Elizabeth Sanfilippo v. Tinder, Inc. et al, No. 2:2018cv08372 - Document 29 (C.D. Cal. 2018)
Court Description: ORDER DENYING PLAINTIFF'S MOTION TO REMAND AND GRANTING DEFENDANT'S MOTION TO COMPEL ARBITRATION by Judge Andre Birotte Jr.: The Court DENIES Plaintiff's Motion to Remand 13 and GRANTS Defendant's Motion to Compel Arbitration [1 8]. The entire action is hereby STAYED and removed from the Court's active caseload until further application by the parties or Order of this Court. The parties shall file Joint Status Reports every 120 days to update the Court on the status of arbitration, and a final Joint Status Report within ten days after the arbitration concludes. Defendant shall be responsible for ensuring that the status reports are timely filed with the Court. All pending calendar dates are vacated. (gk)
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Elizabeth Sanfilippo v. Tinder, Inc. et al Doc. 29 Case 2:18-cv-08372-AB-JEM Document 29 Filed 12/18/18 Page 1 of 11 Page ID #:555 1 JS-6 2 STAY 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 CENTRAL DISTRICT OF CALIFORNIA 10 11 ELIZABETH SANFILIPPO, an individual, 12 13 14 15 16 v. TINDER, INC., a Delaware corporation, and DOES 1 through 20, Inclusive Defendants. 18 20 21 22 23 24 25 26 27 28 ORDER DENYING PLAINTIFF’S MOTION TO REMAND AND GRANTING DEFENDANT’S MOTION TO COMPEL ARBITRATION Plaintiff, 17 19 Case No. 2:18-cv-08372-AB (JEMx) Before the Court is Plaintiff Elizabeth Sanfilippo’s (“Plaintiff”) Motion to Remand and Defendant Match Group, LLC’s (“Defendant”, formerly “Tinder Inc.”) Motion to Compel Arbitration. Dkt. Nos. 13, 18. The Court heard oral arguments regarding the motions on November 30, 2018. For the following reasons, the Court DENIES Plaintiff’s Motion to Remand and GRANTS Defendant’s Motion to Compel Arbitration. I. BACKGROUND A. Plaintiff’s Motion to Remand On August 20, 2018, Plaintiff filed its Complaint (“Complaint”) in the Superior Court for the County of Los Angeles against Defendant relating to Plaintiff’s alleged 1. Dockets.Justia.com Case 2:18-cv-08372-AB-JEM Document 29 Filed 12/18/18 Page 2 of 11 Page ID #:556 1 wrongful termination. On September 27, 2018 Defendant Match Group, LLC 2 successor by merger with Tinder Inc., filed a Notice of Removal pursuant to 28 U.S.C. 3 1332 based on diversity of citizenship. On November 9, 2018, Plaintiff filed its 4 Motion to Remand. In its motion, Plaintiff alleges that she was hired by Tinder, Inc., 5 a Delaware corporation with its headquarters in West Hollywood, California 6 (“Tinder”). Mot. to Remand p. 1. 7 Plaintiff is a resident of Los Angeles County, California. Complaint ¶1. 8 Plaintiff argues that under Delaware law, Tinder, 1 a dissolved corporation, continued 9 to exist for the purposes of the lawsuit and, therefore, there was not complete 10 diversity. Mot. to Remand p. 4. Defendant filed an opposition asserting that Tinder 11 was the incorrect party to the lawsuit because as of July 13, 2017 Tinder merged into 12 Match Group, Inc. Tinder Opp. p.3, Braddock Decl., ¶6. Defendant argues that 13 Tinder is not currently undergoing dissolution—as Plaintiff claims—but rather was 14 merged into Match Group, Inc. and ceased to exist as a separate corporate entity. Id. 15 ¶7. Plaintiff filed a reply reasserting that Tinder was the proper party for the suit 16 because it is a dissolved corporation. 17 B. Defendant’s Motion to Compel Arbitration 18 On October 24, 2018, Defendant filed a motion to compel arbitration and 19 dismiss or stay proceedings. Defendant claims that after the merger, Plaintiff signed a 20 Mutual Arbitration Agreement (the “Agreement”) and consented to resolve disputes 21 through Defendant’s ADR Program. The Agreement provides that, except as 22 otherwise provided for, the parties consent to resolution by arbitration on an 23 individual basis of all claims and controversies arising from or in connection with 24 Plaintiff’s application with, employment with, or termination from the Company. 