Fontana v. The Chefs' Warehouse, Inc., et al

Filing 28

ORDER by Judge Haywood S. Gilliam, Jr. GRANTING 20 MOTION TO COMPEL ARBITRATION. (ndrS, COURT STAFF) (Filed on 6/15/2017)

1
2
3
4

UNITED STATES DISTRICT COURT

5

NORTHERN DISTRICT OF CALIFORNIA

6
7

CHRISTOPHER FONTANA,
Plaintiff,

8

THE CHEFS’ WAREHOUSE INC., et al.,

Re: Dkt. No. 20

Defendants.

11
United States District Court
Northern District of California

ORDER GRANTING MOTION TO
COMPEL ARBITRATION

v.

9
10

Case No.16-cv-06521-HSG

12
Pending before the Court is Defendants’ motion to compel arbitration. Dkt. No. 20. For

13
14

the reasons articulated below, the Court GRANTS the motion.

15

I.

16

BACKGROUND
Plaintiff Christopher Fontana filed this action on August 26, 2016, in Sonoma County

17

Superior Court claiming that his former employer did not pay him his severance package. See

18

Dkt. No. 1. Defendants Del Monte Capitol Meat Company, LLC and The Chef’s Warehouse West

19

Coast, LLC removed the case to federal court on November 9, 2016. Id.

20

According to Plaintiff, he began working for Del Monte in 1996. Dkt. No. 1, Ex. A ¶ 6

21

(“Compl.”). The Chef’s Warehouse acquired Del Monte in 2015. See id. ¶ 8. As part of

22

Plaintiff’s ongoing employment with them, he signed the Del Monte Arbitration Agreement

23

(“Arbitration Agreement”) in March 2015. Dkt. No. 20-2, Ex. A; see also Compl. ¶ 7. Paragraph

24

2 provides:

25
26
27
28

[A]ll disputes . . . that may have arisen prior to, during or after the
date of execution of this Agreement shall be subject to resolution
only through final and binding arbitration with the American
Arbitration Association (“AAA”) . . . . The claims covered by this
Agreement include, but are not limited to, any and all controversies,
claims, or disputes between the Company and Employee arising out
of, relating to, or resulting from the terms and conditions of

Employee’s employment with the Company or the termination of
the Employee’s employment with the Company . . . .

1
2

Dkt. No. 20-2, Ex. A ¶ 2. Both Plaintiff and Del Monte’s Human Resources manager signed the

3

Arbitration Agreement. Id. at 3.
In May 2016, Defendants terminated Plaintiff and offered him a Confidential Settlement

4
5

and General Release (“Severance Agreement”). Compl. ¶ 9; see also Compl., Ex. 1 (copy of

6

partially executed agreement). Plaintiff attempted to re-negotiate and requested additional

7

compensation. Compl. ¶ 11. Defendants refused and said the as-is offer would expire on May 27,

8

2016. Id. ¶ 12. Plaintiff signed the Severance Agreement and returned it to Defendants. Id.; see

9

also Dkt. No. 23 at 2. On May 27, Defendants’ Chief Human Resources Officer acknowledged
that she had received it and would send a check by June 2. Compl. ¶ 14. Instead, Defendants

11
United States District Court
Northern District of California

10

never signed the agreement and e-mailed Plaintiff on June 1 to say that they were rescinding the

12

Severance Agreement. Id. ¶ 15; see also Compl., Ex. 1 (Severance Agreement).
The Severance Agreement does not contain an arbitration clause. Instead it includes a

13
14

severability clause if “a court of competent jurisdiction” determines that “any term or provision of

15

this Agreement is . . . void or invalid at law.” Compl., Ex. 1 ¶ 16. It also contains an integration

16

clause: “[T]he terms and conditions of this Agreement cancel and supersede any prior

17

agreements, promises, representations or understandings that may have existed between Fontana

18

and Del Monte with respect to all matters covered by this Agreement [with the exception of any

19

prior confidentiality agreements].” Id. ¶ 12. Plaintiff argues that this dispute is governed by the

20

Severance Agreement and the severability clause permits the Court to adjudicate the dispute.

