Harris v. Halliburton Company et al, No. 1:2016cv00281 - Document 25 (E.D. Cal. 2016)
Court Description: ORDER ADOPTING 20 FINDINGS AND RECOMMENDATIONS and GRANTING Defendants' 10 Motion to Compel Arbitration; ORDERED that this matter be STAYED to allow for the completion of arbitration, signed by Chief Judge Lawrence J. O'Neill on 8/9/2016. (Martin-Gill, S)
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1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 EASTERN DISTRICT OF CALIFORNIA 10 HARRISON Y. HARRIS, 11 Case No. 1:16 -cv-00281-LJO-JLT Plaintiff, 12 ORDER ADOPTING FINDINGS AND RECOMMENDATIONS AND GRANTING DEFENDANTS’ MOTION TO COMPEL ARBITRATION v. 13 HALLIBURTON COMPANY, et al., 14 Defendants. 15 (ECF No. 20) 16 Plaintiff Harrison Y. Harris (“Plaintiff”) commenced this action against defendants 17 1 18 Halliburton Company and Halliburton Energy Services, Inc. (collectively, “Defendants”), 19 bringing nine claims for race and gender discrimination, harassment and retaliation under Title 20 VII of the Civil Rights Act of 1964 (“Title VII”), the California Fair Employment and Housing 21 Act, and various California labor statutes arising from events that occurred while he was 22 employed by defendant Halliburton Energy Services, Inc. ECF No. 1. Defendants filed a motion to compel arbitration on the basis that Plaintiff’s obligation to 23 24 arbitrate his claims is governed by and enforceable under the Federal Arbitration Act. ECF No. 25 10. This matter is now before the Court upon consideration of the Amended Findings and 26 Recommendations (“F&Rs”) issued by Magistrate Judge Thurston, in which she recommends 27 that Defendants’ motion be granted. ECF No. 20. Plaintiff filed Objections, ECF No. 21, and 28 1 Halliburton Energy Services, Inc., is a subsidiary of Halliburton Company. ECF No. 10-2 at 1. 1 1 Defendants filed a Response, ECF No. 22. 2 In accordance with the provisions of 28 U.S.C. § 636(b)(1)(C), this Court has conducted 3 a de novo review of this case. Having carefully reviewed the entire file, the Court finds the F&Rs 4 to be supported by the record and by proper analysis, and that Plaintiff’s Objections either repeat 5 arguments that the F&Rs have correctly rejected or reflect a misunderstanding both of the 6 relevant facts of this case and the reasoning set forth in the F&Rs. 7 First, Plaintiff takes issue with the Magistrate Judge’s finding that he knowingly waived 8 his right to a judicial forum for his claims. ECF No. 21 at 4-5. Specifically, he reiterates his 9 claim that he was unaware that he had agreed to submit disputes arising out of his employment to 10 binding arbitration pursuant to Defendants’ Dispute Resolution Program (“DRP”), stating that 11 Defendants never provided him with a copy of the DRP and arguing that this omission renders 12 the DRP procedurally unconscionable. Id. 13 Plaintiff’s arguments are unavailing. The Magistrate Judge’s determination as to 14 Plaintiff’s waiver of his claims is supported by a recent Ninth Circuit decision, Ashbey v. 15 Archstone Property Management, Inc., 785 F.3d 1320, 1325-26 (9th Cir. 2015). In Ashbey, the 16 Ninth Circuit held that a plaintiff had knowingly waived his right to a judicial forum for his Title 17 VII and equivalent state-law claims where he signed an acknowledgment form that stated “I 18 understand that it is my responsibility to understand the Archstone Company Policy Manual, 19 including the Dispute Resolution Policy, and to adhere to all of the policies contained herein.” Id. 20 The Ninth Circuit further noted “[t]hat the acknowledgment did not list the terms of the Policy is 21 not fatal to the Policy’s enforcement,” because “[t]he full text of the Policy was at [the 22 plaintiff]’s fingertips; he acknowledged he had received directions on how to access both the 23 Manual and the Dispute Resolution Policy contained in the Manual.” Id. Similarly, in this case, 24 Plaintiff acknowledged that he “[could] obtain a copy of the DRP from the Human Resources 25 Department,” (ECF No. 10-2 at 9 & 28), and the full text of the DRP was accessible to Plaintiff, 26 as the sworn affidavit of Halliburton’s Senior Human Resources Manager Stanley Wells, 27 indicates that “[a]s a Halliburton employee, Plaintiff had access to the Halliburton DRP website 28 via the company intranet. This site includes the DRP materials and documents describing the 2 1 DRP process, including the obligation to submit disputes over asserted legal rights to binding 2 arbitration. This website also serves as a portal for assessing DRP staff with any questions an 3 employee may have about the DRP.” ECF No. 10-2 at 2. Ashbey therefore confirms the F&Rs’ 4 conclusion that Plaintiff made a knowing waiver of his right to a judicial forum for his claims. 