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Zenia Chavarria, Individually, and On Behalf of Other Members of the v. Ralphs Grocer Company

September 15, 2011

ZENIA CHAVARRIA, INDIVIDUALLY, AND ON BEHALF OF OTHER MEMBERS OF THE GENERAL PUBLIC SIMILARLY SITUATED, PLAINTIFF,
v.
RALPHS GROCER COMPANY, AN OHIO CORPORATION, DEFENDANTS.



The opinion of the court was delivered by: Dean D. Pregerson United States District Judge

ORDER DENYING DEFENDANT'S MOTION TO COMPEL ARBITRATION ON AN INDIVIDUAL BASIS; AND TO DISMISS OR STAY ACTION [Motion filed on July 11, 2011]

In March 2011, Zenia Chavarria ("Plaintiff") brought suit individually and on behalf of others similarly situated against her employer, Ralphs Grocery Company ("Ralphs"). Plaintiff alleges various wage and hour violations of California law and seeks compensation for unpaid wages. (Compl. ¶¶ 30-88.) Ralphs now brings a Motion to Compel Arbitration on an Individual Basis and to Dismiss or Stay Action under the Federal Arbitration Act ("FAA"). (Dkt. No. 6.)

Having read the parties' papers, considered the arguments therein, and heard oral argument, the court concludes that the arbitration agreement Ralphs seeks to enforce is procedurally and substantively unconscionable, and DENIES Ralphs' motion.

I. Background

On September 22, 2008, Plaintiff applied for a job at Ralphs. To that end, she completed and signed Ralphs' employment application (the "Employment Application" or "Application"). (Def.'s Motion, Ex. 1, Employment Application.)

The Employment Application includes a paragraph stating that Ralphs has a Dispute Resolution Program. The Application states that the prospective employee agrees that the "Dispute Resolution Program [] includes a Mediation & Binding Arbitration Policy (the 'Policy')," which is "incorporated into this Employment Application by this reference as though it is set forth in full . . . ." (Def.'s Motion, Ex. 1, Employment Application.) The Employment Application concludes with language stating that the applicant has either "received a copy of the Policy or one has been made available to [her] through the Company's Director of Personnel & Benefits, 1100 West Artesia Boulevard, Compton, CA 90220 . . . ."

At some point after September 22, 2008, Plaintiff was interviewed and hired by Ralphs.*fn1 On October 14, 2008, at a new employee orientation attended by Plaintiff, Plaintiff wrote her initials on a form, which acknowledged receipt of twenty-two different forms and manuals. (Decl. Cotes, Ex. A.) Included in that list was an acknowledgment of receipt of the full terms of the "Mediation & Binding Arbitration Policy" (i.e the "Arbitration Policy" or the "Policy").

The Policy is four single-spaced pages long and provides, inter alia:

Policy Preamble, 1., 2., & 4. All employment and pre-employment disputes including civil rights claims, harassment claims, and wage and hour claims will be arbitrated*fn2

[T]his Arbitration Policy is the exclusive mechanism for formal resolution of disputes and awards of relief that otherwise would be available to Employees or the Company in a court of law or equity or in an administrative agency. . . . Covered Disputes are employment-related disputes . . . which involve the interpretation or application of this Arbitration Policy, the employer/employee relationship, an Employee's actual or alleged employment with Ralphs . . ., the termination of such employment, or applying for or seeking such employment. . . .Covered Disputes include, for example and without limitation, disputes having anything to do with the interpretation or application of this Arbitration Policy . . ., and disputes, claims or causes of action for unfair competition, unfair business practices . . . fraud, breach of contract, injunctive relief, unlawful harassment, unlawful discrimination, unlawful retaliation, failure to provide reasonable accomodation(s), unpaid wages or failure to pay overtime or other compensation (or the computation therof), failure to provide family or medical (or other required) leave, failure to consider for hiring, failure to hire for employment and actual or constructive termination of the employment relationship. Covered Disputes . . . [also] include all Employee's individual statutory claims or disputes under federal, state and local laws including, for example and without limitation, any claims or disputes arising under the California Fair Employment and Housing Act; . . . the Civil Rights Act of 1964; the Americans With Disabilities Act; the Age Discrimination in Employment Act; the Family Medical Leave Act; the California Family Rights Act; the California Labor Code . . .; the Fair Labor Standards Act; the Employee Retirement Income Security Act; . . . and the United States Code, as enacted and amended.

3. Jury trial waiver

There are no judge or jury trials permitted under this Arbitration Policy. The Company [i.e. Ralphs] and Employees waive any right that they have or may have to a judge or jury trial of any Covered Disputes

7. The arbitrator must be a retired federal or state judge, and the arbitrator may not be an organization such as JAMS or AAA

[T]he 'Qualified Arbitrator' must be a retired state or federal judge . . . from the state jurisdiction or federal jurisdiction in which the Covered Dispute(s) arose or will be arbitrated. . . .[N]either the American Arbitration Association ("AAA") nor the Judicial Arbitration & Mediation Service ("JAMS") will be permitted to administer any arbitration held under or pursuant to this Arbitration Policy.

7. Selection of an arbitrator: Ralphs will always select the arbitrator for any employee-initiated dispute, absent mutual agreement to the contrary

If the parties do not mutually agree on the selection and appointment of a Qualified Arbitrator, the following selection method will be used to select and appoint a Qualified Arbitrator: (1) Each party to the arbitration proceeding will propose a list of three Qualified Arbitrators that they want appointed to hear and decide the Covered Dispute(s); and (2) The parties will alternate in striking one name from any other party's list of proposed Qualified Arbitrators, with the first strike to be made by a party who has not demanded arbitration pursuant to this Arbitration Policy, followed by a continuing rotation of alternating adverse parties until there is only one proposed Qualified Arbitrator that has not been ...


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