Hernandez v. San Gabriel Temporary Staffing Services, LLC

Filing 30

Order by Judge Lucy H. Koh Granting Defendant's Motion to Compel Arbitration as to Plaintiff's Individual Background Check-Related Claims; Granting Defendant's Request to Strike Plaintiff's Background Check-Related Class Claims; and Staying Remainder of Action Pending the United States Supreme Court's Decision in Ernst & Young LLP v. Morris. (lhklc2S, COURT STAFF) (Filed on 4/2/2018)

1
2
3
4
5
6
7
8

UNITED STATES DISTRICT COURT

9

NORTHERN DISTRICT OF CALIFORNIA

10
SAN JOSE DIVISION

United States District Court
Northern District of California

11
12

DEANNA HERNANDEZ,
Plaintiff,

13
14
15
16

Case No. 17-CV-05847-LHK
ORDER GRANTING DEFENDANT’S
MOTION TO COMPEL ARBITRATION
AS TO PLAINTIFF’S INDIVIDUAL
BACKGROUND CHECK-RELATED
CLAIMS; GRANTING DEFENDANT’S
REQUEST TO STRIKE PLAINTIFF’S
BACKGROUND CHECK-RELATED
CLASS CLAIMS; AND STAYING
REMAINDER OF ACTION PENDING
THE UNITED STATES SUPREME
COURT’S DECISION IN ERNST &
YOUNG LLP V. MORRIS

v.
SAN GABRIEL TEMPORARY STAFFING
SERVICES, LLC,
Defendant.

17
18
19

Re: Dkt. No. 13

20
21

Plaintiff Deanna Hernandez (“Plaintiff”) brings a class action lawsuit against Defendant

22

San Gabriel Temporary Staffing Services, LLC (“Defendant”) that asserts causes of action arising

23

out of (1) the background checks that Defendant allegedly conducts on “prospective, current and

24

former employees,” ECF No. 23 ¶ 2; and (2) an assortment of alleged wage and hour violations

25
26
27
28

1
Case No. 17-CV-05847-LHK

ORDER GRANTING DEFENDANT’S MOTION TO COMPEL ARBITRATION AS TO
PLAINTIFF’S INDIVIDUAL BACKGROUND CHECK-RELATED CLAIMS; GRANTING
DEFENDANT’S REQUEST TO STRIKE PLAINTIFF’S BACKGROUND CHECK-RELATED
CLASS CLAIMS; AND STAYING REMAINDER OF ACTION PENDING THE UNITED
STATES SUPREME COURT’S DECISION IN ERNST & YOUNG LLP V. MORRIS

1

under California law by Defendant. Id. ¶ 4. Before the Court is Defendant’s motion to compel

2

arbitration. ECF No. 13 (“Mot.”). Defendant requests that the Court compel arbitration of all

3

individual claims brought by Plaintiff, strike all of Plaintiff’s class claims, and stay the case

4

pending arbitration. See id. Having considered the submissions of the parties, the relevant law,

5

and the record in this case, the Court (1) GRANTS Defendant’s motion to compel arbitration of

6

Plaintiff’s individual background check-related claims; (2) GRANTS Defendant’s request to

7

dismiss without prejudice Plaintiff’s background check-related class claims; and (3) STAYS the

8

remainder of Plaintiff’s action pending the United States Supreme Court’s resolution of Ernst &

9

Young LLP v. Morris.

10

United States District Court
Northern District of California

11

I.

BACKGROUND
A. Factual Background

12

On December 14, 2016, Plaintiff signed an “At-Will Employment Agreement”

13

(“Agreement”) with Defendant. See ECF No. 13-1 at 6–11 (“Agreement”). Section 8 of the

14

Agreement contains both (1) a choice-of-law provision selecting the “Governing Law” of the

15

Agreement; and (2) an arbitration provision. In its entirety, section 8 of the Agreement reads as

16

follows:

17
18
19
20
21
22
23
24

Governing Law; Arbitration. This Agreement shall be governed by the laws of
the State of California, without regard to that state’s conflict-of-laws rules. Any
dispute that arises out of or relates to Employee’s employment by [Defendant], and
that cannot be resolved independently by [Defendant] and Employee, shall be
resolved through binding arbitration conducted by JAMS in accordance with such
employment arbitration rules or other rules as ensure that the arbitration proceeds
subject to the following requirements: (a) before a single, neutral arbitrator; (b) with
discovery to the same extent as is allowed under the California Code of Civil
Procedure; (c) with a final decision in the form of a detailed, reasoned, opinion
sufficient to enable judicial review; (d) with no limitation on the type of relief
available under the laws relating to any claim advanced in the arbitration; (e) that
the Company be solely responsible for all types of costs associated with the
arbitration that the Employee would not have to pay if proceeding in court,
including all arbitrator fees, case-management fees, and other expenses necessary to

25
26
27
28

2
Case No. 17-CV-05847-LHK

ORDER GRANTING DEFENDANT’S MOTION TO COMPEL ARBITRATION AS TO
PLAINTIFF’S INDIVIDUAL BACKGROUND CHECK-RELATED CLAIMS; GRANTING
DEFENDANT’S REQUEST TO STRIKE PLAINTIFF’S BACKGROUND CHECK-RELATED
CLASS CLAIMS; AND STAYING REMAINDER OF ACTION PENDING THE UNITED
STATES SUPREME COURT’S DECISION IN ERNST & YOUNG LLP V. MORRIS

1
2
3
4
5
6
7
8
9

provide the arbitral forum; and (f) to the greatest extent allowed by applicable law,
the Employee has the same appellate rights as the employee would have if the
arbitrated claim had been brought in the state or federal courts located within
California. Except as otherwise noted in this Agreement, this arbitration provision
applies to all claims whatsoever arising in connection with Employee’s employment
with [Defendant], including claims arising under the Age Discrimination in
Employment Act; the Family and Medical Leave Act; the Worker Adjustment and
Retraining Notification Act; Title VII of the Civil Rights Act of 1964, or any other
state or federal anti-discrimination laws; the Americans with Disabilities Act; the
Employee Retirement Income Security Act; the Equal Pay Act of 1963; the
California Fair Employment and Housing Act; the California Business and
Professions Code; the California WARN Act; the California Labor Code; and/or
any other local city, county, state or federal statutes, laws, regulations, or
ordinances.
Agreement § 8.
Also on December 14, 2016, Plaintiff signed a “Consumer Report & Investigative

11
United States District Court
Northern District of California

10

Consumer Report Authorization” (“Authorization”) indicating that Plaintiff authorized Defendant

12

to obtain “‘consumer reports’ and/or ‘investigative consumer reports’ about [Plaintiff] from a

13

‘consumer reporting agency,’” as well as a “criminal background check” and a “motor vehicle

14

report” about Plaintiff. ECF No. 24-2 at 2. The Authorization also purported to authorize

15

Defendant to consider these reports “when making decisions regarding [Plaintiff’s] employment or

16

prospective employment with [Defendant].” Id. However, Plaintiff alleges that Defendant “failed

17

to provide Plaintiff with the necessary disclosures and summary of rights” before procuring or

18

requesting these background check reports. ECF No. 23 ¶ 22.

