Aaron Elmore v. CVS Pharmacy Inc. et al, No. 2:2016cv05603 - Document 21 (C.D. Cal. 2016)
Court Description: ORDER GRANTING DEFENDANTS PETITION TO COMPEL ARBITRATION AND STAY PROCEEDINGS 13 . The Court STAYS Plaintiffs Claims One through Six, and Eight through Ten pending the completion of arbitration by Judge Otis D. Wright, II. (lc). Modified on 11/9/2016 (lc).
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Aaron Elmore v. CVS Pharmacy Inc. et al Doc. 21 O 1 2 3 4 5 6 7 8 United States District Court Central District of California 9 10 11 Case No. 2:16-cv-05603-ODW(ASx) AARON ELMORE, 12 Plaintiff, 13 v. 14 15 16 CVS PHARMACY, INC.; GARFIELD BEACH CVS, LLC; CVS HEALTH CORP.; and DOES 1–20, inclusive, ORDER GRANTING DEFENDANTS’ PETITION TO COMPEL ARBITRATION AND STAY PROCEEDINGS [13] Defendants. 17 18 I. 19 INTRODUCTION 20 Currently before the Court is Defendants CVS Pharmacy Inc., Garfield Beach 21 CVS, LLC, and CVS Health Corp. (collectively, “CVS”) Petition to compel 22 arbitration and dismiss or, in the alternative, stay proceedings pending the outcome of 23 the arbitration. (Motion to Compel (“Mot.”), ECF No. 13.) Plaintiff Aaron Elmore 24 filed an Opposition to the Petition on September 26, 2016. (ECF No. 14.) CVS filed 25 its Reply brief on October 3, 2016. (ECF No. 15.) For the reasons discussed below, 26 the Court GRANTS CVS’s Petition.1 27 28 1 After carefully considering the papers filed in support of and in opposition to the Motion, the Court deems the matter appropriate for disposition without oral argument. Fed. R. Civ. P. 78; L.R. 7-15. Dockets.Justia.com II. 1 FACTUAL ALLEGATIONS 2 Garfield Beach CVS operates a number of retail stores and pharmacies 3 throughout the State of California. (Luker Decl. ¶ 7.) In June 2013, Garfield Beach 4 CVS hired Elmore. (Seymour Decl. ¶ 2.) In October 2014, CVS Health instituted a 5 company-wide Arbitration of Workplace Legal Disputes Policy (“Arbitration Policy”) 6 that applied to all of its subsidiaries, affiliates, and their employees, including Garfield 7 Beach CVS and Elmore. (Id. ¶ 3.) Elmore was given a copy of the Arbitration Policy 8 with the CVS Health Colleague Guide to Arbitration (“Arbitration Guide”). (Id.) The 9 Arbitration Guide states: 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 Colleagues’ Rights ... Arbitration is a matter of contract between the colleague and CVS Health. Colleagues accept the policy by continuing their employment with CVS Health after becoming aware of the policy. With that being said, we want colleagues’ participation to be voluntary. Colleagues will be asked to acknowledge and agree to the policy, but from the time that a colleague first views or receives the policy, he or she has thirty days to opt out of the policy. .... How to Opt Out In order to opt out, a colleague must mail a written, signed, and dated letter stating clearly that he or she wishes to opt out of the CVS Health Arbitration of Workplace Legal Dispute Policy. The letter must be mailed to CVS Health, P.O. Box 969, Woonsocket, RI 02895. In order to be effective, the colleague’s opt out notice must be postmarked no later than 30 days after the date the colleague first view or receives the policy. Please note, sending in a timely notice is the only way to opt out. A colleague cannot opt out by refusing to complete training or attend meetings about the policy. 27 28 (Id., Ex. A at 7.) 2 1 2 3 4 5 6 7 8 9 10 11 12 The Arbitration Policy mandates arbitration for the following disputes: Claims Covered by This Policy. Except as otherwise stated in this Policy, Covered Claims are any and all legal claims, disputes or controversies that CVS Health may have, now or in the future, against an Employee or that an Employee may have, now or in the future, against CVS Health, its parents, subsidiaries, successor or affiliates, or one of its employees or agents, arising out of or related to the Employee’s employment with CVS Health or the termination of the Employee’s employment. Covered Claims include but are not limited to disputes regarding wages and other forms of compensation, hours of work, meal and rest break periods . . . and other legal authorities relating to employment. (Id., Ex. A at 9–10.) 