25 Nelson Decl. Ex. 1-B, Mutual Arbitration Agreement, ¶1. The Agreement has an 26 effective date of February 1, 2018. Id. Plaintiff was a Brand Marketing Manager for 27 28 1 Tinder operates its headquarters out of West Hollywood, Los Angeles. 2. Case 2:18-cv-08372-AB-JEM Document 29 Filed 12/18/18 Page 3 of 11 Page ID #:557 1 Tinder from September 6, 2016 until July 13, 2017. Nelson Decl. ¶3. Following the 2 merger of Tinder and Match Group, Inc., Plaintiff became an employee of Defendant, 3 Match Group, LLC. Id. Plaintiff remained an employee of Defendant until her 4 termination on March 1, 2018. Plaintiff was issued a Form W-2 for 2017 which 5 indicated Plaintiff’s employer was Match Group, LLC. Nelson Decl. Ex. 1-A. 6 Plaintiff argues in opposition of the motion that this dispute predates the Agreement’s 7 effective date. Plaintiff also argues that the Agreement is unconscionable. Defendant 8 filed a reply. 9 II. 10 11 LEGAL STANDARD A. Remand Federal courts are courts of limited jurisdiction and possess only that 12 jurisdiction as authorized by the Constitution and federal statute. Kokkonen v. 13 Guardian Life Ins. Co. of Am., 511 U.S. 375,377 (1994). Under 28 U.S.C. § 1441(a), 14 a party may remove a civil action brought in a State court to a district court only if the 15 plaintiff could have originally filed the action in federal court. Thus, removal is only 16 proper if the district court has original jurisdiction over the issues alleged in the state 17 court complaint. There is a strong presumption that the Court is without jurisdiction 18 until affirmatively proven otherwise. See Fifty Assocs. v. Prudential Ins. Co. of 19 America, 446 F.2d 1187, 1190 (9th Cir. 1970). When an action is removed from state 20 court, the removing party bears the burden of demonstrating that removal is proper. 21 Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992). 22 Under the diversity statute, 28 U.S.C. § 1332, a federal district court has 23 original jurisdiction when the parties are completely diverse and the amount in 24 controversy exceeds $75,000. See 28 U.S.C. § 1332. Pursuant to 28 U.S.C. § 1441, a 25 defendant may remove an action from state court to federal court if the diversity and 26 amount in controversy requirements are satisfied and if none of the defendants are 27 citizens of the forum state. There is a similarly strong presumption against removal 28 jurisdiction. This presumption “means that the defendant always has the burden of 3. Case 2:18-cv-08372-AB-JEM Document 29 Filed 12/18/18 Page 4 of 11 Page ID #:558 1 2 establishing that removal is proper.” Gaus, 980 F.2d at 566. B. Compel Arbitration 3 The Federal Arbitration Act (“FAA”) applies to “a contract evidencing a 4 transaction involving commerce.” 9 U.S.C. §2. Any arbitration agreement within the 5 scope of the FAA “shall be valid, irrevocable, and enforceable,” and a party 6 “aggrieved by the alleged failure, neglect, or refusal of another to arbitrate” may file a 7 petition in the district court for an order compelling arbitration. 9 U.S.C. §§ 2, 4. 8 “[U]pon being satisfied that the making of the agreement for arbitration [] is not in 9 issue, the court shall make an order directing the parties to proceed to arbitration in 10 accordance with the terms of the agreement.” 9 U.S.C. § 4. “By its terms, the [FAA] 11 leaves no place for the exercise of discretion by a district court, but instead mandates 12 that district courts shall direct the parties to proceed to arbitration on issues as to 13 which an arbitration agreement has been signed.” Dean Witter Reynolds, Inc. v. Byrd, 14 470 U.S. 213, 218 (1985). However, “arbitration is a matter of contract and a party 15 cannot be required to submit to arbitration any dispute which he has not agreed so to 16 submit.” AT&T Techs. Inc. v. Commc’ns Workers of Am., 475 U.S. 643, 648 (1986) 17 (internal citation omitted). 