Frid v. First Republic Bank et al

Filing 19

ORDER STAYING CASE. Case Management Statement due by 1/24/2013. Initial Case Management Conference set for 1/31/2013 11:00 AM in Courtroom 8, 19th Floor, San Francisco. Signed by Judge William Alsup on 5/2/2012. (whasec, COURT STAFF) (Filed on 5/2/2012)

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IN THE UNITED STATES DISTRICT COURT

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FOR THE NORTHERN DISTRICT OF CALIFORNIA
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OLGA FRID,
No. C 12-00806 WHA

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For the Northern District of California

United States District Court

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Plaintiff,
v.
FIRST REPUBLIC BANK, a California
corporation, SAMDANI SHAIK, an
individual, and DOES 1–10, inclusive,
Defendants.
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STAY ORDER AND VACATING
HEARING AND ORDER
CONTINUING CASE
MANAGEMENT CONFERENCE

In this employment dispute, defendant First Republic Bank moves to enforce the
following arbitration clause:
The undersigned Employee, Olga A. Frid, Quality Assurance
Analyst, and First Republic Bank, agree that any claims either
party has arising out of or relating to the Employee’s
employment shall be resolved by final and binding arbitration . . .
The arbitration process may be initiated by either party . . .
The arbitration shall be before a single arbitrator in accordance
with the rules of the American Arbitration Association or such
alternative dispute resolution service as agreed upon by the parties.
The parties may engage in discovery sufficient to adequately
arbitrate the claim(s) in dispute . . . The arbitrator may award
such remedy as he/she deems just and equitable, including punitive
damages, that would have been available if the matter had been
heard in court . . . First Republic Bank shall pay any filing fee and
the fees or costs of the arbitrator. Each party shall pay for its own
costs and attorneys’ fees, if any. However, if any party prevails on
a statutory claim that affords the prevailing party attorneys’ fees
and/or costs, or if there is a written agreement providing for
attorneys’ fees and/or costs, the arbitrator may award reasonable

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attorneys’ fees and/or costs to the prevailing party, applying the
same standards a court could apply under the applicable law . . .
First Republic Bank reserves the right to modify this agreement at
any time with or without notice.

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This was in a single-page agreement signed by plaintiff when she accepted employment
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as a quality-assurance analyst. In this civil action, she now alleges claims covered by the
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agreement.
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Section 2 of the Federal Arbitration Act (FAA) makes agreements to arbitrate “valid,
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irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the
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revocation of any contract.” 9 U.S.C. 2.
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Under the FAA, district courts should apply ordinary principles of state contract law to
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arbitration agreements be declared unenforceable by defenses “that apply only to arbitration or
For the Northern District of California

United States District Court

determine the validity of an agreement to arbitrate. What the FAA does not permit is that
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that derive their meaning from the fact that an agreement to arbitrate is at issue.” AT&T Mobility
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LLC v. Concepcion, 131 S. Ct. 1740, 1746. As Concepcion makes clear, if a generally
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applicable doctrine, such as unconscionability, is applied under state law in a fashion that
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particularly disfavors arbitration, then the rule interferes with arbitration and is preempted by the
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FAA. Id. at 1747. Yet, Concepcion did not overthrow the state common-law contract defense of
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unconscionability whenever an arbitration clause is involved. Rather, the Supreme Court
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reaffirmed that the Act’s savings clause — that arbitration agreements may still be declared
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unenforceable “upon such grounds as exist at law or in equity for the revocation of any contract”
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— preserves generally applicable contract defenses such as unconscionability, so long as those
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doctrines are not applied in a fashion that disfavors or interferes with arbitration. Kilgore v.
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KeyBank, Nat’l Ass’n, 673 F.3d 947 (9th Cir. 2012).
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The agreement in question here is substantively fair except for one egregious provision,
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namely the clause that allows the bank to modify the arbitration agreement at any time with or
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without notice. This unilateral right rendered the contract illusory and was and remains beyond
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the pale under California contract law. Ingle v. Circuit City Stores, Inc., 328 F.3d 1165, 1179
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(9th Cir. 2003).
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This does not matter too much, however, because the clause can and will be severed

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pursuant to California Civil Code Section 1670.5(A). In this regard, defendant First Republic

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Bank has never tried to take advantage of the clause, at least insofar as this record shows.

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The remainder of the agreement will function perfectly well without the unilateral modification

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clause.

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It is unnecessary to reach the question of procedural unconscionability.

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This action will be STAYED for a reasonable period of time to permit plaintiff’s claim

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to be arbitrated. If the arbitration is delayed unreasonably despite diligence by plaintiff, then

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the stay will be lifted and plaintiff will be allowed to litigate here in court. Assuming plaintiff
is diligent in prosecuting the arbitration, the Court anticipates that it should be concluded within

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For the Northern District of California

United States District Court

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one year. If this timetable starts to slide through delay (not due to plaintiff), then either side may

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ask that the stay be lifted. The hearing is VACATED as unnecessary and the case management

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conference is CONTINUED to JANUARY 31, 2013, AT 11:00 A.M.

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IT IS SO ORDERED.

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Dated: May 2, 2012.

WILLIAM ALSUP
UNITED STATES DISTRICT JUDGE

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