Opinion
B322625
02-17-2023
NIRALI PATEL, Plaintiff and Respondent, v. NATIONAL UNIVERSITY, Defendant and Appellant.
Ogletree, Deakins, Nash, Smoak &Stewart, Spencer C. Skeen, Jesse C. Ferrantella, and Alison K. Adelman for Defendant and Appellant. Mark W. Hostetter for Plaintiff and Respondent.
NOT TO BE PUBLISHED
APPEAL from an order of the Santa Clara County Superior Court, No. 19CV344659 Drew C. Takaichi, Judge. Affirmed.
Ogletree, Deakins, Nash, Smoak &Stewart, Spencer C. Skeen, Jesse C. Ferrantella, and Alison K. Adelman for Defendant and Appellant.
Mark W. Hostetter for Plaintiff and Respondent.
LAVIN, J.
INTRODUCTION
Defendant and appellant National University (National) appeals from an order denying its petition to compel arbitration as to the complaint filed by plaintiff and respondent Nirali Patel (plaintiff). Finding no error, we affirm.
FACTS AND PROCEDURAL BACKGROUND
1. The Complaint
According to the operative complaint, plaintiff worked for John F. Kennedy University (employer) from January 2016 to March 2018 as an instructor in the Department of Psychology. Plaintiff alleges that in early 2018, the Chair of the Psychology Department began to make unwanted sexual advances toward her. After she refused those advances, plaintiff was not rehired as an instructor for the spring 2018 term or any subsequent instructional term. Plaintiff filed the present lawsuit against employer under the Fair Employment and Housing Act (Gov. Code, § 12900 et seq.), asserting claims for sexual harassment, discrimination, retaliation, and failure to prevent discrimination and harassment.
2. Employer's Petition to Compel Arbitration
Employer petitioned to compel arbitration. As pertinent here, employer argued that plaintiff had agreed to arbitrate all employment-related disputes pursuant to two contracts she had signed relating to online course development work (course development contracts). Both course development contracts included a provision stating that "[a]ny controversy, claim, or dispute, whether based on contract, tort, or statute under either California or federal law, arising out of or relating to this Contract or any alleged breach of it shall be determined and settled by binding arbitration ... ."
In opposition, and as relevant here, plaintiff asserted that the course development contracts were not at issue because her claims related to her position as an instructor and did not relate to the separate scope of work she performed under the course development contracts. She also argued that the arbitration provisions found in the course development contracts were unconscionable.
In reply, employer explained that plaintiff had signed 10 contracts relating to her employment as an instructor (instructor contracts) and it submitted copies of those contracts for the court's consideration. Each contract covered one instructional term, beginning with the first term in 2016 and continuing through the first term in 2018. The instructor contracts incorporated identical one-page arbitration agreements applicable to "all disputes, claims, or controversies arising out of or relating in any way to your appointment and employment as a faculty member[.]"
These arbitration agreements differed from the single-paragraph provisions contained in the course development contracts.
3. Further Briefing
The court held a brief hearing on the petition to compel arbitration on October 15, 2019. The court subsequently issued an order directing the parties to submit supplemental briefing and setting the matter for a continued hearing. Specifically, the court asked employer to explain why the court should consider the additional new evidence (i.e., the instructor contracts) submitted in support of its reply brief. The court asked plaintiff to file a supplemental opposition addressing employer's supplemental brief and submitting any declaration necessary to respond to the instructor contracts submitted with employer's reply brief. After receiving the briefs, the court held a continued hearing on January 21, 2020 and took the matter under submission.
4. Ruling on Employer's Petition
The court issued its ruling on April 21, 2020. After summarizing the arbitration-related provisions found in the course development contracts and the instructor contracts, the court noted that a court has discretion to consider new evidence submitted in support of a reply brief, but is not required to do so. The court stated that in the context of a petition to compel arbitration, it is the moving party's burden to establish the existence of an agreement to arbitrate in the first instance. The submission of the instructor contracts-the contracts relating to the claims found in plaintiff's complaint-in support of employer's reply brief was plainly inappropriate and the court found it was improper to consider that evidence.
