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Andrade v. P.F. Chang's China Bistro, Inc.

United States District Court, Ninth Circuit

August 9, 2013

LINDA ANDRADE, individually, and on behalf of all others similarly situated; and LILIANA AVILA, individually, and on behalf of all others similarly situated, Plaintiffs,
v.
P.F. CHANG'S CHINA BISTRO, INC., Defendant.

ORDER: (1) GRANTING DEFENDANT'S MOTION TO COMPEL ARBITRATION; AND (2) STAYING JUDICIAL PROCEEDINGS (ECF No. 11)

JANIS L. SAMMARTINO, District Judge.

Presently before the Court is Defendant P.F. Chang's China Bistro Inc.'s ("Defendant") motion to compel arbitration and to dismiss or stay proceedings. (ECF No. 11.) Also before the Court are Plaintiffs Linda Andrade and Liliana Avila's ("Plaintiffs") amended opposition to Defendant's motion, (ECF No. 18), and Defendant's reply in support, (ECF No. 19). Having reviewed the applicable facts and the law, the Court GRANTS Defendant's motion to compel arbitration and STAYS these judicial proceedings pending the outcome of arbitration.

BACKGROUND

Plaintiffs filed their operative First Amended Complaint ("FAC") on December 12, 2012. (ECF No. 8.) Plaintiffs allege in their FAC that Defendant, acting as Plaintiffs' employer, failed to provide complete, detailed wage statements to Plaintiffs and others similarly situated as required by California Labor Code sections 226(a) and 1174, the I.W.C. Wage Order 5-2001(7), and the California Business & Professions Code sections 17200-17208. (ECF No. 8 at ¶¶ 4-6, 16, 24-28.) Plaintiffs bring these claims as a class action. ( Id. at ¶¶ 13-29.) Plaintiffs additionally bring claims against Defendant for violations of California Labor Code sections 226(a) and 1174, and the I.W.C. Wage Order 5-2001(7) as a Private Attorney General Act ("PAGA") representative cause of action. ( Id. at ¶¶ 34-36.) Plaintiffs allege that Defendant omitted applicable hourly wage rates from pay statements. ( Id. at ¶ 4.) Plaintiffs assert that these practices prevented themselves and others similarly situated from verifying the accuracy of their pay statements. ( Id. ) Plaintiffs request that the Court certify a class, enjoin Defendant from withholding complete wage statements, as well as award statutory damages and attorney's fees. ( Id. at 9-10.)

On December 20, 2012, Defendant moved the Court to compel arbitration. (ECF No. 11.) Defendant contends that Plaintiffs signed an arbitration agreement, referred to as the Defendant's Dispute Resolution Policy ("DRP"), before beginning employment with Defendant. (ECF No. 11-1 at 8.) The DRP allegedly requires Plaintiffs to submit their claims individually to arbitration and forbids Plaintiffs from proceeding with their claims as a class or as a PAGA representative action. (ECF. No. 11-1 at 6.) Defendant further alleges that the DRP was provided to Plaintiffs in English, and that if requested, the DRP would have been provided to the Plaintiffs in Spanish. (ECF No. 11 at 3; Fern. Decl ¶ 3, ECF No. 11-3; Fern. Decl. Ex. B, ECF No. 19-2.) The DRP at issue contains a cover page, which states in pertinent part:

We have enclosed P.F. Chang's China Bistro Inc.'s Dispute Resolution Policy which originally went into effect on September 15, 2006. The enclosed information explains the procedures as well as how the Policy works as a whole. Because this policy applies to you, please take the time to read the attached material. The Dispute Resolution Policy will provide all employees a quick and efficient avenue to bring forward any employment related disputes that my arise between you and the Company. As soon as you have reviewed the policy, please sign the acknowledgment form and return it to your immediate manager. You should retain the Dispute Resolution Policy for your files.

(ECF No. 19-2 at 18.)

The DRP arbitration agreement itself states, in pertinent part:

This Policy applies to any dispute arising out of or related to an Employee's employment with P.F. Chang's China Bistro... or termination of an Employee's employment. This Policy requires all such disputes to be resolved only by an arbitrator through final and binding arbitration and not by way of court or jury trial. Such disputes include without limitation disputes arising out of or relating to interpretation or application of this Policy. The Policy also applies, without limitation, to disputes regarding the employment relationship, trade secrets, unfair competition, compensation, breaks and rest periods, termination, or harassment and... all other statutory and common law claims....
A neutral arbitrator shall be selected by mutual agreement of the parties. The location of the arbitration proceeding shall be in the general geographical vicinity of the place where the Employee last worked for P.F. Chang's unless each party to the arbitration agrees in writing otherwise. If for any reason the parties cannot agree to an arbitrator within 30 days after a party initially submits the name of an arbitrator for consideration, one shall be selected through the procedures of the American Arbitration Association as set forth in their existing National Rules for the Resolution of Employment Disputes or through the procedures of any other mutually agreed upon neutral arbitration service. Except as provided herein, the arbitration shall be conducted in accordance with the existing National Rules for the Resolution of Employment Disputes of the American Arbitration Association; provided however, that the Arbitrator shall allow the discovery authorized by the Federal Rules of Civil Procedures or any other discovery required by applicable law in arbitration proceedings. However, there will be no right or authority for any dispute to be brought, heard or arbitrate as a class or collective action, as a private attorney general, or in a representative capacity on behalf of any persons. Also neither party to this agreement will have the right to participate in a class, representative or collective action, as a class representative, class member or an opt-in party, act as a private attorney general, or join or consolidate claims with claims of any other person or entity, against the other party hereto....
Each party will pay the fees for his, her or its own attorneys, subject to any remedies to which that party may later be entitled under applicable law. However, in all cases where required by law, P.F. Chang's will pay the Arbitrator's and arbitration fees. If under applicable law P.F. Chang's is not required to pay all of the Arbitrator's and/or arbitration fees, such fee(s) will be apportioned between the parties by the arbitrator in accordance with applicable law....
The Arbitrator may award any party any remedy to which that party is entitled under applicable law, but such remedies shall be limited to those that would be available to a party in a court of law for the claims presented to and decided by the Arbitrator. The Arbitrator will issue a decision or award in writing, stating the essential findings of fact and conclusions of law. Except as may be required by law, neither a party nor an arbitrator may disclose the existence, content, or results of any arbitration hereunder without the prior written consent of both parties. Should it become necessary to enforce the Arbitrator's decision and award, any party seeking review or enforcement through a court of competent jurisdiction shall take all legally available steps to preserve the above disclosure requirement.

