Totten v. Kellogg Brown & Root, LLC

152 F.Supp.3d 1243

David L. Totten, et al.

v.Kellogg Brown & Root, LLC, et al.

Case No. ED CV 14–1766 DMG (DTBx)

United States District Court, C.D. California.

Signed January 22, 2016

Lee R. Feldman, Alicia Olivares, Leonard H. Sansanowicz, Feldman Browne Olivares APLC, Los Angeles, CA, Michael Rubin, Altshuler Berzon LLP, San Francisco, CA, for David L. Totten, et al.

Kathryn P. Conard, Holly R. Lake, Miller Law Group PC, Karen J. Pazzani, Young, Zinn & Bate LLP, Los Angeles, CA, Rachel E. Linzy, Samuel Zurik, III, The Kullman Firm, New Orleans, LA, for Kellogg Brown & Root, LLC, et al.

Proceedings: IN CHAMBERS—ORDER RE DEFENDANTS' MOTION TO COMPEL ARBITRATION OF INDIVIDUAL CLAIMS, AND DISMISS CLASS AND REPRESENTATIVE CLAIMS [22]

DOLLY M. GEE, UNITED STATES DISTRICT JUDGE

I.PROCEDURAL BACKGROUND

On July 22, 2014, Plaintiff David L. Totten filed an amended complaint in San Bernardino County Superior Court, alleging the following causes of action: (1) failure to pay wages for all hours worked at the minimum wage rate, in violation of Cal. Lab.Code §§ 1194 and 1197 ; (2) failure to pay overtime wages for daily overtime and all time worked, in violation of Cal. Lab.Code §§ 510, 1194, and 1198 ; (3) failure to provide second meal periods or pay meal period premium wages, in violation of Cal. Lab.Code §§ 512 and 226.7 ; (4) failure to provide complete and accurate wage statements, in violation of Cal. Lab.Code § 226 ; (5) failure to timely pay all earned wages due at the time of separation of employment, in violation of Cal. Lab.Code §§ 201, 202, and 203 ; (6) unfair business practices, in violation of Cal. Bus. & Prof.Code § 17200 et seq. ; and (7) civil penalties under the Private Attorneys General Act of 2004 (“PAGA”), Cal. Lab.Code § 2698 et seq. [Doc. # 1–1.] On August 27, 2014, Defendants removed the action to federal court. [Doc. # 1.]

Defendants Kellogg Brown & Root, LLC (“KBR”) and Molycorp, Inc. (“Molycorp”) currently have a motion to compel arbitration and dismiss or stay the action pending before this Court. (“Def.Motion”) [Doc. # 22.] For the reasons set forth below, Defendants' motion to compel arbitration of individual claims, and dismiss class and representative claims, is GRANTED in part and DENIED in part . Defendants' motion to compel arbitration is GRANTED as to Plaintiff's individual claims.

II.FACTUAL BACKGROUND

On January 16, 2012, KBR hired Totten. See Bynum Decl. ¶ 6 [Doc. # 22–1 at 1–3.] Totten worked for KBR at the Mountain Pass rare earth mine in California, where KBR provided services to Molycorp, Inc. Id. ¶¶ 2, 6.

At his new hire orientation on January 16, Totten signed an acknowledgment of and agreement to KBR's Dispute Resolution Program (“DRP”) as a condition of his employment. See id. ¶ 9, Exh. B (“Signature Page”) [Doc. # 22–1 at 38.] Totten contends, however, that he was not given a copy of any of the American Arbitration Association (“AAA”) or Judicial Arbitration and Mediation Services (“JAMS”) rules referenced in the DRP Agreement. Totten Decl. ¶ 3 [Doc. # 23–1].

The DRP Agreement requires employees to arbitrate their claims against KBR and third parties, including KBR's clients such as Molycorp:

This Program is intended to be for the benefit of the Company's clients, customers, contractors, and vendors, who are intended third-party beneficiaries of this Dispute Resolution Plan. The mandatory arbitration provisions of this Plan shall be applicable to all Disputes between Employees and the Company's clients, customers, contractors, and vendors, who shall have the right to enforce the provisions of the Plan.

See id. ¶ 5, Exh. A (“DRP Agreement”) § 3C [Doc. # 22–1 at 4–37.] The agreement to arbitrate also “applies to and binds the Company” as well as “each Employee and Applicant.” Id. § 3B.

Furthermore, the scope of the DRP Agreement encompasses “all legal and equitable claims ... with respect to ... [t]he employment ... of an Employee, including but not limited to the terms, conditions, or termination of such employment ... [or] any other matter related to or concerning the relationship between the Employee and [KBR].” Id. § 2E(4).

