Declaration

Cal. Super. - 6th Dist.April 5, 2021

1o 1 1 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 LITTLEORWMEauegtfnaN 7m F oor San Jose, CA 95113.2431 408.998.4150 DEANGELO DANIELS, individually, and 0n behalf of other members 0f the general public similarly situated; GARUDA LABS, INC dba INSTAWORK, an unknown business entity; and DOES 1 through 21 CV379147 Santa Clara - Civil ANDREW M. SPURCHISE, Bar No. 245998 aspurchise@littler.com LITTLER MENDELSON P.C. 900 3rd Avenue, 8th Floor New York, NY 10022-3298 Telephone: 212.583.9600 Fax No.2 212.832.2719 ELISA NADEAU, Bar N0. 199000 enadeau@littler.com LINDA NGUYEN BOLLINGER, Bar No. 2895 1 5 lbollinger@littler.com ALEC S. DIMARIO, Bar No. 309811 adimario@littler.com LITTLER MENDELSON, P.C. 50 W. San Fernando, 7th Floor San Jose, CA 951 13.2431 Telephone: 408.998.4150 Fax No.2 408.288.5686 Attorneys for Defendant GARUDA LABS, INC. dba INSTAWORK Electronically Filed by Superior Court of CA, County of Santa Clara, on 10/20/2021 3:04 PM Reviewed By: R. Walker Case #21 CV379147 Envelope: 7504423 SUPERIOR COURT OF THE STATE OF CALIFORNIA COUNTY OF SANTA CLARA Plaintiff, V. 100, inclusive, Defendants. Case No. 2 1CV379 147 Honorable Patricia M. Lucas Department 3 DECLARATION OF ALEC S. DIMARIO IN SUPPORT OF DEFENDANT GARUDA LABS, INC. DBA INSTAWORK'S REPLY IN SUPPORT OF MOTION TO COMPEL ARBITRATION, STRIKE CLASS ALLEGATIONS, AND STAY PROCEEDINGS Hearing Date: October 27, 2021 Hearting Time: 1:30 pm Department: 3 Complaint filed: April 5, 2021 Case No. 21CV379147 DIMARIO DECLARATION IN SUPPORT OF DEFENDANT'S REPLY IN SUPPORT OF MOTION TO COMPEL ARBITRATION, STRIKE CLASS ALLEGATIONS, AND STAY PROCEEDINGS 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 LITTLER MENDELSON P.C. Attorneys at Law 7U! Fluol San Jose, CA 951131431 408.998.4150 I, Alec S. DiMario, declare as follows: 1. I am an attorney with the law firm of Littler Mendelson, P.C., attorneys 0f record for Defendant Garuda Labs, Inc. dba Instawork (“Defendant”) in this action. I have personal knowledge of the facts set forth below and, if called as a witness, I could and would competently testify thereto. 2. Attached hereto as Exhibit A is a true and correct copy of the Order, dated December 9, 2020, granting in part Garuda Labs, Inc.’s Motion to Compel Arbitration, Strike Class Allegations and Stay Proceedings entered in the related action entitled Tran v. Garuda Labs, Ina, Case No. RG20061241, in Alameda County Superior Court. 3. The Contractor Services Agreement (“CSA”) in the related Tran action is the same as the CSA accepted by Daniels on November 9, 2020 (see Exhibit B to the Stepinski Declaration). I declare under penalty ofperjury under the laws ofthe State ofCalifornia that the foregoing is true and correct. Executed this 20th day 0f October, 2021, at Berkeley, California. Albi/ESW Alec S. DiMario 4866-7434-6240] / 108436-1004 2 Case No. 21CV379147 DIMARIO DECLARATION IN SUPPORT OF DEFENDANT'S REPLY IN SUPPORT OF MOTION TO COMPEL ARBITRATION, STRIKE CLASS ALLEGATIONS, AND STAY PROCEEDINGS EXHIBIT A Cohelan & Khoury Attn: Singer, Michael D. 605 C Street Suite 200 Littler Mendelson P.C Attn: Bollinger, Linda Nguyen 50 West San Fernando Street 7th Floor San Jose, CA 95 113 San Diego, CA 92101-5305 Superior Court of California, County of Alameda Rene C. Davidson Alameda County Courthouse Tran No. RG20061241 Plaintiff/Petitioners) Order VS. Motion to Compel (Motion) Partial GrantGaruda Labs, Inc Defendant/Respondent(s) (Abbreviated Title) The Motion to Compel (Motion) filed for Garuda Labs, Inc was set for hearing on 12/09/2020 at 03:00PM in Department 19 before the Honorable Stephen Kaus. The Tentative Ruling was published andwas contested. The matter was argued and submitted, and good cause appearing therefore, IT IS HEREBY ORDERED THAT: Defendant Garuda Labs, Inc. dba Instawork ("Defendant") Motion to Compel Arbitration, Strike ClassAllegations and Stay Proceedings (the "Motion") is GRANTED IN PART, as set forth below. This ruling follows a hearing on December 9, 2020. Defendant operates software applications which allow individuals seeking short-term or longer-termemployment opportunities from employers who sign up to participate in Defendant's network. PlaintiffTai Tran ("Plaintiff") used Defendant's Instawork application to obtain employment for a short period inlate 2019 and/or early 2020 and now brings a class action lawsuit on behalf of himself and othersimilarly situated contractor/employee users of Defendant's Instawork application alleging that theyhave been misclassified as independent contractors rather than employees under the California