Diaz et al v. Premium Packing, Inc.

Filing 42

ORDER denying without prejudice 20 , 21 Motions to Compel Arbitration; denying without prejudice 27 Motion for Sanctions; denying without prejudice 30 Motion to Submit Supplemental Evidence. The court schedules a Case Management Confere nce for 10:00 a.m. on 1/28/2016 in order to discuss the evidentiary hearing. On or before 1/21/2016, the parties shall file a Joint Case Management Conference Statement. Signed by Judge Edward J. Davila on 1/6/2016. (ejdlc1S, COURT STAFF) (Filed on 1/6/2016)

1
2
3
4
5
6
7

UNITED STATES DISTRICT COURT

8

NORTHERN DISTRICT OF CALIFORNIA

9

SAN JOSE DIVISION

10

United States District Court
Northern District of California

11
12

MARIO IVAN ESPINOZA DIAZ, et al.,
individually and on behalf of all other
persons similarly situated,
Plaintiffs,

13
v.
14
15

PREMIUM PACKING, INC.,

Case No. 5:15-cv-01258-EJD
ORDER DENYING WITHOUT
PREJUDICE DEFENDANT’S MOTION
TO COMPEL ARBITRATION;
DENYING WITHOUT PREJUDICE
REQUESTS FOR SANCTIONS
Re: Dkt. Nos. 20, 21, 27, 30

Defendant.
16
17

In this employment class action, Plaintiffs Mario Ivan Espinoza Diaz and Guillermo Cruz

18

Cruz (collectively, “Plaintiffs”) allege their former employer, Premium Packing, Inc.

19

(“Premium”), violated several sections of the California Labor Code with respect to the payment

20

of wages. In response to this action, Premium now moves for an order compelling Plaintiffs to

21

arbitrate their claims according to documents Premium asserts governed Plaintiffs’ employment.

22

See Docket Item Nos. 20, 21. Premium also requests an order imposing sanctions against

23

Plaintiffs and their attorneys for presenting pleadings which Premium believes violate Federal

24

Rule of Civil Procedure 11. See Docket Item No. 27.

25
26
27
28

Plaintiffs oppose the motion and deny the existence of an arbitration agreement between
themselves and Premium. See Docket Item No. 24. They also oppose Premium’s motion for
1
Case No.: 5:15-cv-01258-EJD
ORDER DENYING WITHOUT PREJUDICE DEFENDANT’S MOTION TO COMPEL
ARBITRATION; DENYING WITHOUT PREJUDICE REQUESTS FOR SANCTIONS

1

sanctions and affirmatively request sanctions against Premium for “fabricating” evidence.
Federal jurisdiction arises pursuant to 28 U.S.C. § 1332(d). Having carefully reviewed the

2
3

relevant documents submitted by the parties, the court has determined that factual disputes

4

preclude a final decision on the issue of arbitration. Accordingly, Premium’s motion to compel

5

arbitration and the parties’ requests for sanctions will be denied without prejudice subject to an

6

evidentiary hearing addressing the formation of an arbitration agreement.

7

I.

BACKGROUND
Premium is a farm labor contractor which employs workers “to render services in the

8

growing, production of harvesting of farm products and agricultural commodities of its clients.”

10

See Decl. of Ronnie Alderete (“Alderete Decl.”), Docket Item No. 20, at ¶ 3. According to the

11
United States District Court
Northern District of California

9

Complaint, Plaintiffs were employed by Premium as “piece rate” agricultural workers in Salinas,

12

California. See Compl., Docket Item No. 1, at ¶ 6. Diaz alleges he worked for Premium from

13

2003 through March, 2014, and Cruz alleges he worked for Premium from 2008 through late

14

2013. Id.1 Plaintiffs allege that Premium required them to spend time performing mandatory

15

morning exercises, attending mandatory meetings, traveling between fields in a workday, and

16

taking rest periods, but did not compensate them for the time spent on these activities. Id. They

17

filed this action on behalf of themselves and four classes of other Premium workers: a Piece-

18

Workers Class, a Restitution Class, a Wage Statement Class, and a Terminated Employees Class.

