Cobarruviaz v. Maplebear, Inc.

143 F.Supp.3d 930

Dominic Cobarruviaz, et al., Plaintiffs,

v.Maplebear, Inc., Defendant.

Case No. 15-cv-00697-EMC

United States District Court, N.D. California.

Signed November 3, 2015

Robert Stephen Arns, Jonathan Ellsworth Davis, Julie C. Erickson, The Arns Law Firm, Jahan C. Sagafi, Outten & Golden LLP, San Francisco, CA, Michael Scimone, Outten and Golden LLP, New York, NY, Shannon Liss-Riordan, Lichten & Liss-Riordan, P.C., Boston, MA, for Plaintiffs.

Shon Morgan, Matthew S. Hosen, Viola Trebicka, Quinn Emanuel Urquhart & Sullivan, LLP, Los Angeles, CA, Benjamin Berkowitz, Nikki Khanh Vo, Rachael Elizabeth Meny, Ryan K.M. Wong, Theresa H. Nguyen, Keker & Van Nest LLP, San Francisco, CA, for Defendant.

ORDER GRANTING DEFENDANT'S MOTION TO COMPEL ARBITRATION

EDWARD M. CHEN, United States District Judge

I. INTRODUCTION

Plaintiff Dominic Cobarruviaz brought this lawsuit on behalf of himself and a putative class of former and current shoppers and grocery delivery drivers who work for Defendant Maplebear, Inc., which does business as Instacart (hereafter, Instacart). See Docket No. 17 (First Amended Complaint) (FAC). "Instacart is a shopping and delivery service that provides shoppers and delivery drivers who are dispatched through a mobile phone application to shop, purchase, and deliver groceries to customers at their homes and businesses." Id. at ¶ 2. Plaintiffs were classified by Instacart as independent contractors. Id. at ¶ 3. They claim, however, that they are Instacart's employees, and thus are entitled to various protections for employees under the Fair Labor Standards Act (FLSA) and under the labor codes of various states where Plaintiffs worked, such as California, New York, and Colorado. Id. at ¶ 5. The California-based Plaintiffs have also pled a claim for civil penalties under California's Private Attorneys General Act (PAGA). Id. at ¶¶ 119-123.

Prior to working for Instacart, Plaintiffs were required to electronically sign identical Independent Contractor Agreements. See Docket No. 30 (Raman Decl.), Exh. A (Agreement). The fifth page of the seven-page agreement contains an arbitration clause that requires that "any controversy, dispute or claim arising out of or relating to the Services performed by the Contractor ...be submitted to and determined exclusively by binding arbitration." Id. at § 7.1. The Agreement further specified that arbitration "shall be administered by JAMS" under the JAMS rules, but the Agreement materially conflicted with the applicable JAMS rules. In the event of such conflicts, the Agreement's terms applied. Id. at § 7.2. However, JAMS rules provide that "an arbitration demand will not be accepted unless there is full compliance" with JAMS procedures. Based on this arbitration clause, Instacart brought the instant motion to compel arbitration. Docket No. 29 (Mot.).

Instacart's motion came on for hearing before the Court on August 20, 2015. The Court then ordered Instacart to file an arbitration demand with JAMS "for the sole purpose of obtaining a determination from JAMS whether it will accept such arbitration demand." Docket No. 76. JAMS responded that because the Agreement did not comply with JAMS's Minimum Standards, it would "administer the cases only if the parties, by agreement or waiver, amend the arbitration agreement to comply with the Minimum Standards." Docket No. 81 (Joint Status Report), Exh. T. The Court took the matter under submission at the October 1, 2015 status conference. For the reasons set forth below, the Court GRANTS Defendant's motion to compel arbitration.

II. BACKGROUND

To become "Personal Shoppers" for Instacart, Plaintiff was required to apply online. Raman Decl. at ¶ 13. As part of that application process, Plaintiffs were required to review and electronically sign Instacart's Independent Contractor Agreement. Id. at ¶ 13-15. The Agreement states that it is being entered into between Instacart and "an individual (‘Contractor’) (collectively referred to as the ‘Parties'.)." Agreement at 1.

Instacart uses an electronic signature service called HelloSign to process its contracts, and the HelloSign service allows Instacart to track, "using IP addresses and other identifying data, when each Personal Shopper applicant receives, views, and signs each Independent Contractor Agreement." Id. at ¶ 15. There is no dispute that each of the named Plaintiffs electronically signed the Agreement, and Plaintiffs do not argue that a valid contract was not formed between them and Instacart.

