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Barfield v. Ecology Control Industries, Inc.

California Court of Appeals, First District, Fifth Division
Apr 30, 2009
No. A120168 (Cal. Ct. App. Apr. 30, 2009)

Opinion


LEE BARFIELD, Plaintiff and Respondent, v. ECOLOGY CONTROL INDUSTRIES, INC., Defendant and Appellant. A120168 California Court of Appeal, First District, Fifth Division April 30, 2009

NOT TO BE PUBLISHED

Alameda County Super. Ct. No. RG-07-337778

SIMONS, J.

Defendant Ecology Control Industries, Inc. (Ecology Control) appeals from the trial court’s order denying its motion to compel arbitration. Ecology Control contends the court erred in concluding the arbitration provision in plaintiff’s employment agreement is unconscionable. We agree and reverse the trial court’s order.

BACKGROUND

In May 2005, Ecology Control hired plaintiff and respondent Lee Barfield (Barfield) to be the general manager of its Richmond office. At the same time, it also hired Barfield’s wife, Jeanne Barfield, to be the billing manager in the Richmond office. At the time they were hired, both Barfield and his wife were employed by a competitor of Ecology Control, Consolidated Waste.

Barfield’s May 2005 employment agreement (Agreement) contains an arbitration provision, which states: “This Agreement will be governed by the laws of the State of California, applicable to employment contracts and all controversies relating to it, including work-related controversies between you and other company employees, will be settled by final and binding arbitration (other than the Company’s election in Paragraph 4) held in Torrance, California, pursuant to the Arbitration Rules of the American Arbitration Association, by an arbitrator chosen from the AAA Labor Arbitrators Panel. Any such arbitration must be requested in writing, no later than one (1) year from the date the controversy arose, and can be brought by you only after you have exhausted the Company problem resolution procedures. The losing party will pay all reasonable attorneys’ fees incurred by the prevailing party.”

In July 2007, Barfield and his wife filed a lawsuit against Ecology Control in the Alameda County Superior Court. Barfield asserted a single cause of action for constructive termination in violation of public policy. He alleged that Ecology Control demanded that he “secure his wife’s agreement to terminate her employment” and that he resign after his wife “refused to execute paperwork relinquishing all rights in monies owed her” by Ecology Control. Barfield contended that the constructive termination was in violation of public policy “to foster and protect marriage, to make it a permanent and public institution, to encourage the parties to live together, and to prevent separation.”

On July 25, 2008, this court dismissed this appeal as to Jeanne Barfield pursuant to Ecology Control’s abandonment of its appeal as to her.

In October 2007, Ecology Control moved to compel arbitration. The motion was supported by a copy of the Agreement and declarations from Ecology Control’s president and counsel. Following a hearing, the trial court denied the motion to compel. The court concluded that the Agreement was procedurally unconscionable and that the arbitration provision was so one-sided as to be substantively unconscionable.

DISCUSSION

I. Scope of the Arbitration Provision

At the outset, we reject Barfield’s contention the trial court’s order should be affirmed because his claim is outside the scope of the Agreement’s arbitration provision. The scope of an arbitration provision is a question of law we decide de novo. (EFund Capital Partners v. Pless (2007) 150 Cal.App.4th 1311, 1320 (EFund).)

“[A]rbitration is a matter of contract and an arbitrator may consider only such disputes as are covered by the arbitration clause or by a superseding submission agreement. [Citation.]” (Mansdorf v. California Physicians’ Service, Inc. (1978) 87 Cal.App.3d 412, 417.) Nevertheless, the general rule is that courts should “order arbitration unless it can be said with assurance that the arbitration clause is not susceptible of an interpretation that covers the asserted dispute. [Citation.]” (Pacific Inv. Co. v. Townsend (1976) 58 Cal.App.3d 1, 9; see also EFund, supra, 150 Cal.App.4th at pp. 1320-1321; Villacreses v. Molinari (2005) 132 Cal.App.4th 1223, 1229.) The relevant portion of the arbitration provision in this case states: “[A]ll controversies relating to [the employment contract], including work-related controversies between you and other company employees, will be settled by final and binding arbitration....” In analogous cases, where contracts required arbitration for “ ‘any controversy... arising out of or relating to this contract,’ ” courts have held such agreements are sufficiently broad to include tort, as well as contractual, liabilities so long as the tort claims “have their roots in the relationship between the parties which was created by the contract.” (Berman v. Dean Witter & Co., Inc. (1975) 44 Cal.App.3d 999, 1003; see also EFund, at p. 1323; Blatt v. Farley (1990) 226 Cal.App.3d 621, 628; Bos Material Handling, Inc. v. Crown Controls Corp. (1982) 137 Cal.App.3d 99, 105-106.)