5 Next, Plaintiff argues that the Magistrate Judge did not properly analyze the substantive 6 unconscionability of the DRP provisions on attorney’s fees and injunctions. ECF No. 21 at 5-7. 7 With regard to the DRP’s provision on attorney’s fees, Plaintiff argues that the F&Rs failed to 8 account for the possibility that the DRP could permit Defendants to recover costs that it could 9 not recover under California law. Id. at 5-6. However, a plain reading of the relevant provision in 10 the DRP indicates that the recovery of attorney’s fees and cost is restricted to only the employee 11 or applicant—in other words, the DRP does not permit Defendants to recover costs. ECF No. 1012 2 at 57 (Paragraph 8.D, “Notwithstanding the provisions of the preceding subsection, in an 13 proceeding before an arbitrator, the arbitrator, in the arbitrator’s ‘discretion, may allow a 14 prevailing Employee or Applicant reasonable attorney’s fees, expert witness’ fees, and other 15 costs which may be allowable under the Federal Rules of Civil Procedure as part of the award.”). 16 As for the DRP’s provision on injunctions, Plaintiff makes the unsupported assertion that 17 “the DRP does not apply to requests for injunctive orders, e.g., to protect confidentiality of 18 company information or protect trade secrets, which are the claims Halliburton is likely to bring 19 against its employees.” ECF No. 21 at 7. Again, Plaintiff misinterprets the plain text of the DRP, 20 which clearly permits either party to seek an injunction in court. ECF No. 10-2 at 54 (“any court 21 with jurisdiction over the parties may issue any injunctive orders (including preliminary 22 injunctions) if the necessary and equitable requirements under applicable law are met.”). While 23 acknowledging that “courts generally do reject contractual provisions that would have the 24 practical effect of being invoked only, or far more often than the employer,” see Davis v. 25 Gazillion, No. C 10-743 RS, 2010 WL 2740002, at *2 (N.D. Cal. July 12, 2010), the Court sees 26 no basis for Plaintiff’s assertion that the DRP’s injunction provision is more likely to be used by 27 Defendants. Furthermore, as Defendants note in their Response, the provision is completely 28 irrelevant here, as neither Defendants nor Plaintiff seek an injunction in this matter. ECF No. 22 3 1 at 6. 2 Based on these two erroneous assertions, Plaintiff then contends that the DRP is so 3 “permeated with unconscionability” that it cannot be saved by severing the unconscionable 4 provisions. ECF No. 21 at 7-9. However, as the F&Rs correctly find, only two provisions in the 5 DRP can be deemed unconscionable: the provision barring representative claims and the 6 provision regarding Defendants’ unilateral termination and amendment of the DRP. ECF No. 20 7 at 17, 21. Moreover, both provisions are irrelevant to this case, as Plaintiff has not brought any 8 representative claims (see ECF No. 1), and it is impossible for the unilateral termination and 9 amendment provision to apply, because the plain text of this provision indicates that any 10 amendment or termination of the DRP would not apply to disputes that arose prior to amendment 11 or termination (see ECF No. 10-2 at 56). As the F&Rs note, these provisions can be severed from 12 the DRP. See, e.g., Davis, 2010 WL 2740002, at *3 (granting a motion to compel providing that 13 “[t]he final sentence of Paragraph C and Paragraph D are stricken from the arbitration agreement 14 between the parties.”); see also Cal. Civ. Code § 1599 (“Where a contract has several distinct 15 objects, of which is one at least is lawful, and one at least is unlawful, in whole or in part, the 16 contract is void as to the latter and valid as to the rest.” Because the vast majority of the DRP is 17 not unconscionable, the F&Rs are correct in finding that the two unconscionable provisions may 18 be severed and that the DRP is enforceable. 