1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 DARIO MARTINEZ-GONZALEZ, Case No. 18-cv-05226-EMC
8 Plaintiff, FINDINGS OF FACT AND 9 v. CONCLUSIONS OF LAW
10 ELKHORN PACKING CO., LLC, et al., Docket No. 24 11 Defendants.
12 13 I. INTRODUCTION 14 Plaintiff Dario Martinez Gonzalez worked for Defendants Elkhorn Packing Co. LLC and 15 D’Arrigo Bros. Co. during the 2016 and 2017 lettuce seasons. He worked for Defendants as an 16 agricultural laborer, and, in this lawsuit, he alleges that the companies failed to pay him 17 appropriately, failed to provide adequate meal or rest breaks, and breached the duty of care they 18 owed to Plaintiff by providing food that was unsafe to eat. In December 2018, Defendants moved 19 to compel arbitration. See Docket No. 24. In arguing that the parties’ Arbitration Agreement 20 should not be enforced, Plaintiff raised the defenses of economic duress and undue influence. See 21 Docket No. 28. On October 15 and 16, 2019, a bench trial was held to determine the 22 enforceability of the Arbitration Agreement. 23 II. FINDINGS OF FACT 24 A. The Parties 25 1. Plaintiff Dario Martinez Gonzalez is a Spanish-speaking Mexican national who—in 26 2016 and 2017—worked as an H-2A agricultural laborer for Elkhorn Packing Co. LLC 27 (“Elkhorn”) in California. He brings this suit alleging that Elkhorn failed to pay Plaintiff required 1 owed to Plaintiff, and breached their employment contract. See First Amended Complaint, Docket 2 No. 13. 3 2. Defendants are Elkhorn Packing Co., LLC, and D’Arrigo Bros. Co. (“D’Arrigo”), 4 of California. Elkhorn is a farm labor contractor located in Salinas, CA. D’Arrigo is a California 5 agricultural grower that utilizes Elkhorn as a labor contractor. Id. at 2–3. 6 3. Several individuals testified at the trial: 7 a. Dario Martinez Gonzalez – see ¶ 1. He was called as one of Plaintiff’s witnesses. 8 b. Jose Juan Plascencia Macias – is a Spanish-speaking Mexican national who 9 worked for Elkhorn in 2016. He is acquainted with Mr. Martinez Gonzalez 10 because they were on the same work crew for Elkhorn in 2016. He worked for 11 Elkhorn in both 2016 and 2017. He was called as one of Plaintiff’s witnesses. 12 c. Selina Arreola – is employed by Elkhorn. Her current job title is manager, and she 13 has been with the company for eleven years. She does not attend new-hire 14 orientations, but she works with several of the Elkhorn employees who facilitate 15 such events. She was called as one of Defendants’ witnesses. 16 d. Octavio Vidales – is currently employed by Elkhorn and has worked for the 17 company for approximately eleven years. He was a foreman and later a supervisor, 18 and for the last several years he has trained workers on company policies and 19 regulations and conducted new-hire orientations. He speaks Spanish. He was 20 called as one of Defendants’ witnesses. 21 e. Carlos Garcia Gutierrez – worked at Elkhorn from 2007 to 2017. During that 22 time, he was a foreman who occasionally attended and assisted with new-hire 23 orientations. He estimated that he had attended more than 100 orientations for new 24 employees, but only two orientations specifically for H-2A workers. He speaks 25 Spanish. He was called as one of Defendants’ witnesses. 26 f. Crispin Bermudez – currently works at Elkhorn and has been with the company 27 for twenty years. He has had the role of harvest manager for fifteen years. He 1 speaks Spanish. He was called as one of Defendants’ witnesses. 2 B. Stipulated Facts 3 4. The parties stipulated to the following facts: 4 a. Plaintiff worked for defendant Elkhorn Packing Co. in 2016 and 2017. 5 b. Plaintiff was authorized to work in the United States. 6 c. Plaintiff was an H-2A employee during both times he worked for Elkhorn. 7 d. Plaintiff was presented with an Arbitration Agreement in 2016 and 2017. 8 e. The Arbitration Agreement was presented in Spanish. 9 f. Plaintiff signed the Arbitration Agreements in 2016 and 2017. 10 g. Plaintiff was not provided with a copy of the Arbitration Agreement to keep. 11 h. No employee refused to sign the Arbitration Agreement or otherwise opted out of it 12 in 2016 or 2017. 13 i. Plaintiff was not expressly told that he could not work for Elkhorn if did he not 14 sign the Arbitration Agreement. 15 C. Credibility Findings 16 5. The Court considered the demeanor and credibility of the witnesses throughout the 17 trial, comparing their testimony to the available evidence, the testimony of other witnesses, and 18 the arguments and briefing provided by counsel. Where the Court has resolved conflicts in 19 testimony, it has place weight on its assessment of the witnesses’ demeanor as well as the quality 20 of their testimony and the existence of corroborating or contradictory evidence. Although more 21 specific observations are made below, the Court notes that on certain key matters in dispute 22 described herein, the testimony of Plaintiff’s witnesses was more credible than the testimony of 23 Defendants’ witnesses. Defendants’ witnesses were inconsistent with each other and with the 24 record, and in several instances offered answers that strained credulity. 