Tam v. KMS Automotive CA2/5

Filed 4/4/23 Tam v. KMS Automotive CA2/5
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions
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IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION FIVE
MAN NA TAM, B311407
Plaintiff and Respondent, (Los Angeles County
Super. Ct.
v. No. 19STCV45372)
KMS AUTOMOTIVE, INC., et al.,
Defendants and Appellants.
APPEALS from an order of the Superior Court of
Los Angeles County, Susan Bryant-Deason, Judge. Reversed
with directions.
Fisher & Phillips, Nicole Golob and Megan E. Walker for
Defendants and Appellants KMS Automotive, Inc., dba Browning
Mazda of Alhambra, and Dick Browning Automotive Group.
Foley & Mansfield, Margaret I. Johnson and Elizabeth J.
Carpenter for Defendant and Appellant Adrian Hernandez.
McCarty Legal, John McCarty; Law Office of Kenneth E.
Gertz and Kenneth E. Gertz for Plaintiff and Respondent.
Plaintiff sued her former employer (a car dealership and a
closely related company) and a manager who worked for the same
employer. The employer moved to compel arbitration based on
an arbitration agreement plaintiff signed when she began
working. After a delayed service of the summons and complaint,
the manager filed a notice of joinder, joining in the employer’s
motion to compel arbitration. The trial court denied the motion
to compel arbitration, based on Code of Civil Procedure, section
1281.2, subdivision (c) (hereafter section 1281.2(c)). The
employer and the manager separately appealed.
Applying a de novo standard of review to undisputed facts,
we reverse. Although the manager is not a signatory to the
arbitration agreement, he may enforce its terms as an agent of
the dealership and under the doctrine of equitable estoppel, and
he is not a third party under section 1281.2(c). Plaintiff’s claims
against the dealership and manager all fall within the scope of
the arbitration agreement, and no contractual defenses to the
agreement are applicable. We reverse the court’s denial of the
motion to compel and direct the court to order the parties to
arbitration.
FACTUAL AND PROCEDURAL BACKGROUND
The parties to this case are plaintiff and respondent Ma Na
Tam, and defendants and appellants KMS Automotive Inc., dba
Browning Mazda of Alhambra, Dick Browning, Inc., and Adrian
Hernandez. We will refer to the two corporate defendants
collectively as the dealership.1 Adrian Hernandez is a dealership
1 This approach is consistent with the parties’ briefing.
2
employee, and during the relevant time frame held the position of
desk manager for sales or finance manager. Tam began working
at the dealership in April 2017, after signing a number of
employment-related documents and forms, including a form
entitled “EMPLOYEE ACKNOWLEDGEMENT AND
AGREEMENT–AGREEMENT TO ARBITRATE” (the arbitration
agreement).
A. Tam’s lawsuit against the dealership and Hernandez
In April 2020, approximately three years after commencing
employment, Tam filed a first amended complaint (complaint)
against the dealership and Hernandez.2 The complaint
allegations depicted the dealership as a racially and sexually
charged environment in which Tam and other Asian employees
and customers were subject to harassing, discriminatory, and
retaliatory acts. Tam alleged Hernandez drugged and raped her
on multiple occasions, and the dealership did not take
appropriate action in response to her complaints. Tam’s
complaint alleged 12 causes of action: seven causes of action
were asserted against the dealership alone,3 and five causes of
2 The initial complaint was filed in December 2019.
3 The causes of action against both defendants alleged
harassment and failure to protect in violation of the California
Fair Employment and Housing Act (FEHA; Gov. Code, § 12900 et
seq.), sexual assault/battery, intentional infliction of emotional
distress, wrongful harassment in violation of public policy, and
violations of the Unfair Business Practices Act (Bus. & Prof.
Code, § 17200 et seq.).
3
action were alleged against both the dealership and Hernandez.4
There are no separate causes of action asserted solely against
Hernandez.
B. The dealership’s motion to compel arbitration
In August 2020, the dealership filed a motion to compel
arbitration, with the arbitration agreement attached to a
declaration by the dealership’s human resources director. Tam
opposed the motion, arguing the arbitration agreement was
unconscionable and that there was no meeting of the minds, both
because she was given very little time to sign a large volume of
employment-related materials, and because she has a limited
command of English. Tam also argued that her drugging and
rape-related claims were outside the scope of the arbitration
agreement. Finally, Tam argued she should not be required to
arbitrate her claims for violation of the Unfair Business Practices
Act and for equitable relief, and that severing these and the
drugging and rape-related claims would raise the possibility of
conflicting determinations by the arbitrator and the court. The
dealership’s reply brief pointed out that because the complaint
alleged that all defendants acted as agents of the other
defendants, an agent/nonsignatory was entitled to compel
arbitration. The dealership also argued that Tam’s claims based
4 The causes of action against the dealership only were:
discrimination/FEHA, retaliation/FEHA, wrongful
discharge/FEHA, failure to engage in the interactive
process/FEHA, failure to provide a reasonable
accommodation/FEHA, violation of the California Family Rights
Act (Gov. Code, § 12945.2) and whistleblower protection.
4
on sexual assault and battery fell under the arbitration
agreement’s broad language.
C. Hernandez’s joinder
On October 8, 2020, Tam’s counsel informed the court that
the complaint had been initially served on the wrong individual
and that defendant Hernandez had been personally served on
October 6, 2020. The court continued the hearing to December 3,
2020 and ordered the parties to serve the correct defendant
Hernandez with motion papers for the motion to compel
arbitration.
