Davis v. TWC Dealer Group, Inc.

          Contra Costa County Superior Court, No. C-18 00228, Honorable Steven Austin Judge.

          Attorney for Plaintiffs and Respondents: Ferber Law, APC, Jonathan R. Babione, Jennifer Lucas, Connor M. Day.

          Attorney for Defendants and Appellants: Fine, Boggs & Perkins, John Boggs, Roman Zhuk, David Reese.

          RICHMAN, J.

         This is an appeal from an order denying a petition to compel arbitration. We easily affirm the order. And we publish, to also affirm-and remind the profession of-the importance of candor toward the court.

         BACKGROUND

         The Facts

         Appellant TWC Dealer Group, Inc. (TWC) operated a Toyota dealership in Walnut Creek. In the spring of 2013, respondents Donald Davis, Bonnie Davis, and Raymond Davis (when referred to collectively, the Davises) sought employment at TWC, to run its special finance department. The Davises are African-American, and Donald Davis is over the age of 40. And in connection with that employment, all of the Davises were required to sign three separate agreements, each providing that the Davises agreed to arbitration.

         At no place in its 72-pages of briefing here does TWC quote the entirety of any, let alone all, of the agreements, which we note are all different. Specifically:

         The first agreement, signed by the Davises on April 3, 2013, is entitled “Applicant Statement and Agreement” (hereafter, for consistency with the briefing, Agreement No. 1.) Agreement No. 1 is one page long, and consists of six paragraphs, all in identical and small-and quite difficult to read-font. None of the six paragraphs is labeled or titled, in boldface or otherwise. The fourth of the six paragraphs is the one that refers to arbitration, though hardly in language that is easy to comprehend. The paragraph is 30 lines long, and ends with these three sentences: “If CCP § 1284.2 conflicts with other substantive statutory provisions or controlling case law, the allocation of costs and arbitrator fees shall be governed by said statutory provisions or controlling case law instead of CCP §1284.2. Both the Company and I agree that any arbitration proceeding must move forward under the Federal Arbitration Act (9 U.S.C. §§ 3-4) even though the claims may also involve or relate to parties who are not parties in the arbitration agreement and/or claims that are not subject to arbitration; thus, the court may not refuse to enforce this arbitration agreement and may not stay the arbitration proceeding despite the provisions of California Code of Civil Procedure § 1281.2(c). I UNDERSTAND BY AGREEING TO THIS BINDING ARBITRATION PROVISION, BOTH I AND THE COMPANY GIVE UP OUR RIGHTS TO TRIAL BY JURY.”^[1]

         The second of the three agreements was signed by the Davises on April 10. (Agreement No. 2). Agreement No. 2 is two pages, the first of which says at the top “Agreements” in capitalized boldface. The two pages contain two paragraphs, the first of which is entitled “At Will Employment Agreement.” The second paragraph runs from page one over to page two and is entitled in boldface “Binding Arbitration Agreement.” And what a paragraph it is: 67 lines long, without any indentation, included within which is a sentence that is 15 lines long.^[2]

         The third Agreement, also dated April 10, is entitled “Employee Acknowledgement and Agreement” (Agreement No. 3). Agreement No. 3 is two pages long, and consists of six paragraphs, the first of which acknowledges that the employee has “received a copy of the Employee Handbook and... will familiarize myself with its contents.” The arbitration provision is in the third of the six paragraphs, which paragraph is 49 lines long and includes the same 15-line sentence in Agreement No 2. And the 49-line paragraph ends with the penultimate-and confusing-sentence in Agreement No. 1.

         As indicated, nowhere in its briefing does TWC quote the entirety of any of the three agreements. What it does say, citing to 19 pages in the Clerk's Transcript, is this: “Each of these agreements signed by each respondent expressly provides: I and the Company both agree that any claim, dispute, and/or controversy that either party may have against one another... which would otherwise require or allow resort to any court or other governmental dispute resolution forum between myself and the Company (or its 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 my seeking employment with, employment by, or other association with the Company, whether based on tort, contract, statutory, or equitable law, or otherwise, ... shall be submitted to and determined exclusively by binding arbitration.... I agree that the arbitration and this Agreement shall be controlled by the Federal Arbitration Act, in conformity with the procedures of the California Arbitration Act....”

