Motion To Compel Arbitration And Stay ProceedingsMotionCal. Super. - 4th Dist.September 12, 2018O o 0 9 O N n n B R A W N D D D N N N N N R = m m e a e e e e ® N A R W N D = O 0 ® N A L o N — ~ o o Jennifer B. Zargarof (SBN 204382) jzargarof@sidley.com Megan McDonough (SBN 317402) mmcdonough@sidley.com SIDLEY AUSTIN LLP 555 West Fifth Street, Suite 4000 Los Angeles, California 90013 Telephone: (213) 896-6000 Facsimile: (213) 896-6600 Peter F. Klett III (Tenn. Bar No. 12688) Pro Hac Vice To Be Filed pklett@dickinsonwright.com DICKINSON WRIGHT PLLC 424 Church St. Suite 800 Nashville, TN 37219 Telephone: (615) 620-1729 Facsimile: (844) 670-6009 Attorneys for Defendants JetPack Marketing, LLC and EventLink, LLC SUPERIOR COURT OF THE STATE OF CALIFORNIA FOR THE COUNTY OF ORANGE KRISTIE KOVTUN,an individual, and JEREMY PAUL,an individual, Plaintiffs, v. JETPACK MARKETING, LLC a California Limited Liability Company; EVENTLINK LLC, a Michigan Limited Liability Company; and DOES 1 through 150, inclusive, Defendants. Case No. 30-2018-01018059-CU-OE-CJC Assigned to: Hon. Melissa R. McCormick Department: C13 Complaint Filed: September 12, 2018 DEFENDANT’S NOTICE OF MOTION AND MOTION TO COMPEL ARBITRATION AND STAY PROCEEDINGS; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT THEREOF [Filed concurrently with Declaration ofLisa Jorissen, Declaration ofPeter Klett and [Proposed] Order] Date: January 31, 2019 Time: 1:30 pm Dept.: C13 Reservation ID: 72912494 DEFENDANTS’ NOTICE OF MOTION AND MOTION TO COMPEL ARBITRATION AND STAY PROCEEDINGS O o 0 N N A N n M R A W N D N D N N N N N N = o m e a e a a e a e e © N A A W N = O V N O U A B ® o N = 5 TO PLAINTIFFS KRISTIE KOVTUN, JEREMY PAUL AND THEIR COUNSEL OF RECORD: PLEASE TAKE NOTICEthat on January 31, 2018, at 1:30 p.m., or as soon thereafter as may be heard in Department C13 of the Orange County Superior Court, located at 700 Civic Center Drive West, Santa Ana, California 92701, Defendant JetPack Marketing, LLC will and hereby does move for an order compelling arbitration pursuant to a written arbitration agreement and an order staying this action. This Motion is brought pursuant to California Code of Civil Procedure §8 1281.2, et seq. and § 128.5, the Federal Arbitration Act (“FAA”), 9 U.S.C. §§ 2, 3, and 4, and supporting case law, on the groundsthat Plaintiffs are contractually boundto bring the claims set forth in the Complaintin arbitration. This motion is based on this notice of motion and motion, the accompanying Memorandum of Points and Authorities; the Declarations of Lisa Jorissen and Peter Klett filed concurrently herewith; all pleadings, papers, and records on file herein; all matters upon which judicial notice may be taken; any oral argument that may be presented at the hearing; and upon such other matters the Court deems just and necessary. Dated: ~~ October 18, 2018 SIDLEY AUSTIN LLP By: L /]~~ JengiterB. Zdfgarof / Attprneys for/ Defendants JetPack Marketing, LLC and EventLink, LLC 2 DEFENDANTS’ NOTICE OF MOTION AND MOTION TO COMPEL ARBITRATION AND STAY PROCEEDINGS S 0 0 N N U n p A W o 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 II. III. IV. TABLE OF CONTENTS Page INTRODUCTION ......ooovvvvvvrmnnniioieeeeesssssiceessenneseese sessoseerseos 1 FACTUAL BACKGROUND...........cccoovvvmmceecossrneeeeneseeseeesseseoeeomoeooeoooooooooooe 1 A. The Parties Entered Into an Enforceable Arbitration Agreement........................... 1 B. Plaintiffs Filed this Action in Violation of the Arbitration Agreement.................. 3 LEGAL ARGUMENT ......ccoovvmrriiccciceernesssssscosseeeeeeoeeeesesso3 A. Federal and State Law Mandate Enforcement of a Valid Arbitration AGIEEMENL.........ttosieecersesseseee ese eeeoooooeooooe 4 1. Under the FAA, Agreements to Arbitrate Employment Disputes Are Valid 4 2. Under California Law, Agreements to Arbitrate Employment Disputes AreValid... 5 B. The Parties Agreed to Arbitrate Their Disputes .........ccooviiveieiieeeeeeeeeee 6 1. An Arbitration Agreement Exists Between Plaintiff and Defendant... 6 2. Plaintiffs’ Claims Are Within the Scope ofthe Agreement....................... 7 C. The Agreements Are Valid and Enforceable .................oooovvoooomoo 8 1. The Agreements Are Not Procedurally Unconscionable......................... 8 2. The Agreements Are Not Substantively Unconscionable .......................... 9 3. The Court Should Sever Any Unconscionable Term ..........co.ooovvvoni 10 D. Plaintiff Refused to Stipulate to this Matter Proceeding in Arbitration................ 10 E. This Action Must Be Stayed Pending Completion of Arbitration...................... 