On December 1, 2020, Hernandez filed a joinder to the
dealership’s notice of motion and motion to compel arbitration
and dismiss or stay action. The joinder incorporated “by
reference and as fully set forth herein, all papers, exhibits, and
other materials related to” the dealership’s motion, incorporating
by reference all of the dealership’s arguments “as if
independently filed by Hernandez.” Hernandez adopted and fully
incorporated by reference the notice of motion, motion,
memorandum of points and authorities, and applicable
declarations and exhibits submitted by the dealership. He
argued he was a third-party beneficiary to the arbitration
agreement between Tam and the dealership. Finally, Hernandez
argued that Tam would not be prejudiced by his joinder because
she had notice of the dealership’s motion.
At the December 3, 2020 hearing, the court noted that no
party had filed a proof of service showing that Hernandez had
been served with the motion to compel arbitration. It continued
the hearing to January 8, 2021 and ordered the dealership to
5
serve Hernandez with the moving papers for the dealership’s
motion to compel arbitration and file a proof of service with the
court.
In an opposition filed on December 28, 2020, Tam argued
that by filing a joinder instead of a motion to compel arbitration
with supporting legal argument and evidence, Hernandez had
failed to meet his legal burden to establish that the claims
against him were within the scope of the arbitration agreement
or that he, as a nonsignatory, was entitled to enforce the
arbitration agreement. Tam also argued that Hernandez had
violated rule 3.1113(b) of the California Rules of Court by failing
to include a motion with a statement of facts, a concise statement
of the law, evidence and arguments relied on, and a discussion of
the statutes, cases, and authorities relied upon. In addition, Tam
objected to the dealership raising for the first time in its reply
brief the argument that each defendant was the agent or alter
ego of the other, and so any defendant that was not a signatory of
the arbitration agreement could still compel the matter to
arbitration. Lastly, addressing two additional exceptions to the
general rule prohibiting nonsignatories from compelling a signing
party into arbitration, Tam argued that neither the equitable
estoppel or third-party beneficiary exceptions applied.
Three days later, on December 31, 2020, Hernandez filed a
reply brief arguing that his joinder sufficiently incorporated the
dealership’s moving papers, no separate memorandum was
required, and that he was entitled to enforce the arbitration
agreement as an employee, as a third party beneficiary, and
under the doctrine of equitable estoppel.
6
D. The trial court’s ruling
On January 8, 2021, the court announced a tentative ruling
on the motion to compel, heard argument from counsel, and took
the matter under submission. On January 19, 2021, the court
denied the dealership’s motion to compel arbitration and
overruled evidentiary objections to Tam’s declaration in support
of her opposition. The court’s minute order explained, section
1281.2(c) “gives courts discretion to deny a petition to compel
arbitration when [a] party to the arbitration agreement is also a
party to a pending court action . . . with a third party arising out
of the same transaction or series of related transactions and
there is a possibility of conflicting rulings on a common issue of
law or fact.” Relying on Civil Code section 3513, which prohibits
private parties from waiving the advantage of a law established
for a public reason, the trial court found invalid the language in
the arbitration agreement that would have otherwise prohibited
the trial court from refusing to stay or deny arbitration under
section 1281.2(c).5 The court then explained that it was
exercising its discretion under section 1281.2(c) to deny the
motion to compel arbitration, because all three factors of the
exception to arbitration had been met. First, as a nonsignatory to
5 The arbitration agreement provided that “any arbitration
proceeding must move forward under the [Federal Arbitration
Act]’s procedural provisions even if 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; in other words, a
court may not refuse to enforce this arbitration agreement and
may not stay the arbitration proceeding, despite the provisions
of . . . section 1281.2(c).”
7
the arbitration agreement, Hernandez was a third party.
Hernandez’s joinder did not include citations to law or evidence
in support of his right to enforce the arbitration agreement, and
arguments raised in his reply brief would not be considered.
Second, Tam’s claims against Hernandez and the dealership
arose from the same set of transactions, namely Hernandez’s acts
of sexual assault and harassment. Third, compelling arbitration
of Tam’s claims against the dealership would raise the possibility
of conflicting rulings; for example, a jury might find Hernandez
sexually assaulted Tam, while an arbitrator might find the
dealership not liable based on insufficient evidence of sexual
assault or harassment. Finally, the doctrine of equitable estoppel
did not preclude application of section 1281.2(c) because Tam’s
claims against Hernandez were not intimately founded in and
intertwined with the obligations imposed by the arbitration
agreement between Tam and the dealership.
The dealership and Hernandez filed separate notices of
appeal from the court’s denial of the motion to compel.
DISCUSSION
A. Standard of review
The parties here dispute the applicable standard of review,
disagreeing about whether the trial court’s decision denying the
motion to compel arbitration involved any factual findings that
may be implied because no party requested a statement of
decision.
When “ ‘the language of an arbitration provision is not in
dispute, the trial court’s decision as to arbitrability is subject to
8
de novo review.’ ” (JSM Tuscany, LLC v. Superior Court (2011)
193 Cal.App.4th 1222, 1235.) Because the court’s decision was
based solely on the arbitration agreement and the complaint, the
doctrine of implied factual findings does not come into play.
(Molecular Analytical Systems v. Ciphergen Biosystems, Inc.
(2010) 186 Cal.App.4th 696, 708–709 (Molecular Analytical).)
The question of whether a defendant is, in fact, a third party for
the purposes of section 1281.2(c) is a matter of law subject to de
novo review. (Laswell v. AG Seal Beach, LLC (2010) 189
Cal.App.4th 1399, 1406 (Laswell).)
B. Governing law6
“A party to an arbitration agreement may petition the court
to compel other parties to arbitrate a dispute that is covered by
their agreement.” (Jones v. Jacobson (2011) 195 Cal.App.4th 1,
15; Code Civ. Proc., § 1281.2.) In determining whether to grant
or deny a motion to compel arbitration, the court examines the
agreement itself and the complaint filed by the party refusing
arbitration. (Rice v. Downs (2016) 248 Cal.App.4th 175, 185.)
