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Rivera v. Saul Chevrolet, Inc.

United States District Court, N.D. California, San Jose Division

May 9, 2017

SAUL CHEVROLET, INC., et al., Defendants.


          LUCY H. KOH United States District Judge

         Plaintiff Marcos Rivera (“Plaintiff), on behalf of himself, the public, and all others similarly situated, brings this action against Saul Chevrolet, Inc.; Cardinale Automotive Group of Tahoe, Inc.; Cardinale Automotive Group; Volkswagen Hyundai; Cardinale Oldsmobile GMC Truck, Inc.; Cardinale AG Motorbike, Inc.; Cardinale Nissan, Inc.; Cardinale Protective Services, Inc.; Cardinaleway Nevada AG Inc.; Cardinaleway Acura; Cardinale Automotive Group-Arizona, Inc.; Cardinaleway Mazda AT Peoria; and Cardinaleway Mazda AT Superstition Springs (collectively, “Defendants”). Before the Court is Defendants' Motion to Compel Arbitration on an Individual Basis and Stay the Proceedings Pending Arbitration. ECF No. 68 (“Mot.”). Pursuant to Civil Local Rule 7-1(b), the Court finds this matter appropriate for resolution without oral argument and vacates the hearing scheduled for May 11, 2017. Having considered the parties' briefing, the relevant law, and the record in this case, the Court DENIES Defendants' Motion to Compel Arbitration on an Individual Basis and Stay Proceedings Pending Arbitration.


         Plaintiff alleges that he is a former employee of Defendants who worked at “Defendants' Corona, California [automobile] dealership as a non-exempt parts and service counter salesperson.” ECF No. 1 (“Compl.”) ¶ 10. Defendants own multiple car dealerships and “were, at all times relevant hereto, the alter egos of each other.” Id. ¶ 29.

         Plaintiff began working for Defendants on March 4, 2015. ECF No. 74-1, Declaration of Marcos Rivera (“Rivera Decl.”) ¶ 3. On his first day working for Defendants, Plaintiff asserts that he received “(1) an Employee Handbook; (2) a Driving Policy; (3) a Sensitive Information Policy and Program; (4) an explanation of COBRA coverage; (5) a Use of Confidential Information by Employee agreement; (6) a Customer Privacy Policies agreement; (7) a Notice to Employees -Proposition 65; (8) a Welcome to Cardinale Automotive Group sheet; and (9) a Time of Hire Pamphlet regarding workers compensation benefits.” Id. Plaintiffs personnel file also contains an At Will Employment Agreement and Binding Arbitration Agreement (“Arbitration Agreement”). ECF No. 68-2, Declaration of Deena Clay (“Clay Decl.”) ¶ 4 & Ex. A. Although Plaintiff asserts that he does not “specifically recall” the Arbitration Agreement or signing it, Rivera Decl. ¶ 4, the Arbitration Agreement lists Plaintiff as a signatory, contains an “M Rivera” signature in cursive, and is dated March 4, 2015, ECF No. 68-2. Defendants' Controller, Deena Clay, states in a declaration that the signature on the Arbitration Agreement matches the other signatures in Plaintiffs personnel file. Id. ¶ 4-5.

         Plaintiff was paid $3, 000 per month while working for Defendant and was promised commissions based on sales. Compl. ¶ 31. Plaintiff alleges, however, that the “commission structure was a mirage.” Id. Plaintiff asserts that, as a result, Plaintiff “was entitled to payment for each of his hours worked, including substantial overtime worked (at one and one-half times his ‘regular rate of pay, ' based on his salary).” Id. Plaintiff alleges that Defendants required Plaintiff and other employees to work “off the clock, ” which resulted in unpaid wages and overtime. Id. ¶ 32.

         Additionally, Plaintiff alleges that Defendants (1) failed to provide “due meal and rest breaks, or compensation in lieu thereof, [as required] under California law, ” (2) failed to provide employees' wage statements that “accurately state[d] the number of hours worked by (non-exempt) [] employees” or that “state[d] the hourly rate in effect during the pay period, ” and (3) failed to promptly pay these unpaid wages when Plaintiff and other employees “resigned or were discharged from Defendants' employment.” Id.

         On October 14, 2016, Plaintiff filed the instant class action and Fair Labor Standards Act (“FLSA”) collective action suit against Defendants. See Compl. Plaintiff alleges nine causes of action: (1) Failure to Pay Overtime Compensation in violation of the Fair Labor Standards Act (“FLSA”), 29 U.S.C. § 207; (2) Failure to Pay Compensation for All Hours Worked and Minimum Wage Violations in violation of California Labor Code §§ 216, 1194, 1194.2, 1197; (3) Failure to Pay Overtime Compensation in violation of California Labor Code §§ 1194; (4) Failure to Pay Meal and Rest Period Compensation in violation of California Labor Code §§ 226.7, 512; (5) Waiting Time Penalties under California Labor Code § 203; (6) Failure to Pay All Wages by the Appropriate Pay Period in violation of California Labor Code § 204; (7) Failure to Provide Accurate Itemized Statements in violation of California Labor Code § 226; (8) Private Attorney General Act, Cal Labor Code § 2699; and (9) Unfair Business Practices in violation of California Business and Professions Code § 17200, et seq. See Compl. ¶¶ 44-92.