LaborCode and alleging various wage and hour Labor Code violations that apply to California employees. FACTS Defendant is the creator of software applications ("apps") designed to connect business with"independent contractors," whom Defendant refers to as "pros" for either short-term work, whichDefendant refers to as "gigs," or longer-term employment. (Moving Kar Dec. 5j 3.) Pros do not pay tojoin Defendant's app network. (Ibid.) However, in order to join Defendant's network, pros like Plaintiffmust agree to two on-line arbitration agreements. First, in order to create an account, a pro mustdownload the app and then agree to Defendant's Privacy Policy and Terms of Use, the latter of whichcontains an arbitration provision. (Id. at f 4 and Exh. C.) Then, after uploading the pro's prior employment and other information, the pro may look and apply forgigs. In order to do so, the pro must first review Defendant's Contractor Services Agreement ("CSA").The pro must scroll down through the entire CSA and then click a button stating "I accept" in order toagree to the CSA's terms and to be able then apply for a gig. (Id. at *! 5 and Exh. B.) Defendant presents evidence that Plaintiff clicked a button accepting Defendant's Terms of Use on Order 11/12/2019 and clicked a button accepting Defendant's CSA on 12/4/2019, when he negotiated his first gig with a third-party business. (Id. at 9-10 and Exhs. D-E.) Plaintiff in opposition declares that he has never seen or read Defendant's "Terms of Use" and does not recall seeing a hyperlink to either Defendant's Privacy Policy or Terms of Use when created his Instawork account. (Opp. Tran Dec. *!(!2-3.) Further, Defendant contends that the operative arbitration agreement is the one contained in the CSA, asthe later executed arbitration agreement. (See Moving MPA at p. 8 fh, 2.) Plaintiff does not contest either that he entered into the CSA or the terms of the CSA as attached as Exh. B to the Moving Kar Dec. Therefore, the Court will consider the CSA as the operative agreement between the parties forpurposes of this motion. The third paragraph of the CSA states in all capital letters in the top half of the first page: "PLEASE NOTE: SECTION 16 OF THIS AGREEMENT AFFECT HOW DISPUTES BETWEEN YOU AND THE COMPANY ARE RESOLVED. THEY CONTAIN ARBITRATION PROVISIONSTHAT REQUIRE DISPUTES TO BE ARBITRATED ON AN INDIVIDUAL BASIS AND PROHIBIT CLASS ACTION CLAIMS. BY ACCEPTING THESE TERMS OF THIS AGREEMENT. YOU AGREE TO BE BOUND BY THAT ARBITRATION PROVISION. PLEASEREAD IT CAREFULLY. (Kar Dec. Exh. B at p. 1.) § 16 of the CSA entitled "Arbitration and Equitable Relief' states in relevant part: "The Company and Contractor mutually agree to resolve any legal disputes, past, present or Iliture, between them, or between Contractor and any of Company's employees, agents, parents, subsidiaries, [etc.], exclusively through final and binding arbitration instead of a court or jury trial. The parties agree that this arbitration agreement is governed by the U.S. Federal Arbitration Act. ... However, if ... theFederal Arbitration Act is found not to apply, this arbitration agreement will be governed by the law ofthe state where the Contractor last performed services under this Contract. Except as specifically provided below with respect to the Class and Representative Action waiver, this arbitration agreementshall apply to any and all claims arising out of or relating to this Agreement (including without limitation the scope, enforceability, validity or conscionability of this arbitration agreement itself), the Contractor's classification as an independent contractor, Contractor's provision of services to Companyor its Customers, the payments received by Contractor for providing services to Company or its Customers, the termination of this Contract, and all other aspects of the Contractor's relationship withCompany." (Id., Exh. B at p. 7.) § 16.b of the CSA contains a "Class Action Waiver" that states in relevant part: "The Company and the Contractor mutually agree that by entering into this agreement to arbitrate, bothwaive their right to have any dispute or claim brought, heard or arbitrated as a class action or collectiveaction, and an arbitrator shall not have any authority to hear or arbitrate any class or collective action... [A]ny claim in court that all or part of this Class Action Waiver is unenforceable, unconscionable, voidor voidable may be determined only by the court and not by an arbitrator. ... [If] there is a final determination that all or a portion of the Class Action Waiver is unenforceable, [the class action mustbe litigated in court], but the