Abdel-Latif v. Brookdale Employee Services, LLC, et al

Filing 34

ORDER GRANTING 16 MOTION TO COMPEL ARBRITRATION; DENYING MOTION FOR SANCTIONS. Signed by Judge Beth Labson Freeman on 5/9/2024. (blflc3, COURT STAFF) (Filed on 5/9/2024)

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1 2 3 UNITED STATES DISTRICT COURT 4 NORTHERN DISTRICT OF CALIFORNIA 5 SAN JOSE DIVISION 6 7 NADIA ABDEL-LATIF, Plaintiff, 8 v. 9 10 11 Case No. 23-cv-06372-BLF BROOKDALE EMPLOYEE SERVICES, LLC, et al., ORDER GRANTING MOTION TO COMPEL ARBRITRATION; DENYING MOTION FOR SANCTIONS [Re: ECF No. 16] United States District Court Northern District of California Defendants. 12 13 Plaintiff Nadia Abdel-Latif brings nine employment-related claims against Defendants 14 Brookdale Employee Services, LLC, Brookdale Employee Services - Corporate, LLC, and 15 Brookdale Senior Living Communities, Inc. (“Defendants”). ECF No. 1-2 (“Compl.”). Before the 16 Court is Defendants’ Motion to Compel Arbitration and Dismiss or Stay Proceedings; and Request 17 For Sanctions. ECF No. 16-1 (“Mot.”); ECF No. 25 (“Reply”). Plaintiff opposes. ECF No. 22 18 (“Opp.”). 19 The Court finds the motion appropriate for disposition without oral argument. See Civ. 20 L.R. 7-1(b). For the reasons described below, Defendants’ motion is GRANTED IN PART AND 21 DENIED IN PART. 22 I. BACKGROUND 23 Plaintiff was employed by Defendants from approximately November 29, 2021 to August 24 11, 2023. ECF No. 1-2 (“Compl.”) ¶ 15. On November 29, 2021, Plaintiff signed the Brookdale 25 Dispute Resolution Agreement in connection with her employment. Mot. at 2; ECF No. 16-3, Ex. 26 C (“Agreement”); ECF No. 22-2, Ex. A. The Agreement states, “We both understand and agree 27 that this Agreement is governed by the Federal Arbitration Act (9 U.S.C. §§ 1-16), and that this is 28 a matter involving commerce.” Agreement at 1. The Agreement also contains a provision that 1 states, “Brookdale and I agree that any dispute regarding the interpretation, applicability, or 2 enforceability of this Agreement including, but not limited to, any claim that all or any part of this 3 Agreement is void or voidable will also be resolved by an Arbitrator-and not the court.” Id. 4 (emphasis added). 5 Plaintiff brought this action in state court on October 30, 2023, and Defendants removed to 6 federal court on December 11, 2023. ECF No. 1. Defendants filed the instant motion on February 7 16, 2024. ECF No. 16. United States District Court Northern District of California 8 II. LEGAL STANDARD 9 The Federal Arbitration Act (“FAA”) applies to arbitration agreements affecting interstate 10 commerce. 9 U.S.C. §§ 1 et seq. When it applies, the FAA preempts state law rules that conflict 11 with its provisions, as well as “state-law rules that stand as an obstacle to the accomplishment of 12 the FAA’s objectives.” AT&T Mobility LLC v. Concepcion, 563 U.S. 333, 341-43 (2011). 13 III. DISCUSSION 14 Defendants argue that the Agreement is a valid and enforceable contract, the FAA governs 15 the Agreement, the Agreement covers Plaintiff’s claims, and the delegation provision requires the 16 arbitrator to resolve disputes about the enforceability and applicability of the Agreement. Mot. at 17 5. Defendants also seek sanctions for purported “bad faith conduct” by Plaintiff. Id. at 10. 18 Plaintiff argues that the Agreement is unenforceable because it is procedurally and substantively 19 unconscionable, but does not challenge the delegation provision specifically. Opp. at 2-10. 20 Furthermore, Plaintiff does not dispute that she signed the Agreement, or that it is governed by the 21 FAA. See id. at 6; ECF No. 22-2, Ex. A. Plaintiff also argues that sanctions are unwarranted and 22 brings several evidentiary objections. Opp. at 10-11. 23 24 The Court addresses Plaintiff’s objections, then Defendants’ motion to compel arbitration, then Defendants’ motion for sanctions. 