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Titus v. Paramount Equity Mortgage, LLC

United States District Court, E.D. California

August 31, 2017

DENISE TITUS, Plaintiff,
v.
PARAMOUNT EQUITY MORTGAGE, LLC; and DOES 1-100, inclusive, Defendant.

          MEMORANDUM AND ORDER

          MORRISON C. ENCJLAMJD, JR UNITED STATES DISTRICTJUDSE

         Plaintiff Denise Titus brings this Fair Labor Standards Act (“FLSA”) class action against Defendant Paramount Equity Mortgage, LLC, alleging violations of the FLSA and of the California Labor Code. Now before the Court is Defendant's Motion to Compel Arbitration, ECF No. 9, in which Defendant claims an arbitration agreement signed by the parties requires Plaintiff to bring her claims in arbitration and on an individual basis only. Because the relevant clauses of that agreement are unenforceable, Defendant's motion is DENIED.[1]

         BACKGROUND

         Plaintiff was hired as an hourly, non-exempt employee for Defendant in August of 2015. First Am. Compl. (“FAC”), ECF No. 6, ¶¶ 7, 9. While Plaintiff's FAC does not allege exactly when her employment began or terminated, Defendants state that Plaintiff worked for Defendant “from approximately September 14, 2015[, ] through November 2016.” Def.'s Mot. to Compel Arbitration, at 6. Plaintiff alleges that Defendant violated a number of employment laws, including various provisions regulating overtime wages and wage statements. See, e.g., FAC, ¶¶ 10, 20. Plaintiff also brings suit under California's Private Attorney General Act (“PAGA”), see id. ¶¶ 85-90, which allows private parties to pursue civil penalties for violations of the California Labor Code.

         As a prerequisite to Plaintiff's employment, she signed an arbitration agreement on September 14, 2015. Decl. of Angela Friedman, ECF No. 9-1, ¶ 3. In relevant part, that agreement provides:

Agreement to Arbitration. To resolve employment disputes in an efficient and cost-effective manner, you and Paramount Equity Mortgage (“the Company”) agree that any and all claims arising out of or related to your employment that could be filed in a court of law . . . shall be submitted to final and binding arbitration, and not to any other forum. . . .
1. Class Action Waiver. You and Company agree to bring any dispute on an individual basis only, and not as part of a class or collective action. You and Company agree to waive any right to a class or collective action . . . .
2. PAGA Action Waiver. You and Company agree to bring any dispute on an individual basis only, and not as part of a representative action pursuant to the Labor Code Private Attorneys General Act of 2004 . . . .

Decl. of Angela Friedman, Ex. B, ECF No. 9-3, at 2.

         STANDARD

         The Federal Arbitration Act (“FAA”) provides that “[a] written provision in . . . a contract evidencing a transaction involving commerce to settle by arbitration a controversy thereafter arising out of such contract . . . 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 allows a party to seek a court order compelling arbitration where another party refuses to arbitrate. 9 U.S.C. § 4. Valid arbitration agreements must be “rigorously enforced.” Perry v. Thomas, 482 U.S. 483, 490 (1987). The FAA “leaves no place for the exercise of discretion by a district court, but instead mandates that district courts shall direct the parties to proceed to arbitration on issues as to which an arbitration agreement has been signed.” Dean Witter Reynolds, Inc. v. Byrd, 470 U.S. 213, 218 (1985).

         Generally, in deciding whether a dispute is subject to the arbitration agreement, a court must answer two questions: (1) “whether a valid agreement to arbitrate exists, ” and, if so, (2) “whether the agreement encompasses the dispute at issue.” 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. See 9 U.S.C. § 4; Chiron, 207 F.3d at 1130. Accordingly, the Court's role “is limited to determining arbitrability and enforcing agreements to arbitrate, leaving the merits of the claim and any defenses to the arbitrator.” Republic of Nicaragua v. Standard Fruit Co., 937 F.2d 469, 479 (9th Cir. 1991).

         In determining the existence of an agreement to arbitrate, the district court looks to “general state-law principles of contract interpretation, while giving due regard to the federal policy in favor of arbitration.” Wagner v. Stratton Oakmont, Inc., 83 F.3d 1046, 1049 (9th Cir. 1996). “Although ‘courts may not invalidate arbitration agreements under state law applicable only to arbitration provisions, ' general contract defenses such as fraud, duress, or unconscionability, grounded in state contact law, may operate to invalidate arbitration agreements.” Circuit City Stores, Inc. v. Adams, 279 F.3d 889, 892 (9th Cir. 2002) (quoting Doctor's Ass'n., Inc. v. Casarotto, 517 U.S. 681, 687 (1996)). However, courts cannot apply even generally applicable defenses to contract enforceability, such as duress and unconscionability, in a way that disfavors and undermines arbitration. AT&T Mobility LLC v. Concepcion, 563 U.S. 333, 342 (2011).

         Finally, “as a matter of federal law, any doubts concerning the scope of arbitrable issues should be resolved in favor of arbitration, whether the problem at hand is a construction of the contract language or an allegation of waiver, delay, or like defense to arbitrability.” Moses H. Cone Mem'l Hosp. v. Mercury Const. Corp., 460 U.S. 1, 24-25 (1983). A motion to enforce an arbitration agreement “should not be denied unless it may be said with positive assurance that the arbitration clause is not susceptible ...


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