         On February 18, 2017, Defendants filed the instant Motion to Compel Arbitration on an Individual Basis and Stay the Proceedings Pending Arbitration. See Mot. Defendants' motion seeks to compel arbitration as to causes of action 1, 2, 3, 4, 5, 6, 7 and 9, and seeks a stay of proceedings for cause of action 8. Id. at 2. On March 6, 2017, Plaintiff filed an opposition, ECF No. 74 (“Opp'n”), and on March 13, 2017, Defendants filed a reply, ECF No. 77 (“Reply”).


         The Federal Arbitration Act (“FAA”) applies to arbitration agreements in any contract affecting interstate commerce. See Circuit City Stores, Inc. v. Adams, 532 U.S. 105, 119 (2001); 9 U.S.C. § 2. Under Section 3 of the FAA, “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.'” Rent-A-Center, West, Inc. v. Jackson, 561 U.S. 63 (2010) (quoting 9 U.S.C. § 3). If all claims in litigation are subject to a valid arbitration agreement, the court may dismiss or stay the case. See Hopkins & Carley, ALC v. Thomson Elite, 2011 WL 1327359, at *7-8 (N.D. Cal. Apr. 6, 2011).

         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. In deciding whether a dispute is arbitrable, a court must answer two questions: (1) whether the parties agreed to arbitrate, and, if so, (2) whether the scope of that agreement to arbitrate encompasses the claims at issue. See Chiron Corp. v. Ortho Diagnostic Sys., Inc., 207 F.3d 1126, 1130 (9th Cir. 2000). If a party seeking arbitration establishes these two factors, the court must compel arbitration. Id.; 9 U.S.C. § 4. “The standard for demonstrating arbitrability is not a high one; in fact, a district court has little discretion to deny an arbitration motion, since the [FAA] is phrased in mandatory terms.” Republic of Nicar. v. Std. Fruit Co., 937 F.2d 469, 475 (9th Cir. 1991). In cases where the parties “clearly and unmistakably intend to delegate the power to decide arbitrability to an arbitrator, ” the court's inquiry is “limited ... [to] whether the assertion of arbitrability is ‘wholly groundless.'” Qualcomm Inc. v. Nokia Corp., 466 F.3d 1366, 1371 (Fed. Cir. 2006) (applying Ninth Circuit law). Nonetheless, “arbitration is a matter of contract and a party cannot be required to submit to arbitration any dispute which [s]he has not agreed so to submit.” AT & T Techs., Inc. v. Commc 'ns Workers of Am., 475 U.S. 643, 648 (1986) (quoting Steelworkers v. Warrior & Gulf Navigation Co., 363 U.S. 574, 582 (1960)).

         The FAA creates a body of federal substantive law of arbitrability that requires a healthy Scis., Inc. v. Bd. of Trs. of Leland Stanford Junior Univ., 489 U.S. 468, 475-79 (1989) (“[T]he FAA must be resolved with a healthy regard for the federal policy favoring arbitration.”). However, “state law is not entirely displaced from federal arbitration analysis.” Ticknor v. Choice Hotels Int'l, Inc., 265 F.3d 931, 936-37 (9th Cir. 2001). When deciding whether the parties agreed to arbitrate a certain matter, courts generally apply ordinary state law principles of contract interpretation. First Options of Chi., Inc. v. Kaplan, 514 U.S. 938, 944 (1995) (“Courts generally should apply ordinary state-law principles governing contract formation in deciding whether [an arbitration] agreement exists.”). Parties may also contract to arbitrate according to state rules, so long as those rules do not offend the federal policy favoring arbitration. Volt, 489 U.S. at 476, 478-79 (looking to whether state rules “offend[ed] the rule of liberal construction” in favor of arbitration). Thus, in determining whether parties have agreed to arbitrate a dispute, the court applies “general state-law principles of contract interpretation, while giving due regard to the federal policy in favor of arbitration by resolving ambiguities as to the scope of arbitration in favor of arbitration.” Mundi v. Union Sec. Life Ins. Co., 555 F.3d 1042, 1044 (9th Cir. 2009) (quoting Wagner v. Stratton Oakmont, Inc., 83 F.3d 1046, 1049 (9th Cir. 1996)). “[A]s with any other contract, the parties' intentions control, but those intentions are generously construed as to issues of arbitrability.” Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 626 (1985). If a contract contains an arbitration agreement, there is a “presumption of arbitrability, ” AT & T, 475 U.S. at 650, and “any doubts concerning the scope of arbitrable issues should be resolved in favor of arbitration, ” Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24-25 (1983).

         III. ...

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