Sonico v. Charter Communications, LLC et al, No. 3:2019cv01842 - Document 39 (S.D. Cal. 2021)

Court Description: ORDER Granting Renewed Motion to Compel Arbitration and Stay Proceedings (ECF No. 36 ). The Court also orders the parties to proceed to arbitration in California in the manner provided for in the JAMS Agreement. The Court directs the Clerk of Court to Administratively Close this case. Signed by Judge Cynthia Bashant on 1/27/21. (jmo)

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Sonico v. Charter Communications, LLC et al Doc. 39 Case 3:19-cv-01842-BAS-LL Document 39 Filed 01/27/21 PageID.546 Page 1 of 23 1 2 3 4 5 6 UNITED STATES DISTRICT COURT 7 FOR THE SOUTHERN DISTRICT OF CALIFORNIA 8 JUSTIN M. SONICO, individually and on behalf of all other persons similarly situated, 9 10 Plaintiff, 11 v. 12 Case No. 19-cv-01842-BAS-LL ORDER GRANTING RENEWED MOTION TO COMPEL ARBITRATION AND STAY PROCEEDINGS (ECF No. 36) CHARTER COMMUNICATIONS, LLC, et al., Defendants. 13 14 15 Pursuant to the Court’s previous Order (ECF No. 32), Defendants have filed a 16 Renewed Motion to Compel Arbitration and Stay Proceedings (“Renewed Motion”) in this 17 action. (ECF No. 36.) Plaintiff opposes, and Defendants reply. (ECF Nos. 37, 38.) The 18 Court finds this motion suitable for determination on the papers submitted and without oral 19 argument. See Civ.LR 7.1(d)(1). For the reasons stated below, the Court GRANTS the 20 Renewed Motion. 21 I. BACKGROUND 22 Plaintiff filed this putative class action in state court alleging violations of various 23 California wage-and-hour laws, which was then removed to this Court on September 25, 24 2019. (Notice of Removal, ECF No. 1; Compl., Ex A. to Notice of Removal, ECF No. 1- 25 2.) 26 (collectively, “Defendants” or “Charter”) initially moved to compel arbitration because 27 Plaintiff agreed to arbitrate the underlying claims when he was hired by Time Warner Cable 28 (“TWC”) in 2014, which later merged with Charter. (Mot. to Compel Arbitration (“Mot.”), Defendants Charter Communications, LLC and Charter Communications, Inc. -119cv1842 Dockets.Justia.com Case 3:19-cv-01842-BAS-LL Document 39 Filed 01/27/21 PageID.547 Page 2 of 23 1 ECF No. 19.) Plaintiff opposed on the basis that he opted out of a subsequent arbitration 2 agreement (the “Solution Channel Agreement” or “SCA”) presented to employees after 3 TWC merged with Charter in 2016. (Opp’n to Mot., ECF No. 26.) Plaintiff argued that he 4 entered into the SCA before opting out and it therefore superseded the first arbitration 5 agreement, while Defendants maintained that Plaintiff’s opt-out left the first agreement in 6 effect. (See Order Re: Mot. to Compel Arbitration (“Order”) at 5, ECF No. 32.) 7 Because the SCA and opt-out notice specific to Plaintiff were not before the Court, 8 leaving open questions about the agreement’s formation, the Court ordered the parties to 9 engage in limited discovery and permitted Defendants to renew their motion within five 10 days of the conclusion of the discovery process. (Id. at 11.) Defendants’ Renewed Motion 11 attaches the Solution Channel Program Guidelines (“Guidelines”), the SCA, and Plaintiff’s 12 Electronic Opt-Out Acknowledgement. (See Exs. C, F to Decl. of John Fries in supp. of 13 Renewed Mot. (“Fries Decl.”).)1 The Court once again summarizes the two agreements 14 below, including the supplemental information provided in the Renewed Motion about the 15 SCA and Plaintiff’s opt-out. The JAMS Agreement 2 16 A. 17 Defendants claim that Plaintiff signed an arbitration agreement as part of his 18 onboarding process with TWC in December 2014 that requires the claims in his class action 19 lawsuit to proceed to arbitration. 3 (Mot. at 1.) As part of its hiring practices, TWC required 20 applicants for employment to complete an online “onboarding” process. (Decl. of Chance 21 22 23 24 25 26 27 28 1 John Fries is the Vice President, HR Technology for Charter Communications. (Id. ¶ 1.) He is “responsible for data reporting sourced from PeopleSoft, a system used by Charter to electronically collect, maintain, and report on employee information[.]” (Id.) All exhibits are attached to the Fries Declaration as ECF No. 36-2. 2 The JAMS Agreement was submitted only with Defendants’ initial Motion. The Court adopts the summary of the JAMS Agreement and portions of its summary of the SCA included in its original Order on the Motion. (Order at 2–3.) 3 The JAMS Agreement applies to disputes with TWC and its “parents, subsidiaries, affiliates, successors, and assigns,” which Defendants claim covers both Charter Communications, Inc. and Charter Communications, LLC. (Mot. at 3.) Plaintiff does not dispute this. -219cv1842 Case 3:19-cv-01842-BAS-LL Document 39 Filed 01/27/21 PageID.548 Page 3 of 23 1 Cassidy (“Cassidy Decl.”) ¶ 8, ECF No. 19-2.)4 This system required applicants to log into 2 TWC’s Onboarding System (“OBS”) using a unique login identification and a temporary 3 confidential access code available to only the applicant. (Id. ¶ 10.) 4 Once logged in, the applicant was asked to review and accept 12 “required 5 acknowledgments,” the last of which was the JAMS Agreement. (Id. ¶ 11; Onboarding 6 Status Details, Ex. A to Cassidy Decl.) The JAMS Agreement states: 7 8 9 10 11 By accepting employment with [TWC], you and [TWC] . . . agree that any and all claims, disputes, and/or controversies between you and TWC arising from or related to your employment with TWC shall be submitted exclusively to and determined exclusively by binding arbitration before a single Judicial Arbitration and Mediations Services, Inc. (“JAMS”) arbitrator under the Federal Arbitration Act, 9 U.S.C. § 1 et seq. (“FAA”). 12 (Id. ¶ 11; JAMS Agreement at 4, Ex. B to Cassidy Decl., ECF No. 19-3.5) The JAMS 13 Agreement specifically applies to claims 14 17 (3) under any state law governing Charter’s obligation to provide meal, rest, or other breaks, (4) alleging that you were paid improperly or paid insufficient wages, overtime, compensation, or that Charter failed to comply with any law relating to the payment of wages, [and] (5) under any other state law related to your employment with Charter[.] 18 (JAMS Agreement at 4.) It further includes a waiver of all representative, collective, and 19 class actions, allowing employees to pursue claims against Charter only in their individual 20 capacity. (Id. at 4–5.) 15 16 21 The OBS explained why Charter utilized the JAMS agreement, provided a link to 22 the JAMS alternative dispute resolution website where the applicant could review the 23 JAMS arbitration rules, and allowed the applicant to download a PDF copy of the 24 agreement. (Cassidy Decl. ¶ 12; OBS Webpages at 7–8, Ex. C to Cassidy Decl.) Each 25 26 27 28 4 Mr. Cassidy has been the Senior Director of Charter’s Human Resources Service Center since 2017, and states that he has personal knowledge of TWC’s personnel recordkeeping and access to all records maintained in the ordinary course of business regarding Plaintiff’s employment with TWC. (Id. ¶ 2.) 