United States District Court, C.D. California
Charles Hill, et al.
Anheuser-Busch InBev Worldwide, Inc
Attorneys for Plaintiff(s): Not Present.
Attorneys for Defendant(s): Not Present.
CIVIL MINUTES - GENERAL
Honorable Philip S. Gutierrez, United States District Judge.
Proceedings (In Chambers): Order GRANTING the Motion to Compel Arbitration
Before the Court is Defendant Anheuser-Busch InBev Worldwide, Inc.'s (" Defendant") motion to compel Plaintiffs Charles Hill and Joe Correa (" Plaintiffs") to engage in arbitration. See Dkt. # 11. The Court finds the matter appropriate for decision without oral argument. Fed.R.Civ.P. 78; Local R. 7-15. After considering the arguments in the moving, opposing and reply papers, the Court GRANTS the motion.
Plaintiffs filed a Class Action Complaint against Defendant on August 11, 2014, alleging five causes of action: failure to pay minimum wage, failure to provide adequate break periods, failure to itemize wage statements, failure to pay overtime, and violation of California's Unfair Competition Law. Dkt. # 1. On October 8, 2014, Defendant filed this motion to compel Plaintiffs to arbitrate their claims on an individual basis. Dkt. # 11.
Defendant hired Plaintiffs as delivery drivers at the Pomona distributorship in September of 2003. Mot . 1:19-20. Prior to being hired, Plaintiffs each filled out and signed an application form, which stated the following above the signature line:
I AGREE THAT IF I BECOME EMPLOYED BY THE COMPANY, AND UNLESS A WRITTEN CONTRACT PROVIDES TO THE CONTRARY, ANY CLAIM I MAY HAVE AGAINST THE COMPANY WILL BE SUBJECT TO FINAL AND BINDING ARBITRATION IN ACCORDANCE WITH THE COMPANY'S DISPUTE RESOLUTION PROGRAM, AND THAT ARBITRATION WILL BE THE EXCLUSIVE METHOD I WILL HAVE FOR FINAL AND BINDING RESOLUTION
Id. 2:1-11; Drust Decl . Ex. A, C. Plaintiffs then received offer letters, the final portions of which stated the following:
Participation in the Anheuser-Busch Dispute Resolution Program (DRP) is a term and condition of your employment with Pomona/Antelope Valley. Under the DRP, any claims you may have against the company will be subject to a three step process that ends with final and binding arbitration. The DRP will be the exclusive method available to you for final and binding resolution of any of your employment-related claims. A DRP brochure is enclosed for your review.
Mot . 2:13-22; Drust Decl . Ex. B, D. Each Plaintiff signed his respective offer letter. Mot . 2:23-24.
In 2004, Defendant revised its Dispute Resolution Program (" DRP"), the first page of which stated, " THIS POLICY CONSTITUTES A BINDING AGREEMENT BETWEEN YOU AND THE COMPANY FOR THE RESOLUTION OF EMPLOYMENT DISPUTES." Mot . 3:1, 13-16; Kinnison Decl . Ex. G. The first page of the revised DRP also stated the following:
[Y]ou and the Company are agreeing as a condition of your employment to submit all covered claims to the Anheuser-Busch Dispute Resolution Program, (" DRP"), to waive all rights to a trial before a jury on such claims, and to accept an arbitrator's decision as the final, binding and exclusive determination of all covered claims.
Mot . 3:16-23; Kinnison Decl . Ex. G. Defendant sent each Plaintiff a copy of the revised DRP, along with a letter, which in relevant part stated the following:
The Dispute Resolution Program Policy constitutes a binding legal agreement between you and the company, so please read the material carefully. Your continued employment with any of the Anheuser-Busch companies after March 31, 2004 means both you and the company have agreed to the terms of the updated Dispute Resolution Program, and that the DRP will be the sole means for resolving any covered claims.
Mot . 3:4-11; Kinnison Decl . Ex. F. Further, the DRP defines " covered claims" as " claims arising out of the employment relationship that: . . . the Employee may have against the Company . . . where the Employee alleges . . . unlawful or illegal conduct on the part of the Company." Mot . 3:27-4:3; Kinnison Decl . Ex. G.