19

Further, Plaintiff alleges that when she was employed by Defendant, Defendant committed

20

a number of wage and hour violations against Plaintiff and other employees. Specifically,

21

Plaintiff alleges that Defendant (1) “failed to provide her and all other similarly situated

22

individuals with meal periods”; (2) “failed to provide them with rest periods”; (3) “failed to pay

23

premium wages for missed meal and/or rest periods”; (4) “failed to pay them for all hours

24

worked”; (5) “failed to reimburse them for all necessary business expenses”; (6) “failed to provide

25
26
27
28

3
Case No. 17-CV-05847-LHK

ORDER GRANTING DEFENDANT’S MOTION TO COMPEL ARBITRATION AS TO
PLAINTIFF’S INDIVIDUAL BACKGROUND CHECK-RELATED CLAIMS; GRANTING
DEFENDANT’S REQUEST TO STRIKE PLAINTIFF’S BACKGROUND CHECK-RELATED
CLASS CLAIMS; AND STAYING REMAINDER OF ACTION PENDING THE UNITED
STATES SUPREME COURT’S DECISION IN ERNST & YOUNG LLP V. MORRIS

1

them with accurate written wage statements”; and (7) “failed to timely pay them all of their final

2

wages following separation of employment.” Id. ¶ 4.

3

B. Procedural History
Plaintiff filed a class action complaint against Defendant in the Superior Court for the

5

County of Santa Clara on September 6, 2017. See ECF No. 23 Ex. 1 (“Compl.”). Plaintiff’s

6

complaint asserts twelve causes of action against Defendant on behalf of four putative classes and

7

six putative sub-classes. See id. Plaintiff’s first four causes of action are related to the

8

background checks that Defendant allegedly conducts on “prospective, current and former

9

employees.” Id. ¶ 2. Specifically, Plaintiff’s first four causes of action are for: (1) “failure to

10

make proper disclosure” in violation of the Fair Credit Reporting Act (“FCRA”), 15 U.S.C. §

11
United States District Court
Northern District of California

4

1681b(b)(2)(A), id. at 10; (2) “failure to give proper summery of rights” in violation of FCRA, 15

12

U.S.C. §§ 1681d(a)(1) & 1681g(c), id. at 14; (3) “failure to make proper disclosure” in violation of

13

the California Investigative Consumer Reporting Agencies Act (“ICRAA”), Cal. Civ. Code § 1786

14

et seq., id. at 17; and (4) “failure to make proper disclosure” in violation of the California

15

Consumer Credit Reporting Agencies Act (“CCRAA”), Cal. Civ. Code § 1785 et seq. Id. at 20.

16

Plaintiff’s eight remaining causes of action are related to various alleged wage and hour

17

violations committed by Defendant. Specifically, Plaintiff’s eight remaining causes of action are

18

for: (1) “failure to provide meal periods” in violation of California Labor Code §§ 204, 223, 226.7,

19

512, and 1198, id. at 22; (2) “failure to provide rest periods” in violation of California Labor Code

20

§§ 204, 223, 226.7, and 1198, id. at 24; (3) “failure to pay hourly and overtime wages” in violation

21

of California Labor Code §§ 223, 510, 1194, 1197, and 1198, id. at 25; (4) “failure to pay vacation

22

wages” in violation of California Labor Code § 227.3, id. at 29; (5) “failure to indemnify for

23

business expenses” in violation of California Labor Code § 2802(a), id. at 30; (6) “failure to

24

provide accurate written wage statements” in violation of California Labor Code § 226, id.; (7)

25
26
27
28

4
Case No. 17-CV-05847-LHK

ORDER GRANTING DEFENDANT’S MOTION TO COMPEL ARBITRATION AS TO
PLAINTIFF’S INDIVIDUAL BACKGROUND CHECK-RELATED CLAIMS; GRANTING
DEFENDANT’S REQUEST TO STRIKE PLAINTIFF’S BACKGROUND CHECK-RELATED
CLASS CLAIMS; AND STAYING REMAINDER OF ACTION PENDING THE UNITED
STATES SUPREME COURT’S DECISION IN ERNST & YOUNG LLP V. MORRIS

1

“failure to timely pay all final wages” in violation of California Labor Code §§ 201–03, id. at 32;

2

and (8) violation of California’s Unfair Competition Law (“UCL”), Cal. Bus. & Prof. Code §

3

17200 et seq., id. at 33.
Defendant filed an answer to Plaintiff’s complaint in state court on October 10, 2017. See

4
5

ECF No. 23 Ex. 2. The next day, on October 11, 2017, Defendant removed the action to this

6

Court. See ECF No. 1.
On December 21, 2017, Defendant filed the instant motion to compel arbitration. See Mot.

7
8

Plaintiff filed an opposition on February 5, 2018, see ECF No. 24 (“Opp.”), and Defendant filed a

9

reply on February 27, 2018, see ECF No. 27 (“Reply”).

10

United States District Court
Northern District of California

11

II.

LEGAL STANDARD
The Federal Arbitration Act (“FAA”) applies to arbitration agreements in any contract

12

affecting interstate commerce. See Circuit City Stores, Inc. v. Adams, 532 U.S. 105, 119 (2001); 9

13

U.S.C. § 2. Under Section 3 of the FAA, “a party may apply to a federal court for a stay of the

14

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

15

arbitration.’” Rent-A-Center, West, Inc. v. Jackson, 561 U.S. 63 (2010) (quoting 9 U.S.C. § 3). If

16

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

17

the case. See Hopkins & Carley, ALC v. Thomson Elite, 2011 WL 1327359, at *7–8 (N.D. Cal.

18

Apr. 6, 2011).

19

Interpretation of arbitration agreements generally turns on state law. See Arthur Andersen

20

LLP v. Carlisle, 556 U.S. 624, 630–31 (2009). However, the United States Supreme Court has

21

stated that “the first task of a court asked to compel arbitration of a dispute is to determine whether

22

the parties agreed to arbitrate that dispute,” and that “[t]he court is to make this determination by

23

applying the federal substantive law of arbitrability, applicable to any arbitration agreement within

24

the coverage of the Act.” Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S.