5 All exhibits are attached to the Cassidy Declaration as ECF No. 19-3. -319cv1842 Case 3:19-cv-01842-BAS-LL Document 39 Filed 01/27/21 PageID.549 Page 4 of 23 1 applicant was then prompted to electronically acknowledge and accept the terms of the 2 Agreement. (Cassidy Decl. ¶ 13; OBS Webpages at 10.) 6 The OBS automatically recorded 3 the date and time of each applicant’s acceptance of the Agreement’s terms. (Cassidy Decl. 4 ¶ 16.) 5 Plaintiff completed the onboarding process and accepted an online offer for 6 employment with TWC on December 24, 2014. (Id. ¶ 9.) Plaintiff thereafter accepted the 7 JAMS Agreement on December 28, 2014, at 6:45 p.m. using his unique login ID and 8 confidential access code. (Id. ¶ 17; Onboarding Status Details for Justin Sonico, Ex. A to 9 Cassidy Decl.) 10 B. 11 In 2016, Charter acquired TWC. (Mot. at 1; Cassidy Decl. ¶ 2.) In 2017, Charter 12 launched Solution Channel, an exclusive means of resolving pre-employment or 13 employment-related legal disputes through a multi-step claims process that culminates, if 14 necessary, in a final and binding arbitration. (Guidelines at 8–9.) Through this program, a 15 claimant submits a dispute via a web-based portal and, if covered, it is first reviewed 16 internally by Charter, which issues a decision to the claimant by email. (Id. at 10.) If the 17 claimant does not agree with the decision, the claimant can elect to proceed to arbitration. 18 (Id.) The SCA formally binds both parties to arbitration in the event this internal review 19 procedure does not resolve the claim. The Solution Channel Agreement 20 Links to both the SCA and the Guidelines were accessible to employees on a Charter 21 intranet site called Panorama. (Fries Decl. ¶ 9; Panorama webpage at 2, Ex. B to Fries 22 Decl.) 1. 23 Agreement to Arbitrate 24 Like the JAMS Agreement, the SCA requires claims arising from employment 25 disputes with Charter to be submitted to arbitration and bars claims from being brought in 26 27 28 6 Mr. Cassidy attests that the webpages contained in Exhibit C “are identical to the OBS webpages in effect in December 2014, and are therefore identical to the webpages Plaintiff saw when he completed the onboarding process.” (Cassidy Decl. ¶ 15.) -419cv1842 Case 3:19-cv-01842-BAS-LL Document 39 Filed 01/27/21 PageID.550 Page 5 of 23 1 a representative, collective, or class action. (SCA §§ B.1, D.) The SCA states that both the 2 employee and Charter “mutually agree” to these terms as a condition of employment. (Id. 3 § A.) The SCA also states that it constitutes “the complete agreement of the parties on the 4 subject of resolution of the covered disputes, and supersedes any prior or contemporaneous 5 oral or written understanding on this subject[.]” (Id. § P.) 6 Finally, the SCA establishes that it is effective “as of the date of [the employee’s] 7 consent to participate in Solution Channel.” (Id. § V.) The SCA has no place for an 8 employee to sign or otherwise indicate mutual assent to its terms. 9 2. Solution Channel Guidelines 10 The Guidelines explain the Solution Channel dispute resolution process, including 11 arbitration. They contain an enumerated list of “General Rules” stating that “participation 12 in Solution Channel is a condition of consideration for employment with Charter, and a 13 condition of working at Charter.” (Id. at 8, 13.) They also specifically provide: 14 19 Upon implementation of Solution Channel, current employees will be provided a 30-day opt-out period. Those employees will be covered by Solution Channel unless they opt out. Those employees covered by a collective bargaining agreement or other employment agreement are excluded from Solution Channel unless expressly allowed under those agreements (although nothing in this document shall limit the applicability of any arbitration or other dispute resolution provision contained in those agreements). 20 (Id. at 8, 13.) Another section of the Guidelines reiterates that “[c]urrent employees at the 21 effective date of Solution Channel will be enrolled in the Program, unless the employee 22 opts out.” (Id. at 13.) 15 16 17 18 23 3. Plaintiff’s Opt-Out 24 Charter’s intranet webpage also included a link to a webpage allowing employees to 25 elect to opt out of Solution Channel. (See Fries Decl. ¶¶ 11–13; Ex. D to Fries Decl.) The 26 Electronic Opt-Out Acknowledgement included the following statement: 27 28 -519cv1842 Case 3:19-cv-01842-BAS-LL Document 39 Filed 01/27/21 PageID.551 Page 6 of 23 After having carefully considered its components, I am opting out of Solution Channel. By opting out, I understand and agree that I am not required to participate in Solution Channel. I also understand that if I am already subject to another arbitration agreement, I will remain subject to that agreement. I am only opting out of Solution Channel by completing this form. 1 2 3 4 I ALSO UNDERSTAND THAT IF I DO NOT OPT OUT, I AM SPECIFICALLY CONSENTING TO PARTICIPATION IN SOLUTION CHANNEL. 5 6 7 8 (Ex. D to Fries Decl.) Employees could then check a box next to “I want to opt out of 9 Solution Channel,” enter their name, and click “Save” to record their opt-out. (Fries Decl. 10 ¶ 14.) 11 In their Renewed Motion, Defendants now provide documentary evidence 12 establishing Plaintiff’s receipt of the SCA and his subsequent decision to opt out. On 13 October 6, 2017, Charter’s Executive Vice President Paul Marchand announced via email 14 the implementation of the Solution Channel program to “all non-union employees below 15 the level of Executive Vice President, who were active, or who were not on a leave of 16 absence, on that date[.]” (Fries Decl. ¶ 5; SCA email, Ex. A to Fries Decl.) The email 17 noted: “Unless you opt out of participating in Solution Channel within the next 30 days, 18 you will be enrolled. Instructions for opting out of Solution Channel are also located on 19 Panorama.” (Fries Decl. ¶ 8; SCA email.) The email also included a link to the Solution 20 Channel web page on the Charter website, which in turn included a link to access the SCA. 21 (Fries Decl. ¶¶ 9, 10; Solution Channel webpage, Ex. B to Fries Decl.; SCA, Ex. C to Fries 22 Decl.)7 23 24 25 7 Fries attests that this webpage also included a clause about opting out of the SCA, which stated the following: Opting Out of Solution Channel 26 27 If you do not opt out of Solution Channel within the designated time, you will be automatically enrolled in Solution Channel and considered to have consented to the terms of the Mutual Arbitration Agreement at that time. To opt-out of Solution Channel, please 28 -619cv1842 Case 3:19-cv-01842-BAS-LL Document 39 Filed 01/27/21 PageID.552 Page 7 of 23 1 Employees could opt out of Solution Channel using network credentials to access a 2 system called PeopleSoft. (Fries Decl. ¶¶ 13–14; PeopleSoft Solution Channel Page, Ex. 3 D to Fries Decl.) Charter maintains a record of employees who opted out of Solution 4 Channel within the 30-day period. (Fries Decl. ¶ 18.) John Fries, as Vice President, HR 5 Technology, has attested that he has access to this and other employment records and 6 confirmed that Plaintiff: (1) was a Charter employee on October 6, 2017; (2) was included 7 in the distribution list for the email sent by Paul Marchand announcing the Solution Channel 8 program; and (3) opted out of Solution Channel on October 18, 2017. (Id. ¶¶ 19–21; SCA 9 email to Sonico, Ex. E to Fries Decl., ECF No. 36-2; Sonico’s Electronic Opt-Out 10 Acknowledgment, Ex. F to Fries Decl., ECF No. 36-2.) The parties agree that Plaintiff 11 timely opted out of the SCA. 12 II. LEGAL STANDARD 13 The Federal Arbitration Act (“FAA”) applies to contracts involving interstate 14 commerce. 