O'Connell v. Celonis, Inc.

SHAWN O'CONNELL, Plaintiff, v. CELONIS, INC., Defendant.

No. 22-cv-02320-WHO

United States District Court, N.D. California

August 22, 2022

ORDER DENYING MOTION TO TRANSFER OR COMPEL AND DENYING MOTION TO DISMISS RE: DKT. NOS. 21, 22

William H. Orrick United States District Judge

Defendant Celonis, Inc. (“Celonis”) moves to transfer venue of this employment action to the Southern District of New York, or, in the alternative, to compel arbitration against plaintiff Shawn O'Connell. It alleges that I should enforce the forum selection clause in O'Connell's offer letter from Celonis selecting the federal and state courts of New York as the jurisdiction for any disputes and in the alternative, seeks enforcement of an agreement to arbitrate that O'Connell allegedly agreed to by using the website of a third-party (TriNet) that Celonis shared human resources and benefits-related employer responsibilities with. Because the forum selection clause violates Section 925 of the California Labor Code and the Section 1404 factors weigh against transfer, the motion to transfer venue is DENIED. Further, Celonis does not show by a preponderance of evidence that TriNet was empowered by Celonis to bind Celonis employees to an arbitration agreement or that O'Connell had actual or inquiry notice of the existence of the arbitration agreement contained in the TriNet Terms and Conditions. Therefore, the motion to compel arbitration is also DENIED.

Separately Celonis moves to dismiss O'Connell's claims related to his employment, compensation, and alleged wrongful termination by Celonis. As explained below, I conclude that California law applies to O'Connell's claims and DENY the motion to dismiss.

BACKGROUND

Celonis is a software company that was incorporated in Munich Germany, and has headquarters in New York. Complaint (“Compl.”) [Dkt. No. 1-1], ¶ 16. On October 26, 2018, it presented O'Connell, a California citizen (id., ¶ 14) with a written offer letter (“Offer Letter”) setting forth terms of employment with Celonis. See Compl., Ex. 1 [Dkt. No.1] at 1-4. The Offer Letter explained:

Subject to the approval of Celonis' Board, you will be granted 3,000[fn1] restricted stock units (RSUs), each representing the right to receive one ordinary share of Celonis. The RSUs shall be subject to the terms and conditions set forth in the Celonis 2018 Restricted Stock Unit Plan and the standard form of Restricted Stock Unit Agreement thereunder.

Id. at 2. Footnote 1 of the Offer Letter stated “The number of RSUs specified assumes the completion of the currently executed 1-for-10 forward stock split before the RSUs are granted.” Id. O'Connell alleges that because Celonis was unable to match his former salary, Celonis offered him “a significant equity grant of 3,000 restricted stock units” then-valued at $70 each after multiple verbal and written negotiations regarding the proposed terms of his compensation at Celonis with representatives of Celonis and recruiters. Compl. ¶¶ 1, 21-23.

O'Connell's Offer Letter also provided:

The terms of this letter agreement and the resolution of any disputes as to the meaning, effect, performance or validity of this letter agreement or arising out of, related to, or in any way connected with, this letter agreement, your employment with the Company or any other relationship between you and the Company (the “Disputes”) will be governed by New York law, excluding laws relating to conflicts or choice of law. You and the Company submit to the exclusive personal jurisdiction of the federal and state courts located in New York in connection with any Dispute or any claim related to any Dispute.

Offer Letter at 3.

O'Connell accepted and signed the Offer Letter on October 26, 2018. Id. at 4. He lived and worked for Celonis in the San Francisco Bay Area from 2018 until July 26, 2021. Declaration of Shawn O'Connell (“O'Connell Decl.”) [Dkt. No. 26] ¶ 2. According to his declaration, most of his coworkers and his supervisor resided in California, and he performed most of his work in California. O'Connell Decl. ¶ 5.

O'Connell alleges that during his employment with Celonis, he repeatedly requested documentation of his “equity position,” but Celonis never provided that information. Compl. ¶ 27. He alleges that in June 2021, after attempting to clarify his equity position at Celonis, Celonis took the position that the Offer Letter had granted him only 300 shares upon his hiring, based on the footnote explaining the “currently executed” 1-for-10 split. Id. ¶¶ 3, 32, 34-36. He also alleges that the Celonis 2018 Restricted Stock Unit Plan did not exist at the time of his hire and may not have existed at the time of his termination. Id. ¶ 4.