25 D. Recruitment and Hiring of Elkhorn Employees in Mexico 26 6. Plaintiff worked for Defendant Elkhorn in 2016 and 2017. 27 7. In 2016 and 2017, when Plaintiff was not in the United States, he lived in Mexicali, 1 While in Mexico, Plaintiff worked agricultural jobs, earning significantly less money than 2 was possible for him to earn in the United States. Testimony from Plaintiff’s witnesses indicated 3 that it was possible to earn five times as much in the United States as in Mexico. Plaintiff’s 4 testimony revealed that he had worked agricultural jobs in Mexico since age six; there was no 5 evidence that he had ever had a different vocation. He attended school through the secondary 6 school level, which was explained as the equivalent of elementary school plus three additional 7 years. He did not learn English, but he can read and write in Spanish. 8 8. In 2016 and 2017, Plaintiff was responsible for financially supporting his wife, his 9 mother, his step-father (who is now deceased) and his mother-in-law, who suffers from diabetes. 10 His family’s expenses included rent, bills (for water and electricity), taxes on their land, and 11 medical expenses for various members of his family. 12 9. Plaintiff first learned about Elkhorn in 2015 and heard that they were hiring people 13 to work in the United States legally. The process of applying to work for Elkhorn involved getting 14 on an applicant list, completing an application, having one’s application accepted, and then 15 applying for a visa to enter the United States. 16 10. Elkhorn first accepted Plaintiff’s application in Mexico in 2016. After accepting 17 his application, Elkhorn assisted Mr. Martinez Gonzalez in obtaining a visa to enter the United 18 States. However, the only paperwork that Plaintiff completed with or for Elkhorn while he was in 19 Mexico (in either year) was paperwork associated with obtaining the appropriate visa and entering 20 the United States. Mr. Martinez Gonzalez was not presented with any other employment options 21 while applying for his visa. Arbitration was not mentioned as a term of employment with Elkhorn 22 during this time. 23 11. Plaintiff was not presented with the 2016 Arbitration Agreement while he was in 24 Mexico in 2016. 25 12. Plaintiff held an H-2A visa and was authorized to work in the United States in all 26 times relevant to this case. 27 13. H-2A workers at Elkhorn were under the impression that their visas did not permit 1 visa. 2 14. Plaintiff was hired again in 2017 by Elkhorn and obtained an H-2A visa to work in 3 the United States. As in 2016, he was not provided with the 2017 Arbitration Agreement prior to 4 returning to the United States in 2017. 5 E. Orientation in United States 6 15. In both 2016 and 2017, the work that Plaintiff did for Elkhorn was in Monterey 7 County. 8 16. To get workers to Monterey County, Defendants provided buses that transported 9 them from Mexico. In 2016, Plaintiff boarded a bus in Mexico, and 12 hours later the bus arrived 10 in Salinas, CA. In 2017, Plaintiff boarded a similar bus in Mexico, and approximately 12 hours 11 later, that bus arrived in California. In 2017, Plaintiff was housed in King City, CA as opposed to 12 Salinas. 13 17. In 2016, the bus that transported Plaintiff from Mexico arrived in Salinas around 1 14 or 2am. The workers on the bus were assigned to hotel rooms and the next day they boarded 15 buses to go to work. While the workers were on that bus, Crispin Bermudez got on the bus and 16 urged workers to put effort into their work for Elkhorn. He emphasized that they were privileged 17 to be there, that it was a good opportunity, and he cautioned that those who did not want to work 18 hard could go back to Mexico. Other supervisors who oversaw Plaintiff’s work would often 19 repeat this refrain, urging employees to work hard and to follow all company rules. 20 18. During the times that Plaintiff worked for Elkhorn, Elkhorn provided his housing 21 and at least some of his meals. Upon arrival in the United States, Elkhorn employees moved into 22 staff housing immediately. Elkhorn also provided transportation to and from the fields from the 23 hotels; on occasion, the company buses would stop in town so that employees could buy things, 24 send money home, and attend to other needs. 