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Martinez v. Ross Stores, Inc.

United States District Court, N.D. California

September 5, 2019

ROSS STORES, INC., et al., Defendants.



         Pablo Martinez, suing on behalf of himself and a putative class, alleges that defendants Ross Stores, Inc. and DMSI Staffing, LLC violated the Fair Credit Reporting Act, 15 U.S.C. § 1681 et seq. (“FCRA”), in conducting background checks on prospective employees. The action was originally filed in California Superior Court and removed on federal question subject matter. Defendants seek to compel arbitration of the claims on the basis of an arbitration agreement in an employment application. The case is ordered to arbitration.


         The pertinent facts are straightforward. Martinez applied for a job with Ross through a staffing company, DMSI, in December 2017. Dkt. No. 4, Ex. 1 ¶ 16. (“Complaint”). After a background check, Martinez was advised that he would not get a job. Id. Martinez alleges that Ross and DMSI violated the FCRA and related California state law provisions by failing to make adequate disclosures in connection with the background checks and adverse actions on employment.

         When Martinez applied for a job, he signed a “Dispute Resolution Agreement.” Dkt. No. 22, Ex. B(1) (the “DRA”). Among other provisions, the DRA states that Martinez and DMSI “agree to resolve by arbitration any and all disputes arising out of or relating to DMSI's failure to hire you, regardless of whether that dispute is between (1) just you and DMSI or you and any other associate, employee, agent, or representative of DMSI, or (2) you and any client of DMSI or any entity you claim is jointly responsible with DMSI for any hiring decision or decision to deny employment to you or to whom you would otherwise be dispatched for work and/or any employee, agent, or representative of such entity (all of whom are understood to be third-party beneficiaries of this Agreement and are entitled to enforce it), regardless of who initiates the claim regarding such dispute.” Id. at p.1. The DRA waives arbitration “on a class, collective, representative, Private Attorney General Act (“PAGA”) and/or group action basis.” Id. ¶ 3.

         The DRA defines the procedures for arbitration. The parties will mutually select a single arbitrator, the hearing will be held in the location where the individual last worked or applied for work with DMSI, the arbitration fees will be paid by the parties as apportioned by the arbitrator or paid entirely by DMSI if state law so requires, and attorney's fees may be awarded if authorized by state or federal law. Id. ¶ 2.

         The DRA does not name a specific arbitration entity such as AAA or JAMS, and there is no delegation clause in the agreement. The DRA is expressly governed by the Federal Arbitration Act, 9 U.S.C. § 1 et seq. (“FAA”). Id. at p.1.

         Martinez does not dispute that he signed and dated the DRA. Id. at p.2.


         The FAA governs the motion to compel arbitration. The FAA's “overarching purpose . . . is to ensure the enforcement of arbitration agreements according to their terms so as to facilitate streamlined proceedings.” AT&T Mobility LLC v. Concepcion, 563 U.S. 333, 344 (2011). The Court's role under the FAA is limited to determining (1) whether a valid and enforceable contract to arbitrate exists, and if so, (2) whether the scope of the agreement encompasses the claims in issue. Lifescan, Inc. v. Premier Diabetic Servs., Inc., 363 F.3d 1010, 1012 (9th Cir. 2004). If the party seeking to compel arbitration establishes both factors, the FAA requires the Court to enforce the arbitration agreement in accordance with its terms. Id. Any doubts about the scope of arbitrable issues should be resolved in favor of arbitration. Three Valleys Mun. Water Dist. v. E.F. Hutton & Co., Inc., 925 F.2d 1136, 1139 (9th Cir. 1991). See generally Jacobson v. Snap-on Tools Co., No. 15-CV-02141-JD, 2015 WL 8293164, at *2 (N.D. Cal. Dec. 9, 2015).

         The DRA does not contain a choice of law provision, but Martinez signed it in California in connection with an employment opportunity there, and the parties do not disagree that California law applies. See Dkt. No. 21 at 4-5; Dkt. No. 23 at 5. Consequently, Martinez's challenges to the validity and enforceability of the DRA are evaluated under California contract law. Nguyen v. Barnes & Noble Inc., 763 F.3d 1171, 1175 (9th Cir. 2014); Alonso v. AuPairCare, Inc., No. 3:18-CV-00970-JD, 2018 WL 4027834, at *2 (N.D. Cal. Aug. 23, 2018). An arbitration agreement can be avoided on the same grounds available to avoid the enforcement of any contract, so long as the defense does not have a disproportionate effect on arbitration. Thompkins v. 23andMe, Inc., 840 F.3d 1016, 1023 (9th Cir. 2016); Alonso, 2018 WL 4027834, at *2.

         Ross and DMSI bear the burden of establishing the existence of a valid arbitration agreement, and Martinez has the burden of showing that it is unenforceable or otherwise subject to a defense. Norcia v. Samsung Telecomm. Am., LLC, 845 F.3d 1279, 1283 (9th Cir. 2017); Snap-on Tools, 2015 WL 8293164, at *2.


         I.THE DRA IS ...

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