Filed 8/27/14
                            CERTIFIED FOR PUBLICATION

                IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                            SECOND APPELLATE DISTRICT

                                     DIVISION THREE



STEPHANIE CRUISE,                                  B248430

        Plaintiff and Respondent,                 (Los Angeles County
                                                  Super. Ct. No. BC489042)
        v.

KROGER CO., et al.,

        Defendants and Appellants.




        APPEAL from an order of the Superior Court of Los Angeles County,
Suzanne G. Bruguera, Judge. Reversed with directions.
        Littler Mendelson, Jeremy A. Roth, Henry D. Lederman and Emily T. Patajo for
Defendants and Appellants.
        The Law Offices of Maryann P. Gallagher and Maryann P. Gallagher for
Plaintiff and Respondent.

                              _________________________
       Defendants and appellants Kroger Co., Kroger Manufacturing, Compton
Creamery, Keith Oldenkamp, Steve Kuebbing, Jesse Turner, Keith Henry, Jill McIntosh
and Tony Ramirez (sometimes collectively referred to as Kroger or the Kroger
defendants) appeal an order denying their motion to compel arbitration of an employment
discrimination action filed by plaintiff and respondent Stephanie Cruise (Cruise).1
       At the time Cruise applied for employment with Kroger in 2007, she completed an
employment application which contained an arbitration clause requiring arbitration of
employment-related disputes. The employment application also incorporated by
reference Kroger’s Mediation & Binding Arbitration Policy (Arbitration Policy or
Policy).
       The trial court denied Kroger’s motion to compel arbitration, ruling that Kroger
failed to meet its burden to prove the existence of an arbitration agreement. The trial
court was not persuaded the undated four-page arbitration policy attached to Kroger’s
moving papers was extant at the time Cruise read and signed the employment application,
and that it was the same Arbitration Policy to which the employment application referred.
       We conclude the arbitration clause in the employment application, standing alone,
is sufficient to establish the parties agreed to arbitrate their employment-related disputes,
and that Cruise’s claims against Kroger fall within the ambit of the arbitration agreement.
The only impact of Kroger’s inability to establish the contents of the 2007 Arbitration
Policy is that Kroger failed to establish the parties agreed to govern their arbitration by
procedures different from those prescribed in the California Arbitration Act (CAA)
(§ 1280 et seq.). Therefore, the arbitration is to be governed by the CAA, rather than by
the procedures set forth in the employer’s Arbitration Policy. Accordingly, the order
denying the motion to compel arbitration is reversed with directions to grant the motion.


1
      An order denying a motion to compel arbitration is appealable. (Code Civ. Proc.,
§ 1294, subd. (a); Reyes v. Macy’s Inc. (2011) 202 Cal.App.4th 1119, 1122.)

      All further statutory references are to the Code of Civil Procedure, unless
otherwise specified.

                                              2
                  FACTUAL AND PROCEDURAL BACKGROUND
       1. Events preceding litigation.
       On October 20, 2007, Cruise completed and signed an employment application for
the position of Human Resources Assistant Manager at Compton Creamery & Deli
Kitchen, and appeared for an interview at that location.
       The employment application included the following provision, which Cruise
separately initialed, and which stated in relevant part: “MANDATORY FINAL &
BINDING ARBITRATION: I acknowledge and understand that the Company has a
Dispute Resolution Program that includes a Mediation & Binding Arbitration Policy (the
‘Policy’) applicable to all employees and applicants for employment . . . . I acknowledge,
understand and agree that the Policy is incorporated into this Employment Application
by this reference as though it is set forth in full, that except for claims or disputes arising
out of the terms and conditions of any applicable CBA [collective bargaining agreement]
(‘Excluded Disputes’) the Policy applies to any employment-related disputes that exist or
arise between Employees and the Company or ‘Compton Creamery’ (as defined in the
Policy) that would constitute cognizable claims or causes of action in a court or
government agency under applicable law including individual statutory claims or disputes
(‘Covered Disputes’), that Covered Disputes are such claims or disputes that have to do
with an Employee’s seeking, attempted, actual, or alleged employment with the Company
or Compton creamery (or any of them) other than Excluded Disputes, and that the Policy
requires that any Employee who wishes to initiate or participate in formal proceedings to
resolve any Covered Disputes must submit the claims or disputes to final and binding
arbitration in accordance with the Policy. I acknowledge, understand, and agree that
(1) if any Covered Disputes exist or arise between me and the Company or Compton
Creamery (or any of them), other than any Excluded Disputes, I am bound by the
provisions, terms and conditions of the Policy which provides for mediation and
mandatory final and binding arbitration of any Covered Disputes; (2) I am and will
hereafter be deemed and treated as an ‘Employee’ as defined in the Policy for the
purposes thereof, (3) there are no judge or jury trials of any Covered Disputes permitted

