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Rodriguez v. Jerome's Furniture Warehouse

United States District Court, S.D. California

July 24, 2017

MIGUEL RODRIGUEZ, Plaintiff,
v.
JEROME'S FURNITURE WAREHOUSE, Defendant.

          ORDER (1) DENYING MOTION TO COMPEL ARBITRATION; (2) DENYING MOTION TO DISMISS; AND (3) GRANTING MOTION TO STAY

          Hon. M. James Lorenz United States District Judge

         Pending before the Court is Defendant Jerome Furniture Warehouse's (“Defendant”) motion [Doc. 14] to compel Plaintiff Miguel Rodriguez (“Plaintiff”) to submit his claims to arbitration, dismiss the complaint for refiling in state court, or stay litigation pending a forthcoming Supreme Court decision. The Court decides the matter on the papers submitted and without oral argument. See Civ. L. R. 7.1(d.1). For the reasons stated below, the Court DENIES Defendant's motions to compel and dismiss and GRANTS Defendant's motion to stay.

         I. Background

         Plaintiff served as a non-exempt employee for Defendant from approximately July 25, 2005 until June 2016. During his employment, Plaintiff alleges he often worked more than eight hours a day and forty hours a week without receiving overtime compensation. Plaintiff also alleges he was not provided required meal periods and did not receive compensation for these missed meal periods. Because of these violations, Plaintiff alleges Defendant failed to provide him properly itemized wage statements or prompt payment of all wages due upon separation.

         Plaintiff entered into an Arbitration Agreement [Doc. 12-2 Ex. B][1] with Defendant in 2013. The Arbitration Agreement provides that the parties shall submit all disputes that arise out of the employment context to binding arbitration. (Arbitration Agreement.) The Arbitration Agreement also contains a Class Action Waiver [Arbitration Agreement § g] which provides

THE COMPANY AND I AGREE THAT EACH OF U.S. MAY BRING CLAIMS AGAINST THE OTHER ONLY IN OUR INDIVIDUAL CAPACITIES, AND NOT AS A PLAINTIFF OR CLASS MEMBER IN ANY PURPORTED CLASS OR REPRESENTATIVE PROCEEDING.

         (Class Action Waiver.)

         On September 23, 2016, Plaintiff filed a demand for class wide arbitration with JAMS.[2] (Demand [Doc. 12-3 Ex. E].) The Demand alleged violations of the California Labor Code and California's Unfair Competition Law (the “UCL”), Cal Bus. & Prof. Code §17200 et seq, in the form of failure to pay overtime; failure to provide meal periods or premium pay; failure to provide accurate wage statements; and failure to promptly pay owed wages upon separation. (See Demand.) Defendant filed a motion with the arbitrator objecting to class wide arbitration, instead seeking to compel individual arbitration. (Tesauro Decl. [Doc. 12-3] ¶ 5.) Plaintiff subsequently dismissed his demand.

         On December 5, 2016, Plaintiff filed a PAGA, Cal Lab. Code § 2698 et seq., claim with the California Superior Court, County of San Diego. (Doc. 12-4 Ex. F.) The state court PAGA claim does not allege failure to pay overtime. (See Id.) Otherwise, it alleges substantially the same claims based on the same conduct as alleged in the Demand, but on a representative basis. (See Id.) Subsequently, on March 7, 2017, Plaintiff filed a class and collective action Complaint with this Court alleging substantially the same claims based on the same conduct as alleged in the Demand, but with the addition of a Fair Labor Standards Act (“FLSA”) claim under 29 U.S.C. § 207. (Complaint [Doc. 1].) Defendant now moves the Court to either (1) compel arbitration; (2) dismiss the Complaint for refiling in state court; or (3) stay this litigation pending the Supreme Court's decision on a Ninth Circuit case that is dispositive of this motion. (Mot. [Doc. 12].) Plaintiff opposes. (Opp'n [Doc. 13].)

         II. Motion to compel arbitration

         There is no dispute as to the fact that the Federal Arbitration Act (“FAA”) governs here. Under the FAA, a Court need consider only two questions to determine whether to compel arbitration: (1) is there a valid agreement to arbitrate? And, if so, (2) does the agreement cover the matter in dispute? Chiron Corp. v. Ortho Diagnostic Systems, Inc., 207 F.3d 1126, 1130 (9th Cir. 2000). The Arbitration Agreement clearly covers the matters in dispute here. Accordingly, the Court need only consider whether the Arbitration Agreement is valid.

         An agreement to arbitrate is “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. Under California law, the elements of a valid contract are (1) parties capable of contracting; (2) mutual consent; (3) a lawful object; and (4) consideration. Cal. Civ. Code § 1550. However, a court will not enforce an otherwise valid contract if there exists a viable defense, such as illegality. 1 Witkin, Summary 10th (2005) Contracts, § 331, p.

         Plaintiff argues that the Arbitration Agreement is illegal, and therefore invalid, because the Class Action Waiver violates the National Labor Relations Act (“NLRA”). Section 7 of the NLRA provides that

[e]mployees shall have the right to self-organization, to form, join, or assist labor organizations, to bargain collectively through representatives of their own choosing, and to engage in other concerted activities for the purpose of ...

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