25
26
27
28

5
Case No. 17-CV-05847-LHK

ORDER GRANTING DEFENDANT’S MOTION TO COMPEL ARBITRATION AS TO
PLAINTIFF’S INDIVIDUAL BACKGROUND CHECK-RELATED CLAIMS; GRANTING
DEFENDANT’S REQUEST TO STRIKE PLAINTIFF’S BACKGROUND CHECK-RELATED
CLASS CLAIMS; AND STAYING REMAINDER OF ACTION PENDING THE UNITED
STATES SUPREME COURT’S DECISION IN ERNST & YOUNG LLP V. MORRIS

1

614, 626 (1985). In the Ninth Circuit, parties may agree “to have arbitrability governed by

2

nonfederal arbitrability law,” but this requires “clear and unmistakable evidence” of the parties’

3

intent to do so. Cape Flattery Ltd. v. Titan Maritime, 647 F.3d 914, 921 (9th Cir. 2011) (“Courts

4

should apply federal arbitrability law absent ‘clear and unmistakable evidence’ that the parties

5

agreed to apply non-federal arbitrability law.”); see also Brennan v. Opus Bank, 796 F.3d 1125,

6

1129 (9th Cir. 2015) (“For any arbitration agreement within the coverage of the FAA, the court is

7

to make the arbitrability determination by applying the federal substantive law of arbitrability,

8

absent clear and unmistakable evidence that the parties agreed to apply non-federal arbitrability

9

law.” (citations and brackets omitted)).

10

In deciding whether a dispute is arbitrable under federal law, a court must answer two

United States District Court
Northern District of California

11

questions: (1) whether the parties agreed to arbitrate; and, if so, (2) whether the scope of that

12

agreement to arbitrate encompasses the claims at issue. See id. at 1130; see also Chiron Corp. v.

13

Ortho Diagnostic Sys., Inc., 207 F.3d 1126, 1130 (9th Cir. 2000). If the party seeking to compel

14

arbitration establishes both factors, the court must compel arbitration. Id. “The standard for

15

demonstrating arbitrability is not a high one; in fact, a district court has little discretion to deny an

16

arbitration motion, since the [FAA] is phrased in mandatory terms.” Republic of Nicar. v. Std.

17

Fruit Co., 937 F.2d 469, 475 (9th Cir. 1991).

18

Further, parties can agree to delegate arbitrability—or “gateway” issues concerning the

19

scope and enforceability of the arbitration agreement, and whether the dispute should go to

20

arbitration at all—to the arbitrator. The United States Supreme Court has held that the question of

21

“who has the power to decide arbitrability,” the court or the arbitrator, “turns upon what the parties

22

agreed about that matter.” First Options of Chicago v. Kaplan, 514 U.S. 938, 943 (1995)

23

(emphasis in original). “An agreement to arbitrate a gateway issue is simply an additional,

24

antecedent agreement the party seeking arbitration asks the federal court to enforce, and the FAA

25
26
27
28

6
Case No. 17-CV-05847-LHK

ORDER GRANTING DEFENDANT’S MOTION TO COMPEL ARBITRATION AS TO
PLAINTIFF’S INDIVIDUAL BACKGROUND CHECK-RELATED CLAIMS; GRANTING
DEFENDANT’S REQUEST TO STRIKE PLAINTIFF’S BACKGROUND CHECK-RELATED
CLASS CLAIMS; AND STAYING REMAINDER OF ACTION PENDING THE UNITED
STATES SUPREME COURT’S DECISION IN ERNST & YOUNG LLP V. MORRIS

operates on this additional arbitration agreement just as it does on any other.” Rent –A–Center,

2

561 U.S. at 70. The United States Supreme Court recognizes a heightened standard for an

3

arbitrator to decide arbitrability issues under the federal law of arbitrability. See AT&T Techs. v.

4

Commc’ns Workers, 475 U.S. 643, 649 (1986) (“Unless the parties clearly and unmistakably

5

provide otherwise, the question of whether the parties agreed to arbitrate is to be decided by the

6

court, not the arbitrator.”); Kaplan, 514 U.S. at 944 (“Courts should not assume that the parties

7

agreed to arbitrate arbitrability unless there is ‘clea[r] and unmistakabl[e]’ evidence that they did

8

so.”). Thus, an arbitrator should decide arbitrability issues only in cases where the parties “clearly

9

and unmistakably intend to delegate the power to decide arbitrability to an arbitrator.” Qualcomm

10

Inc. v. Nokia Corp., 466 F.3d 1366, 1371 (Fed. Cir. 2006) (applying Ninth Circuit law). In other

11
United States District Court
Northern District of California

1

words, under the federal law of arbitrability, “whether the court or the arbitrator decides

12

arbitrability is an issue for judicial determination unless the parties clearly and unmistakably

13

provide otherwise.” Oracle Am., Inc. v. Myriad Group A.G., 724 F.3d 1069, 1072 (9th Cir. 2013)

14

(internal quotation marks omitted).

15

III.

16

DISCUSSION
In her opposition to Defendant’s motion to compel arbitration, Plaintiff argues that her

17

individual and class background check-related claims—the first four causes of action listed in her

18

complaint—should not be compelled to arbitration because “the arbitration provision by its terms

19

does not apply to” those claims. Opp. at 5. Further, although Plaintiff does not dispute that the

20

arbitration provision applies to her wage and hour claims (the remaining eight causes of action in

21

her complaint), Plaintiff argues that “any arbitration of the wage and hour claims must be on a

22

classwide basis.” Opp. at 2. The Court addresses each argument in turn.

23
24

A. Background Check-Related Claims
As discussed above, Plaintiff’s first four causes of action assert that Defendant violated

25
26
27
28

7
Case No. 17-CV-05847-LHK

ORDER GRANTING DEFENDANT’S MOTION TO COMPEL ARBITRATION AS TO
PLAINTIFF’S INDIVIDUAL BACKGROUND CHECK-RELATED CLAIMS; GRANTING
DEFENDANT’S REQUEST TO STRIKE PLAINTIFF’S BACKGROUND CHECK-RELATED
CLASS CLAIMS; AND STAYING REMAINDER OF ACTION PENDING THE UNITED
STATES SUPREME COURT’S DECISION IN ERNST & YOUNG LLP V. MORRIS

1

FCRA, ICRAA, and CCRAA by requesting or procuring investigative consumer reports and

2

consumer credit reports on Plaintiff and other employees without providing proper disclosures and

3

summaries of rights. See Compl. at 10–21. Plaintiff argues that “the motion to compel arbitration

4

of” these background check-related claims “must be denied” because “there was never any

5

agreement [between Plaintiff and Defendant] to arbitrate” these claims. Opp. at 6–7. Specifically,

6

Plaintiff argues that the arbitration provision does not cover Plaintiff’s background check-related

7

claims because (1) Defendant’s alleged violations of FCRA, ICRAA, and CCRAA against

8

Plaintiff “occurred before [the] arbitration agreement was in effect”; and (2) there is no indication

9

that the arbitration provision in the Agreement between Plaintiff and Defendant applies
retroactively to disputes arising out of events that occurred before Plaintiff entered into the

11
United States District Court
Northern District of California

10

Agreement. Id.