                                               3
under the Policy, (4) I waive any right that I have or may have to a judge or jury trial of
any Covered Disputes, (5) I waive any right that I have or may have to have any formal
dispute resolution proceedings concerning any Covered Disputes take place in a local,
state, or federal court or agency and to have such proceedings heard or presided over by
an active local, state, or federal judge, judicial officer, or administrative officer, (6) all
Covered Disputes must be heard, determined and resolved only by an Arbitrator through
final and binding arbitration in accordance with the Policy, (7) the Company likewise
agrees to mandatory final and binding arbitration of any Covered Disputes, whether
initiated or participated in by me or by the Company, in accordance with the Policy, and
(8) I have received a copy of the Policy or one has been made available to me through
the Company’s Human Resource Manager, 2201 South Wilmington Ave,, Compton,
CA 90220.” (Italics added.)
       The above mentioned Arbitration Policy was not attached to the employment
application and Cruise stated the Policy was not provided to her at the time she applied
for employment.
       On December 7, 2007, seven weeks after Cruise submitted the employment
application, she was hired by Compton Creamery. On April 1, 2012, her employment
was terminated.
       2. Proceedings.
       Cruise initially filed a discrimination complaint with the Department of Fair
Employment & Housing, obtained a right to sue letter, and filed suit against the Kroger
defendants.
       The operative first amended complaint, filed August 30, 2012, alleged statutory
causes of action pursuant to the Fair Employment and Housing Act (FEHA) (Gov. Code,
§ 12900 et seq.) for retaliation, sexual harassment, sexual and racial discrimination,
failure to investigate and prevent harassment and retaliation, as well as common law
claims for wrongful termination in violation of public policy, intentional infliction of
emotional distress and defamation. The complaint also included a demand for a jury trial.


                                                4
              a. Kroger’s motion to compel arbitration.
       On November 29, 2012, the Kroger defendants filed a motion to compel
arbitration and stay judicial proceedings. Kroger contended a valid agreement to arbitrate
exists; Cruise was bound by the arbitration clause in the signed employment application
and as well as by Kroger’s four-page Arbitration Policy; Kroger was entitled to enforce
the arbitration agreement; and the arbitration agreement extended to all of Cruise’s claims
against Kroger.
              b. Cruise’s opposition to motion to compel arbitration.
       Cruise asserted she never signed an arbitration agreement with Kroger. The
arbitration clause in the employment application was “vague,” “brief” and unenforceable.
As for the four-page Arbitration Policy on which Kroger also relied, that was merely an
undated, unauthenticated page from a Ralphs handbook that was not provided to Cruise
when she applied for the position. Cruise contended the failure to provide her with a
copy of the Arbitration Policy meant that no contract was formed with respect to the
undisclosed terms. (Metters v. Ralphs Grocery Co. (2008) 161 Cal.App.4th 696, 702
(Metters).)
       Cruise further argued that even assuming the employment application and
Arbitration Policy were properly presented to her, the federal district court in Chavarria
v. Ralphs Grocery Co. (2011) 812 F.Supp.2d 1079 (Chavarria), already had reviewed
said documents and found them to be unconscionable, both procedurally and
substantively. The “take it or leave it” basis of the arbitration clause in the employment
application rendered it procedurally unconscionable. Further, the instant Arbitration
Policy’s provisions relating to apportionment of fees and appointment of the arbitrator
were substantively unconscionable pursuant to Chavarria as well as Armendariz v.
Foundation Health Psychcare Services, Inc. (2000) 24 Cal.4th 83 (Armendariz).
                      c. Trial court’s ruling.
       On January 25, 2013, the matter came on for hearing. On April 12, 2013, the trial
court denied the motion to compel arbitration and set forth its rationale in an extensive
written ruling, which stated, inter alia:

                                                 5
          “The Defendants have failed to meet their burden to prove the existence of a
signed arbitration agreement. Metters v. Ralphs Grocery Co. (2008) 161 Cal.App.4th
696.[2]
          “1. Defendants have failed to prove the existence of a written agreement to
arbitrate. . . . .
          “2. The defendants present Exhibit ‘A’ to the Snell declaration as the signed
arbitration agreement. However, Exhibit ‘A’ to the Snell declaration consisted merely of
pages from a Ralph’s employee handbook. The Snell declaration does not state that this
document was ever given to plaintiff. Plaintiff submits a declaration in opposition stating
that she never received the Ralphs employee handbook. (See Cruise Declaration).
There is no date on the document and the Snell declaration does not state whether that
document existed in 2007. . . .
          “B. The arbitration and employment policy submitted by Defendants is
procedurally unconscionable. Armendariz[, supra,] 24 Cal. 4th 83 at 115.
          “Kroger required Plaintiff to accept the ‘available’ Arbitration Policy not only as a
condition of employment, but as a condition of Plaintiff’ application for employment.
Plaintiff could not even present herself for consideration without first acceding to the
terms of the Policy. There is, therefore, no question that Kroger is the party of superior
bargaining power. Indeed, describing Kroger’s bargaining power here as simply
‘stronger’ than or ‘superior’ to Plaintiff’s belies the total imbalance between the parties’
relative positions. Kroger does not have merely superior or stronger bargaining power; it



2
       In Metters, defendant Ralphs Grocery Co. moved to compel arbitration claiming
the employee had entered into a binding arbitration agreement when he filled out a
dispute resolution form. (161 Cal.App.4th at p. 698.) However, the dispute form failed
to warn the employee that he was agreeing to binding arbitration. The dispute form,
which was titled Notice of Dispute & Request for Resolution, “did not alert [the
employee] he was agreeing to anything, let alone arbitration.” (Id. at pp. 702-703.)
Metters concluded substantial evidence supported the trial court’s finding that there was
no valid arbitration agreement. (Id. at p. 704.)

                                                6
has all of the bargaining power. Chavarria v Ralphs Grocery Co. (2011) 812 F.Supp.2d
1079, 1085, 1086).
       “ ‘Accordingly, because the Policy was presented as ‘take it or leave it,’ the Policy
is procedurally unconscionable. Additionally, because the Plaintiff was not given the
opportunity to review the full Policy before she was hired, this additional defect acts to
‘multiply’ the degree of procedural unconscionability. [D]efendants’ failures, including
failure to supply the plaintiff with the full terms of the binding arbitration process,
‘multiply the degree of procedural unconscionability of the ADR agreements’).
(Chavarria at 1085 and 1086) [Citation.]
       “C. The arbitration and employment policy is substantially unconscionable:
Chavarria v. Ralphs Grocery Co. (2011) 812 F.Supp.2d 1079
       “1.    The Policy’s provisions regarding the eligibility of potential arbitrators also
raise fundamental unconscionability concerns.
       “Under the terms of the Policy, paragraph 7, ‘the “Qualified Arbitrator” must be a
retired state or federal judge,’ . . . ‘and neither the American Arbitration Association
(‘AAA’) nor the Judicial Arbitration & Mediation Services (‘JAMS’) will be permitted to
administer any arbitration held under or pursuant to this Arbitration Policy.’ . . . .
       “By eliminating the ability of an institutional arbitrator to serve, Kroger eliminates
any uncertainty concerning the selection of the ultimate arbitrator. The AAA, for
example, has its own process for selecting a neutral arbitrator when the parties disagree.
Further, institutional arbitrators are less likely to be influenced by a well-paying repeat
party, such as Kroger, than are hand-picked individual arbitrators who stand to benefit
from Kroger’s frequent patronage. In short, the Policy’s restrictions mandating private,
individual arbitrators outside the AAA and JAMS organizational framework, coupled
with the arbitration selection ‘process,’ ensure that the arbitrator will be a person selected
by Kroger.’ (Chavarria at 1086)
       “2.    ‘These consequences are compounded by the fact that under paragraph 10
of Ralphs’ (Krogers) Arbitration Policy, the arbitrator apportions the arbitration and
arbitrator’s fees between the parties at the outset of the arbitration proceedings and before