18 The court’s role in resolving a motion to compel arbitration under the FAA is 19 limited to determining (1) whether there is a valid agreement to arbitrate, and (2) 20 whether the dispute falls within the scope of the agreement. Republic of Nicaragua v. 21 Standard Fruit Co., 937 F.2d 469, 477-78 (9th Cir. 1991). The movant bears the 22 burden of proving these elements, while the opponent bears the burden of establishing 23 any defense to enforceability. “[I]ssues concerning the validity, revocability, and 24 enforceability of contracts generally” are governed by state law. Perry v. Thomas, 25 482 U.S. 483, 493 (1987). The FAA evinces a “liberal federal policy favoring 26 arbitration agreements.” Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp., 460 27 U.S. 1, 24 (1985). 28 /// 4. Case 2:18-cv-08372-AB-JEM Document 29 Filed 12/18/18 Page 5 of 11 Page ID #:559 1 2 III. DISCUSSION The parties present two issues for the Court’s consideration. First, the Court 3 must determine whether it has diversity jurisdiction; thus, making remand improper. 4 Only after determining that the requirements of diversity jurisdiction have been met 5 may the Court examine the scope and validity of the arbitration agreement. 6 7 A. Diversity Jurisdiction Plaintiff argues that the parties are both citizens of the state of California and, 8 accordingly, there is no diversity of citizenship as required by 28 U.S.C. § 1332. 9 Plaintiff asserts that for the purposes of this lawsuit, she is suing Tinder, 10 headquartered in West Hollywood, Los Angeles. Defendant argues that Tinder was 11 merged into Match Group, LLC, a Delaware corporation with its principal place of 12 business and corporate headquarters in Texas. This merger, Defendant asserts, 13 establishes complete diversity between Plaintiff and Defendant. Plaintiff does not 14 contest Defendant’s allegations regarding amount in controversy; thus, the Court need 15 not engage in an inquiry of Defendant’s notice of removal. See Ibarra v. Manheim 16 Investments, Inc., 775 F. 3d 1193 (9th Cir. 2015). 17 1. The Proper Parties to the Suit Have Diversity of Citizenship 18 Plaintiff’s attempt to defeat diversity of citizenship requires the Court to 19 determine that Tinder is the proper party to this suit. Plaintiff argues that Tinder is a 20 dissolved corporation rather than a corporation that has merged into Match Group, 21 LLC. This is contrary to the facts before the Court. 22 First, the Certificate of Ownership and Merger which merged Tinder with 23 Match states that “[Match Group, Inc.] shall be the surviving corporation of the 24 Merger and shall continue under the name ‘Match Group, Inc.’”. Braddock Decl. Ex. 25 1-A. p. 5. Under the terms of the merger, Tinder became an unincorporated division 26 of Match pursuant to the July 13, 2017 merger. Braddock Decl., ¶7. Tinder was a 27 subsidiary of Match Group, Inc. from the beginning of Plaintiff’s employment until 28 July 13, 2017. Braddock Decl., ¶5. As part of the merger, Match Group, Inc. 5. Case 2:18-cv-08372-AB-JEM Document 29 Filed 12/18/18 Page 6 of 11 Page ID #:560 1 assigned all of Tinder’s assets and liability to one of Match Group, Inc.’s subsidiaries, 2 Match.com, L.L.C. Braddock Decl., ¶6. Shortly thereafter, Match.com, L.L.C. 3 adopted the name Match Group, LLC. Mot. to Remand ¶5. Defendant, Match Group, 4 LLC is currently the assignee of Tinder’s assets and liabilities. Id. ¶6. Further, the 5 Contribution Agreement between Match Group, Inc and Match.com, L.L.C. indicates 6 that “after the First Merger, Tinder, Inc. a Delaware Corporation [] merged with and 7 into [Defendant], with [Defendant] surviving such merger.” Braddock Decl. Ex. 1-B. 8 9 10 11 After the merger, Tinder employees, including Plaintiff, were notified of their change of employer and were issued W-2 tax forms for 2017 that indicated that Match Group, Inc. was their new employer. Nelson Decl. Ex. 1-A. From these facts it is apparent that Tinder merged into Defendant Match Group, 12 Inc. Where an entity undergoes merger, the merged corporation ceases to exist 13 independently and cannot be subject to lawsuit. See e.g., Del. Code Ann. tit. 8, § 251 14 (providing