12

However, Plaintiff premises her contention that Defendant’s alleged violations of FCRA,

13

ICRAA, and CCRAA against Plaintiff “occurred before [the] arbitration agreement was in effect”

14

on her assertion that Plaintiff signed the Agreement on December 27, 2016. Id. at 6. That

15

assertion is belied by the record. Specifically, although one of Defendant’s declarants, “District

16

Manager” Johni Jennings, stated that he “witnessed [Plaintiff] initial and sign” the Agreement

17

“[o]n or about December 27, 2016,” ECF No. 13-1 at 2 (emphasis added), the copy of the

18

Agreement submitted into the record plainly indicates that Plaintiff denoted on the Agreement that

19

the date on which Plaintiff signed the Agreement was December 14, 2016. Specifically, the

20

opening paragraph of the Agreement contains several name and date blanks, and states that “This

21

At-Will Employment Agreement (hereinafter ‘Agreement’), entered into and effective on this __

22

day of ________, 20__, is made by and between [Defendant] and ____________________

23

(hereinafter, ‘Employee’).” In the Agreement, these blanks are completed in handwriting and

24

denote that the Agreement was between Defendant and “Deanna Hernandez” and was entered into

25
26
27
28

8
Case No. 17-CV-05847-LHK

ORDER GRANTING DEFENDANT’S MOTION TO COMPEL ARBITRATION AS TO
PLAINTIFF’S INDIVIDUAL BACKGROUND CHECK-RELATED CLAIMS; GRANTING
DEFENDANT’S REQUEST TO STRIKE PLAINTIFF’S BACKGROUND CHECK-RELATED
CLASS CLAIMS; AND STAYING REMAINDER OF ACTION PENDING THE UNITED
STATES SUPREME COURT’S DECISION IN ERNST & YOUNG LLP V. MORRIS

1

on day “14” of “December,” “2016.” Agreement at 1. Further, the last page of the Agreement

2

contains a blank for an employee’s signature and a corresponding blank for that signature’s date.

3

Those blanks are also completed in handwriting, and denote that Plaintiff signed the Agreement on

4

“12/14/16.” Id. at 6.

5

Thus, the Agreement contradicts Plaintiff’s assertion that Plaintiff signed the Agreement
on December 27, 2016, and instead indicates that Plaintiff signed the Agreement on December 14,

7

2016—the same day on which Plaintiff signed a document authorizing Defendant to obtain

8

consumer credit reports and investigative consumer reports about Plaintiff. See ECF No. 24-2 at

9

2. Further, Plaintiff’s complaint does not allege that Defendant procured or requested any of these

10

reports on Plaintiff before Plaintiff authorized Defendant to do so. Therefore, Defendant’s alleged

11
United States District Court
Northern District of California

6

violations of FCRA, ICRAA, and CCRAA did not occur before December 14, 2016—the date on

12

which the Agreement (and thus the arbitration provision) came into effect. As a result, Plaintiff’s

13

background check-related claims are covered by the arbitration provision and therefore must be

14

compelled to arbitration.

15

Plaintiff asserts no other grounds for opposing Defendant’s request to compel all of

16

Plaintiff’s individual background check-related claims to arbitration. Additionally, Plaintiff

17

asserts no other grounds for opposing Defendant’s request to strike Plaintiff’s background check-

18

related class claims. Thus, the Court GRANTS Defendant’s motion to compel arbitration of

19

Plaintiff’s individual background check-related claims, and GRANTS Defendant’s request to

20

strike Plaintiff’s background check-related class claims.

21
22

B. Wage and Hour Claims
As discussed above, as to Plaintiff’s remaining eight causes of action, which are all wage

23

and hour claims under California law, Plaintiff concedes that the arbitration provision in the

24

Agreement between Plainitff and Defendant “applies by its terms to” those claims. Opp. at 6.

25
26
27
28

9
Case No. 17-CV-05847-LHK

ORDER GRANTING DEFENDANT’S MOTION TO COMPEL ARBITRATION AS TO
PLAINTIFF’S INDIVIDUAL BACKGROUND CHECK-RELATED CLAIMS; GRANTING
DEFENDANT’S REQUEST TO STRIKE PLAINTIFF’S BACKGROUND CHECK-RELATED
CLASS CLAIMS; AND STAYING REMAINDER OF ACTION PENDING THE UNITED
STATES SUPREME COURT’S DECISION IN ERNST & YOUNG LLP V. MORRIS

1

However, Plaintiff argues that “any arbitration” of her wage and hour claims “must be on a

2

classwide basis.” Opp. at 2. Plaintiff’s argument proceeds in three parts. First, Plaintiff asserts

3

that an arbitrator, and not this Court, should decide whether class arbitration is permitted for

4

Plaintiff’s wage and hour claims. Opp. at 4–5. Second, Plaintiff argues that in any event, the

5

arbitration provision in the instant case “by its terms affirmatively permits class arbitration” of

6

Plaintiff’s wage and hour claims. Id. at 2–3. Third, Plaintiff asserts that if the arbitration

7

provision “is not interpreted as permitting class arbitration” of the wage and hour claims, then the

8

arbitration provision is unenforceable under the National Labor Relations Act (“NLRA”), as made

9

clear by the Ninth Circuit’s decision in Morris v. Ernst & Young, 834 F.3d 975 (9th Cir. 2016).

10

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

Id. at 3–4. The Court addresses each part of Plaintiff’s argument in turn.
1. Whether the Arbitrator or the Court Should Decide the Arbitrability of Plaintiff’s
Class Wage and Hour Claims
Plaintiff argues that because the choice-of-law provision of the Agreement “specifically
provides that [the Agreement] is governed by California law,” the Court should apply California
law to determine whether the Agreement delegated all arbitrability issues—including whether
Plaintiff’s class wage and hour claims are arbitrable—to the arbitrator. Opp. at 4. Further,
Plaintiff asserts that pursuant to a recent California Supreme Court decision, Sandquist v. Lebo
Automotive Inc., 1 Cal. 5th 233 (2016), under California law the arbitration provision in the instant
case “must be construed as delegating the issue of class arbitra[bility] to the arbitrator.” Id.
Contrary to Plaintiff’s position, the Court finds that it must apply the federal law of
arbitrability, and not California law, to determine all arbitrability issues in the instant case. As
discussed above, under Ninth Circuit precedent, “[c]ourts should apply federal arbitrability law
absent ‘clear and unmistakable evidence’ that the parties agreed to apply non-federal arbitrability
law.” Cape Flattery, 647 F.3d at 921. In the instant case, the Agreement’s choice-of-law
provision does not clearly and unmistakably show that California arbitrability law should apply
10
Case No. 17-CV-05847-LHK

ORDER GRANTING DEFENDANT’S MOTION TO COMPEL ARBITRATION AS TO
PLAINTIFF’S INDIVIDUAL BACKGROUND CHECK-RELATED CLAIMS; GRANTING
DEFENDANT’S REQUEST TO STRIKE PLAINTIFF’S BACKGROUND CHECK-RELATED
CLASS CLAIMS; AND STAYING REMAINDER OF ACTION PENDING THE UNITED
STATES SUPREME COURT’S DECISION IN ERNST & YOUNG LLP V. MORRIS

1

because it states only that “[t]his Agreement shall be governed by the laws of the State of

2

California, without regard to that state’s conflict-of-laws rules.” Agreement § 8. In Cape