8 9 U.S.C. §§ 1, 2. The FAA provides that contractual arbitration agreements 15 “shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in 16 equity for the revocation of any contract.” Id. § 2. The primary purpose of the FAA is to 17 ensure that “private agreements to arbitrate are enforced according to their terms.” Volt 18 Info. Scis., Inc. v. Bd. of Trs. of the Leland Stanford Junior Univ., 489 U.S. 468, 479 (1989). 19 Therefore, “as a matter of federal law, any doubts concerning the scope of arbitrable issues 20 should be resolved in favor of arbitration.” Moses H. Cone Mem’l Hosp. v. Mercury Constr. 21 Corp., 460 U.S. 1, 24–25 (1983). 22 23 24 25 26 27 28 click here. In the new window that will open, click Main Menu->Self-Service->Solution Channel. (Fries Decl. ¶ 11.) Fries states that the link led to the page where employees could elect to opt-out of the SCA. This webpage is not attached and is presumably one of the Panorama webpages that allegedly existed during the opt-out window but cannot not be recovered by Charter. (See Fries Decl. ¶ 22.) 8 The FAA encompasses “contract[s] evidencing a transaction involving commerce to settle by arbitration.” 9 U.S.C. § 2. “Commerce” is defined as “commerce among the several States.” Id. § 1; Citizens Bank v. Alafabco, Inc., 539 U.S. 52, 56 (2003) (citation omitted). Charter’s representation that it is engaged in interstate commerce is undisputed. (Renewed Mot. at 8–9.) -719cv1842 Case 3:19-cv-01842-BAS-LL Document 39 Filed 01/27/21 PageID.553 Page 8 of 23 1 Given this strong federal preference for arbitration and the contractual nature of 2 arbitration agreements, “a district court has little discretion to deny an arbitration motion” 3 once it determines that a claim is covered by a written and enforceable arbitration 4 agreement. Republic of Nicar. v. Standard Fruit Co., 937 F.2d 469, 475 (9th Cir. 1991). 5 “In determining whether to compel a party to arbitration, a district court may not review 6 the merits of the dispute[.]” Esquer v. Educ. Mgmt. Corp., 292 F. Supp. 3d 1005, 1010 7 (S.D. Cal. 2017). 8 However, “question[s] of arbitrability” include “certain gateway matters” that are 9 “presumptively for courts to decide[.]” Oxford Health Plans LLC v. Sutter, 569 U.S. 564, 10 569 n.2 (2013); see also Momot v. Mastro, 652 F.3d 982, 987 (9th Cir. 2011) (identifying 11 “gateway questions of arbitrability” to include “whether the parties have a valid arbitration 12 agreement or are bound by a given arbitration clause, and whether an arbitration clause in 13 a concededly binding contract applies to a given controversy”); Mohamed v. Uber Techs., 14 Inc., 848 F.3d 1201, 1208 (9th Cir. 2016) (“[T]here is a presumption that courts will decide 15 which issues are arbitrable; the federal policy in favor of arbitration does not extend to 16 deciding questions of arbitrability.”). Thus, a district court must determine (1) whether a 17 valid arbitration agreement exists and, if so, (2) whether the agreement covers the relevant 18 dispute. See 9 U.S.C. § 4; Brennan v. Opus Bank, 796 F.3d 1125, 1130 (9th Cir. 2015) 19 (citing Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79, 84 (2002)). 20 III. ANALYSIS 21 As before, the primary dispute centers around whether any arbitration agreement 22 covers the underlying dispute between the parties. Defendants argue that Plaintiff’s opt- 23 out was effectively a rejection of the offer made in the SCA, leaving the JAMS Agreement 24 as the existing arbitration contract between the parties. (Renewed Mot. at 11–12.) In 25 opposition, Plaintiff maintains that the language of the SCA itself, the Guidelines, and 26 Plaintiff’s personal understanding support that the SCA was operable “upon conveyance to 27 the employee.” (Opp’n at 6.) Thus, Plaintiff argues that the SCA was effective as of 28 October 6, 2017, superseded the JAMS Agreement on this date, and then was subsequently -819cv1842 Case 3:19-cv-01842-BAS-LL Document 39 Filed 01/27/21 PageID.554 Page 9 of 23 1 rendered non-binding on Plaintiff when he opted out on October 18, 2017, leaving no 2 arbitration agreement between the parties. 3 For the reasons stated below, the Court first finds that Plaintiff did not enter into the 4 SCA such that it supersedes the JAMS Agreement. Second, the Court finds that the JAMS 5 Agreement is not procedurally or substantively unconscionable and therefore is 6 enforceable. 7 A. Controlling Agreement 8 The question here is whether a subsequent agreement, the SCA, was formed between 9 the parties such that it supersedes the JAMS Agreement. “It is a well settled principle of 10 contract law that a new agreement between the same parties on the same subject matter 11 supersedes the old agreement.” Mumin v. Uber Techs., Inc., 239 F. Supp. 3d 507, 524 12 (E.D.N.Y. 2017). To determine whether a superseding agreement was formed, courts must 13 apply “ordinary state-law principles that govern the formation of contracts.” Norcia v. 14 Samsung Telecomms. Am., LLC, 845 F.3d 1279, 1283 (9th Cir. 2017) (internal quotations 15 omitted). California Civil Code § 1550 requires four elements for contract formation: “(1) 16 parties capable of contracting; (2) their consent; (3) a lawful object; and (4) a sufficient 17 cause or consideration.” Shaw v. Regents of Univ. of Calif., 58 Cal. App. 4th 44, 52 (1997) 18 (quoting Marshall & Co. v. Weisel, 242 Cal. App. 2d 191, 196 (1966)). At issue in this 19 case is whether Plaintiff consented to the terms of the SCA before opting out. 20 “Every contract requires the mutual assent or consent of the parties.” Meyer v. 21 Benko, 55 Cal. App. 3d 937, 942 (1976). “Mutual assent is determined under an objective 22 standard applied to the outward manifestations or expressions of the parties, i.e., the 23 reasonable meaning of their words and acts, and not their unexpressed intentions or 24 understandings.” Alexander v. Codemasters Grp. Ltd., 104 Cal. App. 4th 129, 141 (2002). 