11 CONCLUSION .....viiiiiietisieeesssseeseee11 i DEFENDANTS’ NOTICE OF MOTION AND MOTION TO COMPEL ARBITRATION AND STAY PROCEEDINGS O o © N N A U n R A W N I D N N N N N N N N = m m e m e m e p © N n R W = O 0 N N N R A W ON D = O o TABLE OF AUTHORITIES Page(s) Cases American Express Co. v. Italian Colors Rest., 133'S. Ct. 2304 (2013) .ociiiieieeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeee 3 AT&T Mobility LLC v. Concepcion, I31 8. Ct 1740 (2011)courseseeeeeeeee ee3,4,5 AT&T Techs., Inc. v. Comm ’ns Workers ofAm., : AT5 U.S. 643 (1986)...eeeeeeeeeeee sees esso 7 Becerra v. Newpark Mall Dental Group, No. 12-01325 LB, 2012 WL 3010973 (N.D. Cal. July 23, 2012) «+..veeveeeroeoeeeooeeoeooooo 5 Brookwood v. Bank ofAm., | 45 Cal. APD. 4th 1667 (1996) .....covmieiiiiiieieeeieeeeeeeee eee ee6 Chiron Corp v. Ortho Diagnostic Sys., Inc., 207 F.3d 1126 (9th Cir. 2000) ...coveiveiiirieiieieteeeeeeeeseesseesees es3 Cione v. Foresters Equity Services, Inc., 68 Cal.Rptr.2d 167 (Cal. Ct. APP. 1997) ..cuveeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeeoeeeoeo 5,6,11 Circuit City Stores, Inc., v. Adams, | 532 US. 105 (2001)cueseeeeeesessoeee 5 Coleman v. Jenny Craig, Inc., 11CV1301-MMA DHB, 2012 WL 3140299 (S.D. Cal. May 15, 2012) c..vovveevereeeeoereos 5 Condee v. Longwood Mgmt. Corp. , 88 Cal. App. 4th 215 (2001)vueseeeeee eee esseresesso. 7 Dean Witter Reynolds Inc. v. Byrd, ATO US. 213 (1985)cuitseeeeeeetersseesesos 4 E.E.O.C.v. Luce, Forward, Hamilton & Scripps, i 345 F.3d 742 (9th Cir. 2003) ....ovviiieiiiieie eeeeeessesesesees seersesses 9 Ferguson v. Countrywide Credit Industries, 298 F.3d 778 (9th Cir. 2002) ....c.vuevriiieeiiiieeieeceeeeeeeeeeseeseveseves eeeeres 10 Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20 (1991)cuvetteseeeeee seestees esoseee 5 Green Tree Fin. Corp.-Ala. v. Randolph, 53T US. 79 (2000)... sess es eres essere 8 ii DEFENDANTS’ NOTICE OF MOTION AND MOTION TO COMPEL ARBITRATION AND STAY PROCEEDINGS N O © 9 A w n A 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 S37 US. 79 (2002)coverseee6,7 KPMG LLP v. Cocchi, 1328. Ct. 23 (2011) (PI CUTIAM) ......ooooeeeevrverrrsaaaaeeeeeeeeeeeeceseseee ee4 ~ Lagatree v. Luce, Forward, Hamilton & Scripps, 74 Cal. App. 4th 1105 (1999) ..ovvvvvvveveeeeeeeeemmseenmnnnannnsaeseeseeeeeeeeeeeeeeeeseeeeeoee oo9 Little v. Auto Stiegler, Inc., 29 Cal. 4th 1064 (2003) ......ooouueeecceeerveeesssieenneeeeeeeeeeeceeeeeeeeeeee5 Madden v. Kaiser Found. Hosps., 17 Cal. 3d 699 (1976) .......eeeeestieteeee e tetas esseseee 5 McManus v. CIBC World Markets Corp., 134 Cal.Rptr.2d 446 (Cal. Ct. APD. 2003) ....vccovmveereeeeeeeeeeeeseeeeeeeeeooeeoeooeooeeoooeoeoeoo 8 Mercuro v. Superior Court, 96 Cal. App. 4th 167 (2002) ........ccoeurrrverrniririeeseeeeeeeeeceeeeeeeeeeeeeoeeoeoeooeooeoeooeooo 10 Mitsubishi Motors Corp. v. Soler Chrysler—Plymouth, Inc., 473 U.S. 614 (1985) inee8 Moncharsh v. Heily & Blase, 3 Cal. 4th 1 (1992)woooeeeeee5,6 Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp., 460 U.S. 1 (1983)iouseeeeee eee ee4,8 Pinnacle Museum Tower Ass'n v. Pinnacle Mkt. Dev. (US) LLC, 55 Cal. 4th 223 (2012) ooo8 Rodriguez v. American Technologies, Inc., | 136 Cal. App. 4th 1110 (2006) ....eouvvrnivereeeeeeeeeeeeeeeeeeee ee11 Rosenthal v. Great Western Fin. Securities Corp., 14 Cal. 4th 394 (1996) ........oevuiiieireieiiecesseseee ee6,7 Serpa v. California Surety Investigations, Inc., 215 Cal. App. 4th 695 (2013) c.oucvuieeiieiecieseeeeeeeeeee eee ee9 Shearson/Am. Express, Inc. v. McMahon, 482 U.S. 220 (1987)..........LLebeebeets ete te ete et estate teeta sees esos 8 Sonic-Calabasas A, Inc. v. Moreno, 311 P.3d 184 (2013)...eeeeeeeeeeee ee10 Vianna v. Doctors’ Management Co., 27 Cal. App. 4th 1186 (1994)o.ooeee5,6,8 iii Howsam v. Dean Witter Reynolds, Inc., DEFENDANTS’ NOTICE OF MOTION AND MOTION TO COMPEL ARBITRATION AND STAY PROCEEDINGS O o 0 I N R A W N D N D N N N N = m m e m e a p e e © N A A W N = O V ® N A L o P o - o o Volt Info. Sci., Inc. v. Bd. of Tr. ofLeland Stanford Jr. Univ., 489 U.S. 468 (1989) .....vvveivieetineeeeeeeeeeeeeeeeee ee5 Statutes FUS.Co§ LI SOG.iimiiiiiiiiiiceceeeeeeeeeeeeeeeeeeeesees4 9 U.S.C. §2mmeeeeee4 I ULS.C. §3eeeeeeeee eee eee ee 11 FUS.CL§Aese ee3,11 Cal. Civ. Code § 1670.5.........c.cooriierireciieeee ee8 Civ. Proc. €ode § 1281.2...eeeeee ee6 Civ. Proc. €ode § 1281.4 ......couuiiiiiiiniieceeeeeeeee eee eeeeeeeee ee11 Civ. Proc. Code § 1281.7 .......couiimmiriiiiiiieeeceeeeeeee eeeeee ee10 Civil COA § 1670.58) ....oeuurveurirrirniissiiieeeseeeseeeeeeeee sesso sees eee eee eee ee 10 Federal Arbitration Act (“FAA)ieeeeee,passim Other Authorities Cal RuCl 37eeeeeeeeeeee ee7 iv DEFENDANTS’ NOTICE OF MOTION AND MOTION TO COMPEL ARBITRATION AND STAY PROCEEDINGS p — S O N O R O N N N N N