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Martinez v. Vision Precision Holdings, LLC

United States District Court, E.D. California

December 30, 2019

MAYRELI MARTINEZ, on behalf of herself and all others similarly situated, and on behalf of the general public, Plaintiff,
v.
VISION PRECISION HOLDINGS, LLC; et al., Defendants.

          ORDER GRANTING DEFENDANT'S MOTION TO COMPEL ARBITRATION (DOC. NO. 5)

         This matter is before the court on defendant Vision Precision Holdings, LLC's (“VPH”) motion to compel arbitration. A hearing on the motion was held on October 16, 2019. Attorney Gwendolyne Ousdahl appeared telephonically on behalf of plaintiff Mayreli Martinez. Attorney Brian Morris appeared telephonically on behalf of defendant. Based on the arguments presented by counsel, and for the reasons set forth below, the court will grant defendant's motion to compel arbitration.

         BACKGROUND

         Plaintiff was a non-exempt, hourly worker employed by defendant as a patient coordinator and sales assistant at one of its retail locations in California. (Doc. No. 1-3, Ex. A (“Compl.”) at ¶ 28.) Defendant owns and operates optical retail stores in California. (Id. at ¶¶ 37-38.)

         Plaintiff originally filed this suit as a class action on May 17, 2019 in the Kern County Superior Court, alleging violations of California's Labor Code and Unfair Competition Law (“UCL”). (Id. at ¶¶ 69-137.) According to the complaint, defendant failed to: (1) pay straight time wages; (2) pay overtime wages; (3) provide meal periods; (4) provide rest periods; (5) provide compliant itemized wage statements; (6) pay wages due at termination; and (7) comply with the UCL. (Id.)

         Defendant removed the action to this federal court on July 22, 2019 on the basis of the Class Action Fairness Act. (Doc. No. 1 at 2.) On August 14, 2019, defendant moved to compel arbitration, relying on an arbitration agreement (the “Agreement”) that plaintiff signed on August 6, 2018. (Doc. No. 5.) The Agreement provides, in part, that:

As a condition of [plaintiff's] employment . . . [plaintiff] and [defendant] agree that certain claims arising out of or relating to [plaintiff's] employment relationship with [defendant] . . . or the termination of that relationship . . . must be submitted for resolution by final binding confidential arbitration . . ..

(Doc. No. 5-2 at 6.)

         Plaintiff filed her opposition to the pending motion on October 2, 2019, arguing that the Agreement is unenforceable due to its procedural and substantive unconscionability. (Doc. No. 8 at 8.) Defendant filed its reply on October 9, 2019. (Doc. No. 9.)

         LEGAL STANDARDS

         A written provision in any contract evidencing a transaction involving commerce to settle a dispute by arbitration is subject to the Federal Arbitration Act (“FAA”). 9 U.S.C. § 2. The FAA confers on the parties involved the right to obtain an order directing that arbitration proceed in the manner provided for in a contract between them. 9 U.S.C. § 4. In deciding a motion to compel arbitration, the court “is limited to determining (1) whether a valid agreement to arbitrate exists [within the contract] and, if it does, (2) whether the agreement encompasses the dispute at issue.” Boardman v. Pacific Seafood Group, 822 F.3d 1011, 1017 (9th Cir. 2016) (citing Chiron Corp. v. Ortho Diagnostic Sys., Inc., 207 F.3d 1126, 1130 (9th Cir. 2000) (brackets in original)).

         Because there is an “emphatic federal policy in favor of arbitral dispute resolution, ” Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, 473 U.S. 614, 631 (1985), “‘any doubts concerning the scope of arbitrable issues should be resolved in favor of arbitration, whether the problem at hand is the construction of the contract language itself or an allegation of waiver, delay, or a like defense to arbitrability.'” Id. at 626 (quoting Moses H. Cone Mem'l Hosp. v. Mercury Const. Corp., 460 U.S. 1, 24-25 (1983)). Because “waiver of the right to arbitration is disfavored, ‘any party arguing waiver of arbitration bears a heavy burden of proof.'” Martin v. Yasuda, 829 F.3d 1118, 1124 (9th Cir. 2016) (quoting Fisher v. A.G. Becker Paribas Inc., 791 F.2d 691, 694 (9th Cir. 1986)).