         We cannot help but observe the four ellipses in TWC's quotation-and observe further TWC's lack of candor, given how much the quotation misrepresents the Agreements here. Using Agreement No. 3 for comparison, the first and second ellipses each omit three lines, the third ellipsis seven lines, and the last ellipsis 24 lines-38 lines. Thirty-eight lines omitted from a 49-line paragraph, a paragraph that, as will be discussed in detail below, our Supreme Court has recently described as a “paragon of prolixity, ” whose substance is “opaque, ” and which has sentences that are “complex, filled with statutory references, and legal jargon.” (OTO, L.L.C. v. Kho (2019) 8 Cal.5th 111, 128) (Kho).) That is what the ellipses leave out. TWC's conduct is not to be condoned.

         Sometime after the Davises became employed, TWC hired a new General Manager, Ralph Colon. As the Davises describe it, Colon “began to systematically undermine [the Davises's] programs, ” an effort “punctuated by shockingly inappropriate ageist and racist comments to and about them.” The Davises attempted to address the issue with TWC, to no avail. They resigned, filed complaints with the Department of Fair Employment and Housing, and obtained right to sue letters. And sued.

         The Proceedings Below

         On February 1, 2018, the Davises filed a complaint naming three defendants: TWC, John Schafer, alleged to be its owner, and Colon. The complaint alleged sixteen causes of action related to their employment at TWC.^[3]

         On March 26, TWC, Schafer, and Colon (for convenience, TWC) filed a petition to compel arbitration and stay proceedings. The petition attached copies of the agreements signed by each of the Davises, and was accompanied by a declaration of TWC controller Bonnie Guest, who testified that the three signed agreements were in each of the three Davises' personnel files. As Guest also testified, TWC's “company policy... requires all personnel to participate in its dispute resolution program, ” going on to testify that “[t]here are no employees of [TWC] who are not required to agree to the dispute resolution provisions, which require binding, individual arbitration of disputes arising out of the employment.” As she summed it up: “All personnel who commence or continue employment with [TWC] are required to comply with the alternative dispute resolution policy, which includes the mandatory arbitration of employment-related claims. This dispute resolution policy is set forth in written agreements throughout the employment of each individual[].”

         The Davises filed opposition to the petition, which opposition did not include any declaration.

         TWC filed a reply, and the Davises a sur-reply, the latter accompanied by a declaration of Jennifer Lucas, their attorney, which declaration said nothing about the circumstances surrounding the signing of the agreements.

         The petition came on for hearing on May 10, prior to which the court had issued a tentative ruling denying the petition. The hearing was brief, most of it being argument by counsel for TWC, and questions by the court to him. Among other things the court questioned TWC's counsel about the adhesive nature of the agreements, and also asked “what about Iskanian?, ” referring to Iskanian v. CLS Transportation Los Angeles, LLC (2014) 59 Cal.4th 348. At the conclusion of the hearing the court took the matter under submission.

         On July 20, the court issued its order denying the petition. The order was a comprehensive 11 pages that first determined there was an agreement to arbitrate, specifically Agreement No. 2 read in conjunction with Agreement No. 3. The court went on to find both procedural and substantive unconscionability, finding among other things that “Agreements [No.] 2 and [No.] 3 are contracts of adhesion drafted by [TWC], and signed by [the Davises] on a ‘take-it-or-leave-it' [basis].” And this: “Adding to the oppressive element of procedural unconscionability, is surprise resulting from the [Davises'] apparent inability to determine which of the three arbitration contracts and which of the provisions contained therein apply. [The Davises] complain that none of the three agreements are identical and their terms are contradicting. The Court agrees that some of the provisions in the agreements are inconsistent and that some are substantively dubious. Notably, while Agreement [No.] 2 clearly states that the right to a jury trial would be waived, Agreement [No.] 3 entirely omits this important clarification. Confusing characteristics like these weigh in favor of a finding of procedural unconscionability. (Samaniego v. Empire Today LLC (2012) 205 Cal.App.4th 1138, 1146.)”

         On August 8, TWC filed a ...