While Defendant sent each Plaintiff this letter along with a copy of the revised DRP to his respective home address, Plaintiffs contend that they never received these additional documents. Opp . 2:20-3:1. Plaintiffs continued their employment with Defendant, but allegedly without knowledge of the revised DRP. Mot . 4:4-5; Opp . 3:1-3. Article Thirteen of the revised DRP states, " The Arbitrator shall have exclusive authority to resolve any dispute relating to the applicability, enforceability or formation of the DRP, including any claim that all or part of the DRP is invalid or unenforceable" (" Article Thirteen Provision"). Kinnison Decl . Ex. G.
III. Legal Standard
The Federal Arbitration Act (" FAA") governs arbitration agreements in contracts involving transactions in interstate commerce. See 9 U.S.C. § 1; Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24, 103 S.Ct. 927, 74 L.Ed.2d 765 (1983). The FAA states that written arbitration agreements " shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract." 9 U.S.C. § 2. The FAA allows " a party aggrieved by the alleged failure, neglect, or refusal of another to arbitrate under a written agreement for arbitration [to] petition any United States district court . . . for an order directing that such arbitration proceed in the manner provided for in such agreement." 9 U.S.C. § 4.
The Supreme Court has described this provision as reflecting both a " liberal federal policy favoring arbitration, " and the " fundamental principle that arbitration is a matter of contract." AT& T Mobility LLC v. Concepcion, 131 S.Ct. 1740, 1745, 179 L.Ed.2d 742 (2011). " Because 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, the 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) (quotation marks omitted). The FAA 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. See Concepcion, 131 S.Ct. at 1746. Any doubts about the scope of arbitrable issues must be resolved in favor of arbitration. Moses H. Cone Mem. Hosp., 460 U.S. at 24-25. If an arbitration agreement exists and covers the dispute at issue, § 4 of the FAA " requires courts to compel arbitration 'in accordance with the terms of the agreement.'" Concepcion, 131 S.Ct. at 1748 (citations omitted).
" The question whether the parties have submitted a particular dispute to arbitration, i.e., the 'question of arbitrability, ' is 'an issue for judicial determination [u]nless the parties clearly and unmistakably provide otherwise.'" Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79, 123 S.Ct. 588, 591, 154 L.Ed.2d 491 (2002) (quoting AT& T Technologies, Inc. v. Communications Workers, 475 U.S. 643, 649, 106 S.Ct. 1415, 89 L.Ed.2d 648 (1986) (emphasis added)). When parties have not contracted otherwise, issues of substantive arbitrability -- validity and applicability -- are decided by courts, and issues of procedural arbitrability -- time limits, notice, laches, estoppel, etc. -- are decided by arbitrators. Id. at 592; see Cox, 533 F.3d at 1119 (" [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."). " [C]lear and unmistakable" evidence of an agreement to also submit issues of substantive arbitrability to an arbitrator can take the form of the parties' conduct or an express statement in the agreement itself. Momot v. Mastro, 652 F.3d 982, 988 (9th Cir. 2011).
Here, the parties raise the following issues of substantive arbitrability, only the last of which is raised by Defendant: (1) Plaintiffs never saw or agreed to the revised DRP; (2) the DRP covers hourly, non-union employees which Plaintiffs are not; (3) Defendant is not a party to the DRP; (4) Plaintiffs' policy-oriented claims are excluded by the DRP; and (5) Plaintiffs must arbitrate their claims individually because class action arbitration is disfavored. Opp . 2:14-7:20. Normally, these substantive threshold issues -- whether a contract was formed, whether such contract applies to these parties or claims, and whether such contract permits class arbitration -- would be decided by the Court. See Howsam, 123 S.Ct. at 591. Thus, the Court will decide these issues absent a " clear and unmistakable" delegation of these determinations to the arbitrators by the parties.
Throughout its Motion, Defendant assumes that the Court will decide any issues potentially preventing the compulsion of arbitration in this case. See generally Mot . In their Opposition, Plaintiffs raise arbitrability issues and request that the Court rule on all of those questions of formation and applicability, save one. See generally Opp . Plaintiffs argue that the Court must submit the issue of the permissibility of class arbitration to an arbitrator. Opp . 7:13-20. In its Reply, Defendant disagrees and urges the Court to resolve the class arbitration issue. Reply 12:11-17. However, Defendant further contends that if the Court submits the class arbitration determination to an arbitrator, then, by the same logic, it must submit all other arbitrability issues to an arbitrator as well. Id.