         In contrast, an arbitration agreement may “be invalidated by ‘generally applicable contract defenses, such as fraud, duress, or unconscionability,' though 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 (2011) (quoting Doctor's Assocs., Inc. v. Casarotto, 517 U.S. 681, 687 (1996)). In deciding whether parties have agreed to arbitrate, courts “apply ordinary state law contract principles that govern the formation of contracts to decide whether an agreement to arbitrate exists.” Norcia v. Samsung Telecomm. Am., LLC, 845 F.3d 1279, 1283 (9th Cir. 2017), cert. denied, ____U.S.____, 138 S.Ct. 203 (2017) (citation and internal quotation marks omitted). However, courts may not apply traditional contractual defenses, like duress and unconscionability, in a broader or more stringent manner to invalidate arbitration agreements and thereby undermine FAA's purpose to “ensur[e] that private arbitration agreements are enforced according to their terms.” Concepcion, 563 U.S. at 344 (quoting Volt Info. Scis., Inc. v. Bd. of Trs., 489 U.S. 468, 478 (1989)).

         LEGAL ANALYSIS

         Here, defendant contends that the court must compel arbitration because plaintiff agreed in a binding and enforceable arbitration agreement to individually arbitrate her claims and waive her right to bring a class claim. (Doc. No. 5-1 at 2.) Plaintiff argues that the Agreement is unenforceable because it is both procedurally and substantively unconscionable. (Doc. No. 8 at 8-9.)

         A. Whether the Parties Entered into an Agreement

         The court first looks at whether a valid arbitration agreement exists and if it covers the dispute at issue. See Boardman, 822 F.3d at 1017.

         Under California law, the “party seeking arbitration bears the burden of proving the existence of an arbitration agreement[.]” Pinnacle Museum Tower Assn. v. Pinnacle Mkt. Dev. (US), LLC, 55 Cal.4th 223, 236 (2012); see also Knutson v. Sirius XM Radio Inc., 771 F.3d 559, 565 (9th Cir. 2014) (the burden of proving the existence of an arbitration agreement is “by a preponderance of the evidence”). In determining whether an agreement to arbitrate exists, “[t]he trial court sits as the trier of fact, weighing all the affidavits, declarations, and other documentary evidence, and any oral testimony the court may receive at its discretion, to reach a final determination.” Ruiz v. Moss Bros. Auto Grp., Inc., 232 Cal.App.4th 836, 842 (2014) (citing Engalla v. Permanente Med. Grp., Inc., 15 Cal.4th 951, 972 (1997), as modified (July 30, 1997)). “Where the existence of a contract is at issue and the evidence is conflicting or admits of more than one inference, it is for the trier of fact to determine whether the contract actually existed.” San Joaquin Gen. Hosp. v. United Healthcare Ins., No. 2:16-cv-01904-KJM-EFB, 2017 WL 1093835, at *2 (E.D. Cal. Mar. 23, 2017) (citing Bustamante v. Intuit, Inc., 141 Cal.App.4th 199, 208 (2006)).

         Here, defendant contends that plaintiff entered into a “FAA-covered arbitration agreement” on August 6, 2018 by electronically signing the Agreement and accepting and continuing her employment with defendant after receipt of the Agreement.[1] (Doc. No. 5-1 at 3, 6-7.) Defendant also asserts that the Agreement applies to “all claims” brought by plaintiff. (Id. at 3.) By its terms, the Agreement covers “any claim that could be asserted in court, ” including claims for wages, breach of contract, discrimination, and harassment.[2] (Doc. No. 5-2, Ex. A at 6.)

         Plaintiff acknowledges that she signed the Agreement and does not dispute that it covers the claims brought in this case. (Doc. No. 8-1 (“Martinez Decl.”) at ¶ 7.) Based on the record before the court, the undersigned concludes that an arbitration agreement does exist between the parties and that it covers the claims at issue in this case.

         B. Whether the Agreement is Valid

         In opposition to the motion to compel arbitration, plaintiff argues that the Agreement is procedurally and substantively unconscionable. (Doc. No. 8 at 9.)

         The FAA provides that arbitration agreements “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. This provision, known as the “savings 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.” Concepcion, 563 U.S. at 339 (quoting Doctor's Assocs., 517 U.S. at 687). “[T]he party opposing arbitration bears the burden of proving any defense, such as unconscionability.” Pinnacle Museum Tower Assn, 55 Cal.4th at 236. “Any doubts about the scope of arbitrable issues, including applicable contract defenses, are to be resolved in favor of arbitration.” Poublon v. C.H. Robinson Co., 846 F.3d 1251, 1259 (9th Cir. 2017).