N = = l l N A R E W D = ~ OD O 0 ® a d R E D D LL INTRODUCTION ©S WV © N a UM A W w W MEMORANDUM OF POINTS AND AUTHORITIES On September 25, 2013, Plaintiffs Kristie Kovtun and Jeremy Paul entered into Independent Contractor Agreements with JetPack Marketing, LLC (“JetPack”). A copy ofthe Independent Contractor Agreements are attached to the Declaration of Lisa Jorissen as Exhibits A and B (the “Agreements”). Pursuantto the AgreementsPlaintiffs agreed to be bound by a mutual arbitration agreement between themselves and JetPack. (/d. at 10). Plaintiffs’ agreements to arbitrate are broad and encompasses “[a]ny dispute or controversy arising under, out of, in connection with, or in relation to this Agreement.” Id. Notwithstanding that express agreement, and in direct violation thereof, Plaintiffs filed their Complaint alleging causes of action for failure to pay overtime, failure to provide itemized wage statements and failure to provide meal and rest periods arising out oftheir employment with Defendantas spelled out in the Agreements. Complaint, 9 1-34. As a matter of well-settled law, the parties’ arbitration agreement is binding and enforceable. Because the parties’ agreements are valid, and because all of Plaintiffs’ claims clearly fall within their scope, their claims must be compelled to arbitration and this action should be stayed. IL FACTUAL BACKGROUND A. The Parties Entered Into an Enforceable Arbitration Agreement JetPackis in the business ofcreating training materials used to train individuals in the automotive industry throughout the country. Jorissen Decl., 3. While JetPack hasits principal place of business located in California,it engagesin interstate commerce and has clients across the US. Id. at 92. On September 25, 2013, Plaintiffs, Kristie Kovtun and Jeremy Paul entered into Independent Contractor Agreements with JetPack. The Agreements state “the parties expressly intend and agree that Contractoris an independent contractor and not an employee of the Company for any reason off under any circumstance.” (Exhibits A and B at Y1.A.) The Agreements also state that in exchange for the payments agreed upon in the contract that both Plaintiffs would perform services for JetPack buf that they were both free to work for others. Jd. See also Addendum 1. Further, the Agreementsstate DEFENDANTS’ NOTICE OF MOTION AND MOTION TO COMPEL ARBITRATION AND STAY PROCEEDINGS O O 0 9 O& O W n B A W D N R N N N N N N D = m m e m e m e a e w e a e P ® N A R W N = , O 0 0 ® N N N R A W O N — ~ O o JetPack shall not have the right to require either Plaintiff to do anything that would prejudice the] independent contractor relationship. Id. q1.A. Addendum 1 to the Agreements signed by each Plaintiff provides the services to be provided by Plaintiffs and the payments or compensation to be paid to Plaintiffs. Ex. A-B, Addendum 1 91-2. Plaintiffs worked under the Agreements without incident or complaint for four (4) years until the completion of their assignments in April of 2018. (Declaration of Lisa Jorissen at 9913-14). Plaintiffs now claim that they are not independent contractors as previously agreed but were employeesand therefore entitled to overtime pay based upon the compensation provided for underthe Agreements more specifically 92 of the Addendum 1. See Complaint at q1e. In the Independent Contractor Agreements, JetPack and Plaintiffs agreed to a procedural framework to resolve any and all disputes arising from the Agreements. See Agreements at 9 10. The Agreements state as follows: 10. Arbitration. Any dispute or controversy arising under, out of, in connection with, or in relation to this Agreement, any amendment hereof, or the breach hereof, and/or relating to the Indemnified Parties or services (the “Dispute”) shall be resolved as follows: a. Negotiation. The Contractor shall attempt promptly and in good faith to resolve any Dispute arising out of or relating to the Agreement, Addendum(s) and/or Indemnified Parties by negotiation. b. Mediation. If any Dispute is not resolved by negotiation, the Contractor shall endeavor to settle the Dispute by mediation. Contractor and/or the Indemnified Parties may request in writing that the other party mediate the Dispute; such notice shall set forth the subject of the Dispute and the relief requested. Unless otherwise agreed, the mediation shall be conducted by a mediator affiliated with and under the rules of: ADR Services, or JAMS or the International Institute for Conflict Prevention and Resolution (formerly known as the CPR Institute for Dispute Resolution (“CPR”). The selection of an organization by the parties shall be made within ten (10) business daysafter a party requests