25 It is typically “manifested by an offer communicated to the offeree and an acceptance 26 communicated to the offeror.” Donovan v. RRL Corp., 26 Cal. 4th 261, 271 (2001). In the 27 case of a written contract, a party’s assent can be manifested by a signature or through 28 conduct. See Marin Storage & Trucking, Inc. v. Benco Contracting & Eng’g, Inc., 89 Cal. -919cv1842 Case 3:19-cv-01842-BAS-LL Document 39 Filed 01/27/21 PageID.555 Page 10 of 23 1 App. 4th 1042, 1049 (2001) (“[O]rdinarily one who signs an instrument which on its face 2 is a contract is deemed to assent to all its terms.”); Esparza v. KS Indus., L.P., 13 Cal. App. 3 5th 1228, 1238 (2017) (“Under California law, consent to a written contract may be implied 4 by conduct.”). 5 Here, Plaintiff did not sign the SCA, and it is undisputed that Plaintiff opted out via 6 an Electronic Opt-Out Acknowledgement. (Ex. F to Fries Decl.) Thus, the Court must 7 determine if Plaintiff manifested mutual assent to the SCA when he received the email on 8 October 6, 2017 and before he exercised his opt-out option on October 18, 2017. The Court 9 finds that he did not. 10 First, Plaintiff does not allege that he conducted himself in a way that demonstrated 11 assent to the terms of the SCA. Regarding his own actions, he states only that “he believed 12 that the SCA was already implemented by the company and therefore believed the new 13 arbitration program to be operable and in effect prior to his decision to opt-out . . . .” (Opp’n 14 at 6; Am. Decl. of Justin Sonico in supp. of Opp’n (“Sonico Decl.”) ¶¶ 9–10, ECF No. 37- 15 1.) Such “unexpressed intentions or understandings,” without allegations that he took any 16 action or conducted himself consistent with this understanding, are not sufficient for mutual 17 assent. See Alexander, 104 Cal. App. 4th at 141; see also Norcia, 845 F.3d at 1285–86 18 (“Under California law, an offeree’s inaction after receipt of an offer is generally 19 insufficient to form a contract.”). 20 Second, Plaintiff alleges that the provision of the SCA making the agreement 21 effective “as of the date of [his] consent to participate in Solution Channel” establishes that 22 it became effective only “upon conveyance to the employee[.]” (Opp’n at 6.) The Court 23 disagrees. Other language in the documents accompanying the SCA indicate that Plaintiff’s 24 “consent to participate” was contingent on his decision whether to opt-out, not his receipt 25 of the agreement. For example, the Electronic Opt-Out Acknowledgement expressly states 26 that Plaintiff’s opt-out applied only to the SCA and that failing to opt out—not simply 27 receiving the SCA—constituted “specific[] consent[] to participation in Solution Channel.” 28 (See Exs. C, F to Fries Decl.) Further, Defendants also present evidence that the SCA email - 10 19cv1842 Case 3:19-cv-01842-BAS-LL Document 39 Filed 01/27/21 PageID.556 Page 11 of 23 1 and the Program Guidelines established that Plaintiff would be “enrolled” in Solution 2 Channel unless he opted out. (See SCA email to Sonico at 2 (“Unless you opt out of 3 participating in Solution Channel within the next 30 days, you will be enrolled.”); Program 4 Guidelines at 13 (“Current employees at the effective date of Solution Channel will be 5 enrolled in the Program, unless the employee opts out.”).)9 Taken together, the SCA and 6 related documents indicate that Plaintiff’s mutual assent to Solution Channel and his 7 enrollment in the program were to be established not by Plaintiff’s receipt of the SCA, but 8 by his failure to timely opt out. 9 Existing case law regarding opt-outs supports this view. Timely opting out of an 10 agreement has generally been understood to be a rejection of an offer. See Sawyer v. Bill 11 Me Later, Inc., No. CV 10-04461 SJO (JCGx), 2010 WL 5289537, at *3 (C.D. Cal. Oct. 12 4, 2010) (citing Circuit City Stores, Inc. v. Najd, 294 F.3d 1104, 1009 (9th Cir. 2002), aff’d, 13 692 F. App’x 356 (9th Cir. 2017)) (“A party accepts the revised contract if it does not 14 exercise a meaningful opportunity to ‘opt out’ provided by the other party to reject the 15 offer.”). Similarly, failing to opt out can constitute assent to an arbitration contract when, 16 among other things, the plaintiff has been informed of the significance of a failure to opt- 17 out. See Circuit City Stores, 294 F.3d at 1109; see also Prizler v. Charter Commc’ns, LLC, 18 19 20 21 22 23 24 25 26 27 28 9 According to Fries, the opt-out clause on the Solution Channel webpage also conditioned acceptance of the SCA on an employee’s failure to opt out of the program in 30 days. (See Fries Decl. ¶ 11 (“If you do not opt out of Solution Channel within the designated time, you will be automatically enrolled in Solution Channel and considered to have consented to the terms of the Mutual Arbitration Agreement at that time.”).) However, as the Court noted above (see footnote 6, supra), this language does not appear in the exhibit attached to the Motion. Under the Federal Rules of Evidence, “[a]n original writing . . . is required in order to prove its content unless these rules or a federal statute provides otherwise.” Fed. R. Evid. 1002. In this specific instance, the “original writing” is the Solution Channel webpage bearing this language. This has not been provided by Defendants. Further, Fries’ recitation of this clause in his declaration does not fall under any exception to the hearsay rule. The Fries Declaration is not itself “an admissible business record or summary of business records because it was prepared for litigation and not regularly kept as part of the practice of any business.” See Alarcon v. Vital Recovery Servs., Inc., 706 F. App’x 394, 395 (9th Cir. 2017) (citing Fed. R. Evid. 803(6)). It also does not serve as an admissible summary because Defendants have not alleged that the webpages associated with the Solution Channel Program are too voluminous to be conveniently examined, nor have they provided originals or duplicates of the webpage materials that accurately reflect the existence of this provision. See id. (citing Fed. R. Evid. 1006). Thus, the Court finds that this passage is not admissible and does not consider it in its analysis. See id. - 11 19cv1842 Case 3:19-cv-01842-BAS-LL Document 39 Filed 01/27/21 PageID.557 Page 12 of 23 1 No. 3:18-CV-1724-L-MSB, 2019 WL 2269974, at *3 (S.D. Cal. May 28, 2019) (holding 2 that a plaintiff’s failure to opt out of Charter’s Solution Channel program constituted 3 implied consent to its terms necessary for contract formation); Esquivel v. Charter 4 Commc’ns, Inc., No. CV 18-7304-GW (MRWx), 2018 WL 10806904, at *7 (C.D. Cal. 5 Dec. 6, 2018) (finding an employee’s “silence (in the form of a failure to opt-out) a 6 permissible expression of assent” where the employee received an email announcing the 7 implementation of the arbitration agreement and the opportunity to opt-out and had a pre- 8 existing employment relationship with the company); Gentry v. Sup. Court, 42 Cal. 4th 9 443, 468 (2007) (finding an employee “manifested his intent to use his silence, or failure 10 to opt out, as a means of accepting the arbitration agreement”), abrogated on other grounds 11 by AT&T Mobility LLC v. Concepcion, 563 U.S. 333 (2011). 