Anderson v. Safe Streets U.S. LLC

MARK ANDERSON, on behalf of himself and all others similarly situated, Plaintiffs, v. SAFE STREETS USA LLC and Does 1 through 100, inclusive, Defendants.

No. 2:18-cv-00323-KJM

UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF CALIFORNIA

August 28, 2018

ORDER

Defendant Safe Streets USA LLC ("Safe Streets") moves to compel arbitration of most claims and stay all further proceedings in this case filed by plaintiff and former employee, Mark Anderson. Anderson opposes the motion. For the following reasons, the court GRANTS Safe Streets' motion.

I. BACKGROUND

A. Factual Background

Anderson asserts began working for Safe Streets in October 2014. Anderson Decl. ¶ 2, ECF No. 10-1. Safe Streets asserts it hired Anderson on August 19, 2015, but he postponed his start date to October 19, 2015. Morgan Suppl. Decl. ¶ 4, ECF No. 12-1.¹ On his hiring dateof August 19, 2015, he signed several documents on that date as part of the hiring process; his electronic signature appears on the documents next to a date and time stamp. Id. ¶¶ 2, 4, 5 & Ex. A at 4, 5, 6, 7, 11, 12, 13. One of these documents, titled "Retention Bonus," contained an "Agreement to Arbitrate." ECF No. 6-3; see also Morgan Suppl. Decl. Ex. A at 8 ¶ 2. The arbitration clause is underlined and clearly visible on the first page of the Retention Bonus document. Morgan Suppl. Decl. Ex. A at 8 ¶ 2. The Retention Bonus agreement states in part, in a sub-paragraph titled "Binding Mutual Arbitration":

You and Safe Streets agree that any Covered Claims (defined below) will be resolved by final and binding arbitration as set forth in this Agreement. The arbitration agreement . . . shall be governed by the Federal Arbitration Act ("FAA") and the law of the State of North Carolina to the extent New Jersey law is not inconsistent with the FAA. This agreement to arbitrate applies with respect to all Covered Claims, whether initiated by you or Safe Streets.

Id. ¶ 2.a. Covered Claims as defined by the agreement include:

[A]ny and all claims or disputes between you and Safe Streets . . . including but not limited to all claims and disputes arising out of or in any way relating to your employment, compensation, benefits and terms and conditions of employment with Safe Streets, or the termination thereof, including but not limited to contract, tort, defamation and other common law claims, wage and hour claims, statutory discrimination, harassment and retaliation claims, and claims arising under or relating to any federal, state or local constitution, statute or regulation, including, without limitation, the [FLSA, Title VII, the ADEA, the WARN Act, the EPA, the ADA, the FMLA,] and any other federal, state or local wage and hour or discrimination law, and any and all other federal, state, or local constitutional, statutory, regulatory, or common law claims or causes of action now or hereafter recognized.

Id. at 9 ¶ 2.b.

The agreement further states, in bold capitalized letters, that no claims may be "INITIATED, MAINTAINED, HEARD OR DETERMINED ON A CLASS, COLLECTIVE, OR REPRESENTATIVE ACTION BASIS EITHER IN COURT OR INARBITRATION," to the maximum extent the law permits. Id. at 9-10 ¶ 2.d. (emphasis in original).

B. Procedural Background

Anderson filed this putative class action against Safe Streets on February 12, 2018. Compl., ECF No. 1. Anderson alleged claims under the Fair Labor Standards Act ("FLSA"), various sections of the California Labor Code, and the California Business & Professions Code. Id. ¶¶ 39-86. One of Anderson's California Labor Code claims is a Private Attorneys General Act ("PAGA") claim to recover civil penalties. Id. ¶¶ 82-86.

On March 9, 2018, Safe Streets moved to compel arbitration, asserting Anderson signed a valid and enforceable arbitration agreement when he started with Safe Streets. Mot., ECF No. 6. Safe Streets contends all claims except for Anderson's PAGA claim fall under the "Covered Claims" section of the arbitration agreement. Id. at 5. Safe Streets asks the court to stay all further proceedings, including Anderson's PAGA claim, until arbitration resolves his other claims. Id. at 7.

Anderson opposes Safe Streets' motion to compel arbitration for several reasons. Opp'n, ECF No. 10. First, he asserts he does not recall seeing or signing the Retention Bonus agreement. Id. at 9-10; Anderson Decl. ¶ 3. He says the time stamp by his purported electronic signature shows a time when he typically would "have been in the field working," Safe Streets required "important documents" to be signed "in ink (a wet signature)," Safe Streets' policies do not provide for the use of electronic signatures, and if he would have been provided an arbitration agreement to sign, he would have first reviewed it with his wife who "works in human resources." Anderson Decl. ¶¶ 4-8. Second, Anderson argues that even if the agreement is valid, it is unconscionable and may not be enforced. Opp'n at 14-15. Third, he claims that the class action waiver clause in the agreement violates the National Labor Relations Act ("NLRA"). Id. at 16. Fourth, Anderson contends the arbitration agreement's statement that it "shall be governed by the [FAA] and the law of the State of North Carolina to the extent New Jersey law is not inconsistent with the FAA" renders "the entire agreement potentially unenforceable." Id. at 17-19& n.23. Fifth, he argues the court should not stay his PAGA claims even if other claims go to arbitration. Id. at 19.