25 19. In the first few days of an employee’s work with Elkhorn, the company would 26 address a range of topics with new employees, including: company policies and regulations, 27 housing rules, emergency plans, protecting oneself against pesticides, sexual harassment, food 1 20. During the trial, there was wide-ranging and inconsistent testimony about the way 2 in which new-hire information was transmitted to employees. Some witnesses said that the 3 company provides a single, unified orientation, while other witnesses stated that various meetings 4 took place on buses, in the fields, and in hotel parking lots. However, all witnesses stated that at 5 least one meeting each year—the one at which employees were directed to sign new-hire 6 documents—was held in the parking lot of the hotel where workers were living. (This parking-lot 7 meeting will hereinafter be referred to as an “orientation.”) That meeting was run by Elkhorn 8 supervisors, and all new-hire crews would attend. It appears that Mr. Vidales is typically the 9 Elkhorn supervisor who conducts these parking lot meetings (sometimes with the assistance of 10 Crispin Bermudez). He estimated that he has led 200-300 such meetings over the course of his 11 time with Elkhorn. Mr. Bermudez estimated that he had participated in 400 or more orientations. 12 Additional Elkhorn employees were often present to facilitate the part of the orientation during 13 which new employees signed the various documents that had been presented to them. In both 14 2016 and 2017, the orientations attended by Plaintiff took place within the first few days of his 15 arrival in the United States, after he and others had started working in the fields. 16 21. At new-hire orientations, Elkhorn witnesses testified attendance could range from 17 forty people to over one hundred. At the 2016 and 2017 meetings attended by Mr. Martinez 18 Gonzalez, approximately 150 H-2A employees attended the orientation in the hotel parking lot. 19 Mr. Vidales testified that, even when there were more than one hundred employees present, he did 20 not have a microphone or other means of amplifying his voice. 21 22. Mr. Martinez Gonzalez and Mr. Plascencia Macias credibly testified that there was 22 no real explanation of the documents they were being asked to sign. Employees were directed to 23 form lines to sign new-hire documents. While waiting to sign the new-hire forms, employees 24 would stand on their feet. There were no chairs available for employees to sit while waiting to 25 sign the documents (although the supervisors who were collecting signatures had chairs). Mr. 26 Martinez Gonzalez said he stood in line for about 40 minutes before he reached the signing table. 27 There were employees in front of and behind him. The orientation occurred after employees had 1 supervisors told him to line up to sign the documents. 2 23. The Court notes that Defendants’ witnesses variously and inconsistently said the 3 orientation before the signing took either 45 minutes or several hours. Elkhorn witnesses also 4 testified that it then took two or more hours to fill out forms and have each employee sign. 5 Elkhorn testimony was inconsistent and not credible (e.g., Mr. Vidales would orient over a 6 hundred new employees for hours in a parking lot with no amplification while everyone stood on 7 their feet, followed by two or more hours on their feet waiting to sign papers). As noted below, 8 Elkhorn wage records are not consistent with these witnesses’ accounts. 9 24. Plaintiff’s witnesses credibly testified that no or only minimal explanation of the 10 new-hire forms was presented, and that new employees were merely directed to line up in order to 11 sign the forms. When employees got to the front of the line, the supervisors would flip through 12 the pages of the new-hire packet and tell the employees where to sign. They were not given the 13 documents to review prior to signing. The only explanation Plaintiff’s witnesses obtained was that 14 these forms related to Social Security. No mention was made or explanation given about the 15 Arbitration Agreement. This account is more consistent with the time-records indicated on the 16 employees’ pay stubs, which reflect fifteen to thirty minutes of compensated time for “safety 17 meetings” on the days when Plaintiff signed his new-hire forms (the dates Elkhorn witnesses 18 agreed the orientations were given). Furthermore, the records show that on each of the orientation 19 days, Plaintiff worked a full day in the fields, over 9 hours. There is no record of an hours-long 20 orientation meeting (in addition to Plaintiff’s work in the field) on either of those dates. As noted, 21 the Court finds the testimony of Plaintiffs’ witnesses to be more credible, and therefore concludes 22 that the orientation meetings provided no real opportunity to review the new-hire documents. 23 25. As part of his role conducting new-hire orientations, Mr. Vidales was supposed to 24 provide information to workers about the Arbitration Agreement. He had been trained to provide 25 that information using a script provided to him by Selina Arreola. At the trial, Ms. Arreola was 26 asked several questions about the Arbitration Agreement, and she struggled to answer some of 27 them. For example, she was unable to explain the term “final and binding”; she had difficulty 1 believe that Mr. Vidales had ever received a copy of the American Arbitration Rules. She 2 evidenced only a cursory understanding of the Arbitration Agreement. Furthermore, when 3 Plaintiff’s attorneys read out Crispin Bermudez’s deposition testimony regarding the Arbitration 4 Agreement, Ms. Arreola said that what Mr. Bermudez described deviated from the explanation she 5 had given him. In addition, she stated that she had never attended an orientation and, therefore, 6 had never actually heard Mr. Vidales or Mr. Bermudez explain the Arbitration Agreement to 7 workers. Mr. Vidales also testified that the script for explaining the Arbitration Agreement does 8 not mention anything about giving up the right to class actions. 