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Mikhak v. University of Phoenix

United States District Court, N.D. California

June 21, 2016

BAHAR MIKHAK, Plaintiff,
v.
UNIVERSITY OF PHOENIX, Defendant.

          ORDER GRANTING MOTION TO COMPEL ARBITRATION

          CHARLES R. BREYER UNITED STATES DISTRICT JUDGE

         Now pending is Defendant's Motion to Compel Arbitration. See generally Mot. (dkt. 14) at 2. Defendant University of Phoenix (hereafter "University") is a global higher education institution offering degree programs online and at more than 100 locations across the United States. Id. Plaintiff Bahar Mikhak is a former faculty candidate denied a fulltime faculty position. Opp'n (dkt. 18) at 1-2. Upon denial, Mikhak filed unsuccessful employment discrimination claims with the Equal Employment Opportunity Commission. Compl. (dkt. 1) ¶¶ 16-17. Mikhak then filed a complaint in the Northern District of California alleging ten counts of unlawful discrimination on the basis of religion, and related claims in violation of Title VII of the Civil Rights Act, 42 U.S.C. § 2000(e)-2(a)(1), the California Fair Employment and Housing Act, Cal. Gov't Code § 12940, and Article 1, Section 8 of the California Constitution. See generally Compl. The University now moves to compel arbitration in accordance with an agreement in the University Faculty Handbook that Mikhak signed consenting to arbitrate all employment-related disputes. Mot. at 1.

         As explained below, the Court hereby GRANTS the Motion to Compel Arbitration and STAYS the action pending the outcome of arbitration.

         I. BACKGROUND

         The University employed Mikhak for one quarter, from April 28, 2014, until October 13, 2014, as a faculty candidate at its Livermore, California, location. Compl. ¶ 13. During that time, Mikhak participated in the University's three-phased process for faculty hiring: the Assessment, Certification and Mentorship phases. Id. ¶ 21. As part of the Mentorship phase, Mikhak taught "Research Methods for Mental Health Counselors" under the supervision of her assigned mentor. Id. ¶¶ 23, 30.

         On several occasions during her Certification and Mentorship phases, Mikhak alleges that she perceived bias against her on the basis of religion. See, e.g., id. ¶¶ 29, 33, 55. Mikhak is a Muslim Submitter of Iranian descent. Id. ¶ 11. In accordance with her beliefs and the daily exercise of her religion, whenever Mikhak contemplates a future action, she utters the phrase "God willing." Id. According to Mikhak, she first perceived bias during her second mock teaching demonstration, when the College Campus Chair, Dr. Ryan Berman, "stood outside [the classroom] . . . awkwardly staring at her." Id. ¶ 28. As her course progressed, Mikhak says that Berman subjected her to in-depth inquiry, such as conducting unexpected classroom visits and questions about her pedagogical methods. See id. ¶¶ 30-55. At the same time, Berman allegedly demanded her to justify her utterance of "God willing, " which he reported offended students. Id. ¶¶ 37-55. Mikhak contends that she faced repeated complaints that appeared religiously motivated, including that "students did not feel comfortable in the classroom, " that she would retaliate against them in her grading, and that she changed her behavior when her mentor was present. Id. ¶ 64; see generally id. ¶¶ 47-75. According to her, these experiences detrimentally affected her health and well-being. Id. ¶ 67. At the end of Mikhak's Mentorship phase, despite a positive recommendation from her mentor, the University did not invite her to become a full-time faculty member. Id. ¶¶ 76-85.

         The University provided Mikhak with its 2014-2015 Faculty Handbook, which included a new Dispute Resolution Policy and Procedure and a binding arbitration agreement. Mot. at 3. The arbitration agreement "applie[d] to any covered dispute arising out of or related to the faculty member's employment with and interactions with the University" and required resolution of all disputes "only by an arbitrator . . . and not by way of court or jury trial." Id. at 3-4. The University emailed a link to all faculty members and uploaded the document to its eCampus online web portal, "the main University interface between faculty and prospective faculty and his or her students." Id. All faculty members had to acknowledge receipt and understanding of the handbook by clicking "Accept" on the "Faculty Acknowledgment Detail" webpage. Id. at 3.