12 Plaintiff points out that in some cases where a plaintiff signs a subsequent arbitration 13 agreement before exercising an opt-out option, courts have held that the agreement 14 supersedes any and all prior existing contracts. See Stiner v. Brookdale Senior Living, Inc., 15 810 F. App’x 531, 533 (9th Cir. 2020) (affirming denial of motion to compel arbitration 16 where a plaintiff’s legal representative signed an agreement to arbitrate that superseded an 17 earlier one and “[i]n that agreement, [the plaintiff] opted out of arbitration”); Arredondo v. 18 Sw. & Pac. Specialty Fin., Inc., No. 1:18-CV-01737-DAD-SKO, 2019 WL 4596776, at *6 19 (E.D. Cal. Sept. 23, 2019). However, a signature is a clear manifestation of assent. See 20 Marin Storage, 89 Cal. App. 4th at 1049. Here, Plaintiff did not sign the SCA or allege 21 any other conduct indicating assent before he elected to opt-out. See Norcia, 845 F.3d at 22 1284–87. Indeed, as explained above, Plaintiff’s decision to opt-out eight days after 23 receiving the SCA reflects the exact opposite. See id.; Sawyer, 2010 WL 5289537, at *3. 24 The Court therefore finds Stiner and Arredondo easily distinguishable from the case at bar. 25 Thus, Plaintiff’s argument that he entered into the SCA before opting out fails. 26 Plaintiff did not mutually assent to the SCA upon receipt of the agreement, and he later 27 affirmatively rejected the SCA when he timely opted out. See Sawyer, 2010 WL 5289537, 28 at *3. For this reason, Plaintiff did not enter into the SCA such that it supersedes the JAMS - 12 19cv1842 Case 3:19-cv-01842-BAS-LL Document 39 Filed 01/27/21 PageID.558 Page 13 of 23 1 Agreement. Having thus determined that the JAMS Agreement controls, the Court now 2 turns to the Plaintiff’s unconscionability arguments regarding that contract. 3 B. Unconscionability of the JAMS Agreement 4 Plaintiff argues that the JAMS Agreement should not be enforced because it is 5 unconscionable. (Opp’n at 7.) “Like other contracts, arbitration agreements can be 6 invalidated for fraud, duress, or unconscionability.” Chavarria v. Ralphs Grocery Co., 733 7 F.3d 916, 921 (9th Cir. 2013). As the party asserting unconscionability, Plaintiff bears the 8 burden of proving the defense. Tompkins v. 23andMe, Inc., 840 F.3d 1016, 1023 (9th Cir. 9 2016) (citing Sanchez v. Valencia Holding Co., LLC, 61 Cal. 4th 899, 911 (2015)). 10 “Under California law, a contract must be both procedurally and substantively 11 unconscionable to be rendered invalid.” Chavarria, 733 F.3d at 922 (citing Armendariz v. 12 Found. Health Psychcare Servs., Inc., 24 Cal. 4th 83, 114 (2000)). 13 “unconscionability on a sliding scale, so that the more substantively one-sided the contract 14 term, the less evidence of procedural unconscionability is required to conclude that the term 15 is unenforceable, and vice versa.” Davis v. Kozak, 53 Cal. App. 5th 897, 905 (2020). 16 1. Courts analyze Procedural Unconscionability 17 “The procedural element of the unconscionability analysis concerns the manner in 18 which the contract was negotiated and the circumstances of the parties at that time.” Gatton 19 v. T-Mobile USA, Inc., 152 Cal. App. 4th 571, 581 (2007) (citing Kinney v. United 20 HealthCare Servs., Inc., 70 Cal. App. 4th 1322, 1329 (1999)). “The element focuses on 21 oppression or surprise.” Id. (citing Armendariz, 24 Cal. 4th at 114). “Oppression arises 22 from an inequality of bargaining power that results in no real negotiation and an absence 23 of meaningful choice.” Id. (citing Flores v. Transam. HomeFirst, Inc., 93 Cal. App. 4th 24 846, 853 (2001)). “Surprise is defined as ‘the extent to which the supposedly agreed-upon 25 terms of the bargain are hidden in the prolix printed form drafted by the party seeking to 26 enforce the disputed terms.’” Id. (quoting Stirlen v. Supercuts, Inc., 51 Cal. App. 4th 1519, 27 1532 (1997)). “The procedural element of an unconscionable contract generally takes the 28 form of a contract of adhesion, which, imposed and drafted by the party of superior - 13 19cv1842 Case 3:19-cv-01842-BAS-LL Document 39 Filed 01/27/21 PageID.559 Page 14 of 23 1 bargaining strength, relegates to the subscribing party only the opportunity to adhere to the 2 contract or reject it.” Little v. Auto Stiegler, Inc., 29 Cal. 4th 1064, 1071 (2003) (citation 3 omitted). (a) 4 Contract of adhesion 5 A procedural unconscionability analysis “begins with an inquiry into whether the 6 contract is one of adhesion.” Armendariz, 24 Cal. 4th at 113. Plaintiff states that the JAMS 7 Agreement is a contract of adhesion because Plaintiff’s acceptance of the agreement was a 8 condition of his employment and he was not provided an opportunity to negotiate or reject 9 its terms. (Sonico Decl. ¶¶ 5–7.) 10 “It is well settled that adhesion contracts in the employment context, that is, those 11 contracts offered to employees on a take-it-or-leave-it basis, typically contain some aspects 12 of procedural unconscionability.” Serpa v. Cal. Surety Investigations, Inc., 215 Cal. App. 13 4th 695, 704 (2013); see also OTO, L.L.C. v. Kho, 8 Cal. 5th 111, 126 (2019) (“Arbitration 14 contracts imposed as a condition of employment are typically adhesive.”). 15 The Court finds that the JAMS Agreement is no exception. As a TWC candidate for 16 employment, Plaintiff was required to complete web-based onboarding before he could 17 become employed. (See Cassidy Decl. ¶ 8.) The onboarding process in turn required that 18 the candidate accept a number of “Required Acknowledgements,” including the JAMS 19 Agreement. 20 “Required Acknowledgment”).) Most importantly, the JAMS Agreement itself states that 21 “[b]y accepting employment with [TWC],” Plaintiff was agreeing to arbitrate employment- 22 related claims. (JAMS Agreement at 1.) Because it was a condition of employment and 23 Plaintiff had no opportunity to negotiate its terms, the JAMS Agreement constitutes a 24 contract of adhesion. 25 procedurally unconscionable. Baltazar v. Forever 21, Inc., 62 Cal. 4th 1237, 1244 (2016) 26 (“Ordinary contracts of adhesion . . . contain a degree of procedural unconscionability even 27 without any notable surprises, and bear within them the clear danger of oppression and 28 overreaching.”) (quotations and citations omitted). (See Onboarding Status Details (listing “Arbitration Agreement” as a Armendariz, 24 Cal. 4th at 115. Therefore, it is somewhat - 14 19cv1842 Case 3:19-cv-01842-BAS-LL Document 39 Filed 01/27/21 PageID.560 Page 15 of 23 1 An “ordinary contract of adhesion” such as this one, however, requires “closer 2 scrutiny of its overall fairness” only where there is some “greater degree of procedural 3 unconscionability” in the form of oppression or surprise. See id. at 1246; OTO, 8 Cal. 5th 4 at 126. 