Ware v. Golden 1 Credit Union, Inc.
Ware v. Golden 1 Credit Union, Inc.
Opinion of the Court
On November 6, 2018, Deshawn Ware ("Ware") filed a putative class action against The Golden 1 Credit Union, Inc. ("Golden 1") alleging wage and hour violations under both federal and state law. Compl., ECF No. 1. Ware invoked the Court's federal question jurisdiction for his claim arising under the Fair Labor Standards Act ("FLSA"); he invoked the Court's supplemental jurisdiction for his state law claims. Compl. ¶¶ 13, 15 (citing
In January 2019, two months after Ware filed his Complaint, Golden 1 filed a Motion to Compel Arbitration. Golden 1's motion argues that Ware's claims fall squarely within an enforceable arbitration agreement. Mot. at 4-7. Ware opposes the motion, maintaining both that the specific provision covering his claims is unenforceable and that the agreement as a whole is unconscionable. Opp'n at 10-15.
I. FACTUAL ALLEGATIONS
Golden 1 hired Ware as a Customer Support Representative ("CSR") in January 2018. Compl. ¶ 18. As a condition of his employment, Ware was required to sign Golden 1's Arbitration Agreement. See Haines Decl., Ex. 1, ECF No. 14-2. The parties agree that both Ware and a Golden 1 representative signed this agreement. See Mot. to Compel Arbitration ("Mot.") at 2, ECF No. 14 ; Opposition ("Opp'n") at 4. In relevant part, the agreement states:
By signing below, The Golden 1 Credit Union ("Golden 1") and Employee agree that all disputes related to Employee's employment by Golden 1, including but not limited to the termination of that employment, shall be submitted to binding arbitration with the American Arbitration Association ("AAA") and subject to the terms of this Arbitration Agreement. The arbitrator shall be required to determine all issues in accordance with the applicable laws of the State of California.... Such arbitration will be subject to the AAA rules as amended from time to time.
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Employee specifically acknowledges that by executing this agreement, employee waives the right to a jury trial in a court of law as to all disputes concerning employee's employment, termination of employment, including, but not limited to, any statutory claims of discrimination and harassment, any claims under the California Labor Code, the Age Discrimination *1149in Employment Act, Title VII of the Civil Rights Act of 1964, the Americans with Disabilities Act of 1990, Sections 1981 through 1988 of Title 42 of The United States Code, The California Fair Employment and Housing Act, Government Code Sections 12940, Et Seq., as well as any other federal, state, or local constitution, law, ordinance, or regulation, or based on any public policy, contract, tort, or common law or any claim for wages, bonuses, benefits, costs, fees, or other expenses including attorney's fees, wrongful termination, breach of contract, or any damages of any kind arising out of the employment relationship including the termination of that relationship
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By signing below, Employee acknowledges and agrees that [ ] Employee has read and understands the terms and consequences of this agreement ... and in consideration for employment, Employee is knowingly and voluntarily entering this Agreement without any duress or undue influence.
Haines Decl., Ex. 1.
II. OPINION
A. Legal Standard
Section 2 of the Federal Arbitration Act ("FAA") states that arbitration agreements found in contracts related to interstate commerce "shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract."
B. Analysis
1. Choice of Law
The parties dispute whether Golden 1's arbitration agreement is governed by the California Arbitration Act ("CAA") or the FAA. See Opp'n at 6-8; Reply at 1-2. Under the CAA, a Court may refuse to enforce an arbitration agreement if it determines (1) a party to that agreement is also a party to a pending court action arising out of the same transaction, and (2) there exists a possibility of conflicting rulings on a common issue of law or fact.
At the core of this analysis lies the question of whether the arbitration agreement's choice-of-law clause incorporated California's procedural rules along with its substantive law. The answer, as Ware argues, turns upon the language of the arbitration agreement, and what it reveals about the contracting parties' intent. Opp'n at 7-9. Although the FAA typically preempts state laws that require a judicial forum to resolve disputes that parties have agreed to arbitrate, "it does not follow that the FAA prevents the enforcement of agreements to arbitrate under different rules than those set forth in the Act itself." Volt Information Sciences, Inc. v. Board of Trustees of the Leland Stanford Junior Univ.,
*1150Ware acknowledges that post- Volt courts have both incorporated and declined to incorporate the CAA's procedural rules, depending on the language of the choice-of-law clause. Opp'n at 6-8 (comparing Mount Diablo Medical Center v. Health Net of California, Inc.,
The arbitration agreement in Preston, like the one here, included both a California choice-of-law clause and an express selection of AAA rules.