3

Flattery, the Ninth Circuit held that similar language—a provision that “[a]ny dispute arising

4

under this Agreement shall be settled by arbitration . . . in accordance with the English Arbitration

5

Act 1996”—was “ambiguous concerning whether English law also applies to determine whether a

6

given dispute is arbitrable in the first place.” 647 F.3d at 921. By the same token, the choice-of-

7

law provision in the instant case is also “ambiguous” because it does not expressly designate the

8

law that governs arbitrability, and thus federal arbitrability law applies by default. See also JDA

9

Software, Inc. v. Sabert Holding Corp., 2017 WL 1398561, at *4 (D. Ariz. Apr. 19, 2017) (finding
that a choice-of-law provision stating that “this Agreement will be governed by the internal laws

11
United States District Court
Northern District of California

10

of the state of Arizona, without reference to its choice of law rules” did not constitute “clear and

12

unmistakable evidence that the parties agreed to apply non-federal arbitrability law”). As a result,

13

the California Supreme Court’s decision in Sandquist is irrelevant to this Court’s determination of

14

arbitrability issues. Instead, the Court must apply federal law to determine all arbitrability issues

15

in the instant case—including the threshold issue of whether arbitrability issues are themselves

16

arbitrable (that is, whether the Agreement delegates all arbitrability issues—including the question

17

of whether Plaintiff’s class wage and hour claims are arbitrable—to an arbitrator).

18

As discussed above, under the federal law of arbitrability, “whether the court or the

19

arbitrator decides arbitrability is an issue for judicial determination unless the parties clearly and

20

unmistakably provide otherwise.” Oracle, 724 F.3d at 1072 (internal quotation marks omitted).

21

“Clear and unmistakable evidence of an agreement to arbitrate arbitrability ‘might include . . . a

22

course of conduct demonstrating assent . . . or . . . an express agreement to do so.’” Mohamed v.

23

Uber Techs., Inc., 848 F.3d 1201, 1208 (9th Cir. 2016) (quoting Momot v. Mastro, 652 F.3d 982,

24

988 (9th Cir. 2011)). Further, the Ninth Circuit has held “that incorporation of the AAA rules

25
26
27
28

11
Case No. 17-CV-05847-LHK

ORDER GRANTING DEFENDANT’S MOTION TO COMPEL ARBITRATION AS TO
PLAINTIFF’S INDIVIDUAL BACKGROUND CHECK-RELATED CLAIMS; GRANTING
DEFENDANT’S REQUEST TO STRIKE PLAINTIFF’S BACKGROUND CHECK-RELATED
CLASS CLAIMS; AND STAYING REMAINDER OF ACTION PENDING THE UNITED
STATES SUPREME COURT’S DECISION IN ERNST & YOUNG LLP V. MORRIS

1

constitutes clear and unmistakable evidence that contracting parties agreed to arbitrate

2

arbitrability.” Brennan, 796 F.3d at 1130.

3

Applying the federal law of arbitrability to the instant case, the Court finds that there is no

4

clear and unmistakable indication that the parties agreed to delegate any arbitrability issues—

5

including the determination of the arbitrability of Plaintiff’s class wage and hour claims—to an

6

arbitrator. The Agreement contains neither an “express agreement” to arbitrate arbitrability nor

7

any mention of the AAA rules. Mohamed, 848 F.3d at 1208; Brennan, 796 F.3d at 1130. Further,

8

neither party points to any “course of conduct demonstrating assent” to delegate any arbitrability

9

issues to an arbitrator. Mohamed, 848 F.3d at 1208. Finally, although Plaintiff points to the broad
language of the arbitration provision stating that “[a]ny dispute that arises out of or relates to

11
United States District Court
Northern District of California

10

Employee’s employment by [Defendant]” must be arbitrated, Agreement § 8, there is no “specific

12

language” anywhere in the Agreement “delegating any threshold question of arbitrability to the

13

arbitrator.” Armenta v. Staffworks, LLC, 2017 WL 3118778, at *4 (S.D. Cal. July 21, 2017)

14

(internal quotation marks omitted).

15

Accordingly, because the Court determines that the Agreement in the instant case fails to

16

provide clear and unmistakable proof that the parties agreed to delegate arbitrability, the Court

17

concludes that it, and not an arbitrator, must decide whether Plaintiff’s class wage and hour claims

18

are arbitrable.

19
20
21
22
23
24
25
26
27
28

2. Whether the Agreement Permits Class Arbitration of Plaintiff’s Wage and Hour
Claims
Plaintiff argues that if the Court must decide whether Plaintiff’s class wage and hour
claims are arbitrable, the Court “should order that the arbitration [of Plaintiff’s wage and hour
claims] should be on a class wide basis” because “the arbitration provision by its terms
affirmatively permits class arbitration.” Opp. at 2. As discussed above, because there is no “‘clear
and unmistakable evidence’ that the parties agreed to apply non-federal arbitrability law,” Cape
12
Case No. 17-CV-05847-LHK

ORDER GRANTING DEFENDANT’S MOTION TO COMPEL ARBITRATION AS TO
PLAINTIFF’S INDIVIDUAL BACKGROUND CHECK-RELATED CLAIMS; GRANTING
DEFENDANT’S REQUEST TO STRIKE PLAINTIFF’S BACKGROUND CHECK-RELATED
CLASS CLAIMS; AND STAYING REMAINDER OF ACTION PENDING THE UNITED
STATES SUPREME COURT’S DECISION IN ERNST & YOUNG LLP V. MORRIS

1

Flattery, 647 F.3d at 921, the Court must apply federal arbitrability law in order to determine

2

whether the Agreement at issue permits class arbitration of Plaintiff’s wage and hour claims.

3

The United States Supreme Court has held that “a party may not be compelled under the

4

FAA to submit to class arbitration unless there is a contractual basis for concluding that the party

5

agreed to do so.” Stolt-Nielsen S.A. v. AnimalFeeds Int’l Corp., 559 U.S. 662, 684 (2010). Thus,

6

the United States Supreme Court concluded that parties “cannot be compelled to submit their

7

dispute to class arbitration” when the arbitration agreement between the parties is “silent” on the

8

issue of class arbitration. Id. at 687. However, the Stolt-Nielsen Court explained that it used the

9

term “‘silent’ in the sense that [the parties] had not reached any agreement on the issue of class
arbitration,” and “not simply” in the sense that the arbitration agreement at issue “made no express

11
United States District Court
Northern District of California

10

reference to class arbitration.” Id. at 668–69, 673. Thus, the “failure to mention class arbitration

12

in the arbitration clause itself does not necessarily equate with the ‘silence’ discussed in Stolt-

13

Nielsen.” Vazquez v. ServiceMaster Global Holding, Inc., 2011 WL 2565574, at *3 n.1 (N.D. Cal.