5 unconscionability. 10 The Court therefore turns to Plaintiff’s other claims of procedural (b) 6 Oppression 7 Plaintiff alleges that the JAMS Agreement is procedurally unconscionable because 8 he was not provided an explanation of the terms, including his waiver of his constitutional 9 rights, or an opportunity to review the terms of the contract or consult with an attorney. 10 Defendants argue that consultations with an attorney or in-person explanations of the terms 11 of the contract are of no import. (Reply at 7.) 12 Defendants are only partly correct. While Plaintiff has failed to show that the 13 circumstances surrounding his acceptance of the JAMS Agreement warranted any 14 explanation from defendants, whether Plaintiff had sufficient time to review the JAMS 15 Agreement and was aided by an attorney are both relevant to determining whether the 16 agreement is oppressive. See OTO, 8 Cal. 5th at 127. 17 (i) Explanation from Defendants 18 “No law requires that parties dealing at arm’s length have a duty to explain to each 19 other the terms of a written contract[.]’” Ramos v. Westlake Servs. LLC, 242 Cal. App. 4th 20 674, 686 (2015) (quoting Brookwood v. Bank of Am., 45 Cal. App. 4th 1667, 1674 (1996)). 21 Further, because it is presumed that a party who accepts a document has “read it and 22 understand its contents[,]” Plaintiff has the burden of overcoming this presumption and 23 Defendants do not have to present “affirmative evidence that the agreements were 24 10 25 26 27 28 Plaintiff does not raise any arguments concerning surprise. In any event, the Court notes that the JAMS Agreement is a two-page contract that states in straightforward terms its purpose and conditions. This is not a prolix form hidden within a myriad of onboarding documents; in fact, given that TWC’s onboarding process took place online, the JAMS Agreement was delineated by a separate link and therefore easy to discern from other required acknowledgments. (See OBS Details.) Cf. Dougherty v. Roseville Heritage Partners, 47 Cal. App. 5th 93, 104 (2020) (finding procedural unconscionability where an arbitration agreement was “buried” in the middle of a 70-page packet of hospital admission documents). - 15 19cv1842 Case 3:19-cv-01842-BAS-LL Document 39 Filed 01/27/21 PageID.561 Page 16 of 23 1 explained to [Plaintiff] or that [he] understood them . . . .” Baker v. Italian Maple Holdings, 2 LLC, 13 Cal. App. 5th 1152, 1163 (2017). Plaintiff says only that he did not receive any 3 explanation from Defendants about the JAMS Agreement (see Sonico Decl. ¶ 5); he does 4 not state that he asked for and was refused an explanation from Defendants, or even that 5 he did not understand the terms of the contract. See Martinez v. Vision Precision Holdings, 6 LLC, No. 1-19-CV-01002-DAD-JLT, 2019 WL 7290492, at *6 (E.D. Cal. Dec. 30, 2019) 7 (finding no oppression where the plaintiff made no effort to ask the defendant for more 8 time or assistance in reviewing an arbitration agreement). Thus, the Court finds that 9 Plaintiff’s attestations do not overcome the presumption that he read and understood the 10 11 JAMS Agreement. (ii) Time to review the JAMS Agreement 12 Whether Plaintiff had sufficient time to consider the JAMS Agreement prior to 13 accepting it requires closer scrutiny of the record. TWC made Plaintiff an “online offer of 14 employment” in 2014, which he accessed using the Onboarding System. (Cassidy Decl. ¶ 15 9.) The OBS System prompted Plaintiff to review and acknowledge 12 policies, the last 16 of which was the JAMS Agreement. (Id. ¶¶ 11–13.) TWC instructed new hires to 17 “complete the Onboarding process as soon as possible” but did not specify a time limit. 18 (OBS Checklist, Ex. C to Cassidy Decl.) Moreover, the time stamps indicate that Plaintiff 19 spent roughly 40 minutes reviewing the 12 policies, and took a little over 20 seconds to 20 review the JAMS Agreement. (See OBS Details.) Plaintiff does not allege that this cursory 21 review was subject to any time constraint—or, indeed, any other type of pressure— 22 imposed by TWC, but offers only the conclusory attestation that he “do[es] not believe [he] 23 had a meaningful opportunity to review any of the documents or policies presented to [him] 24 during the on-boarding process[.]” (Sonico Decl. ¶ 6.) Without more, this conclusory 25 statement is insufficient to support Plaintiff’s claim that he did not receive enough time to 26 review the JAMS Agreement. See Rejuso v. Brookdale Senior Living Communities, Inc., 27 No. CV 17-5227 DMG (RAOx), 2018 WL 6174764, at *6 (C.D. Cal. June 5, 2018) (citing 28 Nigro v. Sears, Roebuck & Co., 784 F.3d 495, 497 (9th Cir. 2015)) (disregarding a self- 16 19cv1842 Case 3:19-cv-01842-BAS-LL Document 39 Filed 01/27/21 PageID.562 Page 17 of 23 1 serving declaration that stated only conclusions and not facts that would be admissible 2 evidence); see also Ruiz, 232 Cal. App. 4th at 842. (iii) 3 Plaintiff’s ability to consult counsel 4 The ability to talk to an attorney before signing an arbitration agreement is properly 5 considered in assessing procedural unconscionability. See OTO, 8 Cal. 5th at 127; Swain 6 v. LaserAway Med. Grp., Inc., 270 Cal. Rptr. 3d 786, 796 (2020), as modified (Nov. 3, 7 2020). It is undisputed that Plaintiff did not sign the JAMS Agreement with the aid of an 8 attorney. However, Plaintiff does not explain why he was unable to secure an attorney 9 before acknowledging the agreement. See Martinez, 2019 WL 7290492, at *6. For 10 example, as aforementioned, he does not state that Defendants provided too little time to 11 review the JAMS Agreement or otherwise exerted pressure on him to sign it, apart from 12 that inherent in any contract proffered as a condition of employment. Cf. Swain, 270 Cal. 13 Rptr. 3d at 796 (finding absence of attorney, time constraints, and other pressure exerted 14 by defendants gave rise to additional procedural unconscionability). 15 In light of this, the Court therefore finds that the absence of an attorney reflects some, 16 though not any significant, level of oppression in the procedural unconscionability analysis. 17 See Martinez, 2019 WL 7290492, at *6 (“[T]he fact that plaintiff may not have navigated 18 the Agreement with the skill of a more sophisticated party does not render it ‘highly 19 oppressive.’”). 20 21 (iv) JAMS Rules Lastly, Plaintiff alleges that Defendants’ failure to provide a copy of the arbitration 22 rules renders the JAMS Agreement procedurally unconscionable. (Opp’n at 10.) 