that a merger occurs when two corporations merge into a single surviving 15 corporation); Cal.Corp.Code § 1107 (a) (providing that the merging corporation 16 ceases to exist and the surviving corporation “shall succeed . . . to all the rights and 17 property of each of the disappearing corporations and shall be subject to all the debts 18 and liabilities of each in the same manner as if the surviving corporation had itself 19 incurred them.”); Meadows v. Bicrodyne Corp., 785 F.2d 670 (9th Cir. 1986) 20 (determining that under California, a merged corporation no longer existed and was, 21 therefore, not a proper party or relevant with respect to the diversity inquiry). 22 While Plaintiff proclaims that Tinder is merely dissolved, and therefore still the 23 proper party to this suit, nothing supports this assertion. Tinder as an entity no longer 24 exists after its merger into Defendant. As such, the Court will consider Defendant 25 Match Group, Inc.’s citizenship for the purposes of diversity jurisdiction. 26 For diversity considerations, a corporation is deemed to be a citizen of the state 27 in which it is incorporated and the state where it has its principal place of business. 28 28 U.S.C. § 1332(c)(1). A limited liability company’s citizenship is determined by the 6. Case 2:18-cv-08372-AB-JEM Document 29 Filed 12/18/18 Page 7 of 11 Page ID #:561 1 2 citizenship of each member. Plaintiff, an individual, is a citizen of Los Angeles, California. Defendant, 3 Match Group, Inc. is the sole member of Match Group, LLC. Match Group, Inc. is 4 incorporated in Delaware and has its principal place of business and corporate 5 headquarters in Texas. Match Group, LLC is also a Delaware corporation with its 6 principal place of business and corporate headquarters in Texas. Braddock Decl., ¶6. 7 Tinder does not exist as a result of the merger and its citizenship is not relevant for the 8 current inquiry. Defendant is the successor of Tinder’s assets and liabilities and the 9 surviving entity resulting from the merger. Thus, complete diversity exists between 10 Plaintiff and Defendant. Because there is complete diversity between the parties, 11 diversity jurisdiction exits. Therefore, the Court will determine whether this suit is 12 bound by the Mutual Arbitration Agreement signed by the parties. 13 14 B. The Mutual Arbitration Agreement Defendant asserts that although this Court has jurisdiction over the case, the 15 parties are bound by a Mutual Arbitration Agreement, which became effective on 16 February 1, 2018. The agreement provides, with limited exceptions that Defendant 17 would use Match Group, Inc.’s Alternative Dispute Resolution Program for California 18 (“ADR Program”). Specifically, the agreement states that “all claims or controversies 19 arising out of or in connection with” Plaintiff’s “application with, employment with, 20 or termination from,” the Company must be arbitrated on an individual basis. Plaintiff 21 argues that her claims occurred prior to the effective date of the Agreement and that 22 the terms of the Agreement do not apply retroactively. Alternatively, Plaintiff argues 23 that the Agreement is unconscionable. 24 25 1. The Agreement Applies to Plaintiff’s Claims Plaintiff first argues that the Agreement does not apply to this dispute because it 26 arose prior to the effective date. Further, Plaintiff asserts that there is nothing on the 27 face of the Agreement that requires it to be applied retroactively. 