9 26. The script that Elkhorn supervisors are supposed to utilize in explaining the 10 Arbitration Agreement outlines four points: 11 a. Arbitration is a means of having disputes resolved without going to a court trial, 12 which can be time-consuming and expensive. 13 b. In arbitration, the employee and Company agree on an arbitrator to resolve their 14 dispute. 15 c. The Company pays the cost of the arbitrator and all other costs of arbitration. 16 However, each party pays for his/her own representative or attorney. 17 d. When we sign this Agreement, we are agreeing to have all disputes resolved by 18 arbitration. Should you change your mind, you have seven days1 to notify us in 19 writing of your decision. 20 27. Although Elkhorn witnesses testified that an explanation about the arbitration 21 agreement to new hires was included in the orientation and that 10-15 minutes was devoted to 22 explaining the Arbitration Agreement, the Court finds that testimony not credible. The Court 23 credits the testimony of Plaintiff and Mr. Plascencia Macias that no explanation about the 24 Arbitration Agreement was given. 25 26
27 1 However, the Arbitration Agreement itself says that employees have ten days (as opposed to 1 F. Signing of the New Hire Documents 2 28. In 2016, Plaintiff was presented with the new-hire documents at an orientation 3 session held by Elkhorn on or around April 11, 2016. In 2017, Plaintiff was presented with the 4 new-hire documents at an orientation session held by Elkhorn on or around March 28, 2017. 5 29. As noted above, on the days Plaintiff was presented with the new-hire documents 6 in 2016 and 2017, he had already worked a full day in the fields. His paystub from the orientation 7 day in 2016 reflects a “Safety Meeting” that lasted approximately one half of an hour. His paystub 8 from the orientation day in 2017 reflects a “Safety Meeting” that lasted approximately 15 minutes. 9 Testimony from Plaintiff’s witnesses indicated that a typical workday for Elkhorn employees 10 would begin at 6:30 or 7am and conclude around 4pm. Employees worked Monday through 11 Saturday. 12 30. During the orientation sessions attended by Plaintiff in 2016 and 2017, Elkhorn 13 employees instructed Mr. Martinez Gonzalez to sign a number of new-hire documents. In 2016, 14 that new-hire packet included a W-4 IRS form, a food safety form, a workers compensation 15 agreement, a pay rate notice, an indemnification form, and the Arbitration Agreement. In 2017, 16 the new-hire packet included a W-4 IRS form, an I-9 IRS form, a food safety form, a workers 17 compensation agreement, a housing policies and employee manual acknowledgement form, and 18 the Arbitration Agreement. 19 31. In 2016, Plaintiff signed the Arbitration Agreement on or around April 11, 2016. 20 In 2017, he signed the Arbitration Agreement on or around March 28, 2017. 21 32. The Arbitration Agreements were written in Spanish, but Plaintiff was not provided 22 with a copy of the Arbitration Agreement to review in advance or given an opportunity to read it at 23 the time of signing. Nor was he told he could keep a copy of the document in either year. 24 33. The 2016 and 2017 Arbitration Agreements did not include language indicating 25 that the Agreements were optional, nor did any Elkhorn employee ever explicitly inform Plaintiff 26 that the Agreements were optional. Similarly, Plaintiff was never explicitly informed that he 27 could seek the advice of an attorney before signing the documents or hold onto the documents to 1 suggests that employees never even had physical custody of the documents; instead, Elkhorn 2 supervisors held the papers and simply pointed employees to the signature page to sign. 3 34. Although several Elkhorn supervisors testified that they believed that the 4 Arbitration Agreement was not mandatory and that no employee would be terminated for refusing 5 to sign the Arbitration Agreement, the Court does not credit that testimony. Mr. Vidales could not 6 explain how he was so informed; Ms. Arreola did not use the word “voluntary” in training Mr. 7 Vidales. There is no document that states that signing the Arbitration Agreement was voluntary 8 and not required. Nor does the script so state. In fact, Mr. Garcia Gutierrez said employees were 9 required to sign the entire packet of documents, which included the Arbitration Agreement. 