13 To implement its Arbitration Policy, CVS required all employees, including 14 Elmore, to complete an electronic LEARNet training course. (Id. ¶ 4.) Employees 15 access the course by logging in at a computer using unique log-in credentials and a 16 personalized password. (Id.) The course requires employees to click on a link that 17 displays the Arbitration Guide and an entire copy of Arbitration Policy. (Id.) To 18 complete the Arbitration Training, employees must electronically sign an 19 acknowledgement confirming they understand that they must resolve all disputes with 20 CVS through arbitration, and that they have thirty days in which to opt out of the 21 arbitration agreement. (Id., Ex. B at 5.) On March 11, 2015, Elmore completed the 22 arbitration training and electronically signed the acknowledgment. (Id. ¶ 5.) Elmore 23 continued to work for Garfield Beach CVS and never opted out of the Arbitration 24 Policy. (Id. ¶ 6.) 25 Elmore filed his complaint in state court on June 20, 2016, asserting ten causes 26 of action: (1) failure to pay meal and rest period compensation; (2) failure to pay 27 overtime compensation; (3) failure to pay minimum wage and wages for all hours 28 worked; (4) failure to pay timely earned wages; (5) failure to pay timely earned wages 3 1 upon separation of employment; (6) failure to provide accurate wage statements in 2 violation of California Labor Code section 226; (7) individual and Private Attorney 3 General Act representative claims; (8) unfair competition in violation of California 4 Business and Professions Code section 17200; (9) wrongful termination in violation of 5 public policy; and (10) retaliation in violation of the Labor Code section 1102.5. 6 (ECF No. 1-4.) 7 subsequently petitioned to compel arbitration. (ECF Nos. 1, 13.) That Petition is now 8 before the Court for review. CVS removed the case to federal court on July 27, 2016, and III. 9 LEGAL STANDARD 10 Section 4 of the Federal Arbitration Act (“FAA”) permits “a party aggrieved by 11 the alleged failure, neglect, or refusal of another to arbitrate under a written agreement 12 for arbitration [to] petition any United States district court . . . for an order directing 13 that . . . 14 agreement.” 9 U.S.C. § 4. Upon a showing that a party has failed to comply with a 15 valid arbitration agreement, the district court must issue an order compelling 16 arbitration. Id. arbitration proceed in the manner provided for in [the arbitration] 17 The FAA adopts a general policy favoring arbitration. See Moses H. Cone 18 Mem’l Hosp. v. Mercury Contr. Corp., 460 U.S. 1, 24–25 (1983); Hall St. Assoc., LLC 19 v. Mattel, Inc., 552 U.S. 576, 581 (2008). Federal courts are required to rigorously 20 enforce an agreement to arbitrate. 21 determining whether to issue an order compelling arbitration, a court may not review 22 the merits of the dispute, and generally must limit its inquiry to (1) whether the 23 contract containing the arbitration agreement evidences a transaction involving 24 interstate commerce, (2) whether there exists a valid arbitration agreement, and (3) 25 whether the dispute falls within the scope of the arbitration agreement. See Republic 26 of Nicar. v. Std. Fruit Co., 937 F.2d 469, 477–78 (9th Cir. 1991). If each question is 27 answered in the affirmative, a court must order the parties to arbitrate in accordance 28 with the terms of their agreement. 9 U.S.C. § 4. See Hall St. Assoc., 552 U.S. at 582. 4 In IV. 1 2 A. DISCUSSION Application of the FAA 3 The first issue to address is whether the FAA applies to the present contract at 4 all. Section 2 of the FAA provides for the enforcement of arbitration provisions in 5 any contract “evidencing a transaction involving commerce.” 9 U.S.C. § 2; Bernhardt 6 v. Polygraphic Co. of Am., 350 U.S. 198, 200 (1956). 7 commerce” is the functional equivalent of the more familiar term “affecting 8 commerce,” words of art that ordinarily signal the broadest permissible exercise of 9 Congress’ Commerce Clause power. Citizens Bank v. Alafabco, Inc., 539 U.S. 52, 56 10 (2003) (per curiam). To fall within the outer reaches of the Commerce Clause, the 11 contract at issue must involve a party who was “working ‘in’ commerce,” “producing 12 goods for commerce,” or “engaging in activity that affected commerce.” Bernardt, 13 350 U.S. at 201. The term “involving 14 It is undisputed that Elmore was employed by a national corporation that does 15 business throughout the United States. Specifically, Garfield Beach CVS operates 16 retail stores and pharmacies throughout the State of California and sells merchandise 17 that it receives from across state lines. (Lucker Decl. ¶ 7.) Accordingly, the FAA 18 governs Elmore’s arbitration agreement. 19 B. Delegation of Arbitrability to the Arbitrator 20 CVS argues that the parties delegated the issue of arbitrability to the arbitrator. 