mediation of a Dispute pursuant to this provision. If an organization/judge and applicable rules have not been agreed upon within such ten-day period, then the Dispute shall be mediated in accordance with the CPR Mediation Procedure and a single mediator will be chosen by CPR. C. Arbitration. If within forty-five (45) days ofthe first mediation session, the Dispute is not resolved, either party may serve the other party with a written notice of binding arbitration. Unless otherwise agreed, the arbitration shall be conducted by and under the commercial arbitration rules of the same organization and conducted the mediation. The arbitration shall be conducted by a panel ofthree (3) arbitrators. The initiator ofthe arbitration shall designate the arbitratorit/she/he selects 2 DEFENDANTS’ NOTICE OF MOTION AND MOTION TO COMPEL ARBITRATION AND STAY PROCEEDINGS O o 0 9 A N U n R N W N m s N D R R N D m m e m e m a e m e e e * ® N A R W N = , O 0 ® N U M A W N ~ ~ o o in its notice of arbitration. Thereafter, the other party(ies) included in the arbitration shall have ten (10) business days to select an arbitrator. The arbitrators selected shall then agree upon a third arbitrator within fifteen (1 5) daysofthe selection of the second arbitrator. If any party fails to appoint an arbitrator, orif the selected arbitrators cannot agree on the third arbitrator, then the dispute resolution service whose rules govern the arbitration shall appoint the arbitrator. B. Plaintiffs Filed this Action in Violation of the Arbitration Agreement Notwithstanding their express agreement to submit “any disputes or controversy arising under, out of, in connection with, or in relation to this Agreement” Plaintiffs filed this lawsuit on September 12, 2018,alleging four causes of action against JetPack: (1) failure to pay overtime for work performed under the Agreements; (2) failure to provide itemized wage statementsfor their salaries as provided under the Agreements; (3) failure to provide meal and rest periods; and (4) unfair competition. See Complaint 1-34. Because these claims fall expressly within the terms ofthe Agreements, Defendant hereby moves this Court for an order: (1) compelling Plaintiffs to submit their claims to binding arbitration in accordance with the Agreements; and (2) staying these proceedings pending arbitration. III. LEGAL ARGUMENT The Federal Arbitration Act (“FAA”) unquestionably applies to the Agreements. In fact, the Agreements expressly provide that “this Agreement and Addendum(s) shall be governed by the Federal Arbitration Act.” Exhibits A-B, 12. The FAA embodies a strong federal policy favoring arbitration. American Express Co. v. Italian Colors Rest., 133 S. Ct. 2304, 2315 (2013) (noting that the FAA “reflects a federal policy favoring actual arbitration”); AT&T Mobility LLC v. Concepcion, 131 S. Ct. 1740, 1745 (2011) (same). Under federal law, which this Court is bound by the Agreements to apply,there is a strong presumption in favor of enforcing the arbitration agreement. Indeed, under the FAA,this Court's role in resolving this motion is limited to determining (1) whether the Agreements encompass the dispute at issue, and (2) whether the Agreementsare otherwise valid. 9 U.S.C. § 4. Once this Court determines that “the response is affirmative on both counts, then the [FAA] requires the Court to enforce the arbitration agreementin accordance withits terms.” Chiron Corp v. Ortho Diagnostic Sys., Inc., 207 F.3d 1126, 1130 (9th Cir. 2000). 3 DEFENDANTS’ NOTICE OF MOTION AND MOTION TO COMPEL ARBITRATION AND STAY PROCEEDINGS O o 0 9 A N R R W N D D D N N N N N R = m s e m a e e e ® N A A W N D = O 0 ® N A L o R — ~ o o Because Plaintiffs’ claims are entirely encompassed within the scope of the agreementto arbitrate, and because the Agreements are otherwise valid, as set forth more fully below,this Court should grant this motion. A. Federal and State Law Mandate Enforcementof a Valid Arbitration Agreement 1. Under the FAA, Agreements to Arbitrate Employment Disputes Are Valid Agreements to arbitrate are “valid, irrevocable, and enforceable” under the FAA. 9 U.S.C. § 2. “The overarching purpose of the FAA . . . is to ensure the enforcement of arbitration agreements according to their terms so as to facilitate streamlined proceedings.” Concepcion, 131 S. Ct. at 1748. The FAA “reflects an emphatic federal policy in favor of arbitral dispute resolution.” KPMG LLP v. Cocchi, 132 S. Ct. 23, 25 (2011) (per curiam) (quoting Mitsubishi Motors Corp. v. Soler Chrysler— Plymouth, Inc., 473 U.S. 614, 631 (1985) (internal quotation marks omitted); see also Moses H. Cone Mem’ Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24 (1983) (the FAA reflects a “liberal federal policy favoring arbitration.”). “This policy, as contained within the Act, ‘requires courts to enforce the bargain of the parties to arbitrate.” Cocci, 132 S. Ct. at 25 (quoting Dean Witter Reynolds Inc. v. Byrd, 470 U.S. 213, 217 (1985)). This strong federal policy of enforcing arbitration agreements includes agreements to arbitrate statutory rights. See 9 U.S.C. § 1 et seq.; Concepcion, 131 S. Ct. at 1749. The purpose of the enactment of the FAA wasto provide statutory acceptance of arbitration agreements, so as to give them the stature of other types of contracts. Concepcion, 131 S. Ct. at 1745. Indeed, the pro-arbitration policy espoused by the FAA is so strong that courts are obligated to resolve any doubtsas to the arbitrability of a plaintiffs claim in favor of arbitration. See Moses H. Cone, 460 U.S.at 24-25 (1983) (FAA “establishesthat, as a matter of federal law” that any doubts concerning the scope of arbitrable issues should be resolved in favor of arbitration). When directing parties to proceed to arbitration on such issues, by its terms, the FAA “leaves no placefor the exercise ofdiscretion.” Dean Witter Reynolds, 470 U.S. at 218 (1985) (emphasis added); see also, Moses H. Cone, 460 U.S, at 24 (“Section 2 [of the FAA] is a congressional declaration of a liberal federal policy favoring arbitration agreements, notwithstanding any state substantive or 4 DEFENDANTS’ NOTICE OF MOTION AND MOTION TO COMPEL ARBITRATION AND STAY PROCEEDINGS N O X X N A R A W N I D N N N N N N N = o m e m m e p e ® N h R A W N 2 , O V 0 ® N A L O o ~ ~ o o procedural policies to the contrary.”); Coleman v. Jenny Craig, Inc., 11CV1301-MMA DHB, 2012 WL 3140299 *2-*4 (S.D. Cal. May 15, 2012). The Supreme Court’s decision in Concepcion recognizes that (1) the FAA reflects “both a ‘liberal federal policy favoring arbitration,” and the ‘fundamental principle that arbitration is a matter of contract’; (2) “[i]n line with these principles, courts must place arbitration agreements on an equal footing with other contracts”; and (3) courts must “enforce [arbitration agreements] according to their terms.” Concepcion, 131 S. Ct. at 1745-46 (internalcitations omitted). This strong public policy in favor of enforcing arbitration agreements has been acknowledged by California and federal courts alike and applies to arbitration agreements understate law and the FAA. See Concepcion, 131 S. Ct. at 1749; Becerra v. Newpark Mall Dental Group, No. 12-01325 LB, 2012 WL 3010973, at *1-2 (N.D. Cal. July 23, 2012); Vianna v. Doctors’ Management Co., 27 Cal. App. 4th 1186, 1189 (1994); Moncharsh v. Heily & Blase, 3 Cal. 4th 1, 9 (1992); see also Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 25 (1991); Volt Info. Sci, Inc. v. Bd. of Tr. ofLeland Stanford Jr. Univ., 489 U.S. 468, 475-76 (1989). It is also well-settled that agreementsto arbitrate employment claims are enforceable. See Circuit City Stores, Inc., v. Adams, 532 U.S. 105, 122-23 (2001). Indeed, as the Court wrote in that case, the Supreme Court’s case law concerning arbitration of employment claims is “clear in rejecting the supposition that the advantages ofthe arbitration process somehow disappear when transferred to the employment context.” Id. at 123. 2. Under California Law, Agreements to Arbitrate Employment Disputes Are Valid California’s public policy is equally as strongly in favor of arbitration agreements. Little v. Auto Stiegler, Inc., 29 Cal. 4th 1064, 1079 (2003); Madden v. Kaiser Found. Hosps., 17 Cal. 3d 699, 706-07 (1976) (“[Alrbitration has become an accepted and favored method of resolving disputes . . . praised by the courts as an expeditious and economical method of relieving overburdened civil calendars.”). California law favors arbitration and when an agreement contains an arbitration clause, it is given a heavy presumption of validity. Cione v. Foresters Equity Services, Inc., 68 Cal.Rptr.2d 167,174, 177 (Cal. Ct. App. 1997). When parties have a valid arbitration agreement, disputes should 5 DEFENDANTS’ NOTICE OF MOTION AND MOTION TO COMPEL ARBITRATION AND STAY PROCEEDINGS S 0 ® N O U n A W N — B R O N D N N N N N N = o m e m e m e e © N A n h A W N D = O 0 ® O N O R r » o o = be sentto arbitration evenifthere is doubt about whether the dispute should be covered by the arbitration clause. Id. at 177. Indeed, the California Code of Civil Procedure requires that a “court shall order the petitioner and the respondent to arbitrate the controversy if it determines that an agreement to arbitrate the controversy exists [.]” Civ. Proc. Code § 1281.2. Likewise, the California Supreme Court has held that “the Legislature has expressed