“Although there is a general policy favoring arbitration, a party
cannot be compelled to accept arbitration of a controversy which
6 While we take note of the arbitration agreement’s
arguably ambiguous choice of law language, including a provision
that expressly makes section 1281.2(c) inapplicable, because we
conclude on other grounds that section 1281.2(c) does not apply,
we decline to address the parties’ arguments that section
1281.2(c) is preempted by federal law, or that the parties’ express
waiver of section 1281.2(c) is invalid. (Gloster v. Sonic
Automotive, Inc. (2014) 226 Cal.App.4th 438, 446–447.)
9
they have not agreed to arbitrate.” (Garcia v. Expert Staffing
West (2021) 73 Cal.App.5th 408, 413; see Mendoza v. Trans
Valley Transport (2022) 75 Cal.App.5th 748, 777.) In “California,
‘[g]eneral principles of contract law determine whether the
parties have entered a binding agreement to arbitrate.’
[Citations.] Generally, an arbitration agreement must be
memorialized in writing. [Citation.] A party’s acceptance of an
agreement to arbitrate may be express, as where a party signs
the agreement. A signed agreement is not necessary, however,
and a party’s acceptance may be implied in fact [citation] or be
effectuated by delegated consent [citation]. An arbitration clause
within a contract may be binding on a party even if the party
never actually read the clause.” (Pinnacle Museum Tower Assn.
v. Pinnacle Market Development (US), LLC (2012) 55 Cal.4th 223,
236.)
“Under both California and federal law, arbitration is
strongly favored and any doubts concerning the scope of
arbitrable issues should be resolved in favor of arbitration.
[Citations.] The burden is on the party opposing arbitration to
show the agreement cannot be interpreted to apply to the
dispute. [Citation.] Whether a contract is reasonably susceptible
to a party’s interpretation can be determined from the language
of the contract itself. [Citation.] The policy in favor of arbitration
does not apply when the contract cannot be interpreted in favor
of arbitration. There is no policy in favor of arbitrating a dispute
the parties did not agree to arbitrate.” (Balandran v. Labor
Ready, Inc. (2004) 124 Cal.App.4th 1522, 1527–1528.)
The trial court has discretion, under section 1281.2(c), to
deny a petition to compel arbitration if a party to the arbitration
agreement is also a party to a pending court action “with a third
10
party, arising out of the same transaction or series of related
transactions and there is a possibility of conflicting rulings on a
common issue of law or fact.” This statutory exception “
‘addresses the peculiar situation that arises when a controversy
also affects claims by or against other parties not bound by the
arbitration agreement.’ ” (Cronus Investments, Inc. v. Concierge
Services (2005) 35 Cal.4th 376, 393.) It does not apply, however,
“when all defendants, including a nonsignatory to the arbitration
agreement, have the right to enforce the arbitration provision
against a signatory plaintiff.” (Laswell, supra, 189 Cal.App.4th
at p. 1405; see Molecular Analytical, supra, 186 Cal.App.4th at
p. 709.)
Generally, only a party to an arbitration agreement may
enforce it. (DMS Services, LLC v. Superior Court (2012)
205 Cal.App.4th 1346, 1352; Jarboe v. Hanlees Auto Group (2020)
53 Cal.App.5th 539, 549.) In limited circumstances, a
nonsignatory to an agreement containing an arbitration provision
may compel arbitration of “a dispute arising within the scope of
that agreement.” (DMS Services, at p. 1353.) As relevant here, a
nonsignatory’s ability to compel arbitration can be grounded on
the doctrine of equitable estoppel, or on the nature of the
relationship between a party to the arbitration agreement and
the nonsignatory, including relationships that reflect an “ ‘
“identity of interest,” ’ ” like “ ‘principal and agent or employer
and employee.’ ” (Id. at pp. 1353–1354; Jones v. Jacobson, supra,
195 Cal.App.4th at p. 18, fn. 9.)
“Under the equitable estoppel doctrine, ‘a nonsignatory
defendant may invoke an arbitration clause to compel a signatory
plaintiff to arbitrate its claims when the causes of action against
the nonsignatory are “intimately founded in and intertwined”
11
with the underlying contract obligations.’ ” (Jarboe v. Hanlees
Auto Group, supra, 53 Cal.App.5th at p. 552; see Molecular
Analytical, supra, 186 Cal.App.4th at p. 706 [equitable estoppel].)
In addition, “even when an arbitration clause does not expressly
extend to agents, an agent for a party may be able to enforce an
arbitration clause.” (Fuentes v. TMCSF, Inc. (2018)
26 Cal.App.5th 541, 550.)
C. Section 1281.2(c) does not apply because Hernandez
is not a third party under that section.
Tam’s claims against Hernandez are based on his status as
her supervisor and a manager at the dealership that employed
both Tam and Hernandez. Accordingly, her claims are
indisputably related to her employment at the dealership.
Whether as an agent or under the doctrine of equitable estoppel,
the law permits Hernandez, a nonsignatory to the arbitration
agreement, to compel Tam to arbitrate her claims against him.
Because Hernandez can compel arbitration, he is not a third
party within the meaning of section 1281.2(c). (Laswell, supra,
189 Cal.App.4th at pp. 1405–1406; Molecular Analytical, supra,
186 Cal.App.4th at p. 709.)
The arbitration agreement at issue here is very broadly
worded, requiring arbitration of “any and all claims between
[Tam] and the Dealership (or its parent or subsidiary companies,
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 [Tam] seeking employment with, employment
by, or other association with the Dealership.”
