Roe v. SFBSC Mgmt., LLC

JANE ROE, et al., Plaintiffs, v. SFBSC MANAGEMENT, LLC, Defendant.

Case No. 14-cv-03616-LB

UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA San Francisco Division

March 2, 2015

ORDER DENYING ARBITRATION

[ECF Nos. 25, 36]

INTRODUCTION

This is a labor dispute under federal and California law. The plaintiffs are or were exotic dancers who are suing their former employer. The court previously granted their motion to proceed anonymously. (ECF Nos. 17, 32.)¹ Defendant SFBSC Management, LLC ("BSC"), moves under the plaintiffs' employment contracts to compel Jane Roe #1 and Jane Roe #2 to arbitrate their claims. (ECF No. 25.) The court held a hearing on this motion. (See ECF No. 48.) The plaintiffs move the court to judicially notice certain material in connection with the arbitration analysis. (ECF No. 36.) The court grants the plaintiffs' request for judicial notice. The court holds that several parts of the arbitration agreement are unconscionable and declines to sever these fromthe rest of the contract. The court therefore denies BSC's motion to compel arbitration.²

STATEMENT

I. THE EMPLOYMENT CONTRACTS

The plaintiffs allege that BSC "operated, controlled, and . . . dictated employment policies" at several California nightclubs where the plaintiffs formerly worked. (Am. Compl. - ECF No. 11 at 1-2, ¶1.) BSC responds that it owned none of the clubs, but rather "provided consulting and administrative services" to the clubs; this included "marketing and advertising, human resources support, payroll coordination, and contract review and administration." (Marlin Decl. - ECF No. 25-4 at 2, ¶ 3.) When the plaintiffs worked at the clubs, they signed "Performer Contracts" that declared them independent contractors, rather than employees, and that generally set the rules under which they would work.

These contracts went through different iterations. All contained arbitration agreements. The short version of the arbitration clause, which appeared in some of the plaintiffs' contracts, read as follows:

All disputes between the parties, whether statutory, contractual or tort, shall be decided by binding arbitration, shall be pursuant to the Federal Arbitration Act, and shall be before a neutral arbitrator agreed upon by the parties. Either party may demand an expert in the adult industry. The arbitrator shall be permitted to award any relief available in a Court. Owner [the given club] shall pay any cost required by law. Any award may be entered as a judgment in any court having jurisdiction. An arbitrator may not consolidate more than one person's claims, and may not preside over any form of representative or class proceeding.

(E.g., ECF No. 25-6 at 6.) A longer version added cost-shifting and cost-sharing terms (emphasized here):

All disputes between the parties, whether statutory, contractual or tort, shall be decided by binding arbitration, shall be pursuant to the Federal Arbitration Act, and shall be before a neutral arbitrator agreed upon by the parties. Either party may demand an expert in the adult industry. The arbitrator shall be permitted to award any relief available in a Court, including fees and costs for enforcing this term. The costs of arbitration shall be borne equally by performer and owner unless the arbitrator concludes that a different allocation is required by law. Any award may be entered as a judgment in any court having jurisdiction. An arbitrator may not consolidate more than one person's claims, and may not preside over any form of representative or class proceeding. NOTE: some agency claims may not be subject to arbitration.

(E.g., ECF No. 25-6 at 4) (emphasis added). All the contracts contained this additional clause:

Waiver of Class Action. Performer agrees that any claim she may make against Owner shall be in her individual capacity, and not as a class or representative action; she agrees not to consolidate any claim she may have against Owner with the claims of others. This clause shall survive termination of the contract, but is severable if the law is deemed to prohibit such waiver.

(E.g., id.) The arbitration provisions, and the class-action waiver, in all the contracts (that the court has seen) were printed wholly in boldface. (E.g., ECF No. 25-5 at 4.) Some versions of the contracts added lines beneath both the arbitration clause, and the class-action waiver, that provided a space for the performer to "Accept" or "Reject" the respective terms by writing her initials. (E.g., ECF No. 35-1 at 7.)

After briefing on its motion closed, BSC found and filed two "extensions" to the plaintiffs' contracts. (ECF No. 43.) One of these extensions is signed by Jane Roe #1; it is dated January 26, 2014, and purports to extend Roe #1's contract with the Gold Club that was set to expire on January 31, 2014. (ECF No. 43-2 at 2.) The other extension is signed by Jane Roe #2; it, too, is for the Gold Club, is dated January 26, 2014, and purports to extend her contract that was set to expire on January 31, 2014. (ECF No. 43-2 at 3.) Both documents extend the relevant original contracts by 90 days. They thus appear to be stopgap agreements covering periods after one full contract expired but before the parties signed a new full contract for the next year. More important for present purposes, both extensions refer to an "Addendum A" to the respective original contracts. (Id. at 2, 3.) No original contract that has appeared in this case refers to, or includes, an Addendum A. (See ECF No. 25-5 at 4, 7, 9; ECF No. 25-6 at 4, 6; ECF No. 25-7 at 2, 4, 6.)