                                               7
the introduction of evidence, regardless of the merits of the claim. The default allocation
is a fifty-fifty fee split. In the event of a dispute regarding the apportionment of fees
(which is almost universally the case), the arbitrator is empowered to resolve the dispute
only if there is settled and controlling United States Supreme Court authority requiring a
particular resolution. Authority from any other court, no matter how relevant, is barred
from consideration. In the absence of a specific United States Supreme Court mandate
for a particular resolution, the arbitrator ‘will’ divide the fees equally between the
parties.’ Chavarria at 1087 [¶] . . . [¶]
       “5.    The fee provision which requires plaintiff to pay 50 percent up front for the
arbitration is unconscionable based on Armendariz[, supra,] 24 Cal. 4th 83 at 110,111:
‘Consistent with the majority of jurisdictions to consider this issue, we conclude that
when an employer imposes mandatory arbitration as a condition of employment, the
arbitration agreement or arbitration process cannot generally require the employee to bear
any type of expense that the employee would not be required to bear if he or she was free
to bring the action in court. This rule will ensure that employees bringing FEHA claims
will not be deterred by costs greater than the usual costs incurred during litigation, costs
that are essentially imposed on an employee by the employer.’
       “D.    Pursuant to Code of Civil Procedure § 1281.2(c), the Court may, in its
discretion, refuse to compel arbitration where there is ‘is a possibility of conflicting
rulings on a common issue of law or fact.’ Code of Civil Procedure § 1281.2(c);
Fitzhugh v. General Healthcare & Rehabilitation Center, LLC (2007) 150 Cal.App.4th
[469,] 475. [¶] The existence of multiple defendants, including the individual alleged to
be a harasser who is not a party to the mediation/arbitration policy presents a possibility
of unnecessary doubling of resources and the possibility of conflicting rulings.
       “Therefore, the Defendants’ Petition to Compel Arbitration and Stay the Action is
Denied.”
       This timely appeal followed.




                                              8
                                     CONTENTIONS
       Kroger contends: the Federal Arbitration Act (FAA) governs the instant
arbitration agreement; California and federal law favor arbitration; the trial court erred as
a matter of law in holding that no valid contract to arbitrate exists, in that Cruise
expressed her assent to the terms of the Arbitration Policy by her initials and signature on
the employment application, the Arbitration Policy was properly incorporated by
reference, and Cruise is charged with knowledge of the terms of the Arbitration Policy
and is deemed to have assented thereto; the trial court erred in ruling the Arbitration
Policy was procedurally and substantively unconscionable; the trial court should sever
any offending provisions and order arbitration; Cruise must arbitrate against all of the
defendants; and the trial court proceeding should be stayed pending arbitration.
                                       DISCUSSION
       1. The undisputed evidence establishes the parties agreed to arbitrate their
employment disputes.
       Under “both federal and state law, the threshold question presented by a petition
to compel arbitration is whether there is an agreement to arbitrate.” (Cheng-Canindin v.
Renaissance Hotel Associates (1996) 50 Cal.App.4th 676, 683, italics added).)
       The instant employment application, which was signed by Cruise, contained the
following provision, which Cruise separately initialed, and which stated in relevant part:
“MANDATORY FINAL & BINDING ARBITRATION: I acknowledge and understand
that the Company has a Dispute Resolution Program that includes a Mediation &
Binding Arbitration Policy (the ‘Policy’) applicable to all employees and applicants for
employment . . . . I acknowledge, understand and agree that the Policy is incorporated
into this Employment Application by this reference as though it is set forth in full, . . . the
Policy applies to any employment-related disputes that exist or arise between Employees
and the Company . . . and that the Policy requires that any Employee who wishes to
initiate or participate in formal proceedings to resolve any Covered Disputes must submit
the claims or disputes to final and binding arbitration in accordance with the Policy.”
(Italics added.)

                                               9
       The above language eliminates any argument the parties did not agree to arbitrate
their employment-related disputes.
       Further, in view of the above provision, Cruise cannot contend her claims against
Kroger fall outside the scope of arbitrable issues. “ ‘In California, the general rule is that
arbitration should be upheld unless it can be said with assurance that an arbitration clause
is not susceptible to an interpretation covering the asserted dispute.’ ” (Izzi v. Mesquite
Country Club (1986) 186 Cal.App.3d 1309, 1315.) Cruise’s statutory causes of action
against Kroger pursuant to FEHA (Gov. Code, § 12900 et seq.) for retaliation, sexual
harassment, sexual and racial discrimination, failure to investigate and prevent
harassment and retaliation, as well as her common law claims for wrongful termination in
violation of public policy, intentional infliction of emotional distress and defamation, are
all “employment-related disputes” and therefore clearly are covered disputes subject to
the arbitration agreement.
       Thus, there is no question the parties agreed to arbitrate their employment-related
disputes, and that Cruise’s claims against Kroger fall within the ambit of the arbitration
agreement. Therefore, Kroger is entitled to enforce the agreement to arbitrate.
       2. The impact of the trial court’s finding that Kroger failed to establish the
precise terms of the Arbitration Policy.
       Kroger’s moving papers were supported by the declaration of Savarda Kia Snell,
Human Resource Manager for Compton Creamery. The Snell declaration, dated
November 28, 2012, provided in relevant part at paragraph 3: “Attached hereto as
Exhibit A is a true and correct copy of the Mediation & Binding Arbitration Policy
(referred to in Defendants’ Memorandum of Points and Authorities as the ‘Arbitration
Policy’).” Exhibit A to the Snell declaration consisted of a four-page document
captioned “RALPHS GROCERY COMPANY [¶] DISPUTE RESOLUTION
PROGRAM [¶] MEDIATION & BINDING ARBITRATION POLICY.” Kroger
asserted said document was a copy of the operative Arbitration Policy which was
incorporated by reference into the employment application which Cruise executed five
years earlier, on October 20, 2007.