10 Various comments made by Elkhorn supervisors during the trial suggest that it was implied to 11 workers that signing the Arbitration Agreement was mandatory. For example, Mr. Vidales said he 12 would say, “[t]his is another document you are going to sign. It’s called the Arbitration 13 Agreement,” when presenting the Arbitration Agreement to workers. Mr. Garcia Gutierrez also 14 testified that the Arbitration Agreements were not voluntary. As noted above, he stated that he 15 believed the documents were required for the employees to begin working, and he stated that he 16 would look for any worker if he or she did not sign all the documents. In any event, no employee 17 was told signing the Arbitration Agreement was optional. 18 35. Elkhorn supervisors testified that of the thousands of employees hired, no 19 employee has ever refused to sign the Arbitration Agreement. Nor did anyone opt out of it in 20 2016 or 2017. There is no evidence that any employee ever opted out. Mr. Vidales specifically 21 testified he was not aware of any employee ever refusing to sign the paperwork presented at 22 orientations. 23 36. Mr. Plascencia Macias indicated that he asked a few questions about the documents 24 that he was signing; Elkhorn employees told him that the documents he was signing were for 25 “seguro,” meaning “insurance” or “social security.” The Elkhorn supervisors stated that that 26 employees were invited to ask questions about the documents, but at least Mr. Garcia Gutierrez 27 testified that no employee had ever asked him any questions. (He also testified that he would not 1 Agreement.) 2 37. The supervisors who were present and assisting in the collection of signatures in 3 both 2016 and 2017 urged employees to hurry so that the people behind them in line could also 4 sign the documents. In neither 2016 nor 2017 were employees provided with the documents in 5 advance in order to have an opportunity to review them prior to signing them. (One Elkhorn 6 witness testified that copies of documents were distributed to new hires and that Mr. Vidales went 7 over them during orientation; that testimony was squarely contradicted by another Elkhorn witness 8 who testified the documents were not distributed to new hires prior to signing.) 9 38. Although Elkhorn did not state that refusal to sign the Arbitration Agreement 10 would result in loss of employment, nor did it physically threaten new hires into signing the 11 Arbitration Agreement, Plaintiff still had numerous reasons to believe that signing the documents 12 presented to him was mandatory. For example: (1) employees were told to hurry, (2) the 13 employees were lined up in lengthy queues to sign the packet of documents, (3) the employees 14 were tired and hungry after having worked in the field all day, and (4) Elkhorn supervisors had 15 emphasized the importance of following the rules, while raising the specter of being sent back to 16 Mexico if employees did not work hard, and (5) employees were in the United States on an H-2A 17 visas procured through Elkhorn. As a result, Plaintiff credibly testified that he believed that he 18 had no option but to sign the papers (including the Arbitration Agreement) to continue working for 19 Elkhorn in both 2016 and 2017. He believed that if he refused to sign any of the documents, he 20 would not be given work and would be sent back to Mexico. He did not believe it was possible— 21 on an H-2A visa—to leave his current employer and seek work with another employer in the 22 United States. 23 39. As noted above, employees were not provided with copies of any of the new-hire 24 documents to keep; all documents were collected by supervisors once they had been signed, and 25 they were returned to Elkhorn’s offices in Salinas, CA, where they were stored. Specifically, Mr. 26 Vidales collected all the signed documents and transmitted them to Elkhorn headquarters. Failure 27 to obtain all signatures on the documents might have delayed that transmittal. 1 However, Plaintiff lacked sufficient knowledge of the contents of the Arbitration Agreement to 2 either (1) understand that he had signed such an Agreement, or (2) become informed of the 3 window within which (and the method by which) he would have be able to withdraw, had he so 4 desired. Mr. Vidales was not aware of any worker that has ever used the 10-day window to 5 withdraw his or her consent to the Arbitration Agreement. Moreover, it appears that Plaintiff did 6 not have access to a computer and a printer if he wanted to revoke in writing (as required by the 7 Agreement). 8 41. Plaintiff did not understand that—by signing the Arbitration Agreements in 2016 9 and 2017—he had forfeited certain legal rights, including the right to a trial in a court of law and 10 the right to participate in a class action. It was not until he spoke with the lawyers representing 11 him in this case that he understood the contents of the Arbitration Agreements that he had signed. 