19

Id. at ¶ 11.
In its motion to compel arbitration, Premium asserts that, upon hire, all new employees are

20
21

provided a copy of the company’s Employee Handbook. See Alderete Decl., at ¶ 6. It further

22

asserts that a Spanish language version of the Handbook is provided to Spanish-speaking

23

employees. Id. at ¶ 8. Both versions of the Handbook contain “Arbitration Policy” provisions that

24
25
26
27
28

1

Premium’s records apparently show that Diaz was employed from April 2, 2011, though March
24, 2014, and Cruz was employed from December 20, 2007, through March 29, 2013. See
Alderete Decl., at ¶ 5.
2
Case No.: 5:15-cv-01258-EJD
ORDER DENYING WITHOUT PREJUDICE DEFENDANT’S MOTION TO COMPEL
ARBITRATION; DENYING WITHOUT PREJUDICE REQUESTS FOR SANCTIONS

1

reference and incorporate addendums discussing the resolution of employment related disputes

2

through private and binding arbitration. Id. at ¶ 6.2
Specifically, the English language version of the Handbook’s addendum states:

3
4

Premium Packing, Inc. utilizes a system of alternative dispute
resolution which involves binding arbitration to resolve all disputes
which may arise out of the employment context. Because of the
mutual benefits (such as reduced expense and increased efficiency)
which private binding arbitration can provide both the Company and
myself, I and the Company both agree that any claim, dispute,
and/or controversy that either party may have against one another . .
. which would otherwise require or allow resort to any court or other
governmental dispute resolution forum between myself and the
Company . . . arising from, related to, or having any relationship or
connection whatsoever with my seeking employment with,
employment by, or other association with the Company, whether
based on tort, contract, statutory or equitable law, or otherwise . . .
shall be submitted to and determined exclusively by binding
arbitration.

5
6
7
8
9
10

United States District Court
Northern District of California

11
12

Id. at Ex. C.3
Premium maintains that its personnel files contain forms entitled “Receipt of Employee

13
14

Handbook” signed by both Diaz and Cruz on June 7, 2013, and December 9, 2009, respectively.

15

See Decl. of Marcy Orozco-Sanchez, Docket Item No. 20, at ¶¶ 13, 14, Exs. D, E. The receipts

16

provide: “I understand that it is my responsibility to read and familiarize myself with the

17

provisions of the handbook and to abide by the rules, policies, and standards set forth.” Id. at ¶ 12.
Plaintiffs initiated the instant action in Monterey County Superior Court on February 10,

18
19

2015. They assert the following state-law claims against Premium: (1) failure to pay minimum

20

wages, (2) failure to pay overtime wages, (3) unfair competition, (4) failure to provide accurate

21

wage statements, and (5) failure to pay all wages owed upon termination. Premium removed the

22

case to this court on March 18, 2015. The instant motions followed.

23
24
25
26
27
28

2

Page 7 of the Employee Handbook provides under the heading “Arbitration Policy” that
“Arbitration of employment disputes will take place in order to resolve any disagreements
amongst employer and employee.”
3

Premium apparently updated its Employee Handbook in 2012. See Alderete Decl., at ¶ 10. This
version retained the same “Arbitration Policy” and incorporated the same arbitration addendum.
Id.
3
Case No.: 5:15-cv-01258-EJD
ORDER DENYING WITHOUT PREJUDICE DEFENDANT’S MOTION TO COMPEL
ARBITRATION; DENYING WITHOUT PREJUDICE REQUESTS FOR SANCTIONS

1

II.

LEGAL STANDARD
Pursuant to the Federal Arbitration Act (“FAA”), 9 U.S.C. § 1 et. seq., a written arbitration

2

agreement is “valid, irrevocable, and enforceable” in much the same way as any other contract or

3
contractual provision. 9 U.S.C. § 2; see Rent-A-Center, West, Inc. v. Jackson, 561 U.S. 63, 67
4
5

(2010). “A party to a valid arbitration agreement may ‘petition any United States district court for
an order directing that such arbitration proceed in the manner provided for in such agreement.’”