On appeal, Barfield contends that the parties “never agreed to arbitrate any claims that arose from the actions of” Ecology Control and that his California Fair Employment and Housing Act claim is “not related to issues covered by the employment contracts.” (Underscoring in original.) Barfield fails to cite any authority supporting his position. In fact, “ ‘[t]here is no requirement that the cause of action arising out of a contractual dispute must be itself contractual’ ”; the “relating to” language embraces tort claims rooted in the contractual employment relationship. (Blatt v. Farley, supra, 226 Cal.App.3d at p. 628.) Barfield’s claim in this case, that he was constructively terminated in violation of public policy, is rooted in the employment relationship and relates to the Agreement, which established, evidenced, and controlled that relationship. The Agreement contains provisions about the duration of employment and bases for termination which may be relevant to any attempt by Ecology Control to justify its actions preceding Barfield’s departure.

Barfield mistakenly asserts the arbitration provision covers “ ‘disputes arising from this agreement,’ ” rather than the broader category of “all controversies relating to” the Agreement. (See Cobler v. Stanley, Barber, Southard, Brown & Associates (1990) 217 Cal.App.3d 518, 530 [an “arising from” arbitration provision “is generally considered to be more limited in scope than would be, for example, a clause agreeing to arbitrate ‘ “any controversy... arising out of or relating to this agreement’ ”].)

Barfield’s action is within the scope of the Agreement’s arbitration provision.

For the first time on appeal, Barfield contends that, under the Agreement, the parties had no obligations under the arbitration provision after the termination of Barfield’s employment. We will not consider this argument, which Barfield could have presented below. (Perez v. Grajales (2008) 169 Cal.App.4th 580, 591-592.)

II. Unconscionability

The trial court found the arbitration provision unconscionable and denied the motion to compel on that ground.

“An agreement to arbitrate is valid except when grounds exist for revocation of a contract. (Code Civ. Proc., §§ 1281, 1281.2, subd. (b).) Unconscionability is one ground on which a court may refuse to enforce a contract. (Civ. Code, § 1670.5.)” (Gatton v. T Mobile USA, Inc. (2007) 152 Cal.App.4th 571, 579 (Gatton).) Barfield bears the burden of proving any fact necessary to his unconscionability defense. (Ibid.; Szetela v. Discover Bank (2002) 97 Cal.App.4th 1094, 1099.) “Unconscionability has a procedural and a substantive element; the procedural element focuses on the existence of oppression or surprise and the substantive element focuses on overly harsh or one-sided results. [Citations.] To be unenforceable, a contract must be both procedurally and substantively unconscionable, but the elements need not be present in the same degree. [Citation.] The analysis employs a sliding scale: ‘the more substantively oppressive the contract term, the less evidence of procedural unconscionability is required to come to the conclusion that the term is unenforceable, and vice versa.’ [Citations.]” (Gatton, at p. 579.) Because the relevant evidence is undisputed, we review the trial court’s determination on unconscionability de novo. (Ibid.)

Ecology Control contends Barfield failed to show that formation of the Agreement involved even a minimal degree of procedural unconscionability. “The procedural element of the unconscionability analysis concerns the manner in which the contract was negotiated and the circumstances of the parties at that time. [Citations.] The element focuses on oppression or surprise. [Citation.] ‘Oppression arises from an inequality of bargaining power that results in no real negotiation and an absence of meaningful choice.’ [Citations.] Surprise is defined as ‘ “the extent to which the supposedly agreed-upon terms of the bargain are hidden in the prolix printed form drafted by the party seeking to enforce the disputed terms.” ’ [Citations.]” (Gatton, supra, 152 Cal.App.4th at p. 581.) Neither oppression nor surprise has been established.

