AccentCare, Inc. et al v. Jacobs
Filing
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ORDER DENYING PETITIONERS' PETITION TO COMPEL INDIVIDUAL ARBITRATION; GRANTING RESPONDENT'S MOTION TO COMPEL ARBITRATION; AND VACATING HEARING. Signed by Judge Jeffrey S. White on 11/9/15. (jjoS, COURT STAFF) (Filed on 11/9/2015)
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IN THE UNITED STATES DISTRICT COURT
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FOR THE NORTHERN DISTRICT OF CALIFORNIA
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ACCENTCARE, INC., and ACCENTCARE
OF CALIFORNIA, INC.,
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For the Northern District of California
United States District Court
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No. C 15-03668 JSW
ORDER DENYING PETITIONERS’
PETITION TO COMPEL INDIVIDUAL
ARBITRATION; GRANTING
RESPONDENT’S MOTION TO COMPEL
ARBITRATION; AND VACATING
HEARING
Petitioners,
v.
EBONY JACOBS,
Respondent.
/
Docket Nos. 1, 23, 24, 25
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Now before the Court is the petition to compel individual arbitration filed by Petitioners
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AccentCare, Inc. and AccentCare of California, Inc. (collectively, “Petitioners”) (Docket Nos. 1, 23,
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24) and the motion to compel arbitration filed by Respondent Ebony Jacobs (“Respondent”) (Docket
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No. 25). The Court finds this matter suitable for disposition without oral argument and VACATES
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the hearing set for November 13, 2015. See N.D. Cal. Civ. L.R. 7-1(b). Having carefully reviewed
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the parties’ papers and considering their arguments and the relevant authority, the Court DENIES
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Petitioners’ motion and GRANTS Respondent’s motion for the reasons set forth below.
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BACKGROUND
On July 13, 2015, Respondent filed a demand for class arbitration. (Ex. 2 to Petition.) The
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demand for arbitration is made on behalf of Respondent and a putative class of persons who, during
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the alleged limitations period, were allegedly employed by Petitioners as “in-home Care Partners”
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and required to work 24-hour shifts while only being paid for 16 hours of those shifts.
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Petitioners allege that Respondent was employed by AccentCare of California, Inc., as an inhome Care Partner from October 26, 2011 to December 14, 2012, and again from July 24, 2013
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through the present. (Petition ¶ 2.) On July 24, 2013, Respondent signed an arbitration agreement
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that provides: “[t]o the fullest extent allowed by law, any controversy, claim or dispute between
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Employee and the Company . . . relating to or arising out of Employee’s employment or the
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cessation of that employment . . . will be submitted to final and binding arbitration in the county in
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which Employee work(ed) for determination in accordance with the American Arbitration
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Association’s (“AAA”) National Rules for the Resolution of Employment Disputes, as the exclusive
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remedy for such controversy, claim or dispute.” (Exh. 1 to Petition, Hanson Decl., Exh. A, ¶ 2.)
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The arbitration agreement further provides that it “is to be construed as broadly as is permissible
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under applicable law.” (Id.)
On August 11, 2015, Petitioners filed in this Court a petition to compel arbitration.
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For the Northern District of California
United States District Court
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Petitioners contend that only individual arbitration proceedings, as opposed to class-wide arbitration
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proceedings, are authorized by the arbitration agreement. On September 21, 2015, Respondent
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countered with a motion to compel arbitration, contending that the arbitrator, not the Court, should
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resolve the question of whether the arbitration agreement contemplates class arbitration.
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The Court shall address additional facts as necessary to its analysis in the remainder of this
Order.
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ANALYSIS
A.
Applicable Legal Standards.
Pursuant to the Federal Arbitration Act (“FAA”), arbitration agreements “shall be valid,
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irrevocable, and enforceable, save upon such grounds that exist at law or in equity for the revocation
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of any contract.” 9 U.S.C. § 2. Once the Court has determined that an arbitration agreement
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involves a transaction involving interstate commerce, thereby falling under the FAA, the Court
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“must issue an order compelling arbitration if the following two-pronged test is satisfied: (1) a valid
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agreement to arbitrate exists; and (2) that agreement encompasses the dispute at issue.” United
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Computer Systems v. AT&T Corp., 298 F.3d 756, 766 (9th Cir. 2002); see also 9 U.S.C. §§ 2, 4;
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Chiron Corp. v. Ortho Diagnostic Sys., Inc., 207 F.3d 1126, 1130 (9th Cir. 2000).
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The FAA represents the “liberal federal policy favoring arbitration agreements,” and “any
doubts concerning the scope of arbitrable issues should be resolved in favor of arbitration.” Moses
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H. Cone Memorial Hospital v. Mercury Constr. Corp., 460 U.S. 1, 24-25 (1983). Under the FAA,
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“once [the Court] is satisfied that an agreement for arbitration has been made and has not been
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honored,” and the dispute falls within the scope of that agreement, the Court must order arbitration.
