Subcontracting Concepts (CT), LLC v. De Melo

245 Cal. Rptr. 3d 838, 34 Cal. App. 5th 201
CourtCalifornia Court of Appeal, 5th District
DecidedApril 10, 2019
DocketA152205
StatusPublished
Cited by22 cases

This text of 245 Cal. Rptr. 3d 838 (Subcontracting Concepts (CT), LLC v. De Melo) is published on Counsel Stack Legal Research, covering California Court of Appeal, 5th District primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Subcontracting Concepts (CT), LLC v. De Melo, 245 Cal. Rptr. 3d 838, 34 Cal. App. 5th 201 (Cal. Ct. App. 2019).

Opinion

Kline, P.J.

*840*205Subcontracting Concepts CT, LLC (SCI); Jesus Fernando Gonzalez; and Pedro Luesch (collectively appellants) appeal from the trial court's order denying their petition to compel arbitration and stay proceedings, brought against Chafie Gabriel Pereira Moreira De Melo (respondent) in this matter arising from respondent's administrative wage claim, filed with the California Labor Commissioner, against appellants. On appeal, appellants challenge the trial court's findings that the arbitration agreement between SCI and respondent was (1) procedurally and substantively unconscionable, and (2) so permeated with unconscionability that severance of the unconscionable terms was not possible. We shall affirm the court's order.

FACTUAL AND PROCEDURAL BACKGROUND

Respondent was hired by Express Messenger Systems, Inc., doing business as OnTrac (OnTrac) and SCI in June 2014, at which time he signed SCI's "Owner/Operator Agreement" (Agreement).1 The Agreement is five pages long, typed in small font, and made up of 27 numbered clauses, including the arbitration clause at issue here, which is the 26th clause.

The arbitration clause provides that if the parties are unable to negotiate and settle a dispute, disputes "within the jurisdictional maximum for small claims will be settled in the small claims court where the Owner / Operator resides. [¶] All other disputes, claims, questions, or differences beyond the jurisdictional maximum for small claims courts within the locality of the Owner / Operator's residence shall be finally settled by arbitration in accordance with the Federal Arbitration Act [ (FAA) ].

"Neither you nor SCI shall be entitled to join or consolidate claims in arbitration by or against other individuals or entities, or arbitrate any claim as a representative member of a class or in a private attorney general capacity.

"The arbitration panel shall be made up of three (3) people. Each party shall choose one arbitrator that will serve on the panel in a non-neutral capacity. The two chosen arbitrators will select a third arbitrator who will be neutral. If the chosen arbitrators are unable to select a third arbitrator within *206ten (10) days of their selection, a third arbitrator shall be appointed by the American Arbitration Association. Each arbitrator shall have experience in the transportation industry and have a legal background.

"Consistent with the expedited nature of arbitration, each party will upon written request of the other party promptly provide copies of any relevant documents necessary to support any claim or defense. All parties shall have the discretion to examine up to three (3) witnesses per party. Each deposition shall be limited to a maximum of two (2) hours. Any objections based on privilege and/or confidential information will be reserved for arbitration. The arbitration and any discovery prior to the arbitration will take place in a location convenient to both parties. The parties may submit briefs in lieu of any formal gathering for arbitration.

"The arbitrators will have authority to award actual monetary damages only. No punitive or equitable relief is authorized. All parties shall bear their own costs for arbitration and no attorney's fees or other costs shall be granted to either party.

*841"The arbitrator's decision shall be final and legally binding and judgment may be entered thereon."2

The evidence of the circumstances surrounding respondent's hiring and signing of the Agreement is as follows. Respondent answered an ad and went to an OnTrac/SCI warehouse, where he was told he had to sign employment documents "on the spot" to get a job and be matched with a supervisor. Respondent needed a job and felt he had to sign the documents. Respondent's native language is Portuguese, and he is not fluent enough in English to fully understand documents written in English. No one asked if he wanted the documents translated into Portuguese and no one explained the documents to him in detail in either English or Portuguese.

Respondent was not given time to carefully review the employment documents at the warehouse and no one told him he could have an attorney review the documents or that he could negotiate their terms before he signed them. Nor did anyone tell him about any rights he might be giving up by signing the documents. He did not know and was not told that New York law applied to the documents or that he would be forced to go to arbitration in case of an employment-related dispute. He "did not know or understand the meaning or purpose of arbitration, the rules and procedures related to arbitration, that [he] would have to pay the cost of arbitration, or that [he]

*207was giving up payments of attorneys' fee[s] and penalties by going to arbitration." When he signed the employment documents, he was not given rules for the American Arbitration Association or any other arbitration association.

On January 26, 2017, respondent filed an administrative wage claim with the Labor Commissioner against OnTrac, SCI, Gonzales, Luesch, and Marilucy Soare, alleging that he was employed by these entities and individuals and seeking unpaid overtime, meal, and rest period wages, reimbursement of unlawful wage deductions and business expenses, as well as statutory penalties for failing to provide accurate itemized wages statements, unpaid sick leave, and statutory waiting time penalties. (See Lab. Code, §§ 203, 226, 2802.)3

On March 14, 2017, SCI, Gonzales, and Luesch filed a petition to compel arbitration and stay proceedings.4 On May 9, the court granted the Labor Commissioner's application for leave to intervene and appear in the matter.

On May 31, 2017, following a hearing, the court issued an order denying the petition to compel arbitration and stay the proceedings after finding that the arbitration clause was both procedurally and substantively unconscionable and that severance of the substantively unconscionable provisions was not possible because the arbitration clause was permeated with unconscionability. Also on May 31, 2017, respondent's counsel served notice of entry of order on appellants' counsel and the Labor Commissioner.

On July 28, 2017, appellants filed a notice of appeal.

*842On October 31, 2018, we granted the Labor Commissioner's unopposed request for judicial notice of materials from the Labor Commissioner's website from 2014 and 2018, that provide detailed instructions on how to file a wage claim and regulations governing hearings held by the Labor Commission pursuant to section 98. (See Cal. Code Regs., tit. 8, §§ 13500 - 13520.)

*208DISCUSSION

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Cite This Page — Counsel Stack

Bluebook (online)
245 Cal. Rptr. 3d 838, 34 Cal. App. 5th 201, Counsel Stack Legal Research, https://law.counselstack.com/opinion/subcontracting-concepts-ct-llc-v-de-melo-calctapp5d-2019.