a ‘strong public policy in favor ofarbitration’and that “courts will ‘indulge every intendmentto give effect to such proceedings.”” Moncharsh, 3 Cal. 4th at 9. The presumption is so strongly in favor of arbitration that an employee is “bound bythe provisions of [an arbitration] agreementregardless of whether [she] read it or [was] aware ofthe arbitration clause when [she] signed the document.” Brookwood v. Bank ofAm., 45 Cal. App. 4th 1667, 1673- 74 (1996) (citations omitted). Under California law, “arbitration agreements should be liberally interpreted, and arbitration should be ordered unless the agreement clearly does not apply to the dispute in question.” Vianna, 27 Cal. App. 4th at 1189. Any “[d]oubts as to whether an arbitration clause appliesto a particular dispute are to be resolved in favor of sending the parties to arbitration.” Id. As demonstrated below, the Agreements are enforceable contracts by which Plaintiffs are boundto arbitrate their claims against JetPack. B. The Parties Agreed to Arbitrate Their Disputes There can be no doubtthat the parties here agreed to arbitrate, and that the claims Plaintiffs bring are within the scope of those Agreements. Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79, 84 (2002) (trial court must ascertain whether an agreement to arbitrate exists, and whether the claims are within the scope ofthat agreement); Rosenthal v. Great Western Fin. Securities Corp., 14 Cal. 4th 394, 413 (1996) (same). 1. An Arbitration Agreement Exists Between Plaintiff and Defendant Though JetPack must prove that the parties entered into an agreement to arbitrate the claims at issue,its burden is light — JetPack is only required to show that an agreementexists by a 6 DEFENDANTS’ NOTICE OF MOTION AND MOTION TO COMPEL ARBITRATION AND STAY PROCEEDINGS O o © N a n r W N — R O R O N N N N N Y = m m e m e l ® N x h w D D = O V 0 ® N r R m o o S preponderance ofthe evidence. Howsam, 537 U.S. at 84; Rosenthal, 14 Cal. 4th at 413. To satisfy its burden, JetPack need only supply a copy ofthe agreement or recite its terms in its motion to compel. Cal. R. Ct. 371; Condee v. Longwood Mgmt. Corp., 88 Cal. App. 4th 215, 218-19 (2001). Here, JetPack metits burden. JetPack has supplied a true and correct copy of the agreement by which Plaintiffs agreed to be bound to arbitrate “any dispute”arising out of or in connection with their Agreements and hasrecited its terms in this motion. Exhibits A-B, 910. Accordingly, the parties formed a valid and enforceable agreementto arbitrate. 2. Plaintiffs’ Claims Are Within the Scope of the Agreement The Agreements specifically cover any dispute arising under, out of, in connection with, or in relation to this Agreement. Plaintiff's Complaint alleges claimsthat are squarely within the ambit of the arbitration clause, including without limitation, their claims for overtime compensation for work performed pursuant to the Agreements and failure to provide wage statementsfor the salaries paid pursuant to the Agreements. The Complaint alleges that during Plaintiffs’ services to JetPack they were misclassified as Independent Contractors as outlined in the Agreements.! Complaint, 8. Plaintiffs also allege that they were not free from control and direction in connection with the performance oftheir work as spelled out in the Agreements and Addendum. Id. Plaintiffs further allege that “pursuant to the independent contractor agreements that Defendants forced Plaintiffs to sign, Plaintiffs were forbidden from exercising independent judgment or direction” and were therefore misclassified. /d. 99. Further, Plaintiffs allege that they were entitled to be paid additional compensation “beyond their regular wages” and were entitled to “overtime wages.” Id, 1913-14. Ofcourse Plaintiffs’ wages are spelled out in Addendum 1 of the Agreements. Accordingly,it is beyonddispute that Plaintiffs’ claims against Defendant fall squarely within the scope ofthe Agreements. Even if there could be any doubt asto this point, such doubt must be resolved in favor of arbitration. AT&T Techs., Inc. v. Comm ns Workers ofAm., 475 U.S. 643, 650 (1986) (doubts as to whether an asserted dispute is covered by an arbitration clause “should be resolved in favor of ! While the merits of Plaintiffs’ claims are not at issue in this Motion, JetPack denies each and every one of Plaintiffs’ allegations in their entirety. 