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Reyes v. United Healthcare Services, Inc.

United States District Court, C.D. California

August 11, 2014

HARRY A. REYES
v.
UNITED HEALTHCARE SERVICES, INC., ET AL.

CIVIL MINUTES - GENERAL ORDER DENYING MOTION TO COMPEL ARBITRATION [10]

DAVID O. CARTER, District Judge.

Before the Court is Defendant United HealthCare Services, Inc.'s Motion to Compel Arbitration ("Motion" or "Mot.") (Dkt. 10). Having considered the written submissions, the Court DENIES the Motion.

I. BACKGROUND

Plaintiff Harry A. Reyes ("Reyes") was employed by United HealthCare Services, Inc. ("United Health") as a customer service representative from August 2, 2010 through April 2, 2013. Decl. of Harry A. Reyes ("Reyes Decl.") ¶ 2. Reyes received his offer letter of employment from United Health on or around July 27, 2010. Mot. to Compel Arbitration, Ex. 1 ("Offer Letter"). On August 3, 2013, Reyes electronically signed an Arbitration Policy mandating arbitration for all employment-related disputes. Mot. to Compel Arbitration, Ex. 2 ("Arbitration Policy"). Acceptance of the Arbitration Policy was a condition of Reyes's employment. See Offer Letter ("Your agreement to be bound by the terms of the [Arbitration] Policy is a condition of your employment."); see also Arbitration Policy § A ("Acceptance of employment or continuation of employment with UnitedHealth Group is deemed to be acceptance of this Policy.").

Reyes declares that the Arbitration Policy was never explained to him and that he was not informed of whether it was required or optional. Reyes Decl. ¶¶ 3, 5. Reyes further declares that he was not provided with the American Arbitration Association (AAA) rules, id. ¶ 4, which are incorporated by reference in the Arbitration Policy, Arbitration Policy § C. According to Reyes, he was never given an opportunity to negotiate any of the terms of the Arbitration Policy. Reyes Decl. ¶ 6.

United Health moves to compel arbitration pursuant to the Arbitration Policy. See generally Mot.

II. LEGAL STANDARD

Both the Federal Arbitration Act (FAA) and California Arbitration Act state that arbitration agreements are generally "valid, enforceable and irrevocable." 9 U.S.C. § 2; Cal. Civ. Proc. Code § 1281. In general, there is "a liberal federal policy favoring arbitration." AT&T Mobility LLC v. Concepcion, 131 S.Ct. 1740, 1745 (2011) (citation and quotation marks omitted); see also Armendariz v. Found. Health Psychcare Serv., Inc., 24 Cal.4th 83, 126 (2000). However, arbitration agreements are enforceable "save upon such grounds as exist at law or in equity for the revocation of any contract." 9 U.S.C. § 2; see also Cal. Civ. Proc. Code § 1281 ("A written agreement to submit to arbitration... is valid, enforceable and irrevocable, save upon such grounds as exist for the revocation of any contract."). "This saving clause permits agreements to arbitrate to be invalidated by generally applicable contract defenses, such as fraud, duress, or unconscionability." Concepcion, 131 S.Ct. at 1746.

"[T]he FAA limits courts' involvement 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).

III. ANALYSIS

Reyes argues that the Arbitration Policy should be invalidated because it is both illusory and unconscionable. United Health disputes these points, and further argues that any objectionable terms should be severed from the Policy.

1. Illusory Modification Clause

The Policy contains the following modification clause:

UnitedHealth Group reserves the right to amend, modify, or terminate the Policy effective on January 1 of any year after providing at least 30 days notice of its intent and the substance of any amendment, modification or termination of the Policy. Notice may be effected by the posting of the notice on the UnitedHealth Group intranet website. The policy may only be amended, modified or terminated in ...

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