Zelkind v. Flywheel Networks, Inc., No. 3:2015cv03375 - Document 38 (N.D. Cal. 2015)
Court Description: ORDER GRANTING 23 MOTION TO COMPEL ARBITRATION AND STAY ACTION. This action is STAYED. The parties shall jointly advise me within 10 days of (i) the arbitrator's determination that the claims are not arbitrable, (ii) the arbitrator's a ward, in the event that the arbitrator determines that the claims are arbitrable, or (iii) the settlement of this dispute. The parties shall file a Joint Status Report every six months, beginning six months from the date of this Order, apprising the Court of the status of the arbitration. Signed by Judge William H. Orrick on 10/16/2015. (jmdS, COURT STAFF) (Filed on 10/16/2015)
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1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 YANA ZELKIND, 7 Case No. 15-cv-03375-WHO Plaintiff, 8 v. 9 FLYWHEEL NETWORKS, INC., 10 Defendant. ORDER GRANTING MOTION TO COMPEL ARBITRATION AND STAY ACTION Re: Dkt. No. 23 United States District Court Northern District of California 11 INTRODUCTION 12 Defendant Flywheel Networks, Inc. contends that plaintiff Yana Zelkind is required to 13 14 arbitrate the claims in her complaint for sexual harassment pursuant to a Dispute Resolution 15 Protocol (“DRP”) that was included within the Terms and Conditions Agreement (“TCA”) she 16 signed at the beginning of her employment with Flywheel. Mot. at 3 [Dkt. No. 23]. Zelkind 17 argues that the arbitration clause is both procedurally and substantively unconscionable. Dkt. No. 18 30. Because the arbitration clause clearly and unmistakably assigns the question of arbitrability to 19 the arbitrator, I GRANT the motion to compel and STAY this matter. 20 BACKGROUND 21 On July 28, 2014, Flywheel, a technology company that connects consumers with 22 residential real estate agents, hired Zelkind as a Sales Representative in its Sacramento office.1 23 Flywheel is a customer of TriNet, which provides payroll processing and certain human resources 24 services for Flywheel. TriNet refers to its customers as “worksite employers” and maintains an 25 online portal for the employees of its worksite employers in order to access certain employment 26 27 28 1 For the purposes of this motion, I rely primarily on the facts Flywheel provided by declaration as Zelkind neither contested them nor offered any evidence on her own behalf. If there is a factual basis on which to dispute arbitrability, Zelkind did not provide it. 1 records and information. This online portal, called “TriNet Passport,” is a password protected 2 environment that can only be accessed using each employee’s username and unique password. 3 On July 30, 2014, two days after beginning her employment, Zelkind logged on to the 4 TriNet Passport. Upon signing in, Zelkind was electronically presented with TriNet’s TCA, which 5 included the DRP. The TCA is an approximately four page long document, which encompasses a 6 subsection containing the DRP, which in turn is approximately one page long. Belloise Decl., Ex. 7 A [Dkt. No. 26] (“Agreement”). The TCA states in pertinent part as follows: 8 9 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 1. Co-Employment vs. Standard Employment TriNet is a licensed professional employer organization (“PEO”) headquartered in San Leandro, California. If your relationship with TriNet is beginning because the company at which you work has become TriNet customer, this means that your company has entered into a customer service agreement with TriNet to share certain employer responsibilities as co-employers. This means TriNet will be your employer of record for administrative purposes and will process payroll, sponsor and administer benefits, and provide certain human resources services. As your worksite employer, your company retains the responsibilities of directing your day-to-day work and managing its business affairs. This TCA addresses your relationship with TriNet and you and your worksite employer have and will continue to have additional terms and conditions of employment. … 9. Dispute Resolution Protocol (“DRP”) a. How The DRP Applies This DRP covers any dispute arising out of or relating to your employment with TriNet. The Federal Arbitration Act applies to this DRP. Also, existing internal procedures for resolving disputes, as well as the options of mediation, will continue to apply with the goal being to resolve disputes before they are arbitrated. This DRP will survive termination of the employment relationship. With only the exceptions described below, arbitration will replace