O'Connell alleges that on January 28, 2020, Celonis actually completed a 1-for-20 stock split instead of a 1-for-10 split. Id. ¶ 36. After the stock split, Celonis calculated that O'Connell owned 6,000 RSUs (300 x 20), but O'Connell believed he had 60,000 RSUs based on the Offer Letter and his prior interactions with the recruiters (3,000 x 20). Id. ¶¶ 23, 36-37.

In June 2021, Celonis presented O'Connell with two options: he could either choose to be placed on a 30-day Performance Improvement Plan (“PIP”) or accept termination. Id. ¶¶ 53, 56. O'Connell did not accept either of the two options, and he was terminated on July 26, 2021. Id. ¶ 66.

The two parties dispute the reason for O'Connell's termination. In its motion to transfer venue, Celonis argues that it offered to place O'Connell on the PIP because “[his] performance was lagging” and it wanted to “give him a chance to improve.” Motion to Transfer Venue (“Tran. Mot.”) [Dkt. No. 21] at 2. But according to O'Connell and accepted as true for purposes of the pending motions, his termination was a result of the disagreement over his compensation, his refusal to testify in favor of Celonis in a sexual assault investigation at the company (Compl. ¶¶ 43-46), and his knowledge of and reporting to his supervisors at Celonis “what he reasonably believed were serious securities violations in connection with its potential IPO and other stock offerings.” Id. ¶¶ 47-50.

The two parties also disagree on whether O'Connell signed or agreed to an arbitration agreement governing his claims during his employment. According to Celonis's counsel, the company had a contract with TriNet Group, Inc. (“TriNet”) that allowed TriNet to share certain human resources and benefits-related employer responsibilities with Celonis as co-employers. See Declaration of Marley Ann Brumme (“Brumme Decl.”) [Dkt. No. 29-1] Ex. A at 2. Celonis argues that on December 4, 2018, O'Connell logged on to the TriNet platform. Celonis's Reply in Further Support of its Motion to Transfer (“Tran. Reply”) [Dkt. No. 29] at 5. Celonis also argues that when he logged on to the site on that date, O'Connell was “presented with the TriNet Terms and Conditions Agreement” (the “TriNet TCA”) and O'Connell allegedly agreed to them when he “click[ed] and accept[ed]” the TriNet TCA. Id. However, Celonis provides no declarations to support these allegations and arguments from any person with knowledge at Celonis or TriNet Instead, its attorneys make assertions in the brief and then attach the TriNet TCA to their declarations. See Declaration of Lance Etcheverry (“Etcheverry Decl.”) [Dkt. No. 21-2], Ex. A; Brumme Decl., Ex. A.

The TriNet TCA provided by counsel is an eight-page-long document with a subsection titled “Dispute Resolution Protocol” (“DRP”). TriNet TCA at 5-8. The TCA attached to the attorney declarations does not specifically reference Celonis or any particular employee. See generally id. Under the DRP, all disputes “arising out of or relating to” the employee's employment with TriNet or with “[his] company” would be arbitrated. Id. at 6. The DRP provides that: “[a]rbitration begins by bringing a claim under the applicable employment arbitration rules and procedures of the Judicial Arbitration and Mediation Services, Inc (‘JAMS') . . . [t]he specific provisions of this DRP and the applicable rules of JAMS . . . will direct the arbitrator in decisions regarding conducting the arbitration.” Id. at 7.

The last subsection of the TCA is titled “Acknowledgement” and states:

By acknowledging below, I confirm that I have read and understand the contents of this TCA (including, but not limited to, the DRP), that I have the responsibility to read and familiarize myself with the employee handbook and additional policies for my company and that I agree to abide by the terms and conditions set forth above in this TCA, including but not limited to the DRP, as well as the policies and procedures set forth in the employee handbook and additional policies.

Id. at 8. But the TCA provided to the Court does not contain a signature line, a signature, or any other type of written or electronic acknowledgment. See generally id.

Celonis argues that when O'Connell accessed the TriNet site on December 4, 2018, he was forced to affirmatively click and accept the TriNet TCA. According to Celonis, at that point TriNet would have sent a confirmatory email to O'Connell containing the TriNet TCA. See Tran. Reply at 5. In Reply, Celonis points to a “confirmation email” that was sent to “s.oconnell@celonis.de.” Id. at 4. That emails states: “[w]e are sending this email to provide notification regarding two important matters: (1) your acceptance of the TriNet Terms & Conditions Agreement (TCA), and (2) your COBRA rights and responsibilities . . . TCA: This confirms that you have accepted the TCA, which you clicked through on the TriNet platform on 12/04/2018.”

In a Sur-reply, O'Connell denies having seen that or any similar email. See O'Connell Decl. ¶ 6; see also Declaration of Shawn O'Connell in Support of Pla...