14

June 29, 2011). In any event, the United States Supreme Court cautioned in Stolt-Nielsen that

15

“[a]n implicit agreement to authorize class-action arbitration . . . is not a term that the arbitrator

16

may infer solely from the fact of the parties’ agreement to arbitrate.” 559 U.S. at 685.

17

In the instant case, the Court disagrees with Plaintiff’s view that the arbitration provision at

18

issue “affirmatively permits class arbitration.” Opp. at 2. Instead, the Court finds that there is no

19

“contractual basis” for concluding that the parties agreed to permit class arbitration because there

20

is no indication that the parties “reached any agreement on the issue of class arbitration.” Stolt-

21

Nielsen, 559 U.S. at 673, 684. Neither party has submitted any evidence extrinsic to the terms of

22

the Agreement indicating that the parties “expected or intended class arbitration to be authorized.”

23

Armenta, 2017 WL 3118778 at *5. Further, there is no indication from the contractual language

24

that the parties reached any sort of agreement on class arbitrability. Indeed, in addition to not

25
26
27
28

13
Case No. 17-CV-05847-LHK

ORDER GRANTING DEFENDANT’S MOTION TO COMPEL ARBITRATION AS TO
PLAINTIFF’S INDIVIDUAL BACKGROUND CHECK-RELATED CLAIMS; GRANTING
DEFENDANT’S REQUEST TO STRIKE PLAINTIFF’S BACKGROUND CHECK-RELATED
CLASS CLAIMS; AND STAYING REMAINDER OF ACTION PENDING THE UNITED
STATES SUPREME COURT’S DECISION IN ERNST & YOUNG LLP V. MORRIS

1

mentioning class proceedings, the terms of the arbitration provision focus exclusively on only two

2

parties, “Employee” (Plaintiff) and “Company” (Defendant). Specifically, the arbitration

3

provision compels to arbitration “[a]ny dispute that arises out of or relates to Employee’s

4

employment by Company.” Agreement § 8. Such language “suggests a presumption of individual

5

arbitration.” Armenta, 2017 WL 3118778 at *5 (“If anything, the language in the Agreement

6

suggests a presumption of individual arbitration. It identifies that ‘any dispute or controversy

7

which would otherwise require or allow or resort to any court or other governmental dispute

8

resolution, between myself and STAFFWORKS . . . shall be submitted to and determined by

9

binding arbitration.’”). Plaintiff argues that the terms of the arbitration provision “affirmatively
permit[] class arbitration” because the arbitration provision states that there will be “no limitation

11
United States District Court
Northern District of California

10

on the type of relief available under the laws relating to any claim in the arbitration,” and “any

12

limitation to individual rather than class relief” would amount to a forbidden “limitation on the

13

type of relief available.” Opp. at 2 (quoting Agreement § 8). However, a class action is not itself

14

a type of “relief.” Instead, “[a] class action is a procedural device, not a claim for relief.” Clerkin

15

v. MyLife.Com, 2011 WL 3809912, at *3 (N.D. Cal. Aug. 29, 2011) (citing Deposit Guaranty

16

Nat’l Bank v. Roper, 445 U.S. 326, 331 (1980)).

17

For the foregoing reason, the Court finds that class arbitration of Plaintiff’s wage and hour

18

claims is not permitted by the arbitration provision in the Agreement because there is no

19

contractual basis for concluding that the parties agreed to authorize it.

20

3. Whether the Arbitration Provision is Unenforceable Under the NLRA

21

Finally, Plaintiff argues that if the arbitration provision does not permit class arbitration of

22

Plaintiff’s wage and hour claims, then it is unenforceable under the NLRA, as made clear by the

23

Ninth Circuit’s recent decision in Morris. Opp. at 3–4. The Court first discusses Morris and the

24

legal framework for when the NLRA renders an arbitration agreement unenforceable. Then, the

25
26
27
28

14
Case No. 17-CV-05847-LHK

ORDER GRANTING DEFENDANT’S MOTION TO COMPEL ARBITRATION AS TO
PLAINTIFF’S INDIVIDUAL BACKGROUND CHECK-RELATED CLAIMS; GRANTING
DEFENDANT’S REQUEST TO STRIKE PLAINTIFF’S BACKGROUND CHECK-RELATED
CLASS CLAIMS; AND STAYING REMAINDER OF ACTION PENDING THE UNITED
STATES SUPREME COURT’S DECISION IN ERNST & YOUNG LLP V. MORRIS

1

Court addresses whether the NLRA causes the arbitration provision in the instant case to be

2

unenforceable to the extent it applies to Plaintiff’s wage and hour claims. Finally, the Court

3

discusses whether a stay of the wage and hour portion of Plaintiff’s action pending the United

4

States Supreme Court’s resolution of Morris is appropriate.

5
6

a. Legal Framework
Section 7 of the NLRA, 29 U.S.C. 151 et seq., provides employees the right “to engage in .
. . concerted activities for the purpose of . . . mutual aid or protection,” D.R. Horton, 357 NLRB

8

No. 184 (2012), which includes the right to “seek to improve working conditions through resort to

9

administrative and judicial forums,” Eastex, Inc. v. NLRB, 437 U.S. 556, 566 (1978). In Morris,

10

the Ninth Circuit held that the right to engage in concerted activity “is the essential, substantive

11
United States District Court
Northern District of California

7

right established by the NLRA.” 834 F.3d at 980. As a result, the Morris court held that an

12

arbitration agreement that requires an employee to “pursue work-related claims individually and,

13

no matter the outcome, [to be] bound by the result . . . is the ‘very antithesis’ of § 7’s substantive

14

right to pursue concerted work-related legal claims.” Id. at 983–85 (citing Lewis v. Epic Sys.

15

Corp., 823 F.3d 1147, 1155 (7th Cir. 2016)). The Morris court specifically addressed a

16

“concerted action waiver”—a waiver of the right to bring concerted legal claims, i.e., collective or

17

class action claims, in any forum—in an arbitration agreement, and held that such concerted action

18

waivers are unenforceable because they violate the right to engage in concerted activity under the

19

NLRA. Id. The Morris court held that a provision in an arbitration agreement is an unenforceable

20

concerted action waiver where the terms of the provision (1) “require[] that employees only use

21

arbitration” to pursue work-related claims against their employer; and (2) “prevent[ ] concerted

22

activity by employees in [those] arbitration proceedings.” Id. at 983–84; see also Coppernoll v.

23

Hamcor, Inc., 2017 WL 446315, at *1 (N.D. Cal. Jan. 17, 2017) (“Because all legal claims had to

24

be arbitrated and arbitration could only be conducted individually, this was an unenforceable

25
26
27
28

15
Case No. 17-CV-05847-LHK

ORDER GRANTING DEFENDANT’S MOTION TO COMPEL ARBITRATION AS TO
PLAINTIFF’S INDIVIDUAL BACKGROUND CHECK-RELATED CLAIMS; GRANTING
DEFENDANT’S REQUEST TO STRIKE PLAINTIFF’S BACKGROUND CHECK-RELATED
CLASS CLAIMS; AND STAYING REMAINDER OF ACTION PENDING THE UNITED
STATES SUPREME COURT’S DECISION IN ERNST & YOUNG LLP V. MORRIS

1
2

concerted action waiver.”).
Morris recognized that an arbitration agreement that precludes the ability to bring
“concerted legal actions” may still be enforceable where an employer provides a “meaningful

4

opportunity” to opt out of the arbitration agreement or its concerted action waiver. Morris, 834

5

F.3d at 982 n.4 (citing Johnmohammadi v. Bloomingdale’s, Inc., 755 F.3d 1072, 1076 (9th Cir.