6
Lifescan, Inc. v. Premier Diabetic Servs., Inc., 363 F.3d 1010, 1012 (9th Cir. 2004) (quoting 9
7
U.S.C. § 4). When such a request is made, two questions must be answered: whether an
8
arbitration agreement exists and whether it encompasses the dispute at issue. See id. at 1012; see
9
also Chiron Corp. v. Ortho Diagnostic Sys., Inc., 207 F.3d 1126, 1130 (9th Cir. 2000). If the party
10
seeking arbitration establishes these two factors, the court must compel arbitration. 9 U.S.C. § 4;
11
United States District Court
Northern District of California

Chiron, 207 F.3d at 1130.
12

Generally, “the party resisting arbitration bears the burden of proving that the claims at

13
issue are unsuitable for arbitration.” Green Tree Fin. Corp.-Alabama v. Randolph, 531 U.S. 79, 91
14

(2000). Thus, a motion to compel arbitration should be denied if “it may be said with positive

15
assurance that the arbitration clause is not susceptible of an interpretation that covers the asserted
16
17
18
19
20

dispute.” AT&T Techs., Inc. v. Commc’ns Workers of Am., 475 U.S. 643, 650 (1986). Similarly,
arbitration should not be compelled if the court finds “grounds as exist at law or in equity for the
revocation of any contract,” such as fraud, duress or unconscionability. 9 U.S.C. § 2; Rent-ACenter, 561 U.S. at 68. “However, federal courts are required to enforce agreements to arbitrate
vigorously, according to their terms, and to resolve ambiguities in favor of arbitration.” Ross

21
Sinclaire & Assoc. v. Premier Sr. Living, LLC, No. 11-CV-5104 YGR, 2012 U.S. Dist. LEXIS
22
89229, at *15-16, 2012 WL 2501115 (N.D. Cal. June 27, 2012).
23
24

III.

EVIDENTIARY OBJECTIONS
Both parties submitted a list of objections to declarations and documents. These

25
evidentiary objections are misplaced.
26
27
28

“On a motion to compel arbitration, the court applies a standard similar to the summary
4
Case No.: 5:15-cv-01258-EJD
ORDER DENYING WITHOUT PREJUDICE DEFENDANT’S MOTION TO COMPEL
ARBITRATION; DENYING WITHOUT PREJUDICE REQUESTS FOR SANCTIONS

1

judgment standard applied under Rule 56 of the Federal Rules of Civil Procedure.” Alvarez v. T-

2

Mobile USA, Inc., No. CIV. 2:10-2373 WBS GGH, 2011 U.S. Dist. LEXIS 146757, at *8, 2011

3

WL 6702424 (E.D. Cal. Dec. 21, 2011). Under Rule 56, “[a] party may object that the material

4

cited to support or dispute a fact cannot be presented in a form that would be admissible in

5

evidence.” Fed. R. Civ. P. 56(c)(2) (emphasis added). Consequently, the focus of an objection at

6

the summary judgment stage is not “the admissibility of the evidence’s form” but on the

7

“admissibility of its contents.” Fraser v. Goodale, 342 F.3d 1032, 1036 (9th Cir. 2003).

8

In consideration of the applicable standard, “objections to evidence on the ground that it is

9

irrelevant, speculative, and/or argumentative, or that it constitutes an improper legal conclusion
are all duplicative of the summary judgment standard itself” and are unnecessary. Burch v.