         According to Mikhak, the University first provided her with an outdated 2011-2012 handbook that lacked any information about arbitration. Mikhak Decl. (dkt. 18-1) ¶ 16. The University shared the updated 2014-2015 version with the provision included on February 28, one week before requiring acknowledgment. Id. ¶ 18; Mot. at 3. Mikhak clicked "Accept" and thereby acknowledged that she "agree[d] to arbitrate employment-related legal claims" on March 7, 2014. Mot. at 4. On September 27, 2014, Mikhak accepted an Addendum Acknowledgment to the handbook, the content of which was unrelated to the arbitration agreement, declaring a second time that she "underst[ood] and agree[d] to abide by the policies set forth in the 2014-2015 Faculty Handbook . . . [her] continued employment with the University is evidence of said agreement." Id. at 5.

         After exhausting her administrative remedies to address her alleged discrimination, Mikhak filed her complaint on February 26, 2016. See generally Compl. The University's Motion to Compel Arbitration followed.

         II. LEGAL STANDARD

         The Federal Arbitration Act (FAA) provides that an agreement to submit commercial disputes to arbitration 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. Such commercial disputes include the employment context. See Circuit City Stores, Inc. v. Adams, 532 U.S. 105, 109 (2001). The FAA places arbitration agreements on "an equal footing with other contracts and requires that private agreements to arbitrate are enforced according to their terms." Rent-A-Ctr. West, Inc. v. Jackson, 561 U.S. 63, 67 (2010) (internal citations omitted). A party may petition a court to compel "arbitration [to] proceed in the manner provided for in such agreement." 9 U.S.C. § 4.

         Generally "a party cannot be required to submit to arbitration any dispute which he has not agreed so to submit." AT&T Techs., Inc. v. Commc'ns Workers of Am., 475 U.S. 643, 648 (1986). However, courts have developed a "liberal federal policy favoring arbitration agreements." AT&T Mobility LLC v. Concepcion, 563 U.S. 333, 339 (2011). A district court's role under the FAA is limited to determining "(1) whether a valid agreement to arbitrate exists, and if it does, (2) whether that agreement encompasses the dispute at issue. If the response is affirmative on both counts, then the Act requires the court to enforce the arbitration agreement in accordance with its terms." Chiron Corp. v. Ortho Diagnostic Sys., Inc., 207 F.3d 1126, 1130 (9th Cir. 2000); see also Howsam v. Dean Witter Reynolds, 537 U.S. 79, 84 (2002).

         Arbitration agreements are "a matter of contract" and "may be invalidated by generally applicable contract defenses, such as fraud, duress or unconscionability." Rent-A-Ctr., 561 U.S. at 67-68. Parties may "agree to limit the issues subject to arbitration" and "to arbitrate according to specific rules." Concepcion, 563 U.S. at 345. "[T]he party resisting arbitration bears the burden of proving that the claims at issue are unsuitable for arbitration." Green Tree Fin. Corp.-Alabama v. Randolph, 531 U.S. 79, 81 (2000).

         III. DISCUSSION

         The University's agreement stipulates that the FAA controls, which Mikhak does not contest. See Mot. at 3; Taylor Decl. Ex. B (dkt. 14-4) ¶ 1; Opp'n at 3. Rather, Mikhak disputes (A) the arbitrability of her claims; (B) the validity of the arbitration agreement; (C) the enforceability of the agreement on unconscionability grounds; and (D) the validity of the agreement to arbitrate Title VII claims. See generally Opp'n.

         A. Arbitrability

         The "gateway" question of arbitrability refers to "whether the parties have submitted a particular dispute to arbitration." Howsam, 537 U.S. at 83. See also Rent-A-Ctr., 561 U.S. at 68-89. "[T]he federal policy in favor of arbitration does not extend to deciding questions of arbitrability." Oracle Am., Inc., v. Myriad Grp., A.G., 724 F.3d 1069, 1072 (9th Cir. 2013). Courts should presume that they determine arbitrability absent "clea[r] and unmistakabl[e] evidence" that the parties agreed to delegate that question to an arbitrator. Howsam, 537 U.S. at 83; see also First Options of Chi., Inc. v. Kaplan, 514 U.S. 938, 939 (1995). Such clear and unmistakable evidence can include "a course of conduct demonstrating assent . . . or . . . an express agreement." Momot v. Mastro, 652 F.3d 982, 988 (9th Cir. 2011) (omissions in text).[1] Courts should not necessarily resolve ambiguities regarding the delegation of arbitrability in favor of arbitration, see First Options, 514 U.S. at 944-45, nor should they apply "ordinary state-law principles that govern the formation of contracts" as they normally would, Momot, 652 F.3d at 987-88.

