the same paragraph is changed to read: (Italics added.)
9. On page 5, in line 3 of the first paragraph under the heading
The Second Provision, the boldface (on the words “any claim”) is
removed (but the italicization is to remain); therefore, the
parenthetical at the end of the paragraph is changed to read:
(Italics added.)
10. On page 5, the last three sentences are changed to read:
Salgado’s current lawsuit is such a claim. Her brief does
not discuss this provision. Nor has she shown why this
language does not apply to the current action.
11. On page 7, the first line of the third paragraph is changed to
read:
Carrows contends there are no grounds to ….
12. On page 8, the first word on line 1, “consequently” is deleted.
13. On page 8, in the last sentence in the first full paragraph, the
words “should be decided” are changed to “shall be decided.”
14. On page 8, line 4, in the paragraph under the heading
DISPOSITION, in the sentence beginning “If so,” the word “it” is
changed to “the court,” so the sentence begins:
If so, the court shall then determine whether the ….
The opinion in the above-entitled matter filed on February
26, 2019, was not certified for publication in the Official Reports.
For good cause, it now appears that the opinion should be
published in the Official Reports and it is so ordered.
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