Chun Ping Turng v. Guaranteed Rate, Inc.

371 F.Supp.3d 610

CHUN PING TURNG, Plaintiff,

v.GUARANTEED RATE, INC., Defendant.

Case No. 18-cv-02642-EMC

United States District Court, N.D. California.

Signed January 17, 2019

Reuben D. Nathan, Nathan & Associates, APC, Newport Beach, CA, John Glugoski, Matthew Righetti, Michael C. Righetti, Righetti Glugoski, P.C., San Francisco, CA, for Plaintiff.

Clint S. Engleson, Timothy Lloyd Johnson, Jonathan Hisataka Liu, Spencer C. Skeen, Ogletree, Deakins, Nash, Smoak and Stewart, P.C., San Diego, CA, for Defendant.

ORDER GRANTING DEFENDANT'S MOTION TO COMPEL ARBITRATION

Docket No. 17

EDWARD M. CHEN, United States District Judge

I. INTRODUCTION

On August 8, 2018, Plaintiff filed the First Amended Complaint ("FAC"). Docket No. 16 ("FAC"). Defendant filed a Motion to Compel Arbitration on August 30, 2018. Docket No. 17 ("Mot."). Both parties were heard on the matter on October 25, 2018.

II. FACTUAL & PROCEDURAL BACKGROUND

This is the second motion to compel arbitration filed in this case. Rather than respond to the first motion to compel arbitration, Plaintiff filed her FAC, raising for the first time a PAGA claim. CompareCompl., with FAC. Plaintiff has since conceded that her PAGA claim is barred by the statute of limitations. Docket No. 18 ("Opp.") at 23–24.

Plaintiff's claims arise under the Federal Labor Standards § 16(b); California Labor Code §§ 226.7(a), 512(a), 226(a), 201 - 203, 221 - 224 et seq. , 2699 ; and California Business and Professions Code § 17200 et seq. FAC. Plaintiff argues that she and other class members are entitled to premium wages for overtime pay based on a regular rate with commission and bonuses. Id. ¶ 9. Plaintiff contends that Defendant denied her, and other class members, minimum wages owed to her and others based on overtime work laws, wages upon discharge, and compensation for meals and rest breaks. Id. Similarly, Plaintiff argues that Defendant failed to keep accurate payroll and wage statements in accordance with California law. Id.

Plaintiff worked as an employee of Defendant from December 2015 to June 2016. Id. ¶ 14. Her role was that of a mortgage specialist in Orange County, California. Id. She contends that in that position she regularly worked over eight hours a day without overtime pay or compensation for rest breaks. Id.

After Plaintiff filed the FAC, Defendant moved to compel arbitration and to dismiss the action under Federal Rule of Civil Procedure rules 12(b)(6) and 12(b)(1). Mot. The basis for this motion is an arbitration agreement in Plaintiff's employment contract. Id. at 10.

Plaintiff opposes the motion to compel arbitration on several grounds. She claims that Defendant waived its right to arbitrate. She argues that the actual agreement is not valid because the express language of the agreement required a signature from the Executive Vice President, which was not satisfied. Opp. at 12. Plaintiff also contends that California law rather than Illinois law governs the contract despite a choice of law provision in the contract. Id. at 14–15. Defendant does not address this contention in its papers.

Plaintiff also challenges the arbitration agreement based on unconscionability. She asserts that the arbitration agreement is procedurally unconscionable because it is a contract of adhesion, and because Plaintiff did not receive a copy of the AAA rules which govern the arbitration agreement. Id. at 22–24.

Plaintiff further contends that the arbitration agreement is substantively unconscionable because the agreement requires her to arbitrate the types of claims an employee is most likely to bring while allowing Defendant the option to avoid arbitration for the types of claims that an employer is most likely to bring. Similarly, she takes issue with the conscionability of the choice of law provision as it requires Plaintiff to waive unwaivable claims. Id. at 24–29. Plaintiff also challenges, as unconscionable, a fee shifting provision and the forum selection clause. Id. Finally, Plaintiff asserts that the defects in the arbitration agreement cannot be severed; therefore, if the Court finds that the contract is unconscionable, she claims that the Court cannot apply the agreement's severability clause. Id. at 30–32.

After the hearing, Plaintiff informed the Court that there is a parallel case in Sacramento County Superior Court (Tadena v. Guaranteed Rate, Inc., et al. , Case No. 32-2018-00232323 (Sac. Super. Ct. 2018) ). The Tadena case is a class action with some overlapping claims to those in the present matter.

A. The Contract

The relevant provisions of the arbitration agreement read:

V. YOUR CONFIDENTIALITY OBLIGATIONS; NON-SOLICITATION

...

