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Hernandez v. San Gabriel Temporary Staffing Services, LLC

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

April 2, 2018

DEANNA HERNANDEZ, Plaintiff,
v.
SAN GABRIEL TEMPORARY STAFFING SERVICES, LLC, Defendant.

         ORDER GRANTING DEFENDANT'S MOTION TO COMPEL ARBITRATION AS TO PLAINTIFF'S INDIVIDUAL BACKGROUND CHECK-RELATED CLAIMS; GRANTING DEFENDANT'S REQUEST TO STRIKE PLAINTIFF'S BACKGROUND CHECK-RELATED CLASS CLAIMS; AND STAYING REMAINDER OF ACTION PENDING THE UNITED STATES SUPREME COURT'S DECISION IN ERNST & YOUNG LLP V. MORRIS RE: DKT. NO. 13

          LUCY H. KOH UNITED STATES DISTRICT JUDGE.

         Plaintiff Deanna Hernandez (“Plaintiff”) brings a class action lawsuit against Defendant San Gabriel Temporary Staffing Services, LLC (“Defendant”) that asserts causes of action arising out of (1) the background checks that Defendant allegedly conducts on “prospective, current and former employees, ” ECF No. 23 ¶ 2; and (2) an assortment of alleged wage and hour violations under California law by Defendant. Id. ¶ 4. Before the Court is Defendant's motion to compel arbitration. ECF No. 13 (“Mot.”). Defendant requests that the Court compel arbitration of all individual claims brought by Plaintiff, strike all of Plaintiff's class claims, and stay the case pending arbitration. See Id. Having considered the submissions of the parties, the relevant law, and the record in this case, the Court (1) GRANTS Defendant's motion to compel arbitration of Plaintiff's individual background check-related claims; (2) GRANTS Defendant's request to dismiss without prejudice Plaintiff's background check-related class claims; and (3) STAYS the remainder of Plaintiff's action pending the United States Supreme Court's resolution of Ernst & Young LLP v. Morris.

         I. BACKGROUND

         A. Factual Background

         On December 14, 2016, Plaintiff signed an “At-Will Employment Agreement” (“Agreement”) with Defendant. See ECF No. 13-1 at 6-11 (“Agreement”). Section 8 of the Agreement contains both (1) a choice-of-law provision selecting the “Governing Law” of the Agreement; and (2) an arbitration provision. In its entirety, section 8 of the Agreement reads as follows:

Governing Law; Arbitration. This Agreement shall be governed by the laws of the State of California, without regard to that state's conflict-of-laws rules. Any dispute that arises out of or relates to Employee's employment by [Defendant], and that cannot be resolved independently by [Defendant] and Employee, shall be resolved through binding arbitration conducted by JAMS in accordance with such employment arbitration rules or other rules as ensure that the arbitration proceeds subject to the following requirements: (a) before a single, neutral arbitrator; (b) with discovery to the same extent as is allowed under the California Code of Civil Procedure; (c) with a final decision in the form of a detailed, reasoned, opinion sufficient to enable judicial review; (d) with no limitation on the type of relief available under the laws relating to any claim advanced in the arbitration; (e) that the Company be solely responsible for all types of costs associated with the arbitration that the Employee would not have to pay if proceeding in court, including all arbitrator fees, case-management fees, and other expenses necessary to provide the arbitral forum; and (f) to the greatest extent allowed by applicable law, the Employee has the same appellate rights as the employee would have if the arbitrated claim had been brought in the state or federal courts located within California. Except as otherwise noted in this Agreement, this arbitration provision applies to all claims whatsoever arising in connection with Employee's employment with [Defendant], including claims arising under the Age Discrimination in Employment Act; the Family and Medical Leave Act; the Worker Adjustment and Retraining Notification Act; Title VII of the Civil Rights Act of 1964, or any other state or federal anti-discrimination laws; the Americans with Disabilities Act; the Employee Retirement Income Security Act; the Equal Pay Act of 1963; the California Fair Employment and Housing Act; the California Business and Professions Code; the California WARN Act; the California Labor Code; and/or any other local city, county, state or federal statutes, laws, regulations, or ordinances.

Agreement § 8.

         Also on December 14, 2016, Plaintiff signed a “Consumer Report & Investigative Consumer Report Authorization” (“Authorization”) indicating that Plaintiff authorized Defendant to obtain “‘consumer reports' and/or ‘investigative consumer reports' about [Plaintiff] from a ‘consumer reporting agency, '” as well as a “criminal background check” and a “motor vehicle report” about Plaintiff. ECF No. 24-2 at 2. The Authorization also purported to authorize Defendant to consider these reports “when making decisions regarding [Plaintiff's] employment or prospective employment with [Defendant].” Id. However, Plaintiff alleges that Defendant “failed to provide Plaintiff with the necessary disclosures and summary of rights” before procuring or requesting these background check reports. ECF No. 23 ¶ 22.