portion of the Class Action Waiver that is enforceable shall be enforced inarbitration." (Ibid.) § 16. c of the CSA provides in relevant part that "any disputes" regarding Contractor's status asan independent contractor "shall be subject to arbitration. " (Id. Exh. B at p. 8.) Finally, § 16,d.8 of the CSA provides: "A party may apply to a court of competent jurisdiction for temporary or preliminary injunctive relief in connection with an arbitrable controversy in accordance with applicable law, and any such application shall not be deemed incompatible with or waiver of this agreement to arbitrate. The court to which theapplication is made is authorized to consider the merits of the arbitrable controversy to the extent it deems necessary in making its ruling, but only to the extent permitted by applicable law. All detenninations of final relief, however, will be decided in arbitration." Order (Ibid.) RELEVANT LAW "On petition of a party to an arbitration agreement alleging the existence of a written agreement to arbitrate a controversy and that a party thereto refuses to arbitrate such controversy, the court shall order the petitioner and the respondent to arbitrate the controversy if it determines that an agreement to arbitrate the controversy exists, unless it determines that: (a) The right to compel arbitration has been waived by the petitioner; or (b) grounds exist for the revocation of the agreement." (Code Civ. Proc. § 1281.2.) "The petitioner bears the burden of proving the existence of a valid arbitration agreement by a preponderance of the evidence, while a party opposing the petition bears the burden ofproving by a preponderance of the evidence any fact necessary to its defense. [Citations] The trial court sits as the trier of fact, weighing all the affidavits, declarations, and other documentary evidence, and any oral testimony the court may receive at its discretion, to reach a final determination." (Ruiz v. Moss Bros. Auto Group, Inc. (2014) 232 Cal.App.4th 836, 842.) "California has a strong public policy in favor of arbitration and any doubts regarding the arbitrability of a dispute are resolved in favor of arbitration." (Howard v. Goldbloom (2018) 30 Cal.App.5th 659, 663.) However, "[u]nder California law, it is presumed the judge will decide arbitrability, unless there is clear and unmistakable evidence the parties intended the arbitrator to decide arbitrability." (Dennison v. Rosland Capital LLC (2020) 47 Cal.App.5th 204, 209.) ANALYSIS As an initial matter, each parties' respective briefing was exceptionally well written, and the Court appreciated the clarity of each party's respective arguments. The Court has carefully reviewed the cases cited by the parties for and against the Motion and the language of the CSA's arbitration provisions. On its face, the first paragraph of § 16 of the CSA clearly and unmistakably delegates to the arbitrator the authority to rale on "any and all claims arising out of or relating to this Agreement (including without limitation the scope, enforceability, validity or conscionability of this arbitration agreement itself)." Plaintiff nevertheless argues that other provisions in § 16 render this seemingly unambiguous language delegating "conscionability" claims to the arbitrator ambiguous, citing to Hartley v. Sup. Ct. (2011) 196 Cal.App.4th 1249 and Parada v. Sup. Ct. (2009) 176 Cal.App.4th 1554. Having reviewed the Hartley and Parada decisions, the Court finds that the present arbitration clause is neither ambiguous nor inconsistent in the way that the Hartley and Parada arbitration clauses were. "In California, an agreement is ambiguous 'when it is capable of two or more constructions, both ofwhich are reasonable.'" (Lamps Plus, Inc. v. Varela (2019) 139 S. Ct. 1407, 1414-1415, quoting Powerine Oil Co. v. Superior Ct. (2005) 37 Cal. 4th 377, 390.) First, neither of the Hartley/Parada arbitration clauses expressly delegated "conscionability" claims to the arbitrator as the CSA does. Second, the CSA arbitration clause's carve-outs for a court to determine solely the enforceability of the § 16.b "Class Action Waiver" or to issue "temporary or preliminary injunctive relief' under § 16.d.8 are neither ambiguous not inconsistent. § 16 expressly states, "Except as specifically provided below with respect to the Class and Representative Action waiver, this arbitration agreement shall apply to any and all claims ..." Further, § 16.d.8 of the CSA contains no reference to "other equitable relief," as the Hartley/Parada arbitration clauses did. It was this reference to "other equitable relief from a court of competent jurisdiction" that the