28 As a general matter, “any doubts concerning the scope of arbitrable issues 7. Case 2:18-cv-08372-AB-JEM Document 29 Filed 12/18/18 Page 8 of 11 Page ID #:562 1 should be resolved in favor of arbitration,” even if “the problem at hand is the 2 construction of the contract language itself.” Moses H. Cone Memorial Hosp. v. 3 Mercury Constr. Corp., 460 U.S. 1, 103 S.Ct. 927 (1983). Here, the operative 4 language of the Agreement asserts that arbitration will be used for all claims or 5 controversies “arising out of or in connection with [Plaintiff’s] application with, 6 employment with, or termination from the Company”. Few claims are excluded from 7 arbitration, but they are of no moment to the issues here.2 8 9 Plaintiff argues that this operative language is like that at issue in Castro v. ABM Indus., Inc., 2018 WL 2197527 (N.D. Cal May 14, 2018). In Castro, the 10 Northern District of California considered whether the language of collective 11 bargaining agreements (“CBAs”) required arbitration where defendant did not notify 12 plaintiffs of their intent to compel arbitration until nearly two years after the effective 13 date of the CBAs and three years after the initiation of the litigation. The language at 14 issue in Castro required “binding mediation and arbitration” to resolve “all Covered 15 Claims, whenever they arise”. Id. at *4. Relying on Morse, the court disagreed that 16 the word “arise” (as opposed to “arose” or “have arisen”) referred to past disputes. Id. 17 Accordingly, the court held that the CBAs only applied to present and future disputes. 18 Id. Plaintiff argues that the language of the Agreement should be read in a similar 19 fashion. 20 To support her point, Plaintiff argues that the terms of the Agreement limits 21 arbitration to disputes that occur after the effective date. Plaintiff alleges sexual 22 harassment that occurred and were reported in mid-2017 and January 2018. Sanfillipo 23 Decl. ¶5. Both these claims precede the Agreement’s effective date of February 1, 24 2018. Accordingly, Plaintiff argues, the Agreement does not apply to Plaintiff’s 25 sexual harassment allegations and cannot be arbitrated through the ADR Program. 26 27 28 2 Section 3 of the ADR Program excludes from the Agreement claims for workers’ compensation or unemployment compensation benefits; any criminal complaint or related criminal proceeding 8. Case 2:18-cv-08372-AB-JEM Document 29 Filed 12/18/18 Page 9 of 11 Page ID #:563 1 Courts in this Circuit are undecided as to whether an arbitration agreement 2 applies retroactively when there is no language that limits the agreement temporally. 3 Compare Jones v. Déjà vu, Inc., 419 F.Supp. 2d 1146, 1150 (N.D. Cal. 2005) 4 (determining that an arbitration provision which dealt with disputes “arising out of 5 this Contract or Performer’s performances” was not temporally limited) and Trujillo v. 6 Gomez, 2015 WL 1757870 (S.D. Cal. Apr. 17, 2015) (holding that an arbitration 7 clause providing that any “claim or controversy arising out of or relating to this 8 Agreement, the Corporation, or the rights or obligations of the Shareholders as 9 Shareholders, officers, or employees or the Corporation will be settled by binding 10 arbitration” did not include any temporal limitations and could require the parties to 11 arbitrate disputes that occurred prior to the effective date) with Morse v. 12 ServiceMaster Glob. Holdings Inc., 2012 WL 4755035, at *5 (N.D. Cal. Oct. 4, 2012) 13 (denying defendant’s motion to compel arbitration of claims that predated the 14 effective date where the parties executed the arbitration agreement after a lawsuit was 15 filed and the agreement did not include language that was retroactive on its face 16 because the word arising “makes it clear that it applies to claims that may arise going 17 forward”). The Ninth Circuit has yet to address this issue. 18 The Agreement here does not appear to intend to limit arbitration to future 19 claims. While Plaintiff cites the Tinder app’s Terms of Use as an adequate example of 20 temporally specific language, the Agreement seems to anticipate a broad scope of 21 disputes. Indeed, the addition of “in connection with” after the initial clause “arising 22 out of” seems to extend the scope of the Agreement well beyond present or future 23 disputes. For example, a dispute about Defendant’s hiring practices at the time of 24 Plaintiff’s initial hiring would most certainly be in connection with Plaintiff’s 25 application with Defendant. While those disputes would have occurred prior to the 26 Agreement’s effective date, it is unlikely that they are not anticipated nor covered by 27 the explicit language the parties agreed to upon execution. It is difficult to interpret 28 the “in connection with” clause in any other fashion. The Agreement, therefore, 9. Case 2:18-cv-08372-AB-JEM Document 29 Filed 12/18/18 Page 10 of 11 Page ID #:564 1 2 applies to all of Plaintiff’s claims against Defendant. 