11
United States District Court
Northern District of California

10

Regents of the Univ. of Cal., 433 F. Supp. 2d 1110, 1119 (E.D. Cal. June 5, 2006). So too are

12

objections which assert that a declarant’s statement was made without personal knowledge, is

13

given in the form of a legal conclusion, or constitutes hearsay. Alvarez, 2011 U.S. Dist. LEXIS

14

146757, at *10. “Instead of challenging the admissibility of this evidence, lawyers should

15

challenge its sufficiency.” Id.
Moreover, objections to documentary evidence “on the basis of a failure to comply with

16
17

the technicalities of authentication requirements or the best evidence rule are . . . inappropriate” so

18

long as such documents could be properly authenticated at trial. Id. at *10-11.
Here, the parties’ objections fall into five categories: (1) challenges based on “lack of

19
20

foundation,” “lack of personal knowledge,” or “improper law opinion,” (2) challenges based on

21

relevance, (3) challenges asserting that a statement is a “legal conclusion” or an “opinion on

22

ultimate issue,” (4) challenges based on hearsay, and (5) challenges claiming a “lack of

23

authentication.” The court has reviewed these objections and finds them superfluous to the legal

24

standard for the reasons explained. Accordingly, they are each overruled.

25

IV.

26
27
28

DISCUSSION
Premium moves to compel arbitration based on the Arbitration Policy provision in its

5
Case No.: 5:15-cv-01258-EJD
ORDER DENYING WITHOUT PREJUDICE DEFENDANT’S MOTION TO COMPEL
ARBITRATION; DENYING WITHOUT PREJUDICE REQUESTS FOR SANCTIONS

1

Handbook. For their part, Plaintiffs do not contest that the Arbitration Policy encompasses their

2

claims if enforceable against them, but challenge the existence of an arbitration agreement

3

between themselves and Premium. In light of this dispute, Premium’s motion is incapable of

4

resolution on the current record.

5

The party moving to compel arbitration, in this case Premium, has burden to establish the

6

existence of an agreement to arbitrate under state contract law. See Knutson v. Sirius XM Radio

7

Inc., 771 F.3d 559, 565 (9th Cir. 2014) (“[T]he party seeking to compel arbitration[] has the

8

burden of proving the existence of an agreement to arbitrate by a preponderance of the

9

evidence.”); Ingle v. Circuit City Stores, Inc., 328 F.3d 1165, 1170 (9th Cir. 2003) (holding the
court “should apply ordinary state-law principles that govern the formation of contracts” to

11
United States District Court
Northern District of California

10

determine whether an arbitration agreement exists). “Only when there is no genuine issue of

12

material fact as to whether the parties formed an agreement to arbitrate should the court rule that,

13

as a matter of law, the parties should or should not be compelled to submit their dispute to

14

arbitration.” Alvarez, 2011 U.S. Dist. LEXIS 146757, at *23 (citing Three Valleys Mun. Water

15

Dist. v. E.F. Hutton & Co., 925 F.2d 1136, 1141 (9th Cir. 1991)). If the opposing party

16

successfully demonstrates reasonable doubt as the creation of a binding arbitration agreement, “the

17

matter should be resolved through an evidentiary hearing or mini-trial.” Id.

18

Premium argues that it has satisfied its burden here. To that end, Premium points out the

19

Employee Handbook it provided to all employees contained an arbitration policy and incorporated

20

an arbitration addendum, the provisions of which are detailed above. Premium also believes the

21

signed receipts it produced with this motion, which purportedly show that Diaz and Cruz

22

acknowledged the existence of the Handbook and its governance of their employment with

23

Premium, demonstrate that Plaintiffs assented to the arbitration policy. Moreover, Premium

24

argues that Plaintiffs impliedly agreed to the arbitration policy by accepting and continuing to

25

accept employment benefits.

26
27
28

Plaintiffs disagree for several reasons. First, Plaintiffs argue that Premium failed to
6
Case No.: 5:15-cv-01258-EJD
ORDER DENYING WITHOUT PREJUDICE DEFENDANT’S MOTION TO COMPEL
ARBITRATION; DENYING WITHOUT PREJUDICE REQUESTS FOR SANCTIONS

1

authenticate the signatures on the receipts acknowledging the Employee Handbook. As to Cruz,

2

he states that he did not sign the receipt and that Premium “fabricated” his signature on the

3

document it produced. See Decl. of Guillermo Cruz (“Cruz Decl.”), Docket Item No. 24, at ¶ 4.