         Further, Plaintiff alleges that when she was employed by Defendant, Defendant committed a number of wage and hour violations against Plaintiff and other employees. Specifically, Plaintiff alleges that Defendant (1) “failed to provide her and all other similarly situated individuals with meal periods”; (2) “failed to provide them with rest periods”; (3) “failed to pay premium wages for missed meal and/or rest periods”; (4) “failed to pay them for all hours worked”; (5) “failed to reimburse them for all necessary business expenses”; (6) “failed to provide them with accurate written wage statements”; and (7) “failed to timely pay them all of their final wages following separation of employment.” Id. ¶ 4.

         B. Procedural History

         Plaintiff filed a class action complaint against Defendant in the Superior Court for the County of Santa Clara on September 6, 2017. See ECF No. 23 Ex. 1 (“Compl.”). Plaintiff's complaint asserts twelve causes of action against Defendant on behalf of four putative classes and six putative sub-classes. See Id. Plaintiff's first four causes of action are related to the background checks that Defendant allegedly conducts on “prospective, current and former employees.” Id. ¶ 2. Specifically, Plaintiff's first four causes of action are for: (1) “failure to make proper disclosure” in violation of the Fair Credit Reporting Act (“FCRA”), 15 U.S.C. § 1681b(b)(2)(A), id. at 10; (2) “failure to give proper summery of rights” in violation of FCRA, 15 U.S.C. §§ 1681d(a)(1) & 1681g(c), id. at 14; (3) “failure to make proper disclosure” in violation of the California Investigative Consumer Reporting Agencies Act (“ICRAA”), Cal. Civ. Code § 1786 et seq., id. at 17; and (4) “failure to make proper disclosure” in violation of the California Consumer Credit Reporting Agencies Act (“CCRAA”), Cal. Civ. Code § 1785 et seq. Id. at 20.

         Plaintiff's eight remaining causes of action are related to various alleged wage and hour violations committed by Defendant. Specifically, Plaintiff's eight remaining causes of action are for: (1) “failure to provide meal periods” in violation of California Labor Code §§ 204, 223, 226.7, 512, and 1198, id. at 22; (2) “failure to provide rest periods” in violation of California Labor Code §§ 204, 223, 226.7, and 1198, id. at 24; (3) “failure to pay hourly and overtime wages” in violation of California Labor Code §§ 223, 510, 1194, 1197, and 1198, id. at 25; (4) “failure to pay vacation wages” in violation of California Labor Code § 227.3, id. at 29; (5) “failure to indemnify for business expenses” in violation of California Labor Code § 2802(a), id. at 30; (6) “failure to provide accurate written wage statements” in violation of California Labor Code § 226, id.; (7) “failure to timely pay all final wages” in violation of California Labor Code §§ 201-03, id. at 32; and (8) violation of California's Unfair Competition Law (“UCL”), Cal. Bus. & Prof. Code § 17200 et seq., id. at 33.

         Defendant filed an answer to Plaintiff's complaint in state court on October 10, 2017. See ECF No. 23 Ex. 2. The next day, on October 11, 2017, Defendant removed the action to this Court. See ECF No. 1.

         On December 21, 2017, Defendant filed the instant motion to compel arbitration. See Mot. Plaintiff filed an opposition on February 5, 2018, see ECF No. 24 (“Opp.”), and Defendant filed a reply on February 27, 2018, see ECF No. 27 (“Reply”).

         II. LEGAL STANDARD

         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).

         Interpretation of arbitration agreements generally turns on state law. See Arthur Andersen LLP v. Carlisle, 556 U.S. 624, 630-31 (2009). However, the United States Supreme Court has stated that “the first task of a court asked to compel arbitration of a dispute is to determine whether the parties agreed to arbitrate that dispute, ” and that “[t]he court is to make this determination by applying the federal substantive law of arbitrability, applicable to any arbitration agreement within the coverage of the Act.” Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 626 (1985). In the Ninth Circuit, parties may agree “to have arbitrability governed by nonfederal arbitrability law, ” but this requires “clear and unmistakable evidence” of the parties' intent to do so. Cape Flattery Ltd. v. Titan Maritime, 647 F.3d 914, 921 (9th Cir. 2011) (“Courts should apply federal arbitrability law absent ‘clear and unmistakable evidence' that the parties agreed to apply non-federal arbitrability law.”); see also Brennan v. Opus Bank, 796 F.3d 1125, 1129 (9th Cir. 2015) (“For any arbitration agreement within the coverage of the FAA, the court is to make the arbitrability determination by applying the federal substantive law of arbitrability, absent clear and unmistakable evidence that the parties agreed to apply non-federal arbitrability law.” (citations and brackets omitted)).

         In deciding whether a dispute is arbitrable under federal law, 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 Id. at 1130; see also Chiron Corp. v. Ortho Diagnostic Sys., Inc., 207 F.3d 1126, 1130 (9th Cir. 2000). If the party seeking to compel arbitration establishes both factors, the court must compel arbitration. Id. “The standard for demonstrating arbitrability is not a high one; in fact, a district court has little discretion to ...


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