Before deciding whether the parties delegated substantive arbitrablity issues to the arbitrator, the Court must determine whether Plaintiffs even agreed to be bound by the DRP. This issue cannot be delegated to an arbitrator because the Court cannot use a provision in the DRP to find that a party intended an arbitrator to decide certain issues before determining that such party is actually bound by the arbitration agreement. See Soto v. Amer. Honda Motor Co., Inc., 946 F.Supp.2d 949, 954 (N.D. Cal. 2012) (" [T]he threshold issue of whether the delegation clause is even applicable to a certain party must be decided by the Court."). Here, the Court holds that Plaintiffs are in fact parties to the DRP and bound by its provisions.
Plaintiffs contend that they never received or accepted the revised DRP. Opp . 2:14-3:7. The common law " mailbox rule" recognizes a rebuttable presumption that an item properly mailed was received by the addressee. Schikore v. BankAmerica Supplemental Retirement Plan, 269 F.3d 956, 961 (9th Cir. 2001) (citing Hagner v. U.S., 285 U.S. 427, 430, 52 S.Ct. 417, 76 L.Ed. 861 (1932); Rosenthal v. Walker, 111 U.S. 185, 193, 4 S.Ct. 382, 28 L.Ed. 395 (1884); Lewis v. U.S., 144 F.3d 1220, 1222 (9th Cir. 1998)). Defendant's current DRP administrator and former vice president declared that a copy of the revised DRP, along with a cover letter, was mailed to each Plaintiff's home address. Mot . 3:1-4; Kinnison Decl .; Reply 2:12-16; Bobak Decl . These declarations are sufficient to raise the presumption that Defendant mailed and Plaintiffs received the revised DRP. See Schikore, 269 F.3d at 964 (" We have held sworn statement is credible evidence of mailing for purposes of the mailbox rule."). In rebutting this presumption, the only evidence Plaintiffs provide is their statements that they " never received" copies of the revised DRP. Opp . 2:27-3:1. These mere statements of denial are not sufficient to rebut the presumption of receipt. See Schikore, 269 F.3d at 963 (" [T]he presumption of receipt established by the mailbox rule applied precisely to avoid [this] type of swearing contest." (internal quotation marks omitted)). Further, Plaintiffs do not dispute that the home addresses used by Defendant were accurate. Finding non-receipt simply because a party alleges that he never received an arbitration agreement that was properly mailed to him is inconsistent with the " liberal federal policy favoring arbitration." See Concepcion, 131 S.Ct. 1740, 1745, 179 L.Ed.2d 742. The Court holds that Plaintiffs received the DRP and continued their employment thereafter, thus they are bound by it.
As for the remaining issues, the Court concludes that the evidence before it clearly and unmistakably indicates an agreement to submit these threshold issues of substantive arbitrability to an arbitrator.
The language of the DRP demonstrates mutual assent to delegate these issues to an arbitrator. The Article Thirteen Provision states that " the Arbitrator shall have exclusive authority to resolve any dispute relating to the applicability, enforceability or formation of the DRP, including any claim that all or part of the DRP is invalid or unenforceable." Kinnison Decl . Ex. G. This constitutes a clear and unmistakable agreement that issues pertaining to the applicability, enforceability and formation of the DRP will be exclusively resolved by an arbitrator. See Momot, 652 F.3d at 988 (holding that the language that " a dispute aris[ing] out of or relat[ing] to . . . the validity or application of any of the provisions of this Section . . . shall be resolved exclusively by binding arbitration" constitutes a clear and unmistakable agreement to arbitrate questions of arbitrability).
Defendant argues that another provision in the DRP stating that " a court [may] determine that any provision of the DRP is invalid or unenforceable, " contradicts the Article Thirteen Provision, stripping it of its clear and unmistakable nature. Reply 11:23-12:10; Kinnison Decl . Ex. G (emphasis added). Defendant is correct that when an arbitration agreement contains contradictory provisions regarding the delegation of certain arbitrable issues to an arbitrator, a court ...