Finding that the FAA governs does not, however, end the inquiry. Ware broadly argues for the Court to enforce the CAA, but more specifically, he contends that Section 1281.2(c) applies. Opp'n at 6. Because state law may be used to fill gaps left open by the FAA, the Court must also determine whether Section 1281.2(c) conflicts with the FAA. AT & T Mobility LLC v. Concepcion,
Again, this Court turns to Preston.
2. Enforceability and Scope of the Agreement
Under the FAA, a district court must answer two questions when deciding a motion to compel arbitration: (1) whether a valid arbitration agreement exists and, if so, (2) whether the agreement encompasses the dispute at issue. Chiron Corp. v. Ortho Diagnostic Systems, Inc.,
*1151United Pub. Employees v. City & Cnty. of San Francisco,
a. Enforceability of the Arbitration Agreement
When an arbitration agreement purports to cover employment claims based on statutory or non-waivable rights, it must provide the five protections discussed in Armendariz v. Foundation Health Psychare Servs.,
Ware argues that the arbitration agreement is nonetheless unenforceable for two reasons. First, the provision covering Ware's claim is invalid, and must therefore be severed. Opp'n at 11-13. Second, the entire agreement is unconscionable. Opp'n at 13-15. Both arguments fail.
Ware first argues that the portion of the agreement requiring arbitration for "all disputes concerning employee's employment" is invalid because, under California law, a PAGA claim may not be sent to arbitration. Opp'n at 11. See also Iskanian v. CLS Transportation Los Angeles, LLC,
Ware separately argues that the arbitration agreement as a whole is unenforceable because it is unconscionable. Under California contract law, any contract may be unenforceable if it is unconscionable. Armendariz,
Here, the arbitration agreement has a low level of procedural unconscionability. The Court disagrees with Ware's argument that Golden 1's failure to attach the AAA rules of arbitration amounts to undue oppressiveness or surprise. California courts have uniformly stepped back from this position, stating that failure to include the AAA rules may not, by itself, support a finding of procedural unconscionability. Peng v. First Republic Bank,
California courts have, however, consistently found that adhesion contracts *1152in the employment context generally contain some aspects of procedural unconscionability. Serpa v. California Sur. Investigations, Inc.,
The Court also disagrees with Ware's contention that the arbitration agreement is substantively unconscionable because, hypothetically, it could impose "a unilateral obligation to arbitrate." Opp'n at 15 (citing Armendariz,
b. Scope of the Arbitration Agreement
The text of the arbitration agreement covers "all disputes related to Employee's employment by Golden 1." Haines Decl., Ex. 1. This squarely covers all of the claims listed in Ware's complaint, except the PAGA claim. Compl. ¶¶ 91-153.
3. Supplemental Jurisdiction
A district court may decline to exercise supplemental jurisdiction when the court "has dismissed all claims over which it has original jurisdiction."
Lacking original jurisdiction over the only remaining claim in this action, the Court declines to exercise supplemental jurisdiction. The PAGA claim is dismissed without prejudice to refiling in state court.
III. ORDER
For the reasons set forth above, the Court GRANTS Defendant's Motion to Compel Arbitration. Excluding the PAGA claim, Ware's federal and state law claims are submitted to arbitration. The PAGA claim is DISMISSED WITHOUT PREJUDICE.
IT IS SO ORDERED.
This motion was determined to be suitable for decision without oral argument. E.D. Cal. L.R. 230(g). The hearing was scheduled for February 19, 2019.
Reference
- Full Case Name
- Deshawn WARE, individually and on behalf of all others similarly situated v. The GOLDEN 1 CREDIT UNION, INC.
- Status
- Published