The court went on, however, to address plaintiff's arguments that the arbitration provisions found in both sets of contracts were unconscionable. With respect to the course development contracts, the court found the arbitration provisions substantively unconscionable because they could impose impermissible costs and attorney's fees on plaintiff. And, in any event, it appeared that the course development contracts were not applicable. The arbitration agreements incorporated into the instructor contracts, the court found, were adhesion contracts and therefore procedurally unconscionable. The court also concluded the agreements were substantively unconscionable and were, in addition, inapplicable to plaintiff's claim for failure to rehire.
5. Employer's Motion for Reconsideration
Employer did not appeal the court's order denying its petition to compel arbitration. Instead, employer moved for reconsideration of the court's order on the ground that new and different facts existed. (Code Civ. Proc., § 1008, subd. (a).)Specifically, employer asserted that due to staff turnover, it was unaware of plaintiff's instructor contracts when it prepared its petition to compel arbitration. It was only after plaintiff opposed the petition and contended that the instructor contracts governed the disputes at hand that employer became aware of, searched for, and located those contracts. These "new facts," employer argued, constituted valid grounds for reconsideration.
All undesignated statutory references are to the Code of Civil Procedure.
In the alternative, employer asked the court to consider its request for an order compelling arbitration "as a matter of first impression." Employer asserted that the instructor contract dated January 9, 2018, was the agreement that governed the claims set forth in plaintiff's complaint. Employer argued that in its order denying the petition to compel arbitration, the court "declined to consider the Instructor Contract arbitration agreements, including the operative January 9, 2018 agreement"and asked the court to modify or revoke its prior order so that it could address the enforceability of the arbitration agreements attached to the instructor contracts. And, employer urged, the arbitration agreement in the January 9, 2018 instructor contract was valid and enforceable, i.e., not unconscionable.
Employer described as "dicta" the court's finding that the arbitration agreement attached to the instructor contracts was substantively unconscionable.
Plaintiff opposed the motion for reconsideration on several grounds. As pertinent here, plaintiff asserted that employer's purportedly delayed discovery of the instructor contracts did not constitute "new or different facts" within the meaning of section 1008. Plaintiff also argued that the court had previously decided that the instructor contracts included an unconscionable arbitration agreement. Accordingly, res judicata barred employer from relitigating the issue.
In reply, employer emphasized its argument that the instructor contract arbitration agreement was not unconscionable and, in the alternative, that any unconscionable term should be severed, and the remainder of the agreement enforced.
6. Ruling on Employer's Motion for Reconsideration
The court issued its ruling on employer's motion for reconsideration in December 2020. The court noted, as an initial matter, that its prior ruling denying employer's petition to compel arbitration had determined that employer's failure to submit the instructor contracts with its petition altered the evidentiary basis for its request and created a due process issue. In the alternative, the court had determined that all the arbitration agreements were procedurally and substantively unconscionable and therefore unenforceable. For both those reasons, the court had denied employer's petition to compel arbitration.
As to the motion for reconsideration, the court found that employer had failed to provide a satisfactory explanation for its failure to timely submit the instructor contracts with its petition to compel arbitration, as required under section 1008, subdivision (a). Further, and with respect to employer's request that the court address the validity and enforceability of the January 9, 2018 arbitration agreement "as a matter of first impression," the court observed that employer had not provided any valid reason for the court to do so. The court noted that under section 1008, subdivision (b), a party may renew a motion under limited circumstances, none of which were present. Further, the court found that employer's citation to Phillips v. Sprint PCS (2012) 209 Cal.App.4th 758, 770 (Phillips), was inapt because no change in the law supported employer's motion.
In Phillips, the trial court had denied a petition to compel arbitration. After the United States Supreme Court issued an opinion that substantially changed the law relating to arbitration in California, the party seeking arbitration renewed its petition. The Court of Appeal held that the trial court did not abuse its discretion by reconsidering its ruling in response to a renewed petition under section 1008, subdivision (b). (Phillips, supra, 209 Cal.App.4th at pp. 768-769.)
The court denied employer's motion. Employer did not appeal.
7. First Amended Complaint
On October 21, 2020, while employer's motion for reconsideration was pending, plaintiff filed her first amended complaint adding National as a Doe defendant. She alleged that at all relevant times, employer and National were alter egos and were her joint employers. Plaintiff also added a fifth cause of action for intentional infliction of emotional distress.
