Martinez v. Vision Precision Holdings

MAYRELI MARTINEZ, on behalf of herself and all others similarly situated,and on behalf of the general public, Plaintiff, v. VISION PRECISION HOLDINGS, LLC; et al., Defendants.

No. 1:19-cv-01002-DAD-JLT

UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF CALIFORNIA

December 30, 2019

ORDER GRANTING DEFENDANT'S MOTION TO COMPEL ARBITRATION

(Doc. No. 5)

This matter is before the court on defendant Vision Precision Holdings, LLC's ("VPH") motion to compel arbitration. A hearing on the motion was held on October 16, 2019. Attorney Gwendolyne Ousdahl appeared telephonically on behalf of plaintiff Mayreli Martinez. Attorney Brian Morris appeared telephonically on behalf of defendant. Based on the arguments presented by counsel, and for the reasons set forth below, the court will grant defendant's motion to compel arbitration.

BACKGROUND

Plaintiff was a non-exempt, hourly worker employed by defendant as a patient coordinator and sales assistant at one of its retail locations in California. (Doc. No. 1-3, Ex. A ("Compl.") at ¶ 28.) Defendant owns and operates optical retail stores in California. (Id. at ¶¶ 37-38.)

Plaintiff originally filed this suit as a class action on May 17, 2019 in the Kern County Superior Court, alleging violations of California's Labor Code and Unfair Competition Law ("UCL"). (Id. at ¶¶ 69-137.) According to the complaint, defendant failed to: (1) pay straight time wages; (2) pay overtime wages; (3) provide meal periods; (4) provide rest periods; (5) provide compliant itemized wage statements; (6) pay wages due at termination; and (7) comply with the UCL. (Id.)

Defendant removed the action to this federal court on July 22, 2019 on the basis of the Class Action Fairness Act. (Doc. No. 1 at 2.) On August 14, 2019, defendant moved to compel arbitration, relying on an arbitration agreement (the "Agreement") that plaintiff signed on August 6, 2018. (Doc. No. 5.) The Agreement provides, in part, that:

As a condition of [plaintiff's] employment . . . [plaintiff] and [defendant] agree that certain claims arising out of or relating to [plaintiff's] employment relationship with [defendant] . . . or the termination of that relationship . . . must be submitted for resolution by final binding confidential arbitration . . ..

(Doc. No. 5-2 at 6.)

Plaintiff filed her opposition to the pending motion on October 2, 2019, arguing that the Agreement is unenforceable due to its procedural and substantive unconscionability. (Doc. No. 8 at 8.) Defendant filed its reply on October 9, 2019. (Doc. No. 9.)

LEGAL STANDARDS

A written provision in any contract evidencing a transaction involving commerce to settle a dispute by arbitration is subject to the Federal Arbitration Act ("FAA"). 9 U.S.C. § 2. The FAA confers on the parties involved the right to obtain an order directing that arbitration proceed in the manner provided for in a contract between them. 9 U.S.C. § 4. In deciding a motion to compel arbitration, the court "is limited to determining (1) whether a valid agreement to arbitrate exists [within the contract] and, if it does, (2) whether the agreement encompasses the dispute at issue." Boardman v. Pacific Seafood Group, 822 F.3d 1011, 1017 (9th Cir. 2016) (citing Chiron Corp. v. Ortho Diagnostic Sys., Inc., 207 F.3d 1126, 1130 (9th Cir. 2000) (brackets in original)).

Because there is an "emphatic federal policy in favor of arbitral dispute resolution," Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, 473 U.S. 614, 631 (1985), "'any doubtsconcerning the scope of arbitrable issues should be resolved in favor of arbitration, whether the problem at hand is the construction of the contract language itself or an allegation of waiver, delay, or a like defense to arbitrability.'" Id. at 626 (quoting Moses H. Cone Mem'l Hosp. v. Mercury Const. Corp., 460 U.S. 1, 24-25 (1983)). Because "waiver of the right to arbitration is disfavored, 'any party arguing waiver of arbitration bears a heavy burden of proof.'" Martin v. Yasuda, 829 F.3d 1118, 1124 (9th Cir. 2016) (quoting Fisher v. A.G. Becker Paribas Inc., 791 F.2d 691, 694 (9th Cir. 1986)).

In contrast, an arbitration agreement may "be invalidated by 'generally applicable contract defenses, such as fraud, duress, or unconscionability,' though not by defenses that apply only to arbitration or that derive their meaning from the fact that an agreement to arbitrate is at issue." AT&T Mobility LLC v. Concepcion, 563 U.S. 333, 339 (2011) (quoting Doctor's Assocs., Inc. v. Casarotto, 517 U.S. 681, 687 (1996)). In deciding whether parties have agreed to arbitrate, courts "apply ordinary state law contract principles that govern the formation of contracts to decide whether an agreement to arbitrate exists." Norcia v. Samsung Telecomm. Am., LLC, 845 F.3d 1279, 1283 (9th Cir. 2017), cert. denied, ___U.S.___, 138 S. Ct. 203 (2017) (citation and internal quotation marks omitted). However, courts may not apply traditional contractual defenses, like duress and unconscionability, in a broader or more stringent manner to invalidate arbitration agreements and thereby undermine FAA's purpose to "ensur[e] that private arbitration agreements are enforced according to their terms." Concepcion, 563 U.S. at 344 (quoting Volt Info. Scis., Inc. v. Bd. of Trs., 489 U.S. 468, 478 (1989)).