going before a government agency or a court for a judge or jury trial. … f. Enforcement Of The DRP This DRP is the full and complete agreement relating to arbitration as the means to resolve covered disputes between you and TriNet and between you and your worksite employer unless the DRP is waived by your worksite employer or superseded by other terms and conditions of your employment with your worksite employer. If any portion of this DRP is determined to be unenforceable, the remainder of this DRP still will be enforceable, subject to the specific exception in section d, above. With respect to covered disputes, each party waives any rights under the law for a jury trial and agrees to arbitration in accordance with the terms of this DRP. Agreement ¶¶ 1, 9. 2 The last subsection of the TCA is entitled “Acknowledgement” and provides, in part, as 1 2 follows: By clicking below, I am acknowledging that I have read and understand the contents of this Terms and Conditions Agreement (including, but not limited to, the DRP), that I have the responsibility to read and familiarize myself with the TriNet Employee Handbook and Additional Policies for my company and that I agree to abide by the terms and conditions set forth above and the policies and procedures set forth in the Employee Handbook and Additional Policies. 3 4 5 6 7 Id. at ¶10. Zelkind agreed to the TCA by providing her email address and clicking on the button 8 marked “I Accept.”2 According to the complaint she filed in state court, Zelkind experienced severe and 10 pervasive sexual harassment by her Flywheel coworkers that caused her to suffer from anxiety and 11 United States District Court Northern District of California 9 acute depression. Complaint at 5-11. She was fired one day after reporting the harassment to 12 Flywheel management. Complaint at 9. She alleges multiple violations under California Fair 13 Employment and Housing Act as well as a cause of action for Intentional Infliction of Emotional 14 Distress. Id. at 12-17. Flywheel’s present motion to compel arbitration of Zelkind’s claims and 15 dismiss her complaint or, in the alternative, stay the proceedings was heard on October 7, 2015. 16 Zelkind’s counsel failed to appear.3 LEGAL STANDARD 17 18 The Federal Arbitration Act (“FAA”) governs the motion to compel arbitration. 9 U.S.C. 19 §§ 1 et seq. Under the FAA, a district court determines (1) whether a valid agreement to arbitrate 20 exists and, if it does, (2) whether the agreement encompasses the dispute at issue. Lifescan, Inc. v. 21 Premier Diabetic Servs., Inc., 363 F.3d 1010, 1012 (9th Cir. 2004). “To evaluate the validity of 22 an arbitration agreement, federal courts should apply ordinary state-law principles that govern the 23 2 24 25 26 27 28 Flywheel expressly notes that there is also a “Reject” button next to the “I Accept” button, “whereby the [employee] could choose not to accept the terms of the DRP.” Mot. at 3. However, according to the TCA, acknowledgement and acceptance of the agreement is a condition of one’s employment with TriNet. Agreement at 1. 3 The Court attempted to reach Zelkind’s counsel after he failed to check in for the hearing. He responded by email that he had a personal emergency and had miscalendared the hearing date. Previously, he failed to file an opposition brief timely, failed to seek leave of court to file the untimely brief until prompted by me, and failed in other ways to file pleadings that comply with the Local Rules. Counsel should either read and comply with the Federal Rules of Civil Procedure and the Local Rules and Standing Orders of this Court or reconsider practicing in federal court. 3 1 formation of contracts.” Ingle v. Circuit City Stores, Inc., 328 F.3d 1165, 1170 (9th Cir. 2003) 2 (citation omitted). If the court is satisfied “that the making of the arbitration agreement or the 3 failure to comply with the agreement is not in issue, the court shall make an order directing the 4 parties to proceed to arbitration in accordance with the terms of the agreement.” 9 U.S.C. § 4. 5 “Any doubts concerning the scope of arbitrable issues should be resolved in favor of arbitration.” 6 Simula, Inc. v. Autoliv, Inc., 175 F.3d 716, 721 (9th Cir. 1999). DISCUSSION 7 “Generally, in deciding whether to compel arbitration, a court must determine two 8 9 ‘gateway’ issues: (1) whether there is an agreement to arbitrate between the parties; and (2) whether the agreement covers the dispute.” Brennan v. Opus Bank, 796 F.3d 1125, 1130 (9th Cir. 11 United States District Court Northern District of California 10 2015). Under federal law, “[t]he question whether parties have submitted a particular dispute to 12 arbitration ... is an issue for judicial determination unless the parties clearly and unmistakably 13 provide otherwise.” Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79, 83 (2002) (internal 14 citations, quotation marks, and modifications omitted); see also id. But if the parties clearly and 15 unmistakably assign the arbitrability question to the arbitrator, a court will enforce the provisions 16 of the agreement that delegate such determinations unless there is a specific challenge to the 17 delegation clause itself. Brennan, 796 F.3d at 1132. In the absence of a specific challenge, “the 18 court should perform a second, more limited inquiry to determine whether the assertion of 19 arbitrability is ‘wholly groundless.’” Qualcomm Inc. v. Nokia Corp., 466 F.3d 1366, 1371 20 (Fed.Cir.2006). 21 22 I. CLEAR AND UNMISTAKABLE DELEGATION OF ARBITRABILITY Flywheel contends that the parties have “clearly and unmistakably agreed” to delegate the 23 resolution of any dispute regarding the arbitrability of Zelkind’s claims to an arbitrator. Mot. at 6. 24 Flywheel points to paragraph 9(d) of the DRP: “[t]he specific provisions of this DRP and the 25 applicable rules of [American Arbitration Association (“AAA”)] or [Judicial Arbitration and 26 Mediation Services, Inc. (“JAMS”)] will direct the arbitrator in decision regarding the 27 enforceability of this DRP and in conducting the arbitration.” Agreement at ¶9(d). Both the AAA 28 and JAMS provide for arbitration rules that grant the arbitrator the power to decide disputes over 4 1 the existence, validity, and scope of an arbitration agreement. Rule 6(a) of the Employment 2 Arbitration Rules and Mediation Procedures for AAA states that “[t]he arbitrator shall have the 3 power to rule on his or her own jurisdiction, including any objections with respect to the existence, 4 scope or validity of the arbitration agreement.” AAA Emp. R. 6(a). Similarly, Rule 11(b) of the 5 JAMS Employment Arbitration Rules & Procedure provides: “Jurisdictional and arbitrability 6 disputes, including disputes over the formation, existence, validity, interpretation or scope of the 7 agreement under which Arbitration is sought, and who are proper Parties to the Arbitration, shall 8 be submitted to and ruled on by the Arbitrator. Unless the relevant law requires otherwise, the 9 Arbitrator has the authority to determine jurisdiction and arbitrability issues as a preliminary 10 matter.” JAMS Emp. R. 11(b). The Ninth Circuit has held that incorporation of an arbitrator's arbitration rules constitutes United States District Court Northern District of California 11 12 clear and unmistakable evidence that the parties agreed to arbitrate arbitrability. Brennan, 796 13 F.3d at 1131 (“We therefore hold that the district court did not err in concluding that these parties' 14 incorporation of the AAA rules constituted “clear and unmistakable” evidence of their intent to 15 submit the arbitrability dispute to arbitration.”); Oracle Am., Inc. v. Myriad Grp. A.G., 724 F.3d 16 1069, 1074-75 (9th Cir. 2013) (“We see no reason to deviate from the prevailing view that 17 incorporation of the [arbitrator’s] arbitration rules is clear and unmistakable evidence that the 18 parties agreed the arbitrator would decide arbitrability.”) Here, parties have met this requirement 19 by incorporating both the AAA and JAMS rules into the DRP. Agreement at ¶9(c)(“Arbitration 20 begins by bringing a claim under the applicable employment arbitration rules and procedures of 21 either the American Arbitration Association (“AAA”) or the Judicial Arbitration and Mediation 22 Services, Inc. (“JAMS”), as then in effect and as modified by any superseding provisions of this 23 DRP.), ¶9(d)(“The specific provisions of this DRP and the applicable rules of the AAA or JAMS 24 will direct the arbitrator in decisions regarding the enforceability of this DRP and in conducting 25 the arbitration.”) By doing so, the parties have clearly and unmistakably agreed to allow the 26 arbitrator to decide the arbitration provision’s application, validity, and scope. 