Mojaddidi v. Divencenzo et al

Filing 23

ORDER denying 16 Motion to lift stay signed by Magistrate Judge Kendall J. Newman on 7/25/17: The parties shall file a joint status report within six months of the date of this order. (Kaminski, H)

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1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 FOR THE EASTERN DISTRICT OF CALIFORNIA 10 11 NAOMI E. MOJADDIDI, 12 Plaintiff, 13 14 No. 2:16-cv-1388-JAM-KJN (PS) v. ORDER GUSTAVO DIVENCENZO, et al., 15 Defendants. 16 Presently pending before the court is plaintiff Naomi E. Mojaddidi’s self-styled 17 18 “opposition to defendants’ motion to compel plaintiff to any further arbitration hearings,” which 19 is properly understood as a motion to lift stay.1 (ECF No. 16.) On April 27, 2017, the court took 20 this matter under submission on the briefs without oral argument, pursuant to Local Rule 230(g). 21 (ECF No. 18). Defendants filed an opposition and plaintiff replied. (ECF Nos. 21, 22.) The 22 undersigned has fully considered the parties’ briefs and appropriate portions of the record. For 23 the reasons that follow, plaintiff’s motion to lift stay is DENIED. 24 I. Background Plaintiff, who proceeds without counsel, filed this action on June 21, 2016, against her 25 26 27 28 1 Defendants have not filed a motion to compel. Further, as explained below, this case has been stayed pending binding arbitration (ECF No. 15 at 3.), and the clear intent of plaintiff’s filing is to lift the stay and avoid arbitration. (See ECF No. 16 at 1–2.) 1 1 employer Olive Garden Italian Restaurant, and other employees, raising various employment- 2 related claims. (ECF No. 1.) On November 4, 2016, the parties stipulated that this matter “will 3 proceed in accordance with Defendant’s [Dispute Resolution Process (“DRP”)],” which includes 4 binding arbitration.2 (ECF No. 14 at 2.) Pursuant to the parties’ stipulation, Judge John A. 5 Mendez stayed the case and ordered the parties into binding arbitration. (ECF No. 15 at 3.) The 6 parties were further ordered to file a joint status conference report, no later than May 8, 2017 7 (Id.), which they have failed to do. Rather, each filed an individual status report, indicating that 8 they had reached an impasse during the mediation portion of the DRP. (See ECF Nos. 17, 19.) 9 II. 10 Plaintiff’s Motion to Lift Stay On April 26, 2017, plaintiff brought the present motion, asserting that the arbitration 11 provision in the DRP “is procedurally and substantively unconscionable under well-settled 12 California law.” (ECF No. 16 at 2.) First, plaintiff argues that the arbitration clause is 13 procedurally unconscionable because it is a contract of adhesion that she had to sign, without 14 adequate time to review, as a condition of employment and because defendant failed to provide 15 her with copies of the rules of the American Arbitration Association (“AAA”). (ECF No. 16 at 16 5–7.) Second, plaintiff argues that the clause is substantively unconscionable because it restricts 17 her right to discovery and because it imposes burdens on her to pay the arbitration fees. (Id. at 9– 18 10.)3 19 III. Legal Standards “[T]he federal law of arbitrability under the Federal Arbitration Act (“FAA”) governs the 20 21 allocation of authority between courts and arbitrators.” Cox v. Ocean View Hotel Corp., 533 22 F.3d 1114, 1119 (9th Cir. 2008) (citing Chiron Corp. v. Ortho Diagnostic Sys., Inc., 207 F.3d 23 2 24 The DRP is a four step process: (1) Open Door Policy; (2) Peer Review; (3) Mediation; and (4) Arbitration. (See ECF 21-1at 27.) 25 3 26 27 28 Plaintiff also argues for the first time in her reply brief that defendant’s “promise to arbitrate is illusory,” preventing contract formation. (ECF No. 22 at 6.) The undersigned declines to consider this argument, as it was not previously raised. See United States v. Wright, 215 F.3d 1020, 1030 n.3 (9th Cir. 2000) (declining to consider arguments raised for the first time in a reply brief). Still, this argument is suspect on its face since, as explained below, courts have enforced binding arbitration pursuant to this same DRP against other plaintiffs. 2 1 1126, 1131 (9th Cir.2000)). “[T]he FAA limits courts’ involvement to determining ‘(1) whether a 2 valid agreement to arbitrate exists and, if it does, (2) whether the agreement encompasses the 3 dispute at issue.’”4 Id.; see Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79, 83 (2002). If a 4 valid agreement exists, “the FAA specifically directs federal district courts to stay proceedings 5 and compel arbitration of ‘any issue referable to arbitration under an agreement in writing for 6 such arbitration.’” Ziober v. BLB Res., Inc., 839 F.3d 814, 817 (9th Cir. 2016), cert. denied, No. 7 16-1269, 2017 WL 1437638 (U.S. June 19, 2017) (quoting 9 U.S.C. § 3). “[A] party may challenge the validity or applicability of [an] arbitration provision by 8 9 10 raising the same defenses ‘available to a party seeking to avoid the enforcement of any contract’” under the applicable state law. Cox, 533 F.3d at 1121 (citations omitted). 