                                              10
       However, the trial court was not persuaded the undated four-page arbitration
policy attached to the Snell declaration was extant at the time Cruise read and signed the
employment application, and that it was the same Arbitration Policy to which the
employment application referred.
       Nonetheless, Kroger’s inability to establish the precise language of the Arbitration
Policy which was in effect at the time of Cruise’s hiring in 2007, does not support the
trial court’s conclusion that found Kroger “failed to prove the existence of a written
agreement to arbitrate.” The undisputed evidence, specifically, the employment
application, is sufficient to establish the existence of a written agreement to arbitrate the
employment-related disputes pled herein by Cruise. Therefore, Kroger’s inability to
establish the precise terms of the Arbitration Policy does not relieve Cruise of the
obligation to arbitrate.
       The only impact of Kroger’s inability to establish the contents of the 2007
Arbitration Policy is that Kroger failed to establish the parties agreed to govern their
arbitration by procedures different from those prescribed in the CAA (§ 1280 et seq.).
Unless the parties otherwise agree, the conduct of an arbitration proceeding is controlled
by the CAA. (See, e.g., 1281.6, §§ 1282, 1282.2.) Here, because Kroger failed to
establish an agreement to the contrary, the instant arbitration proceeding is to be
governed by the procedures set forth in the CAA. Because this arbitration is controlled
by California statutory and case law, Cruise’s arguments that Kroger’s Arbitration Policy
is procedurally and substantively unconscionable are meritless.3



3
       An employer may lawfully require compulsory arbitration of disputes as a
condition of employment. (Lagatree v. Luce, Forward, Hamilton & Scripps (1999)
74 Cal.App.4th 1105, 1122-1123.) With respect to appointment of the arbitrator, section
1281.6 provides that where the parties’ arbitration agreement fails to provide a method of
appointing an arbitrator, the method prescribed in section 1281.6 shall control. (See HM
DG, Inc. v. Amini (2013) 219 Cal.App.4th 110, 1107 [parties need not agree upon a
specific method for appointing an arbitrator to form a binding arbitration agreement].)
Finally, with respect to apportionment of costs, Armendariz held “a mandatory
employment arbitration agreement that contains within its scope the arbitration of FEHA
                                              11
       Nothing herein should be construed as enabling an employer to enforce a missing
arbitration agreement. We merely hold the language of the arbitration clause in the
instant employment application, standing alone, was sufficient to establish an agreement
by the parties to arbitrate employment-related disputes. While the parties’ agreement to
arbitrate is enforceable, the employer’s inability to establish the contents of its
Arbitration Policy precludes the employer from enforcing the provisions of said policy.
Instead, the arbitration proceeding is to be conducted in accordance with the procedures
set forth in the CAA as well as applicable case law.
                                      DISPOSITION4
       The order denying the motion to compel arbitration and stay the action is reversed
with directions to grant the motion. The parties shall bear their respective costs on
appeal.
       CERTIFIED FOR PUBLICATION




                                                          ALDRICH, J.

       I concur:




                      KLEIN, P. J.




claims impliedly obliges the employer to pay all types of costs that are unique to
arbitration.” (24 Cal.4th at p. 113.)
4
       Due to the unavailability of the third member of the panel which heard this matter,
this opinion is being filed with the concurrence of the two remaining members of the
panel. (Cal. Const., art. VI, § 3 [“Concurrence of 2 judges present at the argument is
necessary for a judgment”]; see, e.g., People v. Castellano (1978) 79 Cal.App.3d 844,
862.)
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