(ECF No. 19-2 at 19-20.)

LEGAL STANDARD

The Federal Arbitration Act ("FAA") governs the enforceability of arbitration agreements in contracts. See 9 U.S.C. § 1, et seq.; Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 24-26 (1991). If a suit is proceeding in federal court, the party seeking arbitration may move the district court to compel the resisting party to submit to arbitration pursuant to their private agreement to arbitrate the dispute. 9 U.S.C. § 4. The FAA reflects both a "liberal federal policy favoring arbitration agreements" and the "fundamental principle that arbitration is a matter of contract." AT&T Mobility LLC v. Concepcion, 131 S.Ct. 1740, 1745 (2011) (internal quotation marks and citations omitted); see also Kilgore v. Keybank, Nat'l Ass'n, Nos. 09-16703, 10-15934, 2013 WL 1458876 at *4 (9th Cir. Apr. 11, 2013) (en banc) ("The FAA was intended to overcome an anachronistic judicial hostility to agreements to arbitrate, which American courts had borrowed from English common law." (quoting Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 625 n. 14 (1985))); Circuit City Stores, Inc. v. Adams, 279 F.3d 889, 892 (9th Cir. 2002) ("The [FAA] not only placed arbitration agreements on equal footing with other contracts, but established a federal policy in favor of arbitration, and a federal common law of arbitrability which preempts state law disfavoring arbitration.")

In determining whether to compel a party to arbitration, the Court may not review the merits of the dispute; rather, the Court's role under the FAA is limited "to determining (1) whether a valid agreement to arbitrate exists and, if it does, (2) whether the agreement encompasses the dispute at issue." Cox v. Ocean View Hotel Corp., 533 F.3d 1114, 1119 (9th Cir. 2008) (internal quotation marks and citation omitted). If the Court finds that the answers to those questions are yes, the Court must compel arbitration. See Dean Witter Reynolds, Inc. v. Byrd, 470 U.S. 213, 218 (1985).

In determining the validity of an arbitration agreement, the Court applies state law contract principles. Adams, 279 F.3d at 892; see also 9 U.S.C. § 2. The FAA includes a savings clause that allows arbitration agreements to be invalidated only "upon such grounds as exist at law or in equity for the revocation of any contract." 9 U.S.C. § 2 (emphasis added). Thus, the FAA does not permit arbitration agreements to be declared unenforceable by contract defenses "that apply only to arbitration or derive their meaning from the fact that an agreement to arbitrate is at issue." Concepcion, 131 S.Ct. at 1746 (citation omitted). As the Supreme Court's opinion in Concepcion makes clear, if a doctrine generally applicable to contract enforceability such as unconscionability, is applied by a state in a fashion that disfavors arbitration, then that rule interferes with arbitration and is preempted by the FAA. Id. at 1747-50 ("When state law prohibits outright the arbitration of a particular type of claim, the analysis is straightforward: The conflicting rule is displaced by the FAA.... [A] court may not rely on the uniqueness of an agreement to arbitrate as a basis for a state-law holding that enforcement would be unconscionable, for this would enable the court to effect what... the state legislature cannot.") (internal quotation marks omitted). Thus, "[s]tates cannot require a procedure that is inconsistent with the FAA, even if it is desirable for unrelated reasons." Concepcion, 131 S.Ct. at 1753; see also Coneff v. AT&T Corp., 673 F.3d 1155, 1159 (9th Cir. 2012).

If the Court determines that a valid arbitration agreement encompasses the dispute, then the FAA requires the Court to enforce the arbitration agreement according to its terms. Lifescan, Inc. v. Premier Diabetic Servs., Inc., 363 F.3d 1010, 1012 (9th Cir. 2004); see also Simula Inc. v. Autoliv, Inc., 175 F.3d 716, 719 (9th Cir. 1999) (noting that arbitration agreements must be rigorously enforced); Volt Info. Scis., Inc., v. Bd. of Trs. of Leland Stanford Junior Univ., 489 U.S. 468, 469 (1989) (noting that the purpose of the FAA "is simply to ensure the enforceability, according to their terms, of private agreements to arbitrate"). "The [FAA] leaves no place for the exercise of discretion by a district court, but instead mandates that district courts shall direct the parties to proceed to arbitration on issues as to which an arbitration agreement has been signed." Dean Witter Reynolds, 470 U.S. at 218. The party opposing arbitration bears the burden of establishing the arbitration provision is invalid. Franco v. Athens Disposal Co., Inc., 171 ...


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