19 Finally, Plaintiff objects to the Magistrate Judge’s finding that the Franken Amendment 20 and Executive Order 13673 do not apply in this case. ECF No. 21 at 9-10. The Franken 21 Amendment precludes the Department of Defense from entering a contract in excess of 22 $1,000,000 unless the contractor agrees not to 23 24 25 “take any action to enforce any provision of an existing agreement with an employee or independent contractor that mandates that the employee or independent contractor resolve through arbitration any claim under title VII of the Civil Rights Act of 1964 or any tort related to or arising out of sexual assault or harassment, including battery, [and] intentional infliction of emotional distress.” 26 27 Pub.L. No. 111–118, § 8116, 123 Stat. 3409, 3454–3455 (2010). Similarly, Executive Order 28 4 1 13673, which President Obama signed on July 31, 2014, provides in relevant part, that 2 [All Federal] [a]gencies shall ensure that for all contracts where the estimated value of the supplies acquired and services required exceeds $1 million, provisions in solicitations and clauses in contracts shall provide that contractors agree that the decision to arbitrate claims arising under title VII of the Civil Rights Act of 1964 or any tort related to or arising out of sexual assault or harassment may only be made with the voluntary consent of employees or independent contractors after such disputes arise. 3 4 5 6 Exec. Order No. 13673, 79 FR 45309, Sec. 6(a). 7 Claiming that Halliburton is a “large oil services company with operations throughout the 8 world,” Plaintiff argues that it is “highly likely” that Defendants have a contract with the federal 9 government or the Department of Defense valued at over $1,000,000, and requests that the Court 10 permit him to conduct discovery as to whether Defendants have such a contract. ECF No. 21 at 11 10. 12 Plaintiff’s contentions are without merit. Plaintiff’s Objections misunderstand the F&Rs, 13 as he seems to believe that the Magistrate Judge’s finding was premised upon him not personally 14 working under a government contract while employed by Halliburton Energy Services. Id. at 915 10. However, Defendants, citing the sworn affidavit of Halliburton Energy Services’ Human 16 Resources Manager Stanley Wells, point out in their Response, “[u]ndisputed evidence shows 17 that Halliburton Energy Services is not a government/Department of Defense contractor. It 18 provides services to private national and international resource production companies, such as 19 Chevron.” ECF No.22 at 8. Consequently, Plaintiff’s request that the Court permit him to 20 conduct discovery on this matter is futile. Because there is no evidence that Defendants have a 21 contract with either the Department of Defense or any federal agency, even assuming the 22 Franken Amendment and Executive Order 13673 impose substantive prohibitions2 on the 23 arbitration of Title VII claims, they do not apply to this case. The Court therefore finds no error 24 in the F&Rs’ determination that neither the Franken Amendment nor Executive Order 13673 25 26 27 28 2 Case law does not support this assumption. See, e.g., Abbiati v. Lockheed Martin Information Tech., 84 Mass. App. Ct. 1129, 1129 (2014) (Franken Amendment “does not create any rights or establish procedures that inure to the benefit of civil rights plaintiffs”); Fellows v. Career Systems Dev. Corp., 2-16-cv-00718, 2016 WL 4010964, at *5-6 (W.D. Penn. July 27, 2016) (Executive Order 13673 has yet to come into effect, as its implementing regulations are still pending, and it therefore cannot invalidate an otherwise enforceable arbitration agreement). 5 1 apply in this case. 2 Accordingly, IT IS HEREBY ORDERED that: 3 1. FULL; 4 5 The Amended F&Rs (ECF No. 20), filed June 13, 2016, are ADOPTED IN 2. The clauses pertaining to representative actions (Rule 4.B(i)) and unilateral amendment and termination (Rule 6) are SEVERED from the DRP; 6 7 3. Defendants’ Motion to Compel Arbitration (ECF No. 10) is GRANTED; 8 4. This matter is STAYED to allow for the completion of arbitration; 9 5. Within 120 days and every 120 days thereafter, counsel shall FILE a joint status 10 report. Additionally, within 10 days of the determination by the arbitrator, counsel 11 shall FILE a joint status report; 12 6. The Court shall RETAIN jurisdiction to confirm the arbitration award and enter judgment for purposes of enforcement. 13 14 15 16 17 IT IS SO ORDERED. Dated: /s/ Lawrence J. O’Neill _____ August 9, 2016 UNITED STATES CHIEF DISTRICT JUDGE 18 19 20 21 22 23 24 25 26 27 28 6
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