The DRP Agreement also bars KBR, employees, and applicants from pursuing claims on a class, collective, or representative basis:

Each Dispute shall be arbitrated on an individual basis. Neither the Company nor any Employee or Applicant may pursue any Dispute on a class action, collective action or consolidated basis or in a representative capacity on behalf of other persons or entities who are claimed to be similarly situated, or participate as a class member in such a proceeding. The arbitrator in any proceeding under this Plan shall have no authority to conduct the matter as a consolidated, class, or collective action.

Id. § 4B(i) (emphasis added). The agreement further states:

If the procedural limitation in subparagraph B(i) of this section is held unenforceable by a court in a proceeding in which a party seeks to pursue a class or collective action or otherwise act in a representative capacity, then this Plan shall not apply with respect to that class or representative action which shall proceed instead before the court. If the court, however, ultimately denies the party's request to proceed on a class, collective or representative basis, then the party's individual claim(s) shall be subject to this Plan and referable to arbitration pursuant to the Plan's terms.

Id. § 4B(ii). The agreement also contains provisions addressing modification, discovery costs, and attorneys' fees. Id. §§ 6, 31C, 8B, 8D.

KBR terminated Totten's employment on or around June 24, 2014. Bynum Decl. ¶ 10.

III.LEGAL STANDARD

The Federal Arbitration Act (“FAA”) provides that written arbitration agreements are “valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.” AT & T Mobility LLC v. Concepcion, 563 U.S. 333, 131 S.Ct. 1740, 1744, 179 L.Ed.2d 742 (2011). The FAA reflects “both a ‘liberal federal policy favoring arbitration’ and the ‘fundamental principle that arbitration is a matter of contract.’ ” Id. at 1745 (quoting Rent–A–Center, West, Inc. v. Jackson, 561 U.S. 63, 66, 130 S.Ct. 2772, 177 L.Ed.2d 403 (2010) ). “The FAA mandates that district courts shall direct the parties to proceed to arbitration on issues as to which an arbitration agreement has been signed.” Kilgore v. KeyBank, Nat. Ass'n, 718 F.3d 1052, 1058 (9th Cir.2013) (en banc ) (internal quotation omitted). “The basic role for courts under the FAA is to determine (1) whether a valid agreement to arbitrate exists and, if it does, (2) whether the agreement encompasses the dispute at issue.” Id. (internal quotation omitted). “Upon being satisfied that the issue involved in such suit or proceeding is referable to arbitration under ... an agreement,” the court “shall on application of one of the parties stay the trial of the action until such arbitration has been had in accordance with the terms of the agreement....” 9 U.S.C. § 3.

“Section 2 of the FAA contains a savings clause, which provides that arbitration agreements are ‘enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.’ ” Id. (quoting 9 U.S.C. § 2 ). 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, 131 S.Ct. at 1746 (internal quotation omitted).

Federal substantive law governs questions concerning the interpretation and enforceability of arbitration agreements. Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 22–24, 103 S.Ct. 927, 74 L.Ed.2d 765 (1983). Courts apply ordinary state law contract principles, however, “[w]hen deciding whether the parties agreed to arbitrate a certain matter....” First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 944, 115 S.Ct. 1920, 131 L.Ed.2d 985 (1995). As long as an arbitration clause is not itself invalid under “generally applicable contract defenses, such as fraud, duress, or unconscionability,” it must be enforced according to its terms. Concepcion, 131 S.Ct. at 1746.

“When evaluating a motion to compel arbitration, courts treat the facts as they would when ruling on a motion for summary judgment, construing all facts and reasonable inferences that can be drawn from those facts in a light most favorable to the non-moving party.” Chavez v. Bank of Am., 2011 WL 4712204, at *3 (N.D.Cal. Oct. 07, 2011) (citing Perez v. Maid Brigade, Inc. , 2007 WL 2990368, at *3 (N.D.Cal. Oct. 7, 2007) ).

IV.DISCUSSION

Defendants move to compel arbitration of Totten's individual claims on the ground that they are encompassed within their valid agreement to submit disputes to the KBR DRP. They also seek to dismiss Totten's class and representative claims as they are barred by the DRP Agreement. In opposition, Totten asserts that he never agreed to arbitrate under the DRP. And even if he did, Totten maintains that the arbitration agreement is unenforceable because it is unconscionable. In addition, Totten argues that the DRP Agreement's class action waiver is unenforceable because it interferes with his right to engage in protected concerted action under the National Labor Relations Act (“NLRA”), 29 U.S.C § 151 et seq . Finally, Totten contends that the DRP Agreement's representative action waiver cannot be enforced as to his PAGA claims.

A. Mutual Assent

The parties do not dispute that, if the agreement is valid, it encompasses Totten's claims. Rather, the parties disagree that a valid agreement exists. Under California law, a contract is valid if there is mutual assent between the parties and valid consideration. Div. of Labor Law Enforcement v. Transpacific Transp. Co., 69 Cal.App.3d 268, 275, 137 Cal.Rptr. 855 (1977).

Totten contends that he never assented to the...