25 A. 26 Plaintiff brings several evidentiary objections to two statements from ECF No. 16-3 Evidentiary Objections 27 (“Withers Decl.”). Opp. at 11. The first statement is, “Associates like Ms. Abdel-Latif are given 28 the opportunity to review all documentation and ask any questions they may have.” Withers Decl. 2 1 at 3:12-13. The second statement is, “During her employment, Ms. Abdel-Latif received a copy of 2 Brookdale’s Dispute Resolution Agreement, which she signed by hand on or about November 29, 3 2021.” Id. at 3:14-16. Plaintiff brings the following objections for both statements: Inadmissible 4 Opinion, Lacks Foundation; Conclusory; Speculative; Hearsay. Opp. at 11. United States District Court Northern District of California 5 Although Defendants have demonstrated Ms. Withers’ personal knowledge of company 6 policies in her role as Senior Human Resources Business Partner, Defendants have made no 7 showing that Ms. Withers has personal knowledge that Ms. Abdel-Latif received a copy of the 8 Agreement. Accordingly, the objection to ¶ 8 is sustained, and the Court does not consider that 9 statement. However, the Court notes that both parties have attached the signed Agreement to their 10 briefs, and do not dispute that Plaintiff signed the Agreement on November 29, 2021. See ECF 11 No. 16-3, Ex. C; ECF No. 22-2, Ex. A. 12 B. 13 The Court next addresses Defendants’ motion to compel arbitration, specifically whether Motion to Compel Arbitration 14 the Agreement is a valid contract, whether the FAA governs the Agreement, whether 15 enforceability and applicability are delegated to the arbitrator, and whether a stay or dismissal is 16 appropriate. 17 18 19 20 1. The Agreement is a Valid Contract Defendants argue that the Agreement is a valid contract. Mot. at 5-6. Plaintiff does not oppose. As an initial matter, the Agreement is authentic. Defendants’ burden of proof that the 21 contract exists and is authentic is slight; attaching “a copy of the purported arbitration agreement 22 bearing [the plaintiff’s] signature” is sufficient. Espejo v. S. California Permanente Med. Grp., 23 246 Cal. App. 4th 1047, 1060 (2016). As both parties have attached a copy of the signed 24 arbitration agreement, ECF No. 16-3, Ex. C, ECF No. 22-2, Ex. A, the Court finds no reason to 25 question the authenticity of the Agreement. 26 The Court next turns to whether the Agreement is a valid contract. Under California law, a 27 valid contract exists when: (1) the parties are capable of contracting; (2) there was mutual consent; 28 (3) the contract had a lawful object; and (4) the contract was supported by sufficient cause or 3 United States District Court Northern District of California 1 consideration. Civ. Code § 1550. 2 Here, the Agreement meets these requirements. First, there is no dispute that all parties 3 were capable of contracting. See Civ. Code § 1556. Second, there is mutual consent. A party’s 4 acceptance of an arbitration agreement (as with any contract) may be express (i.e., signed) or 5 implied in fact. Pinnacle Museum Tower Ass’n v. Pinnacle Market Dev. (US), LLC, 55 Cal. 4th 6 223, 236 (2012) (an “employee’s continued employment constitutes acceptance of an arbitration 7 agreement proposed by the employer”). Plaintiff signaled her acceptance of the Agreement in 8 multiple ways. Plaintiff signed her employment application and initialed the statement regarding 9 arbitration, Withers Decl. ¶ 5, Ex. A, Plaintiff signed her offer letter, id. ¶ 6, Ex. B, and Plaintiff 10 signed the Agreement itself. Id., Ex. C. Third, the Agreement had a lawful objective under 11 California and federal law, “resolving litigation” through binding arbitration. See Stewart v. 12 Preston Pipeline Inc., 134 Cal. App. 4th 1565, 1586 (2005). Fourth, the Agreement was 13 supported by sufficient consideration. Asmus v. Pacific Bell, 23 Cal. 4th 1, 14-15 (2000) (in the 14 context of an arbitration agreement, “there is consideration in the form of continued employee 15 services”). Thus, the Court concludes that the Agreement is a valid contract. 16 2. The FAA Governs the Agreement Defendants argue that the FAA governs the Agreement. Mot. at 4-5. Plaintiff does not 17 18 oppose. The FAA applies to agreements “involving commerce.” 