21

Defendants filed the pending motion to compel arbitration pursuant to the Arbitration Agreement.

22

II.

23

LEGAL STANDARD
The Federal Arbitration Act (“FAA”) provides that “[a] written provision in . . . a contract

24

evidencing a transaction involving commerce to settle by arbitration a controversy thereafter

25

arising out of such contract or transaction, or the refusal to perform the whole or any part thereof,

26

or an agreement in writing to submit to arbitration an existing controversy arising out of such a

27

contract, transaction, or refusal, shall be valid, irrevocable, and enforceable, save upon such

28

grounds as exist at law or in equity for the revocation of any contract.” 9 U.S.C. § 2.
2

If the party seeking arbitration establishes that (1) the parties agreed to arbitrate and (2) the

1
2

scope of that agreement to arbitrate encompasses the claims at issue, a court must compel

3

arbitration. Chiron Corp. v. Ortho Diagnostic Sys., Inc., 207 F.3d 1126, 1130 (9th Cir. 2000). In

4

such cases, the party opposing arbitration bears the burden of establishing a defense to the

5

agreement’s enforcement by a preponderance of the evidence. Rosenthal v. Great Western Fin.

6

Securities Corp., 14 Cal. 4th 394, 413 (1996). “The standard for demonstrating arbitrability is not

7

a high one; in fact, a district court has little discretion to deny an arbitration motion, since the

8

[FAA] is phrased in mandatory terms.” Republic of Nicar. v. Std. Fruit Co., 937 F.2d 469, 475

9

(9th Cir. 1991). Furthermore, “any doubts concerning the scope of arbitrable issues should be
resolved in favor of arbitration.” Simula, Inc. v. Autoliv, Inc., 175 F.3d 716, 719 (9th Cir. 1999)

11
United States District Court
Northern District of California

10

(quotation omitted).
That said, “arbitration is a matter of contract and a party cannot be required to submit to

12
13

arbitration any dispute which he has not agreed so to submit.” AT & T Techs., Inc. v. Commc’ns

14

Workers of Am., 475 U.S. 643, 648 (1986) (quotation omitted). To determine whether a valid and

15

enforceable agreement to arbitrate has been established, courts “should apply ordinary state-law

16

principles that govern the formation of contracts” to decide whether the parties agreed to arbitrate

17

a certain matter. First Options of Chi., Inc. v. Kaplan, 514 U.S. 938, 944 (1995).
Under Section 3 of the FAA, “a party may apply to a federal court for a stay of the trial of

18
19

an action upon any issue referable to arbitration under an agreement in writing for such

20

arbitration.” Rent–A–Center, West, Inc. v. Jackson, 561 U.S. 63, 68 (2010) (quotation omitted). If

21

all of the claims in the litigation are subject to a valid arbitration agreement, the court may dismiss

22

or stay the case. Farrow v. Fujitsu Am., Inc., 37 F. Supp. 3d 1115, 1118 (N.D. Cal. 2014).

23

III.

24

ANALYSIS
Defendants move to compel arbitration in accordance with the Arbitration Agreement, but

25

Plaintiff argues that the partially-executed Severance Agreement governs instead and permits

26

adjudication of the dispute in court. The arbitrability of a claim turns on the existence of a valid

27

contract; a motion to compel arbitration “is in essence a suit in equity to compel specific

28

performance of [that contract].” Cox v. Ocean View Hotel Corp., 533 F.3d 1114, 1125 (9th Cir.
3

1
2

2008) (citing Wagner Constr. Co. v. Pac. Mech. Corp., 41 Cal. 4th 19, 58 (Cal. 2007)).
Here, there is no dispute that both parties signed the Arbitration Agreement. See, e.g., Dkt.

3

No. 23 at 2. And the scope of the Arbitration Agreement is broad. It includes “any and all

4

controversies, claims, or disputes between the Company and Employee arising out of, relating to,

5

or resulting from . . . the termination of the Employee’s employment with the Company . . . .”