Employer and National filed answers to the first amended complaint in early 2021. Although employer and National filed separate answers to this pleading, they were filed by the same attorneys.
8. National's Petition to Compel Arbitration
In April 2021, National filed a petition to compel arbitration and stay the pending action. National asserted that as plaintiff's joint employer, it was entitled to enforce the arbitration agreement incorporated into the January 9, 2018 instructor contract and the other nine instructor contracts plaintiff signed. National also cited Phillips, supra, and urged the court to order the case to arbitration notwithstanding its prior order to the contrary in response to employer's petition.
By this point in the litigation, the case had been assigned to a new judge.
With respect to the validity and enforceability of the arbitration agreement, National's petition asserted the arguments previously advanced by employer. As pertinent here, National contended the Federal Arbitration Act applied, plaintiff's claims were governed by the arbitration agreement incorporated into the instructor contracts, the arbitration agreement was valid, and the agreement was not unconscionable or otherwise unenforceable. In the alternative, National argued that any unenforceable provision should be severed and the balance of the arbitration agreement enforced.
Plaintiff opposed the motion, emphasizing that National's assertion that the court had previously declined to order arbitration on purely procedural grounds was incorrect. Instead, the court had already considered-twice-a request for arbitration and determined that the arbitration agreement cited by National was both procedurally and substantively unconscionable and therefore unenforceable. That finding, according to plaintiff, barred National from pursuing further requests for arbitration due to principles of res judicata. Plaintiff also argued that National, as a non-signatory to the instructor contract, lacked standing to enforce the arbitration agreement.
National's reply emphasized the arguments made in its petition and also argued that res judicata did not apply because the ruling at issue was made in the present litigation, not a prior lawsuit.
9. Ruling; National's Appeal
The court held a hearing on the matter on July 20, 2021 and issued a written decision on July 30, 2021. As an initial matter, the court found National had standing to bring the petition to compel arbitration even though it was not a signatory to the arbitration agreement. The court noted that plaintiff's operative complaint alleged that National and employer were in "a joint venture" and were partners, principals, affiliates, representatives, agents, and alter egos of each other. National could therefore enforce the arbitration agreement as employer's agent.
The court briefly reviewed the prior orders regarding employer's requests for arbitration and rejected National's assertion that the court had never considered the merits of employer's arguments. National had claimed that the court previously rejected employer's requests on solely procedural grounds. But the court's prior orders stated otherwise. The April 21, 2020 order denying employer's request for reconsideration, for example, stated," '[I]n the alternative, the Court also concluded and made findings that the arbitration agreements were unenforceable and both procedurally and substantively unconscionable.'" The court also rejected plaintiff's contention that principles of res judicata applied, noting that res judicata relates to the preclusive effect of a judgment in a prior proceeding, which was not at issue.
Finally, and noting that National brought its petition to compel arbitration as an agent of employer, the court addressed National's citation to Phillips, supra. The court stated that in Phillips, a substantial change in the law caused the court to revisit a prior ruling in response to a party's renewed petition to compel arbitration. But here, the court observed, no such change in the law existed. Instead, National's petition simply repeated the facts and asserted the legal arguments already offered by employer and decided by the court. Given that situation, the court declined to exercise its discretion to reevaluate arguments that had already been decided and instead allowed the court's prior ruling denying the petition to compel arbitration to stand.
National timely appeals.
DISCUSSION
National's foundational assertion on appeal is that the court erred because it did not address the petition to compel arbitration on the merits and instead "applied the wrong law." Specifically, National complains that the court "treated [its petition] like a renewed motion, or one for reconsideration[ ]" rather than "hear[ing] it based on the evidence [National] submitted."
We disagree, mainly because National's petition does not satisfy the statutory prerequisites for either a motion for reconsideration or a renewed motion. Section 1008, subdivision (a) provides, "When an application for an order has been made to a judge, or to a court, and refused in whole or in part, or granted, or granted conditionally, or on terms, any party affected by the order may, within 10 days after service upon the party of written notice of entry of the order and based upon new or different facts, circumstances, or law, make application to the same judge or court that made the order, to reconsider the matter and modify, amend, or revoke the prior order. The party making the application shall state by affidavit what application was made before, when and to what judge, what order or decisions were made, and what new or different facts, circumstances, or law are claimed to be shown." National's petition was not filed within the required 10-day window and it was therefore not a proper motion for reconsideration.