9 U.S.C § 2. The Agreement here 19 20 specifies that it is governed by the “Federal Arbitration Act (9 U.S.C. §§ 1-16), and that this is a 21 matter involving commerce.” Withers Decl., Ex. C at 1. Furthermore, Brookdale operates senior 22 living communities throughout the United States. Id. ¶ 3. Thus, the Agreement plainly involves 23 commerce and is governed by the FAA. CarMax Auto Superstores Cal. Ltd. Liab. Co. v. 24 Hernandez, 94 F. Supp. 3d 1078, 1000-02 (C.D. Cal. 2015) (finding that the FAA applied to an 25 arbitration agreement in part because the employer did business in several states and thus involved 26 interstate commerce). 27 \\ 28 \\ 4 1 2 Defendants argue that according to the Agreement, “any dispute regarding the 3 interpretation, applicability, or enforceability of [the Agreement]” should be decided by the 4 arbitrator. Mot. at 2. Defendant alternatively argues that the Agreement covers all of Plaintiffs’ 5 claims. Id. at 6-7. Plaintiff makes several arguments that the Agreement is not enforceable 6 because it is procedurally and substantively unconscionable, Opp. at 2-10, but does not address the 7 validity of the delegation clause. 8 9 United States District Court Northern District of California 3. The Agreement Delegates Applicability and Enforceability to the Arbitrator Although gateway issues such as enforceability and applicability are generally for the court to decide, they “can be expressly delegated to the arbitrator where the parties clearly and 10 unmistakably provide otherwise.” Brennan, 796 F.3d at 1130. For example, the Supreme Court 11 has “recognized that parties can agree to arbitrate ‘gateway’ questions of ‘arbitrability,’ such as 12 whether the parties have agreed to arbitrate or whether their agreement covers a particular 13 controversy.” Rent-A-Ctr., W., Inc. v. Jackson, 561 U.S. 63, 68-69 (2010). “When the parties’ 14 contract delegates the arbitrability question to an arbitrator, a court may not override the contract.” 15 Henry Schein, Inc. v. Archer & White Sales, Inc., 586 U.S. 63, 68 (2019). “In those circumstances, 16 a court possesses no power to decide the arbitrability issue.” Id. “That is true even if the court 17 thinks that the argument that the arbitration agreement applies to a particular dispute is wholly 18 groundless.” Id. 19 Plaintiff does not dispute that the Agreement covers her claims. Her argument is directed 20 to the enforceability of the Agreement on the basis of unconscionability. The Supreme Court has 21 directly addressed the issue of the effect of a delegation clause on a claim of unconscionability. In 22 Rent-A-Ctr., an employer moved to compel arbitration of a former employee’s discrimination 23 lawsuit. 561 U.S. 63; see also Ross v. Shutterfly Lifetouch, LLC, No. 20-CV-06040-BLF, 2021 24 WL 4776666, at *5 (N.D. Cal. Oct. 13, 2021) (discussing Rent-A-Ctr.). The Supreme Court held 25 that the district court properly granted the motion to compel arbitration based on a delegation 26 provision that gave the arbitrator “exclusive authority to resolve any dispute relating to the . . . 27 enforceability . . . of this Agreement.” Rent-A-Ctr., 561 U.S. at 72. In the Supreme Court’s view, 28 that delegation encompassed the former employee’s claim that the arbitration agreement was 5 1 unconscionable. See id. at 71-72. The Supreme Court stated that absent a challenge to the 2 delegation provision specifically, as distinct from a challenge to the arbitration agreement as a 3 whole, the delegation provision had to be treated as valid. See id. at 72. (“Accordingly, unless [the 4 plaintiff] challenged the delegation provision specifically, we must treat it as valid, . . . leaving any 5 challenge to the validity of the Agreement as a whole for the arbitrator.”). United States District Court Northern District of California 6 Here, the Agreement contains a provision that states, “Brookdale and I agree that any 7 dispute regarding the interpretation, applicability, or enforceability of this Agreement including, 8 but not limited to, any claim that all or any part of this Agreement is void or voidable will also be 9 resolved by an Arbitrator-and not the court.” Withers Decl., Ex. C at 1 (emphasis added). This 10 language clearly and unambiguously delegates all issues of enforceability and applicability to the 11 arbitrator. The Court thus possesses no power to decide issues of enforceability or applicability. 