6

2014)); see also Echevarria v. Aerotek, Inc., 2017 WL 24877, at *2 (N.D. Cal. Jan. 3, 2017)

7

(“‘[A]n employer does not provide employees a meaningful opportunity to opt out of an

8

arbitration agreement when it fails to provide any opt-out procedures and does not otherwise

9

explain to employees that they may opt out.’”) (quoting Gonzalez v. Ceva Logistics U.S., Inc.,

10

2016 WL 6427866, at *5 (N.D. Cal. Oct. 31, 2016)). However, neither party has presented any

11
United States District Court
Northern District of California

3

evidence here that Plaintiff was provided an opportunity to opt out of the arbitration provision.

12

Nor does the arbitration provision itself contain a procedure for opting out. Accordingly, this

13

exception to the unenforceability of concerted action waivers does not apply to the instant case.

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

b. Whether the NLRA Causes the Arbitration Provision in the Instant Case to be
Unenforceable
Under Morris, the arbitration provision in the instant case, as applied to Plaintiff’s wage
and hour claims, amounts to a violation of the NLRA and is therefore unenforceable. Specifically,
as discussed above, the Morris court held that an arbitration provision constitutes an
unenforceable concerted action waiver if it (1) “require[s] that employees only use arbitration” to
pursue work-related claims against their employer; and (2) “prevents concerted activity by
employees in [those] arbitration proceedings.” Id. at 983–84. The arbitration provision in the
instant case satisfies both of these criteria. First, the arbitration provision compels “[a]ny dispute
that arises out of or relates to Employee’s employment with Company”—which clearly
encapsulates Plaintiff’s wage and hour claims—to arbitration. Agreement § 8. Second, as
explained above, the arbitration provision does not permit arbitration of Plaintiff’s class wage and
16
Case No. 17-CV-05847-LHK

ORDER GRANTING DEFENDANT’S MOTION TO COMPEL ARBITRATION AS TO
PLAINTIFF’S INDIVIDUAL BACKGROUND CHECK-RELATED CLAIMS; GRANTING
DEFENDANT’S REQUEST TO STRIKE PLAINTIFF’S BACKGROUND CHECK-RELATED
CLASS CLAIMS; AND STAYING REMAINDER OF ACTION PENDING THE UNITED
STATES SUPREME COURT’S DECISION IN ERNST & YOUNG LLP V. MORRIS

1
2

hour claims against Defendant.
Defendant’s only response to Plaintiff’s Morris argument is that while Morris concerned

3

an explicit class action waiver provision, “the agreement at issue [in the instant case] does not

4

contain an explicit class action waiver provision and thus is plainly distinguishable from Morris.”

5

Reply at 3. However, this is a distinction without a difference. Because Defendant “is seeking to

6

not only compel arbitration,” but also to dismiss Plaintiff’s class wage and hour claims,

7

“Defendant is seeking to obtain the same result that was forbidden in Morris—an order (1)

8

limiting Plaintiff[’s wage and hour claims] to arbitration[;] and (2) precluding her from engaging

9

in concerted activity in arbitration.” Armenta, 2017 WL 3118778, at *5–*6 (rejecting an identical
attempt to distinguish Morris and stating that “the Court is unpersuaded by Defendant’s initial

11
United States District Court
Northern District of California

10

argument that the outcome in this case should be different than Morris simply because the

12

Agreement does not contain an express concerted action waiver”).

13

Accordingly, under the currently-binding Ninth Circuit decision in Morris, the arbitration

14

provision in the instant case, as applied to Plaintiff’s wage and hour claims, violates the NLRA

15

and is therefore unenforceable.

16
17
18
19
20
21
22
23
24

c. Whether a Stay Pending the United States Supreme Court’s Decision in Ernst
& Young, LLP v. Morris is Appropriate
Although the arbitration provision is unenforceable under Morris, the United States
Supreme Court granted certiorari in Morris on January 13, 2017. See Ernst & Young, LLP v.
Morris, 137 S. Ct. 809 (2017) (“Petition for writ of certiorari to the United States Court of
Appeals for the Ninth Circuit granted.”). The question before the United States Supreme Court is
“[w]hether an agreement that requires an employer and an employee to resolve employmentrelated disputes through individual arbitration, and waive class and collective proceedings, is
enforceable under the Federal Arbitration Act, notwithstanding the provisions of the National

25
26
27
28

17
Case No. 17-CV-05847-LHK

ORDER GRANTING DEFENDANT’S MOTION TO COMPEL ARBITRATION AS TO
PLAINTIFF’S INDIVIDUAL BACKGROUND CHECK-RELATED CLAIMS; GRANTING
DEFENDANT’S REQUEST TO STRIKE PLAINTIFF’S BACKGROUND CHECK-RELATED
CLASS CLAIMS; AND STAYING REMAINDER OF ACTION PENDING THE UNITED
STATES SUPREME COURT’S DECISION IN ERNST & YOUNG LLP V. MORRIS

1

Labor Relations Act.” See Ernst & Young, LLP v. Morris, U.S. Sup. Ct. Case No. 16-300.1 The

2

United States Supreme Court heard oral argument in Morris on October 2, 2017. Thus, “a

3

decision [is] likely to be issued soon,” and that decision may reverse the Ninth Circuit’s holding in

4

Morris. Hughes v. S.A.W. Entertainment, LTD, 2017 WL 6450485, at *2 (N.D. Cal. Dec. 18,

5

2017).

6

Because the United States Supreme Court’s ruling in Morris is imminent and may reverse

7

the Ninth Circuit’s holding, many courts have granted stays pending the Supreme Court’s Morris

8

ruling. See Hughes, 2017 WL 6450485 at *10; Bui v. Northrop Grumman Sys. Corp., 2017 WL

9

5256739, at *3 (S.D. Cal. Nov. 9, 2017) (staying employment class action where motion to
compel arbitration was pending until after the Supreme Court issues a ruling in Morris); Conde v.

11
United States District Court
Northern District of California

10

Open Door Mktg., LLC, 2017 WL 5172271, at *8 (N.D. Cal. Nov. 8, 2017) (same); Robledo v.

12

Randstad US, L.P., 2017 WL 4934205, at *6 (N.D. Cal. Nov. 1, 2017) (same); Bankwitz v.