12
Tam’s claims against Hernandez for sexual assault,
harassment, intentional infliction of emotional distress, and
unfair business practices are intimately founded in and
intertwined with the employment relationship she had with the
dealership, so there is no question that they fall within the scope
of the arbitration agreement. Tam’s complaint alleges that she
was a top sales performer at the dealership, that the dealership
negligently hired and retained Hernandez, and that Hernandez
engaged in “illegal harassment, discrimination, retaliation and
other illegal actions against [Tam] and others, including the
hostile work environment, the quid pro quo and the favoritism
shown to those who ‘give in’ sexually and/or those who do not
report the sexual harassment, sexual discrimination, sexual
assaults, and/or sexual batteries against them.” The complaint
further alleges that on multiple occasions from December 2017 to
at least February 2018, Hernandez “intentionally and deceptively
drugged [Tam] and then sexually assaulted, sexually battered,
and raped” Tam, that Hernandez was a supervisor over Tam with
authority over her position and terms and conditions of her
employment, and that the dealership was strictly liable for these
acts. Tam also alleged she only endured the hostile work
environment and Hernandez’s maltreatment of her and other co-
workers because Hernandez made it clear that he could “make or
break her attempts to do her job—to successfully sell cars—which
would adversely affect her job performance, her ability to meet
her minimum sales requirements to keep her job, and her ability
to bring in commissions.”
We are unpersuaded by Tam’s explanations about why
Hernandez cannot enforce the arbitration agreement under an
agency theory or the doctrine of equitable estoppel, and why
13
those principles do not preclude application of section 1281.2(c).
Tam’s arguments present a limited view of the applicable case
law and ignore the broad wording of the arbitration agreement
here. In 24 Hour Fitness, Inc. v. Superior Court (1998)
66 Cal.App.4th 1199, for example, an individual plaintiff brought
an action against her former employer and various employees for
alleged sexual harassment in the workplace. Similar to the
language at issue in the case before us, the arbitration agreement
in 24 Hour Fitness was broadly worded to cover “ ‘every kind or
type of dispute’ arising from [plaintiff’s] employment, including
‘any allegation of wrongful discharge, discrimination, or any
injury to [her] physical, mental or economic interests.’ ” (Id. at
p. 1209.) Aside from one defendant who admitted to making
objectionable statements outside of work, the appellate court
reasoned that because plaintiff’s harassment allegations arose in
the context of her employment, the nonsignatory individual
employee defendants could enforce the arbitration agreement
between plaintiff and the employer. (Id. at pp. 1211–1212; see
Thomas v. Perry (1988) 200 Cal.App.3d 510, 516 [arbitration
agreement between corporate employer and former employee
may be invoked by individual employee defendants who were not
parties to agreement].)
In addition to the principal and agent relationship between
the dealership and Hernandez, section 1281.2(c) is also not
applicable here because the equitable estoppel doctrine prevents
Tam from avoiding arbitration when her claims against
Hernandez, even the tort claims, are inextricably intertwined
with her claims against the dealership, all of which arise from
and relate to the contractual employment relationship governed
by the arbitration agreement. (See Molecular Analytical, supra,
14
186 Cal.App.4th at pp. 714–715 [courts review the nature of
claims asserted against nonsignatory defendant and
relationships of persons, wrongs, and issues when applying
equitable estoppel]; Rice v. Downs, supra, 248 Cal.App.4th at
p. 186 [broadly worded arbitration language may extend to tort
claims arising from contractual relationship between parties].)
D. Tam’s tort-based claims fall within the scope of the
arbitration agreement.
Tam contends that any causes of action related to her
claims of rape, drugging, and sexual assault are outside the scope
of arbitration. Alternatively, to the extent we find her claims
against the dealership arbitrable, she asks us to compel
arbitration for those claims only, and instruct the trial court to
determine if adjudication of the nonarbitrable issues (relating to
her claims of rape, drugging and sexual assault) would make the
arbitration unnecessary and if so, whether the arbitration order
should be delayed.7
Keeping in mind a court may only compel arbitration of
those disputes that the parties have agreed to arbitrate (Garcia v.
Expert Staffing West, supra, 73 Cal.App.5th at p. 413), we
disagree that any of Tam’s claims against the dealership or
Hernandez fall outside the scope of the arbitration agreement.
7 Tam’s brief refers generally to RN Solution, Inc. v.
Catholic Healthcare West (2008) 165 Cal.App.4th 1511 (RN
Solution) as an exemplar for how a trial court might delay
arbitration to permit a court trial of nonarbitrable claims. We
understand Tam’s argument to refer to page 1521 and footnote 16
of the RN Solution opinion.
15
“ ‘In determining the scope of an arbitration clause, “[t]he court
should attempt to give effect to the parties’ intentions, in light of
the usual and ordinary meaning of the contractual language and
the circumstances under which the agreement was made.” ’ ”
(RN Solution, supra, 165 Cal.App.4th at p. 1523.)
The arbitration agreement signed by Tam covered “any and
all claims” between Tam and the dealership or its employees
“arising from, related to, or having any relationship or connection
whatsoever” with Tam’s employment by or with the dealership,
“whether sounding in tort, contract, statute or
equity, . . . . [including] without limitation, any claims of
discrimination, harassment, or retaliation,” including claims
under FEHA.8 Tam named the dealership and Hernandez as
defendants in five causes of action: (1) sexual assault/battery;
8 Tam agreed to arbitrate “all claims, disputes, and
controversies that may arise out of or be related in any way to my
employment, including but not limited to the termination of my
employment and my compensation.” The arbitration agreement
was very broadly worded, stating it was applicable “to any and all
claims between [Tam] and the Dealership (or its parent or
subsidiary companies, 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 [Tam] seeking
employment with, employment by, or other association with the
Dealership, whether sounding in tort, contract, statute or
equity, . . . . [including] without limitation, any claims of
discrimination, harassment, or retaliation (whether based on the
California Fair Employment and Housing Act, Title VII of the
Civil Rights Act of 1964, as amended, or any other applicable
state or federal laws or regulations), as well as disputes relating
to terms or conditions of employment.”