2. The Agreement is Valid and Enforceable 3 Alternatively, Plaintiff argues that the Agreement is procedurally and 4 substantively unconscionable. To determine whether an agreement is procedurally 5 unconscionable, courts examine “the manner in which the agreement was negotiated 6 and the circumstances of the parties at the time, focusing on the level of oppression 7 and surprise involved in the agreement.” Romo v. CBRE Group, Inc., No. 8:18-CV- 8 00237-JLS (KESx), 2018 WL 4802152 at *7 (C.D. Cal. Oct. 3, 2018) (citing 9 Chavarria v. Ralphs Grocery Co., 733 F.3d 916, 922 (9th Cir. 2013)). “A contract is 10 oppressive if an inequality of bargaining power between the parties precludes the 11 weaker party from enjoying a meaningful opportunity to negotiate and choose the 12 terms of the contract.” Ingle v. Circuit City Store, Inc., 328 F.3d 1165, 1171 (9th Cir. 13 2003) (internal quotation marks omitted). “Surprise involves the extent to which the 14 supposedly agreed-upon terms of the bargain are hidden in the prolix printed form 15 drafted by the party seeking to enforce the disputed terms.” Id. 16 When making this determination, the threshold issue is whether the contract is 17 adhesive. Plaintiff argues that the “take it or leave it” nature of the Agreement is 18 indicative of the oppressive nature of the Agreement. The agreement was presented to 19 Plaintiff without negotiation and involved no meaningful choice by Plaintiff. 20 However, this alone is not sufficient to consider the contract unenforceable. 21 Borgading v. JPMorgan Chase Bank, No. 16-CV-2485-FMO (RAOx), 206 WL 22 8904413, at *4 (C.D. Cal. Oct. 31, 2016). Plaintiff was not surprised by the 23 Agreement; the terms of the agreement are explicit and boldface highlights that the 24 Agreement is to arbitrate disputes between Plaintiff and Defendant. 25 Regarding the substantive prong, Plaintiff argues that the Agreement is 26 substantively unconscionable because it applies retroactively. This argument does not 27 adhere to California law. See e.g., DeVries v. Experian Info. Sols., Inc., Case No. 16- 28 cv-02953-WHO, 2017 WL 733096, at *8 (N.D. Cal. Feb. 24, 2017); In re Verisign, 10. Case 2:18-cv-08372-AB-JEM Document 29 Filed 12/18/18 Page 11 of 11 Page ID #:565 1 Inc. Derivative Litig., 531 F. Supp. 2d 1173, 1224 (N.D. Cal 2007). There is nothing 2 to support Plaintiff’s claim that the Agreement is unconscionable under California 3 law. Plaintiff has failed to provide any argument persuading the Court that the 4 Agreement is unenforceable. 5 IV. 6 CONCLUSION For the foregoing reasons, the Court DENIES Plaintiff’s Motion to Remand 7 and GRANTS Defendant’s Motion to Compel Arbitration. The entire action is 8 hereby STAYED and removed from the Court’s active caseload until further 9 application by the parties or Order of this Court. 10 The parties shall file Joint Status Reports every 120 days to update the Court 11 on the status of arbitration, and a final Joint Status Report within ten (10) days after 12 the arbitration concludes. Each report must indicate on the face page the date on 13 which the next report is due. Although both parties shall participate in the drafting of 14 the joint reports, Defendant shall be responsible for ensuring that the status reports are 15 timely filed with the Court. 16 The Court retains jurisdiction over this action. 17 All pending calendar dates are vacated. 18 IT IS SO ORDERED. 19 20 21 22 23 Dated: December 18, 2018 _______________________________________ HONORABLE ANDRÉ BIROTTE JR. UNITED STATES DISTRICT COURT JUDGE 24 25 26 27 28 11.
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