12 42. In sum, in both 2016 and 2017: (1) Plaintiff was not informed about the Arbitration 13 Agreement either in Mexico when he applied for the job or at the orientation in the United States; 14 (2) in neither instance was he offered a reasonable opportunity to read the Arbitration Agreement; 15 (3) the Arbitration Agreement was signed with a stack of papers after Plaintiff arrived in the 16 United States within days after a 12- or so hour bus ride from Mexico and after a full day’s work 17 in the fields; (4) he had no familiarity with arbitration or what rights he was giving up when he 18 signed both agreements; (5) he was financially dependent on Elkhorn employment as he made 19 only a fraction of the pay doing agricultural work in Mexico; (6) his family depended on his 20 income; (7) he reasonably believed he could not work for any other United States employer on his 21 H-2A visa and that if he was refused employment with Elkhorn he would have to return to Mexico 22 without a job; (8) he reasonably believed that he had to sign the Arbitration Agreement along with 23 the other papers as directed, at risk of losing his job; (9) he was never told signing the Arbitration 24 Agreement was optional or voluntary. 25 III. CONCLUSIONS OF LAW 26 A. Presumption of a Valid Contract 27 43. Under California law, “[a] party to a contract may rescind the contract . . . [i]f the 1 or obtained through duress, menace, fraud, or undue influence, exercised by or with the 2 connivance of the party as to whom he rescinds, or of any other party to the contract jointly 3 interested with such party.” Cal. Civ. Code § 1689(b)(1). 4 44. Where a contract is prima facie valid, “under California law the burden of proving 5 a claim of ‘undue influence’ is on the claimant.” Olam v. Cong. Mortg. Co., 68 F. Supp. 2d 1110, 6 1139 (N.D. Cal. 1999). Similarly, the burden of proving a claim of “economic duress” is on the 7 claimant. See, e.g., Ferdinando v. Intrexon Corp., No. 16-CV-01826-BTM-JMA, 2016 WL 8 6947060, at *6 (S.D. Cal. Nov. 28, 2016). 9 45. The Court finds that Defendants have made a prima facie showing that Mr. 10 Martinez Gonzalez entered into a valid, enforceable arbitration agreement with Elkhorn. Before 11 the Court are two typed documents entitled “Acuerdo de Arbitraje” or “Arbitration Agreement,” 12 one from 2016 and one from 2017. Plaintiff signed those documents, as did Elkhorn, through its 13 representatives. Plaintiff does not dispute the fact that he signed the documents. 14 46. As a result, since Mr. Martinez Gonzalez seeks to escape the obligations of these 15 Arbitration Agreements, he will “bear the burden of persuasion” in convincing the Court that 16 either or both of the defenses of economic duress and undue influence apply. See Olam, 68 F. 17 Supp. 2d at 1140. 18 B. Economic Duress 19 47. Under California law, the doctrine of economic duress “may come into play upon 20 the doing of a wrongful act which is sufficiently coercive to cause a reasonably prudent person 21 faced with no reasonable alternative to succumb to the perpetrator’s pressure.” Rich & Whillock, 22 Inc. v. Ashton Dev., Inc., 157 Cal. App. 3d 1154, 1158 (Ct. App. 1984). 23 48. The “wrongful act need not be in the nature of a tort or crime,” however “merely 24 being put to a voluntary choice of perfectly legitimate alternatives” does not amount to duress. 25 Johnson v. Int’l Bus. Machines Corp., 891 F. Supp. 522, 529 (N.D. Cal. 1995) (quoting Rich & 26 Whillock, 157 Cal. App. 3d at 1158). 27 49. “Whether the party asserting economic duress had a reasonable alternative is 1 course, or whether a reasonably prudent person might submit.” CrossTalk Prods., Inc. v. 2 Jacobson, 65 Cal. App. 4th 631, 644 (1998). 3 50. In addition, some courts have held that a claimant must also show that the 4 defendant knew of the plaintiff's economic vulnerability and that there was actual inducement to 5 contract. See, e.g., Tanner v. Kaiser Found. Health Plan, Inc., No. C 15-02763-SBA, 2016 WL 6 4076116, at *4 (N.D. Cal. Aug. 1, 2016). 7 51. As Plaintiff contends, “Elkhorn’s decision to present the Arbitration Agreement for 8 signature after agricultural workers arrived in California and were living in employer-controlled 9 housing was a coercive wrongful act.” Plaintiff’s Trial Brief at 3, Docket No. 49. 10 52. Although Elkhorn provided Mr. Martinez Gonzalez with information about the 11 work that he would be doing for them while Mr. Martinez Gonzalez was still in Mexico, the 12 company did not provide him with any information about the Arbitration Agreements prior to his 13 arrival in the United States in 2016 or prior to his return to the United States in 2017. 14 53. The Arbitration Agreements were only to provided to Plaintiff once he had arrived 15 in the United States. Moreover, the Agreements were only provided to him once (1) he was in 16 possession of an H-2A visa that he reasonably believed permitted him to work only for Elkhorn, 17 (2) was living in housing provided by Elkhorn, and (3) had already begun harvesting lettuce for 18 Elkhorn and D’Arrigo. 19 54. In addition, Plaintiff had already been admonished by Elkhorn supervisors to 20 follow Elkhorn’s rules and do as the supervisors instructed him to do or risk being sent back to 21 Mexico. 