Yu v. Volt Info. Scis., Inc.

ALVIN YU, Plaintiff, v. VOLT INFORMATION SCIENCES, INC., et al., Defendants.

Case No. 19-cv-01981-LB

UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA San Francisco Division

August 1, 2019

ORDER GRANTING MOTION TO COMPEL ARBITRATION AND CONDITIONALLY DISMISSING ACTION

Re: ECF No. 13

INTRODUCTION

Plaintiff Alvin Yu brings this putative class action against his former employer Volt, a staffing agency that employed him from July 2016 to November 2017 as a "contingent employee hired for work at Tesla, Inc. as an assembly line worker."¹ Starting in August 2018, Volt suffered a data breach where an unknown third party gained access to Volt computer systems that contained Mr. Yu's and other putative class members' names, social-security numbers, and other personally identifiable information.² Volt allegedly "did not restrict unauthorized access until at least October4, 2018" and "did not disclose the Data Breach until February 14, 2018."³ Mr. Yu asserts that Volt caused harm to the plaintiffs and disregarded their rights by "intentionally, willfully, recklessly, or negligently failing to take adequate and reasonable measures to ensure its email and data systems were protected, failing to take available steps to prevent and stop the breaches from ever occurring, and failing to disclose to affected employees that it did not have adequate security practices."⁴ Mr. Yu brings putative class claims for (1) negligence, (2) breach of an implied contract, (3) violation of the California Consumer Records Act, Cal. Civ. Code § 1798.80 et seq., (4) violation of the California Unfair Competition Law, Bus. & Prof. Code § 17200, (5) willful violation of the Fair Credit Reporting Act ("FCRA"), 15 U.S.C. § 1681(b), (6) negligent violation of the FCRA, (7) unjust enrichment, and (8) invasion of privacy in violation of the California Constitution.⁵ Volt moves to dismiss this case and to compel Mr. Yu to submit his claims to individual arbitration based on the arbitration provision contained in his employment agreement and Volt's employee handbook.⁶

The court held a hearing and now rules as follows. The court finds that (1) the parties entered into a binding agreement that contains an arbitration provision, (2) the parties delegated questions about the arbitrability of disputes to the arbitrator by incorporating the American Arbitration Association ("AAA") employment rules into their arbitration provision, and the agreement to delegate is not unconscionable, (3) it is for the arbitrator, not the court, to determine whether or not the arbitration provision as a whole is unconscionable or whether its scope extends to cover the parties' dispute, and (4) Mr. Yu cannot arbitrate his case as a class action.

The court grants Volt's motion to compel arbitration and conditionally dismisses this case. At the hearing, Mr. Yu said that he wants to amend his complaint to add a claim under the California Private Attorney General Act ("PAGA"). The court gives Mr. Yu 21 days to file a motion forleave to file an amended complaint. (Volt may oppose any such motion.) If Mr. Yu does not file a motion for leave to amend, the court will direct the clerk of court to close this case.

STATEMENT

1. Beginning Employment at Volt

On May 26, 2016, Mr. Yu and fifteen other new hires attended an "instructional employment onboarding session" hosted by a member of Volt's management team.⁷ The session lasted roughly thirty minutes and was "conducted swiftly."⁸ Volt provided the new hires with "a series of legal documents to review and sign," including an "employment contract, a thirty-one-page employee handbook, three non-disclosure and confidentiality agreements, direct deposit forms, tax forms, a background check consent form, more than eight notices related to employer and government policies and rules, and a self-identification of disability disclosure."⁹

1.1 Employment Agreement

Volt's employment agreement (employment contract) is one page long and contains eleven paragraphs.¹⁰ The eighth paragraph is printed entirely in bold text (the only paragraph in bold) and states:

AGREEMENT TO ARBITRATE DISPUTES. Any employment and/or employment termination related disputes and/or disputes arising out of or relating to the actions of the Company [Volt] (or Company's employees) and/or disputes arising out of or related to any assignment and/or termination of any assignment and/or arising out of or relating to the actions of the Client [Volt's customers] (or Client's employees), shall be settled by final and binding arbitration, pursuant to the Federal Arbitration Act, in accordance with the employment rules of the American Arbitration Association ("AAA"), which can be found at www.adr.org or a copy of the AAA rules can be provided to Employee upon Employee's request to the Company at the time of hire. Thearbitrator may award any and all remedies in accordance with the laws of the state where Employee was last employed with the Company. The award shall be in writing, signed by the arbitrator, and shall provide the reasons for the award. Judgment upon the arbitrator's award may be entered in any court having jurisdiction. The Company and Employee hereby waive our respective rights to trial by jury of any cause of action or defense that each may have against the other or against any Client. This agreement to arbitrate disputes does not prevent Employee from filing a charge or claim with any governmental administrative agency as permitted by applicable law.¹¹