12 Schein, 586 U.S. at 68. 13 The outcome may have differed had Plaintiff specifically attacked the delegation provision 14 itself. However, the delegation clause on its face is a clear and unmistakable delegation of 15 authority to the arbitrator. Here, Plaintiff’s unconscionability arguments focus on the agreement 16 as a whole, Opp. at 2-8, discovery limitations, id. at 8-9, and a confidentiality clause, id. at 9. Like 17 the plaintiff in Rent-A-Ctr., Plaintiff has not challenged the delegation provision specifically, so 18 the Court must treat it as valid. Rent-A-Ctr., 561 U.S. at 72. Thus, any challenges to the 19 Agreement’s enforceability have been delegated to the arbitrator. Accordingly, the Court grants 20 Defendants’ motion to compel arbitration. 21 22 23 24 4. A Stay is Appropriate Pending the Arbitrator’s Decision on Enforceability Defendants argue that the case should be dismissed or stayed pending arbitration. Mot. at 9. Plaintiff does not oppose. Where a dispute is subject to arbitration under the terms of a written agreement, the district 25 court shall “stay the trial of the action until such arbitration has been had in accordance with the 26 terms of the agreement.” 9 U.S.C. § 3. The Ninth Circuit has also held that courts have discretion 27 under § 3 to dismiss claims that are subject to an arbitration agreement when “plaintiffs could not 28 possibly win relief.” Sparling v. Hoffman Const. Co., Inc., 864 F.2d 635, 638 (9th Cir. 1988). 6 If the arbitrator finds that the Agreement is unenforceable or does not apply to all of United States District Court Northern District of California 1 2 Plaintiffs’ claims, the action may be heard by this Court. Given the unresolved issue of 3 enforceability, Defendants have not shown that Plaintiff “could not possibly win relief.” Id. Thus, 4 a stay is appropriate pending the arbitrator’s decision on the Agreement’s enforceability. 5 C. 6 Defendants argue that the Court should sanction Plaintiff for purported “bad faith Motion for Sanctions 7 conduct.” Mot. at 10. Defendants do not provide any evidence of bad faith conduct, but state that 8 “Plaintiff’s filing of the instant lawsuit and ongoing refusal to submit her claims to arbitration – 9 without providing any substantive basis for her refusal – is the very definition of bad-faith and 10 frivolous tactics.” Id. Defendants seek attorneys’ fees associated with filing this motion. Id.; 11 ECF No. 16-2 ¶¶ 3-4. Plaintiff responds that her constitutional right to petition permits her to file 12 this lawsuit. Opp. at 10. Defendants’ motion for sanctions is not well-taken. For starters, Defendants’ sanctions 13 14 motion is procedurally defective. “Any motion for sanctions, regardless of the sources of 15 authority invoked, . . . must be separately filed and the date for hearing must be set in conformance 16 with Civil L.R. 7-2.” Civ. L.R. 7-8. Defendants filed their motion for sanctions with their motion 17 to compel arbitration, which alone is sufficient basis to deny Defendants’ motion. Furthermore, 18 Defendants provide no substantive argument, no legal basis for their claims of bad faith (such as a 19 requirement to meet and confer), and no evidence of bad faith beyond conclusory claims and 20 innuendo. As such, the Court denies Defendants’ motion for sanctions. 21 \\ 22 \\ 23 \\ 24 \\ 25 \\ 26 \\ 27 \\ 28 \\ 7 1 ORDER 2 For the foregoing reasons, IT IS HEREBY ORDERED that: 3 1. Defendants’ motion to compel arbitration is GRANTED. 4 2. Defendants’ motion for sanctions is DENIED. 5 3. This litigation is STAYED pending arbitration. 6 4. The clerk SHALL administratively close the case. 7 5. Arbitration proceedings SHALL be commenced within 60 days of the entry of this 8 order, or the parties SHALL file a status report explaining their failure to do so. 9 10 11 United States District Court Northern District of California IV. 12 13 6. The parties SHALL file a joint status update upon completion of arbitration proceedings. Dated: May 9, 2024 ______________________________________ BETH LABSON FREEMAN United States District Judge 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 8

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