4

As to Diaz, he does not recall signing the receipt. See Decl. of Mario Ivan Espinoza Diaz (“Diaz

5

Decl.”), Docket Item No. 24, at ¶ 4.

6

Second, Plaintiffs contend Premium did not establish though competent testimony that

7

they were actually given a copy of the Employee Handbook and arbitration addendum. In fact,

8

both Cruz and Diaz deny receiving or having ever seen these documents. See Cruz Decl., at ¶¶ 4,

9

5; Diaz Decl., at ¶¶ 4, 5.

10

United States District Court
Northern District of California

11
12

Third, Plaintiffs argue they could not have impliedly agreed to arbitrate because they were
never notified that the arbitration of disputes was a condition of employment.
It is generally true that “a petitioner is not required to authenticate an opposing party’s

13

signature on an arbitration agreement as a preliminary matter in moving for arbitration or in the

14

event the authenticity of the signature is not challenged.” Ruiz, 232 Cal. App. 4th at 790 (citing

15

Condee v. Longwood Mgmt. Corp., 88 Cal. App. 4th 215, 218-19 (2001)) (emphasis preserved).

16

However, when an employee denies signing or fails to recall signing an arbitration agreement, the

17

employer must prove by a preponderance of the evidence that a proffered signature or other

18

expression of assent is authentic before arbitration can be compelled. Id. Here, in the face of

19

Plaintiffs’ challenge, Premium must authenticate the signatures of Cruz and Diaz on the receipts

20

by producing evidence sufficient to support a finding that the signatures are what Premium

21

purports them to be since it relies on those documents to demonstrate Plaintiffs’ assent to the

22

arbitration policy in the Handbook. See Fed. R. Evid. 901(a).

23

Premium produced several documents it believes show that Cruz’s printed signature on the

24

receipt dated December 9, 2009, is his true signature. For example, Premium represents that the

25

signature on the receipt is nearly identical to the printed signature on another form produced from

26

Cruz’s personnel file, namely the one entitled “Acuse De Recibo Y Entrenamiento,” which is also

27
28

7
Case No.: 5:15-cv-01258-EJD
ORDER DENYING WITHOUT PREJUDICE DEFENDANT’S MOTION TO COMPEL
ARBITRATION; DENYING WITHOUT PREJUDICE REQUESTS FOR SANCTIONS

1

dated December 9, 2009, and which his attorney attests is “true and correct.” See Decl. of

2

Gregory N. Karasik, Docket Item No. 24, at ¶ 3, Ex. 2. Similarly, Premium produced evidence in

3

an effort to authenticate Diaz’s signature. To that end, Premium argues the signature on Diaz’s

4

receipt dated June 7, 2013, is indistinguishable from the one contained on documents that contain

5

his confirmed signature, such as the Spanish-language declaration he submitted with the

6

opposition to this motion and the retainer agreement attached to Cruz’s declaration. See Cruz

7

Decl., at ¶ 4.

8
9

While it is true that authentication can occur through “[a] comparison with an
authenticated specimen by an expert witness or the trier of fact” or by considering “[t]he
appearance, contents, substance, internal patterns, or other distinctive characteristics of the item,

11
United States District Court
Northern District of California

10

taken together with all the circumstances” (Fed. R. Evid. 901(b)), the court nonetheless finds on

12

this record that there exists a material factual dispute as to whether Plaintiffs entered into

13

arbitration agreements with Premium. Here, the court has been presented with irreconcilable

14

statements concerning Plaintiffs’ signatures on the receipts; thus, the issue of whether or not

15

Plaintiffs actually signed those documents and, by doing so, assented to the arbitration policy can

16

only be resolved by assessing the credibility of witnesses. Indeed, although Premium believes

17

only one conclusion can be drawn from its evidence, there may exist other plausible explanations

18

to account for the signatures that appear on the receipts.