7 . DEFENDANTS’ NOTICE OF MOTION AND MOTION TO COMPEL ARBITRATION AND STAY PROCEEDINGS N O 0 9 A N n b W N N D N N N D N D N m m e m e m e a b a m a e a p a © N A A W D = O 0 d N A W N = o coverage”) (internal quotation marks omitted); Moses H. Cone, 460 U.S. at 24-25 (“any doubts concerning the scope of arbitrable issues should be resolved in favor of arbitration”); Vianna, 27 Cal. App. 4th at 1189 (any “[d]oubts as to whether an arbitration clause applies to a particular dispute are to be resolved in favor of sending the parties to arbitration.”) (quotations and citation omitted). C. The Agreements Are Valid and Enforceable Arbitration agreements governed by the FAA,such as the Agreements here, are presumed to be valid and enforceable. See Shearson/dm. Express, Inc. v. McMahon, 482 U.S. 220, 226 (1987); Mitsubishi Motors Corp., 473 U.S. at 626-27. The burden is on Plaintiffs to prove otherwise. Green Tree Fin. Corp.-Ala. v. Randolph, 531 U.S. 79, 92 (2000); Pinnacle Museum Tower Ass'n v. Pinnacle Mkt. Dev. (US) LLC, 55 Cal. 4th 223, 236 (2012). In this case, Plaintiffs were presented with the Agreements and signed those Agreements on September 25, 2013. Jorissen Decl., 9 7-9, 10-11, Exhibits A-B. In California, an arbitration agreement is valid as long as a general defense to the contract does not apply, such as fraud, duress, or unconscionability. McManus v. CIBC World Markets Corp., 134 Cal.Rptr.2d 446, 452 (Cal. Ct. App. 2003). Inthe instant casethe Agreements are straightforward, fair, and reasonable to both parties. There is nothing in the Agreements to indicate fraud, duress or unconscionability. Because Plaintiffs had an adequate opportunity to review and consider the Agreements, and then chose to acknowledge their assent thereto by signing the Agreements,there is no basis on which] to find that the Agreements are unconscionable or otherwise unenforceable. To be unconscionable, a contract must be procedurally and substantively unconscionable. Jd. at 453; see Cal. Civ. Code § 1670.5. The burden rests squarely with Plaintiff to establish both procedural and substantive unconscionability; and here, there simply is no basis for finding that the Agreements are unconscionable. Green Tree Fin. Corp., 531 U.S. at 92; Pinnacle, 55 Cal. 4th at 236. | 1. The Agreements Are Not Procedurally Unconscionable Procedural unconscionability “focuses on the elements of oppression and surprise. Oppression arises from an inequality of bargaining power which results in no real negotiation and an absence of meaningful choice... Surprise involves the extent to which the terms of the bargain are 8 DEFENDANTS’ NOTICE OF MOTION AND MOTION TO COMPEL ARBITRATION AND STAY PROCEEDINGS O o 0 N N R W D N D N N N N D N D = m e m e m e a e n © N N A W N 2 O V ® N A L O N — o o hidden in a ‘prolix printed form’ drafted by a party in a superior bargaining position.” Serpa v. California Surety Investigations, Inc., 215 Cal. App. 4th 695, 703 (2013) (internal citations/quotations omitted). These elements are lacking in this case. Far from any indication of “surprise,” the Agreements are written in plain language and clearly explain that both parties are agreeing to arbitrate their claims rather than pursue them in court. Moreover, the Agreements articulate all applicable provisions and requirements in clear, unambiguouslanguage broken down into sections with understandable and specific headings, including: “Negotiation, Mediation and Arbitration.” Exhibits A-B, 910.2 2. The Agreements Are Not Substantively Unconscionable Noris there any evidence of substantive unconscionability. “Substantive unconscionability focuses on the actual terms ofthe agreement and evaluates whether they create an ‘overly harsh’ or ‘one-sided’ result... Substantive unconscionability ‘may take various forms,” but typically is found in the employment context when the arbitration agreementis ‘one-sided’ in favor of the employer without sufficient justification....” Serpa, 215 Cal. App. 4th at 703 (internalcitations/quotations omitted). Nothing in these Agreements is one-sided. The arbitration provision does not require one party to bear the cost of the dispute resolution, and both parties are equally required to seek a resolution in the same forum. Frankly, the Agreements provide for a fair process to resolve disputes without costly litigation. The Agreements require the parties to first negotiate in good faith. Second, the Agreements provide for early resolution through mediation. Third, only if negotiation and mediation fail to resolve the dispute then the parties proceed to arbitration. See Agreements 9 10. In this case, Plaintiffs ignored all three reasonable requirements and simply filed this lawsuit in state court. 2 It is wellsettled that even when arbitration agreements are required as a condition of employment does not make it procedurally unconscionable. See E.E.O.C. v. Luce, Forward. Hamilton & Scripps, 345 F.3d 742 (9th Cir. 2003) & Lagatree v. Luce, Forward, Hamilton & Scripps, 74 Cal. App. 4th 1105 (1999) (holding that employers may require employees to agree to binding arbitration of disputes as a condition of employment). 