16
(2) intentional infliction of emotional distress; (3) wrongful
harassment, discrimination and retaliation in violation of public
policy; (4) harassment in violation of FEHA; and (5) violation of
the Unfair Business Practices Act. Each of these causes of action
can be fairly described as arising from or related to Tam’s
employment by the dealership. The key factual allegations that
Tam claims fall outside the scope of the arbitration agreement
are allegations that Hernandez drugged and raped her on
multiple occasions “at different areas of their place of
employment.” However, her allegations also specify that when
Hernandez intentionally and deceptively drugged and sexually
assaulted her, he threatened retribution and conditioned her
continued employment on her acquiescing to these acts and not
reporting them. Because the arbitration agreement covers claims
arising from or related to Tam’s employment, regardless of
whether the claim sounds in tort, contract, or statute, we are not
persuaded by Tam’s argument that her allegations of drugging or
sexual assault fall outside the scope of the parties’ arbitration
agreement.
Tam relies on two cases to argue that her claims based on
drugging and sexual assault are not arbitrable, but both cases
are distinguishable. In Victoria v. Superior Court (1985) 40
Cal.3d 734, 737, 745 to 747, the Supreme Court concluded that
the agreement of a patient at a hospital to arbitrate claims
“arising from rendition or failure to render services” did not
clearly extend to claims that a hospital employee sexually
assaulted her, and that the ambiguity should be construed
against the drafter. In doing so, the court noted that the
employee’s alleged conduct “was entirely outside the scope of his
employment. It had nothing to do with providing, or failing to
17
provide, services.” (Id. at p. 745.) To the extent Tam relies on
Victoria to argue that sexual assault is always outside the scope
of an arbitration agreement, the differences between the
language of the arbitration agreement in that case and the one
before us here make the analysis in Victoria distinguishable, as
that case construed “services”—defined in the agreement as
medical and hospital services—to not require arbitration of a
cause of action for negligent employment of an individual accused
of sexually assaulting a patient. (Id. at pp. 742–745.)
In RN Solution, supra, 165 Cal.App.4th at pages 1514,
1522, plaintiffs RN Solution, Inc. (RNS) and Tanya Woo, its chief
executive officer, sued Catholic Healthcare West (CHW) and
Stephen Robertson, its vice president, and the court considered
the arbitrability of personal injury causes of action (e.g., gender-
based violence, assault, false imprisonment, and intentional
infliction of emotional distress). The two corporate parties had a
recruiting contract under which RNS would recruit nurses for
CHW, and the contract required arbitration of “ ‘any dispute
between CHW and [RNS] aris[ing] out of the services contracted
for in this Agreement,’ ” and “ ‘any dispute arising out of or in
connection with this Agreement.’ ” (Id. at pp. 1513–1514.)
Robertson and Woo became involved in an intimate relationship,
and the complaint alleged that Robertson had coerced Woo into
the relationship by threatening her with the loss of the contract
and that he soon began a pattern of violent and abusive behavior
toward her. (Id. at p. 1515.) The court of appeal concluded the
battery-related causes of action were not arbitrable, reasoning,
“[w]hile the language of the arbitration provision might be
broadly construed to cover every type of business dispute that
might arise between the two signators, it cannot seriously be
18
argued that the parties intended it to cover tort claims arising
from an alleged violent physical assault by an employee of one
company against an employee of the other in the context of an
intimate domestic relationship between them. . . . [N]othing in
the language remotely suggests that it was intended to apply to
personal injury tort claims arising outside of the business
relationship between CHW and RNS.” (Id. at p. 1523, italics
added; see Medical Staff of Doctors Medical Center in Modesto v.
Kamil (2005) 132 Cal.App.4th 679, 683–684 [stating in dictum
that “a punch in the nose during a dispute over a medical billing”
would not fall within scope of agreement to arbitrate disputes
concerning terms of service agreement between medical group
and insurance provider].)
Again, the language of the arbitration agreement here is
broader than the language at issue in RN Solution, as it is not
limited to a business relationship between two corporate parties,
but instead requires arbitration for “any and all claims” between
Tam and the Dealership (including dealership managers or
employees) having any connection to Tam’s employment by the
dealership, regardless of whether the claim sounds in tort,
contract, statute, or equity. As we have already explained, Tam’s
claims are undisputedly related to her employment with the
dealership, so her claims fall squarely within the broad scope of
the arbitration agreement. The facts of the current case more
closely align with those at issue in Bigler v. Harker School (2013)
213 Cal.App.4th 727, where the court found battery allegations
against a teacher who had wrapped his arms around a student,
jumping up and down and humiliating her, to fall within the
arbitration clause in the school’s enrollment contract because
they reflected the teacher’s unfitness and incompetence as a
19
teacher. (Id. at pp. 731, 741.) While Hernandez’s alleged actions,
as pleaded by Tam, are extraordinarily outrageous, harmful, and
cruel, Tam cannot escape the fact that Hernandez’s acts arose in
the context of his supervisory role and her employment with the
dealership, and are therefore within the scope of the arbitration
agreement.