As previously noted, each of the Agreements contains an identical arbitration clause on its fifth page in a section titled "Dispute Resolution." See Agreement at § 7. The arbitration provision is reproduced in the same font as the surrounding contract provisions and in the same sized typeface. Id. One sentence in the arbitration clause is bolded¹ —the only bolded sentence in the entire Agreement—but otherwise no part of the arbitration clause is in any way set off from the surrounding text. It is undisputed that Plaintiffs had no opportunity to opt-out of the arbitration clause, and that agreeing to the arbitration clause was a mandatory requirement for Plaintiffs to perform work for Instacart.

The arbitration provision provides that "the Parties agree that to the fullest extent permitted by law, any controversy, dispute or claim arising out of or relating to the Services performed by the Contractor, this Agreement, the breach, termination, interpretation, enforcement, validity, scope and applicability of any such agreement...which could otherwise be heard before any court of competent jurisdiction (a ‘Dispute’), shall be submitted to and determined exclusively by binding arbitration." Id. at § 7.1. The clause further provides that the "arbitration shall be administered by JAMS at its offices located [in] San Francisco" and that the arbitration will be conducted "pursuant to [JAMS's] Employment Arbitration Rules and Procedures and subject to JAMS Policy on Employment Arbitration Minimum Standards of Procedural Fairness (collectively, ‘Rules') that are in effect when arbitration is demanded." Id. However, the Agreement expressly provides that "[i]n the event of any conflict between the Rules and this Agreement, this Agreement shall apply." Id. at § 7.2.

The Agreement appears to conflict with the JAMS Rules in three ways. First, the Agreement provides that "[t]he parties will equally advance all of the arbitrator's expenses and fees." Id. at § 7.3. In contrast, the JAMS Rules in effect at the time arbitration was demanded provide that the "only fee that an employee may be required to pay is JAMS'[s] initial Case Management Fee" of $400. See JAMS Minimum Standards, Effective July 15, 2009 (Standards) at Standard No. 6;² JAMS Employment Arbitration Rules at 3. According to JAMS, "[a]ll other costs must be borne by the company, including any additional JAMS Case Management Fee and all professional fees for the arbitrator's services." JAMS Standard No. 6.

Second, the Agreement provides that any arbitration "shall be administered by JAMS at its office" in San Francisco. Agreement at § 7.2. The JAMS Minimum Standards provide, however, that "[a]n employee's access to arbitration must not be precluded by the employee's inability to pay any costs or by the location of the arbitration ." JAMS Standard No. 6 (emphasis added). The JAMS Employment Arbitration Rules further provide that "JAMS may, in its discretion, assign the administration of an Arbitration to any of its Resolution Centers," and further provides that "[t]he Arbitrator, after consulting with the Parties that have appeared, shall determine the...location of the Hearing." See Arb. Rules at Rule 1(d), Rule 19(a).

Finally, the Agreement provides that "in his discretion, the arbitrator may award fees and costs to the prevailing party." Agreement at § 7.2. The JAMS Minimum Standards, however, provide that "[i]n California, the arbitration provision may not require an employee who does not prevail to pay the fees and costs incurred by the opposing party," and the Standards also provide that "the remedies available in arbitrations and court proceedings [should be] the same." Standard Nos. 1 and 6. The Agreement states that it "shall be governed by and construed in accordance with the laws of the State of California," and that "[t]he arbitrator shall apply California substantive law to the proceeding." Agreement at §§ 7.4, 13.

The JAMS Minimum Standards provide that "[i]f an arbitration is based on a clause or agreement that is required as a condition of employment, JAMS will accept the assignment only if the proceeding complies with the ‘Minimum Standards....' " Standard B (emphasis added). "If JAMS becomes aware that an arbitration clause or procedure does not comply with the Minimum Standards, it will notify the employer of the Minimum Standards and inform the employer that the arbitration demand will not be accepted unless there is full compliance with those standards." Standard No. 8 (emphasis added). Rule 2 of JAMS's Employment Arbitration Rules further provides that while the "Parties may agree on any procedures not specified herein or in lieu of these Rules," such procedures must be "consistent with the applicable law and JAMS policies (including, without limitation, the JAMS Policy on Employment Arbitration Minimum Standards of Procedural Fairness....)." Arb. Rules at Rule 2(a).

Following the hearing on Defendant's motion, this Court ordered Defendant to file an arbitration demand with JAMS to determine if JAMS would be willing to accept the instant arbitration. Docket No. 76. On September 14, 2015, the parties received a letter from JAMS's Executive Vice President and General Counsel, which stated:

JAMS has received and reviewed the parties' submissions in this matter, including the Court's Order of August 21, 2015. The Court's Order provides that the arbitration demands be filed at JAMS for the sole purpose of obtaining a determination

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