Neither was it a proper renewed motion. Section 1008, subdivision (b) provides, "A party who originally made an application for an order which was refused in whole or part, or granted conditionally or on terms, may make a subsequent application for the same order upon new or different facts, circumstances, or law, in which case it shall be shown by affidavit what application was made before, when and to what judge, what order or decisions were made, and what new or different facts, circumstances, or law are claimed to be shown. For a failure to comply with this subdivision, any order made on a subsequent application may be revoked or set aside on ex parte motion." Given that National was not the "party who originally made an application for an order" to compel arbitration, it would not be proper to consider its petition to be a renewed version of employer's petition.
In any event, these provisions only authorize a motion made on "new or different facts, circumstances, or law." National's petition does not meet this prerequisite either. In an attempt to distinguish its petition from employer's, National asserted that "[b]ecause the new allegations against National University and [employer] are inexorably intertwined, there are new facts that give this Court new and additional reasons to grant arbitration." But National presented no new facts. National relied upon the same facts presented by employer in its reply in support of its petition to compel arbitration and in its motion for reconsideration of the order denying that petition, i.e., the arbitration agreement incorporated into the instructor contracts. And National attempted to enforce the same arbitration agreements cited by employer in its prior requests for arbitration. The legal arguments, moreover, were virtually identical. Of course, National sought to compel arbitration of plaintiff's claims, the court had already determined that no valid agreement to arbitrate existed, and employer did not appeal from the order denying its petition to compel arbitration. Thus, in order for the court to grant National's petition and require plaintiff to arbitrate her claims, the court would have been required to reconsider its prior order on its own motion. The court had the discretion to do so under two theories.
As acknowledged by National, "the issues in controversy against [National] are identical to those in controversy asserted against" employer.
First, section 1008, subdivision (c), provides: "If a court at any time determines that there has been a change of law that warrants it to reconsider a prior order it entered, it may do so on its own motion and enter a different order." No change in the law was presented by National in its petition to compel arbitration, however. And National does not argue on appeal that a change in the law had occurred during the pendency of the proceedings below. Instead, National misrepresents the record and mischaracterizes the court's rulings on employer's petition to compel arbitration-a strategy that is disfavored and which does nothing to advance its arguments.
Second, "[e]ven without a change of law, a trial court may exercise its inherent jurisdiction to reconsider an interim ruling. (Le Francois v. Goel (2005) 35 Cal.4th 1094, 1107.)" (Phillips, supra, 209 Cal.App.4th at p. 768.) We review a trial court's exercise of its inherent authority for an abuse of discretion and, on this record, see no abuse of discretion in the court's refusal to reconsider its prior orders. (See People v. Lujan (2012) 211 Cal.App.4th 1499, 1507.)
National offers several reasons it believes the court should have considered its petition to compel arbitration on the merits rather than relying on and affirming the rationale set forth in its prior orders. Mainly, National suggests that the court's denial of employer's petition to compel arbitration was based on procedural issues that did not exist in its petition. Specifically, employer improperly submitted the instructor contracts in support of its reply brief while National properly submitted its evidence in support of its petition. National's argument ignores the fact that although the court noted the procedural defect in employer's petition, it went on to consider whether an enforceable agreement to arbitrate existed.
National also claims that the court did not, in its prior rulings, "rule on the enforceability of the 2018 Instructor Contract." This is a misrepresentation of the record. Employer submitted the January 2018 instructor contract with its reply brief in support of the petition to compel arbitration. And the April 2020 order denying employer's petition to compel arbitration explicitly addresses the validity of the arbitration agreement attached to that contract and the other nine identical instructor contracts. In other words, National's suggestion that its due process rights have been compromised because the court did not ever rule on the legal issues and evidence presented in its petition to compel is baseless.
Given that the court had previously considered and decided the question presented in National's petition to compel arbitration, and National presented no new evidence or argument to the court, we see no abuse of discretion in the court's decision to leave its prior order denying the request to compel arbitration undisturbed.
DISPOSITION
The order denying appellant and defendant National University's petition to compel arbitration is affirmed. Plaintiff and respondent Nirali Patel shall recover her costs on appeal.
WE CONCUR: EDMON, P. J. EGERTON, J.