Brown v. Quantcast Corp.

          ORDER GRANTING DEFENDANT'S MOTION TO COMPEL ARBITRATION; AND STAYING CASE DOCKET NO. 22

          EDWARD M. CHEN, UNITED STATES DISTRICT JUDGE.

         Plaintiff 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.^[1] 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.

         Quantcast now moves to compel arbitration with respect to Mr. Brown and each of the five other former employees.

         I. FACTUAL & PROCEDURAL BACKGROUND

         Quantcast 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.

         II. DISCUSSION

         A. Legal Standard

         Quantcast 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.

         Grounds 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.'” Id.

         B. First Offer Letter (Mr. Brown and Mr. Berg)

         Both 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.

         Mr. 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.

         1. Scope of the Arbitration Provision

         Mr. 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.

         2. Meeting of the Minds

         Mr. 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 ...