E. Tam’s other defenses to arbitration are not viable.
Tam also contends that the arbitration agreement is
unenforceable because the parties lacked mutual assent or
because the circumstances made it impossible for her to
understand the terms of the arbitration agreement. We are
unpersuaded by both arguments. (See Randas v. YMCA of
Metropolitan Los Angeles (1993) 17 Cal.App.4th 158, 163 [failure
to read an agreement does not preclude its enforceability]; Davis
v. Kozak (2020) 53 Cal.App.5th 897, 905 [both procedural and
substantive unconscionability must be shown to invalidate an
agreement to arbitrate].)
1. Mutual Assent
Tam argues that the dealership and Hernandez cannot
carry their burden of showing mutual assent. We disagree,
because Tam’s signature is evidence of her assent. “ ‘[O]ne who
accepts or signs an instrument, which on its face is a contract, is
deemed to assent to all its terms, and cannot escape liability on
the ground that he has not read it. If he cannot read, he should
have it read or explained to him.’ ” (Randas v. YMCA of
Metropolitan Los Angeles, supra, 17 Cal.App.4th at p. 163.)
20
“Generally, a party may not avoid enforcement of an arbitration
provision because the party has limited proficiency in the English
language. If a party does not speak or understand English
sufficiently to comprehend a contract in English, it is incumbent
upon the party to have it read or explained to him or her.”
(Caballero v. Premier Care Simi Valley LLC (2021)
69 Cal.App.5th 512, 518–519.)
2. Unconscionability
Courts have recognized that “[a]rbitration contracts
imposed as a condition of employment are typically adhesive.”
(OTO, L.L.C. v. Kho (2019) 8 Cal.5th 111, 126.) However, both
procedural and substantive unconscionability must be shown to
invalidate an arbitration agreement. (OTO, at p. 125.) “In
Armendariz [v. Foundation Health Psychcare Services, Inc.
(2000)] 24 Cal.4th 83, the court held that a mandatory
‘arbitration agreement cannot be made to serve as a vehicle for
the waiver of statutory rights created by the FEHA.’ [Citations.]
To be valid, at minimum the arbitration agreement must require
a neutral arbitrator, sufficient discovery, and a written decision
adequate enough to allow judicial review. Further, it must
include all remedies available in a judicial action and the
employee may not be required to pay unreasonable costs or fees.
[Citation.] Elimination of or interference with any of these basic
provisions makes an arbitration agreement substantively
unconscionable.” (Wherry v. Award, Inc. (2011) 192 Cal.App.4th
1242, 1248.)
Tam argues that because she was not given an opportunity
to read and understand the documents presented to her at the
21
beginning of her employment, there was no way she could have
agreed to its terms. We understand this argument to raise an
issue of procedural unconscionability, but without any evidence of
substantive unconscionability, this argument is inadequate to
invalidate the agreement. Tam’s brief does not attempt to show
any recognized basis for substantive unconscionability as a basis
for invalidating the arbitration agreement, relying instead on her
unpersuasive argument that there was no manifestation of
mutual assent.
F. Tam’s claims against Hernandez are also arbitrable.
In her respondent’s brief, Tam argues that the court did not
err in denying Hernandez’s joinder with the dealership’s motion
to compel arbitration, and because Hernandez did not bring his
own independent motion to compel arbitration, he lacks standing
to appeal the denial of the dealership’s motion.
Given that the issues on appeal are subject to a de novo
standard of review, we find it unnecessary to decide whether the
court erred in concluding that Hernandez’s joinder lacked
adequate citations to law or evidence in support of his right to
enforce the arbitration agreement. (See, e.g., Barak v. The
Quisenberry Law Firm (2006) 135 Cal.App.4th 654, 661 [finding
joinder in special motion to strike effective, because moving party
is not required to present admissible evidence]; Commonwealth
Energy Corp. v. Investor Data Exchange, Inc. (2003)
110 Cal.App.4th 26, 31, fn. 3.)
Our opinion establishes that based on the arbitration
agreement and Tam’s complaint, Hernandez has the right to
compel arbitration of Tam’s claims against him. Tam’s counsel
22
acknowledged that Hernandez was not served with a summons
and complaint until after the dealership and Tam had already
briefed the dealership’s motion to compel arbitration. Having
briefed the substantive issues in the context of the current
appeal, Tam also can no longer claim that she lacked notice of
Hernandez’s legal theory. (See, e.g., Felisilda v. FCA US LLC
(2020) 53 Cal.App.5th 486, 493.)
G. Recent federal legislation
The dealership requested judicial notice of a recent federal
law entitled “Ending Forced Arbitration of Sexual Assault and
Sexual Harassment Act of 2021.” According to Tam, “The new
law amends the [Federal Arbitration Act] to prohibit employers
from requiring employees to resolve sexual harassment and
sexual assault claims through private arbitration unless the
employee—after the claim arises—voluntarily elects to
participate in arbitration.” Both parties acknowledge that the
law was not in effect when the trial court made its decision, and
no party argues that the law has retroactive effect or affects our
legal analysis in any way. Therefore, the dealership’s request for
judicial notice filed on October 19, 2022 is denied.
Our dissenting colleague discusses this new legislation, and
his views of the policies behind it, to fashion a new rule that
would make all arbitration provisions purporting to cover claims
based on sexual assault or sexual harassment per se
unconscionable. (Dis. opn., at p. 6, post.) The dissent
alternatively argues that if specific facts to support substantive
unconscionability is still required, it may be found in the case
before us. (Dis. opn., at pp. 6–7, post.) We decline to adopt the
23
position articulated in the dissent, which in effect attempts to
impose the new legislation in this (and other similar) cases by
judicial fiat, and contrary to the express terms of the legislation
regarding the limits of its retroactive application.