Volt provided the employment agreement only in English.¹² (Mr. Yu does not allege that he is not fluent in English.¹³) Mr. Yu did not draft or negotiate the arbitration provisions and was not required to sign or initial the provisions separately.¹⁴ According to Mr. Yu, Volt did not review the employment agreement with the new hires or "specify" or "highlight" that it contained an arbitration provision.¹⁵ Volt did not explain the legal consequences of the arbitration provisions.¹⁶ Volt did not suggest that the new hires consult with an attorney about the arbitration provisions.¹⁷ Volt did not say that new hires could opt out of any provision in the employment agreement.¹⁸ Volt provided Mr. Yu and the other new hires an opportunity to ask questions in a group setting but did not provide an opportunity for private questioning regarding any aspect of the hiring process.¹⁹

The end of the employment agreement contained an attestation that states, "EMPLOYEE/COMPANY HAVE EACH READ AND AGREE TO THE ABOVE TERMS AND CONDITIONS."²⁰ Mr. Yu signed the employment agreement beneath the attestation.²¹

1.2 Employee Handbook

Volt's employee handbook (which is 24 pages, not 31) states on page 24:

Arbitration

Volt believes that alternative dispute resolution is the most efficient and mutually satisfactory means of resolving dispute between Volt and its employees.

Any dispute, controversy or claim which arises out of, involves, affects or relates in any way to your employment with Volt or a claimed breach of the employment relationship or the conditions of employment or the termination of employment, or in any way arising out of, involving, affecting or related to any assignment or termination of any assignment with any customer of Volt, and/or disputes controversies or claims arising out of or related to the actions of Volt, Volt's employees or Volt's customer, or customer's employees under Federal, State and/or local laws shall be resolved by final and binding arbitration, pursuant to the Federal Arbitration Act, in accordance with the applicable rules of the American Arbitration Association (www.adr.org) in the state where you are employed by Volt. The arbitrator may be entitled to award reasonable attorneys' fees and costs to the prevailing party, in accordance with the law. The award shall be in writing, signed by the arbitrator, and shall provide the reasons for the award. Judgment upon the arbitrator's award may be filed in and enforced by any court having jurisdiction. This does not prevent you from filing a charge or claim with any governmental agency as permitted by applicable law.

Your continued employment with Volt is your agreement to the above provision requiring arbitration of any and all employment/assignment disputes.²²

According to Mr. Yu, Volt did not discuss the contents of the handbook.²³ Instead, it distributed an acknowledgement of receipt of the handbook and demanded that Mr. Yu and the other new hires sign the acknowledgement.²⁴ Volt did not explain the acknowledgement.²⁵

The acknowledgement is one page.²⁶ The last line of the acknowledgment states, "Except as otherwise stated, I agree to arbitrate any and all disputes related to my employment or assignment(s) with Volt, as discussed in this Guide."²⁷ Mr. Yu signed the acknowledgement.²⁸

2. Data Breach

Beginning on August 6, 2018, an unknown person or persons gained unauthorized access into Volt's employee email accounts and sent out numerous phishing emails.²⁹ The affected email addresses and computer system contained Mr. Yu's and other affected individuals' personally identifiable information ("PII").³⁰ Volt maintained this PII on employee email accounts in unencrypted form, and the data breachers were able to access this PII freely for several months.³¹

Volt did not restrict unauthorized access to its system until at least October 4, 2018.³²

Volt did not disclose the data breach until February 2019.³³

In February 2019, Volt told Mr. Yu and other affected individuals that "we have confirmed that your name, Social Security number, driver's license number, passport number, credit/debit card information, medical history information, and health insurance information [were contained within the affected employee email accounts]."³⁴

ANALYSIS

Under the Federal Arbitration Act ("FAA"), "arbitration is a matter of contract, and courts must enforce arbitration contracts according to their terms." Henry Schein, Inc. v. Archer and White Sales, Inc., 139 S. Ct. 524, 529 (2019) (ci...