         To establish unconscionability under California law, the party opposing arbitration must demonstrate that the entire contract, or a specific clause in it, is both procedurally and substantively unconscionable. Id. at 1260 (citing Sanchez v. Valencia Holding Co., 61 Cal.4th 899, 910 (2015)). “The prevailing view is that procedural and substantive unconscionability must both be present in order for a court to exercise its discretion to refuse to enforce a contract or clause under the doctrine of unconscionability . . . [b]ut they need not be present in the same degree.” Sanchez, 61 Cal.4th at 910. Courts generally view procedural and substantive unconscionability on a sliding scale, whereby “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.” Armendariz v. Found. Health Psychcare Servs., Inc., 24 Cal.4th 83, 114 (2000). Overall, “unconscionability requires a substantial degree of unfairness beyond a simple old-fashioned bad bargain, ” such as when a contract is “so one-sided as to ‘shock the conscience.'” Mohamed v. Uber Techs., Inc., 848 F.3d 1201, 1210 (9th Cir. 2016) (quoting Baltazar v. Forever 21, Inc., 62 Cal.4th 1237, 1245 (2016)).

         1. Whether the Agreement is Procedurally Unconscionable

         Plaintiff argues that the Agreement is procedurally unconscionable because: (1) the Agreement is a contract of adhesion; (2) defendant employed oppressive methods to obtain plaintiff's assent to the Agreement; and (3) defendant surprised plaintiff with the terms in the Agreement. (Doc. No. 8 at 8-9.)

         “The procedural element of unconscionability focuses on ‘oppression or surprise due to unequal bargaining power.'” Poublon, 846 F.3d at 1260 (quoting Pinnacle Museum Tower Ass'n, 55 Cal.4th at 246); see also Chavarria v. Ralphs Grocery Co., 733 F.3d 916, 922 (9th Cir. 2013) (“Procedural unconscionability concerns the manner in which the contract was negotiated and the respective circumstances of the parties at that time, focusing on the level of oppression and surprise involved in the agreement.”). “Oppression addresses the weaker party's absence of choice and unequal bargaining power that results in no real negotiation, ” while “[s]urprise involves the extent to which the contract clearly discloses its terms as well as the reasonable expectations of the weaker party.” Chavarria, 733 F.3d at 922 (internal quotation marks and citation omitted).

         a. Contract of Adhesion

         “Unconscionability analysis begins with an inquiry into whether the contract is one of adhesion.” Armendariz, 24 Cal.4th at 113. The California Supreme Court has held that the “term [contract of adhesion] signifies a standardized contract, which, imposed and drafted by the party of superior bargaining strength, relegates to the subscribing party only the opportunity to adhere to the contract or reject it.” Id. at 113 (citation omitted). Courts have since recognized that such contracts are “procedurally unconscionable under California law[.]” Chavarria, 733 F.3d at 923 (citing Ting v. AT&T, 319 F.3d 1126, 1148 (9th Cir. 2003)); see also Sanchez, 61 Cal.4th at 915 (“[T]he adhesive nature of the contract is sufficient to establish some degree of procedural unconscionability.”).

         Plaintiff argues that the Agreement is a contract of adhesion:

Defendant unilaterally drafted the Arbitration Agreement and presented it to Plaintiff on a take-it-or-leave-it basis. The Arbitration Procedure is mandatory for all employees. The Arbitration Agreement itself states that the Arbitration Procedure is a condition of employment. (See Doc. No. 5-2, Ex. 1, ¶ 1.) Plaintiff was presented with the Arbitration Agreement upon an offer of employment and was instructed to sign the agreement before her first day of work. Martinez Decl. ¶ 3-5. Plaintiff understood that she had to sign the Agreement before she would be permitted to work her first shift. Martinez Decl. ¶ 7-8. Plaintiff was not given the opportunity to discuss or change any of the provisions in the Arbitration Agreement. Martinez Decl. ¶ 6.

(Doc. No. 8 at 8-9, 15.)

         Based on these allegations advanced by plaintiff, the court concludes that the Agreement is at least somewhat adhesive.[3] See Armendariz, 24 Cal.4th at 115 (finding that an arbitration agreement was adhesive because it “was imposed on employees as a condition of employment and there was no opportunity to negotiate”); Baltazar, 62 Cal.4th at 1245 (“The adhesive nature of the employment contract requires us to be “particularly attuned” to [an employee's] claim of unconscionability[.]” (quoting Armendariz, 24 Cal.4th at 115)). But “the adhesive nature of a contract, without more, would give rise to a low degree of procedural unconscionability at most.” Poublon, 846 F.3d at 1261-62; see also Gutierrez v. FriendFinder Networks Inc., No. 18-cv-05918-BLF, 2019 WL 1974900, at *10 (N.D. Cal. May 3, 2019) (collecting cases).

         The court therefore finds that the Agreement's adhesive nature demonstrates only a minor degree of procedural unconscionability.

         b. Oppression

         Plaintiff contends that the Agreement is oppressive because: 1) plaintiff was not given enough time to consider the proposed contract; 2) plaintiff was forced to accept the Agreement as a condition of employment; 3) the Agreement is long and complex; 4) plaintiff is a layperson; and 5) ...


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