DISPOSITION
The order is reversed, and the trial court is directed to
enter a new and different order granting defendants’ motion to
compel arbitration. KMS Automotive Inc., dba Browning Mazda
of Alhambra, Dick Browning, Inc., and Adrian Hernandez are
awarded their costs on appeal.
NOT TO BE PUBLISHED.
MOOR, J.
I concur:
KIM, J.
24
TAM v. KMS AUTOMOTIVE, INC., et al – B311407
RUBIN, P. J. – DISSENTING:
I respectfully dissent. Ma Na Tam alleged that “[o]n
multiple occasions from late December 2017 to early 2018,” her
supervisor, Adrian Hernandez, “intentionally and deceptively
drugged [her] and then sexually assaulted, sexually battered,
[and] raped [her] including grabbing her, lifting her, pulling off
her clothes, sexual touching for gratification, sexual intercourse,
oral copulations [and] assault . . . .” In words of our Supreme
Court equally applicable here, “Surely it was not contemplated,
let alone expected, by either party to the Agreement that this sort
of attack would befall petitioner” when she accepted a job at
appellants’ car dealership seven months earlier. (Victoria v.
Superior Court (1985) 40 Cal.3d 734, 744 [order compelling
arbitration of sexual assault claim reversed].) “It is, therefore,
difficult to conclude that the parties intended and agreed that
causes of action arising from such an attack would be within the
scope of the arbitration clause.” (Id. at p. 745.)
“Where an arbitration clause is part of a contract of
adhesion, courts will carefully scrutinize the agreement to assure
that the arbitration provisions fall within the reasonable
expectations of the weaker, or ‘adhering’ party, and are not
unduly oppressive or ‘unconscionable.’ ” (Ericksen, Arbuthnot,
McCarthy, Kearney & Walsh, Inc. v. 100 Oak St. (1983) 35 Cal.3d
312, 323, fn. 7; see also Baltazar v. Forever 21, Inc. (2016)
62 Cal.4th 1237, 1244–1245.)
The question presented by appellant’s motion to compel is
whether the parties, in signing an arbitration clause agreeing to
arbitrate “all claims, disputes, and controversies that may arise
out of or be related in any way to [Tam’s] employment”
understood that arbitration would extend to claims of an
employee being drugged, raped, sexually assaulted, or sexually
battered. It is true the language of the agreement is broad:1 Yet
it remains difficult to conclude that sexual assault claims are
covered when, as the agreement becomes more specific, the
arbitration provision expressly identifies only “claims of
discrimination, harassment, or retaliation . . . as well as disputes
relating to terms or conditions of employment, claims for wages
and other compensation, and claims for breach of contract
(express or implied), including claims for breach of
confidentiality” as examples of what is subject to arbitration.
Even if harassment claims are covered, sexual assaults are far
outside the reasonable expectations of what may arise from
employment.
As a second ground for affirming the trial court’s ruling, I
also find the arbitration agreement unconscionable. Among the
few state law defenses to arbitration provisions that are still
available after AT&T Mobility LLC v. Concepcion (2011) 563 U.S.
1 “This agreement to submit to binding arbitration applies
to any and all claims between me and the Dealership (or its
parent or subsidiary companies, owners, directors, officers,
managers, employees, agents, and parties affiliated with tis
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 of
Dealership, whether sounding in tort, contract, statute, or equity,
that would otherwise require or allow resort to any court or other
governmental dispute resolution forum.”
2
333 is unconscionability. For sexual assault and sexual
harassment claims, Congress has now invalidated and made
unenforceable predispute agreements to arbitrate such claims.
Plaintiffs who have signed predispute agreements but who have
not filed their complaints no longer have to rely on a finding of
unconscionability to invalidate arbitration provisions respecting
such claims. Under the “Ending Forced Arbitration of Sexual
Assault and Sexual Harassment Act of 2021” (9 U.S.C. §§ 401,
402), “at the election of the person alleging conduct constituting a
sexual harassment dispute or sexual assault dispute, or the
named representative of a class or in a collective action alleging
such conduct, no predispute arbitration agreement or predispute
joint-action waiver shall be valid or enforceable with respect to a
case which is filed under Federal, Tribal, or State law and relates
to the sexual assault dispute or the sexual harassment dispute.”
Congressional debate on the bill suggests that the move to
invalidate these arbitration provisions had its genesis in the state
law doctrine of unconscionability. As one member of the House of
Representatives put it, forcing arbitration on victims of sexual
assault and harassment “has created a situation that, related to
sexual assault and sexual harassment, is unconscionable. It
shocks the conscience. And in fairness, it is a violation of public
policy, in my opinion, and should be eliminated as part of a
contract.” (Remarks of Rep. Griffith, Debate on H.R. No. 4445,
117th Cong., 2nd Sess., 168 Cong. Rec. H983-09 at pp. *H986-
*H987 (2022).)
Our Fourth District recently concluded the federal statute
is not retroactive to cases, like Tam’s, that were filed before the
legislation was enacted. “During debate, Congress clarified that
the Act is retroactive ‘as to contracts currently signed,’ but not to
3
‘cases currently pending.’ ” [Citation omitted]. In other words,
the Act is only applicable to cases filed after its enactment.”
(Murrey v. Superior Court of Orange County (2023)
87 Cal.App.5th 1223 (Murrey).)
For reasons I explain shortly, my dissent neither adopts
nor rejects Murrey’s holding. I observe only that at least one
commentator has written that retroactive application of the
statute is its only sensible construction, at least as to cases, like
this one, not presently in arbitration. “Interpreting the statute
as retroactively effective is consistent with the legislative history
of the Act. During debate, Congress clarified that the Act is
retroactive ‘as to contracts currently signed,’ but not to ‘cases
currently pending.’ Consistent with this notion, legislative
debate highlighted the importance of the Act’s retroactive impact.