27 28 II. WHOLLY GROUNDLESS INQUIRY Having determined that the parties assigned the arbitrability question to the arbitrator, I 5 1 must now perform a second analysis as to whether the assertion of arbitration is “wholly 2 groundless.” Qualcomm, 466 F.3d at 1371. To do so, I “look to the scope of the arbitration clause 3 and the precise issues that the moving party asserts are subject to arbitration,” but I do not 4 determine whether Zelkind’s claims are in fact arbitrable. Id at 1374. This limited inquiry 5 prevents a party from “asserting any claim at all, no matter how divorced from the parties’ 6 agreement to force arbitration.” Id. at 1373 n.5. If a court finds that the assertion of arbitrability is 7 not “wholly groundless,” then it should stay the action pending a ruling on arbitrability by an 8 arbitrator. Id. at 1371. Flywheel’s assertion that Zelkind’s claims should be arbitrated is not “wholly groundless.” 10 In cases involving PEOs, such as TriNet, the issue of whether the arbitration agreement applies to 11 United States District Court Northern District of California 9 both the worksite employer and the PEO is a factual inquiry. See Coup v. Scottsdale Plaza Resort, 12 LLC, 823 F. Supp. 2d 931, 955 (D. Ariz. 2011) (finding that the arbitration agreement, which only 13 referenced the PEO and not the worksite employer, applied to plaintiffs’ Title VII claims when the 14 worksite employer did not have its own employees but instead all of its workers were employed 15 by the PEO as “on-call employees,” were given the PEO employee manuals, and attended 16 employee training and orientations sessions with the PEO); Nereim v. Premara Fin., Inc., No. 14- 17 cv-00096, 2014 WL 2882692, *1-2 (W.D.N.C. June 25, 2014) (holding that the arbitration 18 agreement clearly applied to both the PEO and the worksite employer when it read “I and [PEO] 19 agree that any legal dispute involving [PEO], Company, or any benefit plan, insurer, employee, 20 officer, or director of [PEO] or Company (all of which are beneficiaries of this agreement to 21 arbitrate and waiver of jury trial) arising from or relating to my employment, wages, leave, 22 employee benefits, application for employment, or termination from employment will be resolved 23 exclusively through binding arbitration before a neutral arbitrator….”). 24 Here, the TCA begins by describing the relationship between TriNet and Flywheel, 25 informing the reader that “your employer has entered into a customer service agreement with 26 TriNet to share certain employer responsibilities co-employers.” Agreement at ¶1. It goes on to 27 explain that“[t]his TCA addresses your relationship with TriNet and your worksite employer have 28 and will continue to have additional terms and conditions of employment.” Id. According to the 6 1 TCA, the DRP is intended as the “full and complete agreement relating to arbitration as the means 2 to resolve covered disputes between you and TriNet and between you and your worksite 3 employer” unless otherwise supersede or waived. Id. at ¶9(f). Covered disputes are those “arising 4 out of or relating to your employment with TriNet.” Id. at ¶9(a) 5 This precise agreement has already been addressed in Langford v. Hansen Technologies, 6 LLC, Civ. No. 3:14-cv-1870 (S.D. Cal., Nov. 19, 2014). Cooper Decl., Ex. P [Dkt. No. 24-16]. In 7 Langford, a case involving allegations of disability discrimination by the onsite employer, the 8 court found that the DRP applied to the worksite employer and was not unconscionable. Id. at 7. 9 The court relied primarily on the sections quoted above to hold that the DRP makes clear that it applies to both TriNet and the worksite employer. Id. at 4-5. I find similarly. Because the 11 United States District Court Northern District of California 10 allegations at issue relate to Zelkind’s employment with TriNet, they fall within the scope of the 12 DRP. Neither party contends it waived the DRP or that the DRP was superseded by another 13 agreement. Therefore, as the DRP indicates, it functions as the full and complete agreement for 14 covered disputes between the Zelkind and Flywheel. CONCLUSION 15 16 Flywheel’s motion to compel arbitration is GRANTED. This action is STAYED pending 17 the arbitrator’s determination whether Zelkind’s claims are arbitrable and, if they are, the 18 resolution of the arbitration. The parties shall jointly advise me within 10 days of (i) the 19 arbitrator’s determination that the claims are not arbitrable, (ii) the arbitrator’s award, in the event 20 that the arbitrator determines that the claims are arbitrable, or (iii) the settlement of this dispute. 21 The parties shall file a Joint Status Report every six months, beginning six months from the date 22 of this Order, apprising the Court of the status of the arbitration. 23 24 25 26 IT IS SO ORDERED. Dated: October 16, 2015 ______________________________________ WILLIAM H. ORRICK United States District Judge 27 28 7
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