19

Moreover, Plaintiffs deny ever receiving a copy of the Handbook or the arbitration

20

addendum and deny having been informed that their consent to the arbitration of disputes with

21

Premium was a condition of employment. They also highlight an inconsistency in Premium’s

22

evidence on these topics: that despite Premium’s representation that its employees are provided

23

with these documents upon hire, the dates upon which Cruz and Diaz allegedly signed the receipts

24

appear to be well after their dates of hire. As such, the court cannot determine on this evidence

25

whether, and if so when, an arbitration agreement was created.

26
27
28

Since the parties’ factual disputes preclude a final determination on the question of
8
Case No.: 5:15-cv-01258-EJD
ORDER DENYING WITHOUT PREJUDICE DEFENDANT’S MOTION TO COMPEL
ARBITRATION; DENYING WITHOUT PREJUDICE REQUESTS FOR SANCTIONS

1

whether or not Plaintiffs’ claims are subject to arbitration, the court must hold an evidentiary

2

hearing on the limited issue of whether Plaintiffs and Premium formed an agreement to arbitrate.

3

This will be a non-jury hearing because Plaintiffs did not make a jury request in their opposition to

4

Premium’s motion. See 9 U.S.C. § 4; see also Alvarez, 2011 U.S. Dist. LEXIS 146757, at *26

5

(“Since Alvarez did not demand a jury trial on or before the return day for T-Mobile’s motion to

6

compel arbitration, he no longer has the right to demand a jury trial on the issue of whether he

7

entered into an agreement to arbitrate with T-Mobile when he activated his phone service.”).4

8

V.

ORDER
Based on the foregoing, Premium’s Motion to Compel Arbitration (Docket Item Nos. 20,

9

21) is DENIED WITHOUT PREJUDICE to being renewed, if appropriate, subsequent to an

11
United States District Court
Northern District of California

10

evidentiary hearing on the issue of whether there exists an arbitration agreement between Plaintiffs

12

and Premium.

13

The court schedules a Case Management Conference for 10:00 a.m. on January 28, 2016,

14

in order to discuss the evidentiary hearing. On or before January 21, 2016, the parties shall file a

15

Joint Case Management Conference Statement which provides, inter alia, a suggested date for the

16

hearing, an estimate of the hearing’s length, a list of witnesses each side intends to call

17

recognizing the limited nature hearing’s scope, a list of the documents or exhibits the parties

18

intend to offer again recognizing the limited scope, and a brief discussion of any legal or

19

evidentiary issues the parties anticipate may arise.

20
21
22
23
24
25
26
27
28

4

The relevant section of the FAA provides:
If the making of the arbitration agreement or the failure, neglect, or
refusal to perform the same be in issue, the court shall proceed
summarily to the trial thereof. If no jury trial be demanded by the
party alleged to be in default, or if the matter in dispute is within
admiralty jurisdiction, the court shall hear and determine such issue.
Where such an issue is raised, the party alleged to be in default may
. . . on or before the return day of the notice of application, demand
a jury trial of such issue . . . .

9 U.S.C. § 4 (emphasis added).
9
Case No.: 5:15-cv-01258-EJD
ORDER DENYING WITHOUT PREJUDICE DEFENDANT’S MOTION TO COMPEL
ARBITRATION; DENYING WITHOUT PREJUDICE REQUESTS FOR SANCTIONS

1

Given the outcome of this motion, the Plaintiffs’ request for sanctions and Premium’s

2

Motion for Sanctions (Docket Item No. 27) are DENIED WITHOUT PREJUDICE. Premium’s

3

motion to submit supplemental evidence (Docket Item No. 30) is DENIED WITHOUT

4

PREJUDICE since such evidence may be admitted at the evidentiary hearing if otherwise

5

admissible according to the Federal Rules of Evidence.

6
7
8
9
10

IT IS SO ORDERED.
Dated: January 6, 2016
______________________________________
EDWARD J. DAVILA
United States District Judge

United States District Court
Northern District of California

11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28

10
Case No.: 5:15-cv-01258-EJD
ORDER DENYING WITHOUT PREJUDICE DEFENDANT’S MOTION TO COMPEL
ARBITRATION; DENYING WITHOUT PREJUDICE REQUESTS FOR SANCTIONS