For example, U.S. Sen. Charles Schumer noted that ‘[t]he good
news about this legislation is all the clauses that people already
signed in their employment contracts, even when they didn’t
know about it, will no longer be valid. So it not only affects the
future but affects those who signed in the past.’[] Ultimately, to
meet the purpose of the Act, courts must interpret it to apply
retroactively to cases not yet filed in arbitration, to provide
survivors of sexual harassment and assault the choice of how to
pursue their claims.” (Laura Farley, Ending Forced Arbitration
Understanding the New Federal Law That Prohibits Mandatory
Arbitration in Matters of Sexual Assault or Harassment, Bench &
B. Minn., July 2022, at 26, 29; italics added.)
Murrey rejected application of the federal statute to the
case before it. It nevertheless reversed the trial court’s order
compelling arbitration, finding the arbitration agreement
unconscionable, the doctrine the Congressional debate suggests
4
motivated the passage of the federal law. The majority suggests
– and I agree it is only a suggestion – Tam may have
demonstrated procedural unconscionability, yet the majority
finds that her argument lacked substantive unconscionability.
(Maj. Opn at p. 22 [“We understand this argument to raise an
issue of procedural unconscionability, but without any evidence of
substantive unconscionability, this argument is inadequate to
invalidate the agreement.”].)
To this, I say that Congress has suggested that forced
arbitration of sexual assault and sexual harassment claims in
and of itself is unconscionable. There need be no delineation of
procedural and substantive elements. Even if substantive
unconscionability is still required for the dwindling number of
cases not covered by the new federal law, I find it here. Our
Supreme Court has stated, “As that formulation implicitly
recognizes, the doctrine of unconscionability has both a
procedural and a substantive element, the former focusing on
oppression or surprise due to unequal bargaining power, the
latter on overly harsh or one-sided results.” ’ [Citation.]”
(Baltazar v. Forever 21, Inc., supra, 62 Cal.4th at p. 1243; italics
added.) In finding unconscionability the Murrey court
summarized existing law on the subject: “ ‘ “The
unconscionability doctrine ensures that contracts, particularly
contracts of adhesion, do not impose terms that have been
variously described as ‘ “ ‘overly harsh’ ” ’ [citation], ‘ “unduly
oppressive” ’ [citation], ‘ “so one-sided as to ‘shock the
conscience’ ” ’ [citation], or ‘unfairly one-sided’ [citation]. All of
these formulations point to the central idea that the
unconscionability doctrine is concerned not with ‘a simple old-
fashioned bad bargain’ [citation], but with terms that are
5
‘unreasonably favorable to the more powerful party’ ” ’ ” (Murrey,
supra, 87 Cal.App.5th at p. 1237, italics added.)
For cases that the federal statute does not yet reach, our
state courts should apply the state law of unconscionability to
sexual assault and harassment claims in a manner consistent
with the federal statute. If it is still necessary to tether Tamara’s
defense to the notion of substantive unconscionability, then the
old “one-sided” aspect of substantive unconscionability is staring
us right in the face. I imagine one could spend hours or even
years on WestLaw or Lexis and still not find a case where a
corporate employer sued an employee for sexual assault.2
The majority paints my dissent as a disguised effort of
ruling by judicial fiat. Respectfully, that is not what I have done.
Action by judicial fiat for the most part involves a court
intruding on the power of the Legislature. (See e.g., People v.
Torres (2020) 48 Cal.App.5th 731, 756 [“This type of ambiguity
just underscores the importance of leaving such matters to the
legislature, which is better suited to dictate the required method,
content, and timing of notice obligations than an appellate panel
can do by judicial fiat.”].) But reconsidering the contours of
unconscionability in light of Congressional history of legislation
on the very same subject matter – sexual assault and sexual
harassment – does not intrude on the legislative prerogative.
Unconscionability is largely a feature of the common law, not
legislation. (See e.g., Epic Systems Corp. v. Lewis (2018)
138 S.Ct. 1612, 1623 [“The employees' efforts to distinguish
Concepcion fall short. They note that their putative NLRA
2
Appellants here are KMS Automotive, Inc. and Dick
Browning, Inc.
6
defense would render an agreement ‘illegal’ as a matter of federal
statutory law rather than ‘unconscionable’ as a matter of state
common law.”].) I merely suggest a different understanding of
unconscionability, and in a way that happens to be consistent
with Congressional action. There are no fiats.
I conclude that the arbitration provision here is
unconscionable and may not be enforced for that reason. I also
conclude that Tam’s sexual assault claims fall outside of the
scope of the arbitration agreement as not within the reasonable
contemplation of the parties. Accordingly, I would affirm the
denial of appellants’ motion to compel arbitration as to the first,
eighth, ninth, eleventh, and twelfth causes of action.3 I would
reverse the court’s order denying the motion to compel (and direct
the trial court to enter an order compelling arbitration of) the
second, third, fourth, fifth, sixth, seventh, and tenth causes of
action. I would then remand the matter for further proceedings
consistent with the views that I have expressed.
RUBIN, P. J.
3 At pages 53-54 of her Respondent’s Brief, Tam argues,
“Alternatively, assuming this Court would require the
Respondent’s claims to be arbitrated, at the very least the Court
should follow the path laid out by the RN Solution, Inc. [v.
Catholic Healthcare West (2008) 165 Cal.App.4th 1511] court
quoted above – determine the causes of action based on the
claims of rape, drugging and sexual assault (upon which all of the
claims against Hernandez are based) are not arbitrable, and
compel only the remaining causes of action to arbitration.”
7