LEGAL ANALYSIS

Here, defendant contends that the court must compel arbitration because plaintiff agreed in a binding and enforceable arbitration agreement to individually arbitrate her claims and waive her right to bring a class claim. (Doc. No. 5-1 at 2.) Plaintiff argues that the Agreement is unenforceable because it is both procedurally and substantively unconscionable. (Doc. No. 8 at 8-9.)

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A. Whether the Parties Entered into an Agreement

The court first looks at whether a valid arbitration agreement exists and if it covers the dispute at issue. See Boardman, 822 F.3d at 1017.

Under California law, the "party seeking arbitration bears the burden of proving the existence of an arbitration agreement[.]" Pinnacle Museum Tower Assn. v. Pinnacle Mkt. Dev. (US), LLC, 55 Cal. 4th 223, 236 (2012); see also Knutson v. Sirius XM Radio Inc., 771 F.3d 559, 565 (9th Cir. 2014) (the burden of proving the existence of an arbitration agreement is "by a preponderance of the evidence"). In determining whether an agreement to arbitrate exists, "[t]he trial court sits as the trier of fact, weighing all the affidavits, declarations, and other documentary evidence, and any oral testimony the court may receive at its discretion, to reach a final determination." Ruiz v. Moss Bros. Auto Grp., Inc., 232 Cal. App. 4th 836, 842 (2014) (citing Engalla v. Permanente Med. Grp., Inc., 15 Cal. 4th 951, 972 (1997), as modified (July 30, 1997)). "Where the existence of a contract is at issue and the evidence is conflicting or admits of more than one inference, it is for the trier of fact to determine whether the contract actually existed." San Joaquin Gen. Hosp. v. United Healthcare Ins., No. 2:16-cv-01904-KJM-EFB, 2017 WL 1093835, at *2 (E.D. Cal. Mar. 23, 2017) (citing Bustamante v. Intuit, Inc., 141 Cal. App. 4th 199, 208 (2006)).

Here, defendant contends that plaintiff entered into a "FAA-covered arbitration agreement" on August 6, 2018 by electronically signing the Agreement and accepting and continuing her employment with defendant after receipt of the Agreement.¹ (Doc. No. 5-1 at 3, 6-7.) Defendant also asserts that the Agreement applies to "all claims" brought by plaintiff. (Id. at 3.) By its terms, the Agreement covers "any claim that could be asserted in court," includingclaims for wages, breach of contract, discrimination, and harassment.² (Doc. No. 5-2, Ex. A at 6.)

Plaintiff acknowledges that she signed the Agreement and does not dispute that it covers the claims brought in this case. (Doc. No. 8-1 ("Martinez Decl.") at ¶ 7.) Based on the record before the court, the undersigned concludes that an arbitration agreement does exist between the parties and that it covers the claims at issue in this case.

B. Whether the Agreement is Valid

In opposition to the motion to compel arbitration, plaintiff argues that the Agreement is procedurally and substantively unconscionable. (Doc. No. 8 at 9.)

The FAA provides that arbitration agreements "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. This provision, known as the "savings clause," "permits agreements to arbitrate to be invalidated by 'generally applicable contract defenses, such as fraud, duress, or unconscionability,' but not by defenses that apply only to arbitration or that derive their meaning from the fact that an agreement to arbitrate is at issue." Concepcion, 563 U.S. at 339 (quoting Doctor's Assocs., 517 U.S. at 687). "[T]he party opposing arbitration bears the burden of proving any defense, such as unconscionability." Pinnacle Museum Tower Assn, 55 Cal. 4th at 236. "Any doubts about the scope of arbitrable issues, including applicable contract defenses, are to be resolved in favor of arbitration." Poublon v. C.H. Robinson Co., 846 F.3d 1251, 1259 (9th Cir. 2017).

To establish unconscionability under California law, the party opposing arbitration must demonstrate that the entire contract, or a specific clause in it, is both procedurally and substantively unconscionable. Id. at 1260 (citing Sanchez v. Valencia Holding Co., 61 Cal. 4th 899, 910 (2015)). "The prevailing view is that procedural and substantive unconscionability must both be present in order for a court to exercise its discretion to refuse to enforce a contract or clause under the doctrine of unconscionability . . . [b]ut they need not be present in the same degree." Sanchez, 61 Cal. 4th at 910. Courts generally view procedural and substantiveunconscionability on a sliding scale, whereby "the more substantively oppressive the contract term, the less evidence of procedural unconscionability is required to...