23 Defendants instead provided a link to the JAMS rules on the onboarding webpage where 24 the JAMS Agreement was located. (Ex. C to Cassidy Decl.) 25 California courts have reached different conclusions about whether the failure to 26 attach a copy of the rules renders a contract as a whole procedurally unconscionable. See 27 Tiri v. Lucky Chances, Inc., 226 Cal. App. 4th 231, 246 n.9 (2014) (citing cases). More 28 recently, however, the California Supreme Court clarified that the failure to attach - 17 19cv1842 Case 3:19-cv-01842-BAS-LL Document 39 Filed 01/27/21 PageID.563 Page 18 of 23 1 arbitration rules to an arbitration agreement does not increase procedural unconscionability 2 where the plaintiff’s challenge to the enforcement of the agreement does not “depend[] in 3 some manner on the arbitration rules in question.” Baltazar, 62 Cal. 4th at 1246. 4 Here, Plaintiff’s challenges to the enforcement of the JAMS Agreement do not 5 concern some aspect of the JAMS Rules themselves. The sole substantive 6 unconscionability claim, discussed below, involves the agreement’s jury trial waiver. No 7 part of the JAMS Rules concern juries. Moreover, the waiver of jury trials was contained 8 in the JAMS Agreement itself, not “artfully hidden” by the incorporation by reference of 9 the JAMS Rules by Defendants. Cf. Ali v. Daylight Transp., LLC, No. A157104, 2020 WL 10 7777912, at *9 (Dec. 4, 2020) (finding procedurally unconscionable the failure to attach 11 the rules where one claim of substantive unconscionability related to the requirement that 12 the plaintiff bear half the costs of arbitration, which was not included in the arbitration 13 agreement itself and only in the rules). 14 Plaintiff also does not argue that he was otherwise unable to access the rules via the 15 link or that he did not have enough time to read them at the time of contracting. See Davis, 16 53 Cal. App. 5th at 909; see also Lane v. Francis Capital Mgmt. LLC, 224 Cal. App. 4th 17 676, 691 (2014) (holding failing to attach rules to arbitration agreement did not render the 18 agreement procedurally unconscionable because rules were easily accessible on the 19 internet and the plaintiff did not lack means or capacity to retrieve them). Thus, the Court 20 concludes Defendants’ failure to provide a copy of the JAMS Rules with the JAMS 21 Agreement does not add to the level of procedural unconscionability. 22 In sum, aside from the standard adhesive nature of the JAMS Agreement, the Court 23 finds some additional procedural unconscionability only in the fact that Plaintiff did not 24 have the aid of an attorney. Plaintiff’s remaining arguments do not militate in favor of 25 procedural unconscionability. Thus, there is a low degree of procedural unconscionability. 26 2. Substantive Unconscionability 27 When the degree of procedural unconscionability of an adhesion contract is low, 28 “the agreement will be enforceable unless the degree of substantive unconscionability is - 18 19cv1842 Case 3:19-cv-01842-BAS-LL Document 39 Filed 01/27/21 PageID.564 Page 19 of 23 1 high.” Poublon v. C.H. Robinson Co., 846 F.3d 1251, 1263 (9th Cir. 2017) (citing Serpa, 2 215 Cal. App. 4th at 704). Substantive unconscionability focuses on the harshness and 3 one-sided nature of the substantive terms of the contract. A & M Produce Co. v. FMC 4 Corp., 135 Cal. App. 3d 473, 486–87 (1982). “Substantive unconscionability ‘may take 5 various forms,’ but typically is found in the employment context when the arbitration 6 agreement is ‘one-sided’ in favor of the employer without sufficient justification, for 7 example, when ‘the employee’s claims against the employer, but not the employer’s claims 8 against the employee, are subject to arbitration.’” Serpa, 215 Cal. App. 4th at 703 (quoting 9 Little, 29 Cal. 4th at 1071). 10 The Supreme Court of California has held that governing California constitutional 11 and statutory provisions do not permit predispute jury waivers. Grafton Partners v. 12 Superior Court, 36 Cal. 4th 944, 967 (2005). Recent decisions have applied Grafton to 13 hold that provisions requiring “plaintiffs to waive in advance their right to a jury trial for 14 any dispute for which arbitration is not allowed by law” are unconscionable under 15 California law. Dougherty, 47 Cal. App. 5th at 107; Durruthy v. Charter Commc’ns, LLC, 16 No. 20-CV-1374-W-MSB, 2020 WL 6871048, at *12 (S.D. Cal. Nov. 23, 2020) (citing 17 Dougherty to find predispute jury trial waiver “clearly” unconscionable under California 18 law); see also Lange v. Monster Energy Co., 46 Cal. App. 5th 436, 452 (2020) (finding 19 provision that required both parties, “in the event that any controversy or claim is 20 determined in a court of law,” to “irrevocably waive” right to a jury trial for disputes 21 covered by contract was “not susceptible to any interpretation other than as an 22 unconscionable predispute jury trial waiver”). 11 23 11 24 25 26 27 28 At least one district court has declined to hold, as a matter of law, “that a trial to a court rather than a jury favors any party in any degree.” Phoenix Leasing. v. Sure Broadcasting, Inc., 843 F. Supp. 1379, 1385 (D. Nev. 1994) (construing federal and California law regarding jury trial waiver to find that because “[t]here is no presumption that a trial to a court is unconscionably more favorable to a lender than a jury trial”), aff’d, 89 F.3d 846 (9th Cir. 1996). However, given the intervening state court decisions cited above, the Court finds that the reasoning in Phoenix Leasing is no longer supported by prevailing state law, which governs unconscionability. See Doctor’s Assocs., Inc. v. Casarotto, 517 U.S. 681, 682 (1996) (“Generally applicable contract defenses, such as fraud, duress, or unconscionability, may be applied to invalidate arbitration agreements without contravening § 2 [of the FAA].”). - 19 19cv1842 Case 3:19-cv-01842-BAS-LL Document 39 Filed 01/27/21 PageID.565 Page 20 of 23 1 The relevant provision in the JAMS Agreement states: 2 In the event a dispute between you and TWC is not arbitrable under this Agreement for any reason and is pursued in court, you and TWC agree to waive any right to a jury trial that might otherwise exist. 3 4 5 (JAMS Agreement at 2.) In other words, this clause requires Plaintiff to waive his right to 6 a jury trial if he raises an employment issue that cannot proceed to arbitration. This is 7 therefore a predispute jury trial waiver prohibited by California law. See Dougherty, 47 8 Cal. App. 5th at 107. The provision is therefore substantively unconscionable. 9 3. Severance 10 Under California law, courts have discretion to sever an unconscionable provision 11 or refuse to enforce the contract in its entirety. See Cal. Civ. Code § 1670.5(a). The 12 relevant provision states: 13 16 If the court as a matter of law finds the contract or any clause of the contract to have been unconscionable at the time it was made the court may refuse to enforce the contract, or it may enforce the remainder of the contract without the unconscionable clause, or it may so limit the application of any unconscionable clause as to avoid any unconscionable result. 