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Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395, 400 (1967). The “central purpose of
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the [FAA is] to ensure that private agreements to arbitrate are enforced according to their terms.”
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Mastrobuono v. Shearson Lehman Hutton, Inc., 514 U.S. 52, 53-54 (1995) (quotation omitted). The
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“preeminent concern of Congress in passing the [FAA] was to enforce private agreements into
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which parties had entered, a concern which requires that [courts] rigorously enforce agreements to
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arbitrate.” Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc. 473 U.S. 614, 625-26 (1985)
(quotations omitted).
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For the Northern District of California
United States District Court
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“The question whether the parties have submitted a particular dispute to arbitration, i.e., the
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‘question of arbitrability,’ is an issue for judicial determination unless the parties clearly and
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unmistakably provide otherwise.” Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79, 83 (2002).
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However, “the phrase ‘question of arbitrability’ has . . . a limited scope.” Id. It is “applicable in the
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kind of narrow circumstance where contracting parties would likely have expected a court to have
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decided the gateway matter, where they are not likely to have thought that they had agreed that an
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arbitrator would do so, and, consequently, where reference of the gateway dispute to the court
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avoids the risk of forcing parties to arbitrate a matter that they may well not have agreed to
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arbitrate.” Id. at 83-84. On the other hand, “procedural questions which grow out of the dispute and
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bear on its final disposition are presumptively not for the judge, but for an arbitrator, to decide.” Id.
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at 84; see also Prima Paint, 388 U.S. at 404 (holding that “a federal court may consider only issues
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relating to the making and performance of the agreement to arbitrate”).
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B.
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The Motions to Compel Arbitration.
The parties in this case do not dispute that there is a valid arbitration agreement or that
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Respondent’s individual claims fall within the scope of that agreement. Rather, the parties dispute
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whether the arbitration may proceed on a class-wide basis and whether the Court or the arbitrator
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shall make this determination. “Neither the Supreme Court nor the Ninth Circuit has explained
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definitively when the availability of class-wide arbitration might be a question for a court and when
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it might be a question for an arbitrator.” Vazquez v. ServiceMaster Global Holding Inc., No. C 09-
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05148 SI, 2011 WL 2565574, *3 (N.D. Cal. June 29, 2011). A plurality of four Justices in Green
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Tree Financial Corp. v. Bazzle, 539 U.S. 444, 452-53 (2003), opined that this question is a matter of
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contract interpretation and arbitration procedure and, thus, is one for the arbitrator. See also id. at
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455 (Stevens, J., concurring in judgment but agreeing only that the question is “[a]rguably” for the
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arbitrator). The Supreme Court clarified in Stolt-Nielsen S.A. v. AnimalFeeds Int’l Corp., 559 U.S.
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662, 679 (2010), that “Bazzle did not yield a majority decision” and that the question of whether the
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Court or the arbitrator should make this determination remains open.
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The Supreme Court has explained that “[j]ust as the arbitrability of the merits of a dispute
depends upon whether the parties agreed to arbitrate that dispute, so the question ‘who has the
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For the Northern District of California
United States District Court
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primary power to decide arbitrability’ turns upon what the parties agreed about that matter.” First
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Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 943 (1995) (internal citations omitted). Absent
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“clear and unmistakable evidence” that the parties intended to arbitrate arbitrability, the Court
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should not presume that intention. Id. at 944 (alterations omitted). Moreover, if an arbitration
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agreement is silent or ambiguous about who should decide arbitrability, the question should be put
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to the Court because to do otherwise “might too often force unwilling parties to arbitrate a matter
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they reasonably would have thought a judge, not an arbitrator, would decide.” Id. at 945.
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In this case, the Court need not determine whether the availability of class-wide arbitration is
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a matter of contract interpretation and arbitration procedure or is a question of arbitrability. Even if
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it is a question of arbitrability, the Court finds that there is clear and unmistakable evidence that the
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parties intended arbitrability to be determined by the arbitrator. See id. at 944-45.
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The Parties incorporated the AAA rules into the arbitration agreement. The Ninth Circuit
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recently held that “incorporation of the AAA rules constitutes clear and unmistakable evidence that
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contracting parties agreed to arbitrate arbitrability.” Brennan v. Opus Bank, 796 F.3d 1125, 1130
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(9th Cir. 2015); see also Oracle Am., Inc. v. Myriad Group A.G., 724 F.3d 1069, 1074 (9th Cir.
