United States District Court, N.D. California
ORDER GRANTING MOTION TO COMPEL ARBITRATION WITH SEVERANCE OF UNCONSCIONABLE PROVISIONS; DISMISSING CASE Re: Dkt. No. 11
RONALD M. WHYTE, District Judge.
Defendant Sonatype, Inc. ("Sonatype") moves to compel arbitration of the 14 claims raised in plaintiff Thomas Pope's ("Pope") complaint. Dkt. No. 11 ("Mot."). The court grants the motion with severance of certain provisions.
Pope is a former employee of Sonatype. Pope filed a complaint on March 2, 2015 alleging 14 claims related to his employment with, and separation from, Sonatype.
Sonatype recruited Pope to work as a salesperson. Over the course of a few weeks, Pope and Sonatype engaged in negotiations over his salary. On February 7, 2013 Pope orally accepted a job offer from Sonatype. To confirm the offer, Sonatype extended a written offer of employment to Pope. Dkt. No. 11-1 ("Offer"). The Offer included an Arbitration Agreement. Id. at page 4. The Arbitration Agreement provides:
You [Pope] and the Company [Sonatype] agree to submit to mandatory binding arbitration of any and all claims arising out of or related to your employment with the Company and the termination thereof, including, but by no means limited to, claims of discrimination, harassment, unpaid wages, breach of contract, wrongful termination, torts, claims for stock or stock options or other ownership interest in the Company, as well as claims based upon any federal, state or local ordinance, statute, regulation or constitutional provision.... All arbitration hearings shall be conducted in Washington, D.C. Arbitration shall be the exclusive method by which to resolve Arbitrable Claims, except that each party may at its, his or her option, seek injunctive relief in a court of competent jurisdiction related to the improper use, disclosure or misappropriation of a party's proprietary, confidential or trade secret information (or any related right).... THE PARTIES HEREBY WAIVE ANY RIGHTS THEY MAY HAVE TO TRIAL BY JURY IN REGARD TO SUCH CLAIMS. This letter does not restrict your right to file administrative claims you may bring before any government agency where, as a matter of law, the parties may not restrict the employee's ability to file such claims (including, but not limited to, the National Labor Relations Board, the Equal Employment Opportunity Commission and the Department of Labor). However, the parties agree that, to the fullest extent permitted by law, arbitration shall be the exclusive remedy for the subject matter of such administrative claims. The arbitration shall be conducted through JAMS before a single neutral arbitrator, in accordance with the JAMS employment arbitration rules then in effect. The arbitrator shall issue a written decision that contains the essential findings and conclusions on which the decision is based. If any legal action, including, without limitation, an action for arbitration or injunctive relief, is brought relating to this letter or the breach or alleged breach thereof, the prevailing party in any final judgment or arbitration award, shall be entitled to the full amount of all reasonable expenses, including all court costs, arbitration fees and actual attorneys' fees paid or incurred in good faith.
Id. ("Arbitration Agreement") (bold emphases added). Pope signed the Offer the same day it was extended, and began working for Sonatype on March 4, 2013. Pope left Sonatype on October 17, 2014.
Pope's complaint is primarily based on claims that Sonatype misrepresented his potential compensation as a salesperson when recruiting him to join the company. Prior to Pope filing the instant complaint, Sonatype opened arbitration proceedings against Pope pursuant to the Arbitration Agreement relating to commissions and a severance package paid when Pope left Sonatype.
Sonatype now moves to compel arbitration of Pope's 14 claims pursuant to the Arbitration Agreement.
II. LEGAL STANDARD
The Federal Arbitration Act ("FAA") governs the enforceability of arbitration agreements regarding transactions involving commerce, including employment agreements such as Pope's agreement with Sonatype. See 9 U.S.C. § 2. The FAA provides that any contract to settle a dispute by arbitration shall be valid and enforceable, "save upon such grounds as exist at law or in equity for the revocation of any contract." 9 U.S.C. § 2. This provision reflects both that (a) arbitration is fundamentally a matter of contract, and (b) Congress expressed a "liberal federal policy favoring arbitration." AT&T Mobility LLC v. Concepcion, 131 S.Ct. 1740, 1745 (2011) (citation and internal quotation marks omitted).
"Under § 4 of the FAA, a district court must issue an order compelling arbitration if the following two-pronged test is satisfied: (1) a valid agreement to arbitrate exists; and (2) that agreement encompasses the dispute at issue." United Computer Systems, Inc. v. AT & T Corp., 298 F.3d 756, 766 (9th Cir. 2002). "Under California law, a contract must be both procedurally and substantively unconscionable to be rendered invalid. California law utilizes a sliding scale to determine unconscionability." Chavarria v. Ralphs Grocery Co., 733 F.3d 916, 922 (9th Cir. 2013) (citation omitted). "[T]he more substantively oppressive the contract term, the less evidence of procedural unconscionability is required to come to the conclusion that the term is unenforceable, and vice versa." Armendariz v. Found. Health Psychcare Servs., Inc., 24 Cal.4th 83, 114 (2000).