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Melez v. Kaiser Foundation Hospitals, Inc.

United States District Court, C.D. California

March 2, 2015


Olivia Sanders, Attorneys Present for Plaintiffs.

John LeCrone, Evelyn Wang, Attorneys Present for Defendants.


CHRISTINA A. SNYDER, District Judge.



On November 12, 2014, plaintiff Kathleen A. Melez, M.D. filed this employment action challenging her termination by defendants Kaiser Foundation Hospitals, Inc., Kaiser Foundation Health Plan, Southern California Permanente Medical Group, and Does 1 through 50. Dkt. No. 1 ("Cmplt."). She asserts claims for: (1) age discrimination in violation of the California Fair Employment and Housing Act ("FEHA"), Cal. Gov. Code §12940(a), et seq.; (2) age discrimination in violation of the Age Discrimination in Employment Act ("ADEA"), 29 U.S.C. § 621, et seq. and § 623, et seq.; (3) retaliation in violation of the FEHA, Cal. Gov. Code § 12940(h), et seq.; (4) retaliation under the ADEA; (5) failure to prevent discrimination and harassment in violation of the FEHA, Cal. Gov. Code § 12940(k), et seq.; (6) unlawful harassment under the ADEA; (7) wrongful termination in violation of public policy; and (8) punitive damages. On January 23, 2015, defendants filed a motion to compel arbitration. Dkt. No. 22 ("Mtn."). On February 9, 2015, plaintiff filed an opposition, arguing that the arbitration agreement is unconscionable and thus unenforceable. Dkt. No. 25 ("Opp."). On February 13, 2015, Defendants filed a reply. Dkt. No. 27 ("Repl."). On March 2, 2015, the Court held a hearing on the matter. For the reasons stated below, the court grants the motion to compel arbitration and stay proceedings.


Defendants work together to provide medical services to patients in California. Cmplt. ¶¶ 14-18. Specifically, Southern California Permanente Medical Group ("SCPMG") is a general partnership of physicians that contracts to provide medical services to members of Kaiser Foundation Health Plan, Inc. at medical facilities owned and operated by Kaiser Foundation Hospitals. Mtn. at 25, Declaration of Douglas J. Killion, M.D. ("Killion Decl.") ¶ 2.[1]

Plaintiff is both a certified pediatrician and a licensed attorney. Plaintiff's Declaration ("Plaintiff Decl.") ¶ 13. Plaintiff claims, however, that: "my legal work experience is limited. I have performed as a pro bono mediator in small claims actions. My other experience with the practice of law has been assisting with litigation in one case. I have no expertise in contract review, litigation or arbitration. I certainly have no expertise in dealing with the requirements for a valid arbitration agreement." Id . Plaintiff began working for SCPMG as a per diem physician in 1991. Cmplt. ¶¶ 2, 13, 25; Killion Decl. ¶ 4. By 2006, plaintiff's supervisor was aware that plaintiff was responsible for caring for her 94-year-old mother, that plaintiff depended on her employment with defendants for her main source of income, and that she relied on her evening and weekend schedule for flexibility in arranging caretakers. Plaintiff Decl. ¶¶ 7-8.

Over a decade after plaintiff began working for SCPMG, she was presented with its Dispute Resolution Procedure ("DRP"). See id. ¶¶ 5, 9. According to plaintiff: "I objected to signing the Dispute Resolution Procedure and delayed signing it until I was forced to do so. I advised my supervisor of my objection, but I was given two options: sign; or be terminated. I could not afford to lose my job, so I signed the agreement." Id . ¶ 9.

Thus, on December 21, 2006, plaintiff signed an acknowledgment that she had read and agreed to abide by the DRP:

I have received a copy of the Dispute Resolution Procedure approved by the SCPMG Board of Directors on May 18, 2006, and have read it. I agree to abide by the Dispute Resolution Procedure and by any changes made to it from time to time by the SCPMG Board of Directors.

Killion Decl., Ex. B at 1.[2] Further, on July 28, 2007, plaintiff signed a Per Diem Physician Employment Contract ("Employment Contract") affirming her agreement to follow the DRP and the SCPMG Partnership Agreement/Rules & Regulations ("Partnership Agreement"):

SECTION VIII - DISPUTE RESOLUTION AND ARBITRATION Physician and SCPMG agree to follow the Dispute Resolution Procedure, and the Rules and Regulations.