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2013) (“[v]irtually every circuit to have considered the issue has determined that incorporation of
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the [AAA] arbitration rules constitutes clear and unmistakable evidence that the parties agreed to
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arbitrate arbitrability.”); see also AccentCare, Inc. v. Echevarria, No. 15-cv-01078-JSW, at *5
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(Order Regarding Motion to Compel Individual Arbitration, June 1, 2015) (“Echevarria”) (citing
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cases). Although Brennan and Oracle America were not in the context of disputes about the
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availability of class arbitration, they are persuasive.
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District courts have emphasized the importance of the specific provisions of the AAA rules
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that are incorporated by the arbitration agreement. Compare Yahoo! Inc. v. Iverson, 836 F. Supp. 2d
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1007, 1012 (N.D. Cal. 2011) (“[T]he incorporation by reference of the AAA Supplementary Rules
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as they existed at the time [the parties] entered into their contract constitutes a clear and
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unmistakable agreement to have the arbitrator decide questions regarding the arbitrability of
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class-wide claims.”) (quotation omitted), with Tompkins v. 23and Me, Inc., No.
5:13-CV-05682-LHK, 2014 WL 2903752, *10 (N.D. Cal. June 25, 2014) (finding no clear and
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For the Northern District of California
United States District Court
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unmistakable evidence where “[t]he AAA maintains multiple sets of rules for different types of
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disputes” and the relevant arbitration agreement “does not identify any of these specific rules”).
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Here, the arbitration agreement incorporates the AAA’s National Rules for the Resolution of
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Employment Disputes. (Exh. 1 to Petition, Hanson Decl., Exh. A, ¶ 2.) These rules provide that the
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“arbitrator shall have the power to rule on his or her own jurisdiction, including any objections with
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respect to the existence, scope or validity of the arbitration agreement.” AAA Employment
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Arbitration Rules, Rule 6.1 This is exactly the same rule that the Ninth Circuit found in Brennan to
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constitute clear and unmistakable evidence that contracting parties agreed to arbitrate arbitrability,
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which strongly supports Respondent’s position. Additionally, the AAA Supplementary Rules for
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Class Arbitration “apply to any dispute arising out of an agreement that provides for arbitration
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pursuant to any of the rules of the” AAA. AAA Supplementary Rules for Class Arbitration, Rule
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1(a). The Supplementary Rules provide that “the arbitrator shall determine as a threshold matter, in
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a reasoned, partial final award on the construction of the arbitration clause, whether the applicable
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arbitration clause permits the arbitration to proceed on behalf of or against a class.” AAA
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Supplementary Rules for Class Arbitration, Rule 3. Accordingly, the specific AAA Rules that are
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incorporated into the arbitration agreement at issue in this case constitute a clear and unmistakable
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agreement to have the arbitrator decide questions regarding the arbitrability of class-wide claims.
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The AAA Rules are available at https://www.adr.org/.
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In Brennan, the Ninth Circuit noted that its holding “should not be interpreted to require that
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the contracting parties be sophisticated or that the contract be ‘commercial’ before a court may
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conclude that incorporation of the AAA rules constitutes ‘clear and unmistakable’ evidence of the
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parties’ intent.” 796 F.3d at 1130. However, the court limited its holding to the facts with which it
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was presented: an employment contract between sophisticated parties. It did not reach the effect, if
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any, of incorporating AAA arbitration rules into consumer contracts or into contracts of any nature
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between unsophisticated parties. Id. at 1131.
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To the extent the effectiveness of delegating arbitrability through incorporation of AAA rules
is limited to sophisticated parties, such a limitation would not assist Petitioners. The Court notes
that Petitioners are the companies that employed Respondent and drafted the arbitration agreement
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For the Northern District of California
United States District Court
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at issue. Petitioners allege that they employed no fewer than 1,000 individuals during the putative
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class period. (Petition at ¶ 16.) Petitioners are not uninformed, unsophisticated consumers. Nor is
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this a consumer contract; as in Brennan, the contract at issue is an employment contract.
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Therefore, the Court finds that the question of arbitrability may be, and was, delegated to the
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arbitrator by the incorporation of the AAA rules. Accordingly, the arbitrator, not the Court, shall
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determine whether the arbitration agreement allows class-wide arbitration.
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CONCLUSION
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For the foregoing reasons, the Court DENIES Petitioners’ motion to compel individual
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arbitration (Docket Nos. 1, 23, 24). The Court GRANTS Respondent’s motion to compel arbitration,
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which contends that the arbitrator should resolve the question of whether the arbitration agreement
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contemplates class arbitration (Docket No. 25).
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The case management conference set for January 15, 2016 at 11:00 a.m. remains on calendar.
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IT IS SO ORDERED.
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Dated: November 9, 2015
JEFFREY S. WHITE
UNITED STATES DISTRICT JUDGE
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