9 DEFENDANTS’ NOTICE OF MOTION AND MOTION TO COMPEL ARBITRATION AND STAY PROCEEDINGS O o 0 N N R W m s D D R N N N N N N ) = m e m e m o e e m p © N a A W N = , O Y X N R A W N o— ~ o o Here, the Agreements do not contain the one-sided provisions that courts have previously rejected. For example,there is no unlawful fee allocation. There are multiple options for mediation and arbitration services. Thereis a fair process for selection of arbitrators. There are appropriate discovery rights and procedures for fair resolution and the obligation to arbitrate is mutual. California recognizesthat arbitration is an adequate substitute for litigation and does not have any inherent disadvantages. Sonic-Calabasas A, Inc. v. Moreno, 311 P.3d 184,207 (2013). The Agreements are mutual and allow forall the rights and remedies that would be afforded to Plaintiffs in court, but in a neutral arbitration forum. Accordingly, the Agreements are conscionable and should be enforced. 3. The Court Should Sever Any Unconscionable Term Should the Court conclude that a term ofthe Agreements are in fact unconscionable, the Court may sever the term of the agreement and enforce the remainder of the agreement. See Civil Code § 1670.5(a). A court should only decline to sever an offending portion if an agreement “is permeated by the unconscionability.” Ferguson v. Countrywide Credit Industries, 298 F.3d 778, 787] (9th Cir. 2002); Mercuro v. Superior Court, 96 Cal. App. 4th 167, 182 (2002). Courts have only found an entire agreement to be unenforceable when multiple defects “indicate a systematic effort to imposearbitration on an employee . . . as an inferior forum that works to the employer’s advantage.” Mercuro, 96 Cal. App. 4th at 185. D. Plaintiff Refused to Stipulate to this Matter Proceeding in Arbitration Pursuant to California Code of Civil Procedure § 1281.7, JetPack filed this Motion in lieu of a response to Plaintiffs’ Complaint. Prior to filing this motion, JetPack forwarded a copy of the signed Agreements to Plaintiffs’ counsel on August 30, 2018 and advised Plaintiffs that they were required to submit the matter to mediation and if the case was not resolved then to arbitration. Declaration ofPeter F. Klett (“Klett Decl.”), 8. Plaintiffs’ counsel initially indicated he was willing to meet and confer over mediation, however, Plaintiffs’ counselfailed to further correspond with defense counsel and simply filed their Complaint in state court on September 20, 2018. Id, 179-10. 10 DEFENDANTS’ NOTICE OF MOTION AND MOTION TO COMPEL ARBITRATION AND STAY PROCEEDINGS S O 0 0 N N U n D A W N D N D N N N N N R = m e m e e ® N A L h L N = O L V © u d O U N B E » o o = E. This Action Must Be Stayed Pending Completion of Arbitration With the heavy presumption of validity thatthe state recognizes and lack of a contract defense, Defendant submits the Agreements are valid and should be enforced. Cione, 68 Cal.Rptr.2d at 177. As demonstrated above,the parties entered into valid and enforceable arbitration agreements, and the agreements encompass Plaintiffs’ claims. Thus, “the court shall make an order summarily directing the parties to proceed with arbitration.” 9 U.S.C. § 4. Under the FAA, upon application of a party, a court “shall” stay further proceedings in a legal action ifit finds that “any issue”in the case should be referred to arbitration under an agreement in writing for such arbitration. 9 U.S.C. § 3. California law also calls for a stay oflitigation where there is a valid arbitration agreement. See Cal. Civ. Pro. Code § 1281.4; Rodriguez v. American Ttechnologies, Inc., 136 Cal. App. 4th 1110, 1122-23 (2006) (citing Marcus v. Superior Court, 75 Cal. App. 3d 204, 209 (1977) (any party to a court proceeding can move to stay the court proceeding pursuant to Cal. Civ. Proc. Code § 1281.4 and the court must order a stay). Defendant therefore respectfully requests that this Court stay this litigation and orderthe parties to arbitration. IV. CONCLUSION For the foregoing reasons, the Agreements are a valid and enforceable arbitration agreements that cover the claims alleged by Plaintiffs in the instant lawsuit. Accordingly, Defendant respectfully request that this Court enter an order compelling arbitration and staying this action. Dated: ~~ October 18, 2018 SIDLEY AUSTIN LLP By: Nn1 7 Jennyfer B. Zagearof ! V Atgrneys for Defendan JetPack Marketing, LLC and EventLink, LLC NASHVILLE 65081-18 663117v2 11 DEFENDANTS’ NOTICE OF MOTION AND MOTION TO COMPEL ARBITRATION AND STAY PROCEEDINGS