13

Ecolab, Inc., 2017 WL 4642284, at *6 (N.D. Cal. Oct. 17, 2017) (same).
This Court also concludes that a stay of the wage and hour portion of Plaintiff’s action

14
15

pending the United States Supreme Court’s resolution of Morris is appropriate. “A district court

16

has the inherent power to stay its proceedings. This power to stay is incidental to the power

17

inherent in every court to control the disposition of the causes on its docket with economy of time

18

and effort for itself, for counsel, and for litigants.” Gustavson v. Mars, Inc., 2014 WL 6986421, at

19

*2 (N.D. Cal. Dec. 10, 2014) (quoting Fuller v. Amerigas Propane, Inc., 2009 WL 2390358, at *1

20

(N.D. Cal. Aug. 3, 2009)) (internal quotation marks omitted). In considering whether to exercise

21

its discretion to grant a stay, a court should weigh three factors: “[1] the possible damage which

22

may result from the granting of a stay, [2] the hardship or inequity which a party may suffer in

23
24
25
26
27
28

1

The United States Supreme Court granted certiorari in two other cases to address the same
question at issue in Morris, namely, Epic Systems Corp. v. Lewis, U.S. Sup. Ct. Case No. 16-285,
and NLRB v. Murphy Oil USA, Inc., U.S. Sup. Ct. Case No. 16-307.
18
Case No. 17-CV-05847-LHK

ORDER GRANTING DEFENDANT’S MOTION TO COMPEL ARBITRATION AS TO
PLAINTIFF’S INDIVIDUAL BACKGROUND CHECK-RELATED CLAIMS; GRANTING
DEFENDANT’S REQUEST TO STRIKE PLAINTIFF’S BACKGROUND CHECK-RELATED
CLASS CLAIMS; AND STAYING REMAINDER OF ACTION PENDING THE UNITED
STATES SUPREME COURT’S DECISION IN ERNST & YOUNG LLP V. MORRIS

1

being required to go forward, and [3] the orderly course of justice measured in terms of the

2

simplifying or complicating of issues, proof, and questions of law which could be expected to

3

result from a stay.” CMAX, Inc. v. Hall, 300 F.2d 265, 268 (9th Cir. 1962). The Court refers to

4

these factors as the Landis factors because they were drawn from the Supreme Court’s decision in

5

Landis v. North American Co., 299 U.S. 248, 254–55 (1936).
As to the first Landis factor, the Court finds that the “possible damage [to Plaintiff] which

7

may result from the granting of a stay” is negligible. CMAX, 300 F.2d at 268. This case is still at

8

a very early stage, and although in certain circumstances granting a stay “risks a loss of evidence,”

9

“[t]his potential harm is [] directly mitigated [in the instant case] by the short duration of the []

10

stay.” Robledo, 2017 WL 4934205 at *3. Specifically, because Morris “has already been fully

11
United States District Court
Northern District of California

6

briefed” and was argued in the United States Supreme Court on October 2, 2017, and because

12

“[t]he only event that the Parties and the Court are waiting for is the decision itself,” a stay

13

pending the Supreme Court’s ruling in Morris “will likely last no more than a few months while

14

the Supreme Court writes its opinion.” Id.

15

As to the second Landis factor, “the hardship or inequity which [Defendant] may suffer” in

16

the absence of a stay is considerable. CMAX, 300 F.2d at 268. Without a stay, Defendant “would

17

be required to defend a large class action and undergo discovery which could be rendered moot if

18

the Supreme Court reverse the Ninth Circuit.” Robledo, 2017 WL 4934205 at *4.

19

Finally, as to the third Landis factor, staying the wage and hour portion of Plaintiff’s action

20

would promote “the orderly course of justice.” CMAX, 300 F.2d at 268. Under currently-binding

21

Ninth Circuit precedent in Morris, the wage and hour portion of Plaintiff’s action must proceed in

22

this Court because the arbitration provision, as applied to Plaintiff’s wage and hour claims, is

23

unenforceable. However, the United States Supreme Court’s decision in Morris may reverse the

24

Ninth Circuit and hold that the arbitration provision is enforceable, which would then require the

25
26
27
28

19
Case No. 17-CV-05847-LHK

ORDER GRANTING DEFENDANT’S MOTION TO COMPEL ARBITRATION AS TO
PLAINTIFF’S INDIVIDUAL BACKGROUND CHECK-RELATED CLAIMS; GRANTING
DEFENDANT’S REQUEST TO STRIKE PLAINTIFF’S BACKGROUND CHECK-RELATED
CLASS CLAIMS; AND STAYING REMAINDER OF ACTION PENDING THE UNITED
STATES SUPREME COURT’S DECISION IN ERNST & YOUNG LLP V. MORRIS

1

Court to dismiss Plaintiff’s class wage and hour claims and compel Plaintiff’s individual wage and

2

hour claims to arbitration. Thus, a stay would conserve judicial resources that might otherwise be

3

unnecessarily expended litigating issues in this Court. “Ultimately, it would prove to be ‘an

4

extraordinary waste of time and money’ to continue litigating this case ‘only to have to do it all

5

again because the experts, the parties and the Court were proceeding under a legal framework that

6

the Supreme Court determined did not apply.’” Robledo, 2017 WL 4934205 at *5 (quoting

7

Meijer, Inc. v. Abbott Labs., 2009 WL 723882, at *4 (N.D. Cal. Mar. 18, 2009) (alteration

8

adopted)).
Accordingly, because all three Landis factors weigh in favor of stay, the Court concludes

9

that a stay of the wage and hour portion of Plaintiff’s action pending the Supreme Court’s

11
United States District Court
Northern District of California

10

resolution of Morris is warranted.

12

IV.

CONCLUSION

13

For the foregoing reasons, the Court (1) GRANTS Defendant’s motion to compel

14

arbitration of Plaintiff’s individual background check-related claims; (2) GRANTS Defendant’s

15

request to strike Plaintiff’s background check-related class claims; and (3) STAYS the remainder

16

of Plaintiff’s action pending the United States Supreme Court’s resolution of Ernst & Young LLP

17

v. Morris. Within seven days of the United States Supreme Court’s decision, the parties shall, by

18

a joint filing, inform this Court of the decision and advise this Court as to how the parties wish to

19

proceed. The Clerk shall administratively close the file. This is a purely internal procedure that

20

does not affect the rights of the parties.

21

IT IS SO ORDERED.

22

Dated: April 2, 2018
______________________________________
LUCY H. KOH
United States District Judge

23
24
25
26
27
28

20
Case No. 17-CV-05847-LHK

ORDER GRANTING DEFENDANT’S MOTION TO COMPEL ARBITRATION AS TO
PLAINTIFF’S INDIVIDUAL BACKGROUND CHECK-RELATED CLAIMS; GRANTING
DEFENDANT’S REQUEST TO STRIKE PLAINTIFF’S BACKGROUND CHECK-RELATED
CLASS CLAIMS; AND STAYING REMAINDER OF ACTION PENDING THE UNITED
STATES SUPREME COURT’S DECISION IN ERNST & YOUNG LLP V. MORRIS