Citing Armendariz v. Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83 (Armendariz), the trial court concluded the agreement “was one of adhesion because, as the Armendariz court noted, the economic pressure exerted by employers is particularly acute, as few employees are in a position to refuse a job over an arbitration requirement.” However, in Armendariz it was clear the agreement was a contact of adhesion: “It was imposed on employees as a condition of employment and there was no opportunity to negotiate.” (Armendariz, at p. 115.) The economic pressure on employees to sign the agreement made imposition of the arbitration provision in a contract of adhesion even more oppressive, but Armendariz did not suggest that the bare fact that a challenged provision is in an employment agreement establishes oppression and, therefore, procedural unconscionability. (Ibid.)

The trial court in its order also expressed concern regarding the fairness of a provision apparently exempting certain employer claims from arbitration and the fairness of the attorney fees provision. Barfield, in his brief on appeal, refers to those provisions in his procedural unconscionability discussion, but the fairness of those provisions is relevant only to the substantive unconscionability analysis. (Gatton, supra, 152 Cal.App.4th at p. 581, fn. 5.)

Unlike in Armendariz, a declaration submitted by the president of Ecology Control in support of the motion to compel averred that the contracts presented to the Barfields “are not standardized employment agreement forms used by [Ecology Control]. Rather [Ecology Control] specially drafted these Employment Agreements because, at the time of their hiring, both Lee and Jeanne Barfield were employed by a competitor of [Ecology Control], Consolidated Waste. The provisions of the respective Employment Agreements were negotiated between the parties and [Ecology Control] did not offer the Employment Agreements on a ‘take it or leave it basis.’ ” Barfield presented no evidence contradicting the declaration of Ecology Control’s president, nor did he provide any other evidence that the Agreement was a contract of adhesion or otherwise involved oppression in its formation. And, at oral argument, Barfield’s counsel conceded he was not relying on oppression to establish procedural unconscionability.

Citing Fitz v. NCR Corp. (2004) 118 Cal.App.4th 702, Barfield contends that surprise is shown by the fact that the arbitration provision refers to, but does not attach, the “Arbitration Rules of the American Arbitration Association.” However, the Fitz court found procedural unconscionability because the agreement there was a contract of adhesion; the discussion regarding the employer’s failure to attach the arbitration rules arose in the context of a discussion about what rules applied to the arbitration. (Id. at pp. 719-722.) In the other case Barfield cites, Harper v. Ultimo (2003) 113 Cal.App.4th 1402, 1406-1407, the unattached Better Business Bureau arbitration rules actually limited the scope of arbitral claims to the detriment of the plaintiff customers. Barfield identifies no such problem with the American Arbitration Association rules. Ultimately, Barfield’s reliance on surprise fails because he submitted no evidence that any aspect of the rules surprised him. The trial court did not rely on surprise to find procedural unconscionability, and, if it had, no evidence would have supported its conclusion.

Because Barfield failed to show that formation of the Agreement involved even a minimal degree of procedural unconscionability, the trial court erred in denying Ecology Control’s motion to compel arbitration on the ground of unconscionability. (Crippen v. Central Valley RV Outlet (2004) 124 Cal.App.4th 1159, 1165; Gutierrez v. Autowest, Inc. (2003) 114 Cal.App.4th 77, 88.)

Because we conclude Barfield failed to make a showing of procedural unconscionability, we need not and do not consider whether Barfield made a showing of substantive unconscionability.

DISPOSITION

The trial court’s order denying appellant’s motion to compel arbitration is reversed and this matter is remanded with instructions that the court enter a new order granting the motion. Appellant is awarded its costs on appeal.

We concur. JONES, P.J., BRUINIERS, J.

Judge of the Contra Costa Superior Court, assigned by the Chief Justice pursuant to article VI, section 6 of the California Constitution.


Summaries of

Barfield v. Ecology Control Industries, Inc.

California Court of Appeals, First District, Fifth Division
Apr 30, 2009
No. A120168 (Cal. Ct. App. Apr. 30, 2009)
Case details for

Barfield v. Ecology Control Industries, Inc.

Case Details

Full title:LEE BARFIELD, Plaintiff and Respondent, v. ECOLOGY CONTROL INDUSTRIES…

Court:California Court of Appeals, First District, Fifth Division

Date published: Apr 30, 2009

Citations

No. A120168 (Cal. Ct. App. Apr. 30, 2009)

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