22 55. Under these circumstances, having already been transported to the United States 23 under the auspices of an H-2A visa obtained through Elkhorn’s job offer, Plaintiff had no 24 “reasonable alternative” but to sign documents he was told to sign. He reasonably believed he 25 could not seek work with another employer, did not have another place to live should his 26 employment with Elkhorn end, and did not even have his own means of transportation by which to 27 return to Mexico. 1 alternative is . . . financial ruin. . . . Courts employ an objective test to determine if ‘reasonable 2 alternatives’ exist.” Brandt v. Verizon Commc’ns, Inc., No. 18-CV-07575-VKD, 2019 WL 3 4082562, at *5 (N.D. Cal. Aug. 29, 2019). 4 57. As Plaintiff explained in his testimony at trial, he was the breadwinner for his 5 family in Mexico, where multiple family members were relying on his income to cover basic 6 expenses like rent, water and electricity bills, taxes, and medical expenses. When not working in 7 the United States (where he could earn five times as much as he was earning in Mexico), Plaintiff 8 worked as an agricultural worker in Mexicali. 9 58. Even the testimony from Defendants’ witnesses acknowledged this reality. As Mr. 10 Bermudez stated: “We understand that behind every employee, there are three, five, even up to 11 eight people from their families who depend on that worker.” Additionally, according to the 12 testimony of Plaintiff’s witnesses, the Elkhorn supervisors repeatedly emphasized how lucky the 13 employees were to have the opportunity to work for Elkhorn and how they should work hard not 14 to lose it. Clearly, Elkhorn was aware of the economic vulnerabilities of their agricultural 15 workers, as they spoke openly about those vulnerabilities both in Salinas and before this Court. 16 59. Thus, the evidence presented by both sides indicates that Plaintiff was in a very 17 challenging financial situation with very few financial resources available to him in Mexico. With 18 significant financial obligations animating his thinking, no reasonable worker in Mr. Martinez 19 Gonzalez’s shoes—without alternative employment prospects, an alternative place to live should 20 he lose his job, and no practical way to return to Mexico—could have refused to sign the 21 Arbitration Agreements that were presented to him without any representation by Elkhorn that 22 signing the Arbitration Agreement was optional. 23 60. With respect to the requirement of inducement, courts “require[e] a nexus between 24 contractual assent and coercion.” Johnson, 891 F. Supp. at 530. Here, Elkhorn’s decision to 25 present the Arbitration Agreement for signature only after Mr. Martinez Gonzalez was in 26 California and living in Elkhorn-provided housing, and only after the work of picking lettuce had 27 already begun, after admonishing him and other workers to follow the rules or risk being sent back 1 Martinez Gonzalez lived, placed Plaintiff in a situation in which it would have, as a practical 2 matter, been impossible for him to refuse to sign the Arbitration Agreement. The fact that out of 3 thousands of workers, no other Elkhorn worker had ever refused to sign the Arbitration Agreement 4 corroborates this point. 5 61. As the Supreme Court has held, arbitration is a “is a matter of consent, not 6 coercion.” Volt Info. Scis., Inc. v. Bd. of Trustees of Leland Stanford Junior Univ., 489 U.S. 468, 7 479 (1989). Where economic duress is what compels a party to sign a contract, there is no true 8 consent, and coercion is the true driving force. Such a contract is not valid or enforceable, and— 9 under the theory of economic duress—the Arbitration Agreement executed between Plaintiff and 10 Defendants is such a contract. 11 62. Accordingly, all the elements of economic duress have been met: (1) a sufficiently 12 coercive wrongful act on the part of the defendant (¶¶ 50-52); (2) no reasonable alternative on the 13 part of the plaintiff (¶¶ 52-57); (3) knowledge of the plaintiff’s economic vulnerability (¶¶ 57-58); 14 and (4) actual inducement to contract (¶ 59 ). 15 C. Undue Influence 16 63. Under California Civil Code § 1575 “Undue influence consists: (1) In the use, by 17 one in whom a confidence is reposed by another, or who holds a real or apparent authority over 18 him, of such confidence or authority for the purpose of obtaining an unfair advantage over him; 19 (2) In taking an unfair advantage of another’s weakness of mind; or, (3) In taking a grossly 20 oppressive and unfair advantage of another’s necessities or distress.” Cal. Civ. Code § 1575. 21 64. California courts recognize a number of factors that are suggestive of undue 22 influence: “(1) discussion of the transaction at an unusual or inappropriate time, (2) consummation 23 of the transaction in an unusual place, (3) insistent demand that the business be finished at once, 24 (4) extreme emphasis on untoward consequences of delay, (5) the use of multiple persuaders by 25 the dominant side against a single servient party, (6) absence of third-party advisers to the servient 26 party, (7) statements that there is no time to consult financial advisers or attorneys.” Odorizzi v. 27 Bloomfield Sch. Dist., 246 Cal. App. 2d 123, 133 (Ct. App. 1966). 