Rainier v. Paradise Chevrolet Cadillac CA4/2

California Court of Appeal·Decided June 7, 2024·No. E079647·Unpublished

Opinion

Filed 6/7/24 Rainier v. Paradise Chevrolet Cadillac CA4/2

NOT TO BE PUBLISHED IN OFFICIAL REPORTS California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA FOURTH APPELLATE DISTRICT DIVISION TWO

STEPHEN D. RAINIER, Plaintiff and Respondent, E079647, E080308 v. (Super.Ct.No. CVRI2202077) PARADISE CHEVROLET CADILLAC, OPINION Defendant and Appellant.

CONSOLIDATED APPEALS from orders of the Superior Court of Riverside County. Craig Riemer and Angel M. Bermudez, Judges. Affirmed.

Fine, Boggs & Perkins, John P. Boggs, David J. Reese and William D. Wheelock for Defendant and Appellant.

Bibiyan Law Group, David D. Bibiyan and Henry G. Glitz for Plaintiff and Respondent.

Defendant and appellant Paradise Chevrolet Cadillac (Paradise) appeals the denial of its petitions to compel arbitration. Plaintiff and respondent Stephen D. Rainier filed

two complaints against Paradise asserting individual and putative class claims for wage and hour claims in violation of the Labor Code (hereinafter, Rainier I), and Private Attorneys General Act of 2004 (PAGA) claims based on the same Labor Code violations (Rainier II).

Paradise filed its first petition to compel1 arbitration of the claims in Rainier I pursuant to the arbitration clause in the “EMPLOYEE ACKNOWLEDGEMENT AND AGREEMENT” (EAA) signed by Rainier at the time of his employment. The trial court denied the petition to compel arbitration finding that there were two unconscionable provisions in the arbitration clause and that these provisions could not be severed from the EAA. Paradise filed a second petition to compel arbitration of the PAGA claims. Relying on the findings in Rainier I, the trial court denied the petition to compel arbitration in Rainier II.

In this appeal, Paradise claims the trial court erred by denying the petition to compel arbitration in Rainier I by finding there were two unconscionable provisions in the arbitration agreement in the EAA. Paradise insists there was only one unconscionable provision, which could have been severed to keep the arbitration provisions, and the trial court further erred by adopting the same findings in Rainier II. We disagree and affirm.

1 Although Paradise filed a petition to compel arbitration, since Rainier had commenced his lawsuit it was properly referred to as a motion to compel arbitration. The term petition has been construed in practice to include the term motion. (Mercury Ins. Group v. Superior Court (1998) 19 Cal.4th 332, 349.)

FACTUAL AND PROCEDURAL HISTORY A. RAINIER I: COMPLAINT Rainier filed his class action complaint against Paradise in Rainier I on May 24, 2022. He identified the class as any current or former nonexempt California employees employed by or formerly employed by Paradise. He alleged that Paradise had violated numerous wage and hour laws in the prior four years, which impacted him and the class.

B. RAINIER I: FIRST PETITION TO COMPEL ARBITRATION Paradise filed a petition to compel arbitration in Rainier I (First Petition). Paradise provided that Rainier was employed at its automobile dealership in Escondido from August 2, 2001, until May 2021. He signed the EAA on August 2, 2001. The EAA was signed by all employees. The EAA had a binding arbitration clause. Paradise alleged that all of the causes of action were covered by the arbitration clause in the EAA signed by Rainier. Paradise argued that the EAA did not provide for class-action arbitration. As such, the trial court should dismiss Rainier’s class action claims and send the matter to binding, individual arbitration.

Attached to the First Petition was a portion of the EAA. The EAA included language that it superseded any prior agreements, understandings, or representations. It also provided the following language: “I further agree that except for exclusively monetary claims of less than $5,000.00, I agree that any claim, dispute, or controversy (including, but not limited to, any and all claims of discrimination and harassment) which would otherwise require or allow resort to any court or other governmental dispute resolution forum between myself and the Dealership (or its owners, directors, and

officers, employees, agents and parties affiliated with its employee benefit and health plans) arising from, related to, or having any relationship or connection whatsoever with my seeking employment with, employment by, or other association with, the Dealership, whether based on tort, contract, statutory, or equitable law, or otherwise, shall be submitted to and determined exclusively by binding arbitration under the Federal Arbitration Act, in conformity with the procedures of the California Arbitration Act.”

The EAA also contained the following language: “Awards exceeding $50,000.00 shall include the arbitrator’s written reasoned opinion and, at either party’s written request within 10 days after issuance of the award, shall be subject to reversal and remand, modification, or reduction following review of the record and arguments of the parties by a second arbitrator who shall, as far as practicable, proceed according to the law and procedures applicable to appellate review by the California Court of Appeal of a civil judgment following court trial. I understand by agreeing to this binding arbitration provision, both I and the Dealership give up our rights to trial by jury.” Directly above Rainier’s signature were the sentences, “MY SIGNATURE BELOW ATTESTS TO THE FACT THAT I HAVE READ, UNDERSTAND, AND AGREE TO BE LEGALLY BOUND TO ALL OF THE ABOVE TERMS. [¶] DO NOT SIGN UNTIL YOU HAVE READ THE ABOVE ACKNOWLEDGEMENT AND AGREEMENT.”

C. RAINIER I: OPPOSITION TO FIRST PETITION AND REPLY Rainier filed opposition to the First Petition. Rainier contended that the arbitration agreement violated the California Supreme Court’s requirement in Armendariz v.

Foundation Health Psychcare Services Inc. (2000) 24 Cal.4th 83 (Armendariz) that an arbitration agreement must provide for a written award in all cases. The provision in the EAA only provided for a written award for awards exceeding $50,000. In addition, although it provided that both parties were entitled to appeal an award to a second arbitrator, it was restricted to only those awards that exceeded $50,000. Paradise had reserved for itself an opportunity to overturn a “sizeable” award made against it, which was a “hallmark of unconscionability.” Rainier insisted that the EAA was “rife with procedural and substantive unconscionability.”

Rainier alleged the EAA was oppressive and had been given to him on a take-it-

or-leave-it basis. He was given no choice but to sign the EAA if he wanted the job. Rainier alleged that the arbitration clause was hidden within 40 pages of the employee handbook. The arbitration agreement was procedurally unconscionable.

Rainier argued that portions of the arbitration clause were substantively unconscionable. Rainier referred to Little v. Auto Stiegler, Inc. (2003) 29 Cal.4th 1064 (Little), which contained a similar clause as that contained in the EAA; the court in Little found the restriction on the ability to appeal to be substantively unconscionable. Rainier complained that a written award was only necessitated when an award exceeded $50,000. The lack of a written award under $50,000 violated Armendariz.

Rainier further argued that the unconscionable provisions could not be severed and the remainder of the arbitration clause in the EAA enforced. The arbitration agreement “permeated” the employment relationship and should not be enforced. The interests of justice would not be served by severance.

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