21 While it is usually the court’s task to “determine whether the parties agreed to 22 arbitrate the dispute,” Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 23 U.S. 614, 626 (1985), the court “will be divested of that authority if the parties 24 ‘clearly and unmistakably provide’ that an arbitrator is to decide whether a dispute is 25 subject to arbitration.” New England Mech., Inc. v. Laborers Local Union 294, 909 26 F.2d 1339, 1345 (9th Cir. 1990) (quoting AT & T Techs., Inc. v. Commc’ns Workers of 27 Am., 475 U.S. 643, 649 (1986)); Brennan v. Opus Bank, 796 F.3d 1125, 1130 (9th Cir. 28 2015); Oracle Am., Inc. v. Myriad Grp. A.G., 724 F.3d 1069, 1072 (9th Cir. 2013). 5 1 “When deciding whether the parties agreed to arbitrate a certain matter (including 2 arbitrability), courts generally . . . should apply ordinary state-law principles that 3 govern the formation of contracts.” First Options of Chicago, Inc. v. Kaplan, 514 4 U.S. 938, 944 (1995). 5 A viable contract under California law requires: “(1) parties capable of 6 contracting; (2) their consent; (3) a lawful object; and (4) sufficient cause or 7 consideration.” United States ex rel. Oliver v. Parsons Co., 195 F.3d 457, 462 (9th 8 Cir. 1999). Here, there appears to be no question that Elmore was “capable of 9 contracting,” and that an agreement to arbitrate is a “lawful object.” Further, Elmore 10 manifested his consent to arbitrating the question of arbitrability by digitally signing 11 the Arbitration Agreement. Finally, because the agreement to arbitration arbitrability 12 was mutual, there was sufficient consideration. See, e.g., Circuit City Stores, Inc. v. 13 Najd, 294 F. 3d 1104, 1108 (9th Cir. 2002) (a promise to be bound by the arbitration 14 process itself serves as an adequate consideration); Strotz v. Dean Witter Reynolds, 15 223 Cal. App. 3d 208, 216 (1990) (“Where an agreement to arbitrate exists, the 16 parties’ mutual promises to forego a judicial determination and to arbitrate their 17 disputes provide consideration for each other.”). 18 Moreover, the arbitration agreement clearly and unmistakably demonstrates the 19 parties’ intent to arbitrate the issue of arbitrability. The second page of the Arbitration 20 Agreement clearly states that the issues to be arbitrated “include disputes arising out 21 of or relating to the validity, enforceability or breach of this [Agreement],” except as 22 they relate to class action waivers, which are not at issue here. (Seymour Decl. ¶ 3, 23 Exh. A at 10.) Elmore does not appear to argue otherwise. Thus, the Court concludes 24 that Elmore validly agreed to arbitrate the question of arbitrability. 25 C. Whether the Assertion of Arbitrability is “Wholly Groundless” 26 Once the court determines that the parties delegated the question of arbitrability 27 to the arbitrator, it conducts “a second, more limited inquiry to determine whether the 28 assertion of arbitrability is ‘wholly groundless.’” Qualcomm Inc. v. Nokia Corp., 466 6 1 F.3d 1366, 1371 (Fed. Cir. 2006); Bitstamp Ltd. v. Ripple Labs Inc., No. 15-CV- 2 01503-WHO, 2015 WL 4692418, at *4 (N.D. Cal. Aug. 6, 2015); Baysand Inc. v. 3 Toshiba Corp., No. 15-CV-02425-BLF, 2015 WL 7293651, at *3 (N.D. Cal. Nov. 19, 4 2015). Here, the agreement subjects to arbitration “any and all legal claims, disputes 5 or controversies that . . . [Elmore] may have, now or in the future, against [CVS] . . . 6 arising out of or related to [Elmore’s] employment with CVS Health or the 7 termination of [Elmore’s] employment.” All of Elmore’s claims in this lawsuit appear 8 to arise out of his employment with CVS, and thus the Court is satisfied that the 9 assertion of arbitrability is not “wholly groundless.” 10 Elmore’s only argument in opposition to CVS’s Petition is that the Arbitration 11 Agreement is procedurally and substantively unconscionable under California law. 12 However, this issue goes to the arbitrability of the dispute, which must be decided by 13 the arbitrator. Brennan, 796 F.3d at 1133; Rent-A-Center, West, Inc. v. Jackson, 561 14 U.S. 63, 71 (2010). The only unconscionability issue the Court may consider is 15 whether the delegation of this decision-making power is itself unconscionable; 16 however, Elmore makes no such argument. Thus, Elmore’s argument fails. V. 17 CONCLUSION 18 Based on the foregoing reasons, CVS’s Petition to Compel Arbitration is 19 GRANTED. (ECF No. 13.) The Court STAYS Plaintiff’s Claims One through Six, 20 and Eight through Ten pending the completion of arbitration. 21 22 IT IS SO ORDERED. 23 24 November 9, 2016 25 26 27 ____________________________________ OTIS D. WRIGHT, II UNITED STATES DISTRICT JUDGE 28 7
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