         Here, the University argues that the agreement "clearly and mistakably delegates gateway issues of arbitrability to the arbitrator" because it covers all "disputes arising out of or relating to interpretation or application of this Arbitration Agreement." Mot. at 11. That the agreement incorporates the National Employment Arbitration Procedures of the American Arbitration Association (AAA), see Taylor Decl. Ex. B ¶ 3, further delegates arbitrability to the arbitrator. See Mot. at 11.

         Brennan held that incorporation of AAA rules constituted clear and unmistakable evidence of intent to arbitrate arbitrability. Brennan v. Opus Bank, 769 F.3d 1125, 1130 (9th Cir. 2015). Oracle previously suggested that its arbitrability delegation rule applied only to agreements between "sophisticated parties." Oracle, 724 F.3d at 1075. Joining the "vast majority of the circuits, " Brennan did not wish to "foreclose the possibility" that "unsophisticated" parties whose agreement incorporated AAA rules could also manifest clear and unmistakable evidence of intent to arbitrate arbitrability. Brennan, 796 F.3d at 1130-31. Nonetheless, the court left open the circumstances of unsophisticated parties raised by Oracle and said that it would not ". . . decide here the effect if any of incorporating AAA rules . . . into contracts of any nature between unsophisticated parties." Id. at 1131 (internal quotations omitted); see also Oracle 724 F.3d at 1075 n.2. The court "limit[ed]" its holding to an arbitration clause between two "sophisticated parties" in that case, "an experienced attorney and businessman . . . who executed an executive-level employment contract" and "a sophisticated, regional financial institution." Brennan, 796 F.3d at 1131. Incorporation of AAA rules sufficed to show their intent to delegate arbitrability. Id.

         Subsequent to Brennan, district courts within the Ninth Circuit have not resolved if unsophisticated parties can possess the clear and unmistakable evidence of intent to arbitrate.[2] In Dickey's, the court ruled that an assessment of clear and unmistakable intent to arbitrate between two parties must "first consider the position of those parties." See Meadows v. Dickey's Barbecue Restaurants (Dickey's), No. 15-cv-02139-JST, 2015 WL 7015396, at *6 (N.D. Cal. Nov. 11, 2015) (Tigar, J.) (quoting Rent-A-Ctr., 516 U.S. at 70 n.1 ("explaining that the ‘clear and unmistakable' requirement is an ‘interpretive rule, ' based on an assumption about the parties' expectations")). The Dickey's plaintiffs represented a putative class of franchisees and owners of Dickey's Barbeque Restaurants. Id. at *1. Dickey's moved to compel arbitration based on a franchise agreement that encompassed "all disputes . . . arising out of or relating to this agreement" and "incorporate[d] by reference the commercial rules of the AAA." Id. at *4-*5. The court concluded that it was unreasonable to expect that an "inexperienced individual, untrained in the law, " would understand that the language of an arbitration agreement provided clear and unmistakable evidence of arbitrability. Id. at *6. The individual Dickey's plaintiffs were "each far less sophisticated than Dickey's, " and had to agree to a "complicated, 60-page agreement drafted by Dickey's"; they apparently had no "legal training or experience dealing with complicated contracts." Id. Because these parties were not sophisticated, the court held that the Brennan rule did not apply in this context, and the court reserved the question of arbitrability rather than delegating it to an arbitrator. Id. at *7.

         Conversely, Galen upheld an arbitrability delegation clause in an independent contractor agreement signed between the employer Redfin and the plaintiff. Galen v. Redfin Corp., No. 14-cv-05229-TEH, 2015 WL 7734137, at *7 (N.D. Cal. Dec. 1, 2015) (Henderson, J.). The agreement encompassed "[a]ll disputes among the parties" and incorporated AAA rules. Id. at *1 ("Any arbitration shall be conducted in accordance with the rules of the American Arbitration Association then in effect"). The court found that the plaintiffs possessed "at least a modicum of sophistication" because they were real estate agents required to obtain a professional license. Id. at *7. This enabled the court to rule that the parties clearly and unmistakably delegated arbitrability. Id.

