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Caviani v. Mentor Graphics Corp.

United States District Court, N.D. California

September 18, 2019

RON CAVIANI, Plaintiff,



         Plaintiff Ron Caviani filed suit in Alameda County superior court alleging various FEHA discrimination claims. Defendant Mentor Graphics removed to federal court. Docket No. 1. The parties exchanged multiple meet-and-confer correspondences regarding the enforceability of an arbitration agreement. Pending before the Court is Defendant’s motion to compel arbitration and to stay proceedings (“Mot.”). Docket No. 24.

         I. BACKGROUND

         The parties do not dispute most facts. Defendant extended an offer of employment to Plaintiff on June 18, 2008; he signed the following day. Mot. at 2; Opp. at 4. Plaintiff began working on June 26, 2008, and he signed the at-issue arbitration agreement (“Agreement”) on June 30, 2008. Mot. at 2; Opp. at 4. The Agreement is one page, and its “Final and Binding Arbitration” clause reads as follows:

All Disputes shall be submitted to and resolved by final and binding arbitration. The arbitration will be conducted under the rules and procedures of JAMS (formerly known as Judicial Arbitration & Mediation Services, Inc.) or its successor, before a mutually agreed upon neutral arbitrator selected in accordance with the JAMS Employment Arbitration Rules or their equivalent. Mentor Graphics will pay any required arbitrator’s fees. Each party will be responsible for its own attorney’s fees and other costs, fees and disbursements incurred. The arbitration will be held in the state and county in which you are/were employed.

         Declaration of Sandy Bradshaw in Support of Defendant’s Motion to Compel Arbitration (“Bradshaw Decl.”), Ex. D.

         The parties dispute whether Defendant included the Agreement with the initial offer letter. Reply at 6; Opp. at 6. The parties also dispute the characterization of Plaintiff’s transition into a new role with Defendant in 2012 when he received a promotion from inside sales representative to territory account manager. Defendant contends it was an internal transfer that maintained the parties’ preexisting employment relationship and agreement to arbitrate all claims. Mot. at 4. Plaintiff argues it was an entirely new employment offer in which Defendant did not provide a new agreement to arbitrate. Opp. at 4. Plaintiff never signed the 2012 letter; Defendant does not dispute this. Id. Defendant terminated Plaintiff in 2017. Defendant brought this motion to compel arbitration.


         Arbitration agreements are “valid, irrevocable, and enforceable” under the Federal Arbitration Act. 9 U.S.C. § 2. Section 2, however, “permits arbitration agreements to be declared unenforceable ‘upon such grounds as exist at law or in equity for the revocation of any contract.’ This saving clause permits agreements to arbitrate to be invalidated by ‘generally applicable contract defenses, such as fraud, duress, or unconscionability,’ but not by defenses that apply only to arbitration or that derive their meaning from the fact that an agreement to arbitrate is at issue.” AT&T Mobility LLC v. Concepcion, 563 U.S. 333, 339–40 (2011) (quoting Doctor's Associates, Inc. v. Casarotto, 517 U.S. 681, 687 (1996)). “By its terms, 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.” Dean Witter Reynolds, Inc. v. Byrd, 470 U.S. 213, 218 (1985). Plaintiff bears the burden of showing that an arbitration agreement should not be enforced. Green Tree Fin. Corp.-Ala. v. Randolph, 531 U.S. 79, 91 (2000).

         Under California law, for a party to claim a contract is unconscionable, it must show that it is both procedurally and substantively unconscionable. Dalton v. J. Mann Inc., 2016 WL 5909710, at *3 (N.D. Cal. Oct. 11, 2016). “A sliding scale is applied so that the more substantively oppressive the contract term, the less evidence of procedural unconscionability is required to come to the conclusion that the term is unenforceable, and vice versa.” Serafin v. Balco Props. Ltd., LLC, 235 Cal.App.4th 165, 178 (2015). When evaluating procedural unconscionability, courts focus on oppression or surprise that results from unequal bargaining power; while evaluating substantive unconscionability, courts are more concerned with overly harsh or one-sided results. Sonic-Calabasas A, Inc. v. Moreno, 57 Cal.4th 1109, 1133 (2013).


         Plaintiff challenges enforcement in three ways: (1) Plaintiff contends there is no valid Agreement because of formation defects; (2) the Agreement is substantively unconscionable; and (3) the Agreement is procedurally unconscionable. Defendant responds by arguing that it has demonstrated the existence of an arbitration agreement by a preponderance of the evidence, and that the parties clearly and unmistakably delegated arbitrability of the Agreement to the arbitrator.

         A. Formation of Arbitration Agreement

         Plaintiff makes two formation arguments. First, he contends he did not agree to arbitrate his claims because at the time he signed his offer of employment, it did not contain the Agreement, despite the offer expressly stating that employment was conditioned on signing the Agreement. Opp. at 6. More specifically, he signed the employment offer on June 19, 2008, began working for Defendant on June 26, 2008, but signed the Agreement to arbitrate all claims on June 30, 2008-which is Plaintiff’s way of saying he did not agree to arbitration at the time he formed an employment relationship with Defendant. Plaintiff’s second argument against formation relates to his 2012 promotion, which did not come with a new arbitration agreement. Plaintiff contends that this new job offer required a separate arbitration ...

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