11 “Under California law, a contractual provision is unenforceable if it is both procedurally 12 and substantively unconscionable.” Kilgore v. KeyBank, Nat. Ass’n, 718 F.3d 1052, 1058 (9th 13 Cir. 2013) (citing Armendariz v. Found. Health Psychcare Servs., Inc., 24 Cal.4th 83, 114 14 (2000)). “The more substantively oppressive the contract term, the less evidence of procedural 15 unconscionability is required to come to the conclusion that the term is unenforceable, and vice 16 versa.” Id. At the same time, this doctrine does not apply to arbitration clauses in all instances. 17 The Supreme Court has held that the FAA preempts state law doctrines that “prohibit[] outright 18 the arbitration of a particular type of claim . . . [or] rely on the uniqueness of an agreement to 19 arbitrate as a basis for a state-law holding that enforcement would be unconscionable.” AT&T 20 Mobility LLC v. Concepcion, 563 U.S. 333, 341 (2011) (citations omitted). 21 IV. Discussion As an initial matter, plaintiff’s arguments are undermined by the fact that she stipulated to 22 23 staying this matter and to proceeding under the DRP. (See ECF Nos. 14, 15.) Moreover, after 24 stipulating, plaintiff actively engaged in mediation—step 3 of the DRP—until an impasse was 25 reached. (See ECF No. 17.) It was not until after this impasse that plaintiff asserted that she “has 26 4 27 28 Here, only the first question—whether the arbitration agreement is valid—is at issue. Defendant does not dispute whether the underlying claims in her complaint are encompassed by the arbitration agreement. Rather, her entire argument rests on the assertion that the agreement is unconscionable and therefore, unenforceable. (See ECF No. 16.) 3 1 since learned that the Arbitration proceeding[s] are not binding, unconstitutional, and . . . filed a 2 motion with the Court . . . requesting termination of all future arbitration hearings.” (Id. at 1–2.) 3 Plaintiff does not address whether her stipulation before the court, which adopted the DRP, was 4 somehow unconscionable. Neither does she address whether her acquiescence to the DRP 5 constitutes a waiver of any challenge she may have raised, prior to her stipulation and subsequent 6 actions in furtherance of the DRP. 7 Assuming, without deciding, that plaintiff did not waive her right to challenge the DRP, 8 her arguments fail on the merits. The DRP is not unconscionable under California law. First, the 9 California Supreme Court held that an arbitration agreement “offered on a take-it-or-leave-it 10 basis,” as a condition of employment, is not procedurally unconscionable. Baltazar v. Forever 21, 11 Inc., 62 Cal. 4th 1237, 1245 (2016). Similarly, the California Supreme Court determined that 12 failure to provide an employee with a copy of the AAA rules referenced by, and governing, an 13 arbitration agreement does not constitute procedural unconscionability. Id. at 1246 (“[Plaintiff’s] 14 argument . . . might have force if her unconscionability challenge concerned some element of the 15 AAA rules of which she had been unaware when she signed the arbitration agreement. But her 16 challenge to the enforcement of the agreement has nothing to do with the AAA rules; her 17 challenge concerns only matters that were clearly delineated in the agreement she signed. 18 [Defendant’s] failure to attach the AAA rules therefore does not affect our consideration of 19 [plaintiff’s] claims of substantive unconscionability.”). 20 Second, the DRP’s purported limits on discovery are not substantively unconscionable. 21 Even assuming that such an agreement is unconscionable under California law, the Unites States 22 Supreme Court has held that the FAA preempts state law on this issue. See AT&T Mobility 23 LLC, 563 U.S. at 341–42 (“[A] court may not rely on the uniqueness of an agreement to arbitrate 24 as a basis for a state-law holding that enforcement would be unconscionable . . . An obvious 25 illustration of this point would be a case finding unconscionable or unenforceable as against 26 public policy consumer arbitration agreements that fail to provide for judicially monitored 27 discovery.” (internal citations and quotation marks omitted)). Additionally, plaintiff’s argument 28 that the DRP imposes substantively unconscionably burdens on her to pay the arbitration fees is 4 1 unfounded. The DRP explicitly provides that “[t]he Company [i.e. defendants] will pay the 2 arbitrator’s fees and expenses, any costs for the hearing facility, and any costs of the arbitration 3 service.” (ECF No. 21-1 at 32.) Third, as defendants’ point out, this same DRP has previously been enforced by the 4 5 United States District Court, Central District of California. (ECF No. 21 at 8 n.5.) See Filiberto 6 Martinez v. Darden Restaurants, Inc. et al., 2:15-cv-03434-GW-GJS (ECF No. 25); Claudia 7 Garcia v. GMRI Inc. et al., 2:12-cv-10152-DMG-PLA (ECF No. 23). 8 V. 9 Conclusion For the reasons discussed above, plaintiff has failed to support her motion to lift the stay 10 and to end the arbitration to which she stipulated. Accordingly, IT IS HEREBY ORDERED 11 THAT: 12 1. Plaintiff’s motion to lift stay (ECF No. 16) is DENIED. 13 2. This matter remains STAYED, pending resolution of binding arbitration in 14 accordance with GMRI, Inc.’s Dispute Resolution Process, as outlined in the 15 court’s November 8, 2016 order. (ECF No. 15.) 16 3. The parties shall file a joint status report within six months of the date of this 17 order. 18 IT IS SO ORDERED. 19 Dated: July 25, 2017 20 21 14 / ps.16-1388.mojaddidi.order re lifting stay 22 23 24 25 26 27 28 5

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