6

Dkt. No. 20-2, Ex. A ¶ 2. Plaintiff’s allegation that Defendants failed to pay him his severance

7

package arises out of, relates to, and results from his termination with Defendants. Because the

8

Court finds that the parties agreed to arbitrate, and the scope of that agreement to arbitrate

9

encompasses the claims at issue, the Court must compel arbitration. See Chiron Corp., 207 F.3d

10

United States District Court
Northern District of California

11

at 1130.
Plaintiff asks the Court to conclude that this agreement was nevertheless superseded by the

12

Severance Agreement. However, Plaintiff offers no factual or legal authority to support this

13

contention. The Arbitration Agreement explicitly states that both parties must execute any

14

document modifying its terms, including the company’s president. See Dkt. No. 20-2, Ex. A ¶ 5.

15

And here, Plaintiff has not provided evidence that the unsigned Severance Agreement is a valid

16

contract at all, let alone one that superseded the Arbitration Agreement.

17

“When it is clear . . . that the proposed written contract would become operative only when

18

signed by the parties[], the failure to sign the agreement means no binding contract was created.”

19

Basura v. U.S. Home Corp., 98 Cal. App. 4th 1205, 1216 (Cal. Ct. App. 2002), as modified (June

20

27, 2002) (quoting Banner Entm’t, Inc. v. Superior Court, 62 Cal. App. 4th 348, 358 (Cal. Ct.

21

App. 1998), as modified (Mar. 30, 1998)); Angell v. Rowlands, 85 Cal. App. 3d 536, 541 (Cal. Ct.

22

App. 1978); cf. Sangerman v. Theriault Enters. Inc., No. C-05-04183 RMW, 2007 WL 707502, at

23

*2 (N.D. Cal., Mar. 6, 2007) (holding that parties were bound by unsigned settlement agreement

24

because the parties orally agreed to terms before drafting agreement and there was no evidence

25

that settlement was conditioned on parties’ signatures); see also Cal. Civ. Code § 1436 (“A

26

condition precedent is one which is to be performed before some right dependent thereon accrues,

27

or some act dependent thereon is performed.”).

28

Here, Plaintiff acknowledges that the Severance Agreement is not fully executed. See Dkt.
4

1

No. 23 at 2. The agreement states in relevant part that “[i]ntending to be legally bound,

2

Christopher Fontana and Del Monte each knowingly and voluntarily execute this [agreement] as

3

of the dates set forth below.” See Compl., Ex. 1. The signature line for Defendants is blank. Id.;

4

see also Dkt. No. 23 at 2. And Plaintiff presented no evidence that, contrary to the language of the

5

Severance Agreement, the parties otherwise agreed that assent to the Severance Agreement could

6

be manifested in some other manner. Under California contract law, the Severance Agreement

7

would only be valid if both Plaintiff and Del Monte signed it. An email from Defendants’ Chief

8

Human Resources Officer is no substitute. Moreover, to the extent there is any lingering doubt as

9

to whether arbitration is appropriate, the Arbitration Agreement contains a delegation clause
giving the arbitrator the authority to resolve such disputes: “The arbitrator shall have the

11
United States District Court
Northern District of California

10

exclusive authority to resolve any dispute relating to the formation, interpretation, applicability

12

and enforceability of this Agreement, including, without limitation, all issues regarding the

13

arbitrability of any claim . . . .” Dkt. No. 20-2, Ex. A ¶ 3; see also Tiri v. Lucky Chances, Inc., 226

14

Cal. App. 4th 231, 242 (Cal. Ct. App. 2014) (upholding delegation clause as long as it is “clear

15

and unmistakable” and is “not [] revocable under state contract defenses such as fraud, duress, or

16

unconscionability”); cf. Simula, Inc., 175 F.3d at 719 (9th Cir. 1999) (“[A]ny doubts concerning

17

the scope of arbitrable issues should be resolved in favor of arbitration.”).

18

IV.

19

CONCLUSION
For the foregoing reasons, Defendants’ motion to compel arbitration is GRANTED. This

20

action is hereby STAYED pending resolution of the arbitration. The clerk is directed to

21

administratively close the case.

22

IT IS SO ORDERED.

23

Dated: 6/15/2017

24
25
HAYWOOD S. GILLIAM, JR.
United States District Judge

26
27
28
5