         Also, in Khraibut, this Court enforced a delegation clause in a non-disclosure agreement between an entrepreneur and the defendant founder of the technology start-up firm Gravity4. Khraibut v. Chahal, No. C15-04463-CRB, 2016 WL 1070662, at *6 (N.D. Cal. Mar. 18, 2016) (Breyer, J.). The agreement stipulated that "any disputes or controversies . . . shall be subject to binding arbitration" that would be "administered by the [AAA] in accordance with its Rules." See id. at *1. The Court followed Brennan and "defer[red] to the AAA's Rules on arbitrability." Id. at *5. The Khraibut plaintiff was "at least minimally sophisticated, " as he was a "savvy entrepreneur in his own right" with previous "dealings in the business world." Id. at *6. Consequently, the Court found that there was "clear and unmistakable evidence of delegation." Id.

         The Court first considers the "gateway" question of arbitrability in the instant case. See Rent-A-Ctr., 561 U.S. at 68-69. The University's arbitration agreement "applies to any covered dispute arising out of or related to the faculty member's employment with and interactions with the University . . . [including] disputes arising out of or relating to interpretation or application" of the agreement. Taylor Decl. Ex. B. ¶ 1. The University argues that this broad clause "clearly and unmistakably" demonstrates the parties' intent to arbitrate arbitrability. See Mot. at 11; Reply (dkt. 21) at 4. Mikhak does not directly dispute the arbitrability of the agreement except by seeking to invalidate it through standard contract law defenses, such lack of mutual assent. See Opp'n at 4. Notwithstanding the question of assent to the contract, discussed infra Section B, the presence of an "express agreement" itself is potentially enough to establish potentially clear and unmistakable evidence of intent to arbitrate arbitrability. See Momot, 652 F.3d at 988. Also contrary to Mikhak's briefing, the arbitrability inquiry should not turn on ordinary contract defenses. See Opp'n at 4; Momot, 652 F.3d at 987-88.

         Here, the broad nature of the arbitration agreement should not weigh heavily in the analysis. The agreement's language of "any covered dispute" is similar to the broad language in the challenged clauses in Dickey's, Galen, and Khraibut. See Dickey's, 2015 WL 7015396, at *2; Galen, 2015 WL 7734137, at *1; Khraibut, 2016 WL 1070662, at *1. More critical is whether the parties are "sophisticated, " and if that finding is dispositive. There is little question that the University qualifies as a sophisticated party. It operates online and at more than 100 locations across the U.S. and worldwide. Mot. at 2. On the other hand, courts have been unclear on whether a non-law professor qualifies as a sophisticated party in the arbitrability and employment context (if, indeed, sophistication is required). Mikhak is a former researcher and only recently started to apply to teaching positions. Mikhak Decl. ¶ 29. She possesses graduate degrees in Epidemiology and Biostatistics, and Genetic and Molecular Epidemiology, and she has taught epidemiology courses online and in person. Compl. ¶¶ 25-26. Mikhak likely had previously signed employment contracts with universities, and she is undoubtedly intelligent. As an experienced professor, she might have the sufficient "modicum of sophistication" to express intent to arbitrate arbitrability. See Galen, 2015 WL 7734137, at *7. Yet based on her field of study, concluding that she is sophisticated in this context is more difficult. She is not a "savvy entrepreneur" with prior "dealings in the business world, " see Khaibut, 2016 WL 1070662, at *6, she does not possess a professional license in a legal or related field, see Galen, 2015 WL 7734137, at *7, and she certainly is not an "experienced attorney and business[wo]man, " see Brennan, 796 F.3d at 1131. Her situation might be more analogous to the inexperienced Dickey's plaintiffs who had no evidence of "legal training or experience dealing with complicated contracts, " and who had to sign a "complicated, 60-page agreement" replete with "a myriad of legal terms." See Dickey's, 2015 WL 7015396, at *6. Mikhak had to accept electronically "a number of terms" presented in response to "a number of documents" related to her hiring, including the 2014-2015 Faculty Handbook, which she felt was "misleading" and contained "inconsistencies." Mikhak Decl. ¶¶ 9, 15. Such a barrage of materials might understandably seem confusing to an individual without experience reviewing legal documents or negotiating employment contracts. Because the courts remain divided on whether parties must be sophisticated to delegate arbitrability and because Mikhak's sophistication is subject to dispute, it is not certain that Mikhak clearly and unmistakably delegated arbitrability. Absent that evidence, courts should not presume delegation of arbitrability. See Howsam, 537 U.S. at 83. The Court therefore reserves its authority to determine arbitrability and refuses to delegate that question to the arbitrator.

         B. ...


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