Hartley Court found ambiguous because "[a] claim that a contract is unenforceable on the ground of unconscionability is an equitable matter." (196 Cal.App.4th at 1257.) CSA § 16.d.8 also expressly states: "All determinations of final relief, however, will be decided in arbitration," which is consistent with § 16. That the CSA's arbitration clause allows the parties to seek temporary or preliminary injunctive relief from a Court rather than an arbitrator makes sense, because an arbitrator would have little ability to enforce a preliminary or temporary injunction in the way that a Court could through its contempt powers. Were an arbitrator to issue injunctive relief as part of his or her final decision, that relief may be enforced by entering the arbitrator's decision as a Court judgment pursuant to § 16(d)(7). Finally, the severability clauses in the Hartley/Parada arbitration agreements are distinguishable from the CSA's severability clause at § 16.g in that the Hartley/Parada provisions expressly referenced an Order unenforceability finding by "any court" (176 Cal.App.4th at 1566) or "a trier of fact of competent jurisdiction" (196 Cal.App.4th at 1257), which created ambiguity because they could reasonably be interpreted to mean that a court could rale on the enforceability of "any provision" of the Hartley/Parada arbitration agreements. The CSA's severability clause is silent as to who would make a determination that any provision of that arbitration agreement is unenforceable. However, § 16.g also contains a merger clause; and reading the CSA's arbitration agreement as a whole, it is clear and unambiguous that the arbitrator would make all determinations as to the enforceability of the arbitration agreement except for the carved-out § 16.b Class Action waiver. Because the delegation clause in § 16 is clear and unmistakable, the Court finds that the arbitrator in the first instance should consider Plaintiffs unconscionability claims regarding both the § 1 6 arbitration agreement and the CSA as a whole. Further, § 16.b is clear that the parties have agreed to arbitrate solely as to Plaintiffs individual claims and not on a class or collective basis. Wherefore the Court GRANTS the motion to compel Plaintiff to arbitrate his claims on an individual basis and to stay the proceedings herein until arbitration has been completed. However, the Court elects not to rale on Defendant's motion to strike the class allegations in this lawsuit at this time. Because Plaintiff has raised unconscionability claims, both to the arbitration agreement and the CSA as a whole, it is possible that an arbitrator could find the CSA unconscionable and unenforceable in its entirety. Thus, the Court deems it advisable to DENY Defendant's motion to strike the Complaint's class allegations WITHOUT PREJUDICE pending conclusion of arbitration proceedings, as ordered above. Further, although the Court has not fully considered the parties' respective arguments regarding Plaintiffs unconscionability arguments, the Court has ftilly read all of the parties' briefing. The Court notes that in Reply Defendant argues that Plaintiffs evidence and argument regarding his inability to pay for arbitration is a "nonissue" because Defendant is legally required to pay for the costs of arbitration pursuant to CCP § 1280(f). (See Reply Brief at p. 11:8-24.) The Court considers Defendant's argument to constitute an effective stipulation that Defendant will pay the costs of arbitration under CSA § 16. Wherefore, the Court ORDERS Defendant to pay the costs of the arbitration proceedings the Court has ordered above. At the hearing, Defendant raised the issue of what costs arc included. The court intends the term to mean arbitration costs as referred to in Armcndariz v. Foundation Health Psyohcare Services, Inc. (2000) 24 Cal,4th 83, 107-13, which describes "costs that are unique to arbitration" and is not here determining which costs are involved. Dated: 12/09/2020 Judge Stephen Kaus Order Superior Court of California, County of Alameda Rene C. Davidson Alameda County Courthouse Case Number: RG20061241 Order After Hearing Re: of 12/09/2020 DECLARATION OF SERVICE BY MAIL I certify that I am not a party to this cause and that a true and correct copy of the foregoing document was mailed first class, postage prepaid, in a sealed envelope, addressed as shown on the foregoing document or on the attached, and that the mailing of the foregoing and execution of this certificate occurred at 1225 Fallon Street, Oakland, California. Executed on 12/10/2020. Chad Finke Executive Officer / Clerk of the Superior Court By Digital Deputy Clerk