17 Id. The California Supreme Court “has interpreted this provision to mean that if a trial 18 court concludes that an arbitration agreement contains unconscionable terms, it then ‘must 19 determine whether these terms should be severed, or whether instead the arbitration 20 agreement as a whole should be invalidated.’” Lange, 46 Cal. App. 5th at 452–53 (quoting 21 Gentry, 42 Cal. 4th at 473). California courts have further held that “the strong legislative 22 and judicial preference is to sever the offending term and enforce the balance of the 23 agreement[,]” noting that refusing to enforce an entire agreement is “contemplate[d] . . . 24 only when an agreement is ‘permeated’ by unconscionability.’” Id. at 453 (alterations in 25 original) (quoting Roman v. Sup. Court, 172 Cal. App. 4th 1462, 1478 (2009)); see also 26 Armendariz, 24 Cal. 4th at 124 (“If the central purpose of the contract is tainted with 27 illegality, then the contract as a whole cannot be enforced. If the illegality is collateral to 28 the main purpose of the contract, and the illegal provision can be extirpated from the 14 15 - 20 19cv1842 Case 3:19-cv-01842-BAS-LL Document 39 Filed 01/27/21 PageID.566 Page 21 of 23 1 contract by means of severance or restriction, then such severance and restriction are 2 appropriate.”). 3 Plaintiff argues that the substantively unconscionable waiver “irreparably taints the 4 entire contract.” 5 appropriate here where the contract contains a severability provision. While California law 6 is unequivocal about the unconscionability of the waiver provision, the Court finds that it 7 does not permeate the entire JAMS Agreement with unconscionability such that it cannot 8 be severed. 9 10 11 12 13 14 15 (Opp’n at 11–12.) Defendants disagree, arguing that severance is Preliminarily, the Court notes that the JAMS Agreement contains the following severability provision: You and TWC agree that if the Agreement or any clause or term of the Agreement is found to be void, unenforceable, or unconscionable, the remainder of the Agreement shall be enforced without the invalid, unenforceable, or unconscionable clause or term, or the application of the clause or term shall be limited as to avoid any invalid, unenforceable, or unconscionable result. 16 (JAMS Agreement at 2.) See Grabowski v. Robinson, 817 F. Supp. 2d 1159, 1179 (S.D. 17 Cal. 2011) (considering severability clause); see also Lang v. Skytap, Inc., 347 F. Supp. 3d 18 420, 433 (N.D. Cal. 2018) (same). 19 When determining whether unconscionability permeates an arbitration agreement, 20 courts consider several factors: (1) whether there are multiple unconscionable provisions; 21 (2) whether the central purpose of the contract is illegal; and (3) whether the court can 22 eliminate the unconscionability from the contract by striking or restricting provisions— 23 instead of rewriting or reforming the agreement. See, e.g., Poublon, 846 F.3d at 1272–73 24 (citing cases); see also Armendariz, 24 Cal. 4th at 124–25. 25 The factors favor severing the waiver provision. First, the waiver is the sole 26 unconscionable provision in the JAMS Agreement. See Butterfield v. Fedex Office, No. 27 SA CV 18-00033 AG (KESx), 2018 WL 5919208, at *3 (C.D. Cal. July 16, 2018) 28 (concluding that a jury trial waiver did not “‘permeate’ the rest of the agreement such that - 21 19cv1842 Case 3:19-cv-01842-BAS-LL Document 39 Filed 01/27/21 PageID.567 Page 22 of 23 1 compelling arbitration would be inappropriate”); cf. Lange, 46 Cal. App. 5th at 451–52, 2 455 (finding provisions waiving the right to punitive damages as remedy for all 3 nonstatutory claims, the requirement that the employer establish all essential elements for 4 issuance of injunction, and the right to a jury trial together permeated contract “with too 5 high a degree of unconscionability for severance to rehabilitate”); Dougherty, 47 Cal. App. 6 5th at 101, 107 (finding no abuse of discretion where trial court declined to sever “multiple 7 defects” in arbitration agreement, including “restrictions on discovery, limitations on 8 damages, and advance waiver of jury trial rights for any nonarbitrable causes of action”). 9 Second, the central purpose of the JAMS Agreement is to mandate arbitration of 10 employment-related claims, which is indisputably lawful. The objective of the jury trial 11 waiver is clearly collateral to this central purpose because the waiver intends to require 12 bench trials for any disputes that cannot be subject to the agreement’s mandate. See 13 Armendariz, 24 Cal. 4th at 124. 14 Third, the jury trial waiver is a single sentence that does not rely on or create any 15 conditions for other provisions in the JAMS Agreement; it can therefore be easily stricken 16 without requiring “reform[ing] the contract by augmenting it or otherwise rewriting the 17 parties’ agreement.” Conyer v. Hula Media Servs., LLC, 53 Cal. App. 5th 1189, 1198 18 (2020). 19 Because the Court finds the JAMS Agreement is not permeated with 20 unconscionability, severing the jury trial waiver from the contract under California Civil 21 Code § 1670.5(a) is appropriate. 22 unconscionability defense to enforcement of the JAMS Agreement, and the Court will 23 compel arbitration upon severing the provision from the contract. 24 IV. The Court thus ultimately rejects Plaintiff’s CONCLUSION 25 In light of the foregoing, the Court GRANTS Defendant’s Renewed Motion to 26 Compel Arbitration (ECF No. 36) under the JAMS Agreement. Specifically, the Court 27 severs the predispute jury trial waiver from the JAMS Agreement discussed above. The 28 Court also ORDERS the parties to proceed to arbitration in California in the manner - 22 19cv1842 Case 3:19-cv-01842-BAS-LL Document 39 Filed 01/27/21 PageID.568 Page 23 of 23 1 provided for in the JAMS Agreement. See 9 U.S.C. § 4. In addition, the Court STAYS 2 this action. See id. § 3. 3 Last, the Court directs the Clerk of Court to ADMINISTRATIVELY CLOSE this 4 case. The decision to administratively close this case pending resolution of the arbitration 5 does not have any jurisdictional effect. See Dees v. Billy, 394 F.3d 1290, 1294 (9th Cir. 6 2005) (“[A] district court order staying judicial proceedings and compelling arbitration is 7 not appealable even if accompanied by an administrative closing. 8 administratively closing a case is a docket management tool that has no jurisdictional 9 effect.”). 10 An order IT IS SO ORDERED. 11 12 DATED: January 27, 2021 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 - 23 19cv1842

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