The defendant later indicated that the Addendum A issue may in fact be a non-issue. On February 9, 2015, BSC filed the Third Supplemental Declaration of Gary Marlin. (ECF No. 49.) Mr. Marlin was BSC's president from 2004 to June 2013. (ECF No. 25-4 at 2, ¶ 1.) His new declaration makes two assertions concerning Addendum A. First, Mr. Marlin states that, by his"understanding," the BSC-run clubs "stopped using addenda to the Performer Contracts" after the 2011-2012 contract year. (ECF No. 49 at 2, ¶¶ 3-4.) After that year, the information that Addendum A had contained was moved into the main body of the contracts. (Id., ¶ 4.) The extensions to Jane Roe #1's and Jane Roe #2's Gold Club contracts were both signed in January 2014, and purport to continue into 2014 contracts that had covered (roughly speaking) 2013. (ECF No. 43-2 at 2-3.) Mr. Marlin thus believes that the extensions' reference to Addendum A is "erroneous." (ECF No. 49 at 2, ¶¶ 4-5.)

The second thing that Mr. Marlin's latest declaration does is to proffer a document labeled "Addendum A." (Id. at 2 (¶ 6), 5 (addendum).) The top of the document carries the name and address of the Gold Club. (Id. at 5.) "To the best of [Mr. Marlin's] knowledge," this is the "only" addendum that BSC's client clubs used in conjunction with Performer Contracts. (Id. at 2, ¶ 6.) The document in question is unsigned and refers to no particular performer. (Id. at 5.) It does not mention arbitration.

II. THE PLAINTIFFS' SPECIFIC CONTRACTS

Jane Roe #1 entered into three Performer Contracts with BSC-managed nightclubs. She entered into one with the Gold Club dated March 6, 2013 (ECF No. 25-5 at 9); another with the Gold Club dated April 9, 2014 (ECF 25-5 at 7); and one with the Condor club dated June 21, 2014 (ECF No. 25-5 at 4). She also signed the extension at ECF No. 43-2 at 2.

Jane Roe #2 entered into five Performer Contracts with BSC-run nightclubs. She entered into three with the Gold Club, respectively dated: February 11, 2013 (ECF No. 25-7 at 2); November 5, 2013 (ECF No. 25-6 at 6); and April 11, 2014 (ECF No. 25-6 at 4). She also entered a contract with the Gold Club dated July 8, 2012 (ECF No. 25-7 at 4), and one with the Centerfolds club dated July 14, 2012 (ECF No. 25-7 at 6). In these last two contracts Jane Roe #2 rejected both the arbitration clause and the class-action waiver. She also signed the extension at ECF No. 43-2 at 3.

III. SURROUNDING CIRCUMSTANCES

According to the plaintiffs, management at the relevant clubs told them that all performers had to sign the contracts — and had to agree to the arbitration clause — in order to work. (ECF No. 33 at 12.) They further allege that management presented them with the contracts when they were"mostly naked." (Id. at 13-14.) They were "rushed" to sign the agreements, or at least felt so; were told they could not take the contracts home to review; and believed that they could not review the contracts before signing them. (Id.) The plaintiffs further claim that management sometimes presented the contracts for signing when performers were intoxicated. (Id. at 14.) They do not allege, however, that they themselves were ever intoxicated when presented with a contract. Last in this area, the plaintiffs contend that the "accept or reject" choice on some contracts was effectively a sham. If a performer checked the "Reject" box, they claim, the club would purposely "lose" the agreement, and later present them with a new one, with a direction to fill it out "correctly" by accepting the arbitration and class-waiver terms. (ECF No. 33 at 12.) Or, say the plaintiffs, management would find a reason not to hire the performer, or to fire her if she had already started working. (Id.)

BSC denies all this. (ECF No. 38 at 14-15; Marlin Decl. - ECF No. 38-2 at 3-5, ¶¶ 8, 12-13; Calcagni Decl. - ECF No. 38-3 at 2- 4, ¶¶ 6-11; Bordeau Decl. - ECF No. 38-4 at 3-4, ¶¶ 10, 13-17.) It denies that employment was conditioned on performers' accepting the arbitration agreement. (Marlin Supp. Decl. - ECF No. 38-2 at 3-5, ¶ 8, 12-13; Calcagni Decl. - ECF No. 38-3 at 2-3, ¶¶ 6-7.) It rejects entirely the plaintiffs' depiction of the circumstances under which they were asked to sign the contracts; it denies that performers are "rushed," approached while intoxicated, purposely approached while "mostly naked," and are prevented from reviewing the agreements before signing them.

JUDICIAL NOTICE

Before...