(d) Non-Solicitation

...

(i) Employees

During the Restricted Period, you may not, directly or indirectly, hire, solicit, or encourage any Person employed by the Company during the last 12 months of employment with the Company or during the remainder of the Restricted Period to end their employment with the Company and/or join you as a partner, agent, employee, independent contractor or otherwise in a business venture or other business relationship. During the Restricted Period, you may not supervise, manage, or oversee the work of any former employee of the Company, the identity of which you learned during your employment with the Company....

(ii) Vendors ....

VII. MANDATORY ARBITRATION AND WAIVER OF RIGHT TO SUE AND RIGHT TO FILE ANY CLASS OR COLLECTIVE ACTION.

(a) Arbitration

Any and all claims (legal or equitable), demands, disputes, or controversies between you and the Company must be resolved by arbitration in accordance with the rules of the American Arbitration Association then in existence. Such arbitration shall take place in Chicago, Illinois, the applicable law will be the laws of the State of Illinois without regard to the conflicts of law provisions therein and the decision of the arbitrator shall be final and binding on you and the Company. Without limiting the foregoing, the following claims must be resolved by arbitration:

(i) Claims related to your compensation with the Company brought under any federal, state or local statute, law, ordinance, regulation or order or the common law of any state, including without limitation claims relating to your wages, salary increases, bonuses, commissions, overtime pay, vacation pay, or severance pay whether or not such claim is based upon a legally protected right, whether statutory, contractual or common law; and

(ii) Claims brought under any federal, state or local statute, law, ordinance, regulation or order, or the common law of any state, alleging that you were or are being subject to discrimination, retaliation, harassment, or denial of equal employment opportunity based on sex, race, color, religion, national origin, disability, age, marital status, or any other category protected by law; and/or relating to your benefits or working conditions, including without limitation, claims related to leaves of absence, Employee benefit plans, Employee health and safety, and activity protected by federal labor laws.

(b) Waiver of Right to Sue and Right to File any Action as a Class or Collective Action

With respect to any and all claims made by you, there will be no right or authority for any dispute to be brought, heard or arbitrated under this Agreement as a class or collective action, private attorney general, or in a representative capacity on behalf of any Person.

(c) Exclusions

The mandatory arbitration provisions of this agreement do not apply to: (i) any claim by you for workers compensation benefits or unemployment compensation benefits; (ii) any claim for injunctive or equitable relief, including without limitation claims related to unauthorized disclosure of confidential information, trade secrets or intellectual property; or (iii) any action brought relating to or arising out of any non-solicitation violations.

IX. ATTORNEYS' FEES AND COSTS; INJUNCTIVE RELIEF

The Company may recover from you its attorneys' fees and costs relating to any action to enforce, defend and/or prosecute this Agreement. You acknowledge that a breach of any provision of this Agreement will cause irreparable harm to the Company and that monetary damage will be inadequate and may be difficult or impossible to ascertain. Therefore, in the event of any such breach, or threatened breach, in addition to all other remedies, the Company shall have the right to require you to fulfill your obligations by way of temporary and/or permanent injunctive relief.

X. MISCELLANEOUS

... This agreement will be effective only after it has been fully executed by you and either the Company's President and CEO or the Executive Vice President of Strategy and Integrated Operations....

To the extent a court of competent jurisdiction determines any provision is not enforceable, the parties agree that the court may modify the provision to the minimum extent necessary to make the provision enforceable. Further, any such invalid provision shall not invalidate the remaining provisions, which shall remain in full force and effect.

Docket No. 18-2 ("Plaintiff's Exhibit 1") at 13–15.

III. DISCUSSION

A. Legal Standard

Arbitration agreements are "valid, irrevocable, and enforceable." 9 U.S.C. § 2. "When considering a party's request, the court is limited to determining (1) whether a valid arbitration agreement exists, and if so (2) whether the arbitration agreement encompasses the dispute at issue." Ambler v. BT Americas Inc. , 964 F.Supp.2d 1169, 1173 (N.D. Cal. 2013) (Davila, J.) (citing 9 U.S.C. §§ 2 – 4 ; Cox v. Ocean View Hotel Corp. , 533 F.3d 1114, 1119 (9th Cir. 2008) ). If there is a valid arbitration agreement and if the agreement encompasses the disputed issue, the court lacks "discretion to deny the motion and must compel arbitration." Id. "By its terms, the [FAA] leaves no place for the exercise of discretion by a district court, but instead mandates that district courts shall direct the parties to proceed to arbitration." Dean Witter Reynolds, Inc. v. Byrd ,...