Safe Streets filed a reply to Anderson's opposition. Reply, ECF No. 12. First, Safe Streets argues that its evidence is sufficient to prove Anderson signed the agreement. Id. at 1-3. Second, it argues the agreement is not procedurally or substantively unconscionable. Id. at 6. Third, Safe Streets argues the class action waiver does not violate the NLRA. Id. at 6-8. Fourth, the FAA preempts contrary state law, and references to other state laws in the arbitration agreement do not extinguish Anderson's state law claims. Id. at 8-9. Fifth, courts routinely stay derivative PAGA claims pending arbitration of non-PAGA claims. Id. at 9.

Safe Streets has submitted a notice of supplemental authority on the recently decided Supreme Court case, Epic Systems Corp. v. Lewis, 138 S. Ct. 1612 (2018). ECF No. 13. Anderson filed a response. ECF No. 14. The parties disagree on whether the holding in Epic Systems is relevant to their dispute.

II. LEGAL STANDARD

Congress enacted the Federal Arbitration Act ("FAA") "in response to widespread judicial hostility to arbitration agreements." AT&T Mobility LLC v. Concepcion, 563 U.S. 333, 339 (2011). The FAA provides that "arbitration agreements generally shall be valid, irrevocable, and enforceable." Knutson v. Sirius XM Radio Inc., 771 F.3d 559, 564 (9th Cir. 2014) (citations and internal quotation marks omitted). Section 2 of the FAA, its "primary substantive provision," Concepcion, 563 U.S. at 339 (citation omitted), states "[a] written provision in . . . a contract evidencing a transaction involving commerce to settle by arbitration a controversy thereafter arising out of such contract or transaction . . . shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract." 9 U.S.C. § 2.

Section 4 of the FAA allows district courts to hear motions to compel arbitration. 9 U.S.C. § 4. Generally, in deciding whether to compel arbitration, a court determines two "gateway" issues: (1) whether the parties agreed to arbitrate; and (2) whether their agreement covers the dispute brought before the court. Brennan v. Opus Bank, 796 F.3d 1125, 1130 (9th Cir. 2015) (citing Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79, 84 (2002)). The partymoving to compel arbitration bears the burden on each of these elements. Ashbey v. Archstone Prop. Mgmt., Inc., 785 F.3d 1320, 1323 (9th Cir. 2015).

The party opposing arbitration may argue the agreement is unenforceable based on any "'generally applicable contract defenses, such as fraud, duress, or unconscionability,'" but not "defenses that apply only to arbitration." Concepcion, 563 U.S. at 343 (quoting Doctor's Associates, Inc. v. Casarotto, 517 U.S. 681, 687 (1996)). After all, "'a party cannot be required to submit to arbitration any dispute which he has not agreed so to submit.'" Knutson, 771 F.3d at 565 (quoting United Steelworkers of Am. v. Warrior & Gulf Nav. Co., 363 U.S. 574, 582 (1960)). A court may therefore declare an arbitration agreement unenforceable when enforcement would contravene a state's law, but only if that state law is not preempted by the FAA. See Concepcion, 563 U.S. at 343. Stated simply, "[w]hen state law prohibits outright the arbitration of a particular type of claim, the analysis is straightforward: The conflicting rule is displaced by the FAA." Id. at 341.

"When considering a motion to compel arbitration, a court applies a standard similar to the summary judgment standard" of Federal Rule of Civil Procedure 56. Concat LP v. Unilever, PLC, 350 F. Supp. 2d 796, 804 (N.D. Cal. 2004) (citation omitted); see also Cox v. Ocean View Hotel Corp., 533 F.3d 1114, 1119 (9th Cir. 2008) ("[D]enial of a motion to compel arbitration has the same effect as a grant of partial summary judgment denying arbitration . . . ."); Greystone Nevada, LLC v. Anthem Highlands Cmty. Ass'n, 549 F. App'x 621, 623 (9th Cir. 2013) (reversing an order compelling arbitration where opposing party had been afforded no opportunity to present evidence and argument). The party opposing arbitration receives the benefit of any reasonable doubts and the court draws reasonable inferences in that party's favor, and only when no genuine disputes of material fact surround the arbitration agreement's existence and applicability may the court compel arbitration. See Three Valleys Mun. Water Dist. v. E.F. Hutton & Co., 925 F.2d 1136, 1141 (9th Cir. 1991) (quoting Par-Knit Mills, Inc. v. Stockbridge Fabrics Co., 636 F.2d 51, 54 (3d Cir. 1980)); Co...