United States District Court, N.D. California
ORDER GRANTING DEFENDANT'S MOTION TO COMPEL
ARBITRATION; AND STAYING CASE DOCKET NO. 22
M. CHEN, UNITED STATES DISTRICT JUDGE.
Tag Brown has filed a putative class and collective action
against Defendant Quantcast Corp., his former employer.
According to Mr. Brown, “Quantcast is a website
analytics company.” Compl. ¶ 14. He worked for
Quantcast as a sales representative for which he was paid a
salary plus commissions. He was deemed exempt from overtime
pay. See Compl. ¶ 26. Mr. Brown has brought
suit because he maintains that Quantcast misclassified him
and others similarly situated as exempt from overtime. Mr.
Brown has asserted a claim for failure to pay overtime under
the federal Fair Labor Standards Act (“FLSA”) as
well as a claim for violation of California Business &
Professions Code § 17200. Since Mr. Tag has filed suit,
five other former employees of Quantcast have opted into the
FLSA collective action - namely:
• Jalen Ransome, see Docket No. 6;
• Tyler Berg, see Docket No. 19;
• Sam Awrabi, see Docket No. 20;
• Andrea Primer, see Docket No. 20; and
• Pierce McManus. See Docket No. 21.
now moves to compel arbitration with respect to Mr. Brown and
each of the five other former employees.
FACTUAL & PROCEDURAL BACKGROUND
argues that arbitration must be compelled because each
individual has an offer-of-employment letter that contains an
arbitration provision. According to Quantcast, some of the
individuals are also subject to arbitration based on
provisions in their sales commission plans and severance
agreements. For purposes of the pending motion, the Court
need only consider the offer letters. There are two different
offer letters that cover the six individuals. The parties
have referred to them as the first and second offer letters,
respectively, and the Court shall do the same. Mr. Brown and
Mr. Berg received the first offer letter. See
Schwartz Decl., Exs. A, E. Ms. Primer, Mr. Ransome, Mr.
Awrabi, and Mr. McManus received the second offer letter.
See Schwartz Decl., Exs. H, J, K, M.
asserts, and Plaintiffs do not dispute, that the Federal
Arbitration Act (“FAA”) governs the instant case.
The FAA provides in relevant part that
[a] written provision in any maritime transaction or a
contract evidencing a transaction involving commerce to
settle by arbitration a controversy thereafter arising out of
such contract or transaction, or the refusal to perform the
whole or any part thereof, or an agreement in writing to
submit to arbitration an existing controversy arising out of
such a contract, transaction, or refusal, 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.
that exist to support the revocation of an arbitration
agreement include no contract formation and contract
invalidity, see generally Eiess v. USAA Fed. Sav.
Bank, No. 19-cv-00108-EMC, 2019 U.S. Dist. LEXIS 144026
(N.D. Cal. Aug. 23, 2019) (discussing both contract formation
and contract validity) - that is, so long as those defenses
do not “apply only to arbitration or . . . derive their
meaning from the fact that an agreement to arbitrate is at
issue.” Sakkab v. Luxottica Retail N. Am.,
Inc., 803 F.3d 425, 432 (9th Cir. 2015) (internal
quotation marks omitted). A party may also argue that an
arbitration clause in a concededly binding contract does not
“‘appl[y] to a given controversy.'”
First Offer Letter (Mr. Brown and Mr. Berg)
Mr. Brown and Mr. Berg received the first offer letter which
contained the following arbitration provision:
To ensure rapid and economical resolution of any disputes
which may arise under this letter agreement, you agree that
any and all disputes or controversies, whether of law or fact
of any nature whatsoever (including, but not limited to, all
state and federal statutory and discrimination claims, with
the sole exception of those disputes which may arise from
your confidentiality agreement) arising from or regarding the
interpretation, performance, enforcement or breach of this
letter agreement shall be resolved by final and binding
arbitration under the Judicial Arbitration and Mediation
Services Comprehensive Arbitration Rules and Procedures.
Schwartz Decl., Exs. A, E.
Brown and Mr. Berg challenge the first offer letter on three
grounds: (1) the arbitration provision does not cover the
claims at issue; (2) there was no “meeting of the
minds” regarding arbitration; and (3) the arbitration
provision is unconscionable and severance cannot save it.
Scope of the Arbitration Provision
Brown and Mr. Berg argue first that the arbitration provision
does not apply to their claims because their claims do not
arise under the employment agreement but rather are based on
statutes. See Elijahjuan v. Superior Court, 210
Cal.App.4th 15, 20-21 (2012) (noting that a Ninth Circuit
case, Narayan v. EGL, Inc., 616 F.3d 895 (9th Cir.
2010), “explains the distinction between rights arising
under a contract and those arising under a Labor Code
statute”; “[a]lthough Narayan involved a
choice of law provision, its reasoning is applicable
here”). The problem with this argument is that it reads
out critical language in the arbitration provision. The
provision does not state that it covers claims arising from
or regarding the employment agreement; rather, the provision
states that it covers claims arising from or regarding
(inter alia) performance of the employment
agreement. Mr. Brown and Mr. Berg's overtime claims do
arise from or regard performance of the employment
agreement which classifies and treats Mr. Brown and Mr. Berg
as exempt from overtime pay.
Meeting of the Minds
Brown and Mr. Berg argue that, even if their claims fall
within the scope of the arbitration provision, the
arbitration provision is not enforceable because there was no
“meeting of the minds” with respect to the
provision. This is essentially a contract formation issue.
They contend that, at the time they signed the first offer
letter, they also signed a sales commission plan, which also
contains an arbitration provision. The arbitration provision
in the sales commission plan states as follows:
Quantcast and Seller agree to submit to mandatory binding
arbitration any and all claims arising out of or related to
Seller's commission under this plan. Seller may bring an
administrative claim before any government agency where, as a
matter of law, the parties may not restrict Seller's
ability to file such claims. However, to the fullest extended
permitted under applicable law (including but not limited to
the federal Arbitration Act), Seller agrees that arbitration
shall be the exclusive remedy for his or her individual
claims that are the subject of such administrative
complaints. The arbitration shall be conducted in San