1 influence to occur. See Kelly v. Provident Life & Acc. Ins., 245 F. App’x 637, 639 (9th Cir. 2007). 2 66. Here, many of the Odorizzi factors are present. First, the testimony made clear that 3 the presentation of new-hire documents came at an unusual or inappropriate time. The parking-lot 4 orientation took place at the end of the day, when Plaintiff and other employees had already 5 worked a full day in the fields. Many if not all of those present were tired, hungry, eager to get 6 cleaned up before going to sleep. In addition, they were made to stand on their feet (potentially 7 for hours) while the paperwork was processed, and there was nowhere for them to sit even when 8 they were signing the documents. More importantly, the Arbitration Agreement (or even an 9 explanation of the Arbitration Agreement), was not provided to Plaintiff or other workers in 10 Mexico before they committed to the job, made the long journey in employer-provided 11 transportation to the United States, and were placed in a position—once in the United States— 12 from which they had no practical way out, if they refused Elkhorn’s direction to sign the 13 Arbitration Agreement. 14 67. It also appears that the consummation of the contract occurred in an unusual place: 15 a hotel parking lot. While this may have been a convenient place to gather groups of dozens or 16 even hundreds of employees, it is an unusual place to execute legally binding documents. As 17 noted above, the fact that employees had no place to sit down, no desks upon which they could 18 review the documents prior to signing them, and no opportunity or privacy that would permit them 19 to speak with an attorney or family member outside of the presence of their employer or 20 coworkers are all suggestive of an unusual setting. 21 68. Significant evidence was also presented that suggests that Elkhorn made insistent 22 demands that the signing of the contracts be completed rapidly. The supervisors who were present 23 and assisting in the collection of signatures in both 2016 and 2017 urged employees to hurry so 24 that the people behind them in line could also sign the documents, and employees were aware that 25 many people were waiting to complete the new-hire paperwork. Furthermore, employees were not 26 provided with the documents in advance in order to have an opportunity to review them prior to 27 signing them. Nor were they told they could take the documents with them to review and then 1 understanding of the Arbitration Agreement when he applied for work with Elkhorn. 2 69. Elkhorn supervisors also repeatedly and seriously emphasized the negative 3 consequences of failing to comply with Elkhorn rules. Mr. Martinez Gonzales reasonably 4 believed that he had no choice but to sign the documents presented to him. If he did not, he 5 believed that he would be fired and either sent back to Mexico by Elkhorn and/or he would no 6 longer be eligible to work in the United States. 7 70. There were also no third-party advisers present to assist the employees in 8 determining whether they would sign the documents. Not only were no lawyers present to advise 9 the employees, but the employees did not believe they were given time to seek out and consult 10 with an attorney. More fundamentally, they did not believe that they were signing any documents 11 that would have benefitted from the advice of an attorney. 12 71. The fact that no Elkhorn supervisors expressly and affirmatively told the workers: 13 (1) that they could not ask for time to review the Arbitration Agreement; (2) that they could not 14 ask to consult with an attorney; or (3) that they had to sign the Arbitration Agreement at risk of 15 losing their jobs, did not negate the coercive environment created by the circumstances and the 16 reasonably perceived risks facing Plaintiff and his co-workers. 17 72. Taken together, the presence of so many of the Odorizzi factors establishes the 18 existence of undue influence on the part of the Defendants. The Court concludes that, taken 19 together, these factors evince “grossly oppressive” conduct on the part of Elkhorn and finds that 20 Plaintiff has met his burden to demonstrate that undue influence was present. 21 /// 22 /// 23 /// 24 /// 25 /// 26 /// 27 /// 1 IV. CONCLUSION 2 73. The Court concludes that the Arbitration Agreement executed between Dario 3 Martinez Gonzalez and Elkhorn Packing was the product of both economic duress and undue 4 influence. As a result, the Agreement is neither valid nor enforceable, and the Court DENIES 5 || Defendants’ Motion to Compel Arbitration. 6 This disposes of Docket No. 24. 7 8 IT IS SO ORDERED. 9 10 Dated: October 29, 2019 11 LL =a ED M.C 13 United States District Judge
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