United States District Court, E.D. California
Monica Mercado filed this action against defendants Sally
Beauty Supply LLC (“SBS”) and Sally Beauty
Holdings, Inc., asserting various state law claims for
wrongful termination, violations of the California Labor
Code, and unfair competition. This matter is before the court
on defendants’ motion to compel arbitration and stay
the case under the Federal Arbitration Act
(“FAA”), 9 U.S.C. §§ 3, 4. ECF No. 4.
Plaintiff opposes the motion. ECF No. 6. The court submitted
the matter as provided by Local Rule 230(g). As explained
below, the court GRANTS defendants’ motion.
2 of the FAA provides that written arbitration agreements
“evidencing a transaction involving commerce . . .
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
thereby places arbitration agreements on an equal footing
with other contracts, and requires courts to enforce them
according to their terms.” Rent-A-Center, West,
Inc. v. Jackson, 561 U.S. 63, 67- 68 (2010) (internal
citations omitted). Section 4 of the FAA allows a party
“aggrieved” by the failure of another party
“to arbitrate under a written agreement for
arbitration” to petition a federal court for an order
compelling arbitration in accordance with the terms of the
agreement. 9 U.S.C. § 4. The court “shall”
order arbitration “upon being satisfied that the making
of the agreement for arbitration or the failure to comply
therewith is not in issue.” Id. Under §
3, a party may apply to a federal court for a stay of the
trial of an action “upon any issue referable to
arbitration under an agreement in writing for such
arbitration.” Id. § 3.
September 14, 2015, Ms. Mercado filed a complaint against her
former employer, defendant SBS, in the San Joaquin County
Superior Court of California, asserting claims for wrongful
termination in violation of public policy, failure to pay
meal and rest period compensation, failure to pay timely
earned wages, failure to pay wages due at the time of
separation from employment, failure to provide accurate wage
statements, and unfair competition. ECF No. 1-1. On October
13, 2015, plaintiff amended her complaint to include
defendant Sally Beauty Holdings, Inc. ECF No. 1-4. On
November 6, 2015, defendants removed the matter to this court
based on diversity of citizenship. ECF No. 1. Plaintiff has
rejected defendants’ request to arbitrate her claims.
Holmes Decl. ¶¶ 4-9, ECF No. 4-4.
February 17, 2016, defendants moved to compel arbitration and
stay the case under the FAA. ECF No. 4 (“Mot.”).
In support of its motion, defendants submitted a copy of the
Mutual Agreement to Arbitrate Claims, Barnes Decl. Ex. A, ECF
No. 4-3 (“Agreement”), and a copy of an
informational handout summarizing the Agreement, id.
Ex. B, ECF No. 4-3, which defendants provided to employees.
Barnes Decl. ¶¶ 3-4, ECF No. 4-2. Plaintiff opposed
the motion, ECF No. 6 (“Opp’n”), and
defendants replied, ECF No. 9 (“Reply”).
Mercado signed the Agreement on October 14, 2013 as a term
and condition of her continued employment with SBS. Barnes
Decl. ¶¶ 3-4. The paragraph titled
“Introduction” states in bold face type,
“All disputes covered by this Agreement between me and
the Company shall be decided by an arbitrator through
arbitration and not by way of court or jury trial.”
Agreement at 1. An acknowledgment at the end of the
Agreement, above the signature line, states in bold,
uppercase type face, “BY SIGNING BELOW, I ACKNOWLEDGE
THAT . . . THE COMPANY AND I ARE GIVING UP OUR RIGHTS TO A
JURY TRIAL AND THAT PURSUANT TO THE TERMS OF THIS AGREEMENT,
WE ARE AGREEING TO ARBITRATED DISPUTES COVERED BY THIS
AGREEMENT.” Id. at 4.
Agreement provides that it is governed by the FAA and
evidences a commercial transaction. Id. at 1, 3. The
section titled “Disputes Covered by the
Agreement” provides that Ms. Mercado and defendants
mutually consent and agree to arbitrate all “past,
present or future” disputes arising out of Ms.
Mercado’s employment with SBS. Id. at 1. The
section further provides that the arbitrator shall decide
“any claim or controversy regarding the Agreement or
any portion of the Agreement or its interpretation,
enforceability, applicability, unconscionability,
arbitrability, or formation, or whether the Agreement or any
portion of the Agreement is void or voidable . . . .”
Id. (“delegation provision”).
section titled “Procedures and Rules” states that
the arbitration proceedings “shall be in accordance
with the then current Employment Arbitration Rules of the AAA
(‘AAA Rules’), ” “except as provided
in this Agreement.” Id. at 3. The section
titled “Discovery and Subpoenas” gives each party
the right to depose one individual and any expert designated
by the other side, to propound document production requests,
and to subpoena witnesses and documents, including documents
from third parties that are relevant to the case.
Id. It also allows additional discovery by mutual
agreement or where the arbitrator so orders it. Id.
The section titled “Confidentiality” requires Ms.
Mercado and SBS to maintain the confidentiality of the
arbitration proceedings, “except: (i) to the extent
agreed upon otherwise, (ii) as may be otherwise appropriate
in response to a governmental agency or legal process, (iii)
as is necessary to enforce, correct, modify, or vacate the
Arbitrator’s award, or (iv) if the law provides to the
contrary.” Id. at 4.
court first addresses the applicable law. As reviewed above,
the FAA applies to any written arbitration agreement
“evidencing a transaction involving commerce.” 9
U.S.C. § 2. The Supreme Court has interpreted the term
“involving commerce” broadly, to encompass a full
exercise of Congress’s commerce power. Allied-Bruce
Terminix Cos. v. Dobson, 513 U.S. 265, 277 (1995);
Citizens Bank v. Alafabco, Inc., 539 U.S. 52, 58
(2003) (upholding Allied-Bruce Terminix). For any
arbitration agreement covered by the FAA, the court applies
the federal substantive law of arbitrability “absent
clear and unmistakable evidence that the parties agreed to
apply non-federal arbitrability law.” Brennan v.
Opus Bank, 796 F.3d 1125, 1129 (9th ...