Killion Decl., Ex. A at 3.[3] Although Plaintiff appears to have read and objected to the DPR, Plaintiff Decl. ¶ 9, and although she admits that she subsequently signed the Employment Contract, id. ¶ 5, she denies that she received a copy of the Partnership Agreement referred to as the "Rules and Regulations" in the Employment Contract, id. ¶ 4. Plaintiff also denies that she received the American Arbitration Association Rules and Mediation Procedures ("AAA Rules") referenced in the DRP. Id . ¶ 6.

The Partnership Agreement designates the DRP as the exclusive remedy for any dispute between a physician and SCPMG, including a claim for wrongful termination, discrimination, harassment, or retaliation:

(a) It is in the interest of SCPMG and its Physicians that any dispute between a Physician and SCPMG be resolved quickly and fairly. Should any matter remain unresolved after informal efforts have been exhausted, this Dispute Resolution Procedure ("DRP") shall be used as the exclusive means for resolution of such disputes, except as specified below.
(b) This DRP applies to any dispute involving a Physician and SCPMG that would otherwise be cognizable in a court of law, including, without limitation, any dispute related to a Physician's relationship with SCPMG or any alleged termination of that relationship, whether based on contract, tort, state or federal statute, ordinance or regulation. Examples of disputes covered by this DRP include, but are not limited to, claims one party may bring against the other or against the officers, directors, employees, partners or agents of such party for breach of contract (express or implied), breach of covenant of good faith and fair dealing, theft, damage to property, unfair business practices, unfair competition, false advertising, violation of obligation to preserve trade secrets, interference with contract, interference with prospective economic advantage, wrongful termination or demotion in violation of public policy, retaliation or retaliatory discharge, discrimination (because of race, sex, national origin, religion, age, disability, marital status, or sexual orientation), failure to accommodate, unlawful harassment, denial of leave, intentional and negligent infliction of emotional distress, fraud and deceit, negligent misrepresentation, libel, slander, invasion of privacy, assault, battery, false imprisonment, conversion, malicious prosecution or abuse of process, breach of fiduciary duty, and claims for payment of draws or other forms of partner compensation, return of capital contribution, or, for non-partner Physicians, claims for wages, commissions, and bonuses. Killion Decl., Ex. D ¶ I(1).[4]

Both the DPR (which plaintiff apparently received, see Plaintiff Decl. ¶ 9) and the Rules and Regulations (which she denies receiving, see id. ¶ 4) describe the procedure for resolving any dispute between a physician and SCPMG, including binding arbitration before the American Arbitration Association ("AAA"). See Killion Decl., Ex. C; id., Ex. D ¶ I(2)-(6).[5]

While the DRP specifically references the AAA Rules and provides a URL link ( to the website where these rules are posted, it also independently details the steps to initiate the arbitration, select a neutral, pay attorneys' fees, engage in discovery, resolve discovery disputes, and conduct the hearing. Id. at 5-7. In the event of conflict between the rules of the AAA and the DRP, the DRP controls. Id. at 7.


The Federal Arbitration Act ("FAA") provides that "a contract evidencing a transaction involving commerce to settle by arbitration a controversy thereafter arising... 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 reflects a "liberal federal policy favoring arbitration agreements." Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 25 (1991) (quoting Moses H. Cone Mem. Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24 (1983)). The "first task of a court asked to compel arbitration of a dispute is to determine whether the parties agreed to arbitrate the dispute." Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 626 (1985). The court must determine (1) whether there exists a valid agreement to arbitrate; and (2) if there is a valid agreement, whether the dispute falls within its terms. Chiron Corp. v. Ortho Diagnostic Sys., 207 F.3d 1126, 1130 (9th Cir. 2000).

When determining whether a valid and enforceable contract to arbitrate has been established for the purposes of the FAA, federal courts should apply "ordinary state-law principles that govern the formation of contracts to decide whether the parties agreed to arbitrate a certain matter." First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 944 (1995); Circuit City Stores v. Adams, 279 F.3d 889, 892 (9th Cir. 2002). "[A]greements to arbitrate [may] 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." AT&T Mobility LLC v. Concepcion, 563 ___ U.S. ___, 131 S.Ct. 1740, 1746 (2011). The party ...

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