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Levy v. Lytx, Inc.

United States District Court, S.D. California

June 28, 2017

DANIEL LEVY, individually and on behalf of others similarly situated, Plaintiff,
v.
LYTX, INC., Defendant.

          ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT'S MOTION TO COMPEL INDIVIDUAL ARBITRATION AND DISMISS CLASS CLAIMS [ECF No. 8]

          Hon. Cynthia Bashant United States District Judge

         Pending before the Court is Defendant Lytx, Inc.'s motion to compel Plaintiff Daniel Levy's claims for alleged violations of the Fair Labor Standards Act (“FLSA”) and California Labor Code to individual arbitration and dismiss class allegations. (ECF No. 8.) Also pending is Defendant's request to stay the proceedings until the Supreme Court's review of Morris v. Ernst & Young, LLP, 834 F.3d 975 (9th Cir. 2016), cert. granted, 127 S.Ct. 809 (2017). (Reply, ECF No. 13.) Plaintiff filed an opposition, arguing that he may pursue class claims in this Court because Defendant's arbitration agreement (“Agreement”) violates the National Labor Relations Act (“NLRA”). (ECF No. 11.)

         The Court finds this motion suitable for determination on the papers submitted and without oral argument. See Fed. R. Civ. P. 78(b); Civ. L.R. 7.1(d)(1). For the reasons that follow, the Court GRANTS IN PART and DENIES IN PART Defendant's motion to compel individual arbitration and dismiss class allegations and DENIES Defendant's request to stay the proceedings.

         I. BACKGROUND

         Plaintiff Daniel Levy is a resident of San Diego, California. (Compl. ¶ 9, ECF No. 1.) Defendant, a technology company, provides analytics services for businesses that use fleets of drivers. (Id. ¶ 10; Cross Decl. ¶ 3, ECF No. 8.) Plaintiff began working for Defendant as a Technology Tech on April 14, 2008. (Cross Decl. ¶ 4.) On that day, Plaintiff signed the Agreement. (Cross Decl. Ex. B at 9.) The Agreement states in part:

Although [Defendant] (“the Company”) hope[s] that employment disputes will not occur, the Company believes that where such disputes do arise, it is in the mutual interest of everyone involved to handle them pursuant to the complaint process outlined in the Employee Handbook and then, if necessary, binding arbitration, which generally resolves disputes quicker than court litigation and with a minimum of disturbance to all parties involved. By entering into this agreement, the Company and the undersigned Employee are waiving the right to a jury trial for most employment-related disputes . . . . The Company and the undersigned Employee hereby agree that any dispute with any party that may arise from Employee's employment with the Company or the termination of Employee's employment with the company shall be resolved by mandatory, binding arbitration before a retired judge.

(Id. at 8.)

         Although the Agreement does not cover some claims, such as those presented to an administrative agency or those based on the NLRA, the Agreement does cover claims made pursuant to the FLSA and California Labor Code. (See Cross Decl. Ex. B at 8-9.) The relevant coverage provision states in part: “The arbitration requirement applies to all statutory, contractual and/or common law claims arising from employment with the Company including, but not limited to . . . claims under the federal Fair Labor Standards Act, or any other federal or state statute covering these subjects . . . .” (Id. at 8.) Finally, the Agreement incorporates the rules of the American Arbitration Association (“AAA”). (Id. at 9.) The rules provision states: “Binding arbitration under this Agreement shall be conducted in accordance with any applicable state statutes [sic] exist; then the arbitration shall be conducted pursuant to the rules of the [AAA] for employment law disputes.” (Id.) The Agreement makes no specific mention of class or individual proceedings. (See Id. at 8-9.)

         On November 4, 2016, Plaintiff resigned from his employment with Defendant. (Cross Decl. ¶ 6.) On December 27, 2016, Plaintiff commenced this suit, alleging that Defendant violated federal and California labor laws by failing to pay wages and keep records according to the standards of the FLSA, the California Labor Code, and California's Unfair Competition Laws. Plaintiff brings a collective action for the alleged FLSA violations and a class action for the alleged violations of California labor law. Defendant now moves to compel individual arbitration of the nine claims asserted in Plaintiff's complaint and dismiss the class allegations. (ECF No. 8.) In the alternative, Defendant requests that the Court stay the proceedings pending the Supreme Court's ruling in Morris.[1] (ECF No. 13.) Plaintiff opposes. (ECF No. 11.)

         II. LEGAL STANDARD

         The Federal Arbitration Act (“FAA”) applies to contracts that evidence transactions involving interstate commerce. 9 U.S.C. §§ 1, 2. The FAA provides that contractual 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.” Id. § 2. The “primary” purpose of the FAA is to ensure that “private agreements to arbitrate are enforced according to their terms.” Volt Info. Scis., Inc. v. Bd. of Trs. of the Leland Stanford Junior Univ., 489 U.S. 468, 479 (1989). Therefore, “as a matter of federal law, 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).

         Given this strong federal preference for arbitration and the contractual nature of arbitration agreements, “a district court has little discretion to deny an arbitration motion” once it determines that a claim is covered by a written and enforceable arbitration agreement. Republic of Nicar. v. Standard Fruit Co., 937 F.2d 469, 475 (9th Cir. 1991). Arbitration agreements, “[l]ike other contracts . . . may be invalidated by ‘generally applicable contract defenses, such as fraud, duress, or unconscionability.'” Rent-A-Ctr., W., Inc. v. Jackson, 561 U.S. 63, 68 (2010) (quoting Doctor's Assocs., Inc. v. Casarotto, 517 U.S. 681, 687 (1996)). “In determining whether to compel a party to arbitration, a district court may not review the merits of the dispute[.]” Marriot Ownership Resorts, Inc. v. Flynn, No. 14-00372 JMS-RLP, 2014 WL 7076827, at *6 (D. Haw. Dec. 11, 2014). Instead, a district court's determinations are limited to (1) whether a valid arbitration agreement exists and, if so, (2) whether the agreement covers the relevant dispute. See 9 U.S.C. § 4; Chiron Corp. v. Ortho Diagnostic Sys., Inc., 207 F.3d 1126, 1130 